NATIONAL BANKSHARES INC 10-Q

10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2026 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 0-15204 NATIONAL BANKSHARES, INC. (Exact name of registrant as specified in its charter) Virginia 54-1375874 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 101 Hubbard Street Blacksburg , Virginia 24062-9002 (Address of principal executive offices) (Zip Code) ( 540 ) 951-6300 (Registrant’s telephone number, including area code) (Not applicable) (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $1.25 per share NKSH Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Outstanding shares of common stock at May 13, 2026 6,368,410 Table of Contents NATIONAL BANKSHARES, INC. Form 10-Q Index Part I – Financial Information Page Item 1 Financial Statements 3 Consolidated Balance Sheets, March 31, 2026 (Unaudited) and December 31, 2025 3 Consolidated Statements of Income for the Three Months Ended March 31, 2026 and 2025 (Unaudited) 4 Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2026 and 2025 (Unaudited) 5 Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025 (Unaudited) 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025 (Unaudited) 7 Notes to Consolidated Financial Statements (Unaudited) 9 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3 Quantitative and Qualitative Disclosures About Market Risk 38 Item 4 Controls and Procedures 38 Part II – Other Information Item 1 Legal Proceedings 38 Item 1A Risk Factors 38 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 38 Item 3 Defaults Upon Senior Securities 38 Item 4 Mine Safety Disclosures 38 Item 5 Other Information 39 Item 6 Exhibits 39 Signatures 40 2 Table of Contents Pa rt I - FINANCIAL INFORMATION Item 1. Financial Statements National Bankshares, Inc. Consol idated Balance Sheets (Unaudited) (in thousands, except share and per share data) March 31, 2026 December 31, 2025 Assets Cash and due from banks $ 7,976 $ 8,419 Interest-bearing deposits 54,177 50,831 Total cash and cash equivalents 62,153 59,250 Securities available for sale, at fair value 658,112 654,377 Mortgage loans held for sale 608 - Loans: Real estate construction loans 53,500 40,694 Consumer real estate loans 331,110 328,653 Commercial real estate loans 452,881 467,783 Commercial non real estate loans 50,736 52,018 Public sector and IDA loans 62,740 63,677 Consumer non real estate loans 45,097 47,101 Total loans 996,064 999,926 Less: deferred fees and costs ( 674 ) ( 616 ) Loans, net of deferred fees and costs 995,390 999,310 Less: allowance for credit losses on loans ( 9,739 ) ( 9,892 ) Loans, net 985,651 989,418 Premises and equipment, net 18,397 18,479 Accrued interest receivable 7,001 6,538 Goodwill 10,718 10,718 Core deposit intangible, net 1,403 1,490 Bank-owned life insurance ("BOLI") 48,869 48,568 Other assets 36,081 35,668 Total assets $ 1,828,993 $ 1,824,506 Liabilities and Stockholders' Equity Noninterest-bearing demand deposits $ 302,844 $ 313,022 Interest-bearing demand deposits 866,848 853,756 Savings deposits 145,134 142,645 Time deposits 314,938 317,510 Total deposits 1,629,764 1,626,933 Accrued interest payable 1,600 1,581 Other liabilities 10,231 11,084 Total liabilities 1,641,595 1,639,598 Commitments and contingencies Stockholders' Equity Preferred stock, no par value, 5,000,000 shares authorized; no ne issued and outstanding $ - $ - Common stock of $ 1.25 par value and additional paid in capital. Authorized 10,000,000 shares; issued and outstanding 6,368,410 (including 5,039 unvested) shares as of March 31, 2026 and December 31, 2025 22,086 22,024 Retained earnings 207,539 202,558 Accumulated other comprehensive loss, net ( 42,227 ) ( 39,674 ) Total stockholders' equity 187,398 184,908 Total liabilities and stockholders' equity $ 1,828,993 $ 1,824,506 See accompanying notes to consolidated financial statements. 3 Table of Contents National Bankshares, Inc. Consoli dated Statements of Income (Unaudited) For the Three Months Ended March 31, (in thousands, except share and per share data) 2026 2025 Interest Income Interest and fees on loans $ 13,944 $ 12,960 Interest on federal funds sold - 3 Interest on interest-bearing deposits 424 1,039 Interest on securities – taxable 4,233 3,860 Interest on securities – nontaxable 340 336 Total interest income 18,941 18,198 Interest Expense Interest on time deposits 2,631 3,311 Interest on other deposits 3,687 4,636 Total interest expense 6,318 7,947 Net interest income 12,623 10,251 (Recovery of) provision for credit losses ( 73 ) 276 Net interest income after (recovery of) provision for credit losses 12,696 9,975 Noninterest Income Service charges on deposit accounts 649 699 Other service charges and fees 142 83 Credit and debit card fees, net 457 417 Trust income 584 579 BOLI income 301 292 Gain on sale of mortgage loans held for sale 19 25 Other income 527 465 Total noninterest income 2,679 2,560 Noninterest Expense Salaries and employee benefits 5,834 5,180 Occupancy, furniture and fixtures 884 739 Data processing 928 983 FDIC assessment 207 207 Intangible asset amortization 87 97 Franchise taxes 350 373 Professional services 373 299 Core system conversion expense - 46 Other operating expenses 665 709 Total noninterest expense 9,328 8,633 Income before income tax expense 6,047 3,902 Income tax expense 1,066 666 Net Income $ 4,981 $ 3,236 Basic net income per common share $ 0.78 $ 0.51 Diluted net income per common share $ 0.78 $ 0.51 Weighted average number of common shares outstanding, basic 6,363,371 6,358,410 Weighted average number of common shares outstanding, diluted 6,366,154 6,360,392 See accompanying notes to consolidated financial statements. 4 Table of Contents National Bankshares, Inc. Consolidate d Statements of Comprehensive Income Three Months Ended March 31, 2026 and 2025 (Unaudited) For the Three Months Ended March 31, (in thousands) 2026 2025 Net Income $ 4,981 $ 3,236 Other Comprehensive (Loss) Income, Net of Tax Unrealized holding (loss) gain on available for sale securities net of tax of ($ 680 ) and $ 2,017 for the periods ended March 31, 2026 and 2025, respectively ( 2,553 ) 7,590 Other comprehensive (loss) income, net of tax ( 2,553 ) 7,590 Total Comprehensive Income $ 2,428 $ 10,826 See accompanying notes to consolidated financial statements. 5 Table of Contents National Bankshares, Inc. Consolidated Statem ents of Changes in Stockholders’ Equity Three Months Ended March 31, 2026 and 2025 (Unaudited) (in thousands except per share data) Common Stock and Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Balances at December 31, 2024 $ 21,831 $ 196,343 $ ( 61,765 ) $ 156,409 Net income – 3,236 – 3,236 Other comprehensive income, net of tax of $ 2,017 – – 7,590 7,590 Stock based compensation 43 – – 43 Balances at March 31, 2025 $ 21,874 $ 199,579 $ ( 54,175 ) $ 167,278 Balances at December 31, 2025 $ 22,024 $ 202,558 $ ( 39,674 ) $ 184,908 Net income – 4,981 – 4,981 Other comprehensive (loss), net of tax of ($ 680 ) – – ( 2,553 ) ( 2,553 ) Stock based compensation 62 – – 62 Balances at March 31, 2026 $ 22,086 $ 207,539 $ ( 42,227 ) $ 187,398 See accompanying notes to consolidated financial statements. 6 Table of Contents National Bankshares, Inc. Consolidat ed Statements of Cash Flows Three Months Ended March 31, 2026 and 2025 (Unaudited) For the Three Months Ended March 31, (in thousands) 2026 2025 Cash Flows from Operating Activities Net income $ 4,981 $ 3,236 Adjustments to reconcile net income to net cash provided by operating activities: (Recovery of) provision for credit losses ( 73 ) 276 Depreciation of premises and equipment 314 248 Amortization of premiums and accretion of discounts on securities, net 236 275 Amortization of core deposit intangible 87 97 Accretion of fair value of acquired loans ( 417 ) ( 251 ) Amortization of fair value of acquired time deposits and leases 13 53 Origination of mortgage loans held for sale ( 1,912 ) ( 1,442 ) Proceeds from sale of mortgage loans held for sale 1,323 1,148 Gain on sale of mortgage loans held for sale ( 19 ) ( 25 ) Increase in cash value of bank-owned life insurance ( 301 ) ( 292 ) Equity based compensation expense 62 43 Net change in: Accrued interest receivable ( 463 ) ( 204 ) Other assets 285 ( 395 ) Accrued interest payable 19 ( 28 ) Other liabilities ( 835 ) ( 173 ) Net cash provided by operating activities 3,300 2,566 Cash Flows from Investing Activities Proceeds from repayments of mortgage-backed securities 5,351 2,977 Proceeds from calls, sales and maturities of securities available for sale 7,000 12,000 Purchases of available for sale securities ( 19,555 ) - Net change in restricted stock ( 24 ) - Purchase of loan participations ( 10,672 ) ( 15,977 ) Collection of loan participations 765 1,482 Loan originations and principal collections, net 14,061 ( 680 ) Recoveries on loans charged off 93 63 Purchases of premises and equipment ( 229 ) ( 963 ) Net cash provided by investing activities ( 3,210 ) ( 1,098 ) Cash Flows from Financing Activities Net change in time deposits ( 2,590 ) ( 14,013 ) Net change in other deposits 5,403 26,963 Net cash used in financing activities 2,813 12,950 Net change in cash and cash equivalents 2,903 14,418 Cash and cash equivalents at beginning of period 59,250 108,117 Cash and cash equivalents at end of period $ 62,153 $ 122,535 7 Table of Contents For the Three Months Ended March 31, (in thousands) 2026 2025 Supplemental Disclosures of Cash Flow Information Cash payments for: Interest on deposits and borrowings $ 6,281 $ 7,975 Income taxes 1,110 - Supplemental Disclosure of Noncash Activities Loans charged against the allowance for credit losses $ 183 $ 112 Unrealized holding (loss) gain on securities available for sale ( 3,233 ) 9,607 See accompanying notes to consolidated financial statements. 8 Table of Contents National Bankshares, Inc. Notes t o Consolidated Financial Statements March 31, 2026 (Unaudited) $ in thousands, except per share data Note 1: General and Summary of Significant Accounting Policies The consolidated financial statements of National Bankshares, Inc. (“NBI”) and its wholly-owned subsidiaries, The National Bank of Blacksburg (the “Bank” or “NBB”) and National Bankshares Financial Services, Inc. (“NBFS”) (collectively, the “Company”), conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the banking industry. All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated. The accompanying interim period consolidated financial statements are unaudited; however, in the opinion of the Company’s management, all adjustments consisting of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements, have been included. Application of the principles of GAAP and practices within the banking industry require management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statement; accordingly, as this information changes, the financial statements may reflect different estimates, assumptions, and judgments. Certain policies inherently rely more extensively on the use of estimates, assumptions, and judgments and as such may have a greater possibility of producing results that could be materially different than originally reported. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance of credit losses on loans and pension plan. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of results of operations for the full year or any other interim period. The interim period consolidated financial statements and financial information included in this Form 10-Q should be read in conjunction with the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). The Company’s significant accounting policies followed in preparation of the unaudited consolidated financial statements are disclosed in Note 1 of the Company's 2025 Form 10-K. All amounts and disclosures included in this quarterly report as of December 31, 2025, were derived from the Company’s audited consolidated financial statements. Certain items in the prior period financial statements have been reclassified to conform to the current presentation. These reclassifications had no effect on prior year net income or stockholders’ equity. The Company posts all reports required to be filed under the Securities Exchange Act of 1934 on its web site at www.nationalbankshares.com . Risks and Uncertainties The Company is closely monitoring risks that may impact its business, including inflation, along with U.S. monetary policy maneuvers to manage inflation. Inflation and U.S. monetary policy maneuvers to reduce it may impact the Company’s customers’ demand for banking services and ability to qualify for and/or repay loans. These risks could adversely affect the Company’s business, financial condition, results of operations, cash flows, credit risk, asset valuations and capital position. Recent Accounting Pronouncements ASU 2025-08 In November 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2025-08, “Financial Instruments—Credit Losses (Topic 326): Purchased Loans.” The amendments in this ASU expand the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. If an entity adopts this ASU in an interim reporting period, it should apply it as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period. The Company does not expect the adoption of ASU 2025-08 to have a material impact on its consolidated financial statements. ASU 2024-03 In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset54amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01, “Income 9 Table of Contents Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. Implementation of ASU 2024-03 may be applied prospectively or retrospectively. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements. Note 2: Loans and Allowance for Credit Losses Loans Loans include acquired loans and originated loans. Acquired loans are presented at their outstanding principal balance, net of the remaining purchase discount of $ 5,134 as of March 31, 2026 and $ 5,551 as of December 31, 2025. Originated loans as of March 31, 2026 and December 31, 2025 are presented at amortized cost, net of deferred fees and costs. The following table presents the composition of the loan portfolio, excluding mortgage loans held for sale, as of the dates indicated. March 31, December 31, 2026 2025 Real estate construction $ 53,500 $ 40,694 Consumer real estate 331,110 328,653 Commercial real estate 452,881 467,783 Commercial non real estate 50,736 52,018 Public sector and IDA 62,740 63,677 Consumer non real estate 45,097 47,101 Gross loans $ 996,064 $ 999,926 Less: deferred fees and costs ( 674 ) ( 616 ) Loans, net of deferred fees and costs $ 995,390 $ 999,310 Allowance for credit losses on loans ( 9,739 ) ( 9,892 ) Total loans, net $ 985,651 $ 989,418 Accrued interest receivable of $ 3,568 at March 31, 2026 and $ 3,361 at December 31, 2025 is not included in total loans above and is also excluded from the Company's estimate of credit losses on loans. 10 Table of Contents Past Due and Nonaccrual Loans The following tables present the aging of past due loans, by loan pool, as of the dates indicated. March 31, 2026 Accruing Current Loans Accruing Loans 30 – 89 Days Past Due Accruing Loans 90 or More Days Past Due Nonaccrual Loans Total Loans Accruing and Nonaccrual 90 or More Days Past Due Real Estate Construction Construction, 1-4 family residential $ 12,410 $ - $ - $ - $ 12,410 $ - Construction, other 41,071 19 - - 41,090 - Consumer Real Estate Equity line 26,958 168 - - 27,126 - Residential closed-end first liens 198,367 1,382 - - 199,749 - Residential closed-end junior liens 11,317 5 - - 11,322 - Investor-owned residential real estate 92,672 241 - - 92,913 - Commercial Real Estate Multifamily residential real estate 140,833 - 189 - 141,022 189 Commercial real estate owner-occupied 126,301 - - 186 126,487 186 Commercial real estate, other 184,678 536 - 158 185,372 - Commercial Non Real Estate Commercial and industrial 50,643 93 - - 50,736 - Public Sector and IDA States and political subdivisions 62,740 - - - 62,740 - Consumer Non Real Estate Credit cards 4,809 3 - - 4,812 - Automobile 12,777 225 - - 13,002 - Other consumer loans 27,027 215 41 - 27,283 41 Total $ 992,603 $ 2,887 $ 230 $ 344 $ 996,064 $ 416 December 31, 2025 Accruing Current Loans Accruing Loans 30 – 89 Days Past Due Accruing Loans 90 or More Days Past Due Nonaccrual Loans Total Loans Accruing and Nonaccrual 90 or More Days Past Due Real Estate Construction Construction, 1-4 family residential $ 11,282 $ - $ - $ - $ 11,282 $ - Construction, other 29,101 311 - - 29,412 - Consumer Real Estate Equity line 27,494 - 50 - 27,544 50 Residential closed-end first liens 196,857 1,447 - - 198,304 - Residential closed-end junior liens 11,154 6 - - 11,160 - Investor-owned residential real estate 91,471 174 - - 91,645 - Commercial Real Estate Multifamily residential real estate 148,644 189 - - 148,833 - Commercial real estate owner-occupied 130,856 - 429 188 131,473 617 Commercial real estate, other 186,939 538 - - 187,477 - Commercial Non Real Estate Commercial and industrial 51,435 248 335 - 52,018 335 Public Sector and IDA States and political subdivisions 63,677 - - - 63,677 - Consumer Non Real Estate Credit cards 4,727 7 2 - 4,736 2 Automobile 12,707 245 14 - 12,966 14 Other consumer loans 28,991 357 51 - 29,399 51 Total $ 995,335 $ 3,522 $ 881 $ 188 $ 999,926 $ 1,069 11 Table of Contents The following table presents nonaccrual loans, by loan class, as of the dates indicated: March 31, 2026 December 31, 2025 With No Allowance With an Allowance Total With No Allowance With an Allowance Total Commercial Real Estate Commercial real estate, owner-occupied $ - $ 186 $ 186 $ - $ 188 $ 188 Commercial real estate, other - 158 158 - - - Total $ - $ 344 $ 344 $ - $ 188 $ 188 No accrued interest receivable was reversed against interest income during the three months ended March 31, 2026 or March 31, 2025. Allowance for Credit Losses on Loans (“ACLL”) The following tables present the activity in the ACLL by portfolio segment for the periods indicated: Activity in the ACLL for the Three Months Ended March 31, 2026 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non-Real Estate Public Sector and IDA Consumer Non-Real Estate Total Balance, December 31, 2025 $ 337 $ 3,823 $ 3,805 $ 849 $ 308 $ 770 $ 9,892 Charge-offs - - - ( 22 ) - ( 161 ) ( 183 ) Recoveries - - - 13 - 80 93 Provision for (recovery of) credit losses 96 55 ( 62 ) ( 195 ) 12 31 ( 63 ) Balance, March 31, 2026 $ 433 $ 3,878 $ 3,743 $ 645 $ 320 $ 720 $ 9,739 Activity in the ACLL for the Three Months Ended March 31, 2025 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non Real Estate Public Sector and IDA Consumer Non Real Estate Total Balance, December 31, 2024 $ 350 $ 3,945 $ 4,320 $ 658 $ 338 $ 651 $ 10,262 Charge-offs - ( 3 ) - - - ( 109 ) ( 112 ) Recoveries - - 8 30 - 25 63 Provision for (recovery of) credit losses ( 17 ) ( 30 ) 269 ( 21 ) 14 62 277 Balance, March 31, 2025 $ 333 $ 3,912 $ 4,597 $ 667 $ 352 $ 629 $ 10,490 Activity in the ACLL for the Year Ended December 31, 2025 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non Real Estate Public Sector and IDA Consumer Non Real Estate Total Balance, December 31, 2024 $ 350 $ 3,945 $ 4,320 $ 658 $ 338 $ 651 $ 10,262 Charge-offs - ( 3 ) - ( 50 ) - ( 529 ) ( 582 ) Recoveries - - 133 33 - 109 275 Provision for (recovery of) credit losses ( 13 ) ( 119 ) ( 648 ) 208 ( 30 ) 539 ( 63 ) Balance, December 31, 2025 $ 337 $ 3,823 $ 3,805 $ 849 $ 308 $ 770 $ 9,892 (1) Adjustment for PCD acquired loans. The following tables present information about the ACLL for individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated. ACLL by Segment and Evaluation Method March 31, 2026 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non-Real Estate Public Sector and IDA Consumer Non-Real Estate Total Individually evaluated $ – $ 24 $ 82 $ – $ – $ – $ 106 Collectively evaluated 433 3,854 3,661 645 320 720 9,633 Total $ 433 $ 3,878 $ 3,743 $ 645 $ 320 $ 720 $ 9,739 ACLL by Segment and Evaluation Method December 31, 2025 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non Real Estate Public Sector and IDA Consumer Non Real Estate Total Individually evaluated $ - $ 26 $ 80 $ - $ - $ - $ 106 Collectively evaluated 337 3,797 3,725 849 308 770 9,786 Total $ 337 $ 3,823 $ 3,805 $ 849 $ 308 $ 770 $ 9,892 12 Table of Contents The following tables present information about individually evaluated loans and collectively evaluated loans by portfolio segment as of the dates indicated. Loans by Segment and Evaluation Method March 31, 2026 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non-Real Estate Public Sector and IDA Consumer Non-Real Estate Individually evaluated $ – $ 456 $ 8,442 $ – $ – $ – Collectively evaluated 53,500 330,654 444,439 50,736 62,740 45,097 Total $ 53,500 $ 331,110 $ 452,881 $ 50,736 $ 62,740 $ 45,097 Loans by Segment and Evaluation Method December 31, 2025 Real Estate Construction Consumer Real Estate Commercial Real Estate Commercial Non Real Estate Public Sector and IDA Consumer Non Real Estate Total Individually evaluated $ - $ 465 $ 8,337 $ - $ - $ - $ 8,802 Collectively evaluated 40,694 328,188 459,446 52,018 63,677 47,101 991,124 Total $ 40,694 $ 328,653 $ 467,783 $ 52,018 $ 63,677 $ 47,101 $ 999,926 Collateral Dependent Loans Loans are collateral dependent when repayment is expected substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Collateral dependent loans are individually evaluated. The Company measures the ACLL on collateral dependent loans based upon the fair value of the collateral. Fair value of the collateral is adjusted for liquidation costs/discounts. If the fair value of the collateral falls below the amortized cost of the loan, the shortfall is recognized in the ACLL. If the fair value of the collateral exceeds the amortized cost, no ACLL is required. As of March 31, 2026 and December 31, 2025, two of the Company’s individually evaluated loans were collateral dependent and secured by real estate. The following table provides detail on collateral dependent loans as of the dates indicated: March 31, 2026 December 31, 2025 Balance Related Allowance Balance Related Allowance Commercial Real Estate Commercial real estate, owner occupied $ 6,216 $ - $ 6,248 $ - Commercial real estate, other 668 - 673 - Total Loans $ 6,884 $ - $ 6,921 $ - Credit Quality The Company categorizes loans by risk based on relevant information about the ability of borrowers to service their debt, including: collateral and financial information, payment history, credit documentation and current economic trends, among other factors. At origination, each loan is assigned a risk rating. Ongoing analysis of the loan portfolio adjusts risk ratings on an individual loan basis to reflect updated information. General descriptions of risk ratings are as follows: • Pass: loans with acceptable credit quality are rated pass. • Special mention: loans with potential weakness due to challenging economic or financial conditions are rated special mention. • Classified: loans with well-defined weaknesses that heighten the risk of default are rated classified. The following tables present the amortized cost basis of the loan portfolio by year of origination, loan class and credit quality as of March 31, 2026 and December 31, 2025, and gross charge-offs by year of origination for the three months ended March 31, 2026 and the year ended December 31, 2025 . 13 Table of Contents Term Loans Amortized Cost Basis by Origination Year Revolving Loans Converted March 31, 2026 Prior 2022 2023 2024 2025 2026 Revolving to Term Total Construction, residential Pass $ - $ - $ 648 $ 415 $ 6,111 $ 214 $ 5,002 $ 20 $ 12,410 Construction, other Pass $ 3,745 $ 1,086 $ 20,161 $ 579 $ 4,755 $ 5,290 $ 5,474 $ - $ 41,090 Equity lines Pass $ - $ - $ - $ - $ - $ - $ 27,007 $ - $ 27,007 Classified - - - - - - 119 - 119 Total $ - $ - $ - $ - $ - $ - $ 27,126 $ - $ 27,126 Residential closed-end first liens Pass $ 84,678 $ 33,161 $ 29,035 $ 20,722 $ 25,366 $ 6,305 $ 66 $ - $ 199,333 Special Mention - 128 - - - - - - 128 Classified 211 - - - 77 - - - 288 Total $ 84,889 $ 33,289 $ 29,035 $ 20,722 $ 25,443 $ 6,305 $ 66 $ - $ 199,749 Residential closed-end junior liens Pass $ 1,404 $ 1,699 $ 1,176 $ 2,963 $ 3,463 $ 585 $ 32 $ - $ 11,322 Investor-owned residential real estate Pass $ 58,567 $ 10,679 $ 2,930 $ 3,685 $ 10,991 $ 2,403 $ 3,201 $ - $ 92,456 Classified 457 - - - - - - - 457 Total $ 59,024 $ 10,679 $ 2,930 $ 3,685 $ 10,991 $ 2,403 $ 3,201 $ - $ 92,913 Multifamily residential real estate Pass $ 69,029 $ 23,514 $ 3,671 $ 13,002 $ 31,151 $ - $ 121 $ - $ 140,488 Classified 189 345 - - - - - - 534 Total $ 69,218 $ 23,859 $ 3,671 $ 13,002 $ 31,151 $ - $ 121 $ - $ 141,022 Commercial real estate, owner-occupied Pass $ 73,725 $ 22,589 $ 9,010 $ 6,025 $ 4,570 $ 708 $ 2,581 $ - $ 119,208 Special mention 6,216 - - - - - - - 6,216 Classified 940 - - - - - 123 - 1,063 Total $ 80,881 $ 22,589 $ 9,010 $ 6,025 $ 4,570 $ 708 $ 2,704 $ - $ 126,487 Commercial real estate, other Pass $ 128,522 $ 30,379 $ 14,088 $ 5,470 $ 3,114 $ 676 $ 1,760 $ - $ 184,009 Special Mention 668 - - - - - - - 668 Classified - 536 159 - - - - - 695 Total $ 129,190 $ 30,915 $ 14,247 $ 5,470 $ 3,114 $ 676 $ 1,760 $ - $ 185,372 Commercial and industrial Pass $ 16,953 $ 2,299 $ 2,927 $ 8,120 $ 7,248 $ 1,924 $ 11,219 $ - $ 50,690 Special Mention - - - - - - 37 - 37 Classified - - - - - - 9 - 9 Total $ 16,953 $ 2,299 $ 2,927 $ 8,120 $ 7,248 $ 1,924 $ 11,265 $ - $ 50,736 Public sector and IDA Pass $ 40,924 $ 5,387 $ 6,388 $ 41 $ - $ - $ 10,000 $ - $ 62,740 Credit cards Pass $ - $ - $ - $ - $ - $ - $ 4,812 $ - $ 4,812 Automobile Pass $ 167 $ 537 $ 1,929 $ 2,836 $ 5,757 $ 1,776 $ - $ - $ 13,002 Other consumer Pass $ 697 $ 720 $ 1,774 $ 5,041 $ 13,981 $ 3,624 $ 1,398 $ - $ 27,235 Special Mention - - - 4 - - - - 4 Classified - - - 41 3 - - - 44 Total $ 697 $ 720 $ 1,774 $ 5,086 $ 13,984 $ 3,624 $ 1,398 $ - $ 27,283 Total Loans Pass $ 478,411 $ 132,050 $ 93,737 $ 68,899 $ 116,507 $ 23,505 $ 72,673 $ 20 $ 985,802 Special Mention 6,884 128 - 4 - - 37 - 7,053 Classified 1,797 881 159 41 80 - 251 - 3,209 Total $ 487,092 $ 133,059 $ 93,896 $ 68,944 $ 116,587 $ 23,505 $ 72,961 $ 20 $ 996,064 14 Table of Contents Gross Charge Offs by Origination Year for the Three Months Ended March 31, 2026 Revolving Loans Converted Prior 2022 2023 2024 2025 2026 Revolving to Term Total Commercial and industrial $ - $ - $ - $ - $ - $ - $ 22 $ - $ 22 Credit cards - - - - - - 31 - 31 Automobile 1 - - - 17 - - - 18 Other consumer - 3 16 27 23 41 2 - 112 Total Gross Charge-Offs $ 1 $ 3 $ 16 $ 27 $ 40 $ 41 $ 55 $ - $ 183 15 Table of Contents Term Loans Amortized Cost Basis by Origination Year Revolving Loans Converted December 31, 2025 Prior 2021 2022 2023 2024 2025 Revolving to Term Total Construction, residential Pass $ - $ - $ - $ 265 $ 1,135 $ 5,780 $ 3,565 $ 537 $ 11,282 Construction, other Pass $ 3,702 $ 752 $ 1,107 $ 16,721 $ 1,045 $ 2,293 $ 3,742 $ 50 $ 29,412 Equity lines Pass $ - $ - $ - $ - $ - $ - $ 27,494 $ - $ 27,494 Classified - - - - - - 50 - 50 Total $ - $ - $ - $ - $ - $ - $ 27,544 $ - $ 27,544 Residential closed-end first liens Pass $ 54,388 $ 32,152 $ 33,508 $ 27,107 $ 21,529 $ 25,624 $ 39 $ 3,673 $ 198,020 Special mention 47 - 130 - - - - - 177 Classified 107 - - - - - - - 107 Total $ 54,542 $ 32,152 $ 33,638 $ 27,107 $ 21,529 $ 25,624 $ 39 $ 3,673 $ 198,304 Residential closed-end junior liens Pass $ 1,208 $ 241 $ 1,757 $ 1,269 $ 3,106 $ 3,547 $ 32 $ - $ 11,160 Investor-owned residential real estate Pass $ 44,806 $ 15,403 $ 10,847 $ 2,956 $ 3,760 $ 11,172 $ 2,236 $ - $ 91,180 Classified 465 - - - - - - - 465 Total $ 45,271 $ 15,403 $ 10,847 $ 2,956 $ 3,760 $ 11,172 $ 2,236 $ - $ 91,645 Multifamily residential real estate Pass $ 40,234 $ 38,409 $ 26,165 $ 4,126 $ 13,043 $ 26,180 $ 137 $ - $ 148,294 Classified 189 - 350 - - - - - 539 Total $ 40,423 $ 38,409 $ 26,515 $ 4,126 $ 13,043 $ 26,180 $ 137 $ - $ 148,833 Commercial real estate, owner occupied Pass $ 69,884 $ 6,700 $ 24,662 $ 9,084 $ 5,913 $ 4,810 $ 2,669 $ - $ 123,722 Special mention 6,248 - - - - - - - 6,248 Classified 1,014 102 - - 125 - 262 - 1,503 Total $ 77,146 $ 6,802 $ 24,662 $ 9,084 $ 6,038 $ 4,810 $ 2,931 $ - $ 131,473 Commercial real estate, other Pass $ 96,143 $ 34,432 $ 30,660 $ 14,173 $ 6,047 $ 3,039 $ 1,613 $ - $ 186,107 Classified 673 - 538 159 - - - - 1,370 Total $ 96,816 $ 34,432 $ 31,198 $ 14,332 $ 6,047 $ 3,039 $ 1,613 $ - $ 187,477 Commercial and industrial Pass $ 6,927 $ 9,845 $ 2,502 $ 3,318 $ 9,388 $ 7,662 $ 11,842 $ 170 $ 51,654 Special mention - - - - - - 20 - 20 Classified - - - - 313 - 31 - 344 Total $ 6,927 $ 9,845 $ 2,502 $ 3,318 $ 9,701 $ 7,662 $ 11,893 $ 170 $ 52,018 Public sector and IDA Pass $ 18,540 $ 23,207 $ 5,495 $ 6,390 $ 45 $ - $ 10,000 $ - $ 63,677 Credit cards Pass $ - $ - $ - $ - $ - $ - $ 4,736 $ - $ 4,736 Automobile Pass $ 49 $ 212 $ 700 $ 2,257 $ 3,390 $ 6,343 $ - $ - $ 12,951 Classified - 1 - - - 14 - - 15 Total $ 49 $ 213 $ 700 $ 2,257 $ 3,390 $ 6,357 $ - $ - $ 12,966 Other Consumer Pass $ 371 $ 413 $ 933 $ 2,235 $ 6,033 $ 17,762 $ 1,589 $ - $ 29,336 Special mention - - - - 5 0 - - 5 Classified - - 3 47 4 2 2 - 58 Total $ 371 $ 413 $ 936 $ 2,282 $ 6,042 $ 17,764 $ 1,591 $ - $ 29,399 Total Loans Pass $ 336,252 $ 161,766 $ 138,336 $ 89,901 $ 74,434 $ 114,212 $ 69,694 $ 4,430 $ 989,025 Special mention 6,295 - 130 - 5 - 20 - 6,450 Classified 2,448 103 891 206 442 16 345 - 4,451 Total $ 344,995 $ 161,869 $ 139,357 $ 90,107 $ 74,881 $ 114,228 $ 70,059 $ 4,430 $ 999,926 16 Table of Contents Gross Charge Offs by Origination Year for the Year Ended December 31, 2025 Revolving Loans Converted Prior 2021 2022 2023 2024 2025 Revolving to Term Total Residential closed-end first liens $ 3 $ - $ - $ - $ - $ - $ - $ - $ 3 Commercial and industrial - - - 50 - - - - 50 Credit cards - - - - - - 54 - 54 Automobile - 4 22 59 23 - - - 108 Other consumer - 1 36 40 78 212 - - 367 Total Gross Charge-offs $ 3 $ 5 $ 58 $ 149 $ 101 $ 212 $ 54 $ - $ 582 17 Table of Contents Loan Modifications to Borrowers Experiencing Financial Difficulty On the date a loan is modified, the Company assesses whether the borrower is experiencing financial difficulty. If the borrower is experiencing financial difficulty, the loan is risk rated special mention or classified, as determined appropriate. If the loan exceeds $ 400 , if it is placed in nonaccrual, or if foreclosure is probable, the loan is individually evaluated for the ACLL. No loans were modified for borrowers experiencing financial difficulty during the three months ended March 31, 2026 or March 31, 2025. Consumer Real Estate Loans In Process of Foreclosure As of March 31, 2026 , the Company had six consumer real estate loans with an amortized cost of $ 289 in process of foreclosure. As of December 31, 2025 , three consumer real estate loans totaling $ 126 were in process of foreclosure. ACL for Unfunded Commitments The following tables present the balance and activity in the ACL for unfunded commitments for the three months ended March 31, 2026 and 2025: Allowance for Credit Losses on Unfunded Commitments Balance, December 31, 2025 $ 298 Recovery of credit losses ( 10 ) Balance, March 31, 2026 $ 288 Balance, December 31, 2024 $ 251 Recovery of credit losses ( 1 ) Balance, March 31, 2025 $ 250 Note 3: Securities The amortized cost and estimated fair value of securities available for sale along with gross unrealized gains and losses as of the dates indicated are summarized as follows: March 31, 2026 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government agencies and corporations $ 305,393 $ - $ 25,141 $ 280,252 States and political subdivisions 177,294 - 25,350 151,944 Mortgage-backed securities 225,008 75 4,095 220,988 Corporate debt securities 5,502 - 574 4,928 Total securities available for sale $ 713,197 $ 75 $ 55,160 $ 658,112 December 31, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government agencies and corporations $ 312,353 $ - $ 24,298 $ 288,055 States and political subdivisions 177,453 - 23,736 153,717 Mortgage-backed securities 210,918 129 3,406 207,641 Corporate debt securities 5,505 - 541 4,964 Total securities available for sale $ 706,229 $ 129 $ 51,981 $ 654,377 18 Table of Contents The following tables present information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that the individual securities have been in a continuous loss position, as of the dates indicated: Less Than 12 Months 12 Months or More March 31, 2026 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses U.S. government agencies and corporations $ 1,990 $ 9 $ 278,262 $ 25,132 State and political subdivisions 3,169 396 148,775 24,954 Mortgage-backed securities 110,412 795 64,881 3,300 Corporate debt securities - - 4,928 574 Total temporarily impaired securities $ 115,571 $ 1,200 $ 496,846 $ 53,960 Less Than 12 Months 12 Months or More December 31, 2025 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses U.S. government agencies and corporations $ - $ - $ 288,055 $ 24,298 State and political subdivisions 1,680 364 151,652 23,372 Mortgage-backed securities 55,986 223 99,446 3,183 Corporate debt securities - - 4,964 541 Total temporarily impaired securities $ 57,666 $ 587 $ 544,117 $ 51,394 The Company evaluates securities available for sale that are in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value. At March 31, 2026, the Company had 516 securities with a fair value of $ 612,417 in an unrealized loss position. The Company reviews securities in an unrealized loss position to evaluate credit risk. The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk. No credit losses were found and no ACL on securities available for sale was recorded as of March 31, 2026. The unrealized losses are attributed to noncredit-related factors, including changes in interest rates and other market conditions. The Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of the investments. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. The amortized cost and fair value of securities available for sale at March 31, 2026, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities included in these totals are categorized by final maturity. March 31, 2026 Amortized Cost Fair Value Available for Sale: Due in one year or less $ 42,219 $ 41,647 Due after one year through five years 234,181 219,319 Due after five years through ten years 195,718 170,662 Due after ten years 241,079 226,484 Total securities available for sale $ 713,197 $ 658,112 Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $ 3,433 at March 31, 2026 and $ 3,177 at December 31, 2025. The deferred tax asset for the net unrealized loss on securities available for sale was $ 11,568 as of March 31, 2026 and $ 10,889 as of December 31, 2025. The deferred tax asset is included in other assets on the Consolidated Balance Sheets. Realized Securities Gains and Losses There were no sales of securities during the three months ended March 31, 2026 and 2025. 19 Table of Contents Restricted Stock. The Company held restricted stock of $ 1,872 as of March 31, 2026 and $ 1,848 as of December 31, 2025. Restricted stock is reported separately from available for sale securities and is included in other assets on the Consolidated Balance Sheets. As a member of the Federal Reserve and the Federal Home Loan Bank of Atlanta (“FHLB”), NBB is required to maintain certain minimum investments in the common stock of those entities. Required levels of investment are based upon NBB’s capital and a percentage of qualifying assets. The Company purchases stock from or sells stock back to the correspondents based on their calculations. The stock is held by member institutions only and is not actively traded. Redemption of FHLB stock is subject to certain limitations and conditions. At its discretion, the FHLB may declare dividends on the stock. In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $ 508,975 at March 31, 2026. The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at March 31, 2026 , did not determine any impairment. Note 4: Defined Benefit Plan The following table presents components of net periodic benefit income for the periods indicated: Net Periodic Benefit Income Three Months Ended March 31, 2026 2025 Service cost $ 287 $ 248 Interest cost 341 324 Expected return on plan assets ( 739 ) ( 692 ) Net periodic benefit income $ ( 111 ) $ ( 120 ) The service cost component of net periodic benefit cost is included in salaries and employee benefits expense in the Consolidated Statements of Income. All other components are included in other operating expense in the Consolidated Statements of Income. Note 5: Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP requires that valuation techniques maximize the use of the observable inputs and minimize the use of the unobservable inputs. GAAP also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels. These levels are: Level 1 – Valuation is based on quoted prices in active markets for identical assets and liabilities. Level 2 – Valuation is based on observable inputs including: • quoted prices in active markets for similar assets and liabilities, • quoted prices for identical or similar assets and liabilities in less active markets, • inputs other than quoted prices that are observable, and • model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. Level 3 – Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market. Fair value is best determined by quoted market prices. However, in cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, fair value estimates may not be realized in an immediate settlement of the instrument. Accounting guidance for fair value excludes certain financial instruments and all nonfinancial instruments from disclosure requirements. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the consolidated financial statements. 20 Table of Contents Financial Instruments Measured at Fair Value on a Recurring Basis Securities Available for Sale Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). The carrying value of restricted Federal Reserve Bank of Richmond and FHLB stock approximates fair value based upon the redemption provisions of each entity and is therefore excluded from the following tables. The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates indicated. Fair Value Measurement Using March 31, 2026 Balance Level 1 Level 2 Level 3 U.S. government agencies and corporations $ 280,252 $ - $ 280,252 $ - States and political subdivisions 151,944 - 151,944 - Mortgage-backed securities 220,988 - 220,988 - Corporate debt securities 4,928 - 4,928 - Total securities available for sale $ 658,112 $ - $ 658,112 $ - Fair Value Measurement Using December 31, 2025 Balance Level 1 Level 2 Level 3 U.S. government agencies and corporations $ 288,055 $ - $ 288,055 $ - States and political subdivisions 153,717 - 153,717 - Mortgage-backed securities 207,641 - 207,641 - Corporate debt securities 4,964 - 4,964 - Total securities available for sale $ 654,377 $ - $ 654,377 $ - The Company’s securities portfolio is valued using Level 2 inputs. The Company relies on an independent third party vendor to provide market valuations. The inputs used to determine value include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. The third party vendor also monitors market indicators, industry activity and economic events as part of the valuation process. Central to the final valuation is the assumption that the indicators used are representative of the fair value of securities held within the Company’s portfolio. Level 2 inputs are subject to a certain degree of uncertainty and changes in these assumptions or methodologies in the future, if any, may impact securities fair value, deferred tax assets or liabilities, or expense. Financial Instruments Measured at Fair Value on a Non-Recurring Basis Certain financial instruments are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the consolidated financial statements. Loans Held for Sale Loans held for sale are carried at the lower of cost or fair value. These loans currently consist of one-to-four family residential loans originated for sale in the secondary market. Fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). As such, the Company records any fair value adjustments on a nonrecurring basis. No nonrecurring fair value adjustments were recorded on loans held for sale at March 31, 2026 or December 31, 2025. Collateral Dependent Loans Collateral dependent loans are measured on a non-recurring basis for the ACLL. If the fair value of the collateral is lower than the loan’s amortized cost basis, the shortfall is recognized in the ACLL. When repayment is expected from the operation of the collateral, fair value is estimated as the present value of expected cash flows from the operation of the collateral. When repayment is expected from the sale of the collateral, fair value is estimated using measurement techniques discussed below and discounted by the estimated cost to sell. The ACLL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the financial asset. 21 Table of Contents For loans secured by real estate, fair value of collateral is determined by the “as-is” value of appraisals or third party evaluations that are less than 24 months of age. Appraisals are prepared by independent, licensed appraisers. Appraisals are based upon observable market data analyzed through an income or sales valuation approach. Valuation falls within Level 2 categorization. The Company may further discount appraisals for marketing strategies, which results in Level 3 categorization. The value of business equipment is based upon an outside appraisal (Level 2) if deemed significant, or the net book value on the applicable business’ financial statements (Level 3) if not considered significant. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). As of March 31, 2026 , two commercial real estate loans totaling $ 6,884 were collateral dependent. Valuation was based upon outside appraisals (Level 2). None of the measurements resulted in a specific allocation. As of December 31, 2025, two commercial real estate loans totaling $ 6,921 were measured under the fair value of collateral method using third party appraisals (Level 2). None of the measurements resulted in a specific allocation. Fair Value Summary The following presents the recorded amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of the dates indicated. Fair values are estimated using the exit price notion. Estimated Fair Value March 31, 2026 Carrying Amount Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 7,976 $ 7,976 $ - $ - Interest-bearing deposits 54,177 54,177 - - Securities available for sale 658,112 - 658,112 - Restricted stock, at cost 1,872 - 1,872 - Mortgage loans held for sale 608 - 608 - Loans, net 985,651 - - 958,482 Accrued interest receivable 7,001 - 7,001 - Bank-owned life insurance 48,869 - 48,869 - Financial liabilities: Deposits $ 1,629,764 $ - $ 1,314,826 $ 314,866 Accrued interest payable 1,600 - 1,600 - Estimated Fair Value December 31, 2025 Carrying Amount Level 1 Level 2 Level 3 Financial assets: Cash and due from banks $ 8,419 $ 8,419 $ - $ - Interest-bearing deposits 50,831 50,831 - - Securities available for sale 654,377 - 654,377 - Restricted stock, at cost 1,848 - 1,848 - Loans, net 989,418 - - 955,899 Accrued interest receivable 6,538 - 6,538 - Bank-owned life insurance 48,568 - 48,568 - Financial liabilities: Deposits $ 1,626,933 $ - $ 1,309,423 $ 317,625 Accrued interest payable 1,581 - 1,581 - 22 Table of Contents Note 6: Components of Accumulated Other Comprehensive Loss The following tables provide information about components of accumulated other comprehensive loss as of the dates indicated: Net Unrealized Loss on Securities Adjustments Related to Pension Benefits Accumulated Other Comprehensive Loss Balance at December 31, 2024 $ ( 62,093 ) $ 328 $ ( 61,765 ) Unrealized holding gain on available for sale securities, net of tax of $ 2,017 7,590 - 7,590 Balance at March 31, 2025 $ ( 54,503 ) $ 328 $ ( 54,175 ) Balance at December 31, 2025 $ ( 40,964 ) $ 1,290 $ ( 39,674 ) Unrealized holding loss on available for sale securities, net of tax of ($ 680 ) ( 2,553 ) - ( 2,553 ) Balance at March 31, 2026 $ ( 43,517 ) $ 1,290 $ ( 42,227 ) Note 7: Revenue Recognition Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest revenue streams such as service charges on deposit accounts, other service charges and fees, credit and debit card fees, trust income, and annuity and insurance commissions are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”). Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as financial guarantees, derivatives, and certain credit card fees are outside the scope of the guidance. Noninterest revenue streams within the scope of Topic 606 are discussed below. Service Charges on Deposit Accounts Service charges on deposit accounts consist of monthly service fees, overdraft and nonsufficient funds fees, ATM fees, wire transfer fees, and other deposit account related fees. The Company’s performance obligation for monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Wire transfer fees, overdraft and nonsufficient funds fees and other deposit account related fees are transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Other Service Charges and Fees Other service charges include safe deposit box rental fees, check ordering charges, and other service charges. Safe deposit box rental fees are charged to the customer on an annual basis and recognized upon receipt of payment. The Company determined that since rentals and renewals occur fairly consistently over time, revenue is recognized on a basis consistent with the duration of the performance obligation. Check ordering charges are transaction based and therefore, the Company’s performance obligation is satisfied and related revenue recognized at a point in time. Credit and Debit Card Fees Credit and debit card fees are primarily comprised of interchange fee income and merchant services income. Interchange fees are earned whenever the Company’s debit and credit cards are processed through card payment networks such as Visa and MasterCard. Merchant services income mainly represents commission fees based upon merchant processing volume. The Company’s performance obligation for interchange fee income and merchant services income are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month. In compliance with Topic 606, credit and debit card fee income is presented net of associated expense. Trust Income Trust income is primarily comprised of fees earned from the management and administration of trusts and estates and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days 23 Table of Contents after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Estate management fees are based upon the size of the estate. A partial fee is recognized half-way through the estate administration and the remainder of the fee is recognized when remaining assets are distributed and the estate is closed. Insurance and Investment Insurance income primarily consists of commissions received on insurance product sales. The Company acts as an intermediary between the Company’s customer and the insurance carrier. The Company’s performance obligation is generally satisfied upon the issuance of the insurance policy. The Company recognizes revenue upon receipt of commission shortly after the insurance policy is issued. Investment income consists of recurring revenue streams such as commissions from sales of mutual funds, annuities and other investments. Commissions from the sale of mutual funds, annuities and other investments are recognized on trade date, which is when the Company has satisfied its performance obligation. The Company also receives periodic service fees (i.e., trailers) from mutual fund companies typically based on a percentage of net asset value. Trailer revenue is recorded over time, usually monthly or quarterly, as net asset value is determined. The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the periods indicated. Three Months Ended March 31, Noninterest Income 2026 2025 In-scope of Topic 606: Service charges on deposit accounts $ 649 $ 699 Other service charges and fees 142 83 Credit and debit card fees, net 457 417 Trust income 584 579 Insurance and Investment (1) 376 354 Noninterest Income (in-scope of Topic 606) $ 2,208 $ 2,132 Noninterest Income (out-of-scope of Topic 606) 471 428 Total noninterest income $ 2,679 $ 2,560 (1) Included within other income in the Consolidated Statements of Income Note 8: Leases The Company’s leases are recorded under ASC Topic 842, “Leases”. The Company categorizes leases as short-term, operating or finance leases. Leases with terms of 12 months or less are designated as short-term and are not capitalized. Operating and finance leases are capitalized as right-of-use assets and lease liabilities. Right-of-use assets, included in other assets, represent the Company’s right to use the underlying asset for the lease term and are calculated as the sum of the lease liability and if applicable, prepaid rent, initial direct costs and any incentives received from the lessor. Lease liabilities, included in other liabilities, represent the Company’s obligation to make lease payments and are presented at each reporting date as the net present value of the remaining contractual cash flows. Cash flows are discounted at the Company’s incremental borrowing rate in effect at the commencement date of the lease. The Company does not separate non-lease components from lease components within a single contract. Counterparties for the Company’s lease contracts are external to the Company and not related parties. Lease payments Short-term lease payments are recognized as lease expense on a straight-line basis over the lease term, or for variable lease payments, in the period in which the obligation was incurred. Operating and finance lease payments may be fixed for the term of the lease or variable. If the escalation factor for a variable lease payment is known, such as a specified percentage increase per year or a stated increase at a specified time, the variable payment is included in the cash flows used to determine the lease liability. If the variable payment is based upon an unknown escalator, such as the consumer price index at a future date, the increase is not included in the cash flows used to determine the lease liability. Options to Extend, Residual Value Guarantees, Restrictions and Covenants Certain of the Company’s operating leases offer the option to extend the lease term and the Company has included such extensions in its calculation of the lease liabilities to the extent the options are reasonably certain of being exercised. The lease agreements do not 24 Table of Contents provide for residual value guarantees and have no restrictions or covenants that would impact dividends or require incurring additional financial obligations. The following tables present information about leases as of the dates and for the periods indicated: March 31, December 31, 2026 2025 Lease liability $ 1,914 $ 2,038 Right-of-use asset $ 1,721 $ 1,839 Weighted average remaining lease term (in years) 4.05 4.26 Weighted average discount rate 3.91 % 3.90 % For the Three Months Ended March 31, Lease Expense 2026 2025 Operating lease expense $ 135 $ 111 Total lease expense 135.0 111 Cash paid for amounts included in lease liabilities $ 140 $ 112 The following table presents a maturity schedule of undiscounted cash flows that contribute to the lease liability: Undiscounted Cash Flow for the Period As of March 31, 2026 Twelve months ending March 31, 2027 $ 544 Twelve months ending March 31, 2028 520 Twelve months ending March 31, 2029 472 Twelve months ending March 31, 2030 305 Twelve months ending March 31, 2031 178 Thereafter 41 Total undiscounted cash flows $ 2,060 Less: discount ( 146 ) Lease liability $ 1,914 Note 9: Stock Based Compensation The Company’s 2023 Stock Incentive Plan (“the Plan”) provides for the grant of various forms of stock-based compensation awards that may be settled in, or based upon the value of, the Company’s common stock. The maximum number of shares available for issuance under the Plan is 120,000 shares. For further information on the Plan, please refer to the Company’s 2025 Form 10-K. Restricted Stock Awards and Restricted Stock Units As of December 31, 2025, the Company had nonvested restricted stock awards ("RSAs"), granted to non-employee directors, and restricted stock units ("RSUs"), granted to employees designated in the incentive compensation plan. Additional RSUs were granted in February 2026 that will vest in equal parts in 2027, 2028 and 2029. The RSAs and RSUs were valued at the closing stock price on the grant date and the Company is recognizing expense over the associated vesting period. Stock based compensation expense charged against income was $ 62 for the three months ended March 31, 2026 and $ 43 for the three months ended March 31, 2025. As of March 31, 2026, the Company expects to recognize stock based compensation expense of $ 166 over the coming 12 months. A summary of changes in the Company’s nonvested RSAs and RSUs under the Plan for the three months ended March 31, 2026 follows: Shares Weighted-Average Grant-Date Fair Value Nonvested at January 1, 2026 9,584 $ 28.85 Granted 4,727 37.77 Nonvested at March 31, 2026 14,311 $ 31.80 25 Table of Contents Note 10: Net Income Per Common Share The factors used in the computation of net income per common share for the periods indicated are presented below: For the Three Months Ended March 31, 2026 2025 Net Income (Numerator) Common Shares Weighted Average Outstanding (Denominator) Per Share Net Income (Numerator) Common Shares Weighted Average Outstanding (Denominator) Per Share Basic net income per common share $ 4,981 6,363,371 $ 0.78 $ 3,236 6,358,410 $ 0.51 Dilutive shares 2,783 1,982 Diluted net income per common share $ 4,981 6,366,154 $ 0.78 $ 3,236 6,360,392 $ 0.51 RSA grants are disregarded in the computation of diluted net income per share if they are determined to be anti-dilutive. There were no anti-dilutive RSAs for the three months ended March 31, 2026 and March 31, 2025 . Note 11 – Goodwill and Other Intangibles Core deposit intangible amortization expense was $ 87 and $ 97 for the three months ended March 31, 2026 and 2025, respectively. The following table provides information on the significant components of goodwill and other acquired intangible assets at March 31, 2026. Beginning Balance Additions Accumulated Amortization Ending Balance Goodwill $ 10,718 $ - $ - $ 10,718 Core deposit intangible $ 1,490 $ - $ ( 87 ) $ 1,403 As of March 31, 2026, estimated future remaining amortization of the core deposit intangible within the years ending December 31, is as follows: Amortization Expense 2026 $ 245 2027 290 2028 248 2029 207 2030 165 2031 123 Thereafter 125 Total amortizing core deposit intangible $ 1,403 Note 12 - Subsequent Events On May 1, 2026 the Company announced the sale of its membership interest in Bearing Insurance Group, LLC. Based solely on information available to the Company, the Company estimates it will recognize a pre-tax gain of approximately $ 6,566 on the transaction, which will be reported in the Company's financial results for the second quarter of 2026. 26 Table of Contents Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations $ in thousands, except per share data The purpose of this discussion and analysis is to provide information about the financial condition and results of operations of the Company. Please refer to the financial statements and other information included in this report as well as the Company’s 2025 Form 10-K for an understanding of the following discussion and analysis. References in the following discussion and analysis to “we” or “us” refer to the Company unless the context indicates that the reference is to the Bank. Cautionary Statement Regarding Forward-Looking Statements We make forward-looking statements in this Form 10-Q that are subject to significant risks and uncertainties. These forward-looking statements include statements regarding our profitability, liquidity, allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and financial and other goals, and are based upon management’s views and assumptions as of the date of this report. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are based upon or are affected by factors that could cause our actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, effects of or changes in: • inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments, • the ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company’s or banking industry’s reputation becomes damaged, • the adequacy of the level of the Company’s allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses, • general and local economic conditions, • monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation (“FDIC”), and the impact of any policies or programs implemented pursuant to financial reform legislation, • unanticipated increases in the level of unemployment in the Company’s market, • the quality or composition of the loan and/or investment portfolios, • our ability to maintain existing deposit relationships or attract new deposit relationships, • changes in consumer spending, borrowing and savings habits, • increased competition with other financial institutions and fintech companies, • demand for financial services in the Company’s market, • the real estate market in the Company’s market, • laws, regulations and policies impacting financial institutions, • technological risks and developments, and cyber-threats, attacks or events, • the Company’s technology initiatives, • geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, • the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events, • the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment, • performance by the Company’s counterparties or vendors, • applicable accounting principles, policies and guidelines, and • risks associated with mergers, acquisitions, and other expansion activities. These risks and uncertainties should be considered in evaluating the forward-looking statements contained in this report. We caution readers not to place undue reliance on those statements, which speak only as of the date of this report. This discussion and analysis should be read in conjunction with the description of our “Risk Factors” in Item 1A of the Company's 2025 Form 10-K. 27 Table of Contents Overview NBI is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956. NBI common stock is listed on the Nasdaq Capital Market and is traded under the symbol “NKSH.” NBI has two wholly-owned subsidiaries; the National Bank of Blacksburg ("NBB") and National Bankshares Financial Services, Inc. ("NBFS"). NBB is a community bank and does business as National Bank from 28 office locations and one loan production office. NBB is the source of nearly all of the Company’s revenue. NBFS does business as National Bankshares Investment Services and National Bankshares Insurance Services. Critical Accounting Policies The Company’s consolidated financial statements are prepared in accordance with GAAP. The financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value obtained when earning income, recognizing an expense, recovering an asset or relieving a liability. Although the economics of the Company’s transactions may not change, the timing of events that would impact the transactions could change. Critical accounting policies are most important to the portrayal of the Company’s financial condition or results of operations and require management’s most difficult, subjective, and complex judgments about matters that are inherently uncertain. If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company’s financial condition or results of operations may be materially impacted. The Company designates as critical those policies governing the ACLL and the pension plan. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. ACLL The ACLL represents the Company's best estimate of current expected credit losses on loans over the expected life as of the measurement date. The estimation utilizes internal and peer historical credit loss experience, current conditions and reasonable and supportable forecasts. The results are also dependent upon management's selection of methodologies, loan credit risk ratings, and determination of the impact of internal and external variables. The Company employs a discounted cash flow ("DCF") model whereby cash flows are projected according to each loan's contractual terms and modified by internal historical prepayment rates. Cash flows are then discounted at the loan's effective interest rate, modified by loss rates determined using the probability of default ("PD") and loss given default ("LGD") sourced from internal and peer historical experience, and a forecast variable. Application of historical prepayment rates to project cash flows lowers the ACLL. Historical prepayment rates may not be representative of realized prepayment rates. Similarly, historical loss experience modified by the forecast variable may not be representative of realized loss experience. Key to loss rate application is the Company's risk grading system, which is governed by a robust policy. Loss rates are calculated and applied by risk grade. Management relies upon risk grades to identify loans with risk characteristics that are different from other loans within a segment. Loans graded special mention or classified and that exceed a value threshold are individually evaluated. If management determines that a borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. Specific reserves for other individually evaluated loans are estimated using a DCF approach. Cash flows are determined by analyzing the borrower's ability to repay and economic conditions affecting the borrower's industry, discounted at loss rates appropriate to the risk grade. The ultimate recoverability of the loan may be higher or lower than the specific reserve. The Company adjusts collectively-evaluated DCF model results for qualitative risk factors that are not inherent in historical losses, but are relevant in assessing expected credit losses within the loan portfolio. Risks considered include the impact of changes in(i) economic conditions, (ii) the nature and volume of the loan portfolio, (iii) the existence, growth and effect of any concentrations in credit, (iv) lending policies and procedures, including underwriting standards and practices, (v) the quality of the credit review function, (vi) the experience, ability and depth of lending management and staff, (vii) the volume and severity of past due loans, (viii)the value of underlying collateral for collateral-dependent loans, and (ix) other factors such as the regulatory, legal and competitive environments. Because of low loss rate history, statistical correlation between losses and qualitative risk factors is not possible and adjustments are based upon management judgment. Management assesses each factor and determines the adjustment to the ACLL based upon a documented and consistently applied methodology. Management's assessment my be higher or lower than actual impact. The estimation of the ACLL involves analysis of internal and external variables, methodologies, assumptions and management’s judgment and experience. These judgments are inherently subjective and actual losses could be greater or less than the estimate.Future estimates of the ACLL could increase or decrease based on changes in the financial condition of individual borrowers,concentrations of various types of loans, economic conditions or the markets in which collateral may be sold. The estimate of the ACLL determines the amount of provision expense and directly affects our financial results. 28 Table of Contents Pension Plan Pension obligations are determined through actuarial calculations based upon significant assumptions, including the IRS mortality table, an effective interest rate of 5.35% for 2026 and 5.32% for 2025, a discount rate of 5.25% for 2026 and 5.50% for 2025, anticipated rate of compensation increases of 4% for both 2026 and 2025, and an expected long-term rate of return of 7.50% for 2026 and 2025. Actual outcomes could vary from the assumptions and result in underaccrual or overaccrual of pension obligations. For information on the Company's critical accounting policies, please refer to the Company’s 2025 Form 10-K, Note 1: Summary of Significant Accounting Policies. Performance Summary Key to understanding the Company’s results of operations and financial position is the interest rate environment. The Federal Reserve's interest rate cuts between September 2025 and December 2025 eased deposit pricing pressure but remain at a level that allows adjustable rate loans to reprice higher than their previous rates. The Company completed the core system conversion during the second quarter of 2025, with related expenses presented in core system conversion expense on the Consolidated Statements of Income. Expanded discussion is provided in subsequent sections. The following table presents the Company’s key performance indicators for the periods indicated. Three Months Ended March 31, Summary Key Performance Indicators 2026 2025 Net Income $ 4,981 $ 3,236 Return on average assets 1.11 % 0.72 % Adjusted return on average assets (1) 1.08 % 0.69 % Return on average equity 10.88 % 8.14 % Adjusted return on average equity (1) 10.57 % 7.84 % Basic net income per common share $ 0.78 $ 0.51 Diluted net income per common share $ 0.78 $ 0.51 Net interest margin (1) 2.98 % 2.40 % Efficiency ratio (1) 59.96 % 65.96 % (1) See “Non-GAAP Financial Measures” below. (2) Average dilutive common shares were 2,783 and 1,982 for the three months ended March 31, 2026 and 2025, respectively. Dilutive common shares stem from unvested restricted stock. Net income for the three months ended March 31, 2026 increased when compared with the comparable period of 2025, due to net interest margin expansion. Analysis of the net interest margin as well as key noninterest income and expense items are presented below. Non-GAAP Financial Measures This report refers to certain financial measures that are computed under a basis other than GAAP (“non-GAAP”). The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. Non-GAAP measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP. Details on non-GAAP measures follow. Net Interest Margin The Company uses the net interest margin (non-GAAP) to measure profitability of interest generating activities, as a percentage of total interest-earning assets. The Company’s net interest margin is calculated on a fully taxable equivalent (“FTE”) basis. The portion of interest income that is nontaxable is grossed up to the tax equivalent by adding the tax benefit based on a tax rate of 21%. Annualized FTE net interest income is divided by total average earning assets to calculate the net interest margin. The following tables present the reconciliation of tax equivalent net interest income, which is not a measurement under GAAP, to net interest income, for the periods indicated. 29 Table of Contents Three Months Ended March 31, Net Interest Margin, FTE 2026 2025 Interest income (GAAP) $ 18,941 $ 18,198 Add: FTE adjustment 256 207 Interest income, FTE (non-GAAP) 19,197 18,405 Interest expense (GAAP) 6,318 7,947 Net interest income, FTE (non-GAAP) $ 12,879 $ 10,458 Average balance of interest-earning assets $ 1,749,925 $ 1,766,645 Net interest margin (non-GAAP) 2.98 % 2.40 % Efficiency Ratio The efficiency ratio is computed by dividing noninterest expense by the sum of FTE net interest income and noninterest income, excluding certain items the Company’s management deems unusual or non-recurring. This is a non-GAAP financial measure that the Company believes provides investors with important information regarding operational efficiency. The components of the efficiency ratio calculation for the periods indicated are summarized in the following table. For the Three Months Ended March 31, Efficiency Ratio 2026 2025 Noninterest expense (GAAP) $ 9,328 $ 8,633 Less: core system conversion expense - (46 ) Adjusted noninterest expense (non-GAAP) $ 9,328 $ 8,587 Noninterest income (GAAP) $ 2,679 $ 2,560 Net interest income, FTE (non-GAAP) 12,879 10,458 Total income for efficiency ratio (non-GAAP) $ 15,558 $ 13,018 Efficiency ratio (non-GAAP) 59.96 % 65.96 % Adjusted Return on Average Assets and Adjusted Return on Average Equity The adjusted return on average assets and adjusted return on average equity are measures of profitability, calculated by annualizing net income and dividing by average year-to-date assets or equity, respectively. Significant income or expenses that are unusual or not expected to recur during the year are not annualized, in order to reduce distortion within the ratios. The tables below present the reconciliation of adjusted annualized net income, which is not a measurement under GAAP, for the periods indicated. Three Months Ended March 31, Annualized Net Income for Ratio Calculation 2026 2025 Net income per GAAP $ 4,981 $ 3,236 Less items not annualized: Partnership income net of tax of ($49) and ($52) for the periods ended March 31, 2026 and 2025, respectively (184 ) (197 ) Core system conversion expense, net of tax of $10 for the period ended March 31, 2025 - 36 Total non-annualized items (184 ) (161 ) Adjusted net income $ 4,797 $ 3,075 Adjusted net income, annualized $ 19,455 $ 12,471 Add: total non-annualized items 184 161 Annualized net income for ratio calculation (non-GAAP) $ 19,639 $ 12,632 Return on average assets (GAAP) 1.11 % 0.72 % Adjusted return on average assets (non-GAAP) 1.08 % 0.69 % Return on average equity (GAAP) 10.88 % 8.14 % Adjusted return on average equity (non-GAAP) 10.57 % 7.84 % 30 Table of Contents Net Interest Income The following tables show interest‑earning assets and interest‑bearing liabilities, the interest earned or paid, the average yield or rate on the daily average balance outstanding, net interest income and net interest margin for the periods indicated. Three Months Ended March 31, 2026 2025 ($ in thousands) Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate Interest-earning assets: Loans (1)(2)(3)(4)(5) $ 995,459 $ 14,110 5.75 % $ 995,049 $ 13,078 5.33 % Taxable securities (5) 640,048 4,233 2.68 % 613,940 3,860 2.55 % Nontaxable securities (1)(5) 62,500 430 2.79 % 62,964 425 2.74 % Federal funds sold - - - 261 3 4.66 % Interest-bearing deposits 51,918 424 3.31 % 94,431 1,039 4.46 % Total interest-earning assets $ 1,749,925 $ 19,197 4.45 % $ 1,766,645 $ 18,405 4.23 % Interest-bearing liabilities: Interest-bearing demand deposits $ 855,206 $ 3,635 1.72 % $ 871,007 $ 4,583 2.13 % Savings deposits 144,444 52 0.15 % 143,987 53 0.15 % Time deposits (6) 315,751 2,631 3.38 % 341,322 3,311 3.93 % Total interest-bearing liabilities $ 1,315,401 $ 6,318 1.95 % $ 1,356,316 $ 7,947 2.38 % Net interest income and interest rate spread $ 12,879 2.50 % $ 10,458 1.85 % Net interest margin 2.98 % 2.40 % (1) Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a Federal income tax rate of 21%. (2) Included in interest income are loan fees of $202 and $87 for the three months ended March 31, 2026 and 2025, respectively. Also included in interest income is accretion of discounts on acquired loans of $417 and $251 for the three months ended March 31, 2026 and 2025. (3) Nonaccrual loans are included in average balances for yield computations. (4) Includes loans held for sale. (5) Daily averages are shown at amortized cost. (6) Included in interest expense is amortization of premium on acquired time deposits of $18 and $58 for the three months ended March 31, 2026 and 2025, respectively. When the three months ended March 31, 2026 and 2025 are compared, the yield on earning assets increased and the cost of interest bearing liabilities decreased, improving the net interest margin. The Federal Reserve's interest rate cuts between September and December 2025 immediately reduced expense for deposits with pricing based on the prime interest rate. Current interest rates are still at a level that will allow improved interest income as loans continue to reach repricing dates. Noninterest Income Three Months Ended March 31, Change 2026 2025 Dollars Percent Service charges on deposits $ 649 $ 699 $ (50 ) (7.15 )% Other service charges and fees 142 83 59 71.08 % Credit and debit card fees, net 457 417 40 9.59 % Trust income 584 579 5 0.86 % BOLI income 301 292 9 3.08 % Gain on sale of mortgage loans 19 25 (6 ) (24.00 )% Other income 527 465 62 13.33 % Total noninterest income $ 2,679 $ 2,560 $ 119 4.65 % Service charges on deposit accounts decreased when the three months ended March 31, 2026 are compared with the comparable period of 2025, while other service charges and fees increased. The increase in other service charges and fees is due to a change in the way the Company recognizes safe deposit box rent. Prior to the core system conversion during the second quarter of 2025, safe deposit box rent was recognized on an accrual basis. Following the core system conversion, safe deposit box rent is recognized upon receipt. 31 Table of Contents Credit and debit card fees, net, increased when the three months ended March 31, 2026 are compared with the comparable period of 2025, due to contract re-negotiation associated with the core system conversion. Other income includes revenue from investment and insurance sales, adjustments to partnership basis and other miscellaneous components. Securities sales, FHLB dividends and derivatives income account for the increase when the three months ended March 31, 2026 is compared with the comparable period of 2025. Noninterest Expense Three Months Ended March 31, Change 2026 2025 Dollars Percent Salaries and employee benefits $ 5,834 $ 5,180 $ 654 12.63 % Occupancy, furniture and fixtures 884 739 145 19.62 % Data processing 928 983 (55 ) (5.60 )% FDIC assessment 207 207 - 0.00 % Intangible asset amortization 87 97 (10 ) (10.31 )% Franchise taxes 350 373 (23 ) (6.17 )% Professional services 373 299 74 24.75 % Core system conversion expense - 46 (46 ) (100 )% Other operating expenses 665 709 (44 ) (6.21 )% Total noninterest expense $ 9,328 $ 8,633 $ 695 8.05 % Noninterest expense increased when the three months ended March 31, 2026 are compared with the comparable period of 2025. Salaries and employee benefits, which include payroll taxes, health insurance, contributions to the employee stock ownership plan and employee 401(k), pension expense, incentives and salary continuation increased when the three months ended March 31, 2026 is compared with the comparable period of 2025, driven by higher incentive and insurance expense. Occupancy, furniture and fixtures expense increased when the three months ended March 31, 2026 are compared with the comparable period of 2025 due to depreciation of assets placed in service after the first quarter of 2025 and additional lease expense. Data processing expenses decreased when the three months ended March 31, 2026 are compared with the comparable period of 2025 due to savings related to the core system conversion. Professional services include legal, audit and consulting expenses, which increased when the three months ended March 31, 2026 are compared with the comparable period of 2025 due to higher audit and consulting fees. Core system conversion expense includes payments made to vendors in advance of the system upgrade completed during the second quarter of 2025. Other operating expense decreased when the three months ended March 31, 2026 are compared with the comparable period of 2025. The category of other operating expenses includes expense for marketing and business development, supplies, non-service pension cost and charitable donations, among others. Included in various categories of noninterest expense are expenses to manage cybersecurity risk. The cost of these measures was $131 for the three months ended March 31, 2026 and $81 for the three months ended March 31, 2025. The Company places high priority on cybersecurity. The decrease in expense reflects renegotiation of contracts and licensing. Income Tax The Company’s income tax expense for the three months ended March 31, 2026 was $1,066 and effective tax rate was 17.63%. For the three months ended March 31, 2025, the Company’s income tax expense was $666 and effective tax rate was 17.07%. The effective tax rate increased due to comparable levels of nontaxable income while pre-tax earnings increased during the period. Asset Quality Key indicators of the Company’s asset quality are presented in the following table. March 31, December 31, 2026 2025 Nonaccrual loans $ 344 $ 188 Loans past due 90 days or more, and still accruing 230 881 ACLL to loans net of deferred fees and costs 0.98 % 0.99 % Year-to-date net charge-offs as a percentage of average loans 1 0.04 % 0.03 % Ratio of nonperforming loans to loans, net of deferred fees and costs 0.03 % 0.02 % Ratio of ACLL to nonperforming loans 2831.10 % 5261.70 % 32 Table of Contents (1) Net charge-offs are annualized through the period indicated. For information on the Company’s policies on the ACLL, please refer to the Company’s 2025 Form 10-K, Note 1: Summary of Significant Accounting Policies. The Company’s risk analysis as of March 31, 2026 determined an ACLL of $9,739, or 0.98% of loans net of deferred fees and costs. This compares with an ACLL of $9,892 as of December 31, 2025, or 0.99% of loans. To determine the appropriate level of the ACLL, the Company considers credit risk for individually evaluated loans and for groups of collectively evaluated loans. Individually Evaluated Loans Individually evaluated loans were $8,898 as of March 31, 2026 and $8,802 as of December 31, 2025. As of both reporting dates, two individually evaluated loans were collateral dependent but were adequately collateralized and did not result in an individual allocation. The remaining individually evaluated loans were measured using the discounted cash flow method, resulting in an allocation of $106. Collectively Evaluated Loans Collectively evaluated loans totaled $987,166, with an ACLL of $9,633 as of March 31, 2026. As of December 31, 2025, collectively evaluated loans totaled $991,124, with an allowance of $9,786. Collectively evaluated loans are divided into classes based upon risk characteristics. Utilizing historical loss information and peer data, the Company calculates probability of default ("PD") and loss given default ("LGD") for each class, which is adjusted for a reasonable and supportable forecast. Cash flow projections based on each loan’s contractual terms are modified by the adjusted PD and LGD for its class. Loan classes are allocated additional loss estimates based upon the Company’s analysis of qualitative factors including economic measures, asset quality indicators, loan characteristics, and changes to internal Company policies and management. Reasonable and Supportable Forecast The Company applies national unemployment forecasts to project cash flows. The Company determined that 12 months represents a reasonable and supportable forecast period as of March 31, 2026, and set a period of 12 months to revert to historical losses on a straight-line basis. The forecast applied as of March 31, 2026 projects that unemployment will increase slightly over the next 12 months, higher than the forecast applied as of December 31, 2025. The higher unemployment forecast increased the required level of the ACLL when March 31, 2026 is compared with December 31, 2025. Qualitative Factors: Economic The Company sources economic data pertinent to its market from the most recently available publications, including business and personal bankruptcy filings, the residential vacancy rate and the inventory of new and existing homes. Higher bankruptcy filings indicate heightened credit risk and increase the ACLL, while lower bankruptcy filings have a beneficial impact on credit risk. Compared with data available as of December 31, 2025, business bankruptcy filings increased while personal bankruptcies filings decreased. Residential vacancy rates and housing inventory are used to measure the health of the housing market. The housing market directly or indirectly affects all loan classes.. Higher vacancy and inventory levels increase credit risk. The residential vacancy rate available as of March 31, 2026 was at a lower level than the data incorporated into the December 31, 2025 calculation. Housing data available as of March 31, 2026 showed slightly lower inventory than as of December 31, 2025, resulting in a lower allocation. Qualitative Factors: Asset Quality Indicators Accruing past due loans are analyzed at the class level and compared with previous levels. Increases in past due loans indicate heightened credit risk. Accruing loans past due 30-89 days were 0.29% of total loans as of March 31, 2026, a decrease from 0.35% as of December 31, 2025. Qualitative Factors: Other Considerations The Company considers other factors that impact credit risk, including the competitive, legal and regulatory environments, changes in lending policies and loan review, changes in lending management and high risk loans. Competitive, legal and regulatory environments were evaluated for changes that would affect credit risk. Higher competition for loans is deemed to increase credit risk, while lower competition decreases credit risk. Competition remained at similar levels to those at December 31, 2025. The legal and regulatory environments also remain in a similar posture to December 31, 2025. Lending policies, loan review procedures and management’s experience influence credit risk. Policies and procedures remain similar to those at December 31, 2025. Levels of high risk loans are considered in the determination of the level of the ACLL. A decrease in the level of high risk loans within a class decreases the required allocation for the loan class, and an increase in the level of high risk loans within a class increases the required allocation for the loan class. Total high risk loans increased from the level at December 31, 2025. 33 Table of Contents The Company monitors local economic news and internal indicators to consider the presence of risk that may not be reflected in its designated qualitative factors above. As of March 31, 2026, management identified elevated local unemployment data and collection activity, similar to December 31, 2025. The Company maintained its allocation from December 31, 2025. Conclusion The calculation of the appropriate level for the ACLL incorporates analysis of multiple factors and requires management’s prudent and informed judgment. Based on analysis of historical indicators, asset quality and economic factors, management believes the level of ACLL is reasonable for the credit risk in the loan portfolio as of March 31, 2026. ACL on Unfunded Commitments The ACL on unfunded commitments was $288, or 0.15% of unfunded commitments as of March 31, 2026. The ACL on unfunded commitments was $298, or 0.17% as of December 31, 2025. Provision for (Recovery of) Credit Losses The provision for credit losses represents charges to earnings necessary to maintain an adequate allowance. The adequacy of the ACLL is reviewed quarterly and adjustments are made as determined necessary. The Company recorded a recovery of credit losses on loans of $63 and a recovery of credit losses on unfunded commitments of $10 for the three months ended March 31, 2026, compared with a provision for credit losses on loans of $277 and a recovery of $1 for unfunded commitments for the three months ended March 31, 2025. Changes in loss rates, qualitative factors and a lower balance of loans accounted for the difference in (recovery of) provision for credit losses. Loan Modifications In the ordinary course of business the Company modifies loan terms on a case-by-case basis for a variety of reasons. Modifications may include rate reductions, payment extensions of varying lengths of time, a change in amortization term or method or other arrangements. Modifications to consumer loans generally involve short-term payment extensions to accommodate specific, temporary circumstances. Modifications to commercial loans may include, but are not limited to, changes in interest rate, maturity, amortization and financial covenants. The Company reviews modifications to determine whether the borrower is experiencing financial difficulty, including indicators of default, bankruptcy, going concern, insufficient projected cash flows and inability to obtain financing from other sources. Please refer to Note 2: Loans and Allowance for Credit Losses in Part I, Item 1 of this report for more information on loans modified for borrowers experiencing financial difficulty. During the three months ended March 31, 2026 and 2025, the Company modified loans in the normal course of business for borrowers who were not experiencing financial difficulty. During the three months ended March 31, 2026, the Company modified 70 loans totaling $27,988. During the three months ended March 31, 2025, the Company provided 195 modifications to loans totaling $24,105. Key Assets and Liabilities NBI’s key assets and liabilities and their change from March 31, 2025 are shown in the following table. 34 Table of Contents March 31, March 31, Change 2026 2025 Dollars Percent Interest-bearing deposits $ 54,177 $ 107,385 $ (53,208 ) (49.55 )% Securities available for sale, at fair value 658,112 596,253 61,859 10.37 % Loans, net 985,651 992,774 (7,123 ) (0.72 )% Total assets 1,828,993 1,835,717 (6,724 ) (0.37 )% Deposits 1,629,764 1,657,760 (27,996 ) (1.69 )% Average Balances Year-to-date daily averages for the major balance sheet categories are as follows: March 31, December 31, Change 2026 2025 Dollars Percent Assets Interest-bearing deposits $ 51,918 $ 76,223 $ (24,305 ) (31.89 )% Securities available for sale, at fair value 653,722 603,869 49,853 8.26 % Loans, net 985,473 995,531 (10,058 ) (1.01 )% Total assets 1,819,379 1,809,631 9,748 0.54 % Liabilities and stockholders’ equity Noninterest-bearing demand deposits $ 306,202 $ 305,115 $ 1,087 0.36 % Interest-bearing demand deposits 855,206 842,479 12,727 1.51 % Savings deposits 144,444 142,547 1,897 1.33 % Time deposits 315,751 328,286 (12,535 ) (3.82 )% Stockholders’ equity 185,707 170,428 15,279 8.97 % Increased customer deposits resulted in increased investment in interest bearing deposit assets. Changes in securities, loans, deposits and stockholders’ equity are discussed below. Securities The Company's securities are designated as available for sale and as such, are reported at fair value. The following table presents information on securities available for sale as of the dates indicated: March 31, December 31, Change 2026 2025 Dollars Percent Amortized cost $ 713,197 $ 706,229 $ 6,968 0.99 % Unrealized loss, net (55,085 ) (51,852 ) (3,233 ) (6.24 )% Securities available for sale, at fair value $ 658,112 $ 654,377 $ 3,735 0.57 % The Company purchased bonds totaling $19,555 during the first quarter of 2026. The unrealized loss in the Company’s investment portfolio is due to interest rate risk. The fair value of bonds moves inversely to interest rate changes and expectations of interest rate changes. A large percentage of the Company’s securities were purchased during the period prior to the Federal Reserve’s interest rate increases that began in March of 2022. The Company’s analysis of the securities portfolio determined no identifiable credit risk as of March 31, 2026 and no ACL has been recorded. Please refer to Note 1: General and Summary of Significant Accounting Policies of the Company's 2025 Form 10-K and Note 3: Securities in Part I, Item 1 of this report for additional information on the securities portfolio. 35 Table of Contents Loans March 31, December 31, Change 2026 2025 Dollars Percent Real estate construction $ 53,500 $ 40,694 $ 12,806 31.47 % Consumer real estate 331,110 328,653 2,457 0.75 % Commercial real estate 452,881 467,783 (14,902 ) (3.19 )% Commercial non real estate 50,736 52,018 (1,282 ) (2.46 )% Public sector and IDA 62,740 63,677 (937 ) (1.47 )% Consumer non real estate 45,097 47,101 (2,004 ) (4.25 )% Less: deferred fees and costs (674 ) (616 ) (58 ) 9.42 % Loans, net of deferred fees and costs $ 995,390 $ 999,310 $ (3,920 ) (0.39 )% Lower demand and increased competition resulted in a slight decrease in the loan portfolio when March 31, 2026 is compared with December 31, 2025. The Company is positioned to make every loan that meets its underwriting standards. Deposits March 31, December 31, Change 2026 2025 Dollars Percent Noninterest-bearing demand deposits $ 302,844 $ 313,022 $ (10,178 ) (3.25 )% Interest-bearing demand deposits 866,848 853,756 13,092 1.53 % Savings deposits 145,134 142,645 2,489 1.74 % Time deposits 314,938 317,510 (2,572 ) (0.81 )% Total deposits $ 1,629,764 $ 1,626,933 $ 2,831 0.17 % The Company continues to focus on providing new deposit products that provide additional functionality and marketing opportunity, enabled by the core system conversion completed in 2025. During the first quarter of 2026, the Company implemented a treasury management suite for commercial and municipal deposit customers, with additional product releases planned throughout 2026. The Company’s depositors within its market area are diverse, including individuals, businesses and municipalities. The Company does not have any brokered deposits. Depositors are insured up to the FDIC maximum of $250 thousand. Municipal deposits, which account for approximately 22% of the Company’s deposits, have additional security from bonds pledged as collateral, in accordance with state regulation. Uninsured non-municipal deposits are approximately 20% of total deposits. As of March 31, 2026, the Company's largest deposit relationship was 5.15% of total deposits. Capital Resources March 31, December 31, Change 2026 2025 Dollars Percent Common stock and additional paid in capital $ 22,086 $ 22,024 $ 62 0.28 % Retained earnings 207,539 202,558 4,981 2.46 % Accumulated other comprehensive loss (42,227 ) (39,674 ) (2,553 ) (6.43 )% Total stockholders’ equity $ 187,398 $ 184,908 $ 2,490 1.35 % The increase in stockholders’ equity reflects net income for the three months ended March 31, 2026, partially offset by a decrease in market value of securities available for sale when March 31, 2026 is compared with December 31, 2025. 36 Table of Contents The Company qualifies as a small bank holding company under the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts bank holding companies with less than $3 billion in assets from reporting consolidated regulatory capital ratios and from minimum regulatory capital requirements. NBB is subject to various capital requirements administered by banking agencies, including an additional capital conservation buffer in order to make capital distributions or discretionary bonus payments. Risk-based capital ratios are calculated in compliance with OCC rules based on the Basel III Capital Rules. Capital ratios for NBB are shown in the following table. March 31, 2026 December 31, 2025 Regulatory Capital Minimum Ratios Regulatory Capital Minimum Ratios with Capital Conservation Buffer Common Equity Tier I Capital Ratio 16.61 % 16.16 % 4.50 % 7.00 % Tier I Capital Ratio 16.61 % 16.16 % 6.00 % 8.50 % Total Capital Ratio 17.46 % 17.02 % 8.00 % 10.50 % Leverage Ratio 10.69 % 10.42 % 4.00 % 4.00 % Liquidity Liquidity measures the Company’s ability to meet its financial commitments at a reasonable cost. Demands on the Company’s liquidity include funding additional loan demand and accepting withdrawals of existing deposits. The Company has diverse liquidity sources, including customer and purchased deposits, customer repayments of loan principal and interest, sales, calls and maturities of securities, Federal Reserve discount window borrowing, short-term borrowing, and FHLB advances. As of March 31, 2026, the Company had $303,165 of borrowing capacity from the FHLB and $184,437 of borrowing capacity at the Federal Reserve Bank discount window. As of March 31, 2026, the Company did not have purchased deposits, discount window borrowings or short-term borrowings. The Company considers its security portfolio for typical liquidity needs, within accounting, legal and strategic parameters. Portions of the securities portfolio are pledged to meet state requirements for public funds deposits. Discount window borrowings also require pledged securities. Increased/decreased liquidity from public funds deposits or discount window borrowings results in increased/decreased liquidity from pledging requirements. The Company monitors public funds pledging requirements and unpledged available for sale securities accessible for liquidity needs. Regulatory capital levels determine the Company’s ability to use purchased deposits and the Federal Reserve Bank discount window. As of March 31, 2026, the Company is considered well capitalized and does not have any restrictions on purchased deposits or borrowing ability at the Federal Reserve Bank discount window. The Company monitors factors that may increase its liquidity needs. Some of these factors include deposit trends, large depositor activity, maturing deposit promotions, interest rate sensitivity, maturity and repricing timing gaps between assets and liabilities, the level of unfunded loan commitments and loan growth. As of March 31, 2026, the Company’s liquidity is sufficient to meet projected trends. To monitor and estimate liquidity levels, the Company performs stress testing under varying assumptions on credit sensitive liabilities and the sources and amounts of balance sheet and external liquidity available to replace outflows. The Company’s Contingency Funding Plan sets forth avenues for rectifying liquidity shortfalls. As of March 31, 2026, the analysis indicated adequate liquidity under the tested scenarios. The Company utilizes several other strategies to maintain sufficient liquidity. Loan and deposit growth are managed to keep the loan to deposit ratio within the Company’s internally-set target range. As of March 31, 2026, the loan to deposit ratio was 61.08%. The investment strategy takes into consideration the term of the investment, and securities in the available for sale portfolio are laddered based upon projected funding needs. As of March 31, 2026, the Company was not aware of any other known trends, events or uncertainties that have or are reasonably likely to have a material impact on our liquidity. As of March 31, 2026, the Company has no material commitments for long-term debt or for capital expenditures. Off-Balance Sheet Arrangements In the normal course of business, NBB extends lines of credit to its customers. Depending on their needs, customers may draw upon lines of credit at any time in any amount up to a pre-approved limit. The Bank also issues two types of standby letters of credit to customers: financial standby letters of credit that guarantee payment to facilitate customer purchases and performance letters of credit that guarantee payment if the customer fails to perform a specific obligation. Amounts drawn upon these lines and letters of credit vary at any given time depending on the business needs of the customers. 37 Table of Contents While it would be possible for customers to fully draw on approved lines of credit and for beneficiaries to call all letters of credit, historically this has not occurred. In the event of a sudden and substantial draw on these lines, the Company would manage liquidity using borrowing capacity, raising additional deposits, or selling securities available for sale or loans. The Company sells mortgages on the secondary market subject to recourse agreements. The mortgages originated must meet strict underwriting and documentation requirements for the sale to be completed. To date, no recourse provisions have ever been invoked. If the Company identified a factor or trend that indicated recourse risk, a loss reserve would be recorded. Contractual Obligations The Company had no finance lease or purchase obligations and no long-term debt at March 31, 2026. Item 3. Quantitative a nd Qualitative Disclosures About Market Risk Not applicable. Item 4. Controls an d Procedures The Company’s management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026 to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the Company's management, including the Company's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Because of the inherent limitations in all control systems, the Company believes that no system of controls, no matter how well designed and operated, can provide absolute assurance that all control issues have been detected. Part I I - OTHER INFORMATION Item 1. Legal P roceedings There are no pending or threatened legal proceedings to which the Company or any of its subsidiaries is a party or to which the property of the Company or any of its subsidiaries is subject that, in the opinion of management, may materially impact the financial condition of the Company. Item 1A. Ris k Factors Please refer to the “Risk Factors” previously disclosed in Item 1A of the Company's 2025 Form 10-K and the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” in Part I. Item 2 of this Form 10-Q. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. 38 Table of Contents Item 5. Other I nformation (a) None. (b) None. (c) During the fiscal quarter ended March 31, 2026 , none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K). Item 6. E xhibits Index of Exhibits Exhibit No. Description 3(i) Amended and Restated Articles of Incorporation of National Bankshares, Inc. (incorporated herein by reference to Exhibit 3.1 of the Form 8-K filed on March 16, 2006) 3(ii) Amended and Restated Bylaws of National Bankshares, Inc. (incorporated herein by reference to Exhibit 3.2 of the Form 8-K filed on July 10, 2024) 4 Specimen copy of certificate for National Bankshares, Inc. common stock (incorporated herein by reference to Exhibit 4(a) of the Annual Report on Form 10-K for fiscal year ended December 31, 1993) +31(i) Section 302 Certification of Chief Executive Officer Filed herewith +31(ii) Section 302 Certification of Chief Financial Officer Filed herewith +32(i) 18 U.S.C. Section 1350 Certification of Chief Executive Officer Filed herewith +32(ii) 18 U.S.C. Section 1350 Certification of Chief Financial Officer Filed herewith +101 The following materials from National Bankshares, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2026 are formatted in iXBRL (Inline Extensible Business Reporting Language), furnished herewith: (i) Consolidated Balance Sheets at March 31, 2026 and December 31, 2025; (ii) Consolidated Statements of Income for the three months ended March 31, 2026 and 2025; (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025; (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025; and (vi) Notes to Consolidated Financial Statements. Filed herewith 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) Filed herewith 39 Table of Contents Signa tures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL BANKSHARES, INC. Date: May 13, 2026 /s/ Lara E. Ramsey By: Lara E. Ramsey President and Chief Executive Officer (Principal Executive Officer) Date: May 13, 2026 /s/ Lora M. Jones By: Lora M. Jones Treasurer and Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer) 40