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
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
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
Part II – Other Information
Legal Proceedings
Item 1A
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5
Other Information
39
Item 6
Exhibits
Signatures
40
2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
National Bankshares, Inc.
Consolidated 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
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; none 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
See accompanying notes to consolidated financial statements.
Consolidated Statements of Income
For the Three Months Ended March 31,
2026
2025
Interest Income
Interest and fees on loans
13,944
12,960
Interest on federal funds sold
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
Intangible asset amortization
87
97
Franchise taxes
350
373
Professional services
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
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
Consolidated Statements of Comprehensive Income
Three Months Ended March 31, 2026 and 2025
(in thousands)
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
Total Comprehensive Income
2,428
10,826
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands except per share data)
CommonStock andAdditionalPaid-in Capital
RetainedEarnings
AccumulatedOtherComprehensiveLoss
Total
Balances at December 31, 2024
21,831
196,343
(61,765
156,409
Net income
–
Other comprehensive income, net of tax of $2,017
Stock based compensation
43
Balances at March 31, 2025
21,874
199,579
(54,175
167,278
Balances at December 31, 2025
Other comprehensive (loss), net of tax of ($680)
62
Balances at March 31, 2026
Consolidated Statements of Cash Flows
Cash Flows from Operating Activities
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of premises and equipment
314
248
Amortization of premiums and accretion of discounts on securities, net
236
275
Amortization of core deposit intangible
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
(19
(25
Increase in cash value of bank-owned life insurance
(301
(292
Equity based compensation expense
Net change in:
(463
(204
285
(395
(28
(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
108,117
Cash and cash equivalents at end of period
122,535
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
8
Notes to Consolidated Financial Statements
$ 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
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,
Real estate construction
Consumer real estate
Commercial real estate
Commercial non real estate
Public sector and IDA
Consumer non real estate
Gross loans
Allowance for credit losses on loans
Total loans, net
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
Past Due and Nonaccrual Loans
The following tables present the aging of past due loans, by loan pool, as of the dates indicated.
AccruingCurrentLoans
AccruingLoans 30 – 89DaysPast Due
AccruingLoans 90 orMoreDays PastDue
NonaccrualLoans
TotalLoans
AccruingandNonaccrual90 orMoreDays PastDue
Real Estate Construction
Construction, 1-4 family residential
12,410
Construction, other
41,071
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
11,322
Investor-owned residential real estate
92,672
241
92,913
Commercial Real Estate
Multifamily residential real estate
140,833
189
141,022
Commercial real estate owner-occupied
126,301
186
126,487
Commercial real estate, other
184,678
536
158
185,372
Commercial Non Real Estate
Commercial and industrial
50,643
Public Sector and IDA
States and political subdivisions
Consumer Non Real Estate
Credit cards
4,809
4,812
Automobile
12,777
225
13,002
Other consumer loans
27,027
215
41
27,283
992,603
2,887
230
344
416
AccruingandNonaccrual90 or MoreDays PastDue
11,282
29,101
311
29,412
27,494
50
27,544
196,857
1,447
198,304
11,154
11,160
91,471
174
91,645
148,644
148,833
130,856
429
188
131,473
617
186,939
538
187,477
51,435
335
4,727
4,736
12,707
245
14
12,966
28,991
357
51
29,399
995,335
3,522
881
1,069
11
The following table presents nonaccrual loans, by loan class, as of the dates indicated:
With NoAllowance
With anAllowance
Commercial real estate, owner-occupied
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 EstateConstruction
ConsumerReal Estate
CommercialReal Estate
CommercialNon-RealEstate
PublicSector andIDA
ConsumerNon-RealEstate
Balance, December 31, 2025
337
3,823
3,805
849
308
770
9,892
Charge-offs
(22
(161
(183
Recoveries
80
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
CommercialNon RealEstate
ConsumerNon RealEstate
Balance, December 31, 2024
3,945
4,320
658
338
651
10,262
(3
(109
(112
30
(17
(30
269
(21
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
(50
(529
(582
133
33
109
(13
(119
(648
208
539
(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
Commercial Non-Real Estate
Consumer Non-Real Estate
Individually evaluated
24
82
106
Collectively evaluated
3,854
3,661
9,633
26
3,797
3,725
9,786
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
456
8,442
330,654
444,439
8,337
8,802
328,188
459,446
991,124
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:
Balance
RelatedAllowance
Commercial real estate, owner occupied
6,216
6,248
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:
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.
Term Loans Amortized Cost Basis by Origination Year
RevolvingLoansConverted
Prior
2022
2023
2024
Revolving
to Term
Construction, residential
Pass
648
415
6,111
214
5,002
20
3,745
1,086
20,161
4,755
5,290
5,474
Equity lines
27,007
Classified
119
84,678
33,161
29,035
20,722
25,366
6,305
66
199,333
Special Mention
128
211
77
288
84,889
33,289
25,443
1,404
1,699
1,176
2,963
3,463
585
32
58,567
10,679
2,930
3,685
10,991
2,403
3,201
92,456
59,024
69,029
23,514
3,671
31,151
121
140,488
345
534
69,218
23,859
73,725
22,589
9,010
6,025
4,570
708
2,581
119,208
Special mention
940
123
1,063
80,881
2,704
128,522
30,379
14,088
5,470
3,114
676
1,760
184,009
159
695
129,190
30,915
14,247
16,953
2,299
2,927
8,120
7,248
1,924
11,219
50,690
37
11,265
40,924
5,387
6,388
10,000
167
537
1,929
2,836
5,757
1,776
Other consumer
697
1,774
5,041
13,981
3,624
1,398
27,235
44
5,086
13,984
478,411
132,050
93,737
68,899
116,507
23,505
72,673
985,802
7,053
1,797
251
3,209
487,092
133,059
93,896
68,944
116,587
72,961
Gross Charge Offs by Origination Year for the Three Months Ended March 31, 2026
22
1
17
18
16
23
Total Gross Charge-Offs
15
2021
265
1,135
5,780
3,565
3,702
752
1,107
16,721
1,045
2,293
3,742
54,388
32,152
33,508
27,107
21,529
25,624
3,673
198,020
47
130
177
107
54,542
33,638
1,208
1,757
1,269
3,106
3,547
44,806
15,403
10,847
2,956
3,760
11,172
2,236
91,180
45,271
40,234
38,409
26,165
4,126
13,043
26,180
137
148,294
40,423
26,515
69,884
6,700
24,662
9,084
5,913
4,810
2,669
123,722
1,014
102
125
262
1,503
77,146
6,802
6,038
2,931
96,143
34,432
30,660
14,173
3,039
1,613
186,107
1,370
96,816
31,198
14,332
6,927
9,845
2,502
3,318
9,388
7,662
11,842
170
51,654
313
9,701
11,893
18,540
23,207
5,495
6,390
45
49
212
700
2,257
3,390
6,343
12,951
213
6,357
Other Consumer
371
413
933
2,235
6,033
17,762
1,589
29,336
0
58
936
2,282
6,042
17,764
1,591
336,252
161,766
138,336
89,901
74,434
114,212
69,694
4,430
989,025
6,295
6,450
2,448
103
891
206
442
4,451
344,995
161,869
139,357
90,107
74,881
114,228
70,059
Gross Charge Offs by Origination Year for the Year Ended December 31, 2025
54
59
108
36
78
367
Total Gross Charge-offs
149
101
582
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
298
Recovery of credit losses
(10
(1
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:
AmortizedCost
GrossUnrealizedGains
GrossUnrealizedLosses
FairValue
U.S. government agencies and corporations
305,393
25,141
280,252
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
55,160
312,353
24,298
288,055
177,453
23,736
153,717
210,918
129
3,406
207,641
5,505
541
4,964
706,229
51,981
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
Fair Value
1,990
278,262
25,132
State and political subdivisions
3,169
396
148,775
24,954
110,412
795
64,881
Total temporarily impaired securities
115,571
1,200
496,846
53,960
1,680
364
151,652
23,372
55,986
223
99,446
3,183
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.
Amortized Cost
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
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.
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,
Service cost
287
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:
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.
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
Level 1
Level 2
Level 3
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 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
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
Carrying Amount
Financial assets:
Securities available for sale
Restricted stock, at cost
1,872
958,482
Bank-owned life insurance
Financial liabilities:
Deposits
1,314,826
314,866
1,848
955,899
1,309,423
317,625
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:
NetUnrealizedLoss onSecurities
AdjustmentsRelated toPensionBenefits
Balance at December 31, 2024
(62,093
328
Unrealized holding gain on available for sale securities, net of tax of $2,017
Balance at March 31, 2025
(54,503
Balance at December 31, 2025
(40,964
1,290
Unrealized holding loss on available for sale securities, net of tax of ($680)
Balance at March 31, 2026
(43,517
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
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.
In-scope of Topic 606:
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
(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
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:
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
Lease Expense
Operating lease expense
135
111
Total lease expense
135.0
Cash paid for amounts included in lease liabilities
140
The following table presents a maturity schedule of undiscounted cash flows that contribute to the lease liability:
Undiscounted Cash Flow for the Period
As ofMarch 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
Total undiscounted cash flows
2,060
Less: discount
(146
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-AverageGrant-DateFair Value
Nonvested at January 1, 2026
9,584
28.85
Granted
37.77
Nonvested at March 31, 2026
14,311
31.80
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:
Net Income(Numerator)
CommonShares Weighted Average Outstanding (Denominator)
PerShare
CommonShares Weighted Average Outstanding(Denominator)
Dilutive shares
2,783
1,982
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
Core deposit intangible
(87
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
2027
290
2028
2029
2030
165
2031
Total amortizing core deposit intangible
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.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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:
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.
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
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.
Summary Key Performance Indicators
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
Net interest margin (1)
2.98
2.40
Efficiency ratio (1)
59.96
65.96
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
Net Interest Margin, FTE
Interest income (GAAP)
Add: FTE adjustment
256
Interest income, FTE (non-GAAP)
19,197
18,405
Interest expense (GAAP)
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)
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.
Noninterest expense (GAAP)
Less: core system conversion expense
(46
Adjusted noninterest expense (non-GAAP)
8,587
Noninterest income (GAAP)
Total income for efficiency ratio (non-GAAP)
15,558
13,018
Efficiency ratio (non-GAAP)
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.
Annualized Net Income for Ratio Calculation
Net income per GAAP
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 $10 for the period ended March 31, 2025
Total non-annualized items
Adjusted net income
4,797
3,075
Adjusted net income, annualized
19,455
12,471
Add: total non-annualized items
184
161
Annualized net income for ratio calculation (non-GAAP)
19,639
12,632
Return on average assets (GAAP)
Adjusted return on average assets (non-GAAP)
Return on average equity (GAAP)
Adjusted return on average equity (non-GAAP)
Net Interest Income
The following tables show interest‑earning assets and interest‑bearing liabilities, the interest earned or paid, the average yield or rate on the daily average balance outstanding, net interest income and net interest margin for the periods indicated.
($ in thousands)
AverageBalance
Interest
AverageYield/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
2.68
613,940
2.55
Nontaxable securities (1)(5)
62,500
430
2.79
62,964
425
2.74
Federal funds sold
261
4.66
51,918
3.31
94,431
4.46
Total interest-earning assets
4.45
4.23
Interest-bearing liabilities:
855,206
3,635
1.72
871,007
4,583
2.13
144,444
52
0.15
143,987
Time deposits(6)
315,751
3.38
341,322
3.93
Total interest-bearing liabilities
1,315,401
1.95
1,356,316
2.38
Net interest income and interest rate spread
2.50
1.85
Net interest margin
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.
Change
Dollars
Percent
Service charges on deposits
(7.15
)%
71.08
9.59
0.86
3.08
Gain on sale of mortgage loans
(6
(24.00
13.33
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.
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.
654
12.63
145
19.62
(55
(5.60
0.00
(10.31
(23
(6.17
74
24.75
(100
(44
(6.21
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.
Nonaccrual loans
Loans past due 90 days or more, and still accruing
ACLL to loans net of deferred fees and costs
0.98
0.99
Year-to-date net charge-offs as a percentage of average loans1
0.04
0.03
Ratio of nonperforming loans to loans, net of deferred fees and costs
0.02
Ratio of ACLL to nonperforming loans
2831.10
5261.70
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.
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
107,385
(53,208
(49.55
596,253
61,859
10.37
992,774
(7,123
(0.72
1,835,717
(6,724
(0.37
1,657,760
(27,996
(1.69
Average Balances
Year-to-date daily averages for the major balance sheet categories are as follows:
76,223
(24,305
(31.89
653,722
603,869
49,853
8.26
985,473
995,531
(10,058
(1.01
1,819,379
1,809,631
9,748
0.54
Liabilities and stockholders’ equity
306,202
305,115
1,087
0.36
842,479
12,727
1.51
142,547
1,897
1.33
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:
Amortized cost
6,968
Unrealized loss, net
(55,085
(51,852
(6.24
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
12,806
31.47
2,457
0.75
(14,902
(3.19
(1,282
(2.46
(937
(1.47
(2,004
(4.25
(58
9.42
(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.
(10,178
(3.25
13,092
1.53
2,489
1.74
(2,572
(0.81
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
Common stock and additional paid in capital
0.28
2.46
Accumulated other comprehensive loss
(6.43
Total stockholders’ equity
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.
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.
RegulatoryCapitalMinimumRatios
Regulatory CapitalMinimum Ratioswith CapitalConservationBuffer
Common Equity Tier I Capital Ratio
16.61
16.16
4.50
7.00
Tier I Capital Ratio
6.00
8.50
Total Capital Ratio
17.46
17.02
8.00
10.50
Leverage Ratio
10.69
10.42
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.
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 and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and 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 II - OTHER INFORMATION
Item 1. Legal Proceedings
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. Risk 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
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
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)
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
+32(i)
18 U.S.C. Section 1350 Certification of Chief Executive Officer
+32(ii)
18 U.S.C. Section 1350 Certification of Chief Financial Officer
+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.
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
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.
Date: May 13, 2026
/s/ Lara E. Ramsey
By: Lara E. Ramsey
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Lora M. Jones
By: Lora M. Jones
Treasurer and
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)