BLACKSBURG, VA, APRIL 15, 2010: Today, National Bankshares, Inc. (NASDAQ Capital Market: NKSH) reported record net income of nearly $3.77 million for the quarter ended March 31, 2010. Net income is 11.28% above the nearly $3.39 million posted by the Company on March 31, 2009, which was itself a record total for the first quarter of the year. Basic net income per share for the first three months of 2010 was $0.54, up from $0.49 per share earned in the same period last year. Net loans were at $580.93 million on March 31, 2010, a 2.2% increase over net loans of $568.60 million at the end of the first quarter of 2009 and a slight decline from the $583.02 million reported at year-end. At March 31, 2010, National Bankshares, Inc. had total assets of $992.94 million, up from both the $982.37 million reported at December 31, 2009 and the $979.79 million in total assets at the end of the first quarter of 2009. At March 31, the Company reported a return on average assets of 1.57%, a return on average equity of 12.27% and a net interest margin of 4.57%.

The Company's Chairman, President and CEO, James G. Rakes, said, "At our National Bank subsidiary during the first quarter of the year, the migration of longer-term, higher-cost time deposits into shorter-term deposits continued. We were able to take advantage of the resulting lower cost of funds in this interest rate environment to maximize the net interest margin. The result has been good earnings. As has been our longtime practice, we also carefully monitored controllable expenses during the quarter." Mr. Rakes went on to say, "This level of earnings has allowed us to continue to prudently add to the allowance for loan losses to help us work through a period of higher nonperforming assets and loan charge-offs. Our trade area was not as seriously impacted as some other parts of the country during the early stages of the recession. But we anticipated that our customers would not be able to totally escape its effects, and we have been preparing for this time. The ratio of nonperforming assets to net loans, plus other real estate owned, grew to 1.77% at March 31, while the ratio of the allowance for loan losses to total loans was 1.21% at the end of the first quarter."

National Bankshares, Inc. is a financial holding company with headquarters in Blacksburg, Virginia. It is the parent company of the National Bank of Blacksburg, which does business as National Bank from 25 offices throughout Southwest Virginia, and of National Bankshares Financial Services, Inc., an insurance and investments subsidiary in the same market. National Bankshares' stock is traded on the NASDAQ Capital Market under the symbol "NKSH".

Forward-Looking Statements

Certain statements in this press release may be "forward-looking statements." Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties. Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual Company results will not differ materially from any future results implied by the forward-looking statements. Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, competition, changes in the stock and bond markets and technology. The Company does not update any forward-looking statements that it may make.

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