Exhibit 99.1

Message to Our Stockholders:

We are pleased to provide you with our 1st Quarter report for 2014.

National Bankshares, Inc. posted net income of $4.40 million, or basic net income per share of $0.63. The return on average assets for the first quarter was 1.61% and the return on average equity was 11.92% compared to 1.56% and 11.26%, respectively, for the first quarter of 2013. At March 31, 2014, the Company had total assets of $1.12 billion, an increase of 2.24% when compared to the end of the first quarter of 2013.

Total loans at quarter-end of $589.95 million were an increase of 2.45% from the total of $575.87 million at the end of March last year. We anticipate improving, though slow, economic activity in our market area, and we hope to build upon the momentum in our loan growth.

We recently concluded our Annual Meeting of Stockholders where we were able to report our strong earnings for 2013. During my remarks, I discussed the various challenges from having to keep so many “balls in the air” when it comes to delivering the very best in products and services while consistently putting into place and monitoring the appropriate regulatory compliance and technology security measures. Additionally, we not only face competition from traditional banks but, each year, we deal with many new non-banking competitors such as Paypal and Bitcoin. Rest assured that our focus of providing a variety of financial products and delivery options with a personalized level of service is a proven success which we are committed to enhancing for our customers every day.

At the Annual Meeting, I announced that the National Bank Board of Directors had appointed Brad Denardo as the Bank’s President and CEO. Brad has played an important part in the Bank’s success for over 30 years, and I am confident that his banking experience, expertise and commitment along with his knowledge of our communities will ensure future success.

On behalf of your Company’s Board of Directors and our employees, we thank you, our stockholders, for your continued support and investment.

James G. Rakes

Chairman, President

and Chief Executive Officer

National Bankshares, Inc.

Board of Directors

Lawrence J. Ball President Moog Components Group	William A. Peery President Cargo Oil Co., Inc.
John E. Dooley Chief Executive Officer Virginia Tech Foundation, Inc. Charles E. Green, III Financial Planner AXA Advisors, LLC Jack M. Lewis President New River Community College Mary G. Miller President Interactive Design & Development, Inc.	James G. Rakes Chairman, President and CEO, National Bankshares, Inc.; Executive Chairman, National Bank; Chairman, President and CEO, National Bankshares Financial Services, Inc. Glenn P. Reynolds President Reynolds Architects Incorporated James M. Shuler Vice Chairman of the Board Virginia House of Delegates, Retired

Mission Statement

National Bankshares, Inc. strives to be an exceptional community bank holding company dedicated to providing shareholder value by offering financial services to customers through subsidiary financial institutions and affiliated companies in an efficient, friendly, personalized and cost-effective manner. We recognize that to do this, our financial institutions must retain the ability to make decisions locally and must actively participate in the communities they serve. We are committed to offering competitive and fair employment opportunities and to maintaining the highest standards in all aspects of our business.

National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

($ In thousands, except share data)	March 31, 2014			March 31, 2013
Assets
Cash and due from banks	$	14,723		$	10,674
Interest-bearing deposits		108,841			107,176
Securities available for sale, at fair value		190,401			190,215
Securities held to maturity (fair value $165,105 in 2014 and $174,218 in 2013)		165,398			166,947
Restricted stock		1,089			1,414
Mortgage loans held for sale		---			313
Loans:
Loans, net of unearned income and deferred fees		589,048			574,958
Less allowance for loan losses		(8,297	)		(8,291	)
Loans, net		580,751			566,667
Bank premises and equipment, net		9,428			10,237
Accrued interest receivable		5,893			5,878
Other real estate owned, net		4,901			1,094
Intangible assets		8,029			9,106
Bank-owned life insurance		21,335			20,690
Other assets		12,321			8,092
Total assets	$	1,123,110		$	1,098,503
Liabilities and Stockholders’ Equity
Noninterest-bearing demand deposits	$	145,963		$	144,815
Interest-bearing demand deposits		503,596			449,992
Savings deposits		77,467			72,420
Time deposits		237,060			269,892
Total deposits		964,086			937,119
Other borrowed funds		---			---
Accrued interest payable		78			146
Other liabilities		5,529			7,878
Total liabilities		969,693			945,143
Stockholders’ equity:
Preferred stock of no par value. Authorized 5,000,000 shares; none issued and outstanding		---			---
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding 6,947,974 shares in 2014 and 2013		8,685			8,685
Retained earnings		158,575			148,378
Accumulated other comprehensive loss, net		(13,843	)		(3,703	)
Total stockholders’ equity		153,417			153,360
Total liabilities and stockholders’ equity	$	1,123,110		$	1,098,503

This financial information is a high level review and discussion of recent performance and activities. For a full discussion, investors should refer to the 04/24/2014 Earnings Press Release and our SEC Filings found at www.sec.gov and on the company’s web site at www.nationalbankshares.com. 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

($ In thousands, except per share data)	March 31, 2014		March 31, 2013
Interest Income
Interest and fees on loans	$	7,935	$	8,319
Interest on interest-bearing deposits		65		58
Interest on securities – taxable		1,653		1,512
Interest on securities – nontaxable		1,500		1,648
Total interest income		11,153		11,537
Interest Expense
Interest on time deposits of $100 or more		153		268
Interest on other deposits		1,162		1,411
Interest on other borrowed funds		---		---
Total interest expense		1,315		1,679
Net interest income		9,838		9,858
Provision for loan losses		103		671
Net interest income after provision for loan losses		9,735		9,187
Noninterest Income
Service charges on deposit accounts		592		588
Other service charges and fees		65		60
Credit card fees		797		740
Trust income		293		289
Bank-owned life insurance		175		188
Other income		277		281
Realized securities gains, net		1		9
Total noninterest income		2,200		2,155
Noninterest Expense
Salaries and employee benefits		2,999		2,940
Occupancy and furniture and fixtures		440		432
Data processing and ATM		363		393
FDIC assessment		147		136
Credit card processing		549		552
Intangibles and goodwill amortization		269		271
Net costs of other real estate owned		77		75
Franchise taxes		279		258
Other operating expense		1,059		907
Total noninterest expense		6,182		5,964
Income before income tax expense		5,753		5,378
Income tax expense		1,349		1,162
Net income	$	4,404	$	4,216
Basic net income per share	$	0.63	$	0.61