FOR IMMEDIATE RELEASE

CONTACTS:             James G. Rakes, President & CEO  (540) 951-6236
                      J. Robert Buchanan, Treasurer    (276) 979-0341


                       NATIONAL BANKSHARES, INC. ANNOUNCES
                        SEMI-ANNUAL DIVIDEND AND RENEWAL
                        OF STOCK REPURCHASE AUTHORIZATION


BLACKSBURG,  VA, MAY 10, 2006:  NATIONAL  BANKSHARES,  INC. (Nasdaq  SmallCap
Market:  NKSH) announced that its Board of  Directors  today  approved  payment
on June 1, 2006 of a  semi-annual  dividend of $0.36 per share to stockholders
of record as of May 19, 2006.

In other business, the Board of Directors renewed its authorization of a stock
repurchase plan in which management is authorized to purchase up to 100,000
shares of the Company's common stock on the open market. This authorization
extends from June 1, 2006 to May 31, 2007. To date, National Bankshares, Inc.
has repurchased 26,640 shares under the current stock repurchase plan that
expires on May 31, 2006. The Company's management has not yet determined how
many shares, if any, might be repurchased under the renewed stock repurchase
plan.

National Bankshares, Inc. is a financial holding company headquartered in
Blacksburg, Virginia. It currently has two bank subsidiaries, The National Bank
and Bank of Tazewell County, with a total of 26 office locations throughout
Southwest Virginia. The Company also operates a non-bank subsidiary, National
Bankshares Financial Services, Inc. Its stock trades on the Nasdaq Stock Market
under the symbol "NKSH". Additional information is available on the Company web
site at www.nationalbankshares.com.