false 2023 FY 0001163389

 2023-06-30

 2024-03-27

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 2022-12-30

 United
States

and Exchange Commission

 Washington,
D.C. 20549

 FORM

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31,2023

 or

 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 000-33411

 New
Peoples Bankshares, Inc.

 (Exact name
of registrant as specified in its charter)

 Virginia

 31-1804543

 (State
 or other jurisdiction of incorporation or organization)

 (I.R.S.
 Employer Identification No.)

 Commerce Drive

 24260

 Honaker VA

 (Zip
 Code)

 (Address
 of principal executive offices)

 Registrant's
telephone number, including area code: (276)
 873-7000

registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 None

registered pursuant to Section 12(g) of the Act:

Stock - $2.00 Par Value

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No
 [ X ]

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes [ ] No
 [ X ]

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
 [ X ] No [ ]

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
 [ X ] No [ ]

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 [X]

 Smaller reporting company [X]

 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. [ ]

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. [ ]

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No
 [ X ]

 The
aggregate market value of the common stock held by non-affiliates, based on the last reported sales price of $2.30 per share on the last
business day of the second quarter of 2023, was $ 22,437,043.

 The
number of shares outstanding of the registrant's common stock was 23,745,900
as of March 27, 2024.

 DOCUMENTS
INCORPORATED BY REFERENCE:

 Portions
of the Proxy Statement for the 2024 Annual Meeting of Shareholders – Part III

 TABLE
OF CONTENTS

 Page

 PART
 I

 Item
 1.

 Business

 Item
 1A.

 Risk
 Factors

 Item
 1B.

 Unresolved
 Staff Comments

 Item
1C.

 Cybersecurity

 Item
 2.

 Properties

 Item
 3.

 Legal
 Proceedings

 Item
 4.

 Mine
 Safety Disclosures

 PART
 II

 Item
 5.

 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6.

 [ Reserved ]

 Item
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A.

 Quantitative
 and Qualitative Disclosures About Market Risk

 Item
 8.

 Statements and Supplementary Data

 Item
 9.

 Changes
 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A.

 Controls
 and Procedures

 Item
 9B.

 Other
 Information

 Item
9C.

 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10.

 Directors,
 Executive Officers and Corporate Governance

 Item
 11.

 Executive
 Compensation

 Item
 12.

 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13.

 Certain
 Relationships and Related Transactions, and Director Independence

 Item
 14.

 Principal
 Accounting Fees and Services

 PART
 IV

 Item
 15.

 Exhibits,
 Financial Statement Schedules

 Item
 16.

 Form
 10-K Summary

 SIGNATURES

 Item 1.
 Business

 General

 New Peoples Bankshares,
Inc. (New Peoples, the Company, we, us or our) is a Virginia financial holding company headquartered in Honaker, Virginia. Our business
is conducted primarily through New Peoples Bank, Inc., a Virginia banking corporation (the "Bank"). The Bank has a division
doing business as New Peoples Financial Services which offers investment services through its broker-dealer relationship with Osaic Institutions,
Inc. NPB Insurance Services, Inc. ("NPB Insurance") is a subsidiary of the Bank and generates revenue through the referral
of insurance services.

 The Bank, headquartered
in Honaker, Virginia, offers a range of banking and related financial services focused primarily on serving individuals, small to medium
size businesses, and the professional community. We strive to serve the banking needs of our customers while developing personal, hometown
relationships with them. Our Board of Directors believes that marketing customized banking services enables us to establish a niche in
the financial services marketplace where we do business.

 We provide professionals
and small to medium size businesses in our market area with responsive and technologically enabled banking services. These services include
loans that are priced on a deposit relationship basis, easy access to our decision makers, and quick and innovative action necessary
to meet a customer's banking needs. Our capitalization and lending limit enable us to satisfy the credit needs of a large portion
of the targeted market segment. When a customer needs a loan that exceeds our lending limit, we try to find other financial institutions
to participate in the loan with us.

 Our
History

 The Bank was incorporated
under the laws of the Commonwealth of Virginia on December 9, 1997 and began operations on October 28, 1998. On September 27, 2001, the
shareholders of the Bank approved a plan of reorganization under which they exchanged their shares of Bank common stock for shares of
New Peoples common stock. On November 30, 2001, the reorganization was completed and the Bank became New Peoples' wholly-owned
subsidiary.

 In June 2003, New
Peoples formed two new wholly-owned subsidiaries, NPB Financial Services, Inc. (renamed NPB Insurance Services, Inc. in June 2012) and
NPB Web Services, Inc., an inactive web design and hosting company.

 The Bank, through
its division New Peoples Financial Services, offers fixed and variable annuities, fee-based asset management and other investment products
through a broker/dealer relationship with Osaic Institutions, Inc.

 In
July 2004, NPB Capital Trust I was formed by New Peoples to issue $11.3 million in trust preferred securities.

 In September 2006,
NPB Capital Trust 2 was formed by New Peoples to issue $5.2 million in trust preferred securities.

 On June 7, 2017,
NPB Insurance Services, Inc. purchased a 39% membership interest in Lonesome Pine Title Agency, LLC, which provides title insurance.
Another member of the agency is a related party to the Company.

 Branch
Locations

 As of March 2024,
we have 17 full-service branches located in four states: Virginia - Abingdon, Bluefield, Bristol, Castlewood, Clintwood, Gate City, Grundy,
Haysi, Honaker, Lebanon, Pounding Mill, Tazewell and Wise; West Virginia - Princeton (2); North Carolina – Boone, and Tennessee
– Kingsport.

 Our Market Areas

 Our primary market
area consists of southwestern Virginia, southern West Virginia, northeastern Tennessee, and western North Carolina. Specifically, we
operate in the southwestern Virginia counties of Russell, Scott, Washington, Tazewell, Buchanan, Dickenson, and Wise; in the southern
West Virginia county of Mercer and the northeastern Tennessee county of Sullivan (collectively, the "Tri-State Area"). In
North Carolina, our loan production office in the county of Watauga became a full-service branch in March 2024. The close proximity and
mobile nature of individuals and businesses in adjoining counties and nearby cities in Virginia, West Virginia, Tennessee and North Carolina
place these markets within our Bank's targeted trade area, as well.

 Accessibility to
Interstates I-77, I-81, I-26, I-64, I40 and I-75, as well as major state and U.S. highways including US 19, US 23, US 58, US 460 and
US 421, make the area an ideal location for businesses to serve markets in the Mid-Atlantic, Southeast and Midwest. The area is strategically
located midway between Atlanta-Pittsburgh, Charlotte-Cincinnati, and Richmond-Louisville, and is within a day's drive of more than
half of the U.S. population. A regional airport located in Bristol, Tennessee serves the area with commercial flights to and from major
cities in the United States. Commercial rail service providers include CSX Transportation and Norfolk Southern Railways.

 The Tri-State Area
has a diversified economy supported by natural resources, which include coal, natural gas, limestone, and timber; agriculture; healthcare;
education; technology; manufacturing and services industries. Predominantly, the market is comprised of locally owned and operated small
businesses. Considerable investments in high-technology communications, high-speed broadband network and infrastructure have been made
which has opened the area to large technology companies and future business development potential for new and existing businesses. Businesses
are taking advantage of the low cost of doing business, training opportunities, available workforce and an exceptional quality of life
experience for employers and employees alike.

 Internet Site

 Our internet banking
site can be accessed at www.newpeoples.bank. The site includes a customer service area
that contains branch and Automated Teller Machine ("ATM") locations, product descriptions and current interest rates offered
on deposit accounts. Customers with internet access can apply for credit cards, open deposit accounts online, access account balances,
make transfers between accounts, enter stop payment orders, order checks, and use an optional bill paying service.

 Available Information

 We file annual, quarterly,
and current reports, proxy statements and other information with the Securities and Exchange Commission (the SEC). The SEC maintains
an internet site that contains reports, proxy and information statements and other information regarding issuers, like us, that file
electronically with the SEC. Our SEC filings are filed electronically and are available to the public online at the SEC's web site
at www.sec.gov. We also provide a link to our filings on the SEC website, free of charge,
through our internet website  under "Investor Relations." Information on the websites
of the Company and the Bank is not a part of, and is not incorporated into, this report or any other filings the Company makes with the
SEC.

 Banking
Services

 General. We
accept deposits, make consumer and commercial loans, issue drafts, and provide other services customarily offered by a commercial bank,
such as business and personal checking and savings accounts, walk-up tellers, drive-in windows, and 24-hour ATMs. The Bank is a member
of the Federal Reserve System and its deposits are insured under the Federal Deposit Insurance Act (the FDIA) to the maximum limit.

 Loans. Generally,
we offer a full range of short-, medium- and longer-term commercial, 1-4 family residential mortgages and personal loans. Commercial
loans include both secured and unsecured loans for working capital (including inventory and receivables), business expansion (including
acquisition of real estate and improvements) and purchase of equipment and machinery. Consumer loans may include secured and unsecured
loans for financing automobiles, home improvements, education, personal investments and other purposes.

 Our lending activities
are subject to a variety of lending limits imposed by state law. While differing limits may apply in certain circumstances based on the
type of loan or the nature of the borrower (including the borrower's relationship to the Bank), the Bank generally is subject to
a loans-to-one-borrower limit of an amount equal to 15% of its capital and surplus plus the allowance for credit losses. The Bank voluntarily
may choose to impose a policy limit on loans to a single borrower that is less than the legal lending limit.

 We obtain short-,
medium- and longer-term commercial and personal loans through direct solicitation of business owners and continued business from existing
customers. Completed loan applications are reviewed by our loan officers. As part of the application process, information is obtained
concerning the income, financial condition, employment and credit history of the applicant. If commercial real estate is involved, information
is also obtained concerning cash flow after debt service. Loan quality is analyzed based on the Bank's experience and its credit
underwriting guidelines.

 Commercial Loans.
We make commercial loans to qualified businesses in our market area. Our commercial lending consists primarily of commercial and industrial
loans to finance accounts receivable, inventory, property, plant and equipment. Commercial business loans generally have a higher degree
of risk than residential mortgage loans but have commensurately higher yields. Residential mortgage loans are generally made on the basis
of the borrower's ability to make repayment from employment and other income and are secured by real estate whose value tends to
be easily ascertainable. In contrast, commercial business loans typically are made on the basis of the borrower's ability to make
repayment from cash flow from its business and are secured by business assets, such as commercial real estate, accounts receivable, equipment
and inventory. As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on
the success of the business itself.

 Further, the collateral
for commercial business loans may depreciate over time and cannot be appraised with as much precision as residential real estate. To
manage these risks, our underwriting guidelines generally require us to secure commercial loans with both the assets of the borrowing
business and other additional collateral and guarantees that may be available. In addition, we actively monitor certain measures of the
borrower, including advance rate, cash flow, collateral value and other appropriate credit factors.

 Residential Mortgage
Loans. Our residential mortgage loans consist of residential first and second mortgage loans, residential construction loans, home
equity lines of credit and term loans secured by first and second mortgages on the residences of borrowers for home improvements, education
and other personal expenditures. We make mortgage loans with a variety of terms, including fixed and floating or variable rates and a
variety of maturities.

 Under our underwriting
guidelines, residential mortgage loans are generally made on the basis of the borrower's ability to make repayment from employment
and other income and are secured by real estate whose value tends to be easily ascertainable. These loans are made consistent with our
appraisal policies and real estate lending policies, which detail maximum loan-to-value ratios and maturities.

 Construction Loans.
Construction lending entails significant additional risks compared to residential mortgage lending. Construction loans often involve
larger loan balances concentrated with single borrowers or groups of related borrowers. Construction loans also involve additional risks
attributable to the fact that loan funds are advanced upon the security of property under construction, which is of uncertain value prior
to the completion of construction. Thus, it is more difficult to evaluate the total loan funds required to complete a project and related
loan-to-value ratios accurately. To minimize the risks associated with construction lending, loan-to-value limitations for residential,
multi-family and non-residential construction loans are in place. These are in addition to the usual credit analyses of borrowers. Management
feels that the loan-to-value ratios help to minimize the risk of loss and to compensate for normal fluctuations in the real estate market.
Maturities for construction loans generally range from 4 to 12 months for residential property and from 6 to 18 months for non-residential
and multi-family properties.

 Consumer Loans.
Our consumer loans consist primarily of installment loans to individuals for personal, family and household purposes. The specific types
of consumer loans that we make include home improvement loans, debt consolidation loans and general consumer lending. Consumer loans
entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured, such as lines of
credit, or secured by rapidly depreciating assets such as automobiles. In such cases, any repossessed collateral for a defaulted consumer
loan may not provide an adequate source of repayment of the outstanding loan balance due to the greater likelihood of damage, loss or
depreciation. The remaining deficiency often does not warrant further substantial collection efforts against the borrower. In addition,
consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely
affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including
federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. A borrower may also be able
to assert against the Bank as an assignee any claims and defenses that it has against the seller of the underlying collateral.

 Our underwriting
policy for consumer loans seeks to limit risk and minimize losses, primarily through a careful analysis of the borrower's creditworthiness.
In evaluating consumer loans, we require our lending officers to review the borrower's level and stability of income, past credit
history and the impact of these factors on the ability of the borrower to repay the loan in a timely manner. In addition, we maintain
an appropriate margin between the loan amount and collateral value.

 Deposits.
We offer a variety of deposit products for both individual and business customers. These include demand deposit, interest-bearing demand
deposit, savings deposit, money market, health savings and individual retirement (IRA) deposit accounts. In addition, we offer certificates
of deposit with terms ranging from 7 days to 60 months, including IRAs with terms ranging from 12 months to 60 months.

 Investment Services.
 We offer a variety of investment services for both individual and business customers. These services include fixed income products,
variable annuities, mutual funds, indexed certificates of deposit, individual retirement accounts, long term care insurance, employee
group benefit plans, college savings plans, financial planning, managed money accounts, and estate planning. We offer these services
through our broker-dealer relationship with Osaic Institutions, Inc.

 Other Bank Services.
Other bank services include safe deposit boxes, cashier's checks, certain cash management services, direct deposit of payroll and
social security checks and automatic drafts for various accounts. We offer ATM and debit card services that can be used by our customers
throughout our service area and other regions. We also offer consumer and commercial VISA credit card services. Electronic banking services
include debit cards, internet banking, telephone banking, mobile banking, remote deposit capture, merchant transaction processing and
wire transfers.

 We do not presently
anticipate obtaining trust powers, but we are able to provide similar services through our affiliation with Osaic Institutions, Inc.
Additionally, we offer programs of differentiator presentations focusing on such issues as financial literacy and elder abuse. We believe
that these types of programs assist our local communities and highlight the skills of our financial service providers.

 Competition

 The financial services
business is highly competitive. We compete as a financial intermediary with other commercial banks, credit unions, mortgage banking firms,
consumer finance companies, securities brokerage firms, insurance companies, money market mutual funds and other financial institutions
operating in the southwestern Virginia, southern West Virginia, eastern Tennessee, and western North Carolina market areas and elsewhere,
including online financial services providers. Our market area is a highly competitive, highly branched banking market.

 Competition in the
market area for loans to small businesses and professionals, the Bank's target market, is intense, and pricing is important. Many
of our larger competitors have substantially greater resources and lending limits than we have. They offer certain services, such as
extensive and established branch networks and trust services, that we do not provide or do not expect to provide in the near future.
Moreover, larger institutions operating in the market area have access to borrowed funds at lower costs than are available to us. Deposit
competition among institutions in our market area is strong, resulting in the possibility of our paying above-market rates to attract
or retain deposits. As the pandemic waned, funds received into our customers' deposit accounts from PPP loans and stimulus payments
were drawn down. This decreased customer liquidity, combined with increased interest rates, has resulted in increased competition for
deposits.

 While pricing is
important, our principal method of countering the competition is service. As a community banking organization, we strive to serve the
banking needs of our customers while developing personal, hometown relationships with them. Additionally, we continue to add and enhance
digital banking services. As a result, we provide a significant amount of service and a range of products through multiple channels at
reasonable fees.

 According to a market share report prepared
by the Federal Deposit Insurance Corporation (the "FDIC"), as of June 30, 2023, the most recent date for which market share
information is available, the Bank's deposits as a percentage of total deposits in its major market areas were as follows:

 County
 or City

 %
 of Market

 Dickenson

 41.27%

 Scott

 32.95%

 Russell

 21.32%

 Buchanan

 13.20%

 Tazewell

 9.04%

 Wise

 8.72%

 Washington

 7.64%

 Mercer
 County, WV

 5.65%

 City
 of Kingsport, TN

 1.20%

 Employees

2023, we had 183 full-time equivalent employees. None of our employees are covered by a collective bargaining agreement, and we consider
relations with employees to be excellent.

 Supervision and Regulation

 General. As
a financial holding company, we are subject to regulation under the Bank Holding Company Act of 1956, as amended ("BHCA"),
and the examination and reporting requirements of the Federal Reserve. We are also subject to the provisions of the Code of Virginia
governing bank holding companies. As a state-chartered commercial bank, the Bank is subject to regulation, supervision and examination
by the Virginia State Corporation Commission's Bureau of Financial Institutions ("BFI"). As a member of the Federal
Reserve System, the Bank is also subject to regulation, supervision and examination by the Federal Reserve. Other federal and state laws,
including various consumer protection and compliance laws, also govern the activities of the Bank.

 The following description
summarizes the most significant federal and state laws applicable to New Peoples and its subsidiaries. To the extent that statutory or
regulatory provisions are described, the description is qualified in its entirety by reference to that particular statutory or regulatory
provision.

 The Bank Holding
Company Act. Under the BHCA, the Federal Reserve examines New Peoples periodically. New Peoples is also required to file periodic
reports and provide any additional information that the Federal Reserve may require. Activities at the bank holding company level are
generally limited to:

 •

 banking, managing or controlling banks;

 •

 engaging in other activities that the Federal Reserve
 has determined by regulation or order to be so closely related to banking as to be a proper incident to these activities.

 •

 furnishing services to or performing services for its
 subsidiaries; and

 Thus, the activities
we can engage in are restricted as a matter of law.

 With some limited
exceptions, the BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve before:

 •

 acquiring substantially all the assets of any bank;

 •

 acquiring direct or indirect ownership or control
 of any voting shares of any bank if after such acquisition it would own or control more than 5% of the voting shares of
 such bank (unless it already owns or controls the majority of such shares); or

 •

 merging or consolidating with another bank holding company.

 As a result, our
ability to engage in certain strategic activities is conditioned on regulatory approval.

 In addition, and
subject to some exceptions, the BHCA and the Change in Bank Control Act require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company as defined in the statutes and regulations. These requirements make it more
difficult for control of our company to change or for us to acquire substantial investments.

 Financial Holding
Company. As of March 4, 2016, the Company elected to become qualified as a financial holding company (FHC). The Gramm-Leach-Bliley
Act (GLBA) created this category of bank holding companies. FHC's may directly or indirectly through subsidiaries engage in financial
activities and activities "incidental" or "complementary" to financial activities. Generally, an FHC need not
give prior notice of such activities but must notify the Federal Reserve within 30 days after an event.

 The BHCA provides
a long list of "financial" activities that may be engaged in by FHCs such as underwriting, brokering or selling insurance;
providing financial or investment advice or underwriting, dealing in or making a market in securities.

 There are other potential
"financial" activities in which the Federal Reserve is permitted to designate as permitted financial or incidental to financial
activities.

 We do not currently
undertake activities specifically permitted to us as an FHC that are not otherwise permissible for bank holding companies not qualified
as FHCs.

 Bureau of Financial
Institutions. As a bank holding company registered with BFI, we must provide the BFI with information concerning our financial condition,
operations and management, among other reports required by the BFI. New Peoples is also examined by the BFI in addition to its Federal
Reserve examinations. Similar to the BHCA, the Code of Virginia requires that the BFI approve the acquisition of direct or indirect ownership
or control of more than 5% of the voting shares of any Virginia bank or bank holding company like us.

 Payment of Dividends.
 New Peoples is a separate legal entity that derives the majority of its revenues from the earnings of, and dividends paid to it
by, its subsidiaries. The Bank is subject to laws and regulations that limit the amount of dividends it can pay. In addition, both New
Peoples and the Bank are subject to various regulatory restrictions relating to the payment of dividends, including requirements to maintain
capital at or above regulatory minimums. Banking regulators have indicated that banking organizations should generally pay dividends
only if the organization's net income available to common shareholders over the past year has been sufficient to fully fund the
dividends and the prospective rate of earnings retention appears consistent with the organization's capital needs, asset quality
and overall financial condition. The FDIC has the general authority to limit the dividends paid by FDIC insured banks if the FDIC deems
the payment to be an unsafe and unsound practice. The FDIC has indicated that paying dividends that deplete a bank's capital base
to an inadequate level would be an unsound and unsafe banking practice.

 Capital Adequacy.
 The federal banking regulators have issued substantially similar capital requirements applicable to all banks and bank holding companies.
In addition, those regulators may from time to time require that a banking organization maintain capital above the minimum levels because
of its financial condition or actual or anticipated growth.

 The Company meets
the eligibility criteria to be considered a small bank holding company in accordance with the Federal Reserve's Small Bank Holding
Company Policy Statement issued in February 2015 and does not report consolidated regulatory capital. With respect to the Bank, the "prompt
corrective action" regulations pursuant to Section 38 of the FDIA are set forth in the following table:

 Total
 Risk

 Tier
 1 Risk

 CET1
 Risk

 Based

 Based

 Based

 Leverage

 Ratio

 Ratio

 Ratio

 Ratio

 Well
 Capitalized

 10.00%

 8.00%

 6.50%

 5.00%

 Adequately
 Capitalized

 8.00%

 6.00%

 4.50%

 4.00%

 Undercapitalized

 <
 8.00%

 <
 6.00%

 <
 4.50%

 <
 4.00%

 Significantly
 Undercapitalized

 <
 6.00%

 <
 4.00%

 <
 3.00%

 <
 3.00%

 Critically
 Undercapitalized

 Tangible
 equity to total assets 2.00%

 The FDIA requires
the federal banking regulators to take "prompt corrective action" if a depository institution does not meet minimum capital
requirements as set forth above. Generally, a receiver or conservator for a bank that is "critically undercapitalized" must
be appointed within specific time frames. The regulations also provide that a capital restoration plan must be filed within 45 days of
the date a bank is deemed to have received notice that it is "undercapitalized," "significantly undercapitalized"
or "critically undercapitalized." Any holding company for a bank required to submit a capital restoration plan must guarantee
the lesser of (i) an amount equal to 5% of the bank's assets at the time it was notified or deemed to be undercapitalized by a
regulator, or (ii) the amount necessary to restore the bank to adequately capitalized status. This guarantee remains in place until the
bank is notified that it has maintained adequately capitalized status for specified time periods. Additional measures with respect to
undercapitalized institutions include a prohibition on capital distributions, growth limits and restrictions on activities.

 The Bank is also
subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 (the Dodd-Frank Act). The final rules established minimum capital ratios plus a "capital conservation
buffer" designed to absorb losses during periods of

 economic stress.
The final provisions for banks with $250.0 billion or less in total assets, such as the Bank, are set forth in the following table:

 Leverage Ratio

 4.00%

 CET1 Risk Based Capital Ratio

 4.50%

 Conservation Buffer (1)

 2.50%

 CET1 Risk Based Capital Ratio with Capital Conservation Buffer

 7.00%

 Tier 1 Risk Based Capital Ratio

 6.00%

 Tier 1 Risk Based Capital Ratio with Capital Conservation Buffer

 8.50%

 Total Risk Based Capital Ratio

 8.00%

 Total Risk Based Capital Ratio with Capital Conservation Buffer

 10.50%

 (1)
 The
 capital conservation buffer must be maintained in order for a banking organization to avoid
 being subject to limitations on capital distributions, including dividend payments, and discretionary
 bonus payments to executive officers.

 The final rules include
comprehensive guidance with respect to the measurement of risk-weighted assets. For residential mortgages, Basel III retains the
risk-weights contained in the prior capital rules, which assign a risk-weight of 50% to most first-lien exposures and 100% to other residential
mortgage exposures. The final rule increased the risk-weights associated with certain on-balance sheet assets, such as high volatility
commercial real estate loans, and loans that are more than 90 days past due or in nonaccrual status. Capital requirements also increased
for certain off-balance sheet exposures including, for example, loan commitments with an original maturity of one year or less.

 Under the final rules,
certain banking organizations, including the Company and the Bank, were permitted to make a one-time election to continue the prior treatment
of excluding from regulatory capital most accumulated other comprehensive income ("AOCI") components, including amounts relating
to unrealized gains and losses on available-for-sale debt securities and amounts attributable to defined benefit post-retirement plans.
Institutions that elected to exclude most AOCI components from regulatory capital under Basel III will be able to avoid volatility that
would otherwise be caused by things such as the impact of fluctuations in interest rates on the fair value of available-for-sale debt
securities. The Company and the Bank elected to exclude AOCI components from regulatory capital under Basel III.

 Failure to meet capital
guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit
insurance by the FDIC, a prohibition on taking brokered deposits and certain other restrictions on its business. As described below,
the FDIC can impose substantial additional restrictions upon FDIC-insured depository institutions that fail to meet applicable capital
requirements as set forth above.

 On September 17,
2019, the federal banking regulators jointly issued a final rule required by the Economic Growth, Regulatory Reform and Consumer Protection
Act ("EGRRCPA") that permits qualifying banks and bank holding companies that have less than $10.0 billion in consolidated
assets, such as New Peoples and the Bank, to elect to be subject to a 9.00% leverage ratio that would be applied using less complex leverage
calculations (commonly referred to as the community bank leverage ratio or "CBLR"). Under the rule, which became effective
on January 1, 2020, banks and bank holding companies that opt into the CBLR framework and maintain a CBLR of greater than 9.00% are not
subject to other risk-based and leverage capital requirements under the Basel III rules and would be deemed to have met the well capitalized
ratio requirements under the "prompt corrective action" framework.

 For further detail
on capital and capital ratios, see discussion contained in Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," sections "Capital Resources" and "Liquidity," and in Item 8, "Financial
Statements and Supplementary Data," "Consolidated Financial Statements and Notes," Note 22, "Capital."

 Other Safety and
Soundness Regulations. There are a number of obligations and restrictions imposed on banks and financial or bank holding companies
and their bank subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors
of such depository institutions and to the FDIC insurance funds in the event that the depository institution is insolvent or is in danger
of becoming insolvent. For example, the Federal Reserve requires a bank or financial or bank holding company to serve as a source of
financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where
it might not do so otherwise. These requirements can restrict the ability of bank holding companies to deploy their capital as they otherwise
might.

 Interstate Banking
and Branching. Banks in Virginia may branch without geographic restriction. Current federal law authorizes interstate acquisitions
of banks and bank holding companies without geographic limitation. Bank holding companies may acquire banks in any state without regard
to state law except for state laws requiring a minimum time a bank must be in existence to be acquired. The Code of Virginia generally
permits out of state bank holding companies or banks to acquire Virginia banks or bank holding companies subject to regulatory approval.
These laws have the effect of increasing competition in banking markets.

 Monetary Policy.
 The commercial banking business is affected not only by general economic conditions but also by the monetary policies of the Federal
Reserve. The Federal Reserve's monetary policies have had a significant effect on the operating results of commercial banks in
the past and are expected to continue to do so in the future. In view of unsettled conditions in the national and international political
environment, economy and money markets, as well as governmental fiscal and monetary policies, their impact on interest rates, deposit
levels, loan demand or the business and earnings of the Bank is unpredictable.

 Federal Reserve
System. Depository institutions that maintain transaction accounts or nonpersonal time deposits are subject to reserve requirements.
These reserve requirements are subject to adjustment by the Federal Reserve. Because required reserves must be maintained in the form
of vault cash or in a noninterest-bearing account at, or on behalf of, a Federal Reserve Bank, the effect of the reserve requirement
is to reduce the amount of the institution's interest-earning assets.

 Transactions with
Affiliates. Transactions between banks and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act. These
provisions restrict the amount of, and provide conditions with respect to, loans, investments, transfers of assets and other transactions
between New Peoples and the Bank.

 Loans to Insiders.
 The Bank is subject to rules on the amount, terms and risks associated with loans to executive officers, directors, principal shareholders
and their related interests.

 Community Reinvestment
Act. Under the Community Reinvestment Act, depository institutions have an affirmative obligation to assist in meeting the credit
needs of their market areas, including low and moderate-income areas, consistent with safe and sound banking practices. The Community
Reinvestment Act emphasizes the delivery of bank products and services through branch locations in a bank's market areas and requires
banks to keep data reflecting their efforts to assist in its community's credit needs. Depository institutions are periodically
examined for compliance with the Community Reinvestment Act and are assigned ratings in this regard. Banking regulators consider a depository
institution's Community Reinvestment Act rating when reviewing applications to establish new branches, undertake new lines of business,
and/or acquire part or all of another depository institution. An unsatisfactory rating can significantly delay or even prohibit regulatory
approval of a proposed transaction by a bank holding company or its depository institution subsidiaries. A bank holding company will
not be permitted to become a financial holding company and no new activities authorized under the GLBA (see below) may be commenced by
a holding company or by a bank financial subsidiary if any of its bank subsidiaries received less than a "Satisfactory" rating
in its latest Community Reinvestment Act examination. The Bank received a rating of "Satisfactory" at its last Community
Reinvestment Act performance evaluation, as of August 1, 2022.

 In October 2023,
the federal bank regulatory agencies jointly issued a final rule intended to strengthen and modernize the CRA regulatory framework. When
implemented, the rule would, among other things, (i) expand access to credit, investment and basic banking services in low- and moderate-income
communities, (ii) adapt to changes in the banking industry, including internet and mobile banking, (iii) provide greater clarity, consistency
and transparency in the application of the regulations and (iv) tailor performance standards to account for differences in bank size,
business model, and local conditions. Most of the final rule's new requirements are applicable beginning January 1, 2026. The remaining
new requirements, including data reporting requirements, are applicable on January 1, 2027.

 Gramm-Leach-Bliley
Act of 1999. The GLBA covers a broad range of issues, including a repeal of most of the restrictions on affiliations among depository
institutions, securities firms and insurance companies. For example, the GLBA permits unrestricted affiliations between banks and securities
firms. It also permits bank holding companies to elect to become FHCs, which can engage in a broad range of financial services as described
above. In order to become an FHC, a bank holding company and all of its affiliated depository institutions must be well-capitalized,
well-managed and have at least a satisfactory Community Reinvestment Act rating. On March 4, 2016 the Federal Reserve Bank of Richmond
approved New Peoples' election to become an FHC.

 The GLBA also provides
that the states continue to have the authority to regulate insurance activities, but prohibits the states, in most instances, from preventing
or significantly interfering with the ability of a bank, directly or through an affiliate, to engage in insurance sales, solicitations
or cross-marketing activities.

 Anti-Money Laundering
Legislation. New Peoples is subject to the Bank Secrecy Act and other anti-money laundering laws and regulations, including the Money
Laundering Control Act of 1986, the USA PATRIOT Act of 2001, and the Anti-Money Laundering Act of 2020. Among other things, these laws
and regulations require New Peoples to take steps to prevent the use of New Peoples for facilitating the flow of illegal or illicit money,
to report large currency transactions, and to file suspicious activity reports. The Company is also required to carry out a comprehensive
anti-money laundering compliance program. Violations can result in substantial civil and criminal sanctions. In addition, provisions
of the USA Patriot Act require the federal bank regulatory agencies to consider the effectiveness of a financial institution's
anti-money laundering activities when reviewing bank mergers and bank holding company acquisitions.

 Privacy and Fair
Credit Reporting. Financial institutions, such as the Bank, are required to disclose their privacy policies to customers and consumers
and require that such customers or consumers be given a choice (through an opt-out notice) to forbid the sharing of nonpublic personal
information about them with nonaffiliated third persons. The Bank also requires business partners with whom it shares such information
to assure the Bank that they have adequate security safeguards and to abide by the redisclosure and reuse provisions of applicable law.
In addition to adopting federal requirements regarding privacy, individual states are authorized to enact more stringent laws relating
to the use of customer information. The Virginia Consumer Data Protection Act, passed in 2021, became effective January 1, 2023. These
privacy laws create compliance obligations and potential liability for the Bank.

 Mortgage Banking
Regulation. The Bank is subject to rules and regulations related to mortgage loans that, among other things, establish standards
for loan origination, prohibit discrimination, provide for inspections and appraisals of property, require credit reports on prospective
borrowers, in some cases restrict certain loan features and fix maximum interest rates and fees, require the disclosure of certain basic
information to mortgagors concerning credit and settlement costs, limit payment for settlement services to the reasonable value of the
services rendered and require the maintenance and disclosure of information regarding the disposition of mortgage applications based
on race, gender, geographical distribution and income level. The Bank is also subject to rules and regulations that require the collection
and reporting of significant amounts of information with respect to mortgage loans and borrowers. The Bank's mortgage origination
activities are subject to the Federal Reserve's Regulation Z, which implements the Truth in Lending Act. Certain provisions of
Regulation Z require creditors to make a reasonable and good faith determination based on verified and documented information that a
consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms. To the extent that we make mortgage
loans, we are required to comply with these rules, subject to available exceptions.

 Sarbanes-Oxley
Act. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") is intended to increase corporate responsibility, provide
enhanced penalties for accounting and auditing improprieties by publicly traded companies and to protect investors by improving the accuracy
and reliability of corporate disclosures made pursuant to the securities law. The changes required by the Sarbanes-Oxley Act and its
implementing regulations are intended to allow shareholders to monitor the performance of companies and their directors more easily and
effectively.

 The Sarbanes-Oxley
Act generally applies to all domestic companies, such as New Peoples, that file periodic reports with the SEC under the Securities Exchange
Act of 1934, as amended. The Sarbanes-Oxley Act includes significant additional disclosure requirements and expanded corporate governance
rules and the SEC has adopted extensive additional disclosures, corporate governance provisions and other related rules pursuant to it.
New Peoples has expended, and will continue to expend, considerable time and money in complying with the Sarbanes-Oxley Act.

 Federal Deposit
Insurance Corporation. The Bank's deposits are insured by the Deposit Insurance Fund, as administered by the FDIC, to the maximum
amount permitted by law, which is $250,000 per depositor. The FDIC uses a "financial ratios method" based on "CAMELS"
composite ratings to determine deposit insurance assessment rates for small established institutions with less than $10 billion
in assets, such as the Bank. The CAMELS rating system is a supervisory rating system designed to take into account and reflect all financial
and operational risks that a bank may face, including capital adequacy, asset quality, management capability, earnings, liquidity and
sensitivity to market risk ("CAMELS"). CAMELS composite ratings set a maximum assessment for banks rated CAMELS 1 and 2 and
set minimum assessments for lower rated institutions. Effective for the first quarterly assessment period of 2023 the FDIC increased
the deposit insurance assessment by 2 basis points for all insured institutions. In 2023 and 2022, the Company recorded expense of $360,000
and $217,000, respectively, for FDIC insurance premiums.

 Dodd-Frank Wall
Street Reform and Consumer Protection Act. The Dodd-Frank Act was signed into law on July 21, 2010. Its wide-ranging provisions affect
all federal financial regulatory agencies and nearly every aspect of the American financial services industry. Among the provisions of
the Dodd-Frank Act that directly impacted the Company was the creation of an independent Consumer Financial Protection Bureau ("CFPB"),
which has the ability to write rules for consumer protections governing all financial institutions. All consumer protection responsibility
formerly handled by other banking regulators is consolidated in the CFPB. It also oversees the enforcement of all federal laws intended
to ensure fair access to credit. Smaller financial institutions, such as the Company and the Bank, continued to be examined primarily
by their primary regulators.

 The Dodd-Frank Act
contains provisions designed to reform mortgage lending, which includes the requirement of additional disclosures for consumer mortgages.
The EGRRCPA modified a number of these requirements, including, for smaller institutions (under $10 billion in total assets) that qualify,
a safe harbor for compliance with the "ability to pay" requirements for consumer mortgage loans. The CFPB has implemented
mortgage lending regulations to carry out its mandate. In addition, the Federal Reserve has issued rules limiting the fees charged to
merchants by credit card companies for debit card transactions. The result of these rules is to limit the amount of interchange fee income
available explicitly to larger banks and indirectly to us. The Dodd-Frank Act also contains provisions that affect corporate governance
and executive compensation.

 The Dodd-Frank Act
has had, and may in the future have, a material impact on New Peoples' operations, particularly through increased compliance costs
resulting from new and possible future consumer and fair lending regulations. Any future changes resulting from the Dodd-Frank Act may
affect the profitability of business activities, require changes to certain business practices, impose more stringent regulatory requirements
or otherwise adversely affect the business and financial condition of New Peoples and the Bank. These changes may also require New Peoples
to invest significant management attention and resources to evaluate and make necessary changes to comply with new statutory and regulatory
requirements.

 The Economic Growth,
Regulatory Reform and Consumer Protection Act of 2018. The EGRRCPA, which became effective in May 2018, amended provisions of the
Dodd-Frank Act and other statutes administered by banking regulators. Among these amendments are provisions exempting insured depository
institutions (and their parent companies) with less than $10 billion in consolidated assets and meeting certain other asset and liabilities
trading tests from the Volker Rule, which prohibits banks from conducting certain investment activities with their own accounts. The
EGRRCPA required the regulators to promulgate rules establishing the new CBLR, as described above. The EGRRCPA increased the asset threshold
from $1 billion to $3 billion for financial institutions to qualify for a less burdensome 18-month on-site examination schedule. The
EGRRCPA made numerous other changes in regulatory requirements based on the size and complexity of financial institutions, particularly
benefiting smaller institutions like the Company.

 Cybersecurity.
 Federal regulators expect that financial institutions design multiple layers of security controls to establish lines of defense and
to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures
to reliably authenticate customers accessing internet-based services of the financial institution. Additionally, a financial institution's
management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption and maintenance
of the institution's operations after a cyber-attack involving destructive malware. A financial institution is expected to maintain
appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data
if the institution or any of its critical service providers fall victim to this type of cyber-attack. If the Company fails to observe
the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.

 Federal bank regulators
issued a joint rule, effective in 2022, establishing computer-security incident notification requirements for banking organizations and
their bank service providers. The rule requires a banking organization to notify its primary federal regulator of any significant computer-security
incident as soon as possible and no later than 36 hours after the banking organization determines that a cyber incident has occurred.
In addition, the final rule requires a bank service provider to notify affected banking organization customers as soon as possible when
the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to
materially affect banking organization customers for four or more hours. The rule defines computer-security incident as an occurrence
that results in actual harm to the confidentiality, integrity, or availability of an information system or the information that the system
processes, stores, or transmits. For additional disclosure related to Cybersecurity, refer to Item 1.C "Cybersecurity."

 Limitations on
Incentive Compensation. The federal bank regulatory agencies have issued comprehensive final guidance on incentive compensation policies
intended to ensure that the incentive compensation policies of financial institutions do not undermine the safety and soundness of such
institutions by encouraging excessive risk-taking. The Interagency Guidance on Sound Incentive Compensation Policies, which covers all
employees that have the ability to materially affect the risk profile of financial institutions, either individually or as part of a
group, is based upon the key principles that a financial institution's incentive compensation arrangements should (i) provide incentives
that do not encourage risk-taking beyond the institution's ability to effectively identify and manage risks, (ii) be compatible
with effective internal controls and risk management, and (iii) be supported by strong corporate governance, including active and effective
oversight by the financial institution's board of directors.

 The Federal Reserve
will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial institutions,
such as the Company and the Bank, that are not "large, complex banking organizations." These reviews will be tailored to
each financial institution based on the scope and complexity of the institution's activities and the prevalence of incentive compensation
arrangements. The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated
into the institution's supervisory ratings, which can affect the institution's ability to make acquisitions and take other
actions. Enforcement actions may be taken against a financial institution if its incentive compensation arrangements or related risk-management
control or governance processes pose a risk to the institution's safety and soundness, and the financial institution is not taking
prompt and effective measures to correct the deficiencies. As of December 31, 2023, the Company and the Bank have not been made aware
of any instances of noncompliance with this guidance.

 Other Laws. Banks
and other depository institutions also are subject to other numerous consumer-oriented laws and regulations. These laws, which include
the Truth in Lending Act, the Truth in Savings Act, the Real Estate Settlement Procedures Act, the Electronic Funds Transfer Act, the
Equal Credit Opportunity Act, the Fair and Accurate Credit Transactions Act of 2003 and the Fair Housing Act, require compliance by depository
institutions with various disclosure and consumer information handling requirements. These and other similar laws result in significant
costs and create potential liability for financial institutions, including the imposition of regulatory penalties for inadequate compliance.

 Future Regulatory
Uncertainty. Because federal and state regulation of financial institutions changes regularly and is the subject of constant legislative
debate, New Peoples cannot forecast how regulation of financial institutions may change in the future and impact its operations. New
Peoples fully expects that the financial institution industry will remain heavily regulated notwithstanding the regulatory relief that
has been recently adopted.

 Item 1A.
 Risk
 Factors

 Not required.

 Item 1B.
 Unresolved
 Staff Comments

 Not applicable.

 Item 1C.
 Cybersecurity

 The
Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, requires certain covered entities to report a covered
incident to the U.S. Department of Homeland Security's Cybersecurity & Infrastructure Security Agency ("CISA") within 72
hours after a covered entity reasonably believes an incident has occurred. Separate reporting to CISA will also be required within 24
hours if a ransom payment is made as a result of a ransomware attack.

 The
SEC adopted a new rule on Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure by Public Companies in 2023, which
applies to all public companies subject to the reporting requirements of the Securities Exchange Act of 1934 and requires disclosure
of material cybersecurity incidents in Current Reports on Form 8-K and periodic disclosure of cybersecurity risk management, strategy,
and governance in Annual Reports on Form 10-K.

 State
regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations and many states have
recently implemented or modified their data breach notification and data privacy requirements. The Company expects this trend of state-level
cybersecurity regulatory activity to continue and continues to monitor these developments.

 Our
risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including financial,
operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance
on technology and potential cyber threats. Our Information Security Officer is primarily responsible for this cybersecurity component
and is a key member of the risk management organization, coordinating with our Chief Risk Officer with board oversight through our Information
Technology Steering Committee and the Audit Risk and Compliance Committee.

 We
maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents,
including timely notification of and escalation to the appropriate Board-approved management committees, and to the Information Technology
Steering Committee. The Incident Response Plan is coordinated through the Information Security Officer and key members of management
are embedded into the Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of our organization
and is evaluated at least annually.

 In
the ordinary course of its business, the Bank relies on electronic communications and information systems to conduct its operations and
to store sensitive data and employs a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious
activity, as well as to report on any suspected advanced persistent threats. Notwithstanding these defensive measures, the threat from
cybersecurity attacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive
measures. Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced
cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected our company. The Bank's
systems and those of its customers and third-party service providers are under constant threat and it is possible that we could experience
a future significant event. The Bank expects risks and exposures related to cybersecurity attacks to remain high for the foreseeable
future.

 Item
 2.
 Properties

2023, the Company's net investment in premises and equipment was $18.3 million. Our main office and operations center are in Honaker,
Virginia, which includes a full-service branch, and a separate administration and operations center.

 The Bank owns 13
of its 17 full-service branch offices, including its headquarters office. In addition to the headquarters in Honaker, Virginia we own
or lease branch offices located in Virginia, West Virginia, Tennessee, and a loan production office in North Carolina. Additionally,
the Bank owns an operations building housing its network and other support operations. The Bank owns one former branch office that was
closed in 2022. The former ITM network and call center facility, that was closed in 2021, was sold in March 2023, as was a former branch
office in Big Stone Gap, Virginia. A warehouse facility in Honaker, Virginia, was sold in 2023. Our loan production office operates from
a building in Boone, North Carolina under a lease executed in June 2023. In December 2023, we executed a lease for a full-service branch
office in Boone, North Carolina. This office commenced operations in March 2024. With the opening of this facility, we will not continue
the lease for the loan origination office when it expires in June 2024. In February 2024, we closed one Bristol, Virginia branch and
transferred the accounts to our branch located in the business district of the city. We continue to maintain the closed branch as an
administrative office.

 A former branch office
located in Jonesborough, Tennessee was used as a hub for meeting with prospective loan customers but is currently offered for sale.

 Two closed branch
locations, Big Stone Gap, Virginia and Chilhowie, Virginia, continue to offer ATM services.

 We continue to assess
our branch network as we look to improve the efficiency of our branch operations while seeking to increase market share.

 We believe that all
of our properties are maintained in good operating condition and are suitable and adequate for our operational needs.

 Item
 3.
 Legal
 Proceedings

 In
the normal course of operations, we may become a party to legal proceedings, as discussed in Note 21 Legal Contingencies to the consolidated
financial statements contained in Item 8 of this form 10-K.

 Item
 4.
 Mine
 Safety Disclosures

 Not applicable.

 Item 5.
 Market
 for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
 Equity Securities

 (a)
Market Information

 Computershare Investor
Services is the stock transfer agent for New Peoples Bankshares, Inc. The common stock of New Peoples is quoted on the OTC Market's
Pink Open Market under the symbol "NWPP". The volume of trading of shares of common stock is very limited. Trades in our
common stock occur sporadically on a local basis and typically in small volumes. Over-the-Counter market quotations reflect inter-dealer
prices without retail mark up, mark down or commissions and may not necessarily represent actual transactions.

 The most recent sales
price of which management is aware was $2.50 per share on March 13, 2024.

 (b)
Holders

 On March 27, 2024,
there were approximately 3,956 shareholders of record.

 (c) Dividends

 Any declaration of
dividends in the future will depend on our earnings, capital requirements, growth strategies, and compliance with regulatory mandates,
principally at the Bank level, since the Company's primary source of income is dividends paid by the Bank. The Company paid a dividend
of $0.06 per share in 2023. On February 26, 2024, the Company declared a dividend of $0.07 per share, payable March 29, 2024.

 We are subject to
certain dividend restrictions and capital requirements imposed by the Federal Reserve Bank as well as Virginia statutes and regulations.
See Note 16, Dividend Limitations on Subsidiary Bank, and Note 22, Capital, to the consolidated financial statements contained in Item
8 of this Form 10-K.

 The Company extended
the stock repurchase program initiated in 2022 that authorizes the repurchase of up to 500,000 of the Company's common shares through
March 31, 2024. Repurchases may be made through open market purchases or in privately negotiated transactions. Shares repurchased will
be returned to the status of authorized and unissued shares of common stock. The actual means and timing of any purchases, number of
shares and prices or range of prices will be determined by the Company.

 Shares of the Company's
common stock were repurchased during the three months ended December 31, 2023, as detailed below. Under the terms of the stock repurchase
program, the Company has the remaining authority to repurchase up to 323,814 shares of common stock. On February 26, 2024, the Board
of Directors approved an extension of the repurchase program through March 31, 2025.

 Period
 Beginning on First Day of Month Ended

 Total
 Number of Shares Purchased

 Price Paid Per Share

 Total
 Number of Shares Purchased as Part of Publicly Announced Plans or Programs

 Maximum
 Number of Shares That May Yet Be Purchased Under Plans or Programs

 October

 11,406

 $

 2.38

 11,406

 349,612

 November
 30, 2023

 6,661

 $

 2.40

 6,661

 342,951

 19,137

 $

 2.45

 19,137

 323,814

 Total

 37,204

 $

 2.42

 37,204

 Item
 6.
 [Reserved]

 Not applicable.

 Item
 7.
 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 Caution About Forward Looking Statements

 We make forward looking
statements in this annual report on Form 10-K that are subject to risks and uncertainties. These forward-looking statements include statements
regarding expectations, intentions, projections and beliefs concerning our profitability, liquidity, and allowance for credit losses,
interest rate sensitivity, market risk, growth strategy, and financial and other goals. 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 on various factors and were derived using numerous assumptions as of the date of this Form
10-K and are subject to significant risks.

 Important
factors that may cause actual results to differ from projections include:

 the success
or failure of our efforts to implement our business plan;

 any required
increase in our regulatory capital ratios;

 satisfying
other regulatory requirements that may arise from examinations, changes in the law and other similar factors;

 deterioration
of asset quality;

 changes in
the level of our nonperforming assets and charge-offs;

 fluctuations
of real estate values in our markets;

 our ability
to attract and retain talent;

 demographical
changes in our markets which negatively impact the local economy;

 the uncertain
outcome of current or future legislation or regulations or policies of state and federal regulators;

 the successful
management of interest rate risk;

 the successful
management of liquidity;

 changes in
general economic and business conditions in our market area and the United States in general;

 credit risks
inherent in making loans such as changes in a borrower's ability to repay and our management of such risks;

 competition
with other banks and financial institutions, and companies outside of the banking industry, including online lenders and those companies
that have substantially greater access to capital and other resources;

 demand, development
and acceptance of new products and services we have offered or may offer;

 deposit flows
and competition for deposits;

 the effects
of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve, inflation,
interest rate, market and monetary fluctuations;

 the occurrence
of significant natural disasters, including severe weather conditions, floods, health related issues and other catastrophic events;

 geopolitical
conditions, including acts or threats of terrorism, international hostilities, or actions taken by the U.S. or other governments in response
to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the U.S. and abroad;

 technology
utilized by us;

 our ability
to successfully manage cybersecurity;

 our reliance
on third-party vendors and correspondent banks;

 changes in
generally accepted accounting principles;

 changes in
governmental regulations, tax rates and similar matters; and,

 other risks,
which may be described, from time to time, in our filings with the SEC.

 Because of these
uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
In addition, our past results of operations do not necessarily indicate our future results. We expressly disclaim any obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 General

 The following commentary
discusses major components of our business and presents an overview of our consolidated financial position as of December 31, 2023 and
2022, as well as results of operations for the years ended December 31, 2023 and 2022. This discussion should be reviewed in conjunction
with the consolidated financial statements and accompanying notes and other statistical information presented elsewhere in this Form
10-K.

 New Peoples generates
a significant amount of its income from the net interest income earned by the Bank. Net interest income is the difference between interest
income and interest expense. Interest income depends on the volume of interest-earning assets outstanding during the period and the interest
rates earned thereon. The Bank's interest expense is a function of the average amount of interest-bearing deposits and borrowed money
outstanding during the period and the interest rates paid thereon. The quality of the assets further influences the amount of interest
income lost on nonaccruing loans and the amount of provision expense added to the allowance for credit losses. The Bank also generates
noninterest income from service charges and fees on deposit accounts, debit and credit card interchange income, and commissions on insurance
and investment products sold.

 Critical Accounting
Policies

 Certain critical
accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. Our most
critical accounting estimates relate to our allowance for credit losses.

credit losses reflects the estimated losses resulting from the inability of our customers to make required payments. If the financial
condition of our borrowers were to deteriorate, resulting in an impairment of their ability to make payments, our estimates would be
updated, and additional provisions could be required. For further discussion of the estimates used in determining the allowance for credit
losses, we refer you to the section on "Allowance for Credit Losses" in this discussion.

 For further discussion
of our other critical accounting policies, see Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements,
contained in Item 8 of this Form 10-K.

 Cybersecurity

 The Company, primarily
through the Bank, depends on its ability to continuously process, record and monitor a large number of customer transactions, and customer,
public and regulatory expectations regarding operational and information security have increased over time. Accordingly, the Company's
and its subsidiaries' operational systems and infrastructure must continue to be safeguarded and monitored for potential failures,
disruptions and breakdowns. Although the Company has business continuity plans and other safeguards in place, disruptions or failures
in the physical infrastructure or operating systems that support its businesses and customers, or cyber-attacks or security breaches
of the networks, systems or devices on which customers' personal information is stored and that customers use to access the Company's
and its subsidiaries' products and services could result in customer attrition, regulatory fines, penalties or intervention, reputational
damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially adversely affect
the Company's results of operations or financial condition.

 Although to date
the Company has not experienced any material losses relating to cyber-attacks or other information security breaches, there can be no
assurance that it or its subsidiaries will not suffer such losses in the future. On June 15, 2022, we experienced a cybersecurity incident
that temporarily interrupted the operability of our computer systems. Limited operations were restored June 17, 2022, and full operations
were restored June 21, 2022. Since that date, restoration efforts have been completed and normal operations have resumed. The Company's
risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, our plans
to continue to implement our e-banking and mobile banking channel strategies and develop additional remote connectivity solutions to
serve our customers when and how they want to be served. As a result, cybersecurity and the continued development and enhancement of
the Company's controls, processes and practices, designed to protect its and its subsidiaries' systems, computers, software,
data and networks from attack, damage or unauthorized access, remain a priority for the Company. As cyber threats continue to evolve,
the Company has expended resources and may be required to expend significant additional resources to continue to modify or enhance its
protective measures or to investigate and remediate any information security vulnerabilities.

 As discussed under
the heading "Cybersecurity" in Item 1.C of this Form 10-K, the federal banking agencies have issued a joint rule that requires
banking organizations to notify their primary regulator as soon as possible and no later than 36 hours after any cybersecurity incident
has occurred, and the SEC has outlined rules for public disclosure.

 Overview

 For the year ended
December 31, 2023, net income was $7.2 million, or basic and diluted net income per share of $0.30, compared to a net income of $8.1
million, or basic and diluted net income per share of $0.34, for the year ended December 31, 2022, a decrease of $0.9 million, or 11.1%.
Retained earnings increased to $14.5 million as of December 31, 2023 from $8.9 million as of December 31, 2022, an increase of $5.6 million
or 62.14%.

 As discussed in "Net
Interest Income and Net Interest Margin" net interest income for the year ended December 31, 2023 was $28.0 million compared to
$28.3 million for the year ended December 31, 2022. The decrease was primarily due to an increase in the cost of interest-bearing liabilities
of 125 basis points ("bps"; 1 basis point is equal to 1/100 th of 1 percent) to 1.88% during the year ended December
31, 2023 compared to 0.63% during the year ended December 31, 2022.

 Noninterest income
increased $709,000 to $9.9 million for the year ended December 31, 2023 from $9.2 million for the comparable period in 2022. The primary
drivers of the increase were the sales of a former operations facility and branch location resulting in a combined gain of $130,000;
an increase in financial services revenue of $168,000; and income resulting from an insurance claim payment in the amount of $257,000.
This was offset by decreases in service charge income and card processing fees totaling a combined $122,000 during the period. Service
charge income decreased due to changes made in 2022 in assessing certain charges that reduced the number of transactions subject to such
fees. Additional changes to our service charge structure took effect during the fourth quarter of 2023, which eliminated charges for
certain representment items, and certain funds transfer fees. Fees from debit card activity declined as customer deposit balances have
reverted to pre-pandemic levels and customer spending habits have also begun to normalize.

 Noninterest expense
was $28.0 million for the year ended December 31, 2023 compared to $26.5 million for the year ended December 31, 2022. The $1.5 million
increase was impacted by increases in salaries and employee benefits of $891,000 data processing and telecommunications costs of $112,000,
legal and professional fees of $273,000, cards rewards program expense of $115,000 and deposit insurance of $143,000. These increases
were partially offset by decreases in occupancy expenses of $192,000, and data processing and telecommunication costs of $171,000, in
comparison to the year ended December 31, 2022. During the first quarter of 2024 changes will be made to our branch network, with the
consolidation of our two offices in Bristol, VA along with the opening of a full-service branch office in Boone, NC. It is expected that
personnel and occupancy costs will incur modest increases resulting from these changes.

 Total assets as of
December 31, 2023 were $826.3 million, an increase of $51.0 million, or 6.6%, from $775.4 million as of December 31, 2022. Gross loans
increased $53.5 million, or 9.2%, during 2023 due to continuing strong loan demand. Investment securities decreased $6.3 million during
2023 primarily due to principal repayments of amortizing investments and other security maturities of $9.4 million, combined with a decrease
of $2.9 million in the unrealized loss position, partially offset by $500,000 in purchases. All of the Company's investments are designated
as available-for-sale.

 Deposits totaled
$716.5 million as of December 31, 2023 compared to $692.7 million as of December 31, 2022. The increase of $23.8 million, or 3.4%, was
due to efforts to attract and retain deposits, specifically time deposits, combined with cyclical funds inflows. As a result of these
efforts, total time deposits increased $64.1 million during the year ended December 31, 2023. The increase in time deposits contributed
to the increase in our cost of funds, as previously discussed, due to the rising interest rate environment experienced over the past
two years.

 New Peoples Bank
remains well-capitalized. The leverage ratio improved to 11.11% as of December 31, 2023, compared to 10.40% as of December 31, 2022.

 The Company's
key performance indicators are as follows:

 Year
 ended December 31,

 2023

 2022

 Return
 on average assets

 0.91
 %

 0.99
 %

 Return
 on average shareholders' equity

 12.00
 %

 13.89
 %

 shareholders' equity to average assets ratio

 7.52
 %

 7.10
 %

 Net
Interest Income and Net Interest Margin

 The Company's
primary source of income is net interest income, which decreased $0.3 million, or 0.9%, in 2023 compared to 2022 due primarily to
an increase in the cost of interest-bearing liabilities of 125 bps to 1.88% during the year ended December 31, 2023 compared to 0.63%
during the year ended December 31, 2022. Time deposits were the primary contributor to the decline in net interest income, due to an
increase of 176 bps in the cost of time deposits to 2.57% and a $33.3 million increase in the average balance due to a shift in the deposit
mix from lower cost products. Additionally, the cost of borrowed funds increased, as trust preferred securities costs rose 323 bps to
7.65% and other borrowings cost rose 114 bps to 3.60%. The impact of other borrowings cost increase was partially offset by a reduction
of $13.2 million in the average outstanding balance. The increase in cost of funds was offset by an increase of 85 bps in the yield on
earning assets. The yield on loans increased 66 bps to 5.35%, helping to offset the increased cost of funding during the year ended December
31, 2023. These rate and volume activities combined to result in a decrease in net interest income of $266,000, while the net interest
margin rose slightly to 3.67% for the year ended December 31, 2023, from 3.62% for 2022.

 The following
table shows the rates paid on earning assets and interest-bearing liabilities for the periods indicated.

 Net
 Interest Margin Analysis

 Average Balances,
 Income and Expense, and Yields and Rates

 For
 the year ended

 For
 the year ended

 Income/

 Yields/

 Income/

 Yields/

 Expense

 Rates

 Expense

 Rates

 ASSETS

 Loans
 (1) (2)

 $

 608,705

 $

 32,552

 5.35%

 $

 591,179

 $

 27,739

 4.69%

 4.99%

 2.41%

 bearing deposits in other banks

 44,864

 2,239

 4.99%

 76,560

 1,514

 1.98%

 investment securities

 109,303

 2,322

 2.12%

 113,141

 2,129

 1.88%

 Total
 earning assets

 763,319

 37,135

 4.87%

 781,212

 31,390

 4.02%

 Less: allowance
 for credit losses

 (6,937)

 (6,790)

 Non-earning

 36,574

 44,722

 Total

 $

 792,956

 $

 819,144

 LIABILITIES
 AND SHAREHOLDERS' EQUITY

 demand deposits

 $

 74,939

 $

 0.61%

 $

 74,786

 $

 0.13%

 Savings
 and money market deposits

 164,429

 1,442

 0.88%

 191,136

 0.13%

 Time

 221,275

 5,681

 2.57%

 188,010

 1,517

 0.81%

 Total
 interest-bearing deposits

 460,643

 7,582

 1.65%

 453,932

 1,875

 0.41%

 Other
 borrowings

 7,124

 3.60%

 20,370

 2.46%

 Trust
 preferred securities

 16,426

 1,274

 7.65%

 4.42%

 Total
 interest-bearing liabilities

 484,193

 9,116

 1.88%

 490,798

 3,105

 0.63%

 Noninterest-bearing

 240,121

 261,834

 Other

 8,781

 8,313

 Total

 733,095

 760,945

 Shareholders'
 equity

 59,861

 58,199

 Total
 liabilities and shareholders' equity

 $

 792,956

 $

 819144

 Net
 interest income

 $

 28,019

 $

 28,285

 Net
 interest margin

 3.67%

 3.62%

 Net
 interest spread

 2.99%

 3.39%

 (1) Nonaccrual
 loans have been included in average loan balances.

 (2)
 Tax exempt income is not significant and has been treated as fully taxable.

 Note: Yields and rates calculated
 based on whole dollars.

 Net interest income
is affected by changes in both average interest rates and average volumes (balances) of interest-earning assets and interest-bearing
liabilities. The following tables set forth the amounts of the total changes in interest income and interest expense which can be attributed
to rates, volume and a combination of rates and volume, for the periods indicated.

 Volume
 and Rate Analysis

 Increase
 (decrease)

 Year
 2023 Compared to 2022

 Volume
 Effect

 Rate
 Effect

 Rate
 and Volume Effect

 in Interest Income/ Expense

 income:

 Loans

 $

 $

 3,876

 $

 $

 4,813

 bearing deposits in other banks

 (627)

 2,307

 (955)

 investment securities

 (72)

 (10)

 Total
 earning assets

 6,467

 (848)

 5,745

 expense:

 demand deposits

 -

 Savings
 and money market deposits

 (36)

 1,416

 (198)

 1,182

 Time

 3,310

 4,164

 Other
 borrowings

 (326)

 (157)

 (241)

 Trust
 preferred securities

 (3)

 (2)

 Total
 interest-bearing liabilities

 (97)

 5878

 6,011

 in net interest income

 $

 $

 $

 (1,078)

 $

 (266)

 Volume
 and Rate Analysis

 Increase
 (decrease)

 Year
 2022 Compared to 2021

 Volume
 Effect

 Rate
 Effect

 Rate
 and Volume Effect

 in Interest Income/ Expense

 income:

 Loans

 $

 $

 (784)

 $

 (6)

 $

 (584)

 -

 bearing deposits in other banks

 (2)

 1,459

 (38)

 1,419

 investment securities

 Total
 earning assets

 (25)

 1,478

 expense:

 demand deposits

 Savings
 and money market deposits

 Time

 (282)

 (281)

 (524)

 Other
 borrowings

 Trust
 preferred securities

 -

 -

 Total
 interest-bearing liabilities

 (19)

 in net interest income

 $

 $

 $

 (274)

 $

 1,074

 The increases in
interest income and interest expense during 2023 were driven mainly by increased interest rates, as short-term assets and liabilities
tied to short-term rates adjusted to market rate increases throughout the year, new production at higher rates, and asset yields outpacing
increases in funding costs in the rising interest rate environment. Overall, our net interest margin increased five basis points to 3.67%
in 2023 compared to 3.62% in 2022.

 The increase in interest
income is primarily attributed to an increase in yields on loans, which was mainly driven by higher market rates, combined with higher
rates on interest bearing deposits in other banks. Overall, loan interest income, including fees, increased $4.8 million during the year
ended December 31, 2023 compared to December 31, 2022.

 Interest expense
increased $6.0 million, due primarily to an increase in the average balance and yield on time deposits, as noted above, combined with
increased market rates on interest-bearing demand deposits, savings and money market deposits, and trust preferred securities. This was
offset by a decrease in interest expense on other borrowings due to a reduction in volume.

 Our interest rate
structure was impacted by the end of the use of LIBOR, which phased-out in 2023. We used LIBOR in pricing a limited number of our interest
earning assets and liabilities, including our trust preferred securities. Most of these contracts were replaced with the secured overnight
funding rate ("SOFR").

 Loans

 Our primary source
of income is interest earned on loans. Total gross loans increased $53.5 million during 2023, or 9.15%, to $638.1 million as of December
31, 2023 as compared to $584.6 million as of December 31, 2022. The primary driver of this increase in total loans was an increase of
$43.1 million in commercial real estate loans to $240.2 million as of December 31, 2023 compared to $197.1 million as of December 31,
2022. Additionally, residential 1-4 family, multifamily, commercial, and consumer installment loans increased $11.0 million, $4.9 million,
$6.5 million, and $3.3 million, respectively. This was offset by decreases of $13.6 million in construction and land development loans;
$1.3 million in farmland loans; $248,000 in agricultural loans; and $114,000 in all other loans. For more detail on loan balances, refer
to Note 6 of the consolidated financial statements contained in Item 8 of this Form 10-K.

 Nonaccrual loans
increased approximately $0.1 million during 2023 from $3.4 million as of December 31, 2022 to $3.5 million as of December 31, 2023. Nonaccrual
loans negatively affect interest income as these loans are nonearning assets. When doubt about
the collectability of a loan exists, it is the Bank's policy to stop accruing interest on that loan under the following
circumstances: (a) whenever we are advised by the borrower that scheduled payment or interest payments cannot be met, (b) when
conditions indicate that payment of principal and interest can no longer be expected, or (c) when any such loan becomes delinquent
for 90 days and is not both well secured and in the process of collection. All interest accrued but not collected on loans that are placed
on nonaccrual is charged off and reversed against interest income in the current period. In the case of a nonaccrual loan that is well
secured and in the process of collection, the interest accrued but not collected is not reversed. Interest received on these loans is
accounted for on the cash basis or cost-recovery method until qualifying for return to accrual. Generally, loans are returned to accrual
status when all the principal and interest amounts contractually due are brought current, six consecutive timely payments are made, and
prospects for future contractual payments are reasonably assured. For more detail on nonaccrual loans, refer to Note 6 of the consolidated
financial statements in Item 8 of this Form 10-K.

 Individually evaluated
loans, previously known as impaired loans under the incurred loss methodology, decreased during 2023, to $1.1 million as of December
31, 2023, from $2.7 million as of December 31, 2022. I nterest income and cash receipts on individually
evaluated loans are handled differently depending on whether or not the loan is on nonaccrual status. If the individually evaluated loan
is not on nonaccrual status, the interest income on the loan is computed using the effective interest method. For more detail
on individually evaluated loan balances, refer to Note 6 of the consolidated financial statements
in Item 8 of this Form 10-K.

presents the dollar composition and percentage of our loan portfolio as of December 31:

 Loan
 Composition

 2023

 2022

 $

 %

 $

 %

 Real

 $

 37.6%

 $

 33.7%

 4.5%

 7.3%

 37.3%

 38.9%

 5.4%

 5.1%

 2.6%

 3.0%

 Total

 558,222

 87.4%

 514,225

 88.0%

 8.3%

 46,697

 8.0%

 3,508

 0.5%

 3,756

 0.6%

 22,639

 3.6%

 19,309

 3.3%

 All

 0.1%

 0.1%

 Total
 loans

 100.0%

 100.0%

 Less:
 allowance for credit losses 1

 7,256

 6,727

 Total

 $

 630,855

 $

 577,886

 1 The
Company adopted ASU 2016-13 on January 1, 2023 using the modified retrospective approach. Therefore, amounts as of December 31, 2022
are shown using the incurred loss methodology.

 Our loan maturities,
and distribution between fixed and variable rate loans as of December 31, 2023 are shown in the following tables:

 Maturities
 of Loans

 Less
 than One Year

 One
 to Five Years

 Five
 to Fifteen Years

 After
 Fifteen Years

 Total

 Real

 $

 17,173

 $

 44,897

 $

 87,241

 $

 90,876

 $

 5,897

 3,656

 9,880

 9,397

 10,013

 20,113

 82,642

 125,465

 1,346

 4,526

 11,825

 16,874

 3,712

 8,780

 2,938

 Total

 35,400

 76,904

 200,368

 245,550

 558,222

 10,311

 30,550

 7,660

 4,709

 1,243

 1,956

 -

 3,508

 2,727

 17,797

 2,067

 22,639

 All

 -

 -

 Total

 $

 49,957

 $

 127,443

 $

 210,095

 $

 250,616

 $

presents the dollar amount of fixed rate and variable rate loans with maturities greater than one year as of December 31, 2023:

 Fixed
 Rate

 Variable
 Rate

 Real

 $

 83,656

 $

 139,397

 6,869

 15,620

 86,809

 141,932

 11,851

 21,200

 3,815

 11,648

 Total

 193,000

 329,797

 33,760

 6,459

 1,951

 19,131

 1,439

 All

 -

 Total

 $

 248,297

 $

 337,958

 Contractual maturities
of loans do not reflect the actual term of our loan portfolio. The average life of mortgage loans is substantially less than the contractual
life due to prepayments and enforcement of due on sale clauses. Scheduled principal amortization also reduces the average life of the
loan portfolio. The average life of mortgage loans tends to increase when current market mortgage rates are substantially above rates
on existing loans while the average life decreases when rates on existing loans are substantially above current market rates.

 Some variable rate
loans may not reprice, or fully reprice, at their next reset date due to instances where the reset rate may not be above the rate floor
or may be more than the allowable rate increase under the terms of the loan. In these instances, it may take several reset periods before
these loans are fully adjusted.

for Credit Losses

 On
January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments (ASC 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred
to as the current expected credit loss ("CECL") methodology. CECL requires an estimate of credit losses for the remaining
estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally
applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance
sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at
the net amount expected to be collected by using an allowance for credit losses.

 The
Company adopted ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach
for all financial assets measured at amortized cost and off-balance sheet credit exposures. The transition adjustment for the adoption
of CECL included a decrease in the allowance for credit losses on loans of $80,000, which is presented as a reduction to net loans outstanding,
and an increase in the allowance for credit losses on unfunded loan commitments of $348,000, which is recorded within other liabilities.
The Company recorded a net decrease to retained earnings of $212,000 as of January 1, 2023 for the cumulative effect of adopting CECL,
which reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded. Results for reporting periods
beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously
applicable accounting standards ("Incurred Loss").

credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected
on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed.
Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Accrued interest receivable
is excluded from the estimate of credit losses.

credit losses represents management's estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance
for credit losses is estimated by management using relevant available information, from both internal and external sources, relating
to past events, current conditions, and reasonable and supportable forecasts.

 The Company primarily
utilizes the cohort and the probability of default/loss given default methodologies for its reasonable and supportable forecasting of
current expected credit losses. To further adjust the allowance for credit losses for expected losses not already included within the
quantitative component of the calculation, the Company may consider the following qualitative adjustment factors: changes to: lending
policies and procedures, national and local economic conditions, the experience and ability of management and staff, the volume and severity
of past due, rated and nonaccrual assets, loan review system, collateral value, concentrations of credit, and legal or regulatory requirements
and competition.

 The Company measures
expected credit losses for loans on a pooled basis when similar risk characteristics exist. Loans that do not share risk characteristics
are evaluated on an individual basis. The Company designates loan relationships of $250,000 or more that have been determined to meet
the regulatory definitions of "special mention" or "classified" (together known as "criticized")
as individually evaluated. The fair value of individually evaluated loans is measured using the fair value of collateral ("collateral
method") or the discounted cash flow ("DCF") method.

credit losses increased to $7.3 million as of December 31, 2023 from $6.7 million as of December 31, 2022. The allowance for credit losses
at the end of 2023 was approximately 1.14% of total loans as compared to 1.15% at the end of 2022. Provisions for credit losses for loans
receivable of approximately $712,000 and $625,000 were recorded during the years ended December 31, 2023 and 2022, respectively. Loans
charged off, net of recoveries, totaled approximately $103,000, or 0.02% of average loans, for the year ended December 31, 2023, compared
to approximately $633,000, or 0.11% of average loans, in 2022. The allowance for credit losses represents an amount that, in the Company's
judgment, will be adequate to absorb expected and estimable losses inherent in the loan portfolio. The judgment in determining the level
of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies
and charge-offs for relevant periods of time, changes in the nature and volume of the loan portfolio, current reasonable and supportable
forecasts of economic conditions that may affect a borrower's ability to repay and the value of collateral, overall portfolio quality
and review of specific potential losses. This evaluation is inherently subjective because it requires estimates that are susceptible
to significant revision as more information becomes available.

 Nonaccrual loans
increased approximately $0.1 million during 2023 from $3.4 million as of December 31, 2022 to $3.5 million as of December 31, 2023. The
amount of interest income that would have been recognized on these loans had they been accruing interest was approximately $61,000 and
$10,000 in the years ended December 31, 2023 and 2022, respectively. There were no loans past due 90 days or greater and still accruing
interest at either December 31, 2023 or 2022. There are no commitments to lend additional funds to non-performing borrowers.

 A majority of our
loans are collateralized by real estate located in our market area. It is our policy to sufficiently collateralize loans to help minimize
exposure to losses in cases of default. Increasing real estate values in our area have reduced this exposure somewhat. However, while
we consider our market area to be somewhat diverse, certain areas are more reliant upon agriculture, coal mining and natural gas. As
a result, increased risk of loan impairments is possible due to the volatile nature of the coal mining and natural gas industries. As
a result of the lingering economic impact of the COVID-19 pandemic, a number of industries have been identified as posing increased risk.
Specifically, residential and commercial rentals, hotels, restaurants and entertainment, and the coal and gas industries have been adversely
impacted by the global and domestic economic slowdown coupled with rising inflation. We are monitoring these industries and consider
these segments to be the primary higher risks in the loan portfolio.

 Commercial and commercial
real estate loans are initially risk rated by the originating loan officer. If deterioration in the financial condition of the borrower
and/or their capacity to repay the debt occurs, the loan may be downgraded by the loan officer or our watch list committee. Guidance
for risk rate grading is established by the regulatory authorities who periodically review the Bank's loan portfolio for compliance.
Classifications used by the Bank are Pass, Special Mention, Substandard, Doubtful and Loss.

 With regard to the
Bank's consumer and consumer real estate loan portfolio, we use the guidance found in the Uniform Retail Credit Classification
and Account Management Policy which affects our estimate of the allowance for credit losses. Under this approach, a consumer or consumer
real estate loan must initially have a credit risk grade of Pass or better. Subsequently, if the loan becomes contractually 90 days past
due or the borrower files for bankruptcy protection, the loan is downgraded to Substandard and placed in nonaccrual status. If the loan
is unsecured upon being deemed Substandard, the entire loan amount is charged-off.

 For non-1-4 family
residential loans that are 90 days or more past due or in bankruptcy, the collateral value less estimated liquidation costs are compared
to the loan balance to calculate any potential deficiency. If the collateral is sufficient, then no charge-off is necessary. If a deficiency
exists, then upon the loan becoming contractually 120 days past due, the deficiency is charged-off against the allowance for credit losses.
In the case of 1-4 family residential or home equity loans, upon the loan becoming 120 days past due, a current value is obtained and
after application of an estimated liquidation discount, a comparison is made to the loan balance to calculate any deficiency. Subsequently,
any noted deficiency is then charged-off against the allowance for credit losses when the loan becomes contractually 180 days past due.
If the customer has filed bankruptcy, then within 60 days of the bankruptcy notice, any calculated deficiency is charged-off against
the allowance for credit losses. Collection efforts continue by means of repossessions or foreclosures, and upon bank ownership, liquidation
ensues.

 Prior to the adoption
of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable
to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans included loans on
nonaccrual status and accruing troubled debt restructurings. When determining if the Company would be unable to collect all principal
and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower's
capacity to pay, which included such factors as the borrower's current financial statements, an analysis of global cash flow sufficient
to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The
Company individually assessed for impairment all nonaccrual loans greater than $250,000 and all troubled debt restructurings, whether
or not currently classified as such. The tables below include all loans deemed impaired, whether or not individually assessed for impairment.
If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the
present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment was
expected solely from the collateral. Interest payments on impaired loans were typically applied to principal unless collectability of
the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

 Annualized net charge-offs,
as a percentage of average loans, was 0.02% during the year ended December 31, 2023, compared to 0.11% for the same period of 2022. The
allowance for credit losses is maintained at a level that management deems appropriate to absorb any potential future losses and known
credit losses within the loan portfolio, whether or not the losses are actually ever realized. Through our quarterly assessment, we continue
to adjust the CECL model to best reflect the risks in the portfolio. However, future provisions may be deemed necessary. During the year
ended December 31, 2023, we made modest adjustments to our qualitative factors to consider risk factors associated with commercial real
estate and residential mortgage loans. Those changes, along with the assessment of the historical and specific risks associated with
the loan portfolio, resulted in a net provision for credit losses of $649,000, of which $712,000 was provided for the loan portfolio;
offset by a reduction of the allowance for unfunded commitments of $63,000. The following table summarizes components of the allowance
for credit losses and related loans as of December 31, 2023 and 2022:

 Selected
 Credit Ratios

 31,

 2023

 2022

 for credit losses 1

 $
 7,256

 $
 6,727

 Total
 loans

 for credit losses to total loans 1

 1.14
 %

 1.15
 %

 Nonaccrual
 loans

 $
 3,534

 $
 3,413

 Nonaccrual
 loans to total loans

 0.55
 %

 0.58
 %

 Ratio
 of allowance for credit losses 1 to nonaccrual loans

 2.05
 X

 1.97
 X

 Charge-offs
 net of recoveries

 $

 $

 loans

 $
 608,705

 $
 591,179

 Net charge-offs
 to average loans

 0.02
 %

 0.11
 %

 1 The Company
adopted ASU 2016-13 on January 1, 2023 using the modified retrospective approach. Therefore, amounts as of December 31, 2022 are shown
using the incurred loss methodology.

shows the average balance, net charge-offs or recoveries and percentage of net charge-offs or recoveries by each major category of loans
for the years ended December 31, 2023 and 2022:

 (Dollars in
 thousands)

 Net
 Charge-offs (Recoveries)

 Net
 Charge-offs (Recoveries) as % of Average Loan Type

 Net
 Charge-offs (Recoveries)

 Net
 Charge-offs (Recoveries) as % of Average Loan Type

 Real estate secured:

 $

 212,409

 $

 -

 0.00%

 $

 202,435

 $

 (28)

 -0.01%

 Construction and land development

 39,920

 (35)

 -0.09%

 39,986

 0.36%

 Residential 1-4 family

 232,280

 0.01%

 225,334

 (36)

 -0.02%

 33,332

 (111)

 -0.33%

 32,768

 0.33%

 17,253

 -

 0.00%

 18,022

 (13)

 -0.07%

 Total real estate loans

 535,194

 (132)

 -0.02%

 518,545

 0.03%

 48,586

 0.05%

 48,093

 0.03%

 3,596

 1.50%

 3,823

 -

 0.00%

 Consumer and all other loans

 20,748

 0.75%

 19,235

 2.31%

 -

 0.00%

 1,483

 -

 0.00%

 Total loans

 $

 608,705

 $

 0.02%

 $

 591,179

 $

 0.11%

shows the balance and percentage of our allowance for credit losses allocated to each major category of loans.

 Allocation of the
Allowance for Credit Losses 1

 %
 of ACL

 %
 of Loans

 %
 of ALLL 1

 %
 of Loans

 Real

 $

 2,518

 34.7

 37.6

 $

 2,364

 35.1

 33.7

 4.1

 4.5

 5.2

 7.3

 2,666

 36.7

 37.3

 2,364

 35.1

 38.9

 7.0

 5.4

 3.9

 5.1

 2.2

 2.6

 2.3

 3.0

 Total

 6,156

 84.7

 87.4

 5,488

 81.6

 88.00

 9.3

 8.3

 5.7

 8.0

 0.5

 0.5

 0.5

 0.6

 and all other loans

 5.5

 3.8

 5.7

 3.4

 -

 -

 -

 6.5

 -

 Total

 $

 7,256

 100.0

 100.0

 $

 6,727

 100.0

 100.0

 1 The Company
adopted ASU 2016-13 on January 1, 2023 using the modified retrospective approach. Therefore, amounts as of December 31, 2022 are shown
using the incurred loss methodology.

 We have allocated
the allowance according to the amount deemed to be reasonably necessary to provide for the expected credit losses within each of the
categories of loans. The allocation of the allowance as shown in the table above should not be interpreted as an indication that credit
losses in future years will occur in the same proportions or that the allocation indicates future credit loss trends. Furthermore, the
portion allocated to each loan category is not the total amount available for future losses that might occur within such categories since
the total allowance is a general allowance applicable to the entire portfolio.

 The allocation of
the allowance for credit losses is based on our judgment of the relative risk associated with each type of loan. We have allocated 34.7%
of the allowance to commercial real estate loans, which constituted 37.6% of our loan portfolio at December 31, 2023. This allocation
decreased slightly compared to 35.1% in 2022, due primarily to the impact of the CECL methodology. We have allocated 9.3% of the allowance
to commercial loans, which constituted 8.3% of our loan portfolio at December 31, 2023. This allocation percentage increased compared
to December 31, 2022, due to the impact of the CECL methodology.

 Both residential
and commercial real estate loans are secured by real estate whose value tends to be easily ascertainable. These loans are made consistent
with appraisal policies and real estate lending policies, which detail maximum loan-to-value ratios and maturities.

 We allocated 4.1%
of the allowance to real estate construction loans, which constituted 4.5% of our loan portfolio as of December 31, 2023. Construction
loans are secured by real estate with values that are dependent upon market and economic conditions. Additionally, these credits are
generally shorter-term projects of eighteen months or less. These loans are made consistent with appraisal policies and real estate lending
policies which detail maximum loan-to-value ratios and maturities.

 We allocated 36.7%
of the allowance to residential real estate loans, which constituted 37.3% of our loan portfolio as of December 31, 2023.

 We allocated 5.5%
of the allowance to consumer and all other loans, which constituted 3.8% of our loan portfolio as of December 31, 2023. Our allocation
generally remained consistent with the allocation as of December 31, 2022.

 Other Real Estate
Owned

 Other real estate
owned decreased $104,000, or 39.9%, to approximately $157,000 as of December 31, 2023 from $261,000 as of December 31, 2022. All properties
are available for sale, primarily, by commercial and residential realtors under the direction of our Special Assets division. During
2023, four properties were sold in the amount of $132,000 and three properties were acquired in the amount of $124,000.

 While the levels
of problem credits and foreclosed properties have been reduced significantly over the past several years, we remain mindful of the impact
on earnings and capital as we work to achieve our goal to reduce nonperforming assets. However, we may recognize some losses and reductions
in the allowance for credit losses as we expedite the resolution of these problem assets.

 Total investment
securities decreased $6.3 million, or 6.5%, to $89.8 million as of December 31, 2023 from $96.1 million as of December 31, 2022. All
securities are classified as available-for-sale for liquidity purposes. There were no sales of securities during 2023 and 2022. During
2023 and 2022, there were maturities, calls and paydowns of $9.4 million and $14.0 million, respectively. The Company purchased $0.5
million and $19.8 million in investment securities during 2023 and 2022, respectively. Investment securities with a carrying value of
$36.8 million and $27.3 million as of December 31, 2023 and 2022, respectively, were pledged to secure public deposits and for other
purposes required, or permitted, by law.

 Our strategy is to
invest excess funds in investment securities, which typically yield more interest income than other short-term investment options, such
as federal funds sold and overnight deposits with the Federal Reserve Bank of Richmond, but which still provide liquidity.

 The fair value of
our investment portfolio is substantially affected by changes in interest rates. Losses could be realized if liquidity and/or business
strategy necessitate the sale of securities in a loss position, due to Federal Reserve actions, U.S. fiscal policies or other factors
affecting market interest rates. As of December 31, 2023, we had a net unrealized loss in our investment portfolio totaling $14.8 million
as compared to a $17.6 million loss as of December 31, 2022. As market interest rates increase, the level of unrealized losses could
change substantially. However, these changes would have no impact on earnings or regulatory capital, unless the securities were sold
at a loss. We believe that all unrealized losses resulted from temporary changes in interest rates and current market conditions and
are not a result of credit deterioration. No allowance for credit losses on available-for-sale securities was recorded as of December
31, 2023. We monitor our portfolio regularly and use it to maintain liquidity, manage interest rate risk and enhance earnings.

 The fair value and
weighted average yield of investment securities as of December 31, 2023 are shown in the following schedule by contractual maturity and
do not reflect principal paydowns for amortizing securities. Expected maturities will differ from contractual maturities because issuers
may have the right to call or prepay obligations with or without call or prepayment penalties. Weighted average yields are calculated
by dividing the contractual interest for each time period by the average amortized contractual cost.

 Less
 than One Year

 One
 to Five Years

 Five
 to ten years

 After
 ten years

 Total

 (Dollars in thousands)

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair Value

 Yield

 U.S Treasuries

 $

 4,159

 1.58%

 $

 6,826

 1.22%

 $

 -

 0.00%

 $

 -

 -%

 $

 1.35%

 U.S. Government Agencies

 3.51%

 2,440

 3.94%

 3,056

 3.23%

 2,821

 3.24%

 8,811

 3.44%

 Taxable municipals

 -

 -%

 2.95%

 6,175

 2.12%

 11,174

 2.40%

 17,859

 2.33%

 Corporate bonds

 2.76%

 3.87%

 1,228

 2.58%

 -

 -%

 2,688

 3.04%

 Mortgage backed securities

 -

 -%

 1,465

 1.95%

 4,390

 1.98%

 43,607

 1.68%

 49,462

 1.71%

 $

 5,149

 1.87%

 $

 12,205

 2.10%

 $

 14,849

 2.34%

 $

 57,602

 1.90%

 $

 2.00%

 Bank Owned Life
Insurance

2023 and 2022, the Bank had an aggregate total cash surrender value of $4.6 million and $4.5 million, respectively, on life insurance
policies covering former key officers.

 The Company recognized
income of approximately $40,000 during the year ended December 31, 2023. The Company recorded a loss of $136,000 due to a write-down
of approximately $158,000, partially offset by earnings of $22,000, during the year ended December 31, 2022. The write-down was due to
the impact of rising interest rates on the value of the underlying assets supporting the policies.

 Deposits

 Total deposits were
$716.5 million as of December 31, 2023, an increase of $23.8 million, or 3.4%, from $692.7 million as of December 31, 2022, due to efforts
to attract and retain deposits, specifically time deposits, combined with cyclical fund inflows. Most of the increase was driven by time
deposits, which increased $64.1 million, or 34.0%, to $252.3 million as of December 31, 2023.

 Information detailing
average deposit balances and average rates paid on deposits is presented in the Net Interest Margin Analysis table contained in the "Net
Interest Income and Net Interest Margin" section.

 Core deposits are
considered to include demand deposits and other types of transaction accounts, such as commercial relationships and savings products,
all of which decreased in 2023. Overall, we continue to maintain core deposits through attractive consumer and commercial deposit products
and strong ties with our customer base and communities.

 Time deposits of
$250,000 or more equaled approximately 7.36% of deposits at the end of 2023 and 3.87% of deposits at the end of 2022.

2023 and 2022, uninsured deposits are estimated to be $93.8 million and $87.5 million, respectively. Estimated uninsured deposits represented
13.1% and 12.6% of total deposits as of December 31, 2023 and 2022, respectively. Included in estimated uninsured deposits are $27.9
million and $14.4 million of public funds, for such respective periods, considered secured via pledged securities or letters of credit
we have with the FHLB.

shows maturities of all time deposits considered uninsured by the FDIC or otherwise.

 Maturities
 of Uninsured Time Deposits

 December 31,
 2023

 Three
 months or less

 $
 4,780

 Over
 three months through six months

 14,503

 Over
 six months through twelve months

 16,344

 Over
 one year

 12,635

 Total

 $
 48,262

2023 and 2022, $36.8 million and $27.3 million of securities, respectively, were pledged to collateralize public deposits, including
time deposits, held in our Tennessee offices, and as collateral for credit facilities available through FRB. Additionally, we held letters
of credit from the FHLB for $12.0 million and $7.0 million at December 31, 2023 and 2022, respectively, to secure public deposits, including
time deposits, held in our Virginia offices.

 We held no brokered
deposits at December 31, 2023 or 2022. Internet accounts are limited to customers located in our primary market area and the surrounding
geographical area. The average balance of and the average rate paid on deposits is shown in the net interest margin analysis table in
the "Net Interest Income and Net Interest Margin" section. Total Certificate of Deposit Registry Service ("CDARS")
time deposits were $6.3 million and $1.4 million at December 31, 2023 and 2022, respectively.

 Noninterest Income

 Noninterest income
increased $709,000 to $9.9 million for the year ended December 31, 2023 from $9.2 million for the comparable period in 2022. The primary
drivers of the increase were the sales of a former operations facility and branch location resulting in a combined gain of $130,0000;
an increase in financial services revenue of $168,000; and income resulting from an insurance claim payment from the cybersecurity incident
in the amount of $257,000. This was offset by decreases in service charge income and card processing fees totaling a combined $122,000
during the period. Service charge income decreased due to changes made in 2022 in assessing certain charges that reduced the number of
transactions subject to such fees. Additional changes to our service charge structure took effect during the fourth quarter of 2023,
which eliminated charges for certain representment items, and certain funds transfer fees. Fees from debit card activity declined as
customer deposit balances have reverted to pre-pandemic levels and customer spending habits have also begun to normalize.

 Noninterest
Expense

 Noninterest expense
was $28.0 million for the year ended December 31, 2023 compared to $26.5 million for the year ended December 31, 2022. The $1.5 million
increase was impacted by increases in salaries and employee benefits of $891,000, data processing and telecommunications costs of $112,000,
legal and professional fees of $273,000, cards rewards program expense of $115,000 and deposit insurance of $143,000. These increases
were partially offset by decreases in occupancy expenses of $192,0000, and data processing and telecommunication costs of $171,000, in
comparison to the year ended December 31, 2022.

 Our efficiency ratio,
a non-GAAP measure, which is defined as noninterest expense divided by the sum of net interest income plus noninterest income, was 73.7%
in 2023 compared to 70.6% in 2022. The modest performance decline in this ratio is a result of the decline in net interest income and
increased noninterest expenses, as discussed above and in the "Net Interest Income and Net Interest Margin" section earlier
in this Item 7. We continue to seek opportunities to operate more efficiently through the use of technology, improving processes, reducing
nonperforming assets and increasing productivity.

 Income Taxes and
Deferred Tax Assets

 Income taxes were
$2.1 million for the year ended December 31, 2023, compared to $2.3 million for the same period in 2022. The effective tax rates were
23.0%, and 22.2% for 2023 and 2022, respectively. The effective tax rate for the periods differed from the federal statutory rate of
21.0% principally due to the lessened impact of tax preference items, along with the effect of certain state income taxes. The higher
effective tax rate in 2023 is the result of an increase in pre-tax earnings in relation to the various tax preference items, and increased
income in states that maintain a tax structure based on allocated income.

tax assets represent the future tax benefit of future deductible differences. If it is more likely than not that a tax asset will not
be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. The Company has evaluated
positive and negative evidence to assess the realizability of its deferred taxes. Based on the evidence, including taxable income projections,
the Company believes it is more likely than not that its deferred tax assets will be realizable. Accordingly, the Company did not include
a valuation allowance against its deferred tax assets as of December 31, 2023 or 2022.

 Tax
positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a position will be
sustained upon examination. If a tax position meets the more likely than not recognition threshold, it is then measured to determine
the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is
greater than 50% likely of being recognized. The Company classifies interest and penalties as a component of income tax expense.

Resources

 During the year ended
December 31, 2023, total shareholders' equity increased $7.6 million to $64.8 million due to the earnings of $7.2 million and the
$2.3 million decrease in the net unrealized loss on available-for-sale investment securities, which was partially offset by a cash dividend
payment of $1.4 million and the repurchase of common stock totaling $237,000. Additionally, the implementation of the current expected
credit loss ("CECL") methodology resulted in a one-time net of tax, direct charge to retained earnings of $212,000. Consequently,
book value per share increased to $2.73 as of December 31, 2023 compared to $2.40 as of December 31, 2022. The Bank remains well capitalized
per regulatory guidance.

 As previously reported,
the Board extended the repurchase of up to 500,000 shares of the Company's common stock through March 31, 2024. During 2023, the
Company repurchased 100,875 shares at an average price of $2.31 per share. Since commencement of the repurchase plan, 174,470 shares
have been repurchased at an average rate of $2.32.

 The Company meets
the eligibility criteria to be considered a small bank holding company in accordance with the Federal Reserve's Small Bank Holding
Company Policy Statement issued in February 2015 and does not report consolidated regulatory capital. The Bank continues to be subject
to various capital requirements administered by banking agencies.

 The Bank is characterized
as "well capitalized" under the "prompt corrective action" regulations pursuant to Section 38 of the FDIA. The capital
adequacy ratios for the Bank, including the minimum ratios to be considered "well capitalized," are set forth in Note 22,
Capital, to the consolidated financial statements in Item 8 of this Form 10-K.

 The Bank is also
subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Act. The final rules
require the Bank to comply with the following minimum capital ratios: (i) a Common Equity Tier 1 ("CET1") ratio of at least
4.5%, plus a 2.5% "capital conservation buffer" (effectively resulting in a minimum CET1 ratio of 7%), (ii) a ratio of Tier
1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively resulting in a minimum Tier
1 capital ratio of 8.5%), (iii) a ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation
buffer (effectively resulting in a minimum total capital ratio of 10.5%), and (iv) a leverage ratio of 4%, calculated as the ratio of
Tier 1 capital to average assets. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking
institutions with a CET1 ratio above the minimum but below the conservation buffer face constraints on dividends, equity repurchases,
and compensation based on the amount of the shortfall. As of December 31, 2023, the Bank meets all capital adequacy requirements to which
it is subject. Based upon projections, we believe our earnings will be sufficient to support the Bank's planned asset growth.

 The Company paid
a cash dividend of $0.06 per share in 2023. On February 28, 2024, the Board of Directors declared a dividend of $0.07 per share, to be
paid on March 29, 2024. Future payments of cash dividends will depend on a number of factors including but not limited to maintaining
positive retained earnings, compliance with regulatory rules governing the payment of dividends, strategic plans, and sufficient capital
at the Bank to allow payment of dividends to the parent company.

 Liquidity

 We closely monitor
our liquidity and our liquid assets in the form of cash, due from banks, federal funds sold and unpledged available-for-sale investments.
Collectively, those balances were $118.0 million as of December 31, 2023, down from $130.5 million as of December 31, 2022. The decrease
is primarily due to loan growth exceeding funding growth through deposits and other borrowings. A surplus of short-term assets is maintained
at levels management deems adequate to meet potential liquidity needs.

 The Bank's
primary funding source is deposits from customers in the markets in which it provides banking services. As discussed previously, deposits
increased during 2023 but competition for deposits remains intense from both bank and non-bank institutions. The Company expects that
pressure on the rates paid on deposits will continue and that it may be required to increase the rates paid on its deposit products,
possibly faster and to a higher degree not currently projected, to retain existing customers and attract new deposit relationships to
fund loans and other activities. As discussed below, the Company has other liquidity sources to manage its liquidity needs as they arise.

2023, all of our investments are classified as available-for-sale, providing an additional source of liquidity in the amount of $53.0
million, which is net of the $36.8 million of securities pledged as collateral. Generally, the investment portfolio serves as a source
of liquidity while yielding a higher return at the purchase date when compared to other short-term investment options, such as federal
funds sold and overnight deposits with the Federal Reserve Bank of Richmond. Total investment securities decreased $6.3 million, or 6.5%,
during 2023 from $96.1 million as of December 31, 2022 to $89.8 million as of December 31, 2023. The Bank also has additional borrowing
capacity on lines for which investments are currently pledged.

 Our loan to deposit
ratio was 89.1% as of December 31, 2023 and 84.4% as of December 31, 2022.

 Available third-party
sources of liquidity remain intact as of December 31, 2023 which includes the following: our line of credit with the FHLB totaling $200.1
million, the brokered certificates of deposit markets, internet certificates of deposit, and the discount window at the Federal Reserve
Bank of Richmond. We also have $30.0 million in unsecured federal funds lines of credit available from three correspondent banks as of
December 31, 2023.

 We have used our
line of credit with FHLB to issue letters of credit totaling $12.0 million to the Treasury Board of Virginia for collateral on public
funds. No draws on the letter of credit have been issued. This letter of credit is considered to be a draw on our FHLB line of credit.
An additional $178.1 million was available on December 31, 2023 on the $200.1 million line of credit, of which $118.9 million is secured
by a blanket lien on our residential real estate loans.

 While we have access
to the brokered deposits market, we held no brokered deposits as of December 31, 2023 or 2022. As of December 31, 2023, we had $6.3 million
in reciprocal CDARS time deposits, compared to $1.4 million as of December 31, 2022.

 The Bank has access
to additional liquidity through the Federal Reserve Bank of Richmond's Discount Window for overnight funding needs. We have collateralized
this line with investment securities. As part of the discount window capacity the FRB, starting in March 2023, offered borrowings through
the Bank Term Funding Program which was created to support businesses and consumers by making additional funds available to eligible
depository institutions. This program, which expired in March 2024, provided loans of up to one year in length, at a fixed rate, with
no prepayment penalties. Collateral guidelines for this program valued eligible collateral at par value with the margin of 100% of par
value. We participated in this program in December 2023, through a $10 million borrowing for one year at a rate of 4.83%. This borrowing
supplemented loan fundings during the month.

 During the fourth
quarter of 2023 we made a voluntary principal payment of $310,000 on one of the outstanding trust preferred securities, originally issued
in 2004. We may consider making future principal payments based on our available liquidity and considering other funding opportunities
that may be available.

 With the on-balance
sheet liquidity and other external sources of funding, we believe the Bank has adequate liquidity and capital resources to meet our requirements
and needs for the foreseeable future. However, liquidity can be further affected by a number of factors such as counterparty willingness
or ability to extend credit, regulatory actions and customer preferences, some of which are beyond our control. With the current economic
uncertainty resulting from recovering from the lingering effects of the COVID-19 pandemic, inflation and the wars in Ukraine and Gaza,
we continue monitoring our liquidity position, specifically cash on hand in order to meet customer demands. Additionally, our contingency
funding plan is reviewed quarterly with our Asset Liability Committee.

Instruments with Off-Balance-Sheet Risk

 The
Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or
notional amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.

 The Bank's
exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on-balance-sheet instruments.

 A summary and discussion
of the contract amount of the Bank's exposure to off-balance-sheet risk as of December 31, 2023 and 2022 is presented at "Consolidated
Financial Statements and Notes" "Note 20 Financial Instruments with Off-Balance Sheet Risk". With the implementation
of CECL in 2023, we established an allowance for credit losses on unfunded commitments, which totaled $285,000 at December 31, 2023.

 Unfunded commitments
under lines of credit are commitments for possible future extensions of credit to existing customers. Those lines of credit may not actually
be drawn upon to the total extent to which the Bank is committed. In response to two bank failures in March 2023, and resulting liquidity
concerns for other super-regional banks, we drew a short-term advance from FHLB as precaution against any significant unusual activity
by borrowers drawing against their lines of credit. We did not experience any significant draws by borrowers during that period nor do
we anticipate experiencing such demand that might cause us to limit customer access to these lines of credit.

 Interest Sensitivity

2023, we had a negative cumulative gap rate sensitivity ratio of 21.59% for the one-year re-pricing period, compared to 17.89% as of
December 31, 2022. A negative cumulative gap generally indicates that net interest income would decline in a rising interest rate environment
as liabilities re-price more quickly than assets. Conversely, net interest income would likely increase in periods during which interest
rates are decreasing. The below table is based on contractual maturities and next repricing date and does not take into consideration
prepayment speeds of investment securities and loans, nor does it consider decay rates for non-maturity deposits. When considering these
prepayment speed and decay rate assumptions, along with our ability to control the repricing of a significant portion of the deposit
portfolio, we are in a position to increase interest income in a rising interest rate environment; however, the ability to control the
repricing of the deposit portfolio can be significantly impacted by competitive pressures, liquidity needs and access to and availability
of other funding sources. With indications that the period of rate increases has tapered and consensus is that at least some modest rate
decreases can be anticipated in the near- to mid-term, we are implementing strategies to moderate any potential adverse impact to our
current interest rate risk profile, from what could be a period of flat to decreasing interest rates.

 Sensitivity Analysis

 (In thousands
 of dollars)

 - 90 Days

 91-365
 Days

 - 3 Years

 4-5 Years

 6-10 Years

 Over
 10 years

 Total

 Uses of funds:

 Loans

 $

 111,139

 $

 86,463

 $

 192,119

 $

 170,535

 $

 60,042

 $

 17,813

 $

 Federal funds sold

 -

 -

 -

 -

 -

 Deposits with banks

 50,113

 -

 -

 -

 -

 50,363

 Investments

 4,452

 10,378

 22,121

 16,112

 26,910

 24,583

 104,556

 Bank owned life insurance

 4,589

 -

 -

 -

 -

 -

 4,589

 Total earning assets

 $

 170,311

 $

 97,091

 $

 214,240

 $

 186,647

 $

 86,952

 $

 42,396

 $

 797,637

 Sources of funds:

 Int Bearing DDA

 69,528

 -

 -

 -

 -

 -

 69,528

 Savings & MMDA

 160,745

 -

 -

 -

 -

 -

 160,745

 Time Deposits

 45,258

 137,876

 60,944

 8,238

 -

 -

 252,316

 Trust Preferred Securities

 16,186

 -

 -

 -

 -

 -

 16,186

 Other Borrowings

 -

 -

 -

 -

 20,000

 Total interest bearing

 $

 291,717

 $

 147,876

 $

 60,944

 $

 18,238

 $

 -

 $

 -

 $

 518,775

 Discrete Gap

 $

 (121,406)

 $

 (50,785)

 $

 153,296

 $

 168,409

 $

 86,952

 $

 42,396

 $

 278,862

 Cumulative Gap

 $

 (121,406)

 $

 (172,191)

 $

 (18,895)

 $

 149,514

 $

 236,466

 $

 278,862

 Cumulative Gap as % of Total Earning Assets

 -15.22%

 -21.59%

 -2.37%

 18.74%

 29.65%

 34.96%

 Item 7A.
 Quantitative
 and Qualitative Disclosures About Market Risk

 Not required.

 Item
 8.
 Statements and Supplementary Data

 FINANCIAL
STATEMENTS

 CONTENTS

 Page

 Report
 of Independent Registered Public Accounting Firm

 Balance Sheets December 31, 2023 and 2022

 Statements of Income – Years Ended December 31, 2023 and 2022

 Statements of Comprehensive Income (Loss) – Years Ended December 31, 2023 and 2023

 Statements of Shareholders' Equity – Years Ended December 31, 2023 and 2022

 Statements of Cash Flows – Years Ended December 31, 2023 and 2022

 Notes to Consolidated
Financial Statements

 Report
of Independent Registered Public Accounting Firm

 To the Shareholders
and the Board of Directors of New Peoples Bankshares, Inc.

 Opinion on the
Financial Statements

 We have audited the
accompanying consolidated balance sheets of New Peoples Bankshares, Inc. and its subsidiaries (the Company) as of December 31, 2023 and
2022, the related consolidated statements of income, comprehensive income (loss), changes in shareholders' equity and cash flows,
for the years then ended, and the related notes (collectively, the financial statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 Adoption of New
Accounting Standard

 As discussed in Notes
2 and 7 to the financial statements, the Company changed its method of accounting for credit losses in 2023 due to the adoption of Accounting
Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,
including all related amendments.

 Basis for Opinion

 These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules
and regulations of the

 Securities and Exchange
Commission and the PCAOB.

 We conducted our
audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we
are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included
performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.

 Critical Audit
Matter

 The critical audit
matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required
to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the financial

 statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter
or on the accounts or disclosures to which it relates.

 Allowance for
Credit Losses – Loans Collectively Evaluated for Credit Losses

 Description of
the Matter

 As further described
in Note 2 (Summary of Significant Accounting Policies) and Note 7 (Allowance for Credit Losses For Loans ("ACLL") to the
consolidated financial statements, the Company changed its method of accounting for credit losses on January 1, 2023, due to the adoption
of Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial
Instruments, as amended. The allowance for

 credit losses on
loans (ACLL) is a valuation allowance that represents management's best estimate of expected credit losses on loans measured at
amortized cost considering available information, from internal and external sources, relevant to assessing collectability over the loans'
contractual terms. Loans which share common risk characteristics are pooled and collectively evaluated by the Company using historical
data, as well as assessments of current conditions and reasonable and supportable forecasts of future conditions. The Company's
ACLL related to collectively evaluated loans represented $7.2 million of the total recorded ACLL of $7.3 million as of December 31, 2023.
The collectively evaluated ACLL consists of quantitative and qualitative components.

 The quantitative
component consists of loss estimates derived from a discounted cash flow model using external observations of historical credit losses
adjusted for estimated prepayments and forecasts of future conditions over a reasonable and supportable period. The estimate considers
large amounts of data in tabulating default, loss given default, and prepayment speeds and requires complex calculations as well as management
judgment in the selection of appropriate inputs.

 In addition to the
quantitative component, the collectively evaluated ACLL also includes a qualitative component which aggregates management's assessment
of available information relevant to assessing collectability that is not captured in the quantitative loss estimation process. Factors
considered by management in developing its qualitative estimates include: changes in general market, economic and business conditions;
lending policies and procedures; experience and ability of management and staff; the nature and volume of the loan portfolio; the volume
and severity of delinquencies and adversely classified loan balances; loan review system; concentrations of credit; the value of underlying
collateral in determining the recorded balance of the allowance for credit losses; and legal or regulatory requirements and competition.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes
available.

 Management exercised
significant judgment when estimating the ACLL on collectively evaluated loans. We identified the estimation of the collectively evaluated
ACLL as a critical audit matter as auditing the collectively evaluated ACLL involved especially complex and subjective auditor judgment
in evaluating management's assessment of the inherently subjective estimates. The primary audit procedures we performed to address
this critical audit matter included:

 Substantively
 testing management's process for measuring the collectively evaluated ACLL,

 including:

 o
 Evaluating
 the conceptual soundness, assumptions, and key data inputs of the Company's discounted
 cashflow methodology, including the identification of loan pools, the probability of default
 and loss given default rate inputs, and the prepayment/curtailment rate inputs for each pool.

 o
 Evaluating
 the methodology and testing the accuracy of incorporating reasonable and supportable forecasts
 in the collectively evaluated ACLL estimate.

 o
 Evaluating
 the completeness and accuracy of data inputs used as a basis for the qualitative factors.

 o
 Evaluating
 the qualitative factors for directional consistency in comparison to prior periods and for
 reasonableness in comparison to underlying supporting data.

 o
 Testing
 the mathematical accuracy of the ACLL for collectively evaluated loans including both the
 discounted cashflow and qualitative factor components of the calculations.

 /s/ Yount,
Hyde, & Barbour, P.C.

 We have served as
the Company's auditor since 2022.

 Roanoke,
Virginia

 April 1, 2024

 NEW PEOPLES BANKSHARES,
INC.

 CONSOLIDATED BALANCE
SHEETS

 DECEMBER 31, 2023
AND 2022

 (in thousands except
share data)

 ASSETS

 2023

 2022

 Cash
 and due from banks

 $
 14,596

 $
 13,979

 deposits with banks

 50,363

 46,747

 Total
 cash and cash equivalents

 64,977

 61,686

 securities available-for-sale, at fair value

 96,076

 Loans
 receivable

 for credit losses

 ( 7,256
)

 ( 6,727
)

 Net
 loans

 630,855

 577,886

 Bank
 premises and equipment, net

 18,265

 19,290

 Other
 real estate owned

 interest receivable

 3,029

 2,555

 taxes, net

 4,461

 4,623

 Bank
 owned life insurance

 4,589

 4,549

 Right-of-use
 assets – operating leases

 3,852

 3,725

 Other

 6,323

 4,707

 Total

 $
 826,313

 $
 775,358

 LIABILITIES

 Deposits

 Noninterest
 bearing

 $
 233,878

 $
 249,924

 482,589

 442,783

 Total

 716,467

 692,707

 Borrowed
 funds

 36,186

 Lease
 liabilities – operating leases

 3,852

 3,725

 interest payable

 1,447

 expenses and other liabilities

 3,550

 4,685

 Total

 761,502

 718,139

 Commitments
 and Contingent Liabilities (Notes 19 and 21)

 SHAREHOLDERS'
 EQUITY

 stock - $ 2.00
 par value; 50,000,000
 shares authorized; 23,745,900
 and 23,848,491
 shares issued and outstanding at December 31,
 2023 and 2022, respectively

 47,492

 47,697

 Additional
 paid-in capital

 14,514

 14,546

 Retained
 earnings

 14,458

 8,917

 Accumulated
 other comprehensive loss

 ( 11,653
)

 ( 13,941
)

 Total
 shareholders' equity

 64,811

 57,219

 Total
 liabilities and shareholders' equity

 $
 826,313

 $
 775,358

 The
accompanying notes are an integral part of these financial statements.

 NEW PEOPLES BANKSHARES,
INC.

 CONSOLIDATED STATEMENTS
OF INCOME

 FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022

 (in thousands except
share and per share data)

 INTEREST
 AND DIVIDEND INCOME

 2023

 2022

 Loans
 including fees

 $
 32,552

 $
 27,739

 Interest-earning
 deposits with banks

 2,239

 1,514

 Investments

 2,167

 1,983

 Dividends
 on equity securities (restricted)

 Total
 interest and dividend income

 37,135

 31,390

 INTEREST
 EXPENSE

 Deposits

 7,582

 1,875

 Borrowed
 funds

 1,534

 1,230

 Total
 interest expense

 9,116

 3,105

 NET
 INTEREST INCOME

 28,019

 28,285

 PROVISION
 FOR CREDIT LOSSES

 NET
 INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 27,370

 27,660

 NONINTEREST

 Service
 charges and fees

 3,886

 3,969

 Card
 processing and interchange income

 3,730

 3,769

 Insurance
 and investment fees

 1,084

 Other
 noninterest income

 1,249

 Total
 noninterest income

 9,949

 9,240

 NONINTEREST
 EXPENSES

 Salaries
 and employee benefits

 14,256

 13,365

 Occupancy
 and equipment expenses

 3,943

 4,135

 Data
 processing and telecommunications

 2,481

 2,369

 Other
 operating expenses

 7,308

 6,650

 Total
 noninterest expenses

 27,988

 26,519

 BEFORE INCOME TAXES

 9,331

 10,381

 TAX EXPENSE

 2,147

 2,299

 NET

 $
 7,184

 $
 8,082

 Per Share

 Basic
 and Diluted

 $
 0.30

 $
 0.34

 Weighted Shares of Common Stock

 Basic
 and Diluted

 23,804,427

 23,898,185

 The
accompanying notes are an integral part of these financial statements.

 NEW
PEOPLES BANKSHARES, INC.

 CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)

 FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022

 (Dollars in thousands)

 2023

 2022

 NET

 $
 7,184

 $
 8,082

 Other
 comprehensive income (loss):

 securities activity:

 gains (losses) arising during the year

 2,896

 ( 16,617
)

 Other
 comprehensive income (losses) on investment securities

 2,896

 ( 16,617
)

 Related
 tax (expense) benefit

 ( 608
)

 3,490

 TOTAL
 OTHER COMPREHENSIVE INCOME (LOSS)

 2,288

 ( 13,127
)

 TOTAL
 COMPREHENSIVE INCOME (LOSS)

 $
 9,472

 $
 ( 5,045
)

 The accompanying notes
are an integral part of these financial statements.

 NEW PEOPLES BANKSHARES,
INC.

 CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY

 FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022

 (in thousands including
share data)

 Shares
 of Common Stock

 Stock

 Additional
 Paid-in- Capital

 Retained

Earnings

 Accumulated
 Other
Comprehensive Income (Loss)

 Total
 Shareholders' Equity

 Balance, December
 31, 2021

 23,922

 $
 47,844

 $
 14,570

 $
 2,031

 $
 ( 814
)

 $
 63,631

 Net income

 —

 —

 —

 8,082

 —

 8,082

 Other
 comprehensive loss, net of tax

 —

 —

 —

 —

 ( 13,127
)

 ( 13,127
)

 Cash dividend declared
 ($0.05 per share)

 —

 —

 —

 ( 1,196
)

 —

 ( 1,196
)

 Repurchase
 of common stock

 ( 74
)

 ( 147
)

 ( 24
)

 —

 —

 ( 171
)

 Balance,
 December 31, 2022

 23,848

 $
 47,697

 $
 14,546

 $
 8,917

 $
 ( 13,941
)

 $
 57,219

 Adoption of ASU 2016-13

 —

 $
 —

 $
 —

 $
 (212
)

 $
 —

 $
 (212
)

 Net income

 —

 —

 —

 7,184

 —

 7,184

 Other
 comprehensive income, net of tax

 —

 —

 —

 —

 2,288

 2,288

 Cash dividend declared
 ($0.06 per share)

 —

 —

 —

 ( 1,431
)

 —

 ( 1,431
)

 Repurchase
 of common stock

 (102
)

 ( 205
)

 ( 32
)

 —

 —

 ( 237
)

 Balance,
 December 31, 2023

 23,746

 $
 47,492

 $
 14,514

 $
 14,458

 $
 ( 11,653
)

 $
 64,811

 The accompanying notes
are an integral part of these financial statements.

 NEW PEOPLES BANKSHARES,
INC.

 CONSOLIDATED STATEMENTS
OF CASH FLOWS

 FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022

 (Dollars are in
thousands)

 2023

 2022

 CASH
 FLOWS FROM OPERATING ACTIVITIES

 Net

 $
 7,184

 $
 8,082

 Adjustments
 to reconcile net income to net cash provided by
operating activities:

 Depreciation

 1,614

 1,741

 Provision
 for credit losses

 (Income)
 loss on bank owned life insurance

 ( 40
)

 Gain
 on sale of mortgage loans

 ( 4
)

 ( 29
)

 (Gain)
 loss on sale or disposal of premises and equipment

 ( 46
)

 Loss
 (gain) on sale of foreclosed real estate and repossessed assets

 ( 70
)

 Loans
 originated for sale

 ( 81
)

 ( 1,577
)

 from sales of loans originated for sale

 1,606

 Adjustment
 of carrying value of foreclosed real estate and repossessed assets

 —

 Net amortization/accretion
 of bond premiums/discounts

 tax (benefit) expense

 ( 390
)

 Net change
 in:

 receivable

 ( 474
)

 ( 443
)

 Other

 ( 667
)

 interest payable

 expenses and other liabilities

 ( 1,743
)

 2,068

 Net
 cash provided by operating activities

 7,401

 13,831

 CASH
 FLOWS FROM INVESTING ACTIVITIES

 Net (increase)
 decrease in loans

 ( 53,725
)

 9,209

 Purchase
 of securities available-for-sale

 ( 500
)

 ( 19,790
)

 from repayments and maturities of securities available-for-sale

 9,369

 13,980

 Net purchase
 of equity securities (restricted)

 ( 625
)

 ( 27
)

 Payments
 for the purchase of premises and equipment

 ( 1,475
)

 ( 548
)

 from sale of premises and equipment

 —

 from insurance claims on other real estate owned or premises

 —

 from sales of other real estate owned

 Net
 cash (used in) provided by investing activities

 ( 45,892
)

 3,082

 CASH
 FLOWS FROM FINANCING ACTIVIES

 Increase
 in short-term borrowings

 —

 Net change
 in long-term debt

 9,690

 —

 Net change
 in noninterest bearing deposits

 ( 16,046
)

 ( 1,333
)

 Net change
 in interest bearing deposits

 39,806

 ( 13,473
)

 Dividends
 paid

 ( 1,431
)

 ( 1,196
)

 Repurchase
 of common stock

 ( 237
)

 ( 171
)

 Net
 cash provided by (used in) financing activities

 41,782

 ( 16,173
)

 Net increase
 in cash and cash equivalents

 3,291

 Cash
 and cash equivalents, beginning of the year

 61,686

 60,946

 Cash
 and cash equivalents, end of the year

 $
 64,977

 $
 61,686

 Supplemental
 Disclosure of Cash Paid During the Year for:

 $
 8,195

 $
 2,851

 Taxes

 3,705

 Supplemental
 Disclosure of Non-Cash Transactions:

 Right-of-use
 assets obtained in exchange for new operating lease liabilities

 —

 Transfer
 of loans to other real estate owned

 —

 Loans
 made to finance sale of foreclosed real estate

 —

 in unrealized losses on securities available for sale

 2,896

 ( 16,617
)

 The accompanying notes
are an integral part of these financial statements.

 NEW PEOPLES
BANKSHARES, INC.

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE
 1 NATURE OF OPERATIONS

 Nature of Operations
– New Peoples Bankshares, Inc. (New Peoples) is a financial holding company whose principal activity is the ownership and management
of a community bank, New Peoples Bank, Inc. (the Bank). New Peoples and the Bank are each organized and incorporated under the laws of
the Commonwealth of Virginia. As a state-chartered member bank, the Bank is subject to regulation by the Virginia Bureau of Financial
Institutions, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System. The Bank provides general
banking services to individuals, small and medium size businesses and the professional community of southwest Virginia, southern West
Virginia, northeastern Tennessee and western North Carolina. These services include commercial and consumer loans along with traditional
deposit products such as checking and savings accounts.

 NOTE
 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Basis
 of Presentation and Consolidation –
 The consolidated financial statements include New Peoples, the Bank, NPB Insurance Services,
 Inc., and NPB Web Services, Inc. (Hereinafter, collectively referred to as the Company, we,
 us, or our). All significant intercompany balances and transactions have been eliminated.
 In accordance with Accounting Standards Codification (ASC) 942, Financial Services –
 Depository and Lending, NPB Capital Trust I and 2 are not included in the consolidated financial
 statements.

 Accounting
 Standards Adopted in 2023 –
 On January
 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic
 326): Measurement of Credit Losses on Financial Instruments (ASC 326). This standard replaced
 the incurred loss methodology with an expected loss methodology that is referred to as the
 current expected credit loss ("CECL") methodology. CECL requires an estimate
 of credit losses for the remaining estimated life of the financial asset using historical
 experience, current conditions, and reasonable and supportable forecasts and generally applies
 to financial assets measured at amortized cost, including loan receivables and held-to-maturity
 debt securities, and some off-balance sheet credit exposures such as unfunded commitments
 to extend credit. Financial assets measured at amortized cost will be presented at the net
 amount expected to be collected by using an allowance for credit losses.

 In addition, CECL
made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as
an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe
that it is more likely than not, they will be required to sell.

 The Company adopted
ASC 326 and all related subsequent amendments thereto effective January 1, 2023 using the modified retrospective approach for all financial
assets measured at amortized cost and off-balance sheet credit exposures. The transition adjustment of the adoption of CECL included
a decrease in the allowance for credit losses on loans of $80,000, which is presented as a reduction to net loans outstanding, and an
increase in the allowance for credit losses on unfunded loan commitments of $348,000, which is recorded within other liabilities. The
Company recorded a net decrease to retained earnings of $212,000 as of January 1, 2023 for the cumulative effect of adopting CECL, which
reflects the transition adjustments noted above, net of the applicable deferred tax assets recorded. Results for reporting periods beginning
after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with previously applicable
accounting standards ("Incurred Loss").

 The Company adopted
ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior
to January 1, 2023. As of December 31, 2022, the Company did not have any other-than-temporarily impaired investment securities. Therefore,
upon adoption of ASC 326, the Company determined that an allowance for credit losses on available-for-sale securities was not deemed
material.

illustrates the impact on the allowance for credit losses from the adoption of ASC 326:

 of allowance for credit losses on available for sale securities

 January
 1, 2023
As Reported Under ASC 326

 31, 2022 Pre-ASC 326 Adoption

 Impact
 of ASC 326 Adoption

 Assets:

 Loans,
 at amortized cost

 $

 $

 $
 —

 for credit losses on loans:

 Real

 2,065

 2,364

 ( 299
)

 2,639

 2,364

 Total

 5,715

 5,488

 ( 5
)

 and other loans

 ( 103
)

 —

 ( 440
)

 Total
 allowance for credit losses for loans

 6,647

 6,727

 ( 80
)

 tax asset

 4,679

 4,623

 Liabilities:

 for credit losses for unfunded commitments

 —

 The Company elected
not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on loans
or securities that are placed on nonaccrual status, which is generally when the instrument is 90 days past due, or earlier if the Company
believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectible
interest.

 On January 1, 2023,
concurrent with its adoption of ASU No. 2016-13, the Company adopted ASU No. 2022-02, "Financial Instruments-Credit Losses (Topic
326), Troubled Debt Restructurings and Vintage Disclosures." The amendments eliminate the accounting guidance for troubled debt
restructurings ("TDRs") by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancings
and restructurings made with borrowers experiencing financial difficulty. Disclosures about periods prior to adoption will be presented
under GAAP applicable for that period.

 Similar to its policy
under previous GAAP, the Company continues to identify modifications to loans and to determine whether the borrower is experiencing financial
difficulty. If the Company determines that the borrower is experiencing financial difficulty, the loan's risk rating is evaluated
to determine whether it falls within the regulatory definition of "criticized" and requires individual evaluation. Under
previous GAAP, modifications to loans when the borrower was experiencing financial difficulty were designated as TDRs and were individually
evaluated for the duration of the loan. Under CECL, if a previously modified loan with financial difficulty is subsequently upgraded
to a pass rating, it will no longer be individually evaluated.

 Use
 of Estimates –
 The
 preparation of financial statements in conformity with generally accepted accounting principles
 of the United States (GAAP) requires management to make estimates and assumptions that affect
 the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
 at the date of the financial statements and the reported amounts of revenues and expenses
 during the reporting period. Actual results could differ from those estimates. The determination
 of the adequacy of the allowance for credit losses is based on estimates that are particularly
 susceptible to significant changes in the economic environment and market conditions.

 Cash
 and Cash Equivalents –
 Cash and cash equivalents as used in the cash flow statements include cash and due from banks,
 interest-bearing deposits with banks, federal funds sold and investment securities when purchased
 within three months of maturity.

 Securities –
 Management determines the appropriate classification of securities at the time of purchase.
 If management has the intent and the Company has the ability at the time of purchase to hold
 securities until maturity, they are classified as held to maturity and carried at amortized
 historical cost. Securities not intended to be held to maturity are classified as available-for-sale
 and carried at fair value. Securities available-for-sale are intended to be used as part
 of the Company's asset and liability management strategy and may be sold in response
 to changes in interest rates, prepayment risk or other similar factors.

 The amortization
of premiums and accretion of discounts are recognized in interest income using the effective interest method over the period to maturity
for discounts and the earlier of call date or maturity for premiums. Realized gains and losses on dispositions are based on the net proceeds
and the adjusted book value of the securities sold, using the specific identification method. Realized gains (losses) on securities available-for-sale
are included in noninterest income and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive
loss. Unrealized gains and losses on investment securities available for sale are based on the difference between book value and fair
value of each security. These gains and losses are credited or charged to other comprehensive loss, net of tax, whereas realized gains
and losses flow through the statements of income.

 for Credit Losses – Available-for-Sale Securities –
 For
 available-for-sale securities, management evaluates all investments in an unrealized loss
 position on a quarterly basis, and more frequently when economic or market conditions warrant
 such evaluation. If the Company has the intent to sell the security or it is more likely
 than not that the Company will be required to sell the security, the security is written
 down to fair value and the entire loss is recorded in earnings.

 If either of the
above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In
making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost,
performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to
make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates
that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security
and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less than the amortized cost
basis. Any amount of unrealized loss that has not been recorded through an allowance for credit losses is recognized in other comprehensive
income (loss).

 Changes in the allowance
for credit losses are recorded as provision for (or reversal of) credit losses expense. Losses are charged against the allowance for
credit losses when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria
regarding intent or requirement to sell is met. As of December 31, 2023, there was no allowance for credit losses related to the available-for-sale
portfolio.

 Loans
 held for sale –
 loans originated and intended for sale in the secondary market are carried at the lower of
 aggregate cost or fair value, as determined by outstanding commitments from investors. Net
 unrealized losses, if any, are recorded as a valuation allowance through earnings. Mortgage
 loans held for sale are generally sold with servicing released. Gains and losses on sales
 of mortgages are based on the difference between the selling price and the carrying value
 of the related loan sold.

 Loans
 –
 Loans
 that management has the intent and ability to hold for the foreseeable future or until maturity
 or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding,
 net of purchase premiums and discounts and deferred fees and costs. Accrued interest receivable
 related to loans totaled $2.6 million as of December 31, 2023 and was reported in accrued
 interest receivable on the consolidated balance sheets. Interest income is accrued on the
 unpaid principal balance. Loan origination fees, net of certain direct origination costs,
 are deferred and recognized in interest income using methods that approximate a level yield
 without anticipating prepayments.

 The accrual of interest
is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when
management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not
be collectible in the normal course of business. Past due status is based on contractual terms of the loan. A loan is considered to be
past due when a scheduled payment has not been received 30 days after the contractual due date.

 All accrued interest
is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using
the cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until
the loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due
are brought current, there is a sustained period of repayment performance, and future payments are reasonably assured.

 Significant
 Group Concentrations of Credit Risk –
 The
 Company identifies a concentration as any obligation, direct or indirect, of the same or
 affiliated interests which represent 25% or more of the Company's capital structure,
 or $16.2 million as of December 31, 2023. Most of the Company's activities are with
 customers located within southwest Virginia, southern West Virginia, northeastern Tennessee
 region and western North Carolina. Certain concentrations may pose credit risk. The Company
 does not have any significant concentrations to any one industry or customer.

 for Credit Losses – Loans –
 The
 allowance for credit losses is a valuation account that is deducted from the loans'
 amortized cost basis to present the net amount expected to be collected on the loans. Loans
 are charged off against the allowance when management believes the uncollectibility of a
 loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously
 charged-off and expected to be charged-off. Accrued interest receivable is excluded from
 the estimate of credit losses.

credit losses represents management's estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance
for credit losses is estimated by management using relevant available information, from both internal and external sources, relating
to past events, current conditions, and reasonable and supportable forecasts.

 The Company primarily
utilizes the cohort and the probability of default/loss given default methodologies for its reasonable and supportable forecasting of
current expected credit losses. To further adjust the allowance for credit losses for expected losses not already included within the
quantitative component of the calculation, the Company may consider the following qualitative adjustment factors: changes to: lending
policies and procedures, national and local economic conditions, the experience and ability of management and staff; the volume and severity
of past due, rated and nonaccrual assets, loan review system, collateral value, concentrations of credit, and legal or regulatory requirements
and competition.

 The Company measures
expected credit losses for loans on a pooled basis when similar risk characteristics exist. The Company has identified the following
portfolio segments and calculates the allowance for credit losses for each using a discounted cash flow methodology:

 •
 Real Estate Loans. We originate loans to qualified businesses and individuals in our market
 area for the purchase, construction or refinancing of commercial real estate. These loans
 consist of owner occupied, non-owner occupied and multi-family transactions. Owner occupied
 real estate properties primarily include retail buildings, medical buildings and industrial/warehouse
 space. Owner-occupied loans are typically repaid first by the cash flows generated by the
 borrower's business operations. The primary risk characteristics are specific to the
 underlying business and its ability to generate sustainable profitability and positive cash
 flow. Non-owner occupied commercial real estate properties primarily include retail buildings,
 hotels, office/medical buildings and industrial/warehouse space. Increases in vacancy rates,
 interest rates or other changes in general economic conditions can have an impact on the
 borrower and their ability to repay the loan. Non-owner occupied commercial real estate loans
 are generally considered to have a higher degree of credit risk as they may be dependent
 on the ongoing success and operating viability of a fewer number of tenants who are occupying
 the property and who may have a greater degree of exposure to economic conditions. Multifamily
 loans are expected to be repaid from the cash flows of the underlying property so the collective
 amount of rents must be sufficient to cover all operating expenses, property management and
 maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other
 changes in general economic conditions can have an impact on the borrower and their ability
 to repay the loan. Construction loans include not only construction of new structures, but
 also additions or alterations to existing structures. Construction loans are generally secured
 by real estate. The primary risk characteristics are specific to the uncertainty on whether
 the construction will be completed according to the specifications and schedules. Factors
 that may influence the completion of construction may be customer specific, such as the quality
 and depth of property management, or related to changes in general economic conditions.

 •
 Loans. We make commercial loans to qualified businesses in our market area. Our commercial
 lending consists primarily of commercial and industrial loans to finance accounts receivable,
 inventory, property, plant and equipment. Commercial business loans generally have a higher
 degree of risk than residential mortgage loans but have commensurately higher yields. Residential
 mortgage loans are generally made on the basis of the borrower's ability to make repayment
 from employment and other income and are secured by real estate whose value tends to be easily
 ascertainable. In contrast, commercial business loans typically are made on the basis of
 the borrower's ability to make repayment from cash flow from its business and are secured
 by business assets, such as commercial real estate, accounts receivable, equipment and inventory.
 As a result, the availability of funds for the repayment of commercial business loans may
 be substantially dependent on the success of the business itself. Further, the collateral
 for commercial business loans may depreciate over time and cannot be appraised with as much
 precision as residential real estate. To manage these risks, our underwriting guidelines
 generally require us to secure commercial loans with both the assets of the borrowing business
 and other additional collateral and guarantees that may be available. In addition, we actively
 monitor certain measures of the borrower, including advance rate, cash flow, collateral value
 and other appropriate credit factors.

 •
 Mortgage Loans. Our residential mortgage loans consist of residential first and second mortgage
 loans, residential construction loans, home equity lines of credit and term loans secured
 by first and second mortgages on the residences of borrowers for home improvements, education
 and other personal expenditures. We make mortgage loans with a variety of terms, including
 fixed and floating or variable rates and a variety of maturities. Under our underwriting
 guidelines, residential mortgage loans are generally made on the basis of the borrower's
 ability to make repayment from employment and other income and are secured by real estate
 whose value tends to be easily ascertainable. These loans are made consistent with our appraisal
 policies and real estate lending policies, which detail maximum loan-to-value ratios and
 maturities.

 •
 Loans. Construction lending entails significant additional risks compared to residential
 mortgage lending. Construction loans often involve larger loan balances concentrated with
 single borrowers or groups of related borrowers. Construction loans also involve additional
 risks attributable to the fact that loan funds are advanced upon the security of property
 under construction, which is of uncertain value prior to the completion of construction.
 Thus, it is more difficult to evaluate the total loan funds required to complete a project
 and related loan-to-value ratios accurately. To minimize the risks associated with construction
 lending, loan-to-value limitations for residential, multi-family and non-residential construction
 loans are in place. These are in addition to the usual credit analyses of borrowers. Management
 feels that the loan-to-value ratios help to minimize the risk of loss and to compensate for
 normal fluctuations in the real estate market. Maturities for construction loans generally
 range from 4 to 12 months for residential property and from 6 to 18 months for non-residential
 and multi-family properties.

 •
 Loans. Our consumer loans consist primarily of installment loans to individuals for personal,
 family and household purposes. The specific types of consumer loans that we make include
 home improvement loans, debt consolidation loans and general consumer lending. Consumer loans
 entail greater risk than residential mortgage loans, particularly in the case of consumer
 loans that are unsecured, such as lines of credit, or secured by rapidly depreciating assets
 such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan
 may not provide an adequate source of repayment of the outstanding loan balance due to the
 greater likelihood of damage, loss or depreciation. The remaining deficiency often does not
 warrant further substantial collection efforts against the borrower. In addition, consumer
 loan collections are dependent on the borrower's continuing financial stability, and
 thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.
 Furthermore, the application of various federal and state laws, including federal and state
 bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans.
 A borrower may also be able to assert against the Bank as an assignee any claims and defenses
 that it has against the seller of the underlying collateral.

 Loans that do not
share risk characteristics are evaluated on an individual basis. The Company designates loan relationships of $250,000 or more that have
been determined to meet the regulatory definitions of "special mention" or "classified" (together known as "criticized")
as individually evaluated. The fair value of individually evaluated loans is measured using the fair value of collateral ("collateral
method") or the DCF method.

 •
 The
 collateral method is applied to individually evaluated loans for which foreclosure is probable.
 The collateral method is also applied to individually evaluated loans when borrowers are
 experiencing financial difficulty and repayment is expected to be provided substantially
 through the operation or sale of the collateral ("collateral dependent"). The
 allowance for credit losses is measured based on the difference between the fair value of
 the collateral and the amortized cost basis of the loan as of the measurement date. When
 repayment is expected to be from the operation of the collateral, the allowance for credit
 losses is calculated as the amount by which the amortized cost basis of the loan exceeds
 the present value of expected cash flows from the operation of the collateral. When repayment
 is expected to be from the sale of the collateral, the allowance for credit losses is calculated
 as the amount by which the loan's amortized cost basis exceeds the fair value of the
 underlying collateral less estimated cost to sell. The allowance for credit losses may be
 zero if the fair value of the collateral at the measurement date exceeds the amortized cost
 basis of the loan.

 •
 The
 DCF method is applied to individually evaluated loans that do not meet the criteria for collateral
 method measurement. Cash flows are projected and discounted using the same method as for
 collectively evaluated loans, and the Company considers default and prepayment assumptions.

 for Credit Losses – Unfunded Commitments –
 instruments include off-balance sheet credit instruments such as commitments to make loans
 and commercial letters of credit issued to meet customer financing needs. The Company's
 exposure to credit loss in the event of nonperformance by the other party to the financial
 instrument for off-balance sheet loan commitments is represented by the contractual amount
 of those instruments. Such financial instruments are recorded when they are funded.

 The Company records
an allowance for credit losses on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable,
through a charge to provision for unfunded commitments, which is included in the provision for credit losses, in the Company's
consolidated statements of income. The allowance for credit losses on off-balance sheet credit exposures is estimated by loan segment
at each balance sheet date under the current expected credit loss model using the same methodologies as portfolio loans, taking into
consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for unfunded commitments is
included in other liabilities on the Company's consolidated balance sheets.

 Bank
 Premises and Equipment –
 Land, buildings and equipment are recorded at cost less accumulated depreciation. Depreciation
 is computed using the straight-line method over the following estimated useful lives:

 of estimated useful lives

 Type

 Estimated
 useful life

 Buildings

 – 40
 years

 Paving
 and landscaping

 years

 Computer
 equipment and software

 to 5
 years

 Vehicles

 years

 Furniture
 and other equipment

 to 10
 years

 Leasehold
improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter.
Repairs and maintenance costs are recorded as a component of noninterest expense as incurred.

 Other
 Real Estate Owned –
 Other real estate owned represents properties acquired through foreclosure or deeds taken
 in lieu of foreclosure and former branch sites that have been closed and for which there
 are no intentions to re-open or otherwise use the location and the time anticipated to dispose
 of the property is expected to not be short-term. At the time of acquisition, these properties
 are recorded at fair value less estimated costs to sell. Expenses incurred in connection
 with operating these properties and subsequent write-downs, if any, are charged to operations.
 Subsequent to foreclosure, management periodically considers the adequacy of the reserve
 for losses on the property. Gains and losses on the sales of these properties are credited
 or charged to income in the year of the sale.

 Bank
 Owned Life Insurance ("BOLI") –
 The
 Bank purchased life insurance policies on certain, now-former, key officers and employees.
 Changes in the cash surrender value are recorded in noninterest income.

 Leases
 –
 A right-of-use asset and related lease liability is recognized for operating leases the Bank
 has entered into for certain office facilities. Most leases include one or more options to
 renew. The exercise of lease renewal options is typically at the sole discretion of management.
 If it is determined that it is reasonably certain that the Bank will exercise renewal options,
 the additional term is included in the calculation of the lease liability. As most of our
 leases do not provide an implicit rate, we use the fully collateralized Federal Home Loan
 Bank borrowing rate, commensurate with the lease terms at the lease commencement date, in
 determining the present value of the lease payments.

 Taxes –
 Deferred tax assets or liabilities are computed based upon the difference between financial
 statement and income tax bases of assets and liabilities using the enacted marginal tax rate.
 The Company provides a valuation allowance on its net deferred tax assets where it is more
 likely than not such assets will not be realized. As of December 31, 2023 and 2022, the Company
 had no valuation allowance on its net deferred tax assets.

 The Company recognizes
the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such
positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. See
Note 10, Income Taxes, for additional information. The Company records any penalties and interest attributed to uncertain tax positions
as a component of income tax expenses.

 Per Share –
 Basic income per share computations are based on the weighted average number of shares outstanding
 during each period. Dilutive earnings per share reflect the additional common shares that
 would have been outstanding if dilutive potential common shares had been issued.

 Instruments – Off-balance-sheet instruments -
 In the ordinary course of business, the Company has entered into commitments to extend credit.
 Such financial instruments are recorded in the financial statements when they are funded.

 Instruments – Fair Value –
 Fair values of financial instruments are estimated using relevant market information and
 other assumptions, as more fully discussed in Note 23. Fair value estimates involve uncertainties
 and matters of significant judgment regarding interest rates, credit risks, prepayments and
 other factors, especially in the absence of broad markets for particular items. Changes in
 assumptions or market conditions could significantly affect these estimates.

 Comprehensive
 Income (Loss) –
 GAAP requires that recognized revenue, expenses, gains and losses be included in net income.
 Although certain changes in assets and liabilities, such as unrealized gains and losses on
 available-for-sale securities, are reported as a separate component of the equity section
 of the balance sheet, such items, along with net income, are components of comprehensive
 income (loss). The change in unrealized gains and losses on available-for-sale securities
 is the Company's only component of other comprehensive loss.

 Revenue
 from Contracts with Customers -
 The
 Company generally satisfies its performance obligations fully on its contracts with customers
 as services are rendered; and the transaction prices are typically fixed, charged either
 on a periodic basis or based on activity.

 Advertising
 Cost –
 Advertising costs are expensed in the period incurred. Those costs, which are included in
 Advertising, sponsorships and donations in Note 25 totaled $206,000 and $162,000, for the
 years ended December 31, 2023 and 2022, respectively.

 Reclassification
 –
 Certain reclassifications have been made to the prior years' financial statements to
 place them on a comparable basis with the current year. Net income and shareholders'
 equity previously reported were not affected by these reclassifications.

 Subsequent
 Events –
 The Company has evaluated subsequent events for potential recognition and/or disclosure through
 the date these consolidated financial statements were issued. See Note 26 Subsequent Events
 for additional information.

 NOTE
 3 INCOME PER SHARE

 Basic income per
share computations are based on the weighted average number of shares outstanding during each year. Dilutive earnings per share reflect
the additional common shares that would have been outstanding if dilutive potential common shares had been issued. For the years ended
December 31, 2023 and 2022, there were no dilutive potential common shares.

 Basic and diluted
net income per common share calculations follows:

 of basic and diluted net loss per common share calculations

 (Amounts
 in thousands, except

 For
 the year ended

 share
 and per share data)

 31,

 2023

 2022

 Net

 $
 7,184

 $
 8,082

 Weighted
 average shares outstanding

 23,804,427

 23,898,185

 Weighted
 average dilutive shares outstanding

 23,804,427

 23,898,185

 Basic
 and diluted income per share

 $
 0.30

 $
 0.34

 NOTE
 4 DEPOSITS IN AND FEDERAL FUNDS SOLD TO BANKS

 The Bank had federal
funds sold and interest-bearing cash on deposit with the Federal Reserve Bank of Richmond (the Federal Reserve Bank) and other commercial
banks amounting to $50.4 million and $47.7 million as of December 31, 2023 and 2022, respectively. Deposit amounts at other commercial
banks may, at times, exceed federally insured limits.

 The Bank has a total
of $30.0 million in unsecured fed funds lines of credit facilities from three correspondent banks that were available as of December
31, 2023 and 2022, respectively. Of these total commitments, all were available as of December 31, 2023 and 2022. As a condition for
$5.0 million of one of the unsecured fed funds lines of credit, the Bank maintains a minimum deposit balance of $250,000 with this correspondent
bank. As of December 31, 2023 and 2022, the Bank was in compliance with this requirement.

 NOTE
 5 INVESTMENT SECURITIES

 The amortized cost and estimated fair
value of securities (all available-for-sale) as of December 31, 2023 and 2022 are as follows:

 of securities amortized cost and estimated fair value

 Gross

 Gross

 Approximate

 Amortized

 Fair

 Cost

 Gains

 Losses

 Value

 U.S.

 $

 11,643

 $

 -

 $

 $

 U.S.

 9,412

 8,811

 22,973

 -

 5,114

 17,859

 bonds

 3,002

 2,688

 57,526

 -

 8,064

 49,462

 Total
 Securities available for sale

 $

 104,556

 $

 $

 14,775

 $

 U.S.

 $

 12,642

 $

 -

 $

 $

 11,685

 U.S.

 10,129

 9,399

 23,022

 -

 6,207

 16,815

 bonds

 3,512

 -

 3,136

 64,419

 -

 9,378

 55,041

 Total
 Securities available for sale

 $

 113,724

 $

 $

 17,652

 $

 96,076

details unrealized losses and related fair values in the available-for-sale portfolio. This information is aggregated by the length of
time that individual securities have been in a continuous unrealized loss position as of December 31, 2023 and 2022.

 of fair value and gross unrealized losses on investment securities

 Less
 than 12 Months

 Months or More

 Total

 Fair
 Value

 Losses

 Fair

 Value

 Losses

 Fair

 Value

 Losses

 U.S.

 $

 -

 $

 -

 $

 $

 $

 $

 U.S.

 -

 8,123

 8,165

 17,374

 5,098

 17,859

 5,114

 bonds

 -

 -

 2,187

 2,187

 -

 -

 49,413

 8,064

 49,413

 8,064

 Total

 $

 $

 $

 88,082

 $

 14,759

 $

 88,609

 $

 14,775

 U.S.

 $

 4,761

 $

 $

 6,922

 $

 $

 11,683

 $

 U.S.

 5,925

 3,295

 9,220

 3,689

 1,113

 13,127

 5,094

 16,816

 6,207

 bonds

 2,375

 3,136

 11,338

 43,612

 8,517

 54,950

 9,378

 Total

 $

 28,088

 $

 2,603

 $

 67,717

 $

 15,049

 $

 95,805

 $

 17,652

2023, the available-for-sale portfolio included 209 investments for which the fair market value was less than amortized cost. As of December
31, 2022, the available-for-sale portfolio included 221 investments for which the fair market value was less than amortized cost. Management
believes that all unrealized losses have resulted from temporary changes in the interest rates and current market conditions and are
not a result of credit deterioration. Management does not plan to sell, and it is not likely that the Bank will be required to sell any
of the securities referenced in the table above before recovery of their amortized cost. None of the individual securities are past due
as

 to principal or interest
payments and a number of these securities have explicit or implicit payment guarantees. The remaining securities have credit ratings
at or above that necessary to be considered "bank qualified."

 Investment securities
with a carrying value of $36.8 million and $27.3 million as of December 31, 2023 and 2022, respectively, were pledged to secure public
deposits and for other purposes required or permitted by law.

 There were no sales
of available-for-sale investment securities during the years ended December 31, 2023 and 2022.

 The amortized
cost and fair value of investment securities as of December 31, 2023, by contractual maturity, are shown in the following schedule. Expected
maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties. Also, actual maturities may differ from scheduled maturities on amortizing securities, such as mortgage-backed
securities and collateralized mortgage obligations, because the underlying collateral on these types of securities may be repaid prior
to the scheduled maturity date.

 of amortized cost and fair value of investment securities contractual maturity

 Weighted

 Amortized

 Fair

 Available for Sale

 Cost

 Value

 Yield

 Due
 in one year or less

 $

 5,263

 $

 5,149

 1.87 %

 Due
 after one year through five years

 12,966

 12,205

 2.10 %

 Due
 after five years through ten years

 16,805

 14,849

 2.34 %

 Due
 after ten years

 69,522

 57,602

 1.90 %

 Total

 $

 104,556

 $

 2.00 %

 The Bank, as a member
of the Federal Reserve Bank and the Federal Home Loan Bank of Atlanta (FHLB), is required to hold stock in each. The Bank also owns stock
in CBB Financial Corp., which is a correspondent of the Bank. These equity securities, which are included in other assets on the consolidated
balance sheet, are restricted from trading and are recorded at a cost of $2.7 million and $2.1 million as of December 31, 2023 and 2022,
respectively. The stock has no quoted market value and no ready market exists.

 NOTE
 6 LOANS

 Loans receivable
outstanding as of December 31, 2023 and 2022, are summarized as follows:

 Summary
 of loans receivable outstanding

 31,

 2023

 2022

 Real

 $

 $

 Total

 558,222

 514,225

 46,697

 3,508

 3,756

 22,639

 19,309

 All

 Total
 loans

 $

 $

 Also included in
total loans above are deferred loan fees of $1.8 million and $1.6 million, as of December 31, 2023 and 2022, respectively. Total deferred
loan costs were $2.0 million and $1.9 million, as of December 31, 2023 and 2022, respectively. Income from net deferred fees and costs
is recognized over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities any unamortized
fee or cost is recognized at that time.

 Loans receivable
on nonaccrual status as of December 31, 2023 and 2022 are summarized as follows:

 Summary
 of loans receivable on nonaccrual status

 CECL

 Incurred
 Loss

 With
 No Allowance

 With
 an Allowance

 Total

 Real

 $

 $

 $

 $

 -

 -

 -

 -

 2,495

 -

 2,495

 2,597

 -

 -

 -

 -

 Total

 3,238

 3,506

 3,377

 -

 -

 -

 -

 installment loans and other loans

 -

 Total
 loans receivable on nonaccrual status

 $

 3,266

 $

 $

 3,534

 $

 3,413

 Total interest income
not recognized on nonaccrual loans for 2023 and 2022 was approximately $61,000 and $10,000, respectively.

 Prior to the adoption
of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable
to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans included loans on
nonaccrual status and accruing troubled debt restructurings. When determining if the Company would be unable to collect all principal
and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower's
capacity to pay, which included such factors as the borrower's current financial statements, an analysis of global cash flow sufficient
to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The
Company individually assessed for impairment all nonaccrual loans greater than $250,000 and all troubled debt restructurings, whether
or not currently classified as such. The tables below include all loans deemed impaired, whether or not individually assessed for impairment.
If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the
present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment was
expected solely from the collateral. Interest payments on impaired loans were typically applied to principal unless collectability of
the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

 Upon adoption of
ASU 2016-13 the Company began evaluating loans that do not share risk characteristics on an individual basis utilizing the collateral
or discounted cash flow methods as described in Note 2 Summary of Significant Accounting Policies. The following table presents the amortized
cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance
for credit losses allocated to those loans as December 31, 2023:

 of summary of impaired loans

 (Dollars in
 thousands)

 Unpaid
 Principal Balance

 Related

 Real

 $

 $

 -

 -

 -

 -

 -

 -

 -

 Total
 real estate secured

 1,124

 -

 -

 -

 -

 -

 -

 Total

 $

 1,124

 $

 The following table presents loans individually
evaluated for impairment by class of loans as of December 31, 2022:

 As of December

 (Dollars are

 Recorded

 Recognized

 Recorded

 Unpaid Principal

 Related

 With
 no related allowance recorded:

 Real

 $

 $

 $

 $

 $

 -

 -

 1,585

 1,617

 1,972

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 All

 -

 -

 -

 -

 -

 With
 an allowance recorded:

 Real

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 All

 -

 -

 -

 -

 -

 Total

 $

 3,154

 $

 $

 2,749

 $

 3,428

 $

 The following tables
show an age analysis of past due loans receivable as of December 31, 2023 and 2022, segregated by class:

 Summary
 age analysis of past due loans receivable

 As of December 31, 2023

 Loans

 30-59

 Days

 Past

 Due

 Loans

 60-89

 Days

 Past

 Due

 Loans

 90 or

 More

 Days

 Past

 Due

 Total

 Past

 Due

 Loans

 Loans

 Total

 Loans

 Real

 $

 $

 -

 $

 $

 1,146

 $

 239,041

 $

 and land

 development

 -

 28,741

 2,628

 1,119

 4,633

 233,600

 -

 -

 34,372

 -

 -

 -

 -

 Total

 3,591

 1,123

 1,353

 6,067

 552,155

 558,222

 -

 -

 53,210

 -

 -

 3,500

 3,508

 installment

 loans

 22,487

 22,639

 All

 -

 -

 -

 -

 Total
 loans

 $

 3,739

 $

 1,154

 $

 1,354

 $

 6,247

 $

 631,864

 $

 As of December 31, 2022

 Loans

 30-59

 Days

 Past

 Due

 Loans

 60-89

 Days

 Past

 Due

 Loans

 90 or

 More

 Days

 Past

 Due

 Total

 Past

 Due

 Loans

 Loans

 Total

 Loans

 Real

 $

 $

 -

 $

 -

 $

 $

 196,801

 $

 and land

 development

 -

 -

 42,381

 3,521

 4,405

 222,827

 -

 -

 29,481

 -

 -

 17,459

 Total

 4,392

 5,276

 508,949

 514,225

 -

 -

 46,641

 46,697

 -

 -

 -

 -

 3,756

 3,756

 installment

 loans

 19,202

 19,309

 All

 -

 -

 Total
 loans

 $

 4,580

 $

 $

 $

 5,498

 $

 579,115

 $

 As of December 31, 2023 and 2022, there
were no loans over 90 days past due that were accruing.

 The Company categorizes
loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current
financial information, historical payment experience, credit documentation, public information, and current economic trends, among other
factors. The Company analyzes loans and leases individually by classifying the loans receivable as to credit risk. The Company uses the
following definitions for risk ratings:

 Pass - Loans
in this category are considered to have a low likelihood of loss based on analysis of relevant information about the ability of the borrowers
to service their debt and other factors.

 Special Mention
 - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower's operations,
credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying
a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.
 Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect
the Company's credit position at some future date.

- A substandard loan is inadequately protected by the current sound net worth and paying capacity of the
obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize
the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies
are not corrected.

 Doubtful
 - Loans classified Doubtful have all the weaknesses
inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on
the basis of currently existing facts, conditions, and values highly questionable and improbable. There were no loans classified as doubtful
at either December 31, 2023 or 2022.

presents the credit risk grade of loans by origination year as of December 31, 2023:

 Summary
 of risk category of loans receivable

 As of December

 2023

 2022

 2021

 2020

 2019

 Prior

 Revolving

 Total

 real estate

 Pass

 $

 46,616

 $

 49,061

 $

 48,943

 $

 28,651

 $

 20,004

 $

 43,524

 $

 $

 237,796

 -

 -

 1,171

 -

 -

 1,577

 -

 -

 -

 -

 -

 Total
 commercial real estate

 $

 46,616

 $

 49,061

 $

 50,114

 $

 28,965

 $

 20,433

 $

 44,001

 $

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 and Land Development

 Pass

 $

 12,043

 $

 5,990

 $

 4,738

 $

 2,521

 $

 1,799

 $

 1,637

 $

 -

 $

 28,728

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 construction and land development

 $

 12,043

 $

 5,990

 $

 4,738

 $

 2,521

 $

 1,799

 $

 1,739

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 29,006

 $

 33,986

 $

 41,214

 $

 13,566

 $

 13,662

 $

 80,087

 $

 23,553

 $

 235,074

 -

 -

 -

 -

 -

 -

 -

 -

 2,662

 2,900

 Total
 residential 1-4 family

 $

 29,093

 $

 33,986

 $

 41,263

 $

 13,566

 $

 13,700

 $

 83,008

 $

 23,617

 $

 $

 -

 $

 -

 $

 ( 30)

 $

 -

 $

 -

 $

 ( 21)

 $

 -

 $

 ( 51)

 Pass

 $

 5,779

 $

 11,483

 $

 7,965

 $

 2,626

 $

 1,081

 $

 5,438

 $

 -

 $

 34,372

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 multifamily

 $

 5,779

 $

 11,483

 $

 7,965

 $

 2,626

 $

 1,081

 $

 5,637

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 1,807

 $

 2,222

 $

 3,414

 $

 $

 1,205

 $

 6,793

 $

 -

 $

 16,217

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 farmland

 $

 1,807

 $

 2,222

 $

 3,414

 $

 $

 1,205

 $

 6,977

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 19,306

 $

 10,228

 $

 5,638

 $

 1,591

 $

 2,167

 $

 1,342

 $

 12,777

 $

 53,049

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 commercial

 $

 19,384

 $

 10,328

 $

 5,638

 $

 1,591

 $

 2,167

 $

 1,345

 $

 12,777

 $

 $

 -

 $

 ( 5)

 $

 ( 14)

 $

 -

 $

 ( 26)

 $

 -

 $

 -

 $

 ( 45)

 Pass

 $

 $

 $

 $

 $

 $

 $

 1,217

 $

 3,490

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 agriculture

 $

 $

 $

 $

 $

 $

 $

 1,217

 $

 3,508

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 ( 59)

 $

 -

 $

 ( 59)

 and All Other

 Pass

 $

 12,352

 $

 4,822

 $

 2,408

 $

 $

 $

 $

 1,339

 $

 23,140

 -

 -

 -

 -

 -

 -

 -

 -

 Total
 consumer and all other

 $

 12,356

 $

 4,823

 $

 2,409

 $

 $

 $

 $

 1,339

 $

 23,151

 $

 ( 198)

 $

 ( 49)

 $

 ( 13)

 $

 -

 $

 -

 $

 ( 2)

 $

 ( 59)

 $

 ( 321)

 Total

 $

 127,643

 $

 118,411

 $

 115,888

 $

 51,039

 $

 41,047

 $

 144,136

 $

 39,947

 $

 Total current period gross charge-offs

 $

 ( 198)

 $

 ( 54)

 $

 ( 57)

 $

 -

 $

 ( 26)

 $

 ( 82)

 $

 ( 59)

 $

 ( 476)

 The following table presents the credit
risk grade of loans as of December 31, 2022, prior to the adoption of ASU 2016-13, under the incurred loss model:

 As
 of December 31, 2022

 Pass

 Mention

 Doubtful

 Total

 Real estate secured:

 $
 195,376

 $
 1,425

 $

 $
 —

 $

 Construction and land development

 41,882

 —

 Residential 1-4 family

 224,228

 2,598

 —

 29,503

 —

 —

 16,848

 —

 Total real estate loans

 507,837

 3,010

 3,378

 —

 514,225

 46,471

 —

 —

 46,697

 3,756

 —

 —

 —

 3,756

 Consumer installment loans

 19,272

 —

 19,309

 All other loans

 —

 —

 —

 Total

 $
 577,962

 $
 3,238

 $
 3,413

 $
 —

 $

 NOTE
 7 ALLOWANCE FOR CREDIT LOSSES FOR LOANS
 ("ACLL")

 In determining the
amount of our allowance for credit losses, we rely on an analysis of our loan portfolio, our experience and our evaluation of general
economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future credit losses
and we may experience significant increases to our provision.

credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition.
The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications
of receivables to borrowers experiencing financial difficulty. Among other techniques, the Company uses a discounted cash flow methodology
to determine the allowance for credit losses.

presents a disaggregated analysis of activity in the allowance for credit losses for loans as of December 31, 2023:

 of allocation of portion of allowance

 (Dollars are

 and Land Development

 and All Other

 Total

 Year ended December 31, 2023

 Beginning balance

 $

 2,364

 $

 $

 2,364

 $

 $

 $

 $

 $

 $

 $

 6,727

 Adjustment to allowance for adoption of ASU 2016-13

 ( 299)

 ( 5)

 ( 103)

 ( 440)

 ( 80)

 Charge-offs

 -

 -

 ( 51)

 -

 -

 ( 45)

 ( 59)

 ( 321)

 -

 ( 476)

 Recoveries

 -

 -

 -

 Provision for credit losses

 ( 244)

 ( 65)

 -

 Ending balance

 $

 2,518

 $

 $

 2,666

 $

 $

 $

 $

 $

 $

 -

 $

 7,256

 The following tables
present a disaggregated analysis of activity in the allowance for credit losses as of December 31, 2022, prior to the adoption of ASU
2016-13:

 Real
 estate secured

 (Dollars are

 and Land Development

 and All Other

 Total

 Year ended December 31, 2022

 Beginning balance

 $

 2,134

 $

 $

 2,237

 $

 $

 $

 1,099

 $

 $

 $

 $

 6,735

 Charge-offs

 ( 5)

 ( 149)

 ( 64)

 ( 111)

 ( 1)

 ( 45)

 ( 1)

 ( 559)

 -

 ( 935)

 Recoveries

 -

 Provision

 ( 9)

 ( 704)

 ( 97)

 Ending balance

 $

 2,364

 $

 $

 2,364

 $

 $

 $

 $

 $

 $

 $

 6,727

 Allowance for
 loan losses at December 31, 2022

 Individually evaluated for impairment

 $

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 Collectively evaluated for impairment

 2,301

 2,341

 6,641

 $

 2,364

 $

 $

 2,364

 $

 $

 $

 $

 $

 $

 $

 6,727

 Loans at December 31, 2022

 Individually evaluated for impairment

 $

 $

 $

 1,649

 $

 -

 $

 $

 $

 -

 $

 -

 $

 -

 $

 2,749

 Collectively evaluated for impairment

 196,711

 41,999

 225,583

 17,496

 46,965

 3,756

 19,644

 -

 581,864

 $

 $

 $

 $

 $

 $

 46,988

 $

 3,756

 $

 19,644

 $

 -

 $

 Allocation of a portion
of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 NOTE
 8 MODIFICATIONS MADE TO BORROWERS EXPERIENCING FINANCIAL
 DIFFICULTY

 An assessment of
whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications
made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement
methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.
Occasionally, the Company modifies loans by providing principal forgiveness on certain of its real estate loans. When principal forgiveness
is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal
forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized
cost basis and a corresponding adjustment to the allowance for credit losses.

 In some cases, the
Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension,
is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness,
may be granted.

 There were no loans
modified to borrowers experiencing financial difficulty during the year ended December 31, 2023. Additionally, there were no loans that
had a payment default during the year that were modified in the previous 12 months.

 Prior to adoption
of ASC 2022-02, there were $2.0 million in loans classified as troubled debt restructurings as of December 31, 2022. All loans considered
to be troubled debt restructurings are individually evaluated for impairment as part of the allowance for credit losses calculation.
No loans modified during the year ended December 31, 2022 were considered to be troubled debt restructurings.

 For the year ended
December 31, 2022, there were no TDRs that subsequently defaulted within twelve months of the loan modification. Generally, a restructured
troubled debt is considered to be in default once it becomes 90 days or more past due following a modification.

 NOTE
 9 BANK PREMISES AND EQUIPMENT

 Depreciation expense
for the year ended December 31, 2023 and 2022 was $1.6 million and $1.7 million, respectively. Bank premises and equipment as of December
31, 2023 and 2022 are summarized as follows:

 of bank premises and equipment

 2023

 2022

 Land

 $

 7,206

 $

 7,371

 Buildings
 and improvements

 15,329

 15,972

 Furniture
 and equipment

 12,672

 13,965

 in progress

 -

 35,223

 37,308

 Less
 accumulated depreciation

 ( 16,958)

 ( 18,018)

 Bank
 Premises and Equipment

 $

 18,265

 $

 19,290

 As
presented in Note 14 Other Real Estate Owned, the Bank sold three former branch locations during 2022. These properties with a combined
carrying value of $2.0 million, were transferred to other real estate owned during 2021, resulting in an increase to OREO of $950,0000,
and disposal and valuation costs of approximately $1.1 million.

 NOTE
 10 INCOME TAXES

 The
Company files a consolidated federal income tax return. The following summarizes the provision for income taxes and the related deferred
tax components for the years ended December 31, 2023 and 2022.

tax expense is summarized as follows for the years ended December 31, 2023 and 2022:

 of pre-tax book income

 2023

 2022

 income tax expense

 $

 2,139

 $

 1,759

 tax expense

 tax expense

 $

 2,147

 $

 2,299

 The following
table summarizes the differences between the actual income tax expense and the amounts computed using the federal statutory tax rate
of 21% for years ended December 31, 2023 and 2022, respectively:

 of reconciliation of income tax expense

 2023

 2022

 tax expense at the applicable federal rate

 $
 2,152

 $
 2,180

 Permanent
 differences resulting from:

 Nondeductible
 expenses

 Tax
 exempt interest income

 ( 2
)

 ( 3
)

 Bank
 owned life insurance

 ( 9
)

 Other
 adjustments

 ( 6
)

 tax expense

 $
 2,147

 $
 2,299

 The net deferred
tax assets and liabilities resulting from temporary differences as of December 31, 2023 and 2022, are summarized as follows:

 of net deferred tax assets and liabilities

 2023

 2022

 tax assets

 for credit losses

 $
 1,696

 $
 1,498

 compensation

 loss on securities available for sale

 3,098

 3,706

 Other
 real estate owned

 Self-insured
 health insurance

 Lease
 Liability

 Other

 Total
 assets, gross

 6,372

 6,762

 tax liabilities

 Depreciation

 Prepaid
 expenses

 loan costs

 Right-of-use
 asset

 Total
 liabilities, gross

 1,911

 2,139

 Net
 deferred tax asset

 $
 4,461

 $
 4,623

 In
accordance with applicable accounting guidance, the Company determined that it was not required to establish a valuation allowance for
deferred tax assets as it is more likely than not that the deferred tax asset will be realized through future taxable income, future
reversals of existing taxable temporary differences and tax strategies. The Company's net deferred tax asset is recorded in the
consolidated financial statements separately.

 As
of December 31, 2023 and 2022, the Company had no unrecognized tax benefits. The Company does not expect the total amount of unrecognized
tax benefits to increase significantly over the next twelve months. The company recognizes interest and penalties as a component of income
tax expense.

 The
Company and Bank are subject to U. S. federal income tax, a capital-based franchise tax in the Commonwealth of Virginia; and income and
excise taxes in West Virginia, Tennessee and North Carolina, respectively, based on earnings realized from business activities within
each state. Years prior to 2020 are no longer subject to examination by taxing authorities.

 NOTE
 11 TIME DEPOSITS

 The aggregate amount
of time deposits that meet or exceed the Federal Deposit Insurance Corporation ("FDIC") Insurance limit of $250,000 was $52.8
million and $26.8 million as of December 31, 2023 and 2022, respectively. We had no brokered time deposits at either December 31, 2023
or 2022. As of December 31, 2023, the scheduled maturities of time deposits are as follows (dollars
are in thousands):

 of maturities

 2024

 $

 183,132

 2025

 38,564

 2026

 22,381

 2027

 4,694

 2028

 3,545

 After
 five years

 -

 Total

 $

 252,316

 NOTE
 12 RELATED PARTY TRANSACTIONS

 Officers, directors
(and companies controlled by them), principal shareholders, and associates were customers of and had loan transactions with the Bank
in the normal course of business. The following table summarizes these transactions, which were made on substantially the same terms
as those prevailing for other customers and did not involve any abnormal risk.

 of related party

 For
 the year ended December 31,

 2023

 2022

 Beginning
 balance

 $
 1,559

 $
 3,419

 New loans
 and advances on lines

 1,750

 2,636

 Effects
 of changes in composition of related parties

 1,557

 —

 Payments
 and other reductions

 ( 2,256
)

 ( 4,496
)

 Ending
 balance

 $
 2,610

 $
 1,559

 Total related party
deposits held at the Bank were $15.6 million and $29.0 million as of December 31, 2023 and 2022, respectively.

 NPB Insurance Services,
Inc. holds a 39% membership interest in Lonesome Pine Title Agency, LLC, which provides title insurance.

 NOTE
 13 RETIREMENT AND OTHER BENEFIT PLANS

 The Company has established
a qualified defined contribution plan that covers all full-time employees. The Company matches employee contributions up to a maximum
of 6% and 3% of their salary for 2023 and 2022, respectively. The Company contributed approximately $519,000 and $235,000 to the defined
contribution plan during the years ended December 31, 2023 and 2022, respectively.

 On February 27, 2023,
the Board of Directors approved and adopted the New Peoples Bankshares, Inc. Long-Term Cash Incentive Plan (the "Plan").
The Plan provides for cash incentive awards to Plan participants based on the Company's quarterly earnings per share of common
stock over the period specified in the Plan. Certain members of management are eligible to participate in the Plan. Individual awards
are settled solely in cash, determined by multiplying quarterly earnings per share by the number of notional shares covered by a Plan
award. Awards for up to 500,000 notional shares of common stock of the Company, adjusted to 750,000 shares in December 2023, may be granted
under the Plan. The Plan does not grant participants equity in the Company and does not create any shareholders' rights. For each
award, a participant receives an allocation equal to earnings per share, for each share covered by the award, on a quarterly basis. Awards
become vested in 25% increments, on each of the first through fourth anniversaries of the date of grant, subject to a participant's
continuous employment with the Company through the applicable anniversary. Awards are settled on the earliest of a participant's
separation from service, a change in control, or the ten-year anniversary of the Plan's effective date. Vested portions of an award
are generally paid in three installments. As of December 31, 2023, 500,000 notional shares have been awarded and a $55,000 liability
was recorded.

 The Bank maintains
a salary continuation plan for key executives which was established in 2002 and is funded by single premium life insurance policies.
Expenses related to the plan were approximately $26,000 and $27,000 for the years ended December 31, 2023 and 2022, respectively.

 NOTE
 14 OTHER REAL ESTATE OWNED

summarizes the activity in other real estate owned for the years ended December 31, 2023 and 2022:

 of other real estate owned

 2023

 2022

 Balance,
 beginning of year

 $

 $
 1,361

 Additions

 —

 Transfers
 from premises and equipment

 —

 —

 from sales

 ( 132
)

 ( 207
)

 Loans
 made to finance sales

 —

 ( 711
)

 Adjustment
 of carrying value

 —

 ( 197
)

 Gains
 (losses) from sales

 ( 96
)

 Balance,
 end of year

 $

 $

 During 2023, four
properties were sold at a loss of $96,000. During 2022, three former branch offices that were transferred from premises to other real
estate owned during 2021, were sold, resulting in valuation adjustments of $137,000 and net losses totaling $5,000, respectively.

2023, 4 loans totaling approximately $401,000 were in the process of foreclosure, of which 3 loans totaling $117,000 were secured by
residential real estate.

 NOTE
 15 BANK OWNED LIFE INSURANCE

2023 and 2022, the Bank had an aggregate total cash surrender value of $4.6 million and $4.5 million, respectively, on life insurance
policies covering former key officers.

 The Company recognized
income of approximately $40,000 during the year ended December 31, 2023. The Company recorded a net write-down of approximately $136,000
during the year ended December 31, 2022.

 NOTE
 16 DIVIDEND LIMITATIONS ON SUBSIDIARY BANK

 A principal source
of funds for the Company is dividends paid by the Bank. The Federal Reserve Act restricts the amount of dividends the Bank may pay. Approval
by the Board of Governors of the Federal Reserve System is required if the dividends declared by a state member bank, in any year, exceed
the sum of (1) net income of the current year and (2) income net of dividends for the preceding two years.

 Virginia
law restricts the amount of dividends a Virginia corporation may pay. Generally, a Virginia corporation may not authorize and make distributions
if, after giving effect to the distribution, it would be unable to meet its debts as they become due in the usual course of business
or if the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed,
if it were dissolved at that time, to satisfy the preferential rights of shareholders whose rights are superior to the rights of those
receiving the distribution. In addition, the payment of distributions to shareholders is subject to any prior rights of outstanding preferred
stock.

 NOTE
 17 LEASING ACTIVITIES

 As
of December 31, 2023, the Bank leases five branch offices and sublets a lot adjacent to another branch office. The lease agreements have
maturity dates ranging from December 2028 to December 2041. It is assumed that there are currently no circumstances in which the leases
would be terminated prior to expiration. The weighted average remaining life of the lease terms as of December 31, 2023 is 8.22 years.

 The
discount rate used in determining the lease liability for each individual lease was the FHLB fixed advance rate which corresponded to
the lease term for each transaction. This methodology is expected to be used for any other subsequent lease agreements. The weighted
average discount rate for the leases as of December 31, 2023 was 3.43%.

 The Company's
operating lease costs for the years ended December 31, 2023 and 2022, as a result of the transactions discussed above, were $465,000
and $456,000, respectively.

 The Company's
other operating leases were evaluated and determined to be immaterial to the financial statements. As
of December 31, 2023, future minimum rental commitments under the non-cancellable operating leases discussed above are as follows (dollars
are in thousands):

 of future minimum rental commitments under the non-cancellable operating leases

 2024

 $

 2025

 2026

 2027

 2028

 Thereafter

 1,737

 Total
 lease payments

 4,570

 Less
 imputed interest

 Total

 $

 3,852

 NOTE
 18 BORROWED FUNDS

presents the breakdown of borrowed funds as of December 31, 2023 and 2022:

 of breakdown of borrowed funds

 FHLB
 Revolving Advances

 Funds Lines

 FHLB
 Term Loans Short-Term

 FRB
 Term Funding Program

 FHLB
 Term Loans Long-Term

 NPB
 Capital Trust I

 NPB
 Capital Trust 2

 Total

 (a)

 (b)

 (a) (c)

 (d)

 (a) (e)

 December 31, 2023

 $

 -

 $

 -

 $

 -

 $

 $

 $

 11,031

 $

 5,155

 $

 36,186

 Highest balance at any month-end

 -

 -

 -

 11,341

 5,155

 Average weighted balance

 -

 -

 6,630

 11,271

 5,155

 23,550

 Average interest rate:

 Paid during the year

 4.96 %

 6.00 %

 4.83 %

 3.51 %

 8.04 %

 7.20 %

 6.51 %

 At year-end

 4.83 %

 3.51 %

 8.26 %

 7.43 %

 5.88 %

 December 31, 2022

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 11,341

 $

 5,155

 $

 Highest balance at any month-end

 -

 -

 60,000

 -

 -

 11,341

 5,155

 Average weighted balance

 -

 19,507

 -

 -

 11,341

 5,155

 36,866

 Average interest rate:

 Paid during the year

 1.68 %

 2.48 %

 4.63 %

 3.79 %

 3.31 %

 At year-end

 6.68 %

 5.85 %

 6.42 %

 (a) - The Bank has
the ability to borrow up to an additional $96.9 million from FHLB under a line of credit which is secured by a blanket lien on residential
real estate loans. With additional collateral, the Bank's total credit availability would be $178.1 million. The Bank had no overnight
borrowings subject to daily rate changes from the FHLB at December 31, 2023 or 2022.

 We have used our
line of credit with FHLB to issue letters of credit totaling $12.0 million to the Treasury Board of Virginia for collateral on public
funds deposited in the Bank. No draws on the letters of credit have been issued. The letters of credit are considered draws on our FHLB
line of credit.

 (b) - Federal
funds lines consist of $30.0 million in unsecured federal funds line of credit facilities with correspondent banks as of December 31,
2023 and 2022, respectively exclusive of any outstanding balance. The Company did not borrow from the lines other than to test the ability
to access the lines.

 (c) – As of
December 31, 2023 and 2022, there are no short term FHLB advances outstanding.

 (d) – As of
December 31, 2023, there is a short-term, fixed rate borrowing outstanding under the FRB Bank Term Funding Program in the amount of $10.0
million. The loan matures December 28, 2024 and can be prepaid without penalty.

 (e) – As of
December 31, 2023, there is a fixed rate, FHLB advance in the amount of $10.0 million outstanding, which matures in 2028. There were
no long term FHLB advances outstanding as of December 31, 2022.

 TPS I - On July 7,
2004, the Company completed the issuance of $11.3 million in floating rate trust preferred securities, maturing July 7, 2034, offered
by its wholly owned subsidiary, NPB Capital Trust I (TPS I). The rate is determined quarterly and floats based on the 3-month SOFR plus
260 basis points. During 2023, a principal reduction of $310 thousand was paid.

 TPS 2 - On September
27, 2006, the Company completed the issuance of $5.2 million in floating rate trust preferred securities, maturing October 7, 2036, offered
by its wholly owned subsidiary, NPB Capital Trust 2 (TPS 2). The rate is determined quarterly and floats based on the 3-month SOFR plus
177 basis points.

 Under the terms of
the subordinated debt transactions, the securities have 30-year maturities and are redeemable, in whole or in part, without penalty,
at the option of the Company after five years from the issuance date, and on a quarterly basis thereafter.

 Following are maturities of borrowed funds
as of December 31, 2023 (dollars in thousands):

 of maturities of borrowed funds

 2024

 $

 2025

 -

 2026

 -

 2027

 -

 2028

 2029
 and thereafter

 16,186

 $

 36,186

 NOTE
 19 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

 In
the normal course of business, the Bank has outstanding commitments and contingent liabilities, such as commitments to extend credit
and standby letters of credit, which are not included in the accompanying consolidated financial statements. The Bank's exposure
to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby
letters of credit is represented by the contractual or notional amount of those instruments. The Bank uses the same credit policies in
making such commitments as it does for instruments that are included in the balance sheet.

instruments whose contract amount represents credit risk as of December 31, 2023 and 2022 were as follows:

 of financial instruments with credit risk

 2023

 2022

 Commitments
 to extend credit

 $
 93,212

 $
 84,149

 Standby
 letters of credit

 3,968

 3,731

 Commitments to extend
credit are agreements to lend to a customer at either a fixed or variable interest rate as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of
a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation. Collateral
held varies but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties.

 Standby letters of
credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Standby letters of
credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved
in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank's policy
for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend
credit.

 NOTE
 20 CREDIT ALLOWANCE FOR UNFUNDED COMMITMENTS

 The Company maintains
a separate allowance for credit losses on off-balance-sheet credit exposures, including unfunded loan commitments, which is included
in other liabilities on the consolidated balance sheet. The allowance for credit losses for off-balance-sheet credit exposures is adjusted
through a provision for credit losses in the consolidated statements of income. The estimate includes consideration of the likelihood
that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life, utilizing
the same models and approaches for the Company's other loan portfolio segments described above, as these unfunded commitments share similar
risk characteristics as its loan portfolio segments. While the Company has identified the unfunded portion of certain lines of credit
as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time, those commitments
are not excluded from the credit losses estimate.

 On January 1, 2023,
the Company recorded an adjustment to initiate an allowance for credit losses for unfunded commitments of $348,000 for the adoption of
ASC Topic 326. For the year ended December 31, 2023, the Company recorded a reversal to the provision for credit losses for unfunded
commitments of $63,000. As of December 31, 2023, the liability for credit losses on off-balance-sheet credit exposures included in other
liabilities was $285,000.

 NOTE
 21 LEGAL CONTINGENCIES

 In
the course of operations, we may become a party to legal proceedings in the normal course of business. At December 31, 2023, we do not
anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company or any of its subsidiaries
to which the property of the Company or any of its subsidiaries is subject, in the opinion of management, may materially impact the financial
condition or liquidity of the Company.

 NOTE
 22 CAPITAL

Requirements and Ratios

 The Company
meets eligibility criteria of a small bank holding company in accordance with the Board of Governors of the Federal Reserve System's
Small Bank Holding Company Policy Statement issued in February 2015, and is no longer obligated to report consolidated regulatory capital.

 The Bank is
subject to various capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect
on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet
items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings, and other factors.

 Quantitative
measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the
following table) of total and Tier 1 capital to risk-weighted assets, Tier 1 capital to average assets, and Common Equity Tier 1 capital
to risk-weighted assets. As of December 31, 2023, the Bank meets all capital adequacy requirements to which it is subject.

 The Bank's
actual capital amounts and ratios are presented in the following table as of December 31, 2023 and 2022, respectively.

 of capital requirements

 Actual

 Capital Requirement

 to Be Well Capitalized Under Prompt Corrective Action Provisions

 Ratio

 Ratio

 Ratio

 31, 2023:

 Total
 Capital to Risk Weighted Assets

 $

 99,246

 16.58 %

 $ 47,873

 8.00 %

 $

 59,842

 10.00 %

 Tier
 1 Capital to Risk Weighted Assets

 91,765

 15.33 %

 35,905

 6.00 %

 47,873

 8.00 %

 Tier
 1 Capital to Average Assets

 91,765

 11.11 %

 33,040

 4.00 %

 41,300

 5.00 %

 Equity Tier 1 Capital

 to
 Risk Weighted Assets

 91,765

 15.33 %

 26,929

 4.50 %

 38,897

 6.50 %

 December 31, 2022:

 Total
 Capital to Risk Weighted Assets

 $

 93,028

 16.50 %

 $ 45,106

 8.00 %

 $

 56,382

 10.00 %

 Tier
 1 Capital to Risk Weighted Assets

 86,301

 15.31 %

 33,829

 6.00 %

 45,106

 8.00 %

 Tier
 1 Capital to Average Assets

 86,301

 10.40 %

 33,206

 4.00 %

 41,508

 5.00 %

 Equity Tier 1 Capital

 to
 Risk Weighted Assets

 86,301

 15.31 %

 25,372

 4.50 %

 36,648

 6.50 %

 Accordingly, as of
December 31, 2023 and 2022, the Bank was well capitalized under the regulatory framework for prompt corrective action. There are no conditions
or events since such dates that management believes have changed the Bank's category.

 The Bank is also
subject to the rules implementing the Basel III capital framework and certain related provisions of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010. The final rules require the Bank to comply with the following minimum capital ratios: (i) a
Common Equity Tier 1 capital to risk-weighted assets ratio of at least 4.5%, plus a 2.5% "capital conservation buffer" (effectively
resulting in a minimum Common Equity Tier 1 capital to risk-weighted assets ratio of 7%), (ii) a ratio of Tier 1 capital to risk-weighted
assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively resulting in a minimum Tier 1 capital ratio of 8.5%),
(iii) a ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (effectively resulting
in a minimum total capital ratio of 10.5%), and (iv) a leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average
assets. The Bank's capital conservation buffer was 8.58% at December 31, 2023. The capital conservation buffer is designed to absorb
losses during periods of economic stress. Banking institutions with a Common Equity Tier 1 capital to risk-weighted assets ratio above
the minimum but below the conservation buffer face constraints on dividends, equity repurchases, and compensation based on the amount
of the shortfall. As of both December 31, 2023 and 2022, the Common Equity Tier 1 Capital to Risk-weighted Assets ratio, the Tier 1 Capital
to Risk-weighted Assets ratio, the Total Capital to Risk-weighted Assets ratio, and the Tier 1 Capital to Average Assets ratio of the
Bank, all exceeded the minimum requirements.

 NOTE
 23 FAIR VALUES

 The Company established
a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at
fair value. The three broad levels defined by this hierarchy are:

 Level 1: Quoted prices
are available in active markets for identical assets or liabilities as of the reported date.

 Level 2: Pricing
inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The
nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that
are valued using other financial instruments, the parameters of which can be directly observed.

 Level 3: Assets and
liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured
using management's best estimate of fair value, where the inputs into the determination of fair value require significant management
judgment or estimation.

 A description of
the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant
to the valuation hierarchy are as follows:

 Investment Securities
Available for Sale - Investment securities available for sale are recorded at fair value on a recurring basis. Fair value measurement
is based upon quoted prices. The Company's available for sale securities, totaling $89.8 million and $96.1 million as of December
31, 2023 and 2022, respectively, are the only assets whose fair values are measured on a recurring basis using Level 2 inputs from an
independent pricing service.

 Collateral Dependent
Loans with an ACL - In accordance with ASC 326, we may determine that an individual loan exhibits unique risk characteristics which
differentiate it from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual
basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing
the borrower's ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting
the borrower's industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment,
the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale
of the collateral. In such cases, 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. We reevaluate the fair value of collateral
supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent
loans is evaluated by appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal
Practice.

 Other Real Estate
Owned – Other real estate owned is adjusted to fair value upon transfer of the loans, or former bank premises, to other
real estate owned. These assets are carried at the lower of their carrying value or fair value. Fair value is based upon
observable market prices, when available, reduced by estimated disposition costs, which the Company considers to be nonrecurring Level
2 inputs. When observable market prices are not available, management determines the fair value of the foreclosed asset using independent
third-party appraisals, evaluated to determine whether or not the property is further impaired below the appraised value, and adjusts
for estimated costs of disposition. The Company records foreclosed assets as nonrecurring Level 3. The aggregate carrying amounts of
foreclosed assets were approximately $157,000 and $261,000 as of December 31, 2023 and 2022, respectively.

 Assets and liabilities
measured at fair value are as follows as of December 31, 2023:

 of summary of assets and liabilities measured at fair valueSchedule
 of summary of assets and liabilities measured at fair value

 Quoted market
 price in active markets

 (Level 1)

 Significant other
 observable inputs

 (Level 2)

 Significant unobservable
 inputs

 (Level 3)

 (On
 a recurring basis)

 Available for sale investments

 U.S.

 $

 -

 $

 $

 U.S.

 -

 8,811

 -

 -

 17,859

 -

 bonds

 -

 2,688

 -

 -

 49,462

 -

 (On
 a non-recurring basis)

 Other real estate owned

 -

 -

 Collateral
 dependent loans with ACL:

 real estate

 -

 -

 Total

 $

 -

 $

 $

 Assets and liabilities
measured at fair value are as follows as of December 31, 2022 (for purpose of this table the impaired loans are shown net of the related
allowance):

 Quoted market
 price in active markets

 (Level 1)

 Significant other
 observable inputs

 (Level 2)

 Significant unobservable
 inputs

 (Level 3)

 (On
 a recurring basis)

 Available for sale investments

 U.S.

 $

 -

 $

 11,685

 $

 U.S.

 -

 9,399

 -

 -

 16,815

 -

 bonds

 -

 3,136

 -

 -

 55,041

 -

 (On
 a non-recurring basis)

 Other real estate owned

 -

 -

 Impaired
 loans:

 Real

 -

 -

 -

 -

 Total

 $

 -

 $

 96,076

 $

 For
Level 3 assets measured at fair value on a recurring or non-recurring basis as of December 31, 2023 and 2022, the significant unobservable
inputs used in the fair value measurements were as follows:

 of significant unobservable inputs In level 3 assets

 (Dollars in thousands)

 Fair Value at
 December 31,

 2023

 Fair Value at

 December 31,

 2022

 Valuation Technique

 Significant Unobservable
 Inputs

 General Range
 of Significant Unobservable Input Values

 Collateral
 dependent loans with ACL:

 real estate

 $

 $

 Appraised
 Value

 Discounts
 to reflect current market conditions, ultimate collectability, and estimated costs to sell

 – 18 %

 -

 Other
 Real Estate Owned

 $

 $

 Appraised
 Value/Comparable Sales/Other Estimates from Independent Sources

 Discounts
 to reflect current market conditions and estimated costs to sell

 – 18 %

 Fair
Value of Financial Instruments

 The
carrying amount and fair value of the Company's financial instruments that are not required to be measured or reported at fair
value on a recurring basis are as follows:

 of estimated fair value of financial instruments

 Fair
 Value Measurements

 Carrying

 Fair

 Value

 Quoted
 market price in active markets

 (Level 1)

 Significant other
 observable inputs

 (Level 2)

 Significant unobservable
 inputs

 (Level 3)

 instruments – assets

 Net
 loans

 $

 630,855

 $

 604,736

 $

 -

 $

 -

 $

 604,736

 instruments – liabilities

 Time

 252,316

 249,941

 -

 249,941

 -

 Borrowed
 funds

 36,186

 34,046

 -

 34,046

 -

 instruments – assets

 Net
 loans

 $

 577,886

 $

 552,675

 $

 -

 $

 -

 $

 552,675

 instruments – liabilities

 Time

 188,233

 187,179

 -

 187,179

 -

 Borrowed
 funds

 14,825

 -

 14,825

 -

 Fair value estimates
are made at a specific point in time, based on relevant market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings
of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments,
fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics
of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes in assumptions can significantly affect the estimates.

 Estimated fair values
have been determined by the Company using historical data, as generally provided in the Company's regulatory reports, and an estimation
methodology suitable for each category of financial instruments. The Company's fair value estimates, methods and assumptions are
set forth below for the Company's other financial instruments.

 The
carrying value of cash and due from banks, federal funds sold, interest-bearing deposits with other banks, deposits with no stated maturities
and accrued interest approximates fair value and is excluded from the table above.

 The
methods utilized to measure the fair value of financial instruments represent an approximation of exit price; however, an actual exit
price may differ.

 NOTE
 24 REVENUE FROM CONTRACTS WITH CUSTOMERS

 All
of our revenue from contracts with customers as defined in ASC 606 is recognized within noninterest income. The following table presents
Noninterest Income by revenue stream for the years ended December 31, 2023 and 2022.

 of revenue from contracts with customers

 2023

 2022

 Service
 charges and fees

 $
 3,886

 $
 3,969

 Card
 processing and interchange income

 3,730

 3,769

 Insurance
 and investment fees

 1,084

 Other
 noninterest income

 1,249

 Total
 noninterest income

 $
 9,949

 $
 9,240

 Certain
revenues are earned from contracts with customers. These revenues are recognized when the promised services are rendered to the customer
and reflect the entitled consideration received in exchange for those services.

 Service
charges and fees – revenue is recognized on deposit services based on published fees for the services provided. These fees
may be collected on a transaction basis, at the time the service is rendered or periodically based on the period over which the service
is provided. Transaction-based fees include services such as stop payment requests, paper statement rendering and ATM usage fees. Periodic
fees include such charges as monthly account maintenance fees. Overdraft fees are realized at the time the overdraft occurs.

 Card
processing and interchange fees – Card-related interchange revenue is primarily comprised of debit and credit card income.
Debit and credit card income is earned when customers' debit or credit cards are processed through a card payment network. Card-related
interchange income is recognized at the time the customer transactions settle.

 Insurance
and investment fees - Insurance and investment fee income consists of commissions received on annuity and investment product sales
through a third-party service provider. Performance is generally satisfied at the time an annuity policy is issued, or at the execution
of an investment transaction.

 NOTE
 25 NONINTEREST EXPENSES

 Other operating expenses,
included as part of noninterest expenses, consisted of the following for the years ended December 31, 2023 and 2022:

 of noninterest expenses

 2023

 2022

 Other
 operating expenses

 $
 3,067

 $
 2,970

 ATM
 network expense

 1,489

 1,471

 Legal
 and professional fees

 1,079

 Loan
 related expenses

 FDIC
 insurance premiums

 Consulting
 fees

 Advertising,
 sponsorships and donations

 Printing
 and supplies

 Other
 real estate owned expenses, net

 Total

 $
 7,308

 $
 6,650

 NOTE
 26 SUBSEQUENT EVENTS

 Subsequent events
are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent
events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including
the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are events that provide evidence
about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring
through the date the financial statements were available to be issued and has identified the following as a non-recognized subsequent
event.

 On February 28, 2024,
the Board of Directors declared a dividend of $0.07 per share payable March 29, 2024 to shareholders of record as of March 15, 2024.

 On February 28, 2024,
the Board of Directors authorized the continuation of the Company's repurchase of up to 500,000 shares of its common stock through
March 31, 2025. This is a continuation of the repurchase program originally announced April 28, 2022, which was set to expire March 31,
2024. To the date of this announced continuation, 189,970 shares have been repurchased at an average price of $2.33 per share, leaving
310,030 shares available for repurchase. Repurchases made through this program will be made through open market purchases or in privately
negotiated transactions.

 NOTE
 27 RECENT ACCOUNTING DEVELOPMENTS

 The following is
a summary of recent authoritative announcements:

 In June 2022, the
Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, "Fair
Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions". ASU 2022-03
clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity
security and, therefore, is not considered in measuring fair value. The ASU is effective for fiscal years, including interim periods
within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company does not expect the adoption of
ASU 2022-03 to have a material impact on its consolidated financial statements.

 In December 2022,
the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848". ASU 2022-06 extends
the period of time preparers can utilize the reference rate reform relief guidance in Topic 848. The objective of the guidance in Topic
848 is to provide relief during the temporary transition period, so the FASB included a sunset provision within Topic 848 based on expectations
of when the London Interbank Offered Rate (LIBOR) would cease being published. In 2021, the UK Financial Conduct Authority (FCA) delayed
the intended cessation date of certain tenors of USD LIBOR to June 30, 2023.

 To ensure the relief
in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date
of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic
848. The ASU is effective for all entities upon issuance. The Company completed its transition away from LIBOR for its loan and other
financial instruments that have not already been transitioned to an alternative reference rate. This transition had no material impact
on earnings or capital.

 In July 2023, the
Financial Accounting Standards Board (FASB) issued ASU 2023-03, "Presentation of Financial Statements (Topic 205), Income Statement—Reporting
Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock
Compensation (Topic 718)". This ASU amends the FASB Accounting Standards Codification for SEC paragraphs pursuant to SEC Staff
Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting
Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. ASU 2023-03 is effective upon
addition to the FASB Codification. The Company does not expect the adoption of ASU 2023-03 to have a material impact on its consolidated
financial statements.

 In October 2023,
the FASB issued amendments to incorporate certain U.S. Securities and Exchange Commission ("SEC") disclosure requirements
into the U.S. GAAP and align the requirements with the SEC's regulations. The amendments are effective prospectively on the date
on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. Early adoption is
prohibited. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

 In December 2023,
the FASB amended the Income Taxes topic in the Accounting Standards Codification to improve the transparency of income tax disclosures.
The amendments are effective for annual periods beginning after December 15, 204. Early adoption is permitted for annual financial statements
that have not yet been issued or made available for issuance. The Company does not expect these amendments to have a material effect
on its consolidated financial statements.

 Other accounting
standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact
on the Company's financial position, results of operations or cash flows.

 NOTE
 28 PARENT
 CORPORATION ONLY FINANCIAL STATEMENTS

 CONDENSED
 BALANCE SHEETS
 AS
 OF DECEMBER 31, 2023 AND 2022
 in Thousands)
 of parent corporation only condensed balance sheets

 2023

 2022

 ASSETS

 Due
 from banks

 $

 $

 in subsidiaries

 80,112

 72,360

 Other

 1,150

 Total

 $
 81,326

 $
 74,031

 LIABILITIES

 interest payable

 $

 $

 expenses and other liabilities

 Trust
 preferred securities

 16,186

 Total

 16,515

 16,812

 SHAREHOLDERS'
 EQUITY

 stock - $2.00 par value, 50,000,000 shares authorized;
23,745,900 and 23,848,491 shares issued and outstanding at December
 31, 2023 and 2022, respectively

 47,492

 47,697

 Additional
 paid capital

 14,514

 14,546

 Retained
 earnings

 14,458

 8,917

 Accumulated
 other comprehensive loss

 ( 11,653
)

 ( 13,941
)

 Total
 shareholders' equity

 64,811

 57,219

 Total
 liabilities and shareholders' equity

 $
 81,326

 $
 74,031

 CONDENSED
 STATEMENTS OF INCOME
 FOR
 THE YEARS ENDED DECEMBER 31, 2023 AND 2022
 of parent corporation only condensed statements of income

 2023

 2022

 Miscellaneous

 $

 $

 Dividends
 from subsidiaries

 2,600

 1,749

 Undistributed
 income of subsidiaries

 5,677

 7,027

 Total

 8,315

 8,798

 Expenses

 Trust
 preferred securities interest expense

 1,274

 Professional
 fees

 Other
 operating expenses

 Total
 expenses

 1,422

 before income taxes

 6,893

 7,896

 tax benefit

 ( 291
)

 ( 186
)

 Net

 $
 7,184

 $
 8,082

 CONDENSED
 STATEMENTS OF CASH FLOWS
 FOR
 THE YEARS ENDED DECEMBER 31, 2023 AND 2022
 of parent corporation only condensed statements of cash flows

 2023

 2022

 Cash
 flows from operating activities

 Net

 $
 7,184

 $
 8,082

 Adjustments
 to reconcile net income to net cash provided by operating activities:

 Equity
 in undistributed earnings of subsidiaries

 ( 5,677
)

 ( 7,027
)

 Net
 decrease in other assets

 Net
 increase in other liabilities

 Net
 cash provided by operating activities

 1,884

 1,701

 Cash
 flows from financing activities:

 Repayment
 of long-term debt

 (310
)

 —

 Repurchase
 of common stock

 ( 237
)

 ( 171
)

 Cash
 dividends paid

 ( 1,431
)

 ( 1,196
)

 Net cash
 used in financing activities

 ( 1,978
)

 ( 1,367
)

 Net
 (decrease) increase in cash and cash equivalents

 ( 94
)

 Cash
 and cash equivalents, beginning of year

 Cash
 and cash equivalents, end of year

 $

 $

 Item
 9.
 Changes
 in and Disagreements with Accountants on Accounting and Financial Disclosure

 None

 Item
 9A.
 Controls
 and Procedures

 Management's
Report on Internal Control over Financial Reporting

 Management is responsible
for establishing and maintaining adequate internal control over financial reporting of New Peoples Bankshares, Inc. New Peoples'
internal control system was designed to provide reasonable assurance to management and the Board of Directors regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
practices.

 All internal control
systems, no matter how well designed, have inherent limitations. Because of these inherent limitations, internal control over financial
reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent
or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 Management assessed
the effectiveness of New Peoples' internal control over financial reporting as of December 31, 2023. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in
"Internal Control - Integrated Framework" issued in 2013. Based on this assessment, management concluded that the internal
control over financial reporting was effective as of December 31, 2023.

 Changes in Internal
Control Over Financial Reporting

 There have been no
changes in our internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely
to materially affect, internal control over financial reporting.

 Disclosure Controls
and Procedures

 We maintain a system
of disclosure controls and procedures that is designed to ensure that material information is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of
our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
the disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended. Based on that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively
as of December 31, 2023.

 Item
 9B.
 Other
 Information

 None.

 Item
 9C.
 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections

 Not applicable.

 PART
III

 Item
 10.
 Directors,
 Executive Officers and Corporate Governance

 The
information contained under the captions "Election of Directors," "Incumbent Directors," "Executive Officers
Who Are Not Directors," "Corporate Governance" and "Delinquent Section 16(a) Reports" in the 2023 Proxy
Statement that is required to be disclosed in this Item 10 is incorporated herein by reference.

 Item
 11.
 Executive
 Compensation

 The
information contained under the captions "Director Compensation" and "Executive Compensation and Related Party Transactions"
in the 2024 Proxy Statement that is required to be disclosed in this Item 11 is incorporated herein by reference.

 Item
 12.
 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
information contained under the captions "Security Ownership of Management" and "Security Ownership of Certain Beneficial
Owners" in the 2024 Proxy Statement that is required to be disclosed in this Item 12 is incorporated herein by reference.

 Item
 13.
 Certain
 Relationships and Related Transactions, and Director Independence

 The information contained
under the caption "Executive Compensation and Related Party Transactions" and "Corporate Governance" in the 2024
Proxy Statement that is required to be disclosed in this Item 13 is incorporated herein by reference.

 Item
 14.

 Principal
 Accountant Fees and Services

 The information contained under the caption
"Audit Information" in the 2024 Proxy Statement that is required to be disclosed in this Item 14 is incorporated herein by
reference.

 The Independent Registered Public Accounting
Firm for the financial statements as of December 31, 2023, and the year then ended was Yount, Hyde & Barbour, P.C., (U.S. PCAOB Auditor
Firm I.D.: 613, located in Roanoke, Virginia)

 Item
 15.
 Exhibit
 and Financial Statement Schedules

 (a)(1) The
response to this portion of Item 15 is included in Item 8 above.

 (a)(2) The response
to this portion of Item 15 is included in Item 8 above.

 (a)(3) The following
exhibits are filed as part of this Form 10-K:

 Exhibit

 Number

 3.1

 Amended
 Articles of Incorporation of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarterly
 period ended June 30, 2008 filed on August 11, 2008).

 3.2

 Bylaws
 of Registrant (incorporated by reference to Exhibit 3.2 to Form 8-K filed August 26, 2020).

 4.1

 Specimen
 Common Stock Certificate of New Peoples Bankshares, Inc. (incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarterly
 period ended June 30, 2012 filed on August 14, 2012).

 4.2

 Description
 of New Peoples Bankshares, Inc.'s Securities

 10.1*

 Employment
 Agreement dated December 1, 2016 between New Peoples Bankshares, Inc., New Peoples Bank, Inc., and C. Todd Asbury (incorporated by
 reference to Exhibit 10.1 to Form 8-K filed December 2, 2016).

 10.2*

 Employment
 Agreement dated May 14, 2019 between New Peoples Bank, Inc., and James W. Kiser. (incorporated by reference to Exhibit 10.2 to Form
 10-K filed March 31, 2023).

 10.3*

 New
 Peoples Bankshares, Inc. Long-Term Cash Incentive Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed March 2, 2023).

 10.4*

 Form
 of Award Agreement for New Peoples Bankshares, Inc. Long-Term Cash Incentive Plan (incorporated by reference to Exhibit 10.2 to Form
 8-K filed March 2, 2023).

 10.5*

 First
 Amendment dated as of August 7, 2023 to the Employment Agreement dated as of December 1, 2016 by and among New Peoples Bankshares,
 Inc., New Peoples Bank, Inc., and C. Todd Asbury (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarterly period
 ended September 30, 2023 filed November 14, 2023).

 10.6*

 Employment Agreement dated October 27, 2023 between New Peoples Bank, Inc. and Bryan Booher. (incorporated by reference to Form 8-K Filed November 2, 2023).

 10.7*

 New Peoples Bankshares, Inc. Long-Term Cash Incentive Plan Amendment (incorporated by reference to Form 8-K filed December 18, 2023)

 Code
 of Ethics (incorporated by reference to Exhibit 14 to Annual Report on Form 10-K for the fiscal year ended December 31, 2003).

 Subsidiaries
 of the Registrant.

 Powers
 of Attorney (contained on signature page).

 31.1

 Certification
 by Chief Executive Officer pursuant to Rule 13a-14(a).

 31.2

 Certification
 by Chief Financial Officer pursuant to Rule 13a-14(a).

 Certification
 by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

 The following

 Cover

____________________________________

 * Denotes management
contract.

 (b) See
Item 15(a)(3) above.

 (c) See
Items 15(a)(1) and (2) above.

 Item
 16.
 Form
 10-K Summary

 None.

 SIGNATURES

 Pursuant to the requirements
of Section 13 or 15(d) 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.

 NEW PEOPLES BANKSHARES, INC.

 (Registrant)

 By:

 /s/ C. TODD
 ASBURY

 C. Todd Asbury

 President and Chief Executive Officer

 Date:

 April 1, 2024

 By:

 /s/ CHRISTOPHER
 G. SPEAKS

 Christopher G. Speaks

 Executive Vice President and Chief Financial Officer

 Date:

 April 1, 2024

 By:

 /s/ JOHN J. BOCZAR

 John J. Boczar

 Chief Accounting Officer and Secretary

 Date:

 April 1, 2024

 POWER OF ATTORNEY

 Each of the undersigned
hereby appoints C. Todd Asbury and Christopher G. Speaks, and each of them, as attorneys and agents for the undersigned, with full power
of substitution, in his name and on his behalf as a director of New Peoples Bankshares, Inc. (the Registrant), to act and to execute
any and all instruments as such attorneys or attorney deem necessary or advisable to enable the Registrant to comply with the Securities
Exchange Act of 1934, and any rules, regulations, policies or requirements of the Securities and Exchange Commission (the Commission)
in respect thereof, in connection with the preparation and filing with the Commission of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 2023 (the Report), and any and all amendments to such Report, together with such other supplements,
statements, instruments and documents as such attorneys or attorney deem necessary or appropriate.

 Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.

 Signature

 Capacity

 Date

 /s/
 C. Todd Asbury

 Director,
 President and

 April

 C.
 Todd Asbury

 Chief
 Executive Officer

 (Principal
 Executive Officer)

 /s/
 CHRISTOPHER G. SPEAKS

 Executive
 Vice President and Chief Financial Officer

 April

 Christopher
 G. Speaks

 (Principal Financial
 Officer)

 /s/
 JOHN J. BOCZAR

 Chief
 Accounting Officer

 April

 John
 J. Boczar

 (Principal
 Accounting Officer)

 /s/
 TIM W. BALL

 April

 Tim
 W. Ball

 /s/
 GINA D. BOGGESS

 April

 Gina
 D. Boggess

 /s/
 J. ROBERT BUCHANAN

 April

 J.
 Robert Buchanan

 /s/
 JOE M CARTER

 April

 Joe
 M. Carter

 /s/
 JOHN D. COX

 April

 John
 D. Cox

 /s/
 HAROLD LYNN KEENE

 Chairman,

 April

 Harold
 Lynn Keene

 /s/
 JAMES W. KISER

 Director,
 President and

 April

 James
 W. Kiser

 Chief
 Executive Officer

 New
 Peoples Bank, Inc.

 /s/
 BARTON SCOT LONG

 April

 Barton
 Scott Long

 /s/
 MICHAEL G. MCGLOTHLIN

 April

 Michael
 G. McGlothlin

 /s/
 B. SCOTT WHITE

 April