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 2024-10-01

 United
States

 Securities
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 31,2024

 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.)

 67 Commerce Drive

 24260

 Honaker VA

 (Zip
 Code)

 (Address
 of principal executive offices)

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

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

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 None

 Securities
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 $2.66 per share on the last business day of the second quarter of 2024, was $ 24,896,869.

 The
number of shares outstanding of the registrant's common stock was 23,616,462 as of March 26, 2025.

 DOCUMENTS
INCORPORATED BY REFERENCE:

 Portions of the
Proxy Statement for the 2025 Annual Meeting of Shareholders – Part III

 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.

 Financial 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.

 Branch Locations

 As of March 24, 2025, 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, makes 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 "New Peoples Bankshares" "SEC Filings." 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, positive pay fraud detection for commercial customers, and 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 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.

 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, 2024, 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

 40.53%

 Scott

 33.94%

 City
 of Bristol, VA

 31.10%

 Russell

 21.95%

 Buchanan

 15.09%

 Tazewell

 10.15%

 Wise

 8.26%

 Washington

 7.21%

 Mercer
 County, WV

 6.67%

 City
 of Kingsport, TN

 1.56%

 Town
 of Boone, NC

 0.25%

 Employees

 As of December 31, 2024, we had 177 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 Board of Governors of the Federal Reserve System (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 paragraphs summarize 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;

 • furnishing
services to or performing services for its subsidiaries; and

 • 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.

 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 the 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.

 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 and
does not report consolidated regulatory capital. With respect to the Bank, the "prompt corrective actio n"
regulations pursuant to Section 38 of the FDIA are set forth in the following table:

 Total
 Risk

 Tier
 1 Risk

 CET1
 Risk

 Based
 Capital

 Based
 Capital

 Based
 Capital

 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:

 Minimum Leverage Ratio

 4.00%

 Minimum CET1 Risk Based Capital Ratio

 4.50%

 Capital Conservation Buffer (1)

 2.50%

 Minimum CET1 Risk Based Capital Ratio with Capital Conservation Buffer

 7.00%

 Minimum Tier 1 Risk Based Capital Ratio

 6.00%

 Minimum Tier 1 Risk Based Capital Ratio with Capital Conservation Buffer

 8.50%

 Minimum Total Risk Based Capital Ratio

 8.00%

 Minimum 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.

 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.

 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 Community Reinvestment Act 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. The final rule has been subject to an injunction since March
29, 2024, and the effective dates will be extended pending resolution of the lawsuit.

 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 2024 and 2023, the Company recorded expense of $386,000 and $360,000, 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.

 In February 2025, the Trump administration halted the
CFPB's operations, and its employees were instructed to cease all supervision and examination activity. As a result, the future
of the CFPB and its impact on the Company's business are uncertain.

 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 (EGRRCPA). 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 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.
In July 2023, the SEC issued a final rule to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance,
and incident reporting by public companies that are subject to the reporting requirements of the Exchange Act. Specifically, the final
rule requires current reporting about material cybersecurity incidents, periodic disclosures about a registrant's policies and procedures
to identify and manage cybersecurity risk, management's role in implementing cybersecurity policies and procedures, and the board
of directors' cybersecurity expertise, if any, and its oversight of cybersecurity risk. See Item 1C. Cybersecurity of this Form
10-K for a discussion of the Company's cybersecurity risk management, strategy and governance.

 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, 2024, 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.

 Risk
Management

 Our Enterprise Risk Management
program (ERM) is designed to identify, assess, and mitigate risks across various aspects of the Company, including financial, operational,
regulatory, reputational, and legal. The ERM program includes an annual risk prioritization process to identify key enterprise risks.
Each key risk is assigned a risk owner to establish action plans and implement risk mitigation strategies. Cybersecurity is a critical
component of this program, given the increasing reliance on technology and potential cyber threats. The Company uses a cybersecurity framework
to aid management in understanding, managing, and reducing cybersecurity risk. This framework aids management in identifying gaps within
cybersecurity infrastructure and evaluating maturity of processes. Cybersecurity frameworks use maturity levels to gauge the strength
of cybersecurity controls. Our information technology and vendor risk management functions assess information technology and cybersecurity
third party providers as part of the initial determination process and then periodically thereafter. We use a variety of methods and tools
to assess a third-party vendor's controls related to cybersecurity threats, including obtaining proof of a provider's independent
testing of data protection controls, imposition of contractual obligations and reviews of data protection controls such as backups, encryption
standards and disaster recovery. 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. Aside from the Information Security Officer, cybersecurity support is
provided by our Director of Information Technology and our Chief Information Officer. Each of these persons has over twenty years of financial
sector information technology and information security administration and management backed by undergraduate and/or post-graduate degrees
in information technology, as well as various information technology and network certifications.

 We maintain a comprehensive Business
Continuity Management program that includes Business Continuity, Disaster Recovery, and Incident Response planning and testing. This program
is designed to minimize the impact of an information security disruption and ensure the Company can return to normal operations in a timely
manner. The Information Security Officer is responsible for the administration and management of the program and key members of management
are embedded into the program by its design. At least annually, management identifies an exhaustive list of business functions for each
area of the Company, and lists resource requirements, assigns Recovery Time and Point Objectives, and Maximum Tolerable Period of Downtime
for each function. Management then completes a comprehensive Business Impact Analysis that prioritizes business functions based on criticality
and is used as a guide for business continuity and disaster recovery planning. 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 facilitates coordination
across multiple parts of our organization. Business Continuity, Disaster Recovery, and Incident Response plans are updated and tested
at least annually. Management performs a variety of tests on the plans including tabletop, simulation, and technical testing to ensure
key personnel are prepared, recovery systems and data are viable, and Recovery Time and Point Objectives can be met. Weaknesses identified
during testing are monitored until they are fully remediated. The Information Technology Steering Committee provides oversight for the
Business Continuity Management Program, which includes ratification of plans and Business Impact Analysis, plan testing frequency, and
remediation of identified weaknesses. The Committee ensures, based on testing, that plans are adequate to meet the Company's objectives.

 We engage various third parties
to assist us in identifying, assessing and responding to cybersecurity threats. This includes around-the-clock managed firewall services
and managed detection and response services. In addition, we engage third parties to test the vulnerability of our cybersecurity infrastructure
on a regular basis and we have a third-party assessment performed annually. A third party provides social engineering and phishing testing
on a subset of bank employees annually. These third-party service providers are in regular contact with our information technology personnel,
and we monitor other sources for information that any of these providers may have encountered cybersecurity threats.

 All employees receive initial
and ongoing training in cybersecurity awareness including such topics as email protocols, social engineering, phishing tactics and security
of Bank issued computers and other devices. Management conducts regularly phishing testing on all employees and assigns additional training
when necessary. Employees with privileged access receive additional relevant training. Key personnel pursue training in their respective
disciplines on a continual basis.

 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

 As of December 31, 2024, the Company's net investment
in premises and equipment was $17.1 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, North Carolina, and Tennessee, and a loan production office in Wytheville, Virginia which opened in February 2025. 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 and leases a former branch office that was closed in 2024 and now serves as an administrative office for the Bank. The
Bank also owns undeveloped lots in Coeburn, Virginia, Mt. Carmel, TN and Princeton, WV (3). A leased full-service branch office in Boone,
North Carolina opened in March 2024.

 One closed and a now sold former branch in Big Stone
Gap, Virginia continues 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 $3.05 per share on March 13, 2025.

 (b)
Holders

 On March 24, 2025, there were approximately 3,813 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 $0.07 per share in 2024. On
February 24, 2025, the Company declared a dividend of $0.08 per share, payable March 31, 2025.

 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.

 (d)
 Stock
 Repurchases

 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, 2025. 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, 2024, as detailed below. Under the terms of the stock repurchase program, the Company has the
remaining authority to repurchase up to 214,638 shares of common stock. On
February 24, 2025, the Board of Directors approved an extension of the repurchase program through March 31, 2026.

 The following table provides information regarding
repurchases of common stock for the three months ended December 31, 2024.

 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

 3,432

 $

 2.70

 3,432

 226,550

 November
 30, 2024

 9,052

 $

 2.73

 9,052

 217,498

 2,860

 $

 3.00

 2,860

 214,638

 Total

 15,344

 $

 2.77

 15,344

 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.

 The following important factors, among others, that
may cause actual results to differ from that expressed in such forward-looking statements 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 trade restrictions
and tariffs, and acts or threats of terrorism, international hostilities, or actions taken by the U.S. or other governments in response
to trade restrictions and tariffs, and 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, including the successful
core operating system conversion in 2025;

 our ability to successfully manage cybersecurity,
including generative artificial intelligence risks;

 our ability to assist in managing third party
fraud against customer accounts including but not limited to check, credit and debit card, and electronic funds transfer fraud;

 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, 2024 and 2023, as well as results of
operations for the years ended December 31, 2024 and 2023. 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.

 The allowance for 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.

 Overview

 For the year ended December 31, 2024, net income was
$8.2 million, or basic and diluted net income per share of $0.35, compared to a net income of $7.2 million, or basic and diluted net income
per share of $0.30, for the year ended December 31, 2023, an increase of $1.0 million, or 14.20%. Retained earnings increased $6.5 million,
or 45.26%, to $21.0 million as of December 31, 2024 from $14.5 million as of December 31, 2023.

 Results for the year ended December 31, 2024 were impacted
by several non-recurring events. On December 31, 2024 the Bank provided notice of termination of the contract with our core systems provider.
We plan to complete the conversion to a new core systems provider in the fourth quarter of 2025. As a result of the termination notice,
we recorded termination charges and certain conversion costs estimated to be $850,000. During the fourth quarter of 2024, we had two transactions
in our bank owned life insurance portfolio ("BOLI") that disposed of the entire portfolio. One policy was cancelled and redeemed,
resulting in a loss of $49,000; and a benefit claim was filed on the second policy resulting in a gain of $1.6 million. After consideration
of the tax impact, these non-recurring items increased earnings by $756,000 or $0.03 per basic and diluted share. In 2023, other noninterest
income included $257,000 in insurance proceeds recovery related to costs incurred during the cybersecurity incident in 2022. The following
non-GAAP table summarizes the impact of these nonrecurring events:

 2024

 2023

 Per
 Share

 Per
 Share

 As
 reported

 Net
 income (GAAP)

 $

 8,204

 $

 0.35

 $

 7,184

 $

 0.30

 Adjust
 for nonrecurring items:

 -

 BOLI
 benefit

 (1,565)

 -

 Insurance
 proceeds

 -

 (257)

 BOLI
 redemption

 -

 Core
 system conversion

 Total
 nonrecurring items

 (666)

 (257)

 Applicable
 tax effect

 (90)

 Nonrecurring
 items net of tax

 (756)

 (203)

 As
 adjusted for nonrecurring items (non-GAAP)

 $

 7,448

 $

 0.32

 $

 6,981

 $

 0.29

 Adjusted net income and net income per share are non-GAAP
financial measures that management uses to supplement the evaluation of the Company's operating results and believes is beneficial
to the users of its financial statements in evaluating the Company's current operating results in relation to past periods.

 As discussed in "Net Interest Income and Net
Interest Margin", net interest income for the year ended December 31, 2024 was $28.5 million compared to $28.0 million for the year
ended December 31, 2023. The increase was primarily due to a $59.6 million increase in average earning assets. Average interest-bearing
liabilities increased $65.3 million to $549.5 million during the comparative twelve-month periods.

 For the year ended December 31, 2024, noninterest income
was $11.3 million, an increase of $1.3 million from the $9.9 million in 2023. Excluding non-recurring items, noninterest income was unchanged
at $9.7 million for 2024 and 2023, due to nonrecurring income of $1.6 million and $257,000 recorded in 2024 and 2023, respectively

 For the year ended December 31, 2024, noninterest expense
was $28.8 million, an increase of $800,000 from $28.0 million in 2023. Excluding non-recurring items, noninterest expense decreased $90,000
to $27.9 million compared to $28.0 million for the year ended December 31, 2023.

 Total assets as of December 31, 2024 were $854.9 million,
an increase of $28.6 million, or 3.46%, from $826.3 million as of December 31, 2023. Gross loans increased $19.4 million, or 3.04%, during
2024 due to continuing loan demand. Investment securities increased $6.2 million during 2024 primarily due to securities purchases executed
throughout the year. All of the Company's investments are designated as available-for-sale.

 Deposits totaled $750.0 million as of December 31,
2024 compared to $716.5 million as of December 31, 2023. The increase of $33.5 million, or 4.68%, was due to efforts to attract and retain
deposits, specifically time deposits through targeted promotional rates and terms and money market accounts through more aggressive pricing
of rates, combined with cyclical funds inflows. As a result of these efforts, total time deposits increased $16.4 million during the year
ended December 31, 2024.

 New Peoples Bank remains well-capitalized. The leverage
ratio is 10.70% as of December 31, 2024, compared to 11.11% as of December 31, 2023.

 The Company's key performance indicators are
as follows:

 Year
 ended December 31,

 2024

 2023

 Return on average assets

 0.96
 %

 0.91
 %

 Return on average shareholders' equity

 12.28
 %

 12.00
 %

 Average shareholders' equity to average assets ratio

 7.81
 %

 7.55
 %

 Net Interest
Income and Net Interest Margin

 The Company's primary source of income is net
interest income, which increased $502,000, or 1.79%, in 2024 compared to 2023 due primarily to an increase in average earning assets
which increased $59.6 million or 7.8% in 2024. Loans and interest bearing deposits in other banks were the principal drivers of this growth
increasing $32.3 million and $29.7 million, respectively. Combined with the increase in the volume of earning assets, the yield on these
assets increased 55 basis points (bps; 1 basis point is equal to 1/100th of 1 percent) to 5.42%. The yield on loans increased 61 bps to
5.96%. The increase in interest income was partially offset by the cost of interest-bearing liabilities which increased 105 bps to 2.93%
during the year ended December 31, 2024 compared to 1.88% during the year ended December 31, 2023. Time deposits were the primary contributor
to the increase in interest expense due to an increase of 137 bps in the cost of time deposits to 3.94% and a $50.6 million increase in
the average balance due to a strategy to attract and retain time deposits. Additionally, the cost of borrowed funds decreased 64 bps to
5.79%, as the cost of other borrowings increased 44 bps to 4.04% while trust preferred securities costs rose 7 bps to 7.72%. Aside from
the rate increases in borrowed funds, the total average balance increased $9.8 million due primarily to the Bank Term Funding Program
borrowing taken in December 2023 and repaid during the fourth quarter of 2024. These rate and volume activities combined to result in
an increase in net interest income of $502,000, while the net interest margin decreased to 3.47% for the year ended December 31, 2024,
from 3.67% for 2023.

 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 Yields and Rates

 2024

 2023

 Income/

 Yields/

 Income/

 Yields/

 Balance

 Expense

 Rates

 Balance

 Expense

 Rates

 ASSETS

 Loans
 (1) (2)

 $

 641,022

 $

 38,208

 5.96%

 $

 608,705

 $

 32,552

 5.35%

 5.18%

 4.99%

 bearing deposits in other banks

 74,524

 3,875

 5.20%

 44,864

 2,239

 4.99%

 investment securities

 107,278

 2,544

 2.37%

 109,303

 2,322

 2.12%

 Total
 earning assets

 822,939

 44,633

 5.42%

 763,319

 37,135

 4.87%

 Less:
 Allowance for credit losses

 (7,628)

 (6,937)

 Non-earning

 40,103

 36,574

 Total

 $

 855,414

 $

 792,956

 LIABILITIES
 AND SHAREHOLDERS' EQUITY

 demand deposits

 $

 72,936

 $

 0.83%

 $

 74,939

 $

 0.61%

 Savings
 and money market deposits

 171,311

 2,833

 1.65%

 164,429

 1,442

 0.88%

 Time

 271,835

 10,707

 3.94%

 221,275

 5,681

 2.57%

 Total
 interest-bearing deposits

 516,082

 14,145

 2.74%

 460,643

 7,582

 1.65%

 Other
 borrowings

 17,486

 4.04%

 7,124

 3.60%

 Trust
 preferred securities

 15,904

 1,248

 7.72%

 16,426

 1,274

 7.65%

 Total
 borrowed funds

 33,390

 1,967

 5.79%

 23,550

 1,534

 6.43%

 Total
 interest-bearing liabilities

 549,472

 16,112

 2.93%

 484,193

 9,116

 1.88%

 Non-interest-bearing

 229,717

 240,121

 Other

 9,431

 8,781

 Total

 788,620

 733,095

 Shareholders'
 equity

 66,794

 59,861

 Total
 liabilities and shareholders' equity

 $

 855,414

 $

 792,956

 Net
 interest income

 $

 28,521

 $

 28,019

 Net
 interest margin

 3.47%

 3.67%

 Net
 interest spread

 2.49%

 2.99%

 (1)
 Nonaccrual loans and loans held for sale have been included in average loan balances.

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

 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
 2024 Compared to 2023

 Volume
 Effect

 Rate
 Effect

 Rate
 and Volume Effect

 in Interest Income/ Expense

 income:

 Loans

 $

 1,728

 $

 3,730

 $

 $

 5,656

 (16)

 (1)

 (16)

 bearing deposits in other banks

 1,480

 1,636

 investment securities

 (43)

 (5)

 Total
 earning assets

 3,149

 4,095

 7,498

 expense:

 demand deposits

 (12)

 (5)

 Savings
 and money market deposits

 1,277

 1,391

 Time

 1,298

 3,035

 5,026

 Other
 borrowings

 Trust
 preferred securities

 (40)

 (26)

 Total
 interest-bearing liabilities

 1,679

 4,518

 6,996

 in net interest income

 $

 1,470

 $

 (423)

 $

 (545)

 $

 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)

 5,878

 6,011

 in net interest income

 $

 $

 $

 (1,078)

 $

 (266)

 The increases in interest income and interest expense
during 2024 were driven by a combination of increased interest rates and increased volumes of interest earning assets and liabilities.
Overall, our net interest margin decreased 20 bps to 3.47% in 2024 compared to 3.67% in 2023.

 The increase in interest income is attributed to an
increase in the average balance and yield on earning assets. Average earning assets increased $59.6 million. Specifically average loans
increased $32.3 million or 5.31%, and average interest-bearing deposits in other banks increased $29.7 million, or 66.1%. In addition,
the yield on average earning assets improved 55 bps to 5.42% for the year ended December 31, 2024 compared to 4.87% for the year ended
December 31, 2023. Overall, loan interest income, including fees, increased $5.7 million during the year ended December 31, 2024 compared
to December 31, 2023.

 Interest expense increased $7.0 million, due primarily
to an increase in the average balance and yield on interest bearing liabilities. Average time deposits and, money market and savings deposits
increased $50.6 million and $6.9 million, respectively. These increases were largely due to aggressive pricing on these deposit products
as the cost of interest-bearing deposits increased 109 bps to 2.74%. The increase in yield on interest bearing deposits was partially
offset by a decrease in cost of borrowed funds which fell 64 bps to 5.79% due to principal payments made on trust preferred securities
and the relatively lower cost for the Bank Term Funding Program borrowing that was outstanding throughout most of 2024.

 Loans

 Our primary source of income is interest earned on
loans. Total gross loans increased $19.4 million during 2024, or 3.04%, to $657.5 million as of December 31, 2024 as compared to $638.1
million as of December 31, 2023. The primary drivers of this increase in total loans were increases in construction loans, commercial
real estate loans and commercial loans which increased $7.3 million to $36.1 million, $3.5 million to $243.6 million and $7.4 million
to $60.6 million, respectively. These increases resulted from small business development efforts throughout 2024 and a commercial loan
promotion offered. In addition, consumer installment and all other loans increased $5.9 million due to private student loan originations
of $1.8 million and the acquisition of $2.9 million in consumer loans. These increases offset reductions in residential and multi-family
mortgage loans which decreased $3.4 million to $234.9 million and $2.2 million to $32.4 million during 2024. 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 decreased approximately $261,000 during
2024 from $3.5 million as of December 31, 2023 to $3.3 million as of December 31, 2024. 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 increased during 2024
to $1.7 million as of December 31, 2024, from $1.1 million as of December 31, 2023. 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.

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

 Loan
 Composition

 2024

 2023

 $

 %

 $

 %

 Real

 $

 37.1%

 $

 240,187

 37.6%

 5.5%

 28,830

 4.5%

 35.7%

 238,233

 37.3%

 4.9%

 34,571

 5.4%

 2.6%

 2.6%

 Total

 563,918

 85.8%

 558,222

 87.4%

 9.2%

 53,230

 8.3%

 4,025

 0.6%

 3,508

 0.5%

 installment loans and all other loans

 4.4%

 23,151

 3.7%

 Total
 loans

 100.0%

 100.0%

 Less:
 allowance for credit losses

 7,684

 7,256

 Total

 $

 649,852

 $

 630,855

 Our loan maturities, and distribution between
fixed and variable rate loans as of December 31, 2024 are shown in the following tables:

 Maturities
of Loans

 One
 Year
or Less

 One
 to Five Years

 Five
 to Fifteen Years

 After
 Fifteen Years

 Total

 Real

 $
 15,546

 $
 42,364

 $
 85,505

 $
 100,231

 $

 7,760

 3,920

 11,587

 12,845

 9,097

 13,086

 72,704

 139,973

 3,862

 11,731

 16,294

 2,706

 8,146

 5,172

 Total

 33,792

 65,938

 189,673

 274,515

 563,918

 18,108

 30,129

 10,763

 1,587

 1,656

 1,451

 4,025

 installment loans and all other loans

 5,225

 17,957

 5,791

 Total

 $
 58,781

 $
 115,475

 $
 206,923

 $
 276,357

 $

 The following table presents the dollar amount of fixed
rate and variable rate loans with maturities greater than one year as of December 31, 2024:

 Fixed
 Rate

 Variable
 Rate

 Real

 $
 74,005

 $
 154,095

 8,582

 19,770

 76,654

 149,109

 10,576

 21,311

 3,069

 12,955

 Total

 172,886

 357,240

 36,375

 6,104

 2,142

 installment loans and all other loans

 22,582

 1,199

 Total

 $
 233,985

 $
 364,770

 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.

 Allowance for
Credit Losses

 The Company maintains
its allowance for credit losses based on the 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 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.

 The allowance for 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 values, 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 "classified" 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.

 The allowance for credit losses increased to $7.7 million
as of December 31, 2024 from $7.3 million as of December 31, 2023. The allowance for credit losses at the end of 2024 was approximately
1.17% of total loans as compared to 1.14% at the end of 2023. Provisions for credit losses for loans receivable of approximately $506,000
and $712,000 were recorded during the years ended December 31, 2024 and 2023, respectively. Loans charged off, net of recoveries, totaled
approximately $78,000, or 0.01% of average loans, for the year ended December 31, 2024, compared to approximately $103,000, or 0.02% of
average loans, in 2023. 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 decreased approximately $261,000 during
2024 from $3.5 million as of December 31, 2023 to $3.3 million as of December 31, 2024. The amount of interest income that would have
been recognized on these loans had they been accruing interest was approximately $49,000 and $61,000 in the years ended December 31, 2024
and 2023, respectively. There were no loans past due 90 days or greater and still accruing interest at either December 31, 2024 or 2023.
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.

 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, or at the time of foreclosure, 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,
or at the time of foreclosure. 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.

 Annualized net charge-offs, as a percentage of average
loans, was 0.01% during the year ended December 31, 2024, compared to 0.02% for the same period of 2023. 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, 2024,
we made modest adjustments to our qualitative factors to consider risk factors associated with commercial real estate and residential
mortgage loans and the impacts of the hurricane Helene. 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 $625,000, of which $506,000 was provided for the
loan portfolio and $119,000 was provided to the allowance for unfunded commitments. The following table summarizes components of the allowance
for credit losses and related loans as of December 31, 2024 and 2023:

 Selected
 Credit Ratios

 31,

 2024

 2023

 for credit losses

 $

 7,684

 $

 7,256

 Total
 loans

 for credit losses to total loans

 1.17%

 1.14%

 Nonaccrual
 loans

 $

 3,273

 $

 3,534

 Nonaccrual
 loans to total loans

 0.50%

 0.55%

 Ratio
 of allowance for credit losses to nonaccrual loans

 2.35X

 2.05X

 Charge-offs
 net of recoveries

 $

 $

 loans

 $

 641,022

 $

 608,705

 Net
 charge-offs to average loans

 0.01%

 0.02%

 The following table 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, 2024 and 2023:

 Average Balance

 Net Charge-offs (Recoveries)

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

 Average Balance

 Net Charge-offs (Recoveries)

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

 $

 240,730

 $

 0.03%

 $

 212,409

 $

 -

 0.00%

 Construction and land development

 30,063

 (44)

 -0.15%

 39,920

 (35)

 -0.09%

 234,848

 (25)

 -0.01%

 232,280

 0.01%

 33,782

 0.28%

 33,332

 (111)

 -0.33%

 16,557

 (297)

 -1.79%

 17,253

 -

 0.00%

 Total real estate loans

 555,980

 (197)

 -0.04%

 535,194

 (132)

 -0.02%

 54,669

 0.28%

 48,586

 0.05%

 3,611

 -

 0.00%

 3,596

 1.50%

 26,319

 0.46%

 20,748

 0.75%

 -

 0.00%

 -

 0.00%

 $

 641,022

 $

 0.01%

 $

 608,705

 $

 0.02%

 The following table 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

 %
 of ACL

 %
 of Loans

 %
 of ALLL

 %
 of Loans

 Real

 $

 2,565

 33.4

 37.1

 $

 2,518

 34.7

 37.6

 4.2

 5.5

 4.1

 4.5

 2,923

 38.0

 35.7

 2,666

 36.7

 37.3

 5.0

 4.9

 7.0

 5.4

 1.9

 2.6

 2.2

 2.6

 Total

 6,341

 82.5

 85.8

 6,156

 84.7

 87.4

 9.8

 9.2

 9.3

 8.3

 0.5

 0.6

 0.5

 0.5

 and all other loans

 7.2

 4.4

 5.5

 3.8

 Total

 $

 7,684

 100.0

 100.0

 $

 7,256

 100.0

 100.0

 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 33.4% of the allowance to commercial real
estate loans, which constituted 37.1% of our loan portfolio at December 31, 2024. This allocation decreased slightly compared to 34.7%
in 2023, due primarily to the slight decrease in nonaccrual and past due loans for this segment of the loan portfolio. We have allocated
9.8% of the allowance to commercial loans, which constituted 9.2% of our loan portfolio at December 31, 2024. This allocation percentage
increased compared to December 31, 2023, due to the increase in this component of the loan portfolio.

 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 4.2% of the allowance to real estate construction
loans, which constituted 5.5% of our loan portfolio as of December 31, 2024. 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 38.0% of the allowance to residential
real estate loans, which constituted 35.7% of our loan portfolio as of December 31, 2024.

 We allocated 7.2% of the allowance to consumer and
all other loans, which constituted 4.4% of our loan portfolio as of December 31, 2024. Our allocation increased compared to the allocation
as of December 31, 2023, due to the impact of activity on overdrawn deposit accounts.

 Other Real Estate Owned

 Other real estate owned decreased $70,000, or 44.59%,
to approximately $87,000 as of December 31, 2024 from $157,000 as of December 31, 2023. During 2024, five properties were sold in the
amount of $1.5 million and four properties were acquired in the amount of $1.3 million.

 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.

 Investment Securities

 Total investment securities increased $6.2 million,
or 6.88%, to $96.0 million as of December 31, 2024 from $89.8 million as of December 31, 2023. All securities are classified as available-for-sale
for liquidity purposes. The increase in investment securities during 2024 was due to purchases of $23.3 million, which more than offset
sales of $2.1 million, and maturities, payments and amortization of $14.6 million and a $419,000 increase in the unrealized loss on securities
available-for-sale. During the third quarter of 2024, odd lot investment securities totaling $2.1 million were sold, and the proceeds
were used to reinvest in other securities. These sales generated a net gain of $4,000.There were no sales of securities during 2023. During
2023, there were maturities, calls and paydowns of $9.4 million, and the Company purchased $0.5 million in investment securities. Investment
securities with a carrying value of $35.2 million and $36.8 million as of December 31, 2024 and 2023, 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, 2024, we had a net unrealized loss in our investment portfolio totaling $15.2 million as compared to a $14.8 million loss as of December
31, 2023. 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, 2024 and 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, 2024 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

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair
 Value

 Yield

 Fair Value

 Yield

 U.S. Treasuries

 $

 2,685

 1.55%

 $

 4,296

 1.03%

 $

 4.12%

 $

 -

 -%

 $

 7,961

 1.57%

 U.S. Government Agencies

 1,230

 3.15%

 1,466

 4.59%

 3,660

 3.54%

 2,449

 3.11%

 8,805

 3.10%

 Taxable municipals

 -

 -%

 2.44%

 6,066

 2.18%

 11,728

 2.56%

 18,524

 2.44%

 Corporate bonds

 -

 -%

 1,408

 3.24%

 2.88%

 -

 -%

 2,253

 3.10%

 Mortgage backed securities

 -

 -%

 2,860

 3.84%

 9,231

 3.54%

 46,350

 2.21%

 58,441

 2.50%

 $

 3,915

 2.05%

 $

 10,760

 2.57%

 $

 20,782

 3.10%

 $

 60,527

 2.31%

 $

 2.48%

 Bank Owned Life Insurance

 As of December 31, 2024 and 2023, the Bank had
an aggregate total cash surrender value of $0 and $4.6 million, respectively, on life insurance policies covering former key
officers. During 2024, one policy was surrendered at market value resulting in a loss of $49,000. In December 2024, a death benefit
receivable of $5.4 million was recorded, resulting in an income accrual of $1.6 million.

 Excluding the loss on surrender and the income accrued
on the death benefit, the Company recognized income of approximately $73,000 and $40,000 during the years ended December 31, 2024 and
2023.

 Deposits

 Total deposits were $750.0 million as of December 31,
2024, an increase of $33.5 million, or 4.68%, from $716.5 million as of December 31, 2023, due to efforts to attract and retain deposits,
specifically time deposits, combined with more aggressive pricing on money market accounts and cyclical fund inflows. Most of the increase
was driven by money market deposits which increased $30.2 million, or 55.9%, to $84.1 million, and time deposits, which increased $16.4
million, or 6.51%, to $268.7 million as of December 31, 2024 and 2023. These increases more than offset a reduction in noninterest bearing
demand deposits of $8.9 million. The increases in time and money market deposits resulted from small business development efforts throughout
2024, revamping certain accounts to better suit customer needs and offering periodic rate promotions.

 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 and money market products. Noninterest bearing
demand deposits decreased $8.9 million in 2024, while interest bearing demand deposits, savings and money market deposits increased $26.0
million. 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
6.84% of deposits at the end of 2024 and 7.36% of deposits at the end of 2023.

 As of December 31, 2024 and 2023, uninsured deposits
are estimated to be $91.9 million and $93.8 million, respectively. Estimated uninsured deposits represented 12.3% and 13.1% of total
deposits as of December 31, 2024 and 2023, respectively. Included in estimated uninsured deposits are $22.9 million and $27.9 million
of public funds, for such respective periods, considered secured via pledged securities or letters of credit we have with the Federal
Home Loan Bank of Atlanta (the FHLB).

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

 Maturities
 of Time Deposits of Greater Than $250,000

 Three
 months or less

 $

 12,138

 Over
 three months through six months

 16,280

 Over
 six months through twelve months

 9,275

 Over
 one year

 10,846

 Total

 $

 48,539

 As of December 31, 2024 and 2023, $35.2 million and
$36.8 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 $14.0
million and $12.0 million at December 31, 2024 and 2023, respectively, to secure public deposits, including time deposits, held in our
Virginia offices.

 We held $3.0 million in brokered deposits at December
31, 2024, and no brokered deposits as of December 31, 2023. While not a primary source of funding, brokered deposits provide a means to
efficiently manage funding and liquidity. 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 $7.0 million and $6.3 million at December 31, 2024 and 2023, respectively.

 Noninterest Income

 For the year ended December 31, 2024, noninterest income
totaled $11.3 million. After excluding non-recurring items, as shown in the table below, which is a non-GAAP measure, noninterest income
was $9.7 million for 2024 compared to $9.9 million for 2023. A $244,000, or 22.51%, increase in financial services revenue to $1.3 million
from the $1.1 million recorded during 2023 offset modest decreases in service charges and card processing revenue of $48,000 and $28,000,
respectively. In addition, noninterest income was impacted by the sales of bank properties in 2024 and 2023. During 2024, a former branch
office and a lot were sold, along with the sale of furniture, resulting in a net gain of $23,000. During the same period of 2023, two
former office facilities and a vehicle were sold resulting in a net gain of $130,000. In 2023, other noninterest income included $257,000
in insurance proceeds recovery related to costs incurred during the cybersecurity incident in 2022, that was not repeated in 2024. Excluding
this item noninterest income for 2023 and the nonrecurring items in 2024, noninterest income would have been unchanged at $9.7 million.

 Noninterest Expense

 For the year ended December 31, 2024, noninterest expense
totaled $28.8 million. After excluding non-recurring items, as shown in the table below, noninterest expense decreased $90,000 to $27.9
million compared to $28.0 million for the year ended December 31, 2023. The decrease was impacted by reductions in legal and professional
fees, consulting, printing and supplies and loan expenses totaling $450,000. The expense reductions were partially offset by increases
in advertising, ATM network and deposit insurance expenses, which combined for an increase of $111,000.

 While we experienced no significant losses resulting
from fraud in 2024, we experienced an increase in the volume and sophistication of fraudulent transaction attempts. These fraudulent transaction
attempts ranged from unauthorized electronic transactions to check theft and forgery. We work continuously with customers to educate them
on identifying potential fraud and the efforts they can take to reduce the risk of fraud. We expect increased fraudulent transaction attempts
to continue for the foreseeable future.

 Our efficiency ratio, a non-GAAP measure, is defined
as noninterest expense divided by the sum of net interest income plus noninterest income and was 72.40% in 2024 compared to 73.71% in
2023. The performance improvement in this ratio is a result of the increase in net interest income, as discussed in the "Net Interest
Income and Net Interest Margin" section earlier in this Item 7. After adjusting for non-recurring items, the efficiency ratio increases
slightly to 73.01%, as shown in the table below. We continue to seek opportunities to operate more efficiently through the use of technology,
improving processes, reducing nonperforming assets and increasing productivity.

 Net
 Interest Income

 Noninterest

 Total

 Noninterest
 Expense

 Efficiency
 Ratio

 As
 reported (GAAP)

 $

 28,521

 $

 11,254

 $

 39,775

 $

 28,797

 72.40%

 Adjust
 for nonrecurring items:

 BOLI
 benefit

 -

 (1,565)

 (1,565)

 -

 BOLI
 redemption

 -

 -

 -

 (49)

 Core
 system conversion

 -

 -

 -

 (850)

 As
 adjusted for nonrecurring items (non-GAAP)

 $

 28,521

 $

 9,689

 $

 38,210

 $

 27,898

 73.01%

 Income Taxes and Deferred Tax Assets

 Income taxes were $2.1 million for the year ended December
31, 2024, compared to $2.1 million for the same period in 2023. The effective tax rates were 20.76%, and 23.01% for 2024 and 2023, 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 lower effective tax rate in 2024 is the result of non-taxable
income resulting from the BOLI insurance benefit accrual included in pre-tax earnings.

 Deferred 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, 2024 or 2023.

 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.

 Capital Resources

 During the year ended December 31, 2024, total shareholders'
equity increased $5.9 million to $70.7 million due to the earnings of $8.2 million which was partially offset by a cash dividend payment
of $1.7 million, the repurchase of common stock totaling $282,000 and the $331,000 increase in the net unrealized loss on available-for-sale
investment securities, net of taxes.

 As previously reported, the Board extended the repurchase
of up to 500,000 shares of the Company's common stock through March 31, 2025. During 2024, the Company repurchased 109,176 shares
at an average price of $2.58 per share. Since commencement of the stock repurchase program, 285,362 shares have been repurchased at an
average rate of $2.42.

 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 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, 2024, 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 $0.07 per share
in 2024. On February 24, 2025, the Board of Directors declared a dividend of $0.08 per share, to be paid on March 31, 2025. 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
$128.5 million as of December 31, 2024, up from $118.0 million as of December 31, 2023. The increase is primarily due to deposit growth
exceeding funding needs for loan growth. 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 2024 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 pay higher rates than 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.

 As of December 31, 2024, all of our investments are
classified as available-for-sale, providing an additional source of liquidity in the amount of $60.8 million, which is net of the $35.2
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 (the FRB). Due to the unrealized loss on securities
available-for-sale, the sale of investments, other than shorter-term investments with minimal unrealized losses or more recently purchased
investments, would not be a main source of liquidity at this time due to the immediate impact on regulatory capital; however, the majority
of the portfolio is considered high credit quality investments and would be available to pledge against borrowed funds. Total investment
securities increased $6.2 million, or 6.88%, during 2024 from $89.8 million as of December 31, 2023 to $96.0 million as of December 31,
2024. The Bank also has additional borrowing capacity on lines for which investments are currently pledged.

 Our loan to deposit ratio was 87.7% as of December
31, 2024 and 89.1% as of December 31, 2023.

 Available third-party sources of liquidity remain intact
as of December 31, 2024 which includes the following: our line of credit with the FHLB totaling $220.1 million subject to pledging requirements,
the brokered certificates of deposit markets, internet certificates of deposit, and the discount window at the FRB. We also have $30.0
million in unsecured federal funds lines of credit available from three correspondent banks as of December 31, 2024.

 We have used our line of credit with FHLB to issue
letters of credit totaling $14.0 million to the Treasury Board of Virginia for collateral on public funds and a $10.0 million fixed rate
borrowing maturing in May of 2028. No draws on the letters of credit have been issued. These letters of credit are considered to be draws
on our FHLB line of credit. An additional $196.1 million was available on December 31, 2024 on the $220.1 million line of credit, of which
$110.6 million is secured by a blanket lien on our residential real estate loans. Full
use of the FHLB borrowing capacity would require the Company to pledge additional assets.

 We held $3.0 million in brokered deposits as of December
31, 2024. No brokered deposits were held as of December 31, 2023. As of December 31, 2024, we had $7.0 million in reciprocal CDARS time
deposits, compared to $6.3 million as of December 31, 2023.

 The Bank has access to additional liquidity through
the FRB's Discount Window for overnight funding needs. We have collateralized this line with investment securities. As part of the
discount window capacity, the FRB 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. We participated in this program in December 2023,
through a $10 million borrowing for one year at a rate of 4.83%, which was repaid during the fourth quarter of 2024.

 During the fourth quarter of 2024, we made a voluntary
principal payment of $1.2 million on one of the outstanding trust preferred securities, originally issued in 2004. In January 2025, we
made another voluntary principal payment of $3.0 million on the same trust preferred issue. 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, 2024 and 2023 is presented in Note 20 to the consolidated financial
statements in Item 8 of this Form 10-K. As of December 31, 2024 and 2023 the allowance for credit losses on unfunded commitments totaled
$404,000 and $285,000, respectively.

 Interest Sensitivity

 As of December 31, 2024, we had a negative cumulative
gap rate sensitivity ratio of 25.11% for the one-year re-pricing period, compared to 21.59% as of December 31, 2023. 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

 (Dollars in
 thousands)

 - 90 Days

 91-365
 Days

 - 3 Years

 4-5 Years

 6-10 Years

 Over
 10 Years

 Total

 Uses of funds:

 Loans

 $

 119,642

 $

 98,132

 $

 227,380

 $

 154,382

 $

 48,693

 $

 9,307

 $

 Federal funds sold

 -

 -

 -

 -

 -

 Deposits with banks

 54,300

 -

 -

 -

 -

 54,300

 Investments

 3,903

 9,583

 22,214

 16,742

 33,394

 25,318

 111,154

 Bank owned life insurance

 -

 -

 -

 -

 -

 -

 -

 Total earning assets

 $

 177,995

 $

 107,715

 $

 249,594

 $

 171,124

 $

 82,087

 $

 34,625

 $

 823,140

 Sources of funds:

 Int Bearing DDA

 73,244

 -

 -

 -

 -

 -

 73,244

 Savings & MMDA

 183,061

 -

 -

 -

 -

 -

 183,061

 Time Deposits

 67,404

 153,691

 38,971

 8,673

 -

 -

 268,739

 Trust Preferred Securities

 14,986

 -

 -

 -

 -

 -

 14,986

 Other Borrowings

 -

 -

 -

 -

 -

 Total interest bearing

 $

 338,695

 $

 153,691

 $

 38,971

 $

 18,673

 $

 -

 $

 -

 $

 550,030

 Discrete Gap

 $

 (160,700)

 $

 (45,976)

 $

 210,623

 $

 152,451

 $

 82,087

 $

 34,625

 $

 273,110

 Cumulative Gap

 $

 (160,700)

 $

 (206,676)

 $

 3,947

 $

 156,398

 $

 238,485

 $

 273,110

 Cumulative Gap as % of Total Earning Assets

 -19.52%

 -25.11%

 0.48%

 19.00%

 28.97%

 33.18%

 Item
 7A.
 Quantitative
 and Qualitative Disclosures About Market Risk

 Not required.

 Item 8.
 Financial Statements and Supplementary Data

 FINANCIAL
STATEMENTS

 CONTENTS

 Page

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets December 31, 2024 and 2023

 Consolidated Statements of Income – Years Ended December 31, 2024 and 2023

 Consolidated Statements of Comprehensive Income (Loss) Years Ended December 31, 2024 and 2023

 Consolidated Statements of Shareholders' Equity – Years Ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows – Years Ended December 31, 2024 and 2023

 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, 2024 and 2023, the related consolidated statements
of income, comprehensive income, changes in shareholders' equity and cash flows, for the years then ended, and the related notes
to the consolidated financial statements (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, 2024 and 2023, and the results of its operations and
its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 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 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 $7.5 million of the total recorded ACLL of $7.7 million as of December 31, 2024.
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 loan 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:

 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.

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

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

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

 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

 CONSOLIDATED BALANCE SHEETS

 DECEMBER 31, 2024 AND 2023

 (in thousands except share data)

 ASSETS

 2024

 2023

 Cash
 and due from banks

 $
 13,218

 $
 14,596

 deposits with banks

 54,300

 50,363

 Total
 cash and cash equivalents

 67,668

 64,977

 Investment
 securities available-for-sale, at fair value

 89,805

 Loans
 receivable

 for credit losses

 ( 7,684
)

 ( 7,256
)

 Net
 loans

 649,852

 630,855

 Bank
 premises and equipment, net

 17,070

 17,841

 Other
 real estate owned

 interest receivable

 3,458

 3,029

 taxes, net

 4,809

 4,461

 Bank
 owned life insurance

 —

 4,589

 Right-of-use
 assets – operating leases

 3,413

 3,852

 Insurance
 benefit receivable

 5,417

 —

 Other

 7,167

 6,747

 Total

 $
 854,925

 $
 826,313

 LIABILITIES

 Deposits

 Noninterest
 bearing

 $
 224,938

 $
 233,878

 525,044

 482,589

 Total

 749,982

 716,467

 Borrowed
 funds

 24,986

 36,186

 Lease
 liabilities – operating leases

 3,413

 3,852

 interest payable

 1,442

 1,447

 expenses and other liabilities

 4,361

 3,550

 Total

 784,184

 761,502

 Commitments
 and Contingent Liabilities (Notes 19 and 21)

 —

 SHAREHOLDERS'
 EQUITY

 stock - $ 2.00 par value; 50,000,000 shares authorized; 23,636,724 and 23,745,900 shares issued and outstanding at December
 31, 2024 and 2023, respectively

 47,273

 47,492

 Additional
 paid-in capital

 14,451

 14,514

 Retained
 earnings

 21,001

 14,458

 Accumulated
 other comprehensive loss

 ( 11,984
)

 ( 11,653
)

 Total
 shareholders' equity

 70,741

 64,811

 Total
 liabilities and shareholders' equity

 $
 854,925

 $
 826,313

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

 CONSOLIDATED STATEMENTS OF INCOME

 (in thousands except share and per share data)

 INTEREST
 AND DIVIDEND INCOME

 2024

 2023

 Loans
 including fees

 $
 38,208

 $
 32,552

 Interest-earning
 deposits with banks

 3,875

 2,239

 Investments

 2,371

 2,167

 Dividends
 on equity securities (restricted)

 Total
 interest and dividend income

 44,633

 37,135

 INTEREST
 EXPENSE

 Deposits

 14,145

 7,582

 Borrowed
 funds

 1,967

 1,534

 Total
 interest expense

 16,112

 9,116

 NET
 INTEREST INCOME

 28,521

 28,019

 PROVISION
 FOR CREDIT LOSSES

 NET
 INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

 27,896

 27,370

 NONINTEREST

 Service
 charges and fees

 3,838

 3,886

 Card
 processing and interchange income

 3,702

 3,730

 Insurance
 and investment fees

 1,328

 1,084

 Other
 noninterest income

 2,386

 1,249

 Total
 noninterest income

 11,254

 9,949

 NONINTEREST
 EXPENSES

 Salaries
 and employee benefits

 14,508

 14,256

 Occupancy
 and equipment expenses

 3,572

 3,456

 Data
 processing and telecommunications

 2,540

 2,481

 Other
 operating expenses

 8,177

 7,795

 Total
 noninterest expenses

 28,797

 27,988

 BEFORE INCOME TAXES

 10,353

 9,331

 TAX EXPENSE

 2,149

 2,147

 NET

 $
 8,204

 $
 7,184

 Per Share

 Basic
 and Diluted

 $
 0.35

 $
 0.30

 Weighted Shares of Common Stock

 Basic
 and Diluted

 23,682,407

 23,804,427

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

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 2024

 2023

 NET

 $

 8,204

 $

 7,184

 Other
 comprehensive income (loss):

 Investment
 securities activity:

 (losses) gains arising during the year

 ( 415)

 2,896

 Reclassification
 adjustment for net gains included in net income

 ( 4)

 -

 Other
 comprehensive (losses) income on investment securities

 ( 419)

 2,896

 Related
 tax benefit (expense)

 ( 608)

 TOTAL
 OTHER COMPREHENSIVE INCOME (LOSS)

 ( 331)

 2,288

 TOTAL
 COMPREHENSIVE INCOME

 $

 7,873

 $

 9,472

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

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY

 (in thousands including share data, but excluding
per share data)

 Shares
 of Common Stock

 Stock

 Additional
 Paid-in- Capital

 Retained
 Earnings

 Accumulated
 Other
 Comprehensive
 Income (Loss)

 Total
 Shareholders' Equity

 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

 Net income

 —

 —

 —

 8,204

 —

 8,204

 Other
 comprehensive loss, net of tax

 —

 —

 —

 —

 ( 331
)

 ( 331
)

 Cash dividend declared
 ($0.07 per share)

 —

 —

 —

 ( 1,661
)

 —

 ( 1,661
)

 Repurchase
 of common stock

 ( 109
)

 ( 219
)

 ( 63
)

 —

 —

 ( 282
)

 Balance,
 December 31, 2024

 23,637

 $
 47,273

 $
 14,451

 $
 21,001

 $
 ( 11,984
)

 $
 70,741

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

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 2024

 2023

 CASH
 FLOWS FROM OPERATING ACTIVITIES

 Net

 $
 8,204

 $
 7,184

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

 Depreciation
 and amortization

 1,572

 1,614

 Provision
 for credit losses

 Net gain
 on sale of available-for-sale securities

 ( 4
)

 —

 on bank owned life insurance

 ( 73
)

 ( 40
)

 Gain
 on sale of mortgage loans

 ( 9
)

 ( 4
)

 Gain
 on sale or disposal of premises and equipment

 ( 21
)

 ( 46
)

 (Gain)
 loss on sale and writedowns of foreclosed real estate

 ( 74
)

 Loss
 on settlement of bank owned life insurance

 —

 on bank owned lifer insurance death benefit

 ( 1,565
)

 —

 Loans
 originated for sale

 ( 329
)

 ( 81
)

 from sales of loans originated for sale

 Net amortization/accretion
 of bond premiums/discounts

 tax benefit

 ( 260
)

 ( 390
)

 Net change
 in:

 receivable

 ( 429
)

 ( 474
)

 Other

 ( 117
)

 ( 667
)

 interest payable

 ( 5
)

 expenses and other liabilities

 ( 1,743
)

 Net
 cash provided by operating activities

 8,344

 7,401

 CASH
 FLOWS FROM INVESTING ACTIVITIES

 Net increase
 in loans

 ( 20,833
)

 ( 53,725
)

 Purchase
 of securities available-for-sale

 ( 23,336
)

 ( 500
)

 from repayments and maturities of securities available-for-sale

 14,419

 9,369

 from sales of securities available-for-sale

 2,134

 —

 Net purchase
 of equity securities (restricted)

 ( 38
)

 ( 625
)

 Payments
 for the purchase of premises, equipment and software

 ( 1,792
)

 ( 1,475
)

 from sales of premises and equipment

 1,186

 from sales of other real estate owned

 1,474

 from settlement of bank owned life insurance

 —

 Net
 cash used in investing activities

 ( 26,025
)

 ( 45,892
)

 CASH
 FLOWS FROM FINANCING ACTIVITIES

 (Decrease)
 increase in short-term borrowings

 ( 10,000
)

 Net change
 in long-term debt

 ( 1,200
)

 9,690

 Net change
 in noninterest bearing deposits

 ( 8,940
)

 ( 16,046
)

 Net change
 in interest bearing deposits

 42,455

 39,806

 Dividends
 paid

 ( 1,661
)

 ( 1,431
)

 Repurchase
 of common stock

 ( 282
)

 ( 237
)

 Net
 cash provided by financing activities

 20,372

 41,782

 Net increase
 in cash and cash equivalents

 2,691

 3,291

 Cash
 and cash equivalents, beginning of the year

 64,977

 61,686

 Cash
 and cash equivalents, end of the year

 $
 67,668

 $
 64,977

 Supplemental
 Disclosure of Cash Paid During the Year for:

 $
 16,117

 $
 8,195

 Taxes

 2,200

 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

 1,330

 Cash
 surrender value of bank owned life insurance transferred benefit receivable

 3,852

 —

 in unrealized losses on securities available for sale

 ( 419
)

 2,896

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

 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.

 Segment Reporting
– The Company's revenue is primarily derived from the business of banking. The Company's financial
performance is monitored on a consolidated basis by the Chief Executive Officer, who is designated the chief operating decision maker
("CODM"), based upon information provided about the Company's products and services offered. The segments are also distinguished
by the level of information provided to the CODM, who uses such information to review the performance of various components of the business,
which are then aggregated if operating performance of product and customers are similar. The CODM evaluates the financial performance
of the Company's business components such as revenue streams, significant expenses, and budget to actual results in assessing the
Company's segments and in determination of allocated resources. The presentation of financial performance to the CODM is consistent
with amounts and financial statement lines items shown in the Company's consolidated balance sheets and consolidated statements of income.
Additionally, the Company's significant expenses are adequately segmented by category and amount in the consolidated statements of income
to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include
salaries and employee benefits, occupancy expense, equipment expense, data processing fees and legal and professional expenses. All of
the Company's financial results are similar and considered by management to be aggregated into one reportable operating segment. While
the Company has assigned certain management responsibilities by region and business-line, the Company's CODM evaluates financial performance
on a Company-wide basis. The majority of the Company's revenue is from the business of banking and the Company's assigned regions have
similar economic characteristics, products, services and customers. Accordingly, all of the Company's operations are considered by management
to be aggregated in one reportable operating segment.

 Accounting Standards Adopted in 2024 – In
August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06 "Debt –
Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity." The ASU simplifies accounting for
convertible instruments by removing major separation models required under current generally accepted accounting principles of the United
States (GAAP). Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible
preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement
conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts
to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. In addition, the amendment
updates the disclosure requirements for convertible instruments to increase information transparency. ASU 2020-06 was effective for the
Company on January 1, 2024. The adoption of this standard had no material impact on the consolidated financial statements.

 In June 2022, the FASB issued
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. ASU 2022-03 was effective for the Company on January
1, 2024. The adoption of this standard had no material impact on the consolidated financial statements.

 In March 2023, the FASB issued ASU 2023-01, "Leases
(Topic 842): Common Control Arrangements." These amendments require entities to amortize leasehold improvements associated with
common control leases over the useful life to the common control group. ASU 2023-01 was effective for the Company on January 1, 2024.
The adoption of this standard had no material impact on the consolidated financial statements.

 On December 31, 2024, the Company adopted ASU 2023-07,
"Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures." These amendments required that a public
entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision
maker and included within each reported measure of segment profit or loss, required other segment items by reportable segment to be disclosed
and a description of their composition, and required disclosure of the title and position of the chief operating decision maker and an
explanation of how they use the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate
resources. The amendments were applied retrospectively to all prior periods presented and did not have a material effect on the Company's
consolidated financial statements. Refer to Segment Reporting section above.

 Use of Estimates – The preparation of
financial statements in conformity with 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.

 Investment 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.

 Allowance 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, 2024, there was no allowance for credit losses related to the available-for-sale portfolio.

 Loans held for sale – Mortgage 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 $ 2.9 million as of December 31, 2024 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 $ 17.7 million as of December 31, 2024. 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.

 Allowance 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.

 The allowance for 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.

 Allowance for Credit Losses – Unfunded Commitments
– Financial 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 of Atlanta (FHLB)
borrowing rate, commensurate with the lease terms at the lease commencement date, in determining the present value of the lease payments.

 Income 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, 2024 and 2023, 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.

 Income 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.

 Financial 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.

 Financial 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 – 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. The change in unrealized gains and losses on available-for-sale
securities is the Company's only component of other comprehensive income (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 $ 240,000
and $ 206,000, for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, there
were no dilutive potential common shares.

 Basic and diluted net income per common share calculations
follows:

 Schedule of basic and diluted net loss per common share calculations

 (Amounts
 in thousands, except

 For
 the year ended

 share
 and per share data)

 31,

 2024

 2023

 Net

 $
 8,204

 $
 7,184

 Weighted
 average shares outstanding

 23,682,407

 23,804,427

 Weighted
 average dilutive shares outstanding

 23,682,407

 23,804,427

 Basic
 and diluted income per share

 $
 0.35

 $
 0.30

 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 $ 54.5 million
and $ 50.4 million as of December 31, 2024 and 2023, 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, 2024 and 2023, respectively.
Of these total commitments, all were available as of December 31, 2024 and 2023. 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, 2024
and 2023, 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, 2024 and 2023 are as follows:

 Schedule of securities amortized cost and estimated fair value

 Gross

 Gross

 Approximate

 Amortized

 Fair

 Cost

 Gains

 Value

 December 31,
 2024

 U.S.

 $
 8,370

 $
 —

 $

 $
 7,961

 U.S.

 9,380

 8,805

 23,940

 —

 5,416

 18,524

 bonds

 2,499

 —

 2,253

 66,965

 8,535

 58,441

 Total
 Securities available for sale

 $
 111,154

 $

 $
 15,192

 $

 U.S.

 $
 11,643

 $
 —

 $

 $
 10,985

 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

 $
 89,805

 The following table 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, 2024 and 2023.

 Schedule of fair value and gross unrealized losses on investment securities

 Less
 than 12 Months

 Months or More

 Total

 Fair
 Value

 Fair

Value

 Fair

Value

 U.S.

 $

 $

 $
 6,981

 $

 $
 7,961

 $

 U.S.

 2,221

 6,026

 8,247

 1,559

 16,965

 5,204

 18,524

 5,416

 bonds

 1,755

 2,254

 14,982

 42,018

 8,224

 57,000

 8,535

 Total

 $
 20,241

 $

 $
 73,745

 $
 14,610

 $
 93,986

 $
 15,192

 U.S.

 $
 —

 $
 —

 $
 10,985

 $

 $
 10,985

 $

 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

 As of December 31, 2024, the available-for-sale portfolio
included 195 investments for which the fair market value was less than amortized cost. As of December 31, 2023, the available-for-sale
portfolio included 209 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 $ 35.2
million and $ 36.8 million as of December 31, 2024 and 2023, respectively, were pledged to secure public deposits and for other purposes
required or permitted by law.

 During the year ended December 31, 2024 securities
with an amortized cost of $ 2.1 million were sold, realizing a net gain of $ 4,000. No securities were sold during the year ended December
31, 2023. The following table presents the gross proceeds, gross gains and gross losses, and the tax provision resulting from sales of
securities.

 Schedule of gross proceeds, gross gains and gross losses, and the tax provision

 2024

 2023

 $
 2,134

 $
 —

 Gains

 —

 ( 39
)

 —

 Tax provision

 —

 The amortized cost and fair value of investment
securities as of December 31, 2024, 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

 Securities Available
 for Sale

 Cost

 Value

 Yield

 Due in one
 year or less

 $
 3,975

 $
 3,915

 2.05
 %

 Due after one year through
 five years

 11,297

 10,760

 2.57
 %

 Due after five years through
 ten years

 22,730

 20,782

 3.10
 %

 Due
 after ten years

 73,152

 60,527

 2.31
 %

 Total

 $
 111,154

 $

 2.48
 %

 The Bank, as a member of the Federal Reserve Bank and
the 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 $ 2.7 million as of December 31, 2024 and 2023, respectively. The stock has no quoted market value and no
ready market exists.

 NOTE 6 LOANS

 Loans receivable outstanding as of December
31, 2024 and 2023 are summarized as follows:

 Schedule of loans receivable outstanding

 31,

 2024

 2023

 Real

 $

 $
 240,187

 28,830

 238,233

 34,571

 Total

 563,918

 558,222

 53,230

 4,025

 3,508

 installment loans and all other loans

 23,151

 Total
 loans

 $

 $

 Also included in total loans above are deferred loan
fees of $ 2.0 million and $ 1.8 million, as of December 31, 2024 and 2023, respectively. Total deferred loan costs were $ 1.9 million and
$ 2.0 million, as of December 31, 2024 and 2023, 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, 2024 and 2023 are summarized as follows:

 Schedule of loans receivable nonaccrual status

 December 31, 2024

 December 31, 2023

 With No Allowance

 With an Allowance

 Total

 With No Allowance

 With an Allowance

 Total

 Real estate secured:

 $

 $

 -

 $

 $

 $

 $

 Construction and land development

 -

 -

 -

 -

 2,232

 2,410

 2,495

 -

 2,495

 -

 -

 -

 -

 Total real estate loans

 2,943

 3,121

 3,238

 3,506

 -

 -

 -

 -

 -

 -

 -

 -

 Consumer installment loans and other loans

 -

 Total loans receivable on nonaccrual status

 $

 3,081

 $

 $

 3,273

 $

 3,266

 $

 $

 3,534

 Total interest income not recognized on nonaccrual
loans for 2024 and 2023 was approximately $ 49,000 and $ 61,000, respectively.

 The Company evaluates 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, 2024 and 2023:

 Schedule of summary of impaired loans

 Unpaid
 Principal Balance

 Related

 Unpaid
 Principal Balance

 Related

 Real

 $

 $

 -

 $

 $

 -

 -

 -

 1,008

 -

 Total

 1,704

 1,124

 installment loans and other loans

 -

 -

 Total

 $

 1,717

 $

 $

 1,124

 $

 The following tables show an age analysis of past due
loans receivable as of December 31, 2024 and 2023, segregated by class:

 Schedule of analysis of past due loans receivable

 As
 of December 31, 2024

 Loans

30-59
Days
Past
Due

 Loans

60-89
Days
Past
Due

 Loans

90 or
More
Days
Past
Due

 Total

Past
Due
Loans

 Current

Loans

 Total

Loans

 Real

 $
 —

 $

 $

 $

 $
 243,235

 $

 and land
Development

 —

 35,776

 2,413

 1,810

 4,733

 230,127

 —

 —

 —

 —

 —

 —

 16,714

 Total

 2,623

 2,398

 5,687

 558,231

 563,918

 —

 60,344

 —

 —

 3,988

 4,025

 installment
loans and all other loans

 28,799

 Total
 loans

 $
 2,915

 $
 2,563

 $

 $
 6,174

 $
 651,362

 $

 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

 Current

Loans

 Total

Loans

 Real

 $

 $
 —

 $

 $
 1,146

 $
 239,041

 $
 240,187

 and land
development

 —

 28,741

 28,830

 2,628

 1,119

 4,633

 233,600

 238,233

 —

 —

 34,372

 34,571

 —

 —

 —

 —

 Total

 3,591

 1,123

 1,353

 6,067

 552,155

 558,222

 —

 —

 53,210

 53,230

 —

 —

 3,500

 3,508

 installment
loans and all other loans

 22,999

 23,151

 Total
 loans

 $
 3,739

 $
 1,154

 $
 1,354

 $
 6,247

 $
 631,864

 $

 As of December 31, 2024 and 2023, 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.

 Substandard - 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, 2024 or 2023.

 The following table presents the credit risk grade
of loans by origination year as of December 31, 2024 and 2023:

 Schedule of credit risk grade of loans

 As of December 31, 2024

 2024

 2023

 2022

 2021

 2020

 Prior

 Revolving

 Total

 Commercial real estate

 Pass

 $

 20,653

 $

 47,052

 $

 43,553

 $

 46,902

 $

 27,155

 $

 56,369

 $

 1,541

 $

 243,225

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total commercial real estate

 $

 20,653

 $

 47,052

 $

 43,808

 $

 47,043

 $

 27,155

 $

 56,394

 $

 1,541

 $

 $

 -

 $

 -

 $

 -

 $

 ( 179)

 $

 -

 $

 -

 $

 ( 1)

 $

 ( 180)

 Construction and Land Development

 Pass

 $

 17,654

 $

 5,078

 $

 6,240

 $

 3,019

 $

 1,719

 $

 2,089

 $

 -

 $

 35,799

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total construction and land development

 $

 17,955

 $

 5,078

 $

 6,240

 $

 3,019

 $

 1,719

 $

 2,101

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 19,094

 $

 27,861

 $

 29,510

 $

 38,329

 $

 11,265

 $

 78,424

 $

 26,933

 $

 231,416

 -

 -

 -

 -

 -

 -

 1,647

 3,125

 Total residential 1-4 family

 $

 19,198

 $

 28,118

 $

 29,552

 $

 39,052

 $

 11,503

 $

 80,390

 $

 27,047

 $

 $

 -

 $

 ( 38)

 $

 -

 $

 -

 $

 -

 $

 ( 37)

 $

 -

 $

 ( 75)

 Pass

 $

 1,564

 $

 4,829

 $

 10,313

 $

 6,818

 $

 2,505

 $

 6,350

 $

 -

 $

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total multifamily

 $

 1,564

 $

 4,829

 $

 10,313

 $

 6,818

 $

 2,505

 $

 6,350

 $

 -

 $

 $

 -

 $

 ( 53)

 $

 -

 $

 -

 $

 -

 $

 ( 42)

 $

 -

 $

 ( 95)

 Pass

 $

 2,669

 $

 1,333

 $

 2,045

 $

 2,812

 $

 $

 7,186

 $

 -

 $

 16,775

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total farmland

 $

 2,669

 $

 1,333

 $

 2,045

 $

 2,812

 $

 $

 7,332

 $

 -

 $

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 18,298

 $

 13,490

 $

 4,780

 $

 2,305

 $

 $

 2,560

 $

 18,284

 $

 60,518

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total commercial

 $

 18,299

 $

 13,490

 $

 4,780

 $

 2,336

 $

 $

 2,562

 $

 18,319

 $

 $

 -

 $

 ( 34)

 $

 ( 55)

 $

 -

 $

 -

 $

 -

 $

 ( 73)

 $

 ( 162)

 Pass

 $

 1,333

 $

 $

 $

 $

 $

 $

 1,553

 $

 4,009

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total agriculture

 $

 1,333

 $

 $

 $

 $

 $

 $

 1,553

 $

 4,025

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Consumer and All Other

 Pass

 $

 14,500

 $

 7,982

 $

 2,706

 $

 1,276

 $

 $

 $

 1,158

 $

 28,926

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total consumer and all other

 $

 14,517

 $

 8,004

 $

 2,726

 $

 1,295

 $

 $

 $

 1,158

 $

 $

 ( 163)

 $

 ( 62)

 $

 ( 14)

 $

 ( 7)

 $

 ( 9)

 $

 -

 $

 ( 24)

 $

 ( 279)

 Total

 $

 96,188

 $

 108,226

 $

 99,803

 $

 102,607

 $

 44,874

 $

 156,220

 $

 49,618

 $

 Total current period gross charge-offs

 $

 ( 163)

 $

 ( 187)

 $

 ( 69)

 $

 ( 186)

 $

 ( 9)

 $

 ( 79)

 $

 ( 98)

 $

 ( 791)

 As of December 31, 2023

 2023

 2022

 2021

 2020

 2019

 Prior

 Revolving

 Total

 Commercial 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

 $

 $

 240,187

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Construction 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

 $

 -

 $

 28,830

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 Pass

 $

 $

 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

 $

 238,233

 $

 -

 $

 -

 $

 ( 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

 $

 -

 $

 34,571

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 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

 $

 53,230

 $

 -

 $

 ( 5)

 $

 ( 14)

 $

 -

 $

 ( 26)

 $

 -

 $

 -

 $

 ( 45)

 Pass

 $

 $

 $

 $

 $

 $

 $

 1,217

 $

 3,490

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 -

 Total agriculture

 $

 $

 $

 $

 $

 $

 $

 1,217

 $

 3,508

 $

 -

 $

 -

 $

 -

 $

 -

 $

 -

 $

 ( 59)

 $

 -

 $

 ( 59)

 Consumer 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)

 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.

 The allowance for 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.

 The following tables present a disaggregated
analysis of activity in the allowance for credit losses for loans as of December 31, 2024 and 2023:

 Schedule of allowance for credit losses for loans

 Real estate secured

 Construction and Land Development

 Consumer and All Other

 Unallocated

 Total

 Year ended December 30, 2024

 Beginning balance

 $
 2,518

 $

 $
 2,666

 $

 $

 $

 $

 $

 $
 —

 $
 7,256

 Charge-offs

 ( 180
)

 —

 ( 75
)

 ( 95
)

 —

 ( 162
)

 —

 ( 279
)

 —

 ( 791
)

 Recoveries

 —

 —

 —

 Provision for credit losses

 2,639

 2,898

 ( 148
)

 —

 7,762

 Ending balance

 $
 2,565

 $

 $
 2,923

 $

 $

 $

 $

 $

 $
 —

 $
 7,684

 Real estate secured

 Construction and Land Development

 Consumer and All Other

 Unallocated

 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

 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.

 On September 27, 2024, Hurricane Helene passed through
western North Carolina, southwest Virginia and northeast Tennessee, causing flood and wind damage in its path. To assist borrowers impacted
by this natural disaster, we offered short-term payment deferrals of 3 months. At December 31, 2024, 36 loans totaling $ 9.2 million are
participating in this deferral program. One of these loans, a residential mortgage loan totaling $ 178,000, received an additional 3 month
deferral, due to the extent of damage to the property. Additionally, there were no loans that had a payment default during the year that
were modified in the previous 12 months.

 NOTE 9 BANK PREMISES AND EQUIPMENT

 Depreciation expense for the year ended December
31, 2024 and 2023 was $ 1.2 million and $ 1.2 million, respectively. Bank premises and equipment as of December 31, 2024 and 2023 are summarized
as follows:

 of bank premises and equipment

 2024

 2023

 Land

 $

 6,441

 $

 7,206

 Buildings
 and improvements

 14,664

 15,329

 Furniture
 and equipment

 9,279

 11,225

 in progress

 -

 Property
 plan equipment, gross

 30,384

 35,223

 Less
 accumulated depreciation

 ( 13,314)

 ( 15,935)

 Bank
 Premises and Equipment

 $

 17,070

 $

 17,841

 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, 2024 and 2023.

 Income tax expense
is summarized as follows for the years ended December 31, 2024 and 2023:

 of pre-tax book income

 2024

 2023

 Current
 income tax expense

 $

 2,054

 $

 2,139

 tax expense

 tax expense

 $

 2,149

 $

 2,147

 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, 2024 and 2023, respectively:

 of reconciliation of income tax expense

 2024

 2023

 tax expense at the applicable federal rate

 $

 2,637

 $

 2,152

 Permanent
 differences resulting from:

 Prior
 year tax

 -

 Nondeductible
 expenses

 Tax
 exempt interest income

 ( 1)

 ( 2)

 Bank
 owned life insurance

 ( 15)

 ( 9)

 Surrender
 of bank owned life insurance

 -

 Penalty
 on surrender of bank owned life insurance

 -

 Bank
 owned life insurance benefit

 ( 329)

 -

 Other
 adjustments

 ( 6)

 tax expense

 $

 2,149

 $

 2,147

 The net deferred tax assets and liabilities resulting
from temporary differences as of December 31, 2024 and 2023, are summarized as follows:

 of net deferred tax assets and liabilities

 2024

 2023

 tax assets

 for credit losses

 $

 1,828

 $

 1,696

 compensation

 loss on securities available for sale

 3,186

 3,098

 Other
 real estate owned

 Self-insured
 health insurance

 Lease
 liability

 Other

 Total
 assets, gross

 6,450

 6,372

 tax liabilities

 Depreciation

 Prepaid
 expenses

 loan costs

 Right-of-use
 asset

 Total
 liabilities, gross

 1,615

 1,911

 Net
 deferred tax asset

 $

 4,835

 $

 4,461

 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, 2024 and 2023, 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 2021 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 $ 51.3 million and $ 52.8 million
as of December 31, 2024 and 2023, respectively. Brokered time deposits totaled $ 3.0 million and $ 0 at December 31, 2024 and 2023, respectively.
 As of December 31, 2024, the scheduled maturities of time deposits are as follows (dollars are in
thousands):

 of maturities

 2025

 $

 221,094

 2026

 29,197

 2027

 9,774

 2028

 3,603

 2029

 5,071

 After
 five years

 -

 Total

 $

 268,739

 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.

 Schedule of related party

 For
 the year ended December 31,

 2024

 2023

 Beginning
 balance

 $
 2,610

 $
 1,559

 New loans
 and advances on lines

 2,895

 1,750

 Effects
 of changes in composition of related parties

 —

 1,557

 Payments
 and other reductions

 ( 1,430
)

 ( 2,256
)

 Ending
 balance

 $
 4,075

 $
 2,610

 Total related party deposits held at the Bank were
$ 17.9 million and $ 15.6 million as of December 31, 2024 and 2023, 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 % of their salary for 2024 and
2023, respectively. The Company contributed approximately $ 529,000 and $ 519,000 to the defined contribution plan during the years ended
December 31, 2024 and 2023, 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, 2024 and 2023, 605,000
and 500,000 notional shares,
respectively, have been awarded, and for the years ended December 31, 2024 and 2023 expense totaling $ 160,000
and $ 55,000
was recorded.

 The Bank maintains a salary continuation plan for key
executives which was established in 2002 and was funded by single premium life insurance policies. Expenses related to the plan were approximately
$ 24,000 and $ 26,000 for the years ended December 31, 2024 and 2023, respectively.

 NOTE 14 OTHER REAL ESTATE OWNED

 The following table summarizes the activity
in other real estate owned for the years ended December 31, 2024 and 2023:

 Schedule of activity in other real estate owned

 2024

 2023

 Balance,
 beginning of year

 $

 $

 Additions

 1,330

 from sales

 ( 1,474
)

 ( 132
)

 Adjustment
 of carrying value

 ( 9
)

 —

 Gains
 (losses) from sales

 ( 96
)

 Balance,
 end of year

 $

 $

 As of December 31, 2024, one loan secured by
residential real estate totaling approximately $ 16,000 was in the process of foreclosure. As of December 31, 2023, four loans totaling
approximately $ 401,000 were in the process of foreclosure, of which three loans totaling $ 117,000 were secured by residential real estate.

 NOTE 15 BANK OWNED LIFE INSURANCE

 As of December 31, 2024 and 2023, the Bank had an aggregate
total cash surrender value of $ 0 and $ 4.6 million, respectively, on life insurance policies covering former key officers. During 2024
one policy was surrendered at market value resulting in a loss of $ 49,000. In December 2024, a death benefit receivable of $ 5.4 million
was recorded, resulting in an income accrual of $ 1.6 million.

 Excluding the loss on surrender and the accrual of
income on the death benefit, the Company recognized income of approximately $ 73,000 and $ 40,000 during the years ended December 31, 2024
and 2023, respectively.

 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, 2024, the Bank leases four branch offices and a former branch office now used as administrative 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, 2024 is 7.27 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, 2024 was 3.36 %.

 The Company's operating lease costs for the years
ended December 31, 2024 and 2023, as a result of the transactions discussed above, were $ 558,000 and $ 465,000, respectively.

 The Company's other operating leases were evaluated
and determined to be immaterial to the financial statements. As of December 31, 2024, 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

 2025

 $

 2026

 2027

 2028

 2029

 Thereafter

 1,243

 Total
 lease payments

 4,008

 Less
 imputed interest

 Total

 $

 3,413

 NOTE 18 BORROWED FUNDS

 The following table presents the breakdown of
borrowed funds as of December 31, 2024 and 2023:

 of breakdown of borrowed funds

 Short-term
 Borrowings

 Long-term
 Borrowings

 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)

 Balance
 December 31, 2024

 $

 -

 $

 -

 $

 -

 $

 -

 $

 $

 9,831

 $

 5,155

 $

 24,986

 Highest balance at any month-end

 -

 -

 -

 11,031

 5,155

 Average weighted balance

 -

 -

 -

 7,486

 10,749

 5,155

 33,390

 Average interest rate:

 Paid during the year

 5.61 %

 4.83 %

 3.51 %

 8.15 %

 7.30 %

 5.88 %

 At year-end

 3.51 %

 7.52 %

 6.69 %

 5.74 %

 Balance
 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 %

 (a) – The
Bank has the ability to borrow up to an additional $86.6 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 $196.1 million. The Bank
had no overnight borrowings subject to daily rate changes from the FHLB at December 31, 2024 or 2023.

 We have used our line of credit with FHLB to issue
letters of credit totaling $14.0 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 consisted
of $30.0 million in unsecured federal funds line of credit facilities with correspondent banks as of December 31, 2024 and 2023, 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, 2024 and 2023, there
were no short term FHLB advances outstanding.

 (d) – A short-term, fixed rate borrowing under
the FRB Bank Term Funding Program in the amount of $10.0 million at December 31, 2023, was prepaid without penalty during the fourth quarter
of 2024.

 (e) – As of December 31, 2024 and 2023, there
was a fixed rate, FHLB advance in the amount of $10.0 million outstanding, which matures in 2028.

 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 Secured Overnight Financing Rate (SOFR)
plus 260 basis points. During 2024, a principal reduction of $ 1.2 million was paid. On January 7, 2025, a principal reduction
of $ 3.0 million 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, 2024 (dollars
in thousands):

 of maturities of borrowed funds

 2025

 $

 -

 2026

 -

 2027

 -

 2028

 2029

 -

 2030
 and thereafter

 14,986

 $

 24,986

 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.

 Financial instruments
whose contract amount represents credit risk as of December 31, 2024 and 2023 were as follows:

 of financial instruments with credit risk

 2024

 2023

 Commitments
 to extend credit

 $
 108,316

 $
 93,212

 Standby
 letters of credit

 2,617

 3,968

 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. As of December 31, 2024 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, and those commitments are excluded from
the credit losses estimate.

 For the years end December 31, 2024 and 2023, the Company
recorded a provision of $ 119,000 and a reversal of $ 63,000, respectively, to the liability for credit losses for unfunded commitments.
As of December 31, 2024 and 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities
was $ 404,000 and $ 285,000, respectively.

 NOTE 21 LEGAL CONTINGENCIES

 In the course of
operations, we may become a party to legal proceedings in the normal course of business. As of December 31, 2024, 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

 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, 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, 2024, 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, 2024 and 2023, respectively.

of capital requirement

 Actual

 Minimum
 Capital Requirement

 Minimum
 to Be Well Capitalized Under Prompt Corrective Action Provisions

 Ratio

 Ratio

 Ratio

 31, 2024:

 Total
 Capital to Risk Weighted Assets

 $

 101,769

 16.19 %

 $ 50,300

 8.00 %

 $

 62,875

 10.00 %

 Tier
 1 Capital to Risk Weighted Assets

 93,907

 14.94 %

 37,725

 6.00 %

 50,300

 8.00 %

 Tier
 1 Capital to Average Assets

 93,907

 10.70 %

 35,113

 4.00 %

 43,892

 5.00 %

 Equity Tier 1 Capital

 to
 Risk Weighted Assets

 93,907

 14.94 %

 28,294

 4.50 %

 40,869

 6.50 %

 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 %

 Accordingly, as of December 31, 2024 and 2023, 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 8.19% at December 31, 2024. 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, 2024 and 2023, 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 $96.0 million and $89.8 million as of December 31, 2024 and 2023, 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 $ 87,000 and
$ 157,000 as of December 31, 2024 and 2023, respectively.

 Assets and liabilities measured at fair value are as
follows as of December 31, 2024:

 of summary of assets and liabilities measured at fair value

 Quoted
 market price in active markets

 1)

 other observable inputs

 2)

 unobservable inputs

 3)

 (On a recurring basis)

 Available for sale investments

 U.S. Treasuries

 $

 -

 $

 7,961

 $

 -

 U.S. Government Agencies

 -

 8,805

 -

 Taxable municipals

 -

 18,524

 -

 Corporate bonds

 -

 2,253

 -

 Mortgage backed securities

 -

 58,441

 -

 (On a non-recurring basis)

 Other real estate owned

 -

 -

 Collateral dependent loans with ACL:

 Consumer installment and all other loans

 -

 -

 Total

 $

 $

 $

 Not included in the above table is a residential 1-4
family mortgage loan totaling $178,000 that has a specific allowance for credit loss allocation of 100% due to the destruction of the
collateral.

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

 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.

 $

 -

 $

 10,985

 $

 -

 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

 $

 $

 89,805

 $

 For Level 3 assets
measured at fair value on a recurring or non-recurring basis as of December 31, 2024 and 2023, the significant unobservable inputs used
in the fair value measurements were as follows:

 of significant unobservable inputs In level 3 assets

 Fair
 Value at December 31,

 2024

 Fair
 Value at

 31,

 2023

 Valuation
 Technique

 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 %

 and all other

 $

 $

 -

 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

 1)

 other observable inputs

 2)

 unobservable inputs

 3)

 instruments – assets

 Net
 loans

 $

 649,852

 $

 633,023

 $

 -

 $

 -

 $

 633,023

 instruments – liabilities

 Time

 268,739

 268,509

 -

 268,509

 -

 Borrowed
 funds

 24,986

 23,071

 -

 23,071

 -

 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

 -

 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, 2024 and 2023.

 of revenue from contracts with customers

 2024

 2023

 Service
 charges and fees

 $

 3,838

 $

 3,886

 Card
 processing and interchange income

 3,702

 3,730

 Insurance
 and investment fees

 1,328

 1,084

 Other
 noninterest income

 2,386

 1,249

 Total
 noninterest income

 $

 11,254

 $

 9,949

 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, 2024 and 2023:

 of noninterest expenses

 2024

 2023

 Other
 operating expenses

 $

 3,605

 $

 3,603

 ATM
 network expense

 1,540

 1,489

 Legal
 and professional fees

 1,081

 Core
 system termination costs

 -

 Loan
 related expenses

 FDIC
 insurance premiums

 Consulting
 fees

 Advertising,
 sponsorships and donations

 Printing
 and supplies

 Other
 real estate owned expenses, net

 ( 5)

 Total

 $

 8,177

 $

 7,795

 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 24, 2025, the Board of Directors declared
a dividend of $ 0.08 per share payable March 31, 2025 to shareholders of record as of March 17, 2025.

 On January 24, 2025, 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, 2026. This is a continuation
of the repurchase program originally announced April 28, 2022, which was set to expire March 31, 2025. To the date of this announced continuation,
286,792 shares have been repurchased at an average price of $2.42 per share, leaving 213,208 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 December 2023, the FASB issued ASU 2023-09, "Income
Taxes (Topic 740): Improvements to Income Tax Disclosures." The amendments in this ASU require an entity to disclose specific categories
in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, which is greater
than five percent of the amount computed by multiplying pretax income by the entity's applicable statutory rate, on an annual basis.
Additionally, the amendments in this ASU require an entity to disclose the amount of income taxes paid (net of refunds received) disaggregated
by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions
that are equal to or greater than five percent of total income taxes paid (net of refunds received). Lastly, the amendments in this ASU
require an entity to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between
domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. This
ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on
a prospective basis; however, retrospective application is permitted. The Company does not expect these amendments to have a material
effect on its consolidated financial statements.

 In November 2024, the FASB issued ASU 2024-03, "Income
Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement
Expenses." ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about
certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation,
depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts
remaining in relevant expense captions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01,
"Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the
Effective Date", which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt
the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting
periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. Implementation of ASU 2024-03 may be applied prospectively
or retrospectively. The Company does not expect 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, 2024 AND 2023
 (Dollars in Thousands)

 of parent corporation only condensed balance sheets

 2024

 2023

 ASSETS

 Due
 from banks

 $

 3,348

 $

 Investment
 in subsidiaries

 81,923

 80,112

 Other

 Total

 $

 86,017

 $

 81,326

 LIABILITIES

 interest payable

 $

 $

 expenses and other liabilities

 Trust
 preferred securities

 14,986

 16,186

 Total

 15,276

 16,515

 SHAREHOLDERS'
 EQUITY

 stock - $2.00 par value, 50,000,000 shares authorized;

 23,636,724
 and 23,745,900 shares issued and outstanding at December 31, 2024 and 2023, respectively

 47,273

 47,492

 Additional
 paid capital

 14,451

 14,514

 Retained
 earnings

 21,001

 14,458

 Accumulated
 other comprehensive loss

 ( 11,984)

 ( 11,653)

 Total
 shareholders' equity

 70,741

 64,811

 Total
 liabilities and shareholders' equity

 $

 86,017

 $

 81,326

 CONDENSED STATEMENTS
OF INCOME
 FOR THE YEARS
ENDED DECEMBER 31, 2024 AND 2023
 (Dollars in
thousands)

 of parent corporation only condensed statements of income

 2024

 2023

 Miscellaneous

 $

 $

 Dividends
 from subsidiaries

 7,144

 2,600

 Undistributed
 income of subsidiaries

 2,142

 5,677

 Total

 9,323

 8,315

 Expenses

 Trust
 preferred securities interest expense

 1,248

 1,274

 Professional
 fees

 Other
 operating expenses

 Total
 expenses

 1,406

 1,422

 before income taxes

 7,917

 6,893

 tax benefit

 ( 287)

 ( 291)

 Net

 $

 8,204

 $

 7,184

 CONDENSED STATEMENTS OF CASH FLOWS

 of parent corporation only condensed statements of cash flows

 2024

 2023

 Cash
 flows from operating activities

 Net

 $

 8,204

 $

 7,184

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

 Equity
 in undistributed earnings of subsidiaries

 ( 2,142)

 ( 5,677)

 Net
 decrease in other assets

 Net
 (decrease) increase in accrued interest payable and other liabilities

 ( 39)

 Net
 cash provided by operating activities

 6,064

 1,884

 Cash
 flows from financing activities:

 Repayment
 of long-term debt

 ( 1,200)

 ( 310)

 Repurchase
 of common stock

 ( 282)

 ( 237)

 Cash
 dividends paid

 ( 1,661)

 ( 1,431)

 Net
 cash used in financing activities

 ( 3,143)

 ( 1,978)

 Net
 increase (decrease) in cash and cash equivalents

 2,921

 ( 94)

 Cash
 and cash equivalents, beginning of year

 Cash
 and cash equivalents, end of year

 $

 3,348

 $

 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, 2024. In making this assessment, management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission 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,
2024.

 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, 2024.

 Item 9B.
 Other Information

 During the three months ended December 31, 2024,
none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a Rule 10b5-1 trading
arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

 Item 9C.
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Not applicable.

 Item 10. Directors, Executive Officers and
Corporate Governance

 The information contained under the
captions "Election of Directors," "Incumbent Directors Whose Terms Expire in 2026 and 2027," "Executive
Officers Who Are Not Directors," "Corporate Governance" and "Delinquent Section 16(a) Reports" in the 2024
Proxy Statement that is required to be disclosed in this Item 10 is incorporated herein by reference.

 The Company has adopted an insider
trading policy that governs the purchase, sale, and/or other transactions of our securities by its directors, officers and employees.
A copy of the Company's insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10-K for the fiscal year ended
December 31, 2024. In addition, with regard to the Company's trading in its own securities, it is the Company's policy to
comply with the federal securities laws and the applicable exchange listing requirements.

 Item 11. Executive Compensation

 The information contained under the
captions "Director Compensation" and "Executive Compensation and Related Party Transactions" in the 2025 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 2025
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 2025 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 2025 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, 2024, 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. Exhibits 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).

 New Peoples Bankshares, Inc. Insider Trading Policy

 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 materials for the Company's 10-K
 Linkbase Document.

 in Exhibit 101).

____________________________________

 * 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.

 (Registrant)

 By:

 /s/ JAMES W. KISER

 James W. Kiser

 Director, President and Chief Executive Officer

 Date:

 By:

 /s/ CHRISTOPHER
 G. SPEAKS

 Christopher G. Speaks

 Executive Vice President and Chief Financial Officer
and Treasurer

 Date:

 By:

 /s/ JOHN J. BOCZAR

 John J. Boczar

 Chief Accounting Officer and Secretary

 Date:

 March 31, 2205

 POWER OF ATTORNEY

 Each of the undersigned hereby appoints James W.
Kiser 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, 2024 (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/
JAMES W. KISER

 Director,
 President and

 March
 31, 2025

 James
 W. Kiser

 Chief
 Executive Officer

 (Principal
 Executive Officer)

 /s/
 CHRISTOPHER G. SPEAKS

 Executive
 Vice President and Chief Financial Officer

 March
 31, 2025

 Christopher
 G. Speaks

 (Principal Financial
 Officer)

 /s/
 JOHN J. BOCZAR

 Chief
 Accounting Officer

 John
 J. Boczar

 (Principal
 Accounting Officer)

 /s/
 TIM W. BALL

 Tim
 W. Ball

 /s/
 GINA D. BOGGESS

 Gina
 D. Boggess

 /s/
 J. ROBERT BUCHANAN

 J.
 Robert Buchanan

 /s/
 JOE M CARTER

 Joe
 M. Carter

 /s/
 JOHN D. COX

 John
 D. Cox

 /s/
 HAROLD LYNN KEENE

 Chairman,

 Harold
 Lynn Keene

 /s/
 BARTON SCOT LONG

 Barton
 Scott Long

 /s/
 MICHAEL G. MCGLOTHLIN

 Michael
 G. McGlothlin

 /s/
 B. SCOTT WHITE

 Vice
 Chairman, Director

 B.Scott
 White