2020 New Peoples Bank Annual Report

ANNUAL REPORT

2020

Banking by the Golden Rule

New Peoples Bankshares, Inc. is the financial holding company for New Peoples Bank, Inc., a community bank with 21 offices serving
southwestern Virginia, southern West Virginia, northeastern Tennessee and western North Carolina. The company’s common stock is
traded over the counter under the trading symbol, “NWPP.” For more information, visit npbankshares.com. To learn more about New
Peoples Bank and its services, visit www.newpeoples.bank.

MEET OUR BOARD

BOARD OF DIRECTORS

C. Todd Asbury Tim W. Ball Gina D. Boggess J. Robert Buchanan Our Mission
Joe M. Carter John D. Cox
Charles H. Gent, Jr. Eugene S. Hearl New Peoples Bank
provides high-
quality, state-of-
the-art, golden-rule
banking services
to our customers
generating an
excellent return to
our stockholders
and providing a
challenging and
rewarding work
environment for our
employee family.

H. Lynn Keene Fred W. Meade Michael G. McGlothlin B. Scott White Our Vision

Chairman Vice Chairman New Peoples Bank
will be the #1
EXECUTIVE OFFICERS financial institution
of choice in Central
Appalachia making
our customers,
investors,
employees and
communities
dreams come true.

C. Todd Asbury John J. Boczar Bryan T. Booher J.W. Kiser

President & CEO EVP | Chief Financial Officer EVP | Chief Risk Officer EVP | Chief Banking Officer

MESSAGE FROM THE PRESIDENT

Dear Fellow Shareholders,

I am pleased to present to you our 2020 annual report. Although 2020 was a challenging year for
everyone, we have come through the year stronger than ever. Our theme for the year 2020 was “Focus.”
Despite all of the distractions that came our way from the pandemic, we were able to continue to focus
on the strategies to help us enhance performance and increase shareholder value.

PCre. sTioddedntA&sbCuErOy During 2020, we continued our work on improving efficiency. We hired consultants and focused on
reorganizing the bank, as well as changing procedures to become more efficient. We have worked
hard to maximize the use of technology investments and to operate more smoothly. We evaluated
our products and services and made enhancements to make them more profitable and better suited to
customer needs. We still are working on some things in 2021 to further improve efficiency and increase
earnings. We are already beginning to see the positive results of those changes. In fact, the last two
quarters of 2020, we started experiencing an increase in net income on a quarterly basis to nearly
record highs.

COVID-19 pandemic brought about sudden unexpected changes that nobody could truly predict. However, we immediately
implemented what we refer to as the “We Care” initiative. At the onset of the pandemic, we took great strides to take care of our
customers. Our employees made phone calls to many of our customers to check on them and to make them aware of our digital
services to help them continue to do their banking in a safe manner. We closed our lobbies, and despite not being open in the
lobbies, we grew in both loans and deposits during the pandemic. We helped small businesses with over $40 million in PPP loans.
Upon customer request, we assisted with loan payment deferrals to help them during the difficult times, of which nearly all have
returned to a regular payment schedule. We also have taken care of our employees. Bankers are essential workers, and I am proud
of our team and how well they have taken care of our customers during this challenging time. We have provided our employees with
resources and implemented policies to keep them safe also. Lastly, we have taken care of our communities and helped by providing
leadership and financial support to community needs.

Although we dealt with the many changes originated from the pandemic, we continued to focus on expanding our presence in
growth markets, in particular in the Tri-Cities market area and northwestern North Carolina. In October 2020, we relocated our
Bloomingdale branch to a new location in Kingsport, Tennessee which provides more space and greater visibility in this market. We
also have begun work on renovating a building in Bristol, Virginia in which we plan to open this office in the third quarter of 2021.
Lastly, we opened a loan production office in Boone, North Carolina and we have been having great success in this new market
area. We will continue to look for opportunities in markets that will yield a high return for our shareholders.

We have come a very long way. The plans are all coming together. I am truly thankful for the past several years of the building blocks
that have been put in place. Conservative policies, safe risk management practices, a great group of bankers, and strong core loan
and deposit growth has established a strong financial institution. These blocks have been tested, but we have weathered the “storm”
well in this past year.

We are stronger than ever! We remain well capitalized. Asset quality is still improving. We have a strong management team.
Earnings are increasing. Liquidity sources are solid. Our risk management practices are superior. Our customers and employees
are awesome. All of this combined are making your investment greater in value. If earnings trends continue, we believe we will be
able to pay a dividend in 2022. We are strong! We are safe! We are making great progress toward a brighter future.

Thank you for your partnership. Your continued support has seen us through difficult times in the past and it will see us through
whatever we face in the future.

God bless you all!

C. Todd Asbury
President & CEO

Banking by the Golden Rule 1

A LOOK BACK AT 2020

New Peoples Bank Opens New State-of-the-
Art Full Service Branch in Kingsport, TN

To meet our growing demands in the Kingsport area, we relocated our branch
at 2600 N John B Dennis Highway to a larger and more convenient location at
1999 East Stone Drive, Kingsport, TN. Our new full service facility, designed
to create a great customer experience through its innovative characteristics
and amenities, is located at the corner of Stone Drive and American Way,
and features a spacious interior, a comfortable customer lounge & education
center, a private area to access safe deposit box content, Interactive Teller Machines both inside and outside, and
easy accessible drive-thru lanes. This move, planned with our customers in mind, is a win-win — lots of benefit and
convenience all around. We look forward to the endless opportunities this new location presents for our customers,
our community and our team members.

New Peoples Bank Announces Expansion
into Western North Carolina Area

In December 2020, C. Todd Asbury, President and CEO of New
Peoples Bank announced the bank’s expansion into the Boone and
Banner Elk, North Carolina area with the opening of a Loan Production
Office in Boone and the hiring of veteran bankers David Lecka, Garrett
Shore, and Melissa Potter. Lecka, Shore, and Potter bring an additional
59 years of combined experience to the New Peoples Bank team.
“Strategically, we have been planning to expand our footprint in high
growth markets in the Central Appalachian region. The Boone, North
Carolina area fits well within this strategy and we are excited to open
this loan production office,” said Asbury. “Having the right team in
place is essential when entering new markets and I have no doubt that
David, Garrett, and Melissa will carry through our mission of creating
value for our customers and the communities we serve.”

Financial Literacy

As part of our financial literacy effort, New Peoples Bank is making a program aptly
named, HOW TO DO YOUR BANKING, available to area high schools. Students
learn to make wise financial decisions with this program using digital and printed student
workbooks, role-play simulations and video exercises. Practical lessons on the importance
of saving, even small amounts, by budgeting as a means of achieving financial goals, using the world of electronic
banking, as well as keeping a checking account in balance and reconciling it with a bank statement are all within
this program.
New Peoples Bank began HOW TO DO YOUR BANKING in November 2008 serving five schools. The program
has grown over the years and now currently serves 36 schools. To date, New Peoples Bank has reached 30,165
students, their educators and parents. Teachers often invite a representative from New Peoples Bank to visit their
classroom to offer a real perspective about the world of business and finance, as well as discuss career paths and
insights into the innovative and creative aspects of banking. NPB representatives lead classroom discussions and
answer questions as students prepare for their financial literacy test that is often required before graduation.

2 New Peoples Bankshares, Inc.

STRONG. DEDICATED. EXPERIENCED.

Living Our Values

Our success in navigating the COVID-19 pandemic would not have been possible without the extraordinary support
of our employees for our customers, our communities and for one another. As the pandemic unfolded, our customers’
financial needs increased and we were prompt in our response. When the Small Business Administration (SBA)
Paycheck Protection Program (PPP) application window opened, NPB led the charge. Our passionate employees
were pleased to assist nearly 700 businesses providing much needed resources to maintain payroll, hire back
employees, and cover applicable overhead.
Appropriate measures were taken to ensure our employees’ safety in order for them to continue to provide exceptional
support during the pandemic. First, we implemented a work-from-home strategy with split-team rotations for those
employees whose jobs could be performed remotely. For team members required to be onsite, we instituted various
safeguards such as social distancing policies, face covering requirements, and symptom & temperature checks.
A temporary adjustment was made to our retail branch model in which we operated primarily in drive-through mode,
in-branch lobby service by appointments, and curbside. For the safety of our customers and employees, protective
shields were installed at our relationship banker stations, markings on the floors were placed to encourage social
distancing, hand-sanitizing stations were strategically located, and regular sanitizing of all touch areas within the
bank consistently performed. ITM/ATM, online & mobile platforms, and our Digital Branch continued to operate as
normal.
While we cannot wait to see you, our number one priority continues to be the health and well-being of you, our
employees and the communities we serve. We are working closely with state and local health agencies and carefully
monitoring caseloads in the communities where we operate to help ensure that we are doing everything we can to
keep our customers and employees safe. We appreciate each of you and thank you for your continued loyalty and
support of New Peoples Bank. We are looking forward to seeing you soon and welcoming you back in whatever
capacity you are most comfortable.

Safe Banking for Seniors

New Peoples Bank is participating in the American Bankers Association Foundation’s Safe Banking for Seniors
campaign in a nationwide effort to help older customers’ and their financial caregivers understand the risks of fraud
and financial abuse and how to protect themselves and their loved ones.
Financial abuse against older Americans can take many forms, from illegal debits, to third-party scams and even
unauthorized withdrawals by an approved caregiver. Since January 1, 2011, baby boomers (born between 1946
and 1964) have been turning 65 daily and this will continue until 2030. With the share of the US population 65
years and over projected to reach 18% by 2030, the opportunities to take advantage of these at-risk bank customers
will become more prevalent.
To help raise awareness and combat the widespread problem of elder financial abuse, New Peoples Bank, as
a community service, is offering free presentations to small groups of seniors or civic organizations in our local
communities. These workshops are designed to educate our customers and communities with the facts, tools, and best
practices needed to bank more securely.
To schedule a presentation, contact any New Peoples Bank branch location or email us
at [email protected].

Banking by the Golden Rule 3

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars in thousands, except per share data) 2020 2019 2018

FOR THE YEAR $ 30,036 $ 30,955 $ 28,472
Interest and Dividend Income
Interest Expense 4,893 5,979 4,265
Net Interest Income
Non-interest Income 25,143 24,976 24,207
Non-interest Expense
Net Income 8,147 8,652 7,607

AT YEAR END 26,997 28,997 30,494
Assets
Loans 2,890 2,059 919
Deposits
Stockholders Equity $ 756,302 $ 706,373 $ 682,142
575,566 562,544 547,096
KEY RATIOS 668,012 621,477 595,992
Return on Average Assets 58,177 54,602 51,250
Return on Average Equity
Yield on Earning Assets 0.39% 0.29% 0.14%
Cost of Funds 5.18% 3.89% 1.83%
Net Interest Margin 4.37% 4.74% 4.63%
1.05% 1.26% 0.94%
PER SHARE INFORMATION 3.66% 3.82% 3.94%
Net Income
Book Value $ 0.12 $ 0.09 $ 0.04
2.43 2.28 2.14

Asset Growth (in thousands) Deposit and Loan Growth (in thousands)

780, 000 800, 000
760, 000 700, 000
740, 000 600, 000
720, 000 500, 000
700, 000 400, 000
680, 000
660, 000 300, 000
640, 000 200, 000
100, 000

-

2018 2019 2020
Depo sits
2018 2019 2020 Loans

Capital Growth (in thousands, except per share data) Income Components (dollars in thousands)

60,000 2.50 30,000
58,000 2.40 25,000
56,000 2.30 20,000
54,000 2.20 15,000
52,000 2.10 10,000
50,000 2.00
48,000 1.90 5,000
46,000 -

2018 2019 2020 2018 2019 2020
Net Income Net Interest Income Non-interest Income
Ca pital Book Value per Share

4 New Peoples Bankshares, Inc.

MEET OUR TEAM

SENIOR MANAGEMENT TEAM

Gary L. Keys Dan Counts
First Senior Vice President & Chief Development Officer Senior Vice President, Director of Marketing

Landon McGlothlin Lori Counts
Senior Vice President & Chief Information Officer Senior Vice President, Director of Human Resources

Joe E. Waters II Kathy K. Jackson
Senior Vice President & Executive Director of Financial Services Senior Vice President, Retail Branch Administrator
& Commercial Deposit Support
David Lecka
Debbie Arrington Senior Vice President, Commercial Banker
Senior Vice President, Banking Operations

BRANCH LOCATIONS & MANAGEMENT

NORTHERN MARKET SOUTHERN MARKET
Mori Williams, Senior Vice President & Northern Market President Freddy Sullivan, Senior Vice President & Southern Market President

Bluefield Branch Tazewell Branch Abingdon Branch Gate City Branch
514 Commerce Drive 127 Chamber Drive 350 West Main Street 663 E Jackson Street
Bluefield, VA 24605 Tazewell, VA 24651 Abingdon, VA 24210 Gate City, VA 24251

Princeton Branch (Oakvale) Bristol Branch Kingsport Branch
180 Lyle Way 101 Linden Square 1999 East Stone Drive
Princeton, WV 24740 Bristol, VA 24202 Kingsport, TN 37660

Princeton Branch (Stafford) Chilhowie Branch Weber City Branch
1221 Stafford Drive 155 East Lee Highway 1299 US Highway 23 South
Princeton, WV 24740 Chilhowie, VA 24319 Weber City, VA 24290

CENTRAL MARKET WESTERN NORTH CAROLINA MARKET
Richard Smith, Senior Vice President & Central Market President David Lecka, Senior Vice President & Commercial Banker

Big Stone Gap Branch Honaker Branch Boone Loan Production Office
2271 Hwy 105 S
419 Shawnee Avenue East 53 Commerce Drive Boone, NC 28607

Big Stone Gap, VA 24219 Honaker, VA 24260

Castlewood Branch Lebanon Branch
87 Miners Drive 1421 East Main Street
Castlewood, VA 24224 Lebanon, VA 24266

Clintwood Branch Pound Branch Opening 2021
198 Colley Shopping Center 11241 Indian Creek
Clintwood, VA 24228 Pound, VA 24279

Grundy Branch Pounding Mill Branch
20487 Riverside Dr 12602 Gov. GC Peery Hwy
Grundy, VA 24614 Pounding Mill, VA 24637

Haysi Branch Wise Branch
111 Haysi Main 5448 Wise-Norton Rd
Haysi, VA 24256 Norton, VA 24273

Banking by the Golden Rule 5

67 Commerce Drive
Honaker, Virginia 24260
276-873-6288
Npbankshares.com
NewPeoples.Bank
LinkedIn.com/NewPeoplesBankInc
Facebook.com/NewPeoplesBank
Twitter.com/NewPeoplesBank
Instagram.com/newpeoplesbnk

Honaker, Virginia is home to New Peoples Bankshares, Inc. The community also is designated as the Redbud Capital of the World by
the Virginia General Assembly because amazing redbud trees abound throughout the town and nearby countryside. In early spring,
Honaker erupts in a brilliant display of pink. Thousands of redbud trees herald the arrival of spring, awakening from their winter
hibernation and exploding with the telltale buds that turn to lush green leaves in the weeks that follow. In honor of the Commonwealth’s
distinction, and in homage to our hometown, New Peoples Bankshares happily features the lovely redbud in our corporate symbol.

Banking by the Golden Rule