OTC: NWPP

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.

4

Branch
Locations

As of March 24, 2026,
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”); and
Watauga County in western North Carolina. 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, I-40 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 attractive 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 agriculture, healthcare, education, technology, manufacturing, services industries, and natural
resources including coal, natural gas, limestone, and timber. 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”). 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 https://newpeoples.bank/ about-us 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.

5

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. 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. As part of the application process, information is obtained concerning the income, financial condition, employment, and credit
history of the applicant. Completed loan applications are reviewed by our loan officers. 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 more easily ascertainable. In contrast, commercial business loans typically are made on the basis of the borrower’s ability
to make repayment from cash flows 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.

6

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 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.

7

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 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.

In addition, the
financial services industry continues to undergo rapid technological change, with increased competition from non-banks offering products
and services traditionally offered by banks as well as new technologies and services, including new ways that customers can make payments
or manage their accounts, the use of stablecoins and other forms of cryptocurrency, tokens, and other digital assets or alternative payment
systems.

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, 2025, 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
County, VA

40.80%

Scott
County, VA

37.35%

Russell
County, VA

24.84%

Norton
(City), VA

21.03%

Buchanan
County, VA

14.18%

Tazewell
County, VA

10.40%

City
of Bristol, VA

8.09%

Mercer
County, WV

7.08%

Washington
County, VA

4.57%

City
of Kingsport, TN

1.05%

Town
of Boone, NC

0.60%

Employees

As of December 31,
2025, we had 177 full-time equivalent employees. None of our employees are covered by a collective bargaining agreement. We consider
relations with employees to be excellent.

8

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.

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 commencing such activities.

9

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 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. We are also examined by the BFI in addition to our 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.

New Peoples 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
action” 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.

10

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 23, “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.

11

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 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 issued a final rule intended to strengthen and modernize the Community Reinvestment Act regulatory
framework. However, in March 2024, a federal court issued a preliminary injunction that has prevented the rule from taking effect. In
July 2025, the federal bank regulatory agencies issued a joint proposal to rescind the 2023 final rule and replace it with the Community
Reinvestment Act framework that existed prior to its issuance. The agencies continue to apply the Community Reinvestment Act rules as
they existed before the 2023 modernization, considering the injunction and pending finalization of the rescission of the modernization
rule.

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.

12

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.

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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. In 2025 and 2024, the Company recorded expense of approximately $404,000 and $386,000,
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. 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, continue
to be examined primarily by their primary regulators.

During 2025, the
CFPB reduced its staff by over 80%. The reduction in force is the subject of litigation, and the staffing cuts are currently stayed pending
the federal circuit court’s rehearing of the case. The impact of these developments on banking organizations is uncertain. States
and state attorneys general may increase regulatory, investigative and enforcement activity with respect to consumer protection in response
to changes in regulation, supervision and enforcement of consumer protection laws by federal regulators.

Notwithstanding ongoing,
legal, budgetary and structural challenges affecting the CFPB, the CFPB remains an active federal regulatory agency with continuing supervisory
and enforcement authority and retains its broad authority to pursue enforcement actions, including investigations, civil actions and
cease and desist proceedings. The Bank is also subject to other federal and state consumer protection laws and regulations that, among
other things, prohibit unfair, deceptive and abusive, corrupt or fraudulent business practices, untrue or misleading advertising and
unfair competition.

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.

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.

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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, 2025, New Peoples and the Bank have not been made aware
of any instances of noncompliance with this guidance.

Fair Access to
Financial Services. In August 2025, President Trump signed Executive Order 14331, “Guaranteeing Fair Banking Access for All
Americans,” which states that it is the policy of the United States that no American should be denied access to financial services
because of their constitutionally or statutorily protected beliefs, affiliations, or political views. The Executive Order directs the
Treasury Secretary and federal banking regulators to address politicized or unlawful debanking activities. In recent years, certain states
have also enacted, or have proposed to enact, statutes, regulations or policies that prohibit financial institutions from denying or
canceling products or services to a person or business, or otherwise discriminating against a person or business in making available
products or services, on the basis of certain social or political factors or other activities.

Artificial Intelligence.
CFPB and other federal regulatory guidance reiterates that creditors are not excused from the adverse action notice requirements under
the Equal Credit Opportunity Act if they rely on complex algorithmic underwriting models. States have also started to regulate the use
of artificial intelligence technologies. In July 2024, the federal banking agencies issued a final rule that requires, among other things,
financial institutions to ensure that their automated valuation models for property valuation follow certain quality control standards,
including a requirement that such valuation models comply with nondiscrimination laws.

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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.