FOR IMMEDIATE RELEASE

CONTACTS:      James G. Rakes, President & CEO     (540) 951-6236
               Marilyn B. Buhyoff, Counsel         (540) 951-6331


                      THE NATIONAL BANK COMPLETES PURCHASE
                           OF COMMUNITY NATIONAL BANK


BLACKSBURG, VA JUNE 25, 2004: The National Bank of Blacksburg (NBB or The
National Bank) of Blacksburg, Virginia today announced that it has completed the
purchase of Community National Bank (CNB) of Pulaski, Virginia. NBB purchased
substantially all of the approximately $70 million in assets and assumed all of
the liabilities of the Pulaski bank. No details of the transaction were made
public.

Community National Bank, which was a subsidiary of The South Financial Group,
Inc. of Greenville, South Carolina, will be dissolved. The single office of CNB
will become a branch office of The National Bank.

James G. Rakes, President and Chief Executive Officer of NBB said, "We want to
welcome the customers and employees of Community National Bank to The National
Bank. We are particularly pleased to be keeping this bank a community bank. It
is our third office in Pulaski County and it will solidify our presence in that
market. In addition, we are in a position to offer an expanded array of services
to CNB's customers."

The National Bank of Blacksburg is a wholly-owned subsidiary of National
Bankshares, Inc. (Nasdaq SmallCap Market: NKSH). National Bankshares is also the
parent company of Bank of Tazewell County of Tazewell, Virginia, and of National
Bankshares Financial Services, Inc. which does business as National Bankshares
Investment Services and National Bankshares Insurance Services. For more
information, visit the bank's web site at www.nbbank.com.