EXHIBIT 13.1
2007 ANNUAL REPORT
Cardinal Bankshares Corporation
Post Office Box 215 • Floyd, Virginia 24091
To Our Shareholders and Banking Families
As we present our 2007 Annual Report for Cardinal Bankshares Corporation we find many accomplishments in a very turbulent year.
In a year of economic cooling off, we were able to increase net loans. At the end of 2007 loans were $122,783,000, an increase of $1,550,000.
Our investment portfolio increased by $4,415,000. The increase helped lock in investment income and use of excess liquidity.
Total assets ended the year at $209,361,000, an increase of $1,512,000.
Like many banks, we showed a slight decline in earnings in 2007. We ended the year at $2,257,000, down by approximately $254,000 from 2006. The biggest contributor to the decline was interest paid to depositors. Interest expense increased by $1,575,000 in 2007. Other major expenditures were personnel cost and occupancy expense due to branch expansion. Even with this decline, Cardinal posted the second best earnings in the history of the company.
Cardinal also increased cash dividends by 2¢ per share in 2007, paying 60¢ per share for the year. Cardinal paid a record $921,439 cash dividend in 2007. The increase amounted to 3.44% over the 58¢ paid in 2006.
The capital position of the Bank is strong. Our equity to average assets ended at 13.84%. This places Cardinal equal to or higher than peer. Cardinal exceeds the ratios for a well capitalized financial institution.
Cardinal is fortunate to not have sub-prime loans on the books. Our asset quality is good and our loan loss reserves are maintained at a level deemed adequate by the regulators.
Unfortunately, 2007 was a year that caught the banking industry in the backwash of the sub-prime loans, the slow down of economic conditions, narrow interest margins, and ever increasing regulatory costs. These took a toll on the bottom line. Stock prices tumbled and losses were some of the greatest in many years. Only about 49% of banks and savings institutions showed an increase in earnings in 2007. Unfortunately, the predictions are for this trend to continue for most of 2008.
The coming year will be a challenge for the banking industry. Financial institutions will need to place strong emphasis on asset quality and operational controls. With Cardinal’s capital position, experienced staff, and Board of Directors, we are in position to do that.
Thanks go to our staff, Board of Directors, and loyal customers for the strong support in the past year. We ask for the same loyalty and support in 2008.
| Sincerely, |
|
| Leon Moore |
| Chairman, President and CEO |
Board of Directors of Cardinal Bankshares Corporation and Bank of Floyd
| Dr. Joseph Howard Conduff, Jr. | Kevin D. Mitchell | Dr. A. Carole Pratt | ||
| General Dentist | Dairy Farmer | General Dentist | ||
| Drs. Pratt and Mansell, D.D.S. | ||||
| William R. Gardner, Jr. | Ronald Leon Moore | |||
| Semi-Retired | Chairman, President & CEO | G. Harris Warner, Jr. | ||
| Part-Time Educator | Cardinal Bankshares Corporation | Attorney-at-Law | ||
| Floyd County Public Schools | and Bank of Floyd | Warner & Renick PLC |
Officers of Cardinal Bankshares Corporation
| Ronald Leon Moore | Chairman of the Board, President, and Chief Executive Officer | |
| Dr. Joseph Howard Conduff, Jr | Chair of Audit Committee | |
| William R. Gardner, Jr | Vice Chairman of the Board | |
| J. Alan Dickerson | Vice President and Chief Financial Officer | |
| Wanda M. Gardner | Senior Vice President – Internal Auditor | |
| Dianne H. Hamm | Senior Vice President – Compliance | |
| Betty Whitlock | Senior Vice President – Information Systems | |
| Annette V. Battle | Senior Vice President – Corporate Secretary |
Officers of Bank of Floyd
| Executive | ||
| Ronald Leon Moore | Chairman of the Board, President and Chief Executive Officer | |
| Dr. Joseph Howard Conduff, Jr | Chair of Audit Committee | |
| William R. Gardner, Jr | Vice Chairman of the Board | |
| J. Alan Dickerson | Vice President and Cashier | |
| Annette V. Battle | Senior Vice President – Corporate Secretary |
Officers of Bank of Floyd,continued
| Main Office | ||
| Wanda M. Gardner | Senior Vice President – Internal Auditor | |
| Dianne H. Hamm | Senior Vice President – Compliance | |
| Sunny K. Pratt | Senior Vice President – Credit Review | |
| D. Thomas Semler | Senior Vice President – Credit Administration | |
| Betty A. Whitlock | Senior Vice President – Manager of Information Systems | |
| Bill R. Hubble | Vice President – Branch Administration | |
| Sharon N. Zeman | Vice President – Branch Operations | |
| Ola Lee Driskell | Vice President – Lending | |
| Patricia B. Spangler | Vice President – Funds Management | |
| Marie V. Thomas | Vice President | |
| Shelby L. Rutherford | Assistant Vice President – Human Resources | |
| Ronnie L. Stump | Assistant Cashier – Security Officer | |
| Patricia K. Harris | Assistant Vice President – Branch | |
| Carolyn W. Reed | Assistant Vice President – Branch | |
| Gary D. Young | Assistant Cashier –Purchasing Officer & Building and Grounds | |
| Yara S. Middleton | Administrative Assistant – Finance | |
| Sandra K. Mabery | Supervisor – Card Operations | |
| Jan R. Rorrer | Supervisor – Loan Operations | |
| Gail N. Goad | Supervisor – Computer Operations | |
| Betty Moran | Supervisor – Bookkeeping | |
| Cave Spring Office | ||
| Lynne R. Burkholder | Assistant Vice President – Branch Manager | |
| Jason M. Branin | Branch Operations | |
| Rodney A. Moline | Vice President – Business Development Offcier | |
| Christiansburg Office | ||
| Lance C. Yelton | Branch Manager | |
| Brenda O. Linkous | Branch Operations | |
| Fairlawn Office | ||
| Linda H. Gardiner | Vice President – Business Development Officer | |
| Matthew S. Hall | Branch Operations | |
| Hillsville Office | ||
| Eugene G. Shockley | Vice President – Branch Manager | |
| Frances I. Sharpe | Supervisor of Branch Operations | |
| Tanglewood Office | ||
| Lisa C. Ratliff | Supervisor of Branch Operations | |
| West Salem Office | ||
| Wilbur C. Andrews | Branch Manager | |
| Sandra M. Broughman | Branch Operations | |
| Willis Office | ||
| Teresa S. Keith | Head Teller | |
Stockholder Information
The Annual Meeting
The Annual Meeting of Shareholders will be held Wednesday, April 23, 2008, at 2:00 p.m. in the Bank of Floyd’s conference room, 101 Jacksonville Circle, Floyd, Virginia.
Requests for Information
Requests for additional information should be directed to Mrs. Annette Battle, Corporate Secretary, Cardinal Bankshares Corporation, P.O. Box 215, Floyd, Virginia, 24091; telephone (540) 745-4191.
| Independent Auditors | Corporate Counsel | |
| Elliott Davis, LLC | Mr. Douglas Densmore | |
| Certified Public Accountants | Gentry Locke Rakes & Moore | |
| Post Office Box 760 | 10 Franklin Road SE | |
| Galax, Virginia 24333 | Roanoke, Virginia 24022 | |
Federal Deposit Insurance Corporation
The Bank is a member of the FDIC. This statement has not been reviewed, or confirmed for accuracy or relevance by the Federal Deposit Insurance Corporation.
Member of Federal Reserve Bank of Richmond
Member of Federal Home Loan Bank of Atlanta
Banking Offices
| Cave Spring Office | Floyd Office | West Salem Office | ||
| 4094 Postal Drive | 101 Jacksonville Circle | 1634 West Main Street | ||
| Roanoke, Virginia 24018 | Floyd, Virginia 24091 | Salem, Virginia 24153 | ||
| (540) 774-1111 | (540) 745-4191 | (540) 387-4533 | ||
| ATM location | ATM location | ATM location | ||
| Christiansburg Office | Hillsville Office | Willis Office | ||
| 2145 Roanoke Street SE | 185 South Main Street | 5598B Floyd Highway South | ||
| Christiansburg, Virginia 24073 | Hillsville, Virginia 24343 | Willis, Virginia 24380 | ||
| (540) 381-8121 | (276) 728-2341 | (540) 745-4191 | ||
| ATM location | ATM location | |||
| Fairlawn Office | Tanglewood Office | |||
| 349 Peppers Ferry Blvd | 4309 Starkey Road | |||
| Radford, Virginia 24141 | Roanoke, Virginia 24018 | |||
| (540) 633-1680 | (540) 776-0800 | |||
| ATM location | ATM location | |||
 | Stock Listing | Investor Relations & Financial Statements Cardinal Bankshares Corporation’s Annual Report on Form 10-K and quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission, may be obtained without charge by visiting the Corporation’s web site athttp://www.bankoffloyd.comand by selecting theCardinal Bankshares Corporation link. Copies of these documents can also be obtained without charge upon written request. Requests for this and other financial information about Cardinal should be directed to: J. Alan Dickerson, Chief Financial Officer, Cardinal Bankshares Corporation, P.O. Box 215, Floyd, VA 24091. | ||
| Cardinal Bankshares | ||||
| Corporation common | ||||
| stock is traded on the | ||||
OTC Bulletin Board. Current market quotations for the common stock can be obtained athttp://otcbb.com/dynamic/using the symbol CDBK.
Stock Transfer Agent Bank of Floyd serves as transfer agent for Cardinal. You may write the transfer agent as follows: Stock Transfer Agent, Bank of Floyd, P.O. Box 215, Floyd, VA 24091, telephone 540-745-4191 or toll-free at 1-888-562-4130. | ||||
Cardinal Bankshares Corporation
Post Office Box 215
Floyd, Virginia 24091
Phone: (540) 745-4191
Fax: (540) 745-4133
