Cardinal Bankshares (CDBK) 10-Q/A 2011 Q1 Quarterly report (amended)

U. S. SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q/A

Amendment No. 1

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

Commission File No. 0-28780

CARDINAL BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

Virginia	54-1804471
(State of Incorporation)	(I.R.S. Employer Identification No.)

101 Jacksonville Circle, P. O. Box 215, Floyd, Virginia 24091

(Address of principal executive offices)

(540) 745-4191

(Registrant’s telephone number)

Indicate 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  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  ¨    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨.    No  x.

The number of shares outstanding of the issuer’s Common Stock, $10 par value as of December 5, 2011 was 1,535,733.

Explanatory Note

Cardinal Bankshares Corporation (the “Company”) files this Amendment No. 1 on Form 10-Q/A to amend its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 that was originally filed with Securities and Exchange Commission on May 11, 2011 (the “Original Filing”.) We file this Form 10-Q/A to correct the inadvertent omission of the additional required disclosures regarding Loans and the Allowance for Loan Losses contained in Part I, Item 1, Note 2 of the Consolidated Financial Statements in the Original Filing. The appropriate information is set forth in the revised tables included in this Form 10-Q/A.

No other changes have been made to the Form 10-Q. This Form 10-Q/A does not reflect events that may have occurred subsequent to the Original Filing and does not modify or update in any way other disclosures made in the Form 10-Q.

Pursuant to Exchange Act Rule 12b-5, new certifications by the Company’s principal executive officer and principal financial officer are filed or furnished with this Form 10-Q/A as Exhibits 31.1, 31.2, and 32.1.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Notes to Consolidated Financial Statements

Note 2. Loans and Allowance for Loan Losses

The major components of loans in the Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010 are summarized below (in thousands):

	2011			2010
Commercial	$	6,963		$	7,230
Real estate
Construction and land development		11,967			13,110
Residential, 1-4 families		28,605			29,961
Residential, 5 or more families		4,247			4,277
Farmland		1,320			1,274
Nonfarm, nonresidential		84,119			85,049
Agricultural		17			72
Consumer		2,973			2,923
Other		5,236			5,388
Gross loans		145,447			149,284
Unearned discount and net deferred loan fees and costs		(356	)		(368	)
Total loans	$	145,091		$	148,916

As a part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade assigned to commercial and consumer loans, (ii) the level of classified commercial loans, (iii) net charge-offs, (iv) nonperforming loans, and (v) the general economic conditions in the Company’s geographic markets.

The Company uses a risk grading system to assign a risk grade to each of its loans. Loans are graded on a quantitative scale ranging from one through four levels of pass through doubtful.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Loans and Allowance for Loan Losses (continued)

The following table presents the loan portfolio by credit quality indicator (risk grade) as of March 31, 2011 and December 31, 2010. Those loans with a risk grade above special mention have been combined in the pass column for presentation purposes.

March 31, 2011 (In thousands)	Pass		Special Mention		Sub- Standard		Doubtful		Total Loans
Commercial	$	6,821	$	—	$	142	$	—	$	6,963
Real Estate		114,785		4,939		7,949		2,585		130,258
Agriculture		17		—		—		—		17
Consumer		2,973		—		—		—		2,973
Other		5,236		—		—		—		5,236
Total loans	$	129,832	$	4,939	$	8,091	$	2,585	$	145,447

December 31, 2010 (In thousands)	Pass		Special Mention		Sub- Standard		Doubtful		Total Loans
Commercial	$	7,077	$	—	$	153	$	—	$	7,230
Real Estate		120,313		4,940		5,421		2,997		133,671
Agriculture		72		—		—		—		72
Consumer		2,923		—		—		—		2,923
Other		5,388		—		—		—		5,388
Total loans	$	135,773	$	4,940	$	5,574	$	2,997	$	149,284

A loan’s risk grade is assigned at the inception of the loan and is based on the financial strength of the borrower and the type of collateral. Loan risk grades are subject to reassessment at various times throughout the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of substandard or below and an outstanding amount of $500 thousand or more are reassessed on a quarterly basis. During this reassessment process individual reserves may be identified and placed against certain loans that are considered impaired.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provision. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Loans and Allowance for Loan Losses (continued)

The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of March 31, 2011 and December 31, 2010.

	Accruing Loans
March 31, 2011 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total Accruing Loans Past Due		Nonaccrual Loans		Current Loans		Total Loans
Commercial	$	—	$	—	$	—	$	—	$	6,963	$	6,963
Real Estate		—		2,500		2,500		7,089		120,669		130,258
Agriculture		—		—		—		—		17		17
Consumer		—		—		—		—		2,973		2,973
Other		—		—		—		—		5,236		5,236
Total loans	$	—	$	2,500	$	2,500	$	7,089	$	135,858	$	145,447

	Accruing Loans
December 31, 2010 (In thousands)	30-89 Days Past Due		90 Days or More Past Due		Total Accruing Loans Past Due		Nonaccrual Loans		Current Loans		Total Loans
Commercial	$	50	$	—	$	50	$	—	$	7,180	$	7,230
Real Estate		2,546		—		2,546		7,471		123,654		133,671
Agriculture		—		—		—		—		72		72
Consumer		—		—		—		—		2,923		2,923
Other		—		—		—		—		5,388		5,388
Total loans	$	2,596	$	—	$	2,596	$	7,471	$	139,217	$	149,284

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Loans and Allowance for Loan Losses (continued)

The following table details impaired loan data as of March 31, 2011 and December 31, 2010:

March 31, 2011 (In thousands)	Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recorded		Interest Income Collected
With No Related Allowance Recorded
Commercial	$	—	$	—	$	—	$	—	$	—
Real Estate		6,786		—		6,789		64		46
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
		6,786		—		6,789		64		46
With an Allowance Recorded
Commercial		142		18		147		3		1
Real Estate		7,339		1,130		7,337		27		26
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
		7,481		1,148		7,484		30		27
Total
Commercial		142		18		147		3		1
Real Estate		14,125		1,130		14,126		91		72
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
	$	14,267	$	1,148	$	14,273	$	94	$	73
December 31, 2010 (In thousands)	Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recorded		Interest Income Collected
With No Related Allowance Recorded
Commercial	$	—	$	—	$	— ��	$	—	$	—
Real Estate		4,291		—		4,293		169		210
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
		4,291		—		4,293		169		210
With an Allowance Recorded
Commercial		152		17		167		12		12
Real Estate		5,564		1,372		4,837		33		71
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
		5,716		1,389		5,004		45		83
Total
Commercial		152		17		167		12		12
Real Estate		9,855		1,372		9,130		202		281
Agriculture		—		—		—		—		—
Consumer		—		—		—		—		—
Other		—		—		—		—		—
	$	10,007	$	1,389	$	9,297	$	214	$	293

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 2. Loans and Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the three-month periods ended March 31, 2011 and March 31, 2010. Allocation portion of the allowance to one category of loans does not preclude its activity to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

March 31, 2011 (In thousands)	Beginning Balance		Charge- Offs		Recoveries		Provision		Ending Balance
Commercial	$	99	$	50	$	—	$	—	$	49
Real Estate		2,877		418		—		186		2,645
Agriculture		2		—		—		—		2
Consumer		34		—		3		—		37
Other		61		—		2		—		63
	$	3,073	$	468	$	5	$	186	$	2,796
March 31, 2010 (In thousands)	Beginning Balance		Charge- Offs		Recoveries		Provision		Ending Balance
Commercial	$	127	$	19	$	—	$	15	$	123
Real Estate		2,373		—		—		365		2,738
Agriculture		3		—		—		—		3
Consumer		52		4		—		—		48
Other		115		—		2		—		117
	$	2,670	$	23	$	2	$	380	$	3,029

Part II. OTHER INFORMATION

Item: 6 Exhibits

31.1	–	Certification of Chief Executive Officer Pursuant To Rule 13a-14(a)
31.2	–	Certification of Chief Financial Officer Pursuant To Rule 13a-14(a)
32.1	–	Certification of Chief Executive Officer and Chief Financial Officer Pursuant To 18 U.S.C. Section 1350

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

CARDINAL BANKSHARES CORPORATION

/s/ Ronald Leon Moore

Ronald Leon Moore

Chairman, President & Chief Executive Officer

/s/ J. Alan Dickerson

J. Alan Dickerson

Vice President & Chief Financial Officer

Date: December 5, 2011