Cardinal Bankshares (CDBK) 8-K Cardinal Bankshares Corporation Announces Operating Results

Exhibit 99.1

Cardinal Bankshares Corporation Announces Operating Results

Floyd, VA, February 17, 2012 - Cardinal Bankshares Corporation has announced results of operations for the year ending December 31, 2011.

Cardinal ended the year with total assets of $266,160,000, an increase of $17,092,000 or 6.86% over 2010. Total deposits increased $15,426,000 or 7.11% to $232,411,000, while net loans decreased $18,552,000 or 12.72% to $127,291,000. Loan loss reserves as a percentage of total loans increased to 2.20% for 2011 as compared to 2.06% for 2010.

Net income increased for a second consecutive year, totaling $1,099,000 for 2011, an increase of 13.42% compared to 2010. Earnings per share for 2011 increased $.09 to $.72 per share, an increase of 14.28% over 2010.

The three capital ratios used to measure bank strength continue to be well in excess of the requirements necessary to be classified as well capitalized.

Leon Moore, Chairman and CEO, commented, “The Bank improved its operating results for 2011 while maintaining its track record of being well capitalized and paying a semi-annual dividend. Total assets continued to increase while growth in deposits was greater than anticipated. Loans decreased due to payoffs as rates continue to decline, with the Bank focusing on loan quality and interest rate margin.”

Moore continued, “The Bank’s solid performance was achieved during an economy which continues to be a challenge, along with increased competition and increasing regulation. As a result of hard work, dedication and focus by all the Bank’s employees, senior management and the Board we show a positive improvement in our performance, while maintaining a safe, sound, well capitalized and customer service oriented financial institution.”

In conclusion, Moore stated: “The improved operating results, along with the increase in total assets and deposits, continues to show the public support for and belief in the locally head-quartered community bank model.”

Cardinal Bankshares Corporation is a bank holding company headquartered in Floyd, Virginia, and is the parent company for Bank of Floyd. Bank of Floyd is a community bank, headquartered in Floyd, Virginia. Bank of Floyd operates seven locations in Floyd, Hillsville, Roanoke, Salem, Christiansburg, Fairlawn and Willis, Virginia. Bank of Floyd is the parent company of FBC, Inc. offering insurance services through Bankers Insurance and Virginia Title Center.

Cardinal Bankshares Corporation stock is traded over the Bulletin Board under the stock symbol CDBK.OB.

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, (In thousands, except share data)	(Unaudited) 2011			(Audited) 2010
Assets
Cash and due from banks	$	4,255		$	2,948
Interest-bearing deposits in banks		14,758			7,792
Federal funds sold		33,700			21,550
Total cash and cash equivalents		52,713			32,290
Investment securities available for sale, at fair value		57,105			42,644
Investment securities held to maturity (fair value approximates $13,662 and $14,780 at December 31, 2011 and 2010, respectively)		12,950			14,698
Restricted equity securities		592			575
Total loans		130,158			148,916
Allowance for loan losses		(2,867	)		(3,073	)
Net loans		127,291			145,843
Bank premises and equipment, net		2,895			3,846
Accrued interest receivable		824			954
Foreclosed assets		3,418			509
Bank owned life insurance		5,437			5,279
Other assets		2,935			2,430
Total assets	$	266,160		$	249,068
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	32,135		$	28,264
Interest-bearing deposits		200,276			188,721
Total deposits		232,411			216,985
Accrued interest payable		88			111
Other liabilities		628			85
Total liabilities		233,127			217,181
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $10 par value; 5,000,000 shares authorized; 1,535,733 shares issued and outstanding at December 31, 2011 and 2010		15,357			15,357
Additional paid-in capital		2,925			2,925
Retained earnings		14,292			13,439
Accumulated other comprehensive gain (loss)		459			166
Total stockholders’ equity		33,033			31,887
Total liabilities and stockholders’ equity	$	266,160		$	249,068

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Statements of Income

Years ended December 31, (In thousands, except share and per share data)	(Unaudited) 2011			(Audited) 2010
Interest and dividend income
Loans and fees on loans	$	8,031		$	8,818
Federal funds sold		49			44
Investment securities:
Taxable		1,346			1,233
Exempt from federal income tax		679			726
Dividend income		15			19
Deposits with banks		2			7
Total interest income		10,122			10,847
Interest expense
Deposits		3,066			4,395
Total interest expense		3,066			4,395
Net interest income		7,056			6,452
Provision for loan losses		592			661
Net interest income after provision for loan losses		6,464			5,791
Noninterest income
Service charges on deposit accounts		208			194
Other service charges and fees		117			124
Net realized gains on sales of securities		115			98
Net other-than-temporary impairment on investments		(300	)		—
Income on bank owned life insurance		158			164
Other income		126			103
Total noninterest income		424			683
Noninterest expense
Salaries and employee benefits		3,496			3,236
Occupancy and equipment		607			679
Legal and professional		287			157
Bank franchise tax		172			156
Data processing services		227			241
FDIC insurance premiums		303			368
Foreclosed assets, net		(33	)		51
Loss on sale of premises and equipment		82			—
Other operating expense		583			632
Total noninterest expense		5,724			5,520
Income before income taxes		1,164			954
Income tax expense (benefit)		65			(15	)
Net income	$	1,099		$	969
Basic earnings per share	$	.72		$	.63
Diluted earnings per share	$	.72		$	.63
Weighted average basic shares outstanding		1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733