EXHIBIT 99.1



May 8, 2002



Dear Shareholder,

In our  letter  to you of March 25,  2002 and in the  notes to the  Consolidated
Financial  Statements  contained in the Annual  Report we have informed you that
the lawsuit of Creve Coeur Mortgage Associates,  Inc. vs. Tri City National Bank
would be going to jury trial April l5, 2002.  We can now report that after three
days of trial an agreement to settle this suit was  negotiated on April 17, 2002
and was executed and paid on April 25, 2002. The payment to Creve Coeur Mortgage
Associates,  Inc. for this settlement together with our own legal fees will have
a $l.8 to l.9  million  dollar  after  tax  effect on our  corporation's  second
quarter earnings.

After the settlement  was reached  Circuit Court Judge Dominic Amato entered the
following statement into the trial record.

     "THE COURT: All right. Now, in basic fairness, there's no question that the
     real bad guy here,  the predator,  was Johnnie Bond, who  perpetrated  this
     conspiracy  of fraud with  regard to the  industries  that are  involved by
     Creve  Coeur and Tri City,  and that he's  really the bad  apple,  he's the
     person that has the court's  disdain.  Tri City's officers became a pawn in
     it. It's a difficult process. It happens.

     But as far as the court's concerned, Creve Coeur Mortgage Associates,  Inc.
     and Tri City National Bank, are good, professional businesses.  They're run
     by good, competent people. It's unfortunate that things like this happen. I
     think both of their names should be  restored.  I feel badly the taint that
     was created on both because of Mr. Bond. And I have  absolutely no problem,
     and I do hereby vacate that portion of the


Shareholder
May 8, 2002
Page 2


     prior court orders finding summary judgment,  and I will enter an order for
     dismissal in this action with prejudice."

We will now aggressively  pursue  collection of our losses from the Johnnie Bond
fraud from our bank's  fidelity  bond  insurer.  As we have  informed  you,  our
initial  requests  for  coverage of these  losses were  denied.  However,  after
consultation  with  outside  counsel we believe the claims  should be paid.  The
losses are less than the amount of our  coverage,  so if our views  prevail they
should be recovered.

Various  aspects  of this and  related  cases have been  ongoing  for over three
years.  This has  obviously  been a large  cost in  dollars,  time  and  effort.
Operating  results  are strong  through  April  30th,  and the  efforts of every
employee, senior management,  and your board of directors are focused on earning
a return on average  assets in excess of l.0% in 2002,  (the  benchmark  for our
peer group) even after paying the settlement and costs.  With these problems now
behind us we look forward to giving full attention to enhancing your investment.

Very truly yours,

TRI CITY BANKSHARES CORPORATION




Henry Karbiner, Jr.
President, Chairman & CEO