SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ____________ to _____________
Commission file number: 0-30535
GRAYSON BANKSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Virginia 54-1647596
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
113 West Main Street
Independence, Virginia 24348
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (276) 773-2811
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of June 30, 2002.
1,718,968 shares of common stock, par value $1.25 per share
GRAYSON BANKSHARES, INC.
TABLE OF CONTENTS
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 2002 and December 31, 2001...........................................3
Consolidated Statements of Income
For the Six Months Ended June 30, 2002 and 2001...............................4
Consolidated Statements of Income
For the Three Months Ended June 30, 2002 and 2001.............................5
Consolidated Statements of Stockholders' Equity
For the Six Months Ended June 30, 2002 and
the Year Ended December 31, 2001..............................................6
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2002 and 2001...............................7
Notes to Consolidated Financial Statements....................................8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................................10
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................12
Part II. Other Information
Item 1. Legal Proceedings............................................................13
Item 2. Changes in Securities and Use of Proceeds....................................13
Item 3. Defaults Upon Senior Securities..............................................13
Item 4. Submission of Matters to a Vote of Security Holders..........................13
Item 5. Other Information............................................................13
Item 6. Exhibits and Reports on Form 8-K.............................................13
Signatures
2
Part I: Financial Information
Item 1: Financial Statements
Grayson Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 2002 and December 31, 2001
June 30, December 31,
Assets 2002 2001
--------------- ----------------
(Unaudited) (Audited)
Cash and due from banks $ 6,244,738 $ 8,715,457
Interest-bearing deposits with banks - -
Federal funds sold 13,548,345 12,636,046
Investment securities available for sale 38,537,164 26,010,899
Investment securities held to maturity 5,381,076 6,615,328
Restricted equity securities 845,450 825,750
Loans, net of allowance for loan losses of $1,940,627
at June 30, 2002 and $1,821,966 at December 31, 2001 148,116,696 140,897,841
Property and equipment, net 3,423,177 2,913,998
Accrued income 1,980,801 1,713,644
Other assets 5,118,301 1,140,177
--------------- ----------------
$ 223,195,748 $ 201,469,140
=============== ================
Liabilities and Stockholders' Equity
Liabilities
Demand deposits $ 20,625,508 $ 20,790,306
Interest-bearing demand deposits 16,625,904 15,168,088
Savings deposits 35,978,640 31,606,065
Large denomination time deposits 31,602,253 29,944,872
Other time deposits 85,344,508 81,813,651
--------------- ----------------
Total deposits 190,176,813 179,322,982
FHLB Advances 10,000,000 -
Accrued interest payable 353,351 267,798
Other liabilities 596,182 792,587
--------------- ----------------
201,126,346 180,383,368
Commitments and contingencies
Stockholders' equity
Preferred stock, $25 par value; 500,000
shares authorized; none issued - -
Common stock, $1.25 par value; 5,000,000 shares
authorized; 1,718,968 shares issued and
outstanding in 2002 and 2001 2,148,710 2,148,710
Surplus 521,625 521,625
Retained earnings 18,989,022 18,221,877
Accumulated other comprehensive income (loss) 410,045 193,561
--------------- ----------------
22,069,402 21,085,773
--------------- ----------------
$ 223,195,748 $ 201,469,140
=============== ================
See Notes to Consolidated Financial Statements
3
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Income
For the Six Months ended June 30, 2002 and 2001
Six Months Ended
June 30,
2002 2001
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 5,866,571 $ 5,932,691
Federal funds sold 116,604 201,012
Investment securities:
Taxable 841,610 549,971
Exempt from federal income tax 249,311 236,708
Deposits with banks - -
------------- --------------
7,074,096 6,920,382
Interest expense:
Deposits 3,143,529 3,687,731
Interest on borrowings 210,034 -
------------- --------------
3,353,563 3,687,731
Net interest income 3,720,533 3,232,651
Provision for loan losses 210,000 135,000
------------- --------------
Net interest income after
provision for loan losses 3,510,533 3,097,651
------------- --------------
Noninterest income:
Service charges on deposit accounts 160,986 163,859
Other income 184,076 49,005
------------- --------------
345,062 212,864
------------- --------------
Noninterest expense:
Salaries and employee benefits 1,447,236 1,289,210
Occupancy expense 58,984 65,453
Equipment expense 207,160 172,489
Other expense 579,897 533,693
------------- --------------
2,293,277 2,060,845
Income before income taxes 1,562,318 1,249,670
Income tax expense 417,000 357,000
------------- --------------
Net income $ 1,145,318 $ 892,670
============= ==============
Basic earnings per share $ .67 $ .52
============= ==============
Weighted average shares outstanding 1,718,968 1,718,968
============= ==============
See Notes to Consolidated Financial Statements
4
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Income
For the Three Months ended June 30, 2002 and 2001
Three Months Ended
June 30,
2002 2001
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 2,926,605 $ 2,954,331
Federal funds sold 54,733 97,169
Investment securities:
Taxable 448,960 275,804
Exempt from federal income tax 142,672 115,161
Deposits with banks - -
------------- --------------
3,572,970 3,442,465
Interest expense:
Deposits 1,555,526 1,844,924
Interest on borrowings 115,267 -
------------- --------------
1,670,793 1,844,924
Net interest income 1,902,177 1,597,541
Provision for loan losses 105,000 60,000
------------- --------------
Net interest income after
provision for loan losses 1,797,177 1,537,541
------------- --------------
Noninterest income:
Service charges on deposit accounts 89,606 85,468
Other income 110,319 20,476
------------- --------------
199,925 105,944
------------- --------------
Noninterest expense:
Salaries and employee benefits 758,429 663,531
Occupancy expense 29,068 32,447
Equipment expense 103,020 87,553
Other expense 301,675 301,017
------------- --------------
1,192,192 1,084,548
Income before income taxes 804,910 558,937
Income tax expense 218,000 160,000
------------- --------------
Net income $ 586,910 $ 398,937
============= ==============
Basic earnings per share $ .34 $ .23
============= ==============
Weighted average shares outstanding 1,718,968 1,718,968
============= ==============
See Notes to Consolidated Financial Statements
5
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
For the Six Months ended June 30, 2002 (unaudited) and the
Year ended December 31, 2001 (audited)
Accumulated
Common Stock Other
------------ Retained Comprehensive
Shares Amount Surplus Earnings Income (Loss) Total
------ ------ ------- -------- ------------- -------------
Balance, December 31, 2000 1,718,968 $ 2,148,710 $ 521,625 $ 16,986,754 $ (19,428) $ 19,637,661
Comprehensive income
Net income - - - 1,939,900 - 1,939,900
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $109,722 - - - - 212,989 212,989
------------
Total comprehensive income 2,152,889
Dividends paid
($.41 per share) - - - (704,777) - (704,777)
--------- ----------- ---------- ------------- ------------ ------------
Balance, December 31, 2001 1,718,968 2,148,710 521,625 18,221,877 193,561 21,085,773
Comprehensive income
Net income - - - 1,145,318 - 1,145,318
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $111,522 - - - - 216,484 216,484
------------
Total comprehensive income 1,361,802
Dividends paid
($.22 per share) - - - (378,173) - (378,173)
--------- ----------- ---------- ------------- ------------ ------------
Balance, June 30, 2002 1,718,968 $ 2,148,710 $ 521,625 $ 18,989,022 $ 410,045 $ 22,069,402
========= =========== ========== ============= ============ ============
See Notes to Consolidated Financial Statements
6
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six Months ended June 30, 2002 and 2001
Six Months Ended
June 30,
2002 2001
------------- --------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 1,145,318 $ 892,670
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 177,000 148,800
Provision for loan losses 210,000 135,000
Deferred income taxes 26,000 31,000
Net realized gains on securities (1,750) (2,407)
Accretion of discount on securities, net of
amortization of premiums 51,590 13,072
Deferred compensation 3,356 5,508
Changes in assets and liabilities:
Accrued income (267,157) (174,610)
Other assets (115,646) (14,181)
Accrued interest payable 85,553 (2,542)
Other liabilities (199,761) (195,822)
------------- --------------
Net cash provided by operating activities 1,114,503 836,488
------------- --------------
Cash flows from investing activities:
(Increase) decrease in interest-bearing deposits with banks - -
Net (increase) decrease in federal funds sold (912,299) (135,211)
Purchases of investment securities (14,151,619) (7,553,437)
Sales of investment securities - 2,401,407
Maturities of investment securities 3,137,772 4,148,459
Purchases of restricted equity securities (19,700) -
Net increase in loans (7,428,855) (4,507,502)
Purchases of bank-owned life insurance (4,000,000) -
Purchases of property and equipment, net of sales (686,179) (143,908)
------------- --------------
Net cash used in investing activities (24,060,880) (5,790,192)
------------- --------------
Cash flows from financing activities:
Net increase (decrease) in demand,
savings and NOW deposits 5,665,593 (234,048)
Net increase in time deposits 5,188,238 7,481,424
Dividends paid (378,173) (343,794)
Net increase (decrease) in other borrowings 10,000,000 -
------------- --------------
Net cash provided by financing activities 20,475,658 6,903,582
------------- --------------
Net increase (decrease) in cash and cash equivalents (2,470,719) 1,949,878
Cash and cash equivalents, beginning 8,715,457 4,993,526
------------- --------------
Cash and cash equivalents, ending $ 6,244,738 $ 6,943,404
============= ==============
Supplemental disclosure of cash flow information:
Interest paid $ 3,268,010 $ 3,690,273
============= ==============
Taxes paid $ 410,930 $ 335,680
============= ==============
See Notes to Consolidated Financial Statements
7
Grayson Bankshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Note 1. Organization and Summary of Significant Accounting Policies
Organization
Grayson Bankshares, Inc. (the Company) was incorporated as a Virginia
corporation on February 3, 1992 to acquire the stock of The Grayson National
Bank (the Bank). The Bank was acquired by the Company on July 1, 1992.
The Bank was organized under the laws of the United States in 1900 and currently
serves Grayson County, Virginia and surrounding areas through six banking
offices. As an FDIC insured, National Banking Association, the Bank is subject
to regulation by the Comptroller of the Currency. The Company is regulated by
the Federal Reserve.
The consolidated financial statements as of June 30, 2002 and for the periods
ended June 30, 2002 and 2001 included herein, have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, the information furnished in
the interim consolidated financial statements reflects all adjustments necessary
to present fairly the Company's consolidated financial position, results of
operations, changes in stockholders' equity and cash flows for such interim
periods. Management believes that all interim period adjustments are of a normal
recurring nature. These consolidated financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto as of December 31, 2001, included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001.
The accounting and reporting policies of the Company and the Bank follow
generally accepted accounting principles and general practices within the
financial services industry.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
the Bank, which is wholly owned. All significant, intercompany transactions and
balances have been eliminated in consolidation.
Note 2. Allowance for Loan Losses
The following is an analysis of the allowance for loan losses for the six months
ended June 30.
2002 2001
------------- --------------
Balance, beginning $ 1,821,966 $ 1,760,999
Provision charged to expense 210,000 135,000
Recoveries of amounts charged off 97,439 37,021
Amounts charged off (188,778) (99,737)
------------- --------------
Balance, ending $ 1,940,627 $ 1,833,283
============= ==============
Note 3. Income Taxes
A reconciliation of income tax expense computed at the statutory federal income
tax rate to income tax expense included in the statements of income for the six
months ended June 30, 2002 and 2001 follows:
2002 2001
------------- --------------
Tax at statutory federal rate $ 531,188 $ 424,888
Tax exempt interest income (86,806) (81,841)
Alternative minimum tax credit - -
Other (27,382) 13,953
------------- --------------
$ 417,000 $ 357,000
============= ==============
8
Grayson Bankshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
Note 4. Commitments and Contingencies
Financial Instruments with Off-Balance-Sheet Risk
The Bank is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. These instruments involve, to varying degrees, credit risk in excess
of the amount recognized in the consolidated balance sheets.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those instruments.
The Bank uses the same credit policies in making commitments and conditional
obligations as for on-balance-sheet instruments. A summary of the Bank's
commitments at June 30, 2002 and 2001 is as follows:
2002 2001
------------- --------------
Commitments to extend credit $ 5,942,424 $ 4,833,998
Standby letters of credit - -
------------- --------------
$ 5,942,424 $ 4,833,998
============= ==============
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the party. Collateral held varies, but may include accounts
receivable, inventory, property and equipment, residential real estate and
income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held varies
as specified above and is required in instances which the Bank deems necessary.
9
Part I: Financial Information
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The following discussion provides information about the major components of the
results of operations and financial condition of the Company. This discussion
and analysis should be read in conjunction with the Consolidated Financial
Statements and Notes to Consolidated Financial Statements included in this
report.
Results of Operations
Total interest income increased by $130,505 for the quarter ended June 30, 2002
compared to the quarter ended June 30, 2001, while interest expense on deposits
and other borrowings decreased by $174,131 over the same period. This resulted
in an increase in net interest income of $304,636 or 19.07%. This increase is
due primarily to the stabilization of interest rates, which enabled the Bank to
recapture some of the interest margin that was lost during the rapid rate
declines of 2001.
Other income was up $89,843 in the second quarter of 2002 compared to the second
quarter of 2001. This is a result of increases in the cash value of bank-owned
life insurance policies which were purchased in January 2002.
The provision for credit losses was $105,000 for the quarter ended June 30, 2002
and $60,000 for the quarter ended June 30, 2001. An increase in the provision
was necessary based on overall loan growth as well as an increase in the
percentage of commercial credits. Management believes the provision and the
resulting allowance for loan losses are adequate.
Total other expenses increased by $107,644, or 9.93% for the quarter ended June
30, 2002 compared to the quarter ended June 30, 2001. This is due primarily to a
cost increase of over twenty percent for employee medical benefits and equipment
costs associated with the upgrading of various computer systems.
The significant increases in net interest income and other income resulted in an
increase in net income before taxes of $245,973, or 44.01% for the quarter ended
June 30, 2002, compared to the same quarter in 2001. Increased income generated
an increase in income tax expense, however our effective tax rate decreased by
approximately one percentage point due to increases in tax-exempt investments.
Net income increased by $187,973, or 47.12% to $586,910 for the second quarter
of 2002 compared to the same period in 2001.
For the six months ended June 30, 2002, total interest income increased by
$153,714 compared to the six-month period ended June 30, 2001, while interest
expense decreased by $334,168 over the same period. This resulted in an increase
in net interest income of $487,882, or 15.09%. As stated above, net interest
margins increased as interest rates began to stabilize.
Other income was up $135,071 for the six-month period ended June 30, 2002
compared to the same period in 2001. Again this was the result of increases in
the cash value of bank-owned life insurance policies.
Normal cost increases, combined with the aforementioned costs of benefits and
equipment upgrades, resulted in an overall increase in other expenses of
$232,432 for the first six months of 2002 compared to the first six months of
2001. Net income for the six-month period ended June 30, 2002 increased by
$252,648, or 28.30% compared to the six-month period ended June 30, 2001.
10
Part I: Financial Information
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition
Total assets increased by $21,726,608, or 10.78% from December 31, 2001 to June
30, 2002. Net loans increased by $7,218,855 and investment securities increased
by $11,311,713.
Total deposits increased by $10,853,831, or 6.05% from December 31, 2001 to June
30, 2002. In the fourth quarter of 2001, the Bank applied for, and was granted
membership in the Federal Home Loan Bank of Atlanta. The Bank used this
membership in the first quarter of 2002 to borrow funds at a low fixed-interest
rate and in turn invest the funds in securities with similar maturities in order
to enhance earnings. FHLB advances were $10,000,000 at June 30, 2002.
Shareholders' equity totaled $22,069,402 at June 30, 2002 compared to
$21,085,773 at December 31, 2001. The $983,629 increase was the result of
earnings for the six months combined with an increase in the market value of
securities that are classified as available for sale, less the payment of
dividends of $378,173.
Regulatory guidelines relating to capital adequacy provide minimum risk-based
ratios at the Bank level which assess capital adequacy while encompassing all
credit risks, including those related to off-balance sheet activities. The Bank
(a wholly owned subsidiary of the Company) exceeds all regulatory capital
guidelines and is considered to be well capitalized.
Forward-Looking Statements
Certain information contained in this discussion may include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are generally identified by phrases such as
"the Company expects," "the Company believes" or words of similar import. Such
forward-looking statements involve known and unknown risks including, but not
limited to, changes in general economic and business conditions, interest rate
fluctuations, competition within and from outside the banking industry, new
products and services in the banking industry, risk inherent in making loans
such as repayment risks and fluctuating collateral values, problems with
technology utilized by the Company, changing trends in customer profiles and
changes in laws and regulations applicable to the Company. Although the Company
believes that its expectations with respect to the forward-looking statements
are based upon reliable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
11
Part I: Financial Information
Item 3: Quantitative and Qualitative Disclosures about Market Risk
The principal goals of the Bank's asset and liability management strategy are
the maintenance of adequate liquidity and the management of interest rate risk.
Liquidity is the ability to convert assets to cash to fund depositors'
withdrawals or borrowers' loans without significant loss. Interest rate risk
management balances the effects of interest rate changes on assets that earn
interest or liabilities on which interest is paid, to protect the Bank from wide
fluctuations in its net interest income which could result from interest rate
changes.
Management must ensure that adequate funds are available at all times to meet
the needs of its customers. On the asset side of the balance sheet, maturing
investments, loan payments, maturing loans, federal funds sold, and unpledged
investment securities are principal sources of liquidity. On the liability side
of the balance sheet, liquidity sources include core deposits, the ability to
increase large denomination certificates, federal fund lines from correspondent
banks, borrowings from the Federal Home Loan Bank and the Federal Reserve Bank,
as well as the ability to generate funds through the issuance of long-term debt
and equity.
Interest rate risk is the effect that changes in interest rates would have on
interest income and interest expense as interest-sensitive assets and
interest-sensitive liabilities either reprice or mature. Management attempts to
maintain the portfolios of interest-earning assets and interest-bearing
liabilities with maturities or repricing opportunities at levels that will
afford protection from erosion of net interest margin, to the extent practical,
from changes in interest rates.
The Bank uses a number of tools to manage its interest rate risk, including
simulating net interest income under various scenarios, monitoring the present
value change in equity under the same scenarios, and monitoring the difference
or gap between rate sensitive assets and rate sensitive liabilities over various
time periods.
The earnings simulation model forecasts annual net income under a variety of
scenarios that incorporate changes in the absolute level of interest rates,
changes in the shape of the yield curve and changes in interest rate
relationships. Management evaluates the effect on net interest income from
gradual changes in the Prime Rate of up to 300 basis points up or down over a
12-month period. The current model indicates that an increase in rates of 300
basis points over the next twelve months would result in a decrease in net
interest income of $561,000, or 13.24%, while a similar decrease in rates would
result in an increase in net interest income of $520,000, or 12.28%. The model
also incorporates Management's forecasts for balance sheet growth, noninterest
income and noninterest expense. The interest rate scenarios are used for
analytical purposes and do not represent Management's view of future market
movements. Rather, these are intended to provide a measure of the degree of
volatility interest rate movements may apply to the earnings of the Company.
Modeling the sensitivity of earnings to interest rate risk is highly dependent
on numerous assumptions embedded in the simulation model. While the earnings
sensitivity analysis incorporates Management's best estimate of interest rate
and balance sheet dynamics under various market rate movements, the actual
behavior and resulting earnings impact likely will differ from that projected.
12
Part II: Other Information
Grayson Bankshares, Inc. and Subsidiary
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Company or
its subsidiary is a party or of which any of their property is the
subject.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held on April 9, 2002,
the shareholders of the Company voted upon the following matters with
the following results:
The election of the following persons as directors of the Company to
serve until the third annual meeting following their election and
therefore until their successors have been elected and have qualified:
Name Votes For Votes Withheld
---- --------- --------------
Jacky K. Anderson 1,397,055 2,892
Fred B. Jones 1,396,505 3,442
J. David Vaughan 1,397,355 2,592
Thomas M. Jackson, Jr. 1,396,705 3,242
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 - Statement of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C.ss. 1350
(b) Reports on 8-K
None
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
GRAYSON BANKSHARES, INC.
Date: August 14, 2002 By: /s/ Jacky K. Anderson
--------------------------------------------
Jacky K. Anderson
President and Chief Executive Officer
Date: August 14, 2002 By: /s/ Blake M. Edwards, Jr.
-------------------------------------------
Blake M. Edwards, Jr.
Chief Financial Officer
14