UNITED STATES
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, 2003
[ ] 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)
(276) 773-2811
(Registrant's telephone number, including area code)
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 is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes_____ No __X__
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
There were 1,718,968 shares of Common Stock, par value
$1.25 per share, outstanding as of August 11, 2003
GRAYSON BANKSHARES, INC.
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets--June 30, 2003 and December 31, 2002 3
Consolidated Statements of Income--Six Months Ended June 30, 2003 and
June 30, 2002 4
Consolidated Statements of Income--Three Months Ended June 30, 2003 and
June 30, 2002 5
Consolidated Statements of Stockholders' Equity--Six Months Ended June 30,
2003 and Year Ended December 31, 2002 6
Consolidated Statements of Cash Flows--Six Months Ended June 30, 2003
and June 30, 2002 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
Item 4. Controls and Procedures 13
PART II OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
Part I. Financial Information
Item 1. Financial Statements
Grayson Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, 2003 and December 31, 2002
- --------------------------------------------------------------------------------
June 30, December 31,
Assets 2003 2002
----------------- -------------------
(Unaudited) (Audited)
Cash and due from banks $ 7,883,468 $ 11,265,444
Interest-bearing deposits with banks - -
Federal funds sold 31,452,704 19,740,228
Investment securities available for sale 43,082,695 40,120,124
Investment securities held to maturity 2,478,388 3,906,401
Restricted equity securities 1,081,750 845,450
Loans, net of allowance for loan losses of $2,185,010
at June 30, 2003 and $2,189,028 at December 31, 2002 160,261,408 154,190,005
Property and equipment, net 5,384,014 4,126,234
Accrued income 2,158,936 1,798,906
Other assets 5,347,009 5,289,797
--------------- ----------------
$ 259,130,372 $ 241,282,589
=============== ================
Liabilities and Stockholders' Equity
Liabilities
Demand deposits $ 23,464,041 $ 22,950,583
Interest-bearing demand deposits 18,014,577 18,079,169
Savings deposits 40,976,650 37,822,606
Large denomination time deposits 35,324,131 35,232,988
Other time deposits 95,673,017 92,823,178
--------------- ----------------
Total deposits 213,452,416 206,908,524
FHLB Advances 20,000,000 10,000,000
Accrued interest payable 329,478 328,975
Other liabilities 479,968 815,573
--------------- ----------------
234,261,862 218,053,072
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 2003 and 2002 2,148,710 2,148,710
Surplus 521,625 521,625
Retained earnings 21,313,692 19,967,611
Accumulated other comprehensive income (loss) 884,483 591,571
--------------- ----------------
24,868,510 23,229,517
--------------- ----------------
$ 259,130,372 $ 241,282,589
=============== ================
See Notes to Consolidated Financial Statements
3
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Income
For the Six Months Ended June 30, 2003 and 2002
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
2003 2002
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 5,730,743 $ 5,866,571
Federal funds sold 140,682 116,604
Investment securities:
Taxable 862,264 841,610
Exempt from federal income tax 220,909 249,311
Deposits with banks - -
------------- --------------
6,954,598 7,074,096
Interest expense:
Deposits 2,770,793 3,143,529
Interest on borrowings 243,851 210,034
------------- --------------
3,014,644 3,353,563
Net interest income 3,939,954 3,720,533
Provision for loan losses 180,000 210,000
------------- --------------
Net interest income after
provision for loan losses 3,759,954 3,510,533
------------- --------------
Noninterest income:
Service charges on deposit accounts 201,292 160,986
Other income 1,196,411 184,076
------------- --------------
1,397,703 345,062
------------- --------------
Noninterest expense:
Salaries and employee benefits 1,763,157 1,447,236
Occupancy expense 70,803 58,984
Equipment expense 210,305 207,160
Other expense 664,759 579,897
------------- --------------
2,709,024 2,293,277
Income before income taxes 2,448,633 1,562,318
Income tax expense 690,000 417,000
------------- --------------
Net income $ 1,758,633 $ 1,145,318
============= ==============
Basic earnings per share $ 1.02 $ .67
============= ==============
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, 2003 and 2002
- --------------------------------------------------------------------------------
Three Months Ended
June 30,
2003 2002
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 2,915,509 $ 2,926,605
Federal funds sold 70,603 54,733
Investment securities:
Taxable 392,594 448,960
Exempt from federal income tax 106,112 142,672
Deposits with banks - -
------------- --------------
3,484,818 3,572,970
Interest expense:
Deposits 1,354,616 1,555,526
Interest on borrowings 129,850 115,267
------------- --------------
1,484,466 1,670,793
Net interest income 2,000,352 1,902,177
Provision for loan losses 90,000 105,000
------------- --------------
Net interest income after
provision for loan losses 1,910,352 1,797,177
------------- --------------
Noninterest income:
Service charges on deposit accounts 110,262 89,606
Other income 183,106 110,319
------------- --------------
293,368 199,925
------------- --------------
Noninterest expense:
Salaries and employee benefits 922,715 758,429
Occupancy expense 35,634 29,068
Equipment expense 102,864 103,020
Other expense 327,290 301,675
------------- --------------
1,388,503 1,192,192
Income before income taxes 815,217 804,910
Income tax expense 203,000 218,000
------------- --------------
Net income $ 612,217 $ 586,910
============= ==============
Basic earnings per share $ .36 $ .34
============= ==============
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, 2003 (unaudited) and the
Year Ended December 31, 2002 (audited)
- --------------------------------------------------------------------------------
Accumulated
Common Stock Other
---------------------- Retained Comprehensive
Shares Amount Surplus Earnings Income (Loss) Total
------ ------ ------- -------- ------------- -----
Balance, December 31, 2001 1,718,968 $ 2,148,710 $ 521,625 $ 18,221,877 $ 193,561 $ 21,085,773
Comprehensive income
Net income - - - 2,536,459 - 2,536,459
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $202,495 - - - - 398,010 398,010
--------------
Total comprehensive income 2,934,469
Dividends paid
($.46 per share) - - - (790,725) - (790,725)
--------- ----------- ---------- ------------- ------------- -------------
Balance, December 31, 2002 1,718,968 2,148,710 521,625 19,967,611 591,571 23,229,517
Comprehensive income
Net income - - - 1,758,633 - 1,758,633
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $(94,480) - - - - 183,402 183,402
Unrealized gain on interest
rate swap agreement
net of taxes of (56,415) - - - - 109,510 109,510
--------------
Total comprehensive income 2,051,545
Dividends paid
($.24 per share) - - - (412,552) - (412,552)
Balance, June 30, 2003 1,718,968 $ 2,148,710 $ 521,625 $ 21,313,692 $ 884,483 $ 24,868,510
========= =========== ========== ============= ============= =============
See Notes to Consolidated Financial Statements
6
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2003 and 2002
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
2003 2002
------------- --------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 1,758,633 $ 1,145,318
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 180,000 177,000
Provision for loan losses 180,000 210,000
Deferred income taxes 69,000 26,000
Net realized gains on securities (905,810) (1,750)
Accretion of discount on securities, net of
amortization of premiums 107,797 51,590
Deferred compensation 5,738 3,356
Changes in assets and liabilities:
Accrued income (360,030) (267,157)
Other assets (111,182) (115,646)
Accrued interest payable 503 85,553
Other liabilities (341,343) (199,761)
------------- --------------
Net cash provided by operating activities 583,306 1,114,503
------------- --------------
Cash flows from investing activities:
(Increase) decrease in interest-bearing deposits with banks - -
Net (increase) decrease in federal funds sold (11,712,476) (912,299)
Purchases of investment securities (18,365,453) (14,151,619)
Sales of investment securities 11,449,464 -
Maturities of investment securities 6,457,326 3,137,772
Purchases of restricted equity securities (236,300) (19,700)
Net increase in loans (6,251,403) (7,428,855)
Purchases of bank-owned life insurance - (4,000,000)
Purchases of property and equipment, net of sales (1,437,780) (686,179)
------------- --------------
Net cash used in investing activities (20,096,622) (24,060,880)
------------- --------------
Cash flows from financing activities:
Net increase (decrease) in demand,
savings and NOW deposits 3,602,910 5,665,593
Net increase in time deposits 2,940,982 5,188,238
Dividends paid (412,552) (378,173)
Net increase (decrease) in other borrowings 10,000,000 10,000,000
------------- --------------
Net cash provided by financing activities 16,131,340 20,475,658
------------- --------------
Net increase (decrease) in cash and cash equivalents (3,381,976) (2,470,719)
Cash and cash equivalents, beginning 11,265,444 8,715,457
------------- --------------
Cash and cash equivalents, ending $ 7,883,468 $ 6,244,738
============= ==============
Supplemental disclosure of cash flow information:
Interest paid $ 3,014,141 $ 3,268,010
============= ==============
Taxes paid $ 748,001 $ 410,930
============= ==============
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, 2003 and for the periods
ended June 30, 2003 and 2002 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, 2002, included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2002. The results of operations for
the three-month and six-month periods ended June 30, 2003 and 2002 are not
necessarily indicative of the results to be expected for the full year.
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, 2003 and 2002.
2003 2002
------------- --------------
Balance, beginning $ 2,189,028 $ 1,821,966
Provision charged to expense 180,000 210,000
Recoveries of amounts charged off 25,390 97,439
Amounts charged off (209,408) (188,593)
------------- --------------
Balance, ending $ 2,185,010 $ 1,940,812
============= ==============
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, 2003 and 2002 follows:
2003 2002
------------- --------------
Tax at statutory federal rate $ 832,535 $ 531,188
Tax exempt interest income (92,379) (86,806)
Other tax exempt income (61,200) (36,720)
Other 11,044 9,338
------------- --------------
$ 690,000 $ 417,000
============= ==============
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, 2003 and 2002 is as follows:
2003 2002
------------- --------------
Commitments to extend credit $ 7,724,747 $ 5,942,424
Standby letters of credit - -
------------- --------------
$ 7,724,747 $ 5,942,424
============= ==============
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 decreased by $88,152 for the quarter ended June 30, 2003
compared to the quarter ended June 30, 2002, and interest expense on deposits
and other borrowings decreased by $186,327 over the same period. This resulted
in an increase in net interest income of $98,175 or 5.16%. The decreases in both
interest income and expense came as a result of the general decreases in
interest rates which have occurred over the past year.
Other income was up $93,443 in the second quarter of 2003 compared to the second
quarter of 2002. This is a result of increases in mortgage origination fees
generated by the recent refinancing volume.
The provision for credit losses was $90,000 for the quarter ended June 30, 2003
and $105,000 for the quarter ended June 30, 2002. Management believes the
provision and the resulting allowance for loan losses are adequate.
Total other expenses increased by $196,311, or 16.47% for the quarter ended June
30, 2003 compared to the quarter ended June 30, 2002. This is due primarily to
increases in salaries and employee benefits which resulted from the hiring of
additional personnel accompanied by increases in medical benefits and pension
costs.
The increases in net interest income and other income, combined with the
increase in other expenses, resulted in an increase in net income before taxes
of $10,307, or 1.28% for the quarter ended June 30, 2003, compared to the same
quarter in 2002. Income tax expense decreased slightly due to an increase in
tax-exempt investments. As a result, net income increased by $25,307, or 4.31%
to $612,217 for the second quarter of 2003 compared to $586,910 for the second
quarter of 2002.
For the six months ended June 30, 2003, total interest income decreased by
$119,498 compared to the six-month period ended June 30, 2002, while interest
expense decreased by $338,919 over the same period. This resulted in an increase
in net interest income of $219,421, or 5.90%. As stated above, the decreases in
both interest income and expense came as a result of general decreases in
interest rates.
Other income was up $1,052,641 for the six-month period ended June 30, 2003
compared to the same period in 2002. This is a result of increases in the cash
value of bank-owned life insurance policies, which were purchased in 2002, as
well as increases in mortgage-origination fees and securities gains resulting
from the restructuring of a leveraging strategy that was implemented in the
first quarter of 2002. Securities gains from this transaction totaled
approximately $870,000.
Normal cost increases, combined with the aforementioned costs of salaries and
benefits, resulted in an overall increase in other expenses of $415,747 for the
first six months of 2003 compared to the first six months of 2002. Net income
for the six-month period ended June 30, 2003 increased by $613,315, or 53.55%
compared to the six-month period ended June 30, 2002. The significant increase
in net income was due primarily to the securities gains noted above in the
discussion of other income.
10
Financial Condition
Total assets increased by $17,847,783, or 7.40% from December 31, 2002 to June
30, 2003. Net loans increased by $6,071,403 and investment securities increased
by $2,508,133.
Total deposits increased by $6,543,892, or 3.16% from December 31, 2002 to June
30, 2003. Federal Home Loan Bank advances increased by $10,000,000 over the same
period as the Bank capitalized on the opportunity to lock in long-term, low
fixed-rate borrowings. The Bank borrowed from the FHLB at a floating rate based
on LIBOR and subsequently entered into a pay-fixed, receive-floating, interest
rate swap agreement with a correspondent to fix the borrowing rate at 3.75% for
ten years.
Shareholders' equity totaled $24,868,510 at June 30, 2003 compared to
$23,229,517 at December 31, 2002. The $1,638,993 increase was the result of
earnings for the six months combined with increases in the market values of
securities that are classified as available for sale and interest rate swap
areements, less the payment of dividends of $412,552.
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
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 $558,000, or 6.21%, while a similar decrease in rates would
result in an increase in net interest income of $470,000, or 5.22%. 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 I: Financial Information
Item 4: Controls and Procedures
- --------------------------------------------------------------------------------
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with the Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15. Based upon that evaluation, the Company's President and Chief
Executive Officer along with the Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in our periodic SEC filings.
There have been no significant changes in our internal controls or in other
factors that could materially affect, or are reasonably likely to materially
affect, internal controls subsequent to the date we carried out this evaluation.
13
Part II. Other Information
Item 1. Legal Proceedings
There are no matters pending legal proceedings to which the Company or
its subsidiary is a party or of which any of their property is 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 8, 2003,
the shareholders of the Company voted upon the following matters with the
following results:
(1) 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
---- --------- --------------
Dennis B. Gambill 1,430,945 5,792
Jack E. Guynn, Jr. 1,430,677 6,060
Charles T. Sturgill 1,430,777 5,960
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) of the Securities Exchange Act of 1934.
31.2 Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) of the Securities Exchange Act of 1934.
32 Statement of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350.
(b) Reports on 8-K
None
14
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, thereunto duly authorized.
GRAYSON BANKSHARES, INC.
Date: August 14, 2003 By: /s/ Jacky K. Anderson
------------------------------------------
Jacky K. Anderson
President and Chief Executive Officer
By: /s/ Blake M. Edwards
------------------------------------------
Blake M. Edwards
Chief Financial Officer
15
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
of the Securities Exchange Act of 1934.
31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
of the Securities Exchange Act of 1934.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350.