Exhibit 99.1
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Grayson Bankshares, Inc.
Financial Report
December 31, 2004
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113 West Main Street o Post Office Box 186
Independence, Virginia 24348
(276) 773-2811
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East Independence (276) 773-2811
Elk Creek (276) 655-4011
Galax (276) 238-2411
Troutdale (276) 677-3722
Sparta (336) 372-2811
Carroll (276) 238-8112
Hillsville (276) 728-2810
Message to Shareholders
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Dear Fellow Shareholders,
It is our pleasure to present our 4th Quarter 2004 financial Report to you.
Our total assets are $269,668,938, up $5,804,010 or 2.20% over the previous
year. Net loans have increased by $20,757,140, or 11.78%, while deposits
increased by $2,840,195, or 1.24%, during the last twelve months. Federal funds
sold and investment securities decreased as balances were allocated to funding
the increased loan demand.
Stockholder's equity at December 31, 2004 was $26,177,047, representing an
increase of $1,576,251, or 6.41% for the year then ended. A fourth quarter
dividend of 21 cents per share was declared and paid in December bringing total
dividends paid in 2004 to $0.60 per share. The book value of our stock at year
end was $15.23 per share.
Net income totaled $766,817 for the three-month period ended December 31, 2004
and $3,241,468 for the year then ended. The slight decrease in the yearly
results is due to a decrease in "other income" which was higher in 2003 because
of securities gains and a nonrecurring gain realized upon termination of an
interest rate swap. An increase in the Bank's net interest margin led to
increases in net interest income of 18.87% and 23.86% for the three-month and
twelve-month periods ended December 31, 2004, compared to the same periods in
2003.
Thanks to everyone who attended the grand opening of our new Hillsville office
on December 17 and helped to make it such a success. We are especially grateful
to the many employees who worked so diligently to make the day possible.
As always, we appreciate your support, welcome your comments and the opportunity
to serve you.
Sincerely,
Jacky K. Anderson
President and CEO
Consolidated Balance Sheets
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December 31, December 31,
2004 2003
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Assets
Cash and due from banks $ 10,032,398 $ 11,748,140
Federal funds sold 8,833,069 15,305,544
Investment securities 37,909,290 46,281,768
Loans 199,521,629 178,550,117
Less allowance for loan losses 2,609,759 2,395,387
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Net loans 196,911,870 176,154,730
Properties and equipment 7,316,750 6,228,192
Accrued interest receivable 1,833,728 1,891,116
Other assets 6,831,833 6,255,438
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Total assets $ 269,668,938 $ 263,864,928
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Liabilities
Demand deposits $ 31,569,179 $ 26,708,360
Interest-bearing demand deposits 21,352,600 19,359,587
Savings deposits 51,489,408 53,415,745
Large denomination time deposits 36,668,682 34,695,733
Other time deposits 89,979,474 94,039,723
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Total deposits 231,059,343 228,219,148
FHLB Advances 12,000,000 10,000,000
Accrued interest payable 253,652 264,640
Other liabilities 178,896 780,344
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Total liabilities 243,491,891 239,264,132
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Commitments and contingencies
Stockholders' equity
Preferred stock, $25 par value; 500,000
shares authorized; none outstanding - -
Common stock, $1.25 par value; 5,000,000
shares authorized; 1,718,968 shares
issued and outstanding 2,148,710 2,148,710
Surplus 521,625 521,625
Retained earnings 23,797,290 21,587,202
Accumulated other comprehensive income (loss) (290,578) 343,259
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Total stockholders' equity 26,177,047 24,600,796
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Total liabilities and stockholders' equity $ 269,668,938 $ 263,864,928
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Officers
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Julian L. Givens..................................Chairman of the Board
Jacky K. Anderson.......................................President & CEO
Dennis B. Gambill........................................Vice President
Brenda C. Smith...............................................Secretary
Blake M. Edwards................................Chief Financial Officer
Consolidated Statements of Operations
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Three Months Ended December 31, Year Ended December 31,
2004 2003 2004 2003
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Interest income
Loans and fees on loans $ 3,440,672 $ 3,061,387 $ 12,985,131 $ 11,771,356
Interest on securities 395,017 474,683 1,729,116 2,000,501
Federal funds sold 46,477 35,892 139,300 245,840
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Total interest income 3,882,166 3,571,962 14,853,547 14,017,697
Interest expense
Deposits 986,468 1,120,211 3,954,159 5,123,483
FHLB Advances 125,028 120,815 519,247 513,639
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Total interest expense 1,111,496 1,241,026 4,473,406 5,637,122
Net interest income 2,770,670 2,330,936 10,380,141 8,380,575
Provision for loan losses 105,000 120,000 390,000 410,000
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Net interest income after provision
for loan losses 2,665,670 2,210,936 9,990,141 7,970,575
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Other income
Service charges on deposit accounts 140,649 115,964 549,871 429,135
Other income 185,448 178,109 886,866 2,073,894
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Total other income 326,097 294,073 1,436,737 2,503,029
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Other expenses
Salaries and employee benefits 1,076,120 908,173 4,296,445 3,633,502
Occupancy expense 70,112 57,978 232,506 169,858
Equipment expense 173,183 148,747 638,069 501,658
Other expense 596,410 451,635 1,803,265 1,524,492
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Total other expense 1,915,825 1,566,533 6,970,285 5,829,510
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Net income before income taxes 1,075,942 938,476 4,456,593 4,644,094
Income taxes 309,125 258,535 1,215,125 1,305,535
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Net income $ 250,821 $ 448,063 $ 981,204 $ 1,140,507
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Net income $ 766,817 $ 679,941 $ 3,241,468 $ 3,338,559
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Net income per share $ .45 $ .40 $ 1.89 $ 1.94
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Weighted average shares outstanding 1,718,968 1,718,968 1,718,968 1,718,968
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Board of Directors
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Julian L. Givens..............................................Retired Physician
Carl J. Richardson......................................................Retired
Jacky K. Anderson........Grayson BankShares, Inc. and The Grayson National Bank
Jean W. Lindsey.............................................Walters' Drug, Inc.
Fred B. Jones............................................................Farmer
Dennis B. Gambill........Grayson BankShares, Inc. and The Grayson National Bank
Jack E. Guynn, Jr.......................................Guynn Enterprises, Inc.
Charles T. Sturgill...............................Grayson County Clerk of Court
J. David Vaughan..............................................Vaughan Furniture
Thomas M. Jackson, Jr..................................................Attorney
Member Federal Deposit Insurance Corporation
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