Exhibit 99.1
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GRAYSON
BANKSHARES, INC.
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Financial Report
December 31, 2005
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113 West Main Street o Post Office Box 186
Independence, Virginia 24348
(276) 773-2811
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 2005 Financial Report to you.
Our total assets are $304,165,217, up $33,950,336 or 12.56% over the previous
year. Net loans have increased by $20,179,196, or 10.25%, while deposits
increased by $19,340,175, or 8.37%, during the last twelve months.
Stockholders' equity increased by $1,576,296 for the year. Total stockholders'
equity at December 31, 2005 was $27,753,342, which represents a book value of
$16.15 per share. A fourth quarter dividend of 23 cents per share was declared
and paid in December bringing total dividends paid in 2005 to $0.68 per share.
Both interest income and interest expense increased in 2005 due to growth of the
bank and to increases in interest rates. Net interest income increased by 5.96%
and 11.02% for the three-month and twelve-month periods ended December 31, 2005,
compared to the same periods in 2004. Other income was down for the year as a
result of a nonrecurring gain that was recognized in the second quarter of 2004.
The increase in other expenses was due to the addition of the Hillsville branch
and to the overall growth of the bank. Net income totaled $842,489 for the
three-month period ended December 31, 2005 and $3,108,307 for the year then
ended.
I am extremely pleased with our performance in 2005 and I believe your bank is
well positioned for continued growth and success in the future.
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,
2005 2004
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Assets
Cash and due from banks $ 8,394,367 $ 10,032,399
Federal funds sold 21,914,513 8,833,069
Investment securities 39,279,408 37,909,290
Loans 219,769,122 199,521,630
Less allowance for loan losses 2,678,055 2,609,759
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Net loans 217,091,067 196,911,871
Properties and equipment 7,249,704 7,316,750
Accrued interest receivable 2,177,475 1,833,728
Other assets 8,058,683 7,377,774
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Total assets $ 304,165,217 $ 270,214,881
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Liabilities
Demand deposits $ 36,242,161 $ 31,569,179
Interest-bearing demand deposits 22,975,642 21,352,601
Savings deposits 46,569,058 51,489,408
Large denomination time deposits 46,132,454 36,668,682
Other time deposits 98,480,204 89,979,474
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Total deposits 250,399,519 231,059,344
FHLB Advances 25,000,000 12,000,000
Accrued interest payable 467,686 253,652
Other liabilities 544,670 724,839
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Total liabilities 276,411,875 244,037,835
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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 25,736,698 23,797,289
Accumulated other comprehensive
income (loss) (653,691) (290,578)
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Total stockholders' equity 27,753,342 26,177,046
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Total liabilities and
stockholders' equity $ 304,165,217 $ 270,214,881
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.................................Officers
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
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Consolidated Statements of Operations
Three Months Ended December 31, Year Ended December 31,
2005 2004 2005 2004
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Interest income
Loans and fees on loans $ 4,109,267 $ 3,440,672 $ 15,309,030 $ 12,985,131
Interest on securities 408,852 395,017 1,611,829 1,729,116
Federal funds sold 173,003 46,477 405,083 139,300
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Total interest income 4,691,122 3,882,166 17,325,942 14,853,547
Interest expense
Deposits 1,484,015 986,468 4,947,344 3,954,159
FHLB Advances 271,158 125,028 854,658 519,247
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Total interest expense 1,755,173 1,111,496 5,802,002 4,473,406
Net interest income 2,935,949 2,770,670 11,523,940 10,380,141
Provision for loan losses 105,000 105,000 504,468 390,000
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Net interest income after provision
for loan losses 2,830,949 2,665,670 11,019,472 9,990,141
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Other income
Service charges on deposit accounts 141,292 140,649 528,320 549,871
Other income 218,070 185,448 740,165 886,866
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Total other income 359,362 326,097 1,268,485 1,436,737
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Other expenses
Salaries and employee benefits 1,177,706 1,076,120 4,868,352 4,296,445
Occupancy expense 92,451 70,112 309,513 232,506
Equipment expense 169,749 173,183 750,603 638,069
Other expense 575,835 596,410 2,047,101 1,803,265
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Total other expense 2,015,741 1,915,825 7,975,569 6,970,285
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Net income before income taxes 1,174,570 1,075,942 4,312,388 4,456,593
Income taxes 332,081 309,125 1,204,081 1,215,125
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Net income $ 842,489 $ 766,817 $ 3,108,307 $ 3,241,468
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Net income per share $ .49 $ .45 $ 1.81 $ 1.89
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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.
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
Bryan L. Edwards..............................................................Sparta Town Manager
Member Federal Deposit Insurance Corporation
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