8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 8, 2005 (February 8, 2005)

Cardinal Bankshares Corporation

(Exact name of registrant as specified in its charter)

Virginia	0-28780	54-1804471
(State or other jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

101 Jacksonville Circle, PO Box 215 Floyd, Virginia	24091
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (540) 745-4191

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01. Other Events

On February 8, 2005, Cardinal Bankshares Corporation (“Cardinal Bankshares”) issued a news release announcing financial results for the year ended December 31, 2004. The News Release (the “News Release”) is attached as Exhibit 99 to this report and is incorporated into this Item 8.01 by reference.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits. - None

(99) The News Release.

* * *

This Current Report on Form 8-K (including information included or incorporated by reference herein) may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding certain of Cardinal Bankshares’ goals and expectations with respect to earnings, earnings per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and statements preceded by, followed by or that include the words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, “projects”, “outlook” or similar expressions. These statements are based upon the current beliefs and expectations of Cardinal Bankshares’ management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Cardinal Bankshares’ control).

The following factors, among others, could cause Cardinal Bankshares’ financial performance to differ materially from that expressed in such forward-looking statements: (1) the strength of the United States economy in general and the strength of the local economies in which Cardinal Bankshares conducts operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Cardinal Bankshares’ loan portfolio and allowance for loan losses; (2) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; (3) inflation, interest rate, market and monetary fluctuations; (4) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions); (5) the timely development of competitive new products and services by Cardinal Bankshares and the acceptance of these products and services by new and existing customers; (6) the willingness of customers to accept third party products marketed by Cardinal Bankshares; (7) the willingness of customers to substitute competitors’ products and services for Cardinal Bankshares’ products and services and vice versa; (8) the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); (9) technological changes; (10) changes in consumer spending and saving habits; (11) the effect of corporate restructurings, acquisitions and/or dispositions; (12) the growth and profitability of Cardinal Bankshares’ noninterest or fee income being less than expected; (13) unanticipated regulatory or judicial proceedings or rulings; (14) the impact of changes in accounting principles; (15) adverse changes in financial performance and/or condition of Cardinal Bankshares’ borrowers which could impact repayment of such borrowers’ outstanding loans; (16) the impact on Cardinal Bankshares’ businesses, as well as on the risks set forth above, of various domestic or international military or terrorist activities or conflicts; and (17) Cardinal Bankshares’ success at managing the risks involved in the foregoing.

Cardinal Bankshares cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning Cardinal Bankshares or other matters and attributable to Cardinal Bankshares or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Cardinal Bankshares does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this Current Report on Form 8-K.

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 hereunto duly authorized.

	CARDINAL BANKSHARES CORPORATION
Date: February 8, 2005	By:	/s/ Ronald Leon Moore
	Name:	Ronald Leon Moore
	Title:	Chairman, President and Chief Executive Officer, and Acting Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
(99)	The News Release.

EX-99

Exhibit 99

Cardinal Bankshares Corporation

101 Jacksonville Circle

Floyd, Virginia 24091

Contact:	Leon Moore	Telephone: (540) -745-4191
	Chairman of the Board and CEO	FAX: (540-) 745-4133

February 8, 2005	Traded: OTC Bulletin Board	Symbol: CDBK
For Immediate Release

Cardinal Bankshares Corporation Announces Strong Earnings for 2004

FLOYD, VA – Cardinal Bankshares Corporation is pleased to report an earnings increase over 2003. “ With the added cost of federal regulations, competition, interest rate uncertainty, branch expansion and automation upgrades, it is particularly gratifying to report strong earnings”, stated Leon Moore, chairman and chief executive officer. Moore also stated that 2004 was the second best year for net income in the Company’s history.

Net income amounted to $2,242,000, an increase of $217,000 over the 2003 income of $2,025,000. Basic earnings per share amounted to $1.46, an increase of $.14 over the $1.32 per share in 2003.

Net income for the 4^th quarter of 2004 increased by 4% over 2003, ending at $527,375, compared to $507,018 in the 4^th quarter 2003.

Total assets ended the year at $190,633,000. Net loans increased by $4 million and ended the year at $123,042,000.

Moore added, “Our continued strong performance allows Cardinal to add value to our shareholders, to the communities we serve and to our staff.”

Cardinal provides a wide range of commercial banking services to individuals and small to medium-sized businesses through its main office located in Floyd, Virginia and its branch locations in Christiansburg, Hillsville, Roanoke, Salem and Willis, Virginia.

****

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, (In thousands, Unaudited)	2004			2003
Assets
Cash and due from banks	$	4,162		$	3,419
Interest-bearing deposits in banks		3,602			4,316
Federal funds sold		7,175			9,125
Investment securities available for sale, at fair value		20,942			21,771
Investment securities held to maturity		20,001			18,560
Restricted equity securities		603			598
Total loans		124,673			120,730
Allowance for loan losses		(1,631	)		(1,697	)
Net loans		123,042			119,033
Bank premises and equipment, net		4,205			2,437
Accrued interest receivable		933			883
Foreclosed properties		—			385
Bank owned life insurance		4,483			4,327
Other assets		1,485			1,558
Total assets	$	190,633		$	186,412
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	27,211		$	22,959
Interest-bearing deposits		134,044			136,256
Total deposits		161,255			159,215
Securities sold under agreements to repurchase		2,493			1,826
Accrued interest payable		110			123
Other liabilities		925			794
Total liabilities		164,783			161,958
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $10 par value; 5,000,000 shares authorized; 1,535,733 shares issued and outstanding		15,357			15,357
Additional paid-in capital		2,925			2,925
Retained earnings		7,444			5,970
Accumulated other comprehensive income		124			202
Total stockholders’ equity		25,850			24,454
Total liabilities and stockholders’ equity	$	190,633		$	186,412

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Statements of Income

Years ended December 31, (In thousands, except share and per share data, Unaudited)	2004		2003
Interest income
Loans and fees on loans	$	7,971	$	7,804
Federal funds sold and securities purchased under agreements to resell		97		119
Investment securities:
Taxable		902		961
Exempt from federal income tax		924		921
Deposits with banks		26		69
Total interest income		9,920		9,874
Interest expense
Deposits		3,102		3,781
Borrowings		55		28
Total interest expense		3,157		3,809
Net interest income		6,763		6,065
Provision for loan losses		55		30
Net interest income after provision for loan losses		6,708		6,035
Noninterest income
Service charges on deposit accounts		267		308
Other service charges and fees		87		86
Net realized gains on sales of securities		4		—
Income on bank owned life insurance		156		178
Other income		256		302
Total noninterest income		770		874
Noninterest expense
Salaries and employee benefits		2,719		2,479
Occupancy and equipment		618		553
Foreclosed assets, net		12		36
Other operating expense		1,260		1,254
Total noninterest expense		4,609		4,322
Income before income taxes		2,869		2,587
Income tax expense		627		562
Net income	$	2,242	$	2,025
Basic earnings per share	$	1.46	$	1.32
Diluted earnings per share	$	1.46	$	1.32
Weighted average basic shares outstanding		1,535,733		1,535,733
Weighted average diluted shares outstanding		1,535,733		1,535,733