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) November 16, 2005 (November 16, 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.)

Item 8.01. Other Events

On November 16, 2005, Cardinal Bankshares Corporation (“Cardinal Bankshares”) issued a news release announcing financial results for the first nine months of 2005. 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.

(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.

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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: November 16, 2005	By:	/s/  Ronald Leon Moore
	Name:	Ronald Leon Moore
	Title:	Chairman, President and Chief Executive Officer
	By:	/s/  Stephanie Kent
	Name:	Stephanie Kent
	Title:	Controller, Senior Vice President and Principal Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
(99)	The News Release.

4

EX-99

Cardinal Bankshares Corporation

101 Jacksonville Circle

Floyd, Virginia 24091

Contact:	Leon Moore	Telephone: (540) -745-4191
	Chairman of the Board, President and CEO	FAX: (540) -745-4133
	Stephanie Kent
	Senior Vice President and Principal Financial Officer

November 16, 2005 Traded: OTC Bulletin Board        Symbol: CDBK

For Immediate Release

Cardinal Bankshares Corporation Announces Results of Operations for the First Nine Months of 2005

FLOYD, VA – Cardinal Bankshares Corporation reported good growth for the first nine months of 2005 as compared to the same period of 2004. Total assets at September 30, 2005 were $193,327,000. Net loans increased by $8 million from December 31, 2004 and ended at $131,156,000 as of September 30, 2005. Deposit growth since December 31, 2004 amounted to $3,554,000.

“The bank has been able to increase its net interest income, yet the continued increasing costs of federal regulations, competition, branch expansion and automation upgrades lower our overall net income.”, stated Leon Moore, chairman and chief executive officer.

Net income for the first nine months of 2005 amounted to $1,605,000, a slight decrease of $110,000 from the income of $1,715,000 for the same period in 2004. Basic earnings per share amounted to $1.05 per share.

Noninterest expense increased approximately $409,000 the first nine months of 2005 compared to the first nine months of 2004. The largest portion of that amount was related to bringing our new branches in Roanoke and Salem into operation. The majority of those expenses were related to buildings, furniture and fixtures, personnel cost, and regulatory compliance.

On November 9, 2005 the Board of Directors of Cardinal Bankshares Corporation approved a cash dividend of 28¢ per share for the second half of 2005. Mr. Moore stated, “This represents an annual cash dividend of 53¢ for the year 2005. The increase amounts to a 6% increase over the 2004 cash dividend of 50¢ per share. The increase marks the 14^th consecutive year of cash dividend increases.” The dividend will be payable on December 30^th to shareholders of record on December 16, 2005.

Moore added, “We continue to look for new expansion opportunities and products to serve our customers. 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.

****

This press release may contain “forward-looking statements,” within the meaning of federal securities laws, that involve risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Company and other factors it believes are appropriate in the circumstances. However, the Company’s expectations are subject to a number of risks and uncertainties and other factors that could cause actual results, events and developments to differ materially from those contemplated by any forward-looking statements herein. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’s most recent Form 10-KSB report and other documents filed with the Securities and Exchange Commission.

Cardinal Bankshares Corporation and Subsidiary

Consolidated Balance Sheets

	(Unaudited)			(Audited)
(In thousands, except share data)	September 30, 2005			December 31, 2004
Assets
Cash and due from banks	$	4,085		$	4,162
Interest-bearing deposits		8,610			3,602
Federal funds sold		1,725			7,175
Investment securities available for sale, at fair value		16,733			20,942
Investment securities held to maturity (fair value September 30, 2005—$18,907; December 31, 2004—$20,729)		18,468			20,001
Restricted equity securities		546			603
Total loans		132,593			124,673
Allowance for loan losses		(1,437	)		(1,631	)
Net loans		131,156			123,042
Bank premises and equipment, net		4,044			4,205
Accrued interest receivable		949			933
Foreclosed properties		418			2
Bank owned life insurance		4,588			4,483
Other assets		2,005			1,441
Total assets	$	193,327		$	190,591
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits	$	27,217		$	27,211
Interest-bearing deposits		137,592			134,044
Total deposits		164,809			161,255
Securities sold under agreements to repurchase		121			2,493
Accrued interest payable		131			110
Other liabilities		1,323			883
Total liabilities		166,384			164,741
Commitments and contingent liabilities		—			—
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		8,665			7,444
Accumulated other comprehensive income, net		(4	)		124
Total stockholders’ equity		26,943			25,850
Total liabilities and stockholders’ equity	$	193,327		$	190,591

Cardinal Bankshares Corporation and Subsidiary

Consolidated Statements of Income (Unaudited)

	Three months ended September 30,						Nine months ended September 30,
(In thousands, except share data)	2005			2004			2005			2004
Interest income
Loans and fees on loans	$	2,211		$	1,981		$	6,378		$	5,979
Federal funds sold and securities purchased under agreements to resell		52			27			110			71
Investment securities:
Taxable		178			232			596			678
Exempt from federal income tax		227			231			695			686
Deposits with banks		55			4			89			18
Total interest income		2,723			2,475			7,868			7,432
Interest expense
Deposits		925			762			2,544			2,325
Borrowings		3			18			25			38
Total interest expense		928			780			2,569			2,363
Net interest income		1,795			1,695			5,299			5,069
Provision for loan losses		12			30			48			55
Net interest income after provision for loan losses		1,783			1,665			5,251			5,014
Noninterest income
Service charges on deposit accounts		68			67			197			201
Other service charges and fees		27			22			76			65
Net realized gains on sales of securities		—			—			9			4
Other operating income		82			105			244			265
Total noninterest income		177			194			526			535
Noninterest expense
Salaries and employee benefits		781			712			2,166			1,964
Occupancy and equipment		170			152			535			422
Foreclosed assets, net		(17	)		(1	)		(17	)		8
Other operating expense		398			278			1,058			939
Total noninterest expense		1,332			1,141			3,742			3,333
Income before income taxes		628			718			2,035			2,216
Income tax expense		126			158			430			501
Net Income	$	502		$	560		$	1,605		$	1,715
Basic earnings per share	$	0.33		$	0.37		$	1.05		$	1.12
Diluted earnings per share	$	0.33		$	0.37		$	1.05		$	1.12
Weighted average basic shares outstanding		1,535,733			1,535,733			1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733			1,535,733			1,535,733