Exhibit 99.1

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 Sigman

Senior Vice President and Principal Financial Officer

February 9, 2007	Traded: OTC Bulletin Board	Symbol: CDBK
For Immediate Release

Cardinal Bankshares Corporation Announces Increase in Net Earnings for 2006

FLOYD, VA – Cardinal Bankshares Corporation announces increase in 4^th quarter earnings and record earnings for 2006.

Net income for the 4^th quarter of 2006 increased by 5.50% over 2005, ending at $631 thousand, compared to $598 thousand in the 4^th quarter 2005.

Net income amounted to $2.5 million, over the 2005 net income of $2.2 million. Basic earnings per share amounted to $1.63, compared to $1.44 per share in 2005. Total interest income for the year increased $1.2 million to $11.9 million. Interest expense increased by $795 thousand for the year to $4.3 million. Non-interest income increased $165 thousand to $924 thousand for the year, which included a one time gain of $126 thousand due to adjustment in a benefit plan.

Total assets ended the year at $207.8 million. Net loans ended the year at $121.3 million, a slight decline from 2005. The decline was primarily due to payout of several loan participations and a slow down in commercial activity. Total deposits increased by $9.4 million and ended the year at $177.3 million.

Leon Moore, Chairman of the Board, commented, “With the increased pressure on interest margins and a cooling loan demand, we are pleased that our net income remained strong. We were also able to produce a positive value for our shareholders with a 9% increase in cash dividends for the year. Cardinal Bankshares paid a record 58¢ per common share for the year 2006. This was a record 15^th consecutive increase in cash dividends for the company.”

The company’s capital position remains very strong with an equity to asset ratio of 13.66% ending the year at $28.4 million.

Asset quality remained good with non-performing assets ending the year at $656 thousand. The company added an additional $208 thousand to reserve for loan loss. Moore stated, “Due to the uncertainty of the economy and commercial activity we felt it appropriate to increase the provision.”

“We look forward to 2007 for potential growth and expansion of Cardinal’s franchise,” stated Moore.

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. The opening of a new branch in Fairlawn, Pulaski County is on target for Spring 2007.

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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 Subsidiaries

Consolidated Balance Sheets

December 31, (In thousands, except share data)	2006			2005
Assets
Cash and due from banks	$	3,416		$	4,292
Interest-bearing deposits in banks		21,135			9,042
Federal funds sold		8,800			5,125
Investment securities available for sale, at fair value		23,654			19,308
Investment securities held to maturity		17,248			17,470
Restricted equity securities		554			546
Total loans		122,974			129,981
Allowance for loan losses		(1,640	)		(1,427	)
Net loans		121,334			128,554
Bank premises and equipment, net		4,071			3,997
Accrued interest receivable		974			998
Foreclosed properties		212			418
Bank owned life insurance		4,789			4,631
Other assets		1,662			1,854
Total assets	$	207,849		$	196,235
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	28,279		$	26,747
Interest-bearing deposits		148,993			141,101
Total deposits		177,272			167,848
Securities sold under agreements to repurchase		—			134
Accrued interest payable		221			134
Other liabilities		1,966			1,061
Total liabilities		179,459			169,177
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		10,453			8,833
Accumulated other comprehensive income		(345	)		(57	)
Total stockholders’ equity		28,390			27,058
Total liabilities and stockholders’ equity	$	207,849		$	196,235

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Statements of Income

Years ended December 31, (In thousands, except share and per share data)	2006			2005
Interest income
Loans and fees on loans	$	9,399		$	8,698
Federal funds sold and securities purchased under agreements to resell		249			142
Investment securities:
Taxable		835			759
Exempt from federal income tax		852			918
Deposits with banks		582			167
Total interest income		11,917			10,684
Interest expense
Deposits		4,317			3,500
Borrowings		4			26
Total interest expense		4,321			3,526
Net interest income		7,596			7,158
Provision for loan losses		208			48
Net interest income after provision for loan losses		7,388			7,110
Noninterest income
Service charges on deposit accounts		281			262
Other service charges and fees		100			100
Net realized gains on sales of securities		3			9
Other income		540			388
Total noninterest income		924			759
Noninterest expense
Salaries and employee benefits		2,984			2,991
Occupancy and equipment		681			710
Foreclosed assets, net		(7	)		(13	)
Other operating expense		1,380			1,382
Total noninterest expense		5,038			5,070
Income before income taxes		3,274			2,799
Income tax expense		763			596
Net income	$	2,511		$	2,203
Basic earnings per share	$	1.63		$	1.44
Diluted earnings per share	$	1.63		$	1.44
Weighted average basic shares outstanding		1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733