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) March 4, 2009 (March 3, 2009)

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 2.02. Results of Operations and Financial Condition

On March 3, 2009 Cardinal Bankshares Corporation (“Cardinal Bankshares”) issued a news release announcing financial results for the ended December 31, 2008. The News Release (the “News Release”) is attached as Exhibit 99.1 to this report and is incorporated into this Item 8.01 by reference.

Item 9.01. Financial Statements and Exhibits.

(99.1) 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: March 3, 2009	By:	/s/ Ronald Leon Moore
	Name:	Ronald Leon Moore
	Title:	Chairman, President and Chief Executive Officer
	By:	/s/ J. Alan Dickerson
	Name:	J. Alan Dickerson
	Title:	Chief Financial Officer and Vice-President

EXHIBIT INDEX

Exhibit No.	Description
(99.1)	The News Release.

EX-99.1

Exhibit 99.1

Press Release: March 3, 2009

Cardinal Bankshares Corporation has announced results of operation for the year ending December 31, 2008.

Cardinal ended the year with total assets of $221,040,075, an increase of $11,778,927 or 5.62% over 2007. Net loans increased $23,478,877 to end the year at $146,261,939. Total deposits increased $11,365,395.

Net profits at year-end were $1,558,655, a decline of $698,801 or 30.96% from 2007.

Leon Moore, Chairman and CEO, commented, “While our net profits did not measure up to our expectations, we are certainly encouraged by our loan and deposit growth for the year. Short-term investment income was reduced by $1,119,326 due to declining interest rates, which was the major factor reducing earnings. Due to increased loan income and tight expense controls we were able to mitigate a portion of the income loss on short-term investments.”

Moore continued, “The decline in rates and the economy is unprecedented in recent times. Unfortunately, we expect the economy to continue to decline in 2009. Asset quality remained good during 2008, and we continued to take an aggressive approach on loan delinquencies and building allowance for loan losses to meet unforeseen future delinquencies. Due to an uncertain economy in 2009, and possibly into 2010, our vision is to maintain a safe and sound financial institution.”

Moore concluded by stating, “The 7,500 plus community banks and savings institutions did not cause the current economic crisis we are now facing; however, we must manage through the turmoil.”

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, (In thousands, except share data)	(Unaudited) 2008			(Audited) 2007
Assets
Cash and due from banks	$	3,299		$	4,526
Interest-bearing deposits in banks		227			15,511
Federal funds sold		12,875			8,800
Investment securities available for sale, at fair value		28,868			26,312
Investment securities held to maturity (fair value Approximates $16,642 and $19,120 at December 31, 2008 and 2007, respectively)		16,506			18,990
Restricted equity securities		534			536
Total loans		147,921			124,452
Allowance for loan losses		(1,659	)		(1,669	)
Net loans		146,262			122,783
Bank premises and equipment, net		4,000			4,262
Accrued interest receivable		1,134			1,045
Foreclosed properties		289			212
Bank owned life insurance		4,951			4,757
Other assets		2,095			1,527
Total assets	$	221,040		$	209,261
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	26,975		$	29,562
Interest-bearing deposits		162,038			148,087
Total deposits		189,013			177,649
Accrued interest payable		222			211
Other liabilities		2,359			1,488
Total liabilities		191,594			179,348
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		12,411			11,789
Accumulated other comprehensive income		(1,247	)		(158	)
Total stockholders’ equity		29,446			29,913
Total liabilities and stockholders’ equity	$	221,040		$	209,261

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Statements of Income

Years ended December 31, (In thousands, except share and per share data)	(Unaudited) 2008			(Audited) 2007
Interest income
Loans and fees on loans	$	9,456		$	9,125
Federal funds sold and securities purchased under agreements to resell		171			443
Investment securities:
Taxable		1,369			1,191
Exempt from federal income tax		876			895
Dividend income		26			32
Deposits with banks		271			1,272
Total interest income		12,169			12,958
Interest expense
Deposits		5,687			5,892
Borrowings		—			—
Total interest expense		5,687			5,892
Net interest income		6,482			7,066
Provision for loan losses		94			(19	)
Net interest income after provision for (recovery of) loan losses		6,388			7,085
Noninterest income
Service charges on deposit accounts		208			224
Other service charges and fees		106			103
Net realized gains on sales of securities		39			56
Income on bank owned life insurance		194			377
Other income		218			215
Total noninterest income		765			975
Noninterest expense
Salaries and employee benefits		3,271			3,191
Occupancy and equipment		724			697
Legal and professional		396			410
Bank franchise tax		67			131
Date processing services		231			158
Foreclosed assets, net		—			3
Other operating expense		655			696
Total noninterest expense		5,344			5,286
Income before income taxes		1,809			2,774
Income tax expense		250			517
Net income	$	1,559		$	2,257
Basic earnings per share	$	1.01		$	1.47
Diluted earnings per share	$	1.01		$	1.47
Return on average assets		.72	%		1.07	%
Return on average equity		5.17	%		7.70	%
Average equity to average assets		13.96	%		13.84	%
Weighted average basic shares outstanding		1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733