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 17, 2012 (February 17, 2012)

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 2.02. Results of Operations and Financial Condition

On February 17, 2012, Cardinal Bankshares Corporation (“Cardinal Bankshares”) issued a news release announcing operating results for the year ended December 31, 2011. The News Release (the “News Release”) is attached as Exhibit 99.1 to this report and is incorporated into this Item 2.02 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: February 17, 2012	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 & Vice-President

EXHIBIT INDEX

Exhibit No.	Description
(99.1)	The News Release.

EX-99.1

Exhibit 99.1

Cardinal Bankshares Corporation Announces Operating Results

Floyd, VA, February 17, 2012 - Cardinal Bankshares Corporation has announced results of operations for the year ending December 31, 2011.

Cardinal ended the year with total assets of $266,160,000, an increase of $17,092,000 or 6.86% over 2010. Total deposits increased $15,426,000 or 7.11% to $232,411,000, while net loans decreased $18,552,000 or 12.72% to $127,291,000. Loan loss reserves as a percentage of total loans increased to 2.20% for 2011 as compared to 2.06% for 2010.

Net income increased for a second consecutive year, totaling $1,099,000 for 2011, an increase of 13.42% compared to 2010. Earnings per share for 2011 increased $.09 to $.72 per share, an increase of 14.28% over 2010.

The three capital ratios used to measure bank strength continue to be well in excess of the requirements necessary to be classified as well capitalized.

Leon Moore, Chairman and CEO, commented, “The Bank improved its operating results for 2011 while maintaining its track record of being well capitalized and paying a semi-annual dividend. Total assets continued to increase while growth in deposits was greater than anticipated. Loans decreased due to payoffs as rates continue to decline, with the Bank focusing on loan quality and interest rate margin.”

Moore continued, “The Bank’s solid performance was achieved during an economy which continues to be a challenge, along with increased competition and increasing regulation. As a result of hard work, dedication and focus by all the Bank’s employees, senior management and the Board we show a positive improvement in our performance, while maintaining a safe, sound, well capitalized and customer service oriented financial institution.”

In conclusion, Moore stated: “The improved operating results, along with the increase in total assets and deposits, continues to show the public support for and belief in the locally head-quartered community bank model.”

Cardinal Bankshares Corporation is a bank holding company headquartered in Floyd, Virginia, and is the parent company for Bank of Floyd. Bank of Floyd is a community bank, headquartered in Floyd, Virginia. Bank of Floyd operates seven locations in Floyd, Hillsville, Roanoke, Salem, Christiansburg, Fairlawn and Willis, Virginia. Bank of Floyd is the parent company of FBC, Inc. offering insurance services through Bankers Insurance and Virginia Title Center.

Cardinal Bankshares Corporation stock is traded over the Bulletin Board under the stock symbol CDBK.OB.

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, (In thousands, except share data)	(Unaudited) 2011			(Audited) 2010
Assets
Cash and due from banks	$	4,255		$	2,948
Interest-bearing deposits in banks		14,758			7,792
Federal funds sold		33,700			21,550
Total cash and cash equivalents		52,713			32,290
Investment securities available for sale, at fair value		57,105			42,644
Investment securities held to maturity (fair value approximates $13,662 and $14,780 at December 31, 2011 and 2010, respectively)		12,950			14,698
Restricted equity securities		592			575
Total loans		130,158			148,916
Allowance for loan losses		(2,867	)		(3,073	)
Net loans		127,291			145,843
Bank premises and equipment, net		2,895			3,846
Accrued interest receivable		824			954
Foreclosed assets		3,418			509
Bank owned life insurance		5,437			5,279
Other assets		2,935			2,430
Total assets	$	266,160		$	249,068
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	32,135		$	28,264
Interest-bearing deposits		200,276			188,721
Total deposits		232,411			216,985
Accrued interest payable		88			111
Other liabilities		628			85
Total liabilities		233,127			217,181
Commitments and contingencies		—			—
Stockholders’ equity
Common stock, $10 par value; 5,000,000 shares authorized; 1,535,733 shares issued and outstanding at December 31, 2011 and 2010		15,357			15,357
Additional paid-in capital		2,925			2,925
Retained earnings		14,292			13,439
Accumulated other comprehensive gain (loss)		459			166
Total stockholders’ equity		33,033			31,887
Total liabilities and stockholders’ equity	$	266,160		$	249,068

Cardinal Bankshares Corporation and Subsidiaries

Consolidated Statements of Income

Years ended December 31, (In thousands, except share and per share data)	(Unaudited) 2011			(Audited) 2010
Interest and dividend income
Loans and fees on loans	$	8,031		$	8,818
Federal funds sold		49			44
Investment securities:
Taxable		1,346			1,233
Exempt from federal income tax		679			726
Dividend income		15			19
Deposits with banks		2			7
Total interest income		10,122			10,847
Interest expense
Deposits		3,066			4,395
Total interest expense		3,066			4,395
Net interest income		7,056			6,452
Provision for loan losses		592			661
Net interest income after provision for loan losses		6,464			5,791
Noninterest income
Service charges on deposit accounts		208			194
Other service charges and fees		117			124
Net realized gains on sales of securities		115			98
Net other-than-temporary impairment on investments		(300	)		—
Income on bank owned life insurance		158			164
Other income		126			103
Total noninterest income		424			683
Noninterest expense
Salaries and employee benefits		3,496			3,236
Occupancy and equipment		607			679
Legal and professional		287			157
Bank franchise tax		172			156
Data processing services		227			241
FDIC insurance premiums		303			368
Foreclosed assets, net		(33	)		51
Loss on sale of premises and equipment		82			—
Other operating expense		583			632
Total noninterest expense		5,724			5,520
Income before income taxes		1,164			954
Income tax expense (benefit)		65			(15	)
Net income	$	1,099		$	969
Basic earnings per share	$	.72		$	.63
Diluted earnings per share	$	.72		$	.63
Weighted average basic shares outstanding		1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733