SEC Letter

In response to the comments set forth in your letter dated April 20, 2012 (the “Comment Letter”) with regard to the above-referenced Definitive Proxy Statement filed April 12, 2012 (the “Proxy Statement”) and Definitive Additional Materials filed April 19, 2012 (the “April 19 Materials”) of Cardinal Bankshares Corporation (“Cardinal” or the “Company”), we provide herewith a copy of a Supplement to the Proxy Statement dated May 3, 2012 (the “Supplement”), which is being filed today under Schedule 14A, and the Company’s responses to the Comment Letter.

Except as otherwise noted in this letter, the information provided in response to the Comment Letter has been supplied by the Company, which is solely responsible for it. For your convenience, the text of the Staff’s comments is set forth in bold below, followed in each case by the response.

CALIFORNIA \ CONNECTICUT \ MASSACHUSETTS \ MICHIGAN \ NEW JERSEY \ NEW YORK \ PENNSYLVANIA \ VIRGINIA \ WASHINGTON, DC

The Staff’s comment is noted. The Company has revised the Proxy Statement by the Supplement to provide the information requested by the comment. See “Proposal 1 – Election of Directors” beginning on page 2 of the Supplement.

The Company has revised the Proxy Statement by the Supplement to reflect the revised number of board nominees being supported by the Schaller Coalition. The information is contained in several places in the Supplement.

The requested supplemental documentation in support of the claims made in the April 19 Materials is contained in Exhibit A attached hereto. Cardinal has made a correction statement in the Supplement with respect to the statistic regarding stock price.

The requested supplemental documentation identifying the Virginia peer banks and in support of the claims made in the April 19 Materials is contained in Exhibit A attached hereto.

The Staff’s comment is noted. The Company respectfully requests that it not be obligated to provide such information publicly. The customers referenced in Cardinal’s letter all reside and/or work in Floyd County, Virginia, where Cardinal is headquartered. The population of Floyd County is approximately 15,279, according to the 2010 U.S. Census. It is a community where the individuals and professionals who

reside and/or work there are generally well known throughout the community. Cardinal believes that to publicly divulge such information in a way that provides a meaningful response to the comment would have the unintended consequence of having the identities of such individuals revealed, which may lead to significant adverse effects on such persons and/or their businesses in the community.

The Staff’s comment is noted. On June 6, 2011, Cardinal received a letter from Schaller Equity Partners wherein Douglas E. Schaller stated: “When considering the difficult process of selecting a new president and the risks inherent in any succession plan, I believe shareowners would best be served by a sale of the Bank to a larger institution.” A copy of the letter is attached as an exhibit to amendment no. 1 to Schedule 13D filed by the Schaller Ownership (as defined in the Proxy Statement) on June 6, 2011.

On July 27, 2011, Cardinal received a letter from Schaller Equity Partners wherein Mr. Schaller stated: “I continue to believe that shareholders would best be served by the sale of the Corporation to a more secure and stable community bank….” A copy of the letter is attached as an exhibit to amendment no. 2 to Schedule 13D filed by the Schaller Ownership on July 27, 2011.

In a news article published in The Floyd Press, Floyd, Virginia on August 14, 2011, Mr. Schaller is referenced as having told The Floyd Press that he was still pursuing the sale of Bank of Floyd and that his plan was to sell it to a nearby bank.

On September 29, 2011, Schaller Equity Partners published an open letter to Cardinal’s shareholders in The Floyd Press. The open letter repeated Mr. Schaller’s above-referenced earlier statement in the June 6 letter regarding a sale of Cardinal and made further statements regarding his position as to why he believed that a sale of the Company is possible and that the Company’s board should consider a potential sale of the Company. Mr. Schaller also repeated the three primary reasons stated in the June 6 letter that led him to the sale conclusion, none of which have been countered by statements of Mr. Schaller or the Schaller Coalition made in connection with the more recent position of strategic growth. Importantly, all three reasons stated by Mr. Schaller would be true if the Schaller Coalition nominees are elected. To the Company’s knowledge, the Schaller Coalition has not explained to Cardinal shareholders why now such reasons are not as valid as they were in late September 2011. A copy of the letter is attached as an exhibit to amendment no. 3 to Schedule 13D filed by the Schaller Ownership on September 29, 2011.

On December 22, 2011, Schaller Equity Partners published a second open letter to Cardinal’s shareholders in The Floyd Press. In the letter, Mr. Schaller stated his belief that the Company has two futures: One with Mr. Leon Moore, Chairman, President and Chief Executive Officer of Cardinal, continuing in his current positions, in which case Mr. Schaller advocates the sale of the Company; the other with Mr. Moore retiring from the Company and both Mr. Moore and Michael D. Larrowe, Executive Vice President of Cardinal and a director, stepping down from the Company’s board. A copy of the letter is attached as an exhibit to amendment no. 4 to Schedule 13D by the Schaller Ownership on December 29, 2011.

After four amendments to Schedule 13D were filed by the Schaller Ownership describing Mr. Schaller’s belief that Cardinal shareholders would be best served with a sale of the Company, including letters to shareholders on such topic, on February 28, 2012, the Schaller Ownership filed amendment no. 7 to Schedule 13D for the purpose of, among other things, denying a “rumor” that Schaller Equity Partners (or other Schaller Ownership members) has a plan or intends to sell the Company or Bank of Floyd. While the Company has no knowledge about this so-called “rumor,” it is aware of the public information contained in the Schaller Ownership’s own filings with the Securities and Exchange Commission with respect to a possible sale of the Company and of the above-referenced news article in The Floyd Press.

The Company acknowledges that the Schaller Coalition’s definitive proxy statement states that certain “early discussions” (apparently with board members) included the possibility of a sale of the Company. Still, the Schaller Coalition’s proxy statement contains almost no information as to Mr. Schaller’s repeated public communications during a seven-month period leading up to the solicitation – from June 2011 through December 2011 – regarding the possible sale of the Company. In addition, the Company understands that the Schaller Ownership controls approximately 70% of the voting power of the Schaller Coalition. The Company’s board considered the public statements made by Mr. Schaller for a significant period of time prior to the Schaller Coalition’s solicitation, the substantial voting power of the Schaller Ownership and Mr. Schaller’s very recent apparent change of heart as to the strategic opportunities available to the Company, in formulating its belief that the strategy of Mr. Schaller and the Schaller Coalition after taking control of Cardinal is to sell the Company.

The Staff’s comment is noted. The Company has amended the Proxy Statement by the Supplement to provide updated information requested by the comment. See “Background Information on the Events Leading up to the Schaller Coalition’s Solicitation” on page 4 of the Supplement.

The Staff’s comment is noted. As disclosed on page 4 of the Supplement, if one or more of the Schaller Coalition nominees is elected to the Company’s board, each current director of the Company that is re-elected at the annual meeting has indicated to the Company that he would resign from the board immediately after the annual meeting. If such event were to occur, one or more of the Schaller Coalition nominees would constitute the entire Company board at that time,

and therefore have control of the board. See “Impact on Board Membership if Schaller Nominee Elected” under “Proposal 1 – Election of Directors” on page 4 of the Supplement.

Please contact me at 804-343-4079, or Douglas W. Densmore at 540-510-3024, should you require further information or if you have any questions.

Bank Stock Performance

Source: SNL Financial

Price

Performance:

Peak

(10/9/07)

Date

(3/6/2012)

-14.2%

-46.3%

-71.1%

-52.0%

-47.8%

-52.0%

-43.2%

-61.1%

-56.4%

-27.0%

-85%

-45%

-5%

S&P 500

Nasdaq Bank

<$250M

$250-$500M

$500M-$1B

$1B-$5B

$5B-$10B

>$10B

VA Banks

CDBK

Exhibit A

Peer Group Analysis

Y-o-Y

Tangible

Deposit

Common

Core

Dividend

Price/

Price

Total

Growth

Equity/

NPAs/

Reserves/

EPS

Payout

Stated

Change

Assets

Rate

Assets

Loans

ROAA

Growth

Ratio

Book

Two-Year

Local Peers

($000)

(%)

Highlands Bankshares, Inc. *

634,121

5.1

6.16

2.39

(1.02)

20.9

(77.7)

Bank

the

James

Financial

Group,

Inc.

427,436

1.5

6.3

3.19

1.73

0.31

(67.3)

0.0

71.6

(12.8)

Pinnacle Bankshares Corporation

342,484

1.1

7.7

1.56

1.48

0.37

54.3

0.0

52.8

20.0

Bank of Marion

348,943

10.4

1.78

1.98

0.69

80.8

76.0

MainStreet BankShares, Inc. *

206,381

10.8

4.70

2.18

0.01

32.6

(26.1)

Bank of Fincastle

180,416

2.7

14.0

3.44

1.25

0.93

12.3

49.2

Median

0.5

9.1

3.31

1.85

0.34

33.3

24.6

42.7

(19.5)

Cardinal Bankshares Corporation

$266,160

7.6

12.4

5.03

2.20

0.56

43.2

22.2

67.4

80.0

Data as of December 31, 2011

* Data as of September 30, 2011

Source: SNL Financial

(4.0)

(0.1)

(6.1)