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 17, 2006 (March 17, 2006)

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.):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting materials pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 &  Financial Conditions

           On March 17, 2006, Cardinal Bankshares Corporation (“Cardinal Bankshares”) issued a news release announcing financial results for the year ended December 31, 2005.  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: March 17, 2006	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

EXHIBIT INDEX

Exhibit No.	Description
(99.1)	The News Release.

EX-99.1

EXHIBIT 99.1

Cardinal Bankshares Corporation Announces Consistent Earnings for 2005

          FLOYD, Va., March 17 /PRNewswire-FirstCall/ -- Cardinal Bankshares Corporation (OTC Bulletin Board: CDBK) is pleased to report consistent earnings during 2005.  “With the continued increasing costs of branch expansions, personnel additions, regulatory compliance and interest expenses, it is particularly gratifying to report steady earnings,” stated Leon Moore, chairman and chief executive officer.  Moore also stated that the Company was once again able to increase the cash dividend to shareholders to $.53 per common share.  “This represents a 6.00% increase over 2004 and marks the 14th consecutive year we have been able to increase cash dividends to shareholders.”

          Net income amounted to $2,203,000, consistent with the 2004 income of $2,242,000.  Basic earnings per share amounted to $1.44, compared to $1.46 per share in 2004.

          Net income for the 4th quarter of 2005 increased by 13% over 2004, ending at $598,333, compared to $527,375 in the 4th quarter 2004.

          Total assets ended the year at $196,235,000.  Net loans increased by $5.5 million and ended the year at $128,554,000.

          Moore added, “Our continued strong performance allows Cardinal to add value to our shareholders, to the communities we serve and to our staff.  Our exceptional capital position also places our Company in a position to consider our extended growth options in the future.”

          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 Subsidiaries
Consolidated Balance Sheets

December 31, (In thousands, except share data)	2005			2004
Assets
Cash and due from banks	$	4,292		$	4,162
Interest-bearing deposits in banks		9,042			3,602
Federal funds sold		5,125			7,175
Investment securities available for sale, at fair value		19,308			20,942
Investment securities held to maturity		17,470			20,001
Restricted equity securities		546			603
Total loans		129,981			124,673
Allowance for loan losses		(1,427	)		(1,631	)
Net loans		128,554			123,042
Bank premises and equipment, net		3,997			4,205
Accrued interest receivable		998			933
Foreclosed properties		418			2
Bank owned life insurance		4,631			4,483
Other assets		1,854			1,441
Total assets	$	196,235		$	190,591
Liabilities and Stockholders’ Equity
Liabilities
Noninterest-bearing deposits	$	26,747		$	27,211
Interest-bearing deposits		141,101			134,044
Total deposits		167,848			161,255
Securities sold under agreements to repurchase		134			2,493
Accrued interest payable		134			110
Other liabilities		1,061			883
Total liabilities		169,177			164,741
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		8,833			7,444
Accumulated other comprehensive income		(57	)		124
Total stockholders’ equity		27,058			25,850
Total liabilities and stockholders’ equity	$	196,235		$	190,591

Cardinal Bankshares Corporation and Subsidiaries
Consolidated Statements of Income

Years ended December 31,
(In thousands, except share and per share data)	2005			2004
Interest income
Loans and fees on loans	$	8,698		$	7,971
Federal funds sold and securities purchased under agreements to resell		142			97
Investment securities:
Taxable		759			902
Exempt from federal income tax		918			924
Deposits with banks		167			26
Total interest income		10,684			9,920
Interest expense
Deposits		3,500			3,101
Borrowings		26			55
Total interest expense		3,526			3,156
Net interest income		7,158			6,764
Provision for loan losses		48			55
Net interest income after provision for loan losses		7,110			6,709
Noninterest income
Service charges on deposit accounts		262			267
Other service charges and fees		100			87
Net realized gains on sales of securities		9			4
Income on bank owned life insurance		148			156
Other income		240			255
Total noninterest income		759			769
Noninterest expense
Salaries and employee benefits		2,991			2,719
Occupancy and equipment		710			618
Foreclosed assets, net		(13	)		12
Other operating expense		1,382			1,260
Total noninterest expense		5,070			4,609
Income before income taxes		2,799			2,869
Income tax expense		596			627
Net income	$	2,203		$	2,242
Basic earnings per share	$	1.44		$	1.46
Diluted earnings per share	$	1.44		$	1.46
Weighted average basic shares outstanding		1,535,733			1,535,733
Weighted average diluted shares outstanding		1,535,733			1,535,733

          CONTACT:  Leon Moore, Chairman of the Board, President and CEO, or Stephanie Kent, Senior Vice President and Principal Financial Officer, of Cardinal Bankshares Corporation +1-540-745-4191, Fax: +1-540-745-4133

SOURCE  Cardinal Bankshares Corporation
          -0-                                                            03/17/2006
          /CONTACT:  Leon Moore, Chairman of the Board, President and CEO, or Stephanie Kent, Senior Vice President and Principal Financial Officer, of Cardinal Bankshares Corporation +1-540-745-4191, Fax: +1-540-745-4133/
          /Web site:  http://www.bankoffloyd.com /
          (CDBK)