SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                         Commission file number 0-24557

                         CARDINAL FINANCIAL CORPORATION
                 (Name of Small Business Issuer in its Charter)

                     Virginia                               54-1874630
           (State or Other Jurisdiction                  (I.R.S. Employer
        of Incorporation or Organization)               Identification No.)

           10555 Main Street, Suite 500
                Fairfax, Virginia                              22030
     (Address of Principal Executive Offices)               (Zip Code)

                                 (703) 934-9200
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $1.00 par value
                                (Title of Class)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for past 90 days.
                                                            Yes __X__   No _____

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. ____

         The issuer's  revenues for the fiscal year ended December 31, 1999 were
$5,650,115.

         The aggregate  market value of the voting stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked prices of such stock, as of March 29, 2000 was $17,766,030.

         The number of shares  outstanding of Common Stock, as of March 30, 2000
was 4,242,634.



<PAGE>

                                TABLE OF CONTENTS


                                     PART I
<TABLE>
<CAPTION>
                                                                                             Page
<S>                                                                                           <C>
Item 1.       Description of Business........................................................  3

Item 2.       Description of Property........................................................ 15

Item 3.       Legal Proceedings.............................................................. 16

Item 4.       Submission of Matters to a Vote of Security Holders............................ 16


                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters....................... 17

Item 6.       Management's Discussion and Analysis of Financial Condition
              and Results of Operation....................................................... 17

Item 7.       Financial Statements........................................................... 30

Item 8.       Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure......................................... 30


                                    PART III

Item 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act.............................. 30

Item 10.      Executive Compensation......................................................... 30

Item 11.      Security Ownership of Certain Beneficial Owners and Management................. 31

Item 12.      Certain Relationships and Related Transactions................................. 31

Item 13.      Exhibits, List and Reports on Form 8-K......................................... 31

</TABLE>




                                       2
<PAGE>

                                     PART I

Item 1.      Description of Business

General

         Cardinal  Financial  Corporation  (the  "Company")  is a  bank  holding
company that was  incorporated  under Virginia law in 1997. The Company's  three
banking subsidiaries that have begun operations (collectively,  the "Banks") are
the following:

         o    Cardinal  Bank,  N.A.,  which is based in  Fairfax,  Virginia  and
              commenced operations on June 8, 1998;
         o    Cardinal Bank - Manassas/Prince  William,  N.A., which is based in
              Manassas, Virginia and commenced operations on July 26, 1999;
         o    Cardinal Bank - Dulles,  N.A., which is based in Reston,  Virginia
              and commenced operations on August 2, 1999; and

The  Company  also  has  an  investment  advisory  subsidiary,  Cardinal  Wealth
Services, Inc., which commenced operations on February 1, 1999. A fourth banking
subsidiary, Cardinal Bank - Alexandria/Arlington,  N.A. (in organization), which
will be based in Alexandria, Virginia, is expected to commence operations in the
second quarter of 2000.

         Through  its  banking  subsidiaries,  the  Company  pursues a community
banking  strategy by offering a broad range of banking  products to individuals,
professionals  and  small  to  medium-sized  businesses,  with  an  emphasis  on
personalized service and local decision-making authority. Management's expansion
strategy to date has included attracting experienced local management teams, who
have  significant  decision-making  authority at the local bank level, and local
independent boards of directors  consisting of individuals with strong community
affiliations  and  extensive  business   backgrounds  and  business  development
potential in the identified  markets.  Each management team operates in a manner
that provides  responsive,  personalized  services.  The Company provides credit
policies and procedures as well as centralized  back office functions to provide
corporate, technological and marketing support to the Banks.

         The  Company's  principal  executive  offices are located at 10555 Main
Street,  Suite 500,  Fairfax,  Virginia 22030, and its telephone number is (703)
934-9200. The Company also maintains a web site at www.cardinalbank.com.

Business Development

         Background.  The  Company  was  formed  in late  1997,  principally  in
response to  perceived  opportunities  resulting  from the  takeovers of several
Virginia-based banks by regional bank holding companies.  Since January 1, 1997,
numerous community banks  headquartered in northern Virginia have been acquired.
Collectively,  these banks had deposits of approximately $1.0 billion. Moreover,
in 1997 and 1998,  four  statewide  banks  with  substantial  northern  Virginia
operations -- Crestar Bank,  Central Fidelity  National Bank,  Signet Bank, N.A.
and Jefferson  National Bank -- were acquired by large out-of-state bank holding
companies.

         In the  Company's  market  area,  the  bank  consolidations  have  been
accompanied  by the  dissolution  of local boards of directors and relocation or
termination  of  management  and  customer  service  professionals.  The Company
believes that local industry  consolidation has disrupted customer



                                       3
<PAGE>

relationships as the larger regional financial  institutions  increasingly focus
on larger corporate customers,  standardized loan and deposit products and other
services.  Generally,  these  products  and  services  are offered  through less
personalized  delivery  systems,  which has created the demand for high quality,
personalized services to small and medium-sized businesses and professionals. In
addition, consolidation in the local market has created opportunities to attract
experienced bankers. Bank acquisitions have dislocated  experienced and talented
management personnel due to the elimination of redundant functions and the drive
to  achieve  cost  savings.  Additionally,   uncertainty  over  possible  future
acquisitions  has helped enable the Company to attract  officers from banks that
have not been acquired.  As a result of these factors,  management believes that
the Company has taken  advantage of a rare  opportunity  to attract its targeted
banking  customers and  experienced  management  personnel  within the Company's
identified markets.

         Initial  Capitalization of the Company. The Company funded its start-up
and organizational  costs through a private offering (the "Private Offering") of
1,409,509  shares of its common stock, par value of $1.00 per share (the "Common
Stock"),  in the fourth quarter of 1997 and the first quarter of 1998. The total
proceeds to the Company in the Private  Offering  were $10.6  million,  of which
$8.0 million were used to  capitalize  Cardinal  Bank,  N.A.,  in June 1998.  In
addition,  the Company raised additional capital for general corporate purposes,
including the  capitalization  of Cardinal Wealth  Services,  Inc. and the three
additional  Banks,  and to support the growth of assets and  deposits  through a
public offering (the "Public  Offering") of 2,830,000  shares of Common Stock in
the third  quarter  of 1998.  The total  proceeds  to the  Company in the Public
Offering  were  $26.0  million,   after  deducting  underwriting  discounts  and
expenses.

         Experienced  Board and  Management.  The  Company's  Board of Directors
consists of 11  individuals,  seven of whom formerly were founding  directors of
First Patriot Bankshares Corporation ("First Patriot"),  the holding company for
Patriot  National Bank,  headquartered  in Reston,  Virginia.  First Patriot was
organized  in 1990 and was  acquired  in 1997 by an  out-of-state  bank  holding
company. John H. Rust, Jr., the Company's Chairman,  served as Chairman of First
Patriot.  Directors  of the  Company  who were former  First  Patriot  directors
include  the  chairs  of  First  Patriot's  loan,  audit,   strategic  planning,
compensation and marketing committees. Until he joined the Company in late 1997,
L. Burwell Gunn,  Jr., the  Company's  President  and Chief  Executive  Officer,
served as Executive Vice President and Commercial  Division head for the Greater
Washington  Region for  Crestar  Bank.  The last 13 years of Mr.  Gunn's 25 year
career with Crestar all involved service in the northern  Virginia area. Each of
the Company's eight other executive officers has extensive banking experience in
northern Virginia.  See Item 9., "Directors,  Executive Officers,  Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act," below.

         Decentralized  Operating  Strategy.  The  foundation  of the  Company's
strategy  is to operate a  multi-community  bank  organization  that  emphasizes
decision-making  at  the  local  bank  level  combined  with  strong  corporate,
technological,  marketing,  financial  and  managerial  support.  The  Company's
operating model is for each bank to operate with local  management and boards of
directors  consisting  of  individuals  with  extensive  knowledge  of the local
community and the authority to make credit decisions.  The Company believes that
this  operating  strategy  enables  the Banks to attract  customers  who wish to
conduct their business with a locally owned and managed  institution with strong
ties and an active commitment to the community.

         Centralized  Corporate  Support.  The Company  provides  oversight  and
various  services to the Banks,  including  technology,  finance and accounting,
human resources, credit administration, internal audit, compliance, loan review,
marketing,   retail  administration,   administrative   support,   policies  and
procedures,  product development and item processing. By providing such services
and  oversight,  the  Company  expects  not only to  achieve  monetary  savings,
compared  to the  costs if the  Banks  were  individually  responsible  for such
functions,  but also expects to achieve a uniformity of  operations  and



                                       4
<PAGE>

service  that  will be  associated  with the  "Cardinal"  name in the  Company's
northern  Virginia  markets.  The Banks' principal focus is to generate deposits
and loans.  This  corporate  support  system  will enable the Company to achieve
administrative  economies of scale while  capitalizing on the  responsiveness to
client needs of its decentralized  community bank network. With the support from
its  significant   investment  in  infrastructure,   particularly  a  management
information  system  that links the  Company to the Banks and  facilitates  data
processing, compliance, and reporting requirements, the Company believes that it
has the  operational  and  administrative  capacity to accommodate the Banks and
effectively manage the Company's growth for the foreseeable future.

Growth Strategy

         The  Company  intends to focus on the growth of the Banks.  Each Bank's
growth is expected to come from within such Bank's primary  service area through
loan and  deposit  business.  The Company  focuses on  acquiring  market  share,
particularly from large bank holding companies,  by emphasizing local management
and  decision-making  and through delivering  personalized  services to business
customers and  individuals.  Specifically,  the Company's  competitive  strategy
consists  of  approving  loan  requests  quickly  with a local  loan  committee,
operating with flexible, but prudent, lending policies, personalizing service by
establishing a long-term banking relationship with the customer, and maintaining
the  requisite  personnel  to ensure a high level of service.  While the Company
does not currently intend to actively search for expansion  opportunities beyond
its designated markets,  the Company may consider  opportunities that arise from
time to time, which could occur through acquisitions of existing institutions or
branches.

         The Company  believes that a management  team that is familiar with the
needs of its community can provide  higher quality  personalized  service to its
customers.  The local  management team of each Bank has a significant  amount of
decision-making authority and is accessible to its customers. As a result of the
consolidation  trend in the northern  Virginia  area,  the Company's  management
believes that there are significant  opportunities  to attract  experienced bank
managers  who would like to join an  institution  promoting a community  banking
concept.

         As it  anticipated  the opening of its  subsidiary  Banks,  the Company
established  through its first subsidiary,  Cardinal Bank, N.A., loan production
offices in Manassas,  the Reston area of Fairfax County, and Alexandria in order
to establish  customer  relationships,  brand  awareness  and a pipeline of loan
business.  The loan  production  offices were  staffed by personnel  who are now
employed by the Bank that opened in that  location.  Loans  originated  in these
loan production offices are transferred by Cardinal Bank, N.A. to the respective
Bank when it opens.

         Each Bank has a local board of directors that is comprised of prominent
members of the community,  including business leaders and  professionals.  These
directors  not only  operate  the Banks,  but also act as  ambassadors  of their
respective  Banks within the  community and are expected to promote the business
development  of each Bank.  The  directors  and  officers of the Company and the
directors  of  the  Banks  are  active  in  the  civic,  charitable  and  social
organizations  located in the local communities.  It is anticipated that members
of the local  management  teams will hold  leadership  positions  in a number of
community  organizations  and continue to volunteer  for other  positions in the
future.

         The Company  believes  that each Bank's  ability to compete  with other
financial  institutions  in its  respective  market area will be enhanced by its
posture  as a locally  managed  bank with a broad base of local  ownership.  The
directors  of each of the Banks,  most of whom reside or work in the market area
in which their respective Banks will operate, own a significant amount of Common
Stock.  The Company  believes  that local  ownership of Common Stock is a highly
effective means of attracting customers and fostering loyalty to the Banks.



                                       5
<PAGE>

Market Areas

         The Company's  targeted  market  includes  areas in and around  Fairfax
County, Virginia, including the independent cities of Fairfax and Alexandria, as
well  as  Arlington,   Manassas,   and  Prince  William  and  Loudoun  Counties.
Interstates  95,  495,  and 66 all pass  through  the  market  area and  provide
efficient access to other regions of the state. Prominent local newspapers,  the
Washington  Post and  Washington  Times,  and a number of radio  and  television
stations provide diverse media outlets. The broad exposure of television,  print
media and radio offer several opportunities to explore effective advertising and
public relations avenues for the Company.

         The Company has established banking operations in four locations in the
broad target market, each of which represents a separate market. These distinct,
but contiguous  markets are: (1) the city of Fairfax and central Fairfax County;
(2) the city of Manassas and Prince William  County;  (3) the city of Alexandria
and Arlington  County;  and (4) the Reston and Herndon areas (of western Fairfax
County) and Loudoun County.  As of 1997,  Fairfax  County,  the city of Fairfax,
Prince  William  County,  the city of Manassas,  Arlington  County,  the city of
Alexandria  and Loudoun County each ranked in the top ten for Virginia in median
household income,  and collectively the population of the area represented 24.4%
of the state's total  population.  Northern  Virginia  continues to provide more
than half of all the jobs created in the state and  outstrips  the state in most
other  measures  of growth.  In 1999,  the number of jobs in  northern  Virginia
increased by 41,110, as compared to a state-wide increase of 64,137.

The Banks

         The Banks engage in the commercial banking business in their respective
communities.  The  Company  believes  that there is a demand  for,  and that the
northern Virginia communities described above will support, new locally operated
community banks.  Although the Company could have obtained a banking presence in
the identified markets by opening branch offices of Cardinal Bank, management of
the  Company  believes  that  separate  banks  with  their own  local  boards of
directors and banking  practices,  tailored to the local market, is a preferable
approach. Each Bank provides personalized banking services, with emphasis on the
financial  needs  and  objectives  of  individuals,  professionals  and small to
medium-sized  businesses.  Additionally,  substantially  all credit and  related
decisions  are made by the  Banks'  local  management  and  board of  directors,
thereby facilitating prompt response.

         The  principal  business  of each Bank is to accept  deposits  from the
public and to make loans and other  investments.  The principal sources of funds
for each  Bank's  loans and  investments  are  demand,  time,  savings and other
deposits,  repayment of loans, and borrowings. In addition, a portion of the net
proceeds of the Public Offering, after having been contributed to the capital of
each Bank, were used by each Bank to fund loans.  The principal source of income
for each Bank is interest  collected on loans.  The  principal  expenses of each
Bank are interest  paid on savings and other  deposits,  employee  compensation,
office expenses,  and other overhead expenses.  The Banks do not currently offer
trust or fiduciary services.

         The Company is committed to providing high quality banking products and
services to the Banks'  customers and has made a  significant  investment in its
advanced automated operating  accounting system,  which supports virtually every
banking  function.  The system  provides the technology that fully automates the
branches, processes bank transactions,  mortgages, loans and electronic banking,
conducts  data base and direct  response  marketing,  provides  cash  management
solutions,  streamlined  reporting and  reconciliation  support as well as sales
support.



                                       6
<PAGE>

         With this investment in technology,  the Company offers  Internet-based
delivery  products for both  consumers and commercial  customers.  Customers can
open accounts, apply for loans, check balances, check account history,  transfer
funds,  download images of checks,  pay bills,  download active  statements into
QuickenTM or Microsoft MoneyTM, use interactive  calculators and transmit e-mail
with the Company over the Internet. The Internet provides an inexpensive way for
the  Company to expand  its  geographic  borders  and  branch  activities  while
providing the kind of services one would expect from the larger banks.

         The Company also offers  customers the  convenience  of digital  imaged
checks that make it easy to reconcile  statements,  organize  and store  account
information  while  streamlining  the back  office.  Every  item is  imaged  and
available for  inspection.  Among the many  features,  check imaging  allows for
instant statement  reconstruction  for research,  which can be faxed or e-mailed
directly to a customer's personal computer.

Customers

         Management believes that the recent bank consolidation  within northern
Virginia   provides   a   significant   opportunity   to  build  a   successful,
locally-oriented franchise. Management of the Company further believes that many
of  the  larger  financial  institutions  do  not  emphasize  a  high  level  of
personalized service to the small and medium-sized  commercial,  professional or
individual  retail  customers.  The  Company  focuses its  marketing  efforts on
attracting  small  and  medium-sized  businesses  and  professionals,   such  as
physicians, accountants and attorneys. Because the Company focuses on businesses
and professionals,  the majority of its loan portfolio is in the commercial area
with  an  emphasis  placed  on  originating  sound,  profitable  commercial  and
industrial  loans  secured  by  real  estate,  accounts  receivable,  inventory,
property, plant and equipment.

         Although the Company  expects to concentrate  its lending to commercial
businesses,  the  Company  attracts a  significant  amount of  professional  and
consumer  business.  Many of its customers  are the  principals of the small and
medium-sized businesses for whom the Banks provide banking services.  Management
emphasizes  "relationship  banking" in order that each customer can identify and
establish  a comfort  level  with bank  officers  who come to  understand  their
customers' business and financial needs in depth.  Management intends to develop
its retail  business with  individuals who appreciate a higher level of personal
service, contact with their lending officer and responsive  decision-making.  It
is  expected  that most of the  Company's  business  will be  further  developed
through its lending  officers and local  boards of directors  and by pursuing an
aggressive strategy of making calls on customers throughout the market area.

Banking Products and Services

         The Company  offers a broad array of banking  products  and services to
its customers. These products and services are set forth below.

         Loans.  Through each Bank,  the Company offers a wide range of short to
long-term  commercial and consumer loans,  which are described in further detail
below. The Company has established  pre-determined  percentage levels as targets
for the division of the Company's loan portfolio  across the various  categories
of   loans.    Commercial    loans,   real    estate-commercial    loans,   real
estate-construction loans, real estate-residential loans, home equity loans, and
consumer  loans  account  for  approximately  33%,  29%,  1%,  17%,  6% and 14%,
respectively,  of its loan  portfolio.  The Company  believes that this division
reflects  the current  credit  demands of its markets and  provides a sufficient
amount of  diversification to avoid  over-reliance on one category.  The Company
may adjust these levels from time to time as the credit demands of the community
change and as each Bank's business evolves.



                                       7
<PAGE>

         Credit  Policies.  With  respect to each  Bank's  loan  portfolio,  the
Company oversees credit  operations while still granting local authority to each
Bank.  The  Company's   chief  credit  officer  is  primarily   responsible  for
maintaining  a quality loan  portfolio and  developing a strong  credit  culture
throughout the entire organization.  The chief credit officer is responsible for
developing and updating the credit policies and procedures for the organization.
The Board of Directors of a Bank may make  exceptions  to these credit  policies
and  procedures as  appropriate,  but any such  exception must be documented and
made for sound business reasons.

         Credit  quality  is  controlled  by the chief  credit  officer  through
compliance  with the Company's  credit  policies and  procedures.  The Company's
risk-decision  process is actively managed in a disciplined  fashion to maintain
an  acceptable  risk profile  characterized  by soundness,  diversity,  quality,
prudence,  balance and  accountability.  The Company's  credit approval  process
consists  of  specific  authorities  granted  to  the  lending  officers.  Loans
exceeding a particular  lending  officer's  level of authority  are reviewed and
considered for approval by an officers' loan committee and, then, a Bank's Board
of  Directors.  In addition,  the chief credit  officer  works closely with each
lending officer at the Bank level to ensure that the business being solicited is
of the quality and structure that fits the Company's desired risk profile.

         Under  its  credit   policies,   the  Company   generally   limits  the
concentration  of credit risk by a particular Bank in any loan or group of loans
to 30% of that Bank's capital. Such concentration limit pertains to any group of
borrowers  related as to the source of repayment  or any one specific  industry.
Furthermore, each Bank has established limits on the total amount of that Bank's
outstanding  loans to one  borrower,  all of which are set below  legal  lending
limits.  Any loan that a Bank proposes to make that will exceed such established
limits requires the prior approval of the Company's Board of Directors.

         Commercial  Loans.  The Company  makes  commercial  loans to  qualified
businesses  in its  market  area.  The  Company's  commercial  lending  consists
primarily  of  commercial  and  industrial  loans for the  financing of accounts
receivable,  inventory,  property,  plant and equipment. The Company also offers
Small Business  Administration  ("SBA") guaranteed loans and asset-based lending
arrangements to certain of its customers.

         Commercial  business loans  generally have a higher degree of risk than
residential mortgage loans, but have commensurately  higher yields.  Residential
mortgage loans generally are made on the basis of the borrower's ability to make
repayment  from his  employment  and other income and are secured by real estate
whose value tends to be easily ascertainable.  In contrast,  commercial business
loans  typically  are  made  on the  basis  of the  borrower's  ability  to make
repayment  from cash flow from its business and are secured by business  assets,
such as commercial real estate, accounts receivable, equipment and inventory. As
a result,  the  availability  of funds for the repayment of commercial  business
loans may be  substantially  dependent  on the success of the  business  itself.
Further,  the collateral for commercial  business loans may depreciate over time
and cannot be appraised with as much precision as residential real estate.

         To manage these risks,  the  Company's  policy is to secure  commercial
loans  with  both the  assets of the  borrowing  business  and other  additional
collateral  and  guarantees  that may be  available.  In  addition,  the Company
actively monitors certain measures of the borrower, including advance rate, cash
flow, collateral value and other appropriate credit factors.

         Commercial  Mortgage  Loans.  The Company  also  originates  commercial
mortgage loans. These loans are primarily secured by various types of commercial
real  estate,  including  office,  retail,   warehouse,   industrial  and  other
non-residential  types of properties and are made to the owner and/or  occupiers
of such property.  These loans have maturities  generally ranging from one to 10
years.



                                       8
<PAGE>

         Commercial  mortgage  lending  entails  significant   additional  risk,
compared with residential mortgage lending.  Commercial mortgage loans typically
involve  larger loan balances  concentrated  with single  borrowers or groups of
related  borrowers.  Additionally,  the payment  experience  on loans secured by
income producing  properties is typically dependent on the successful  operation
of a business  or a real estate  project  and thus may be subject,  to a greater
extent,  to  adverse  conditions  in the real  estate  market or in the  economy
generally.  The  Company's  commercial  real estate loan  underwriting  criteria
require  an  examination  of  debt  service  coverage  ratios,   the  borrower's
creditworthiness  and prior  credit  history  and  reputation,  and the  Company
generally requires personal guarantees or endorsements of borrowers. The Company
also carefully considers the location of the security property.

         Loan-to-value  ratios for commercial  mortgage  loans  generally do not
exceed 75%.  Loan-to-value  ratios up to 85% are  permitted  if the borrower has
unusually strong general  liquidity,  net worth and cash flow, and loan-to-value
ratios up to 90% are permitted if an SBA guaranty has been obtained.

         Residential  Mortgage Loans. The Company's  residential  mortgage loans
consist of residential first and second mortgage loans, residential construction
loans and home equity lines of credit and term loans secured by first and second
mortgages on the  residences of borrowers for home  improvements,  education and
other personal expenditures.  The Company makes mortgage loans with a variety of
terms,  including  fixed  and  floating  or  variable  rates  and a  variety  of
maturities.  Maturities for  construction  loans  generally range from six to 12
months for residential property and from 12 to 18 months for non-residential and
multi-family properties.

         Residential  mortgage  loans  generally  are  made on the  basis of the
borrower's  ability to make  repayment  from his employment and other income and
are secured by real estate whose value tends to be easily  ascertainable.  These
loans are made  consistent with the Company's  appraisal  policy and real estate
lending policy, which detail maximum loan-to-value ratios and maturities.  Loans
for owner-occupied  property generally are made with a loan-to-value ratio of up
to 80% for first liens and 75% for junior liens. Higher loan-to-value ratios may
be allowed based on the borrower's unusually strong general liquidity, net worth
and cash flow. Loan-to-value ratios for home equity lines of credit generally do
not exceed 75%. If the loan-to-value ratio exceeds 90% for residential  mortgage
loans, the Company has determined that it is an unusually strong credit.

         Construction  lending entails  significant  additional risks,  compared
with residential mortgage lending.  Construction loans often involve larger loan
balances  concentrated  with single  borrowers  or groups of related  borrowers.
Construction  loans also involve  additional risks attributable to the fact that
loan funds are advanced upon the security of property under construction,  which
is of uncertain value prior to the completion of construction.  Thus, it is more
difficult  to evaluate  accurately  the total loan funds  required to complete a
project and related  loan-to-value ratios. To minimize the risks associated with
construction  lending,  the Company limits  loan-to-value ratios for residential
property to 85% and for non-residential  property and multi-family properties to
80%, in addition to its usual credit analysis of its borrowers.

         Management  expects that the loan-to-value  ratios described above will
be  sufficient  to  compensate  for  fluctuations  in the real estate  market to
minimize the risk of loss.

         Consumer  Loans.  The Company's  consumer  loans  consist  primarily of
installment  loans to individuals for personal,  family and household  purposes.
The specific types of consumer loans made by the Banks include home  improvement
loans, debt consolidation loans and general consumer lending.



                                       9
<PAGE>

         Consumer loans may entail greater risk than residential  mortgage loans
do, particularly in the case of consumer loans that are unsecured, such as lines
of credit, or secured by rapidly depreciable assets such as automobiles. In such
cases, any repossessed  collateral for a defaulted consumer loan may not provide
an adequate source of repayment of the  outstanding  loan balance as a result of
the greater likelihood of damage, loss or depreciation. The remaining deficiency
often does not  warrant  further  substantial  collection  efforts  against  the
borrower. In addition, consumer loan collections are dependent on the borrower's
continuing  financial  stability,  and  thus  are more  likely  to be  adversely
affected by job loss, divorce, illness or personal bankruptcy.  Furthermore, the
application  of various  federal  and state  laws,  including  federal and state
bankruptcy  and  insolvency  laws, may limit the amount that can be recovered on
such loans.  A loan may also give rise to claims and defenses by a consumer loan
borrower  against an assignee of such loan, such as the Company,  and a borrower
may be able to assert  against such  assignee  claims and  defenses  that it has
against the seller of the underlying collateral.

         The  Company's  policy for consumer  loans is to accept  moderate  risk
while minimizing  losses,  primarily through a careful analysis of the borrower.
In  evaluating  consumer  loans,  the Company  requires its lending  officers to
review the borrower's level and stability of income, past credit history and the
impact of these  factors on the  ability of the  borrower to repay the loan in a
timely  manner.  In addition,  the Company  requires  that its banking  officers
maintain an appropriate  margin  between the loan amount and  collateral  value.
Many of the Company's consumer loans are made to the principals of the small and
medium-sized businesses for whom the Banks provide banking services.

         In the fourth  quarter of 1999,  the Company  purchased a $7.8  million
installment loan portfolio. While the Company does not have any current plans to
purchase additional loan portfolios, the Company may consider opportunities that
arise  from time to time  with  respect  to  portfolios  that  meet  established
underwriting criteria.

         Credit Card and Other Loans.  The Company  also issues  credit cards to
certain of its customers. In determining to whom it will issue credit cards, the
Company  evaluates the  borrower's  level and  stability of income,  past credit
history and other factors.  Finally, the Company makes additional loans that are
not classified in one of the above categories. In making such loans, the Company
attempts  to  ensure  that the  borrower  meets  the  Company's  credit  quality
standards.

         Deposits.  Management  offers  a broad  range of  interest-bearing  and
noninterest-bearing  deposit accounts,  including commercial and retail checking
accounts,  money  market  accounts,   individual  retirement  accounts,  regular
interest-bearing  savings  accounts and  certificates of deposit with a range of
maturity  date  options.   The  primary   sources  of  deposits  are  small  and
medium-sized  businesses and individuals  within an identified  market.  In each
identified  market,  senior  management  has the  authority  to set rates within
specified  parameters  in order  to  remain  competitive  with  other  financial
institutions.  All  deposits  are  insured  by  the  Federal  Deposit  Insurance
Corporation  ("FDIC") up to the maximum  amount  permitted  by law.  The Company
implements  a service  charge  fee  schedule,  which is  competitive  with other
financial  institutions  in a Bank's  market  area,  covering  such  matters  as
maintenance  fees on checking  accounts,  per item  processing  fees on checking
accounts, returned check charges and other similar fees.

         Specialized  Consumer Services.  Management offers specialized products
and  services  to its  customers,  such as  travelers  checks  and safe  deposit
services.

         Courier  Services.  The Company offers courier services to its business
customers.  Courier  services  permit the Company to provide the convenience and
personalized  service  that its  customers  require by  scheduling  pick-ups  of
deposits.



                                       10
<PAGE>

         Telephone and Internet  Banking.  The Company  believes that there is a
strong demand within its market for telephone banking and internet banking. Both
services allow both commercial and retail  customers to access detailed  account
information and execute a wide variety of the banking  transactions  referred to
above.  Management believes that these services are particularly  attractive for
its customers,  as it enables them to conduct their banking business and monitor
their bank  accounts  from remote  locations.  Telephone  and  internet  banking
assists the Banks in attracting  and  retaining  customers  and  encourages  its
customers to maintain their total banking relationships with the Company.

         Automatic  Teller  Machines  ("ATMs").  The  Company has an ATM at each
office  of each  Bank.  Management  makes  other  financial  institutions'  ATMs
available to its  customers  and offers  customers a certain  number of free ATM
transactions per month.

         Other Products and Services.  The Company evaluates other services such
as  trust  services,   insurance,   mortgage   services  and  other  permissible
activities.  Management  expects to  introduce  these  services  as they  become
economically viable.

Brokerage and Investment Advisory Services

         Through Cardinal Wealth Services,  Inc., the Company provides financial
and estate  planning  services.  Cardinal  Wealth  Services,  Inc.  has formed a
strategic alliance with LM Financial  Partners,  Inc., a wholly owned subsidiary
of Legg Mason Inc. Through this alliance,  the Company's  financial advisors can
offer its  customers an  extensive  range of  financial  products and  services,
including estate planning,  qualified retirement plans, mutual funds, annuities,
life insurance, fixed income securities and equity research and recommendations.

Competition

         Banks generally compete with other financial  institutions  through the
selection of banking products and services offered, the pricing of services, the
level of service provided, the convenience and availability of services, and the
degree of  expertise  and the  personal  manner in which  services  are offered.
Virginia  law permits  statewide  branching by banks.  Consequently,  commercial
banking in Virginia is highly  competitive.  Many large  banking  organizations,
several of which are controlled by  out-of-state  holding  companies,  currently
operate in the Company's targeted market areas. In addition, competition between
commercial  banks and  thrift  institutions  (savings  institutions  and  credit
unions)  has  intensified  significantly  by the  elimination  of many  previous
distinctions  between  the  various  types  of  financial  institutions  and the
expanded  powers  and  increased  activity  of thrift  institutions  in areas of
banking that  previously  had been the sole domain of commercial  banks.  Recent
legislation, together with other regulatory changes by the primary regulators of
the various financial institutions, has resulted in the almost total elimination
of practical  distinctions  between a commercial bank and a thrift  institution.
Consequently,  competition among financial  institutions of all types is largely
unlimited  with respect to legal ability and authority to provide most financial
services.  Furthermore,  as a consequence of legislation recently enacted by the
United States Congress,  out-of-state banks not previously allowed to operate in
Virginia  are  allowed to  commence  operations  and  compete  in the  Company's
targeted market areas.

         Each of the Banks faces competition from other banks, as well as thrift
institutions,   consumer  finance  companies,   insurance  companies  and  other
institutions in the Banks'  respective  market areas.  Some of these competitors
are not subject to the same degree of regulation  and  restriction  imposed upon
the Banks.  Many of these competitors also have broader  geographic  markets and
substantially  greater  resources  and  lending  limits than the Banks and offer
certain  services  such as trust  banking  that the  Banks are not  expected  to
provide in the near term. In addition,  many of these  competitors have numerous



                                       11
<PAGE>

branch offices  located  throughout the extended  market areas of the Banks that
the  Company  believes  may  provide  these  competitors  with an  advantage  in
geographic  convenience that the Banks do not have at present.  Such competitors
may also be in a  position  to make  more  effective  use of media  advertising,
support services, and electronic technology than can the Banks. Employees

         At December 31, 1999, the Company had 82 full time  employees,  none of
which is represented by a union or covered by a collective bargaining agreement.
Management considers employee relations to be good.

Government Supervision and Regulation

         The  following  discussion  is a  summary  of the  principal  laws  and
regulations that comprise the regulatory framework applicable to the Company and
the  Banks.  Other  laws and  regulations  that  govern  various  aspects of the
operations  of banks  and  bank  holding  companies  are not  described  herein,
although  violations of such laws and  regulations  could result in  supervisory
enforcement  action  against the Company or a Bank.  The following  descriptions
summarize  the material  terms of the  principal  laws and  regulations  and are
qualified in their entirety by reference to applicable laws and regulations.

         General.  As  a  bank  holding  company,  the  Company  is  subject  to
regulation  under the Bank Holding Company Act of 1956, as amended (the "BHCA"),
and the examination and reporting  requirements of the Board of Governors of the
Federal Reserve System (the "Federal  Reserve").  Under the BHCA, a bank holding
company may not directly or indirectly acquire ownership or control of more than
5% of the voting  shares or  substantially  all of the assets of any  additional
bank or merge or consolidate with another bank holding company without the prior
approval of the Federal  Reserve.  The BHCA also generally limits the activities
of a bank holding company to that of banking,  managing or controlling banks, or
any other activity which is determined to be so closely related to banking or to
managing or controlling banks that an exception is allowed for those activities.

         As national banks, the Banks are subject to regulation, supervision and
examination by the Office of the Comptroller of the Currency ("OCC").  The Banks
also are subject to regulation, supervision and examination by the FDIC. Federal
law  also  governs  the  activities  in  which  the  Banks  may  engage  and the
investments that they may make and limits the aggregate amount of loans that may
be granted to one  borrower  to 15% of a bank's  capital  and  surplus.  Various
consumer and compliance laws and regulations also affect the Banks' operations.

         The  activities   permissible  to  bank  holding  companies  and  their
affiliates were substantially expanded by the Gramm-Leach-Bliley  Act, which the
President   signed  on  November  12,  1999.   Gramm-Leach-Bliley   repeals  the
anti-affiliation  provisions  of the  Glass-Steagall  Act to permit  the  common
ownership of commercial banks,  investment banks and insurance companies.  Under
Gramm-Leach-Bliley,  a  bank  holding  company  can  elect  to be  treated  as a
financial  holding  company.  A  financial  holding  company  may  engage in any
activity and acquire and retain any company that the Federal Reserve  determines
to be financial in nature.  A financial  holding  company also may engage in any
activity  that is  complementary  to a  financial  activity  and does not pose a
substantial  risk to the safety and soundness of depository  institutions or the
financial system generally.  The Federal Reserve must consult with the Secretary
of the  Treasury in  determining  whether an activity is  financial in nature or
incidental to a financial activity.

         The earnings of the Banks,  and  therefore the earnings of the Company,
are  affected  by  general  economic  conditions,  management  policies  and the
legislative  and  governmental   actions  of  various  regulatory   authorities,
including those referred to above.



                                       12
<PAGE>

         The OCC  conducts  regular  examinations  of the Banks and reviews such
matters as the adequacy of loan loss reserves, quality of loans and investments,
management  practices,   compliance  with  laws,  and  other  aspects  of  their
operations.  In addition to these regular  examinations,  the Banks must furnish
the OCC with periodic  reports  containing a full and accurate  statement of its
affairs. Supervision,  regulation and examination of banks by these agencies are
intended primarily for the protection of depositors rather than shareholders.

         Insurance of Accounts,  Assessments  and  Regulation  by the FDIC.  The
deposits  of the Banks are  insured by the FDIC up to the limits set forth under
applicable  law. The deposits of the Banks are subject to the deposit  insurance
assessments of the Bank Insurance Fund ("BIF") of the FDIC.

         The FDIC has  implemented  a risk-based  deposit  insurance  assessment
system  under  which the  assessment  rate for an insured  institution  may vary
according to  regulatory  capital  levels of the  institution  and other factors
(including supervisory evaluations).  Depository institutions insured by the BIF
that are "well  capitalized",  are  required to pay only the  statutory  minimum
assessment of $2,000 annually for deposit  insurance,  while all other banks are
required to pay premiums ranging from .03% to .30% of domestic  deposits.  These
rate schedules are subject to future  adjustments by the FDIC. In addition,  the
FDIC has authority to impose  special  assessments  from time to time.  However,
because the legislation  enacted in 1996 requires that both Savings  Association
Insurance  Fund insured and  BIF-insured  deposits pay a pro rata portion of the
interest due on the obligations issued by the Financing Corporation, the FDIC is
assessing  BIF-insured  deposits  an  additional  1.30 basis  points per $100 of
deposits to cover those obligations.

         The FDIC is authorized  to prohibit any  BIF-insured  institution  from
engaging in any activity that the FDIC determines by regulation or order to pose
a serious threat to the respective  insurance fund.  Also, the FDIC may initiate
enforcement actions against banks, after first giving the institution's  primary
regulatory  authority an opportunity to take such action. The FDIC may terminate
the deposit  insurance of any depository  institution if it determines,  after a
hearing,  that the  institution  has engaged or is engaging in unsafe or unsound
practices,  is in an unsafe or unsound condition to continue operations,  or has
violated any  applicable  law,  regulation,  order or any  condition  imposed in
writing by the FDIC. It also may suspend deposit  insurance  temporarily  during
the  hearing  process  for  the  permanent  termination  of  insurance,  if  the
institution has no tangible  capital.  If deposit  insurance is terminated,  the
deposits  at the  institution  at  the  time  of  termination,  less  subsequent
withdrawals,  shall  continue  to be insured for a period from six months to two
years,  as  determined  by the FDIC.  Management  is not  aware of any  existing
circumstances that could result in termination of any Bank's deposit insurance.

         Capital.  The OCC and the Federal  Reserve have issued  risk-based  and
leverage  capital  guidelines  applicable  to  banking  organizations  that they
supervise. Under the risk-based capital requirements,  the Company and the Banks
are each  generally  required  to maintain a minimum  ratio of total  capital to
risk-weighted  assets (including certain  off-balance sheet activities,  such as
standby  letters of  credit) of 8%. At least half of the total  capital is to be
composed of common equity,  retained earnings and qualifying perpetual preferred
stock, less certain intangibles ("Tier 1 capital"). The remainder may consist of
certain   subordinated  debt,  certain  hybrid  capital  instruments  and  other
qualifying  preferred  stock  and a limited  amount  of the loan loss  allowance
("Tier 2 capital" and, together with Tier 1 capital, "total capital").

         In  addition,  each of the  federal  banking  regulatory  agencies  has
established   minimum   leverage   capital   ratio   requirements   for  banking
organizations. These requirements provide for a minimum leverage ratio of Tier 1
capital  to  adjusted  average  quarterly  assets  equal to 3% for bank  holding
companies  that are  rated a  composite  "1" and 4% for all other  bank  holding
companies.  Bank holding  companies are



                                       13
<PAGE>

expected  to  maintain   higher  than  minimum   capital  ratios  if  they  have
supervisory,  financial,  operational or managerial  weaknesses,  or if they are
anticipating or experiencing significant growth.

         The  risk-based  capital  standards of the OCC and the Federal  Reserve
explicitly  identify  concentrations  of credit risk and the risk  arising  from
non-traditional  activities, as well as an institution's ability to manage these
risks, as important  factors to be taken into account by the agency in assessing
an institution's  overall capital adequacy.  The capital guidelines also provide
that an institution's exposure to a decline in the economic value of its capital
due to  changes in  interest  rates be  considered  by the agency as a factor in
evaluating a bank's capital adequacy.  The OCC and the Federal Reserve also have
recently issued  additional  capital  guidelines for bank holding companies that
engage in certain trading activities.

         Other  Safety  and  Soundness  Regulations.   There  are  a  number  of
obligations  and  restrictions  imposed  on bank  holding  companies  and  their
depository  institution  subsidiaries by federal law and regulatory  policy that
are  designed  to reduce  potential  loss  exposure  to the  depositors  of such
depository  institutions  and to the FDIC insurance  funds in the event that the
depository  institution  becomes  in danger of  default  or is in  default.  For
example,  under a policy of the Federal  Reserve  with  respect to bank  holding
company  operations,  a bank holding company is required to serve as a source of
financial  strength  to its  subsidiary  depository  institutions  and to commit
resources to support such institutions in circumstances where it might not do so
otherwise. In addition, the "cross-guarantee"  provisions of federal law require
insured  depository  institutions under common control to reimburse the FDIC for
any loss  suffered  or  reasonably  anticipated  by the BIF as a  result  of the
default of a  commonly  controlled  insured  depository  institution  or for any
assistance  provided  by the FDIC to a commonly  controlled  insured  depository
institution  in  danger  of  default.  The  FDIC  may  decline  to  enforce  the
cross-guarantee  provision  if it  determines  that  a  waiver  is in  the  best
interests of the BIF. The FDIC's claim for  reimbursement  is superior to claims
of shareholders of the insured depository institution or its holding company but
is  subordinate  to claims of  depositors,  secured  creditors  and  holders  of
subordinated  debt (other than  affiliates) of the commonly  controlled  insured
depository institution.

         The federal  banking  agencies  also have broad  powers  under  current
federal  law to take  prompt  corrective  action to resolve  problems of insured
depository  institutions.  The Federal  Deposit  Insurance Act requires that the
federal banking  agencies  establish five capital levels for insured  depository
institutions - "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly  undercapitalized,"  and "critically  undercapitalized."  It also
requires or permits such agencies to take certain  supervisory actions should an
insured   institution's   capital  level  fall.  For  example,   an  "adequately
capitalized"  institution is restricted  from accepting  brokered  deposits.  An
"undercapitalized" or "significantly  undercapitalized" institution must develop
a  capital  restoration  plan  and is  subject  to a  number  of  mandatory  and
discretionary  supervisory actions. These powers and authorities are in addition
to  the  traditional  powers  of the  Federal  banking  agencies  to  deal  with
undercapitalized institutions.

         Federal regulatory  authorities also have broad enforcement powers over
the Company and the Banks,  including  the power to impose fines and other civil
and  criminal  penalties,  and to appoint a receiver  in order to  conserve  the
assets  of any  such  institution  for  the  benefit  of  depositors  and  other
creditors.

         Payment of  Dividends.  The  Company  is a legal  entity  separate  and
distinct  from the Banks.  Virtually  all of the  revenues of the  Company  will
result from dividends paid to the Company by the Banks. Under OCC regulations, a
national  bank may not  declare a dividend in excess of its  undivided  profits,
which means that each Bank must recover any start-up  losses before it may pay a
dividend  to the  Company.  Additionally,  a  national  bank may not  declare  a
dividend if the total amount of all dividends,  including the proposed dividend,
declared by the  national  bank in any  calendar  year  exceeds the total of the
national  bank's  retained  net income of that year to date,  combined  with its
retained net income of the



                                       14
<PAGE>

two preceding years, unless the dividend is approved by the OCC. A national bank
may not declare or pay any dividend if, after making the dividend,  the national
bank would be  "undercapitalized,"  as defined in  regulations  of the OCC.  The
Company is subject to state laws that limit the amount of  dividends it can pay.
In  addition,  the  Company is subject to various  general  regulatory  policies
relating  to the  payment  of  dividends,  including  requirements  to  maintain
adequate  capital above regulatory  minimums.  The Federal Reserve has indicated
that  banking  organizations  should  generally  pay  dividends  only if (1) the
organization's  net income available to common  shareholders  over the past year
has been sufficient to fund fully the dividends and (2) the prospective  rate of
earnings  retention appears  consistent with the  organization's  capital needs,
asset  quality and overall  financial  condition.  These  laws,  regulations  or
policies will  materially  impact the ability of the Banks and,  therefore,  the
Company to pay dividends in the early years of operations.

         Community Reinvestment.  The requirements of the Community Reinvestment
Act  ("CRA")  are  applicable  to  the  Banks.  The  CRA  imposes  on  financial
institutions an affirmative  and ongoing  obligation to meet the credit needs of
their  local  communities,  including  low and  moderate  income  neighborhoods,
consistent with the safe and sound operation of those institutions.  A financial
institution's  efforts in meeting community credit needs currently are evaluated
as part of the examination process pursuant to twelve assessment factors.  These
factors also are considered in evaluating mergers, acquisitions and applications
to open a branch or facility.

         Interstate  Banking  and  Branching.  Current  federal  law  authorizes
interstate  acquisitions of banks and bank holding companies without  geographic
limitation. Effective June 1, 1997, a bank headquartered in one state is able to
merge  with a bank  headquartered  in another  state,  as long as neither of the
states has opted out of such  interstate  merger  authority  prior to such date.
States are  authorized  to enact laws  permitting  such  interstate  bank merger
transactions  prior to June 1, 1997, as well as  authorizing a bank to establish
"de novo" interstate branches.  Virginia enacted early "opt in" laws, permitting
interstate bank merger  transactions.  Once a bank has established branches in a
state  through an  interstate  merger  transaction,  the bank may  establish and
acquire  additional  branches  at  any  location  in  the  state  where  a  bank
headquartered  in that state could have  established or acquired  branches under
applicable federal or state law.

         Economic  and  Monetary  Polices.  The  operations  of the  Company are
affected not only by general economic  conditions,  but also by the economic and
monetary policies of various regulatory authorities.  In particular, the Federal
Reserve regulates money, credit and interest rates in order to influence general
economic  conditions.  These  policies have a  significant  influence on overall
growth and  distribution of loans,  investments and deposits and affect interest
rates charged on loans or paid for time and savings  deposits.  Federal  Reserve
monetary  policies  have had a significant  effect on the  operating  results of
commercial  banks in the  past  and are  expected  to  continue  to do so in the
future.


Item 2.      Description of Property

         The Company's headquarters are located at 10555 Main Street, Suite 500,
Fairfax,  Virginia.  The Company  occupies  10,000 square feet under a five year
lease that began on January 15, 1999.

         Cardinal Bank,  N.A. is  headquartered  at 10641 Lee Highway,  Fairfax,
Virginia. The Bank occupies a three-story brick structure,  which contains 9,000
square feet, under a 10 year lease that began on January 1, 1998. The Bank has a
branch that has five teller stations, one drive-through window and a walk-up ATM
and night depository.  Cardinal Bank, N.A. also operates an ATM at the Company's
headquarters.



                                       15
<PAGE>

         Cardinal Wealth Services, Inc. is headquartered at 10555 Main St, Suite
100, Fairfax,  Virginia.  The subsidiary occupies 3,597 square feet under a five
year lease. The subsidiary also rents offices at each Bank location.

         Cardinal Bank - Manassas/Prince  William, N.A. is headquartered at 9626
Center  Street,  Manassas,  Virginia.  The Bank  occupies a two-story  building,
containing  approximately  6,000 square feet, that is owned by the Company.  The
Bank includes a branch that has five teller  stations,  a night depository and a
two-lane drive through window with drive up ATM.

         Cardinal  Bank - Dulles,  N.A. is  headquartered  at 11150 Sunset Hills
Road,  Reston,  Virginia.  The Bank occupies  6,625 square feet of a three-story
structure,  containing  50,012 square feet,  under a 10 year lease that began on
January 1, 1999.  The Bank  includes a branch  that has a walk-up  ATM and night
depository  and five teller  stations,  with future plans for a remote  one-lane
drive through window with drive up ATM.

         Cardinal Bank -  Alexandria/Arlington,  N.A. (in organization)  will be
headquartered at 1737 King Street,  Alexandria,  Virginia. The Company currently
uses the office space as a loan  production  office.  The office  occupies 5,256
square  feet under a 15 year  lease  that  began on January 1, 1999.  The bank's
branch will have five teller stations and a walk-up ATM and night depository.


Item 3.      Legal Proceedings

         In the ordinary course of operations,  the Company and the Banks expect
to be parties to various legal proceedings.  At present, there are no pending or
threatened  proceedings  against  the  Company  or any of the  Banks  which,  if
determined adversely,  would have a material effect on the business,  results of
operations, or financial position of the Company or any of the Banks.


Item 4.      Submission of Matters to a Vote of Security Holders

         No matters were  submitted to a vote of security  holders,  through the
solicitation  of proxies or otherwise,  during the transition  period covered by
this report.






                                       16
<PAGE>

                                     PART II

Item 5.      Market for Common Equity and Related Stockholder Matters

         The Common Stock of the Company is traded on the Nasdaq SmallCap Market
under the symbol of "CFNL".  The following table sets forth the high and low bid
information for the shares of Common Stock on the Nasdaq SmallCap Market for the
quarters indicated.

                                                              Bid Information
                                                              ---------------
                                                            High ($)     Low ($)
Fiscal Year Ended December 31, 1998 (1)                     --------     -------
---------------------------------------
         3rd quarter...................................      10.63        7.25
         4th quarter...................................       8.13        6.13

Fiscal Year Ended December 31, 1999
-----------------------------------
         1st quarter...................................       7.00        6.25
         2nd quarter...................................      10.94        6.75
         3rd quarter...................................       7.88        6.25
         4th quarter...................................       7.38        5.50
________________

(1)      The Company's  Common Stock began trading on the Nasdaq SmallCap Market
         on July 17, 1998,  at an initial  public  offering  price of $10.00 per
         share. Prior to that date, there was no established  trading market for
         the Common Stock.

         As of March 29, 2000,  there were  approximately  255 record holders of
Common Stock.

         The Company has never  declared any cash dividends on the Common Stock,
and any future  payment of dividends is solely in the discretion of the Board of
Directors  and is dependent  upon the earnings  and  financial  condition of the
Company and such other  factors as the Board of Directors  from time to time may
deem relevant.


Item 6.      Management's  Discussion  and Analysis of Financial  Condition  and
             Results of Operation

Forward Looking Statements

         This report contains certain forward-looking  statements,  which can be
identified  by the use of  forward-looking  terminology  such as "may,"  "will,"
"expect,"  "anticipate,"  "estimate," or "continue," or the negative  thereof or
other  comparable  terminology.   The  Company  cautions  readers  that  certain
important factors,  including among others, problems with technology utilized by
the Company as described  below, in some cases have affected,  and in the future
could affect,  the Company's actual results and could cause the Company's actual
results in 1999 and beyond to differ  materially  from  those  expressed  in any
forward-looking  statements  in this  report.  Reference  is  made to the  "Risk
Factors"  section  of the  Prospectus  dated  July 17,  1998 that is part of the
Company's  Registration  Statement on Form SB-2 (Registration No. 333-52279) and
that was filed with the  Securities  and  Exchange  Commission  on July 20, 1998
pursuant to Rule 424(b)  under the  Securities  Act of 1933,  as amended,  for a
description of certain of these important factors.



                                       17
<PAGE>

General

         The Company is the holding company for three bank  subsidiaries and one
non-bank  subsidiary.  The Company began operations November 24, 1997 and opened
its first bank subsidiary,  Cardinal Bank, N.A., on June 8, 1998.  Following its
private  offering in December 1997 that generated $10.6 million in capital,  the
Company  raised an  additional  $26.0 million in an initial  public  offering of
2,830,000 shares in July 1998. In February 1999, Cardinal Wealth Services,  Inc.
began  operations  as the Company's  nonbank  investment  subsidiary.  Through a
strategic alliance with LM Financial Partners,  Inc., a wholly-owned  subsidiary
of Legg Mason, Inc., Cardinal Wealth Services, Inc. can offer an extensive range
of financial  products and services.  In July 1999,  the  Company's  second bank
subsidiary,  Cardinal Bank  -Manassas/Prince  William,  N.A.  began  operations.
Cardinal Bank - Dulles, N.A., the third banking subsidiary,  began operations in
August 1999. A fourth bank subsidiary is scheduled to open in the second quarter
of 2000 located in Alexandria, Virginia.

         The  following  presents  management's  discussion  and analysis of the
consolidated financial condition and results of operation of the Company for the
years  ended  December  31,  1999 and  1998.  The  discussion  should be read in
conjunction with the accompanying consolidated financial statements.

1999 Compared to 1998

         Earnings Summary

         The net loss for the year ended  December  31, 1999 was  $4,038,719  or
$0.95 per  diluted  share,  compared to a net loss of  $1,696,345,  or $0.64 per
diluted  share,  for the year ended  December 31, 1998.  The increase in the net
loss in 1999  compared  to 1998  was  primarily  due to  increased  non-interest
expenses   associated  with  the  opening  of  three   subsidiaries.   Two  bank
subsidiaries,  Cardinal Bank - Manassas/Prince  William, N.A., and Cardinal Bank
-Dulles,  N.A., opened in the third quarter of 1999 and one non-bank subsidiary,
Cardinal Wealth Services, Inc., opened in the first quarter of 1999.

         These  operating  results  represent a return on average  shareholders'
equity of -12.26% for the year ended  December  31, 1999  compared to -7.45% for
the year ended  December 31, 1998.  Return on average  assets for the year ended
December 31, 1999 was -5.61% compared to -5.37% in 1998.

         Financial Condition Summary

         Total assets were $97.0  million at December  31, 1999,  an increase of
$39.7 million, or 69.4%, compared with December 31, 1998. Loans, net of unearned
income,  increased $51.8 million in 1999 to $68.2 million.  This increase can be
attributed to strong  results from Cardinal  Bank,  N.A. as well as the activity
associated with two new banking subsidiaries that opened in the third quarter of
1999. Cash and cash equivalents declined $6.3 million and investment  securities
available-for-sale  declined  $8.7  million  in 1999  compared  to  1998.  These
declines can be attributed to funding increased loan growth.

         Total  deposits  grew $38.0 million to $59.9 million in 1999 from $21.9
million at year-end 1998 due again to having  multiple banks  operating for part
of 1999  versus  only one  operating  in 1998.  Non-  interest-bearing  deposits
increased $7.3 million or 144.5% and  interest-bearing  deposits increased $30.7
million or 182.6%.  The  Company's  short-term  borrowings  were $6.0 million at
December 31, 1999. There were no borrowings at December 31, 1998. The short-term
borrowings  are FHLB  advances  and were  utilized  for loan  growth  and  other
operating purposes.



                                       18
<PAGE>

         Shareholders'  equity decreased $4.0 million or 11.5% from December 31,
1998 to December 31, 1999. Operating losses for the year ended December 31, 1999
caused the decline. At December 31, 1999 the Company's regulatory capital levels
exceeded those established for well-capitalized institutions.

         Net Interest Income and Net Interest Margin

         The fundamental source of the Company's  revenue,  net interest income,
is defined as the  difference  between  income on earning assets and the cost of
funds supporting those assets. The significant  categories of earning assets are
loans and  investment  securities,  while  deposits and FHLB advances  represent
interest  bearing  liabilities.  The level of net  interest  income is  impacted
primarily by variations  in the volume and mix of these assets and  liabilities,
as well as changes  in  interest  rates when  compared  to  previous  periods of
operation.  Net interest  income for 1999 was $3.02 million,  148.7% higher than
the prior year.  The growth in net  interest  income was due to the  increase in
average  interest-earning  assets of 144.9%  which was the  result of three bank
subsidiaries  operating in 1999 compared to only one operating in 1998.  The net
interest  margin  increased  to 4.75%  in 1999  compared  to 4.66% in 1998.  The
average  rate on  earning  assets  increased  79 basis  points  to 6.57% and the
average rate on interest-bearing liabilities decreased 42 basis points to 4.67%.
Table 1 reflects the  components  of interest  income and  interest  expense and
their applicable yields and costs.

         Provision and Allowance for Loan Losses

         Management's  policy is to maintain the  allowance for loan losses at a
level  sufficient to absorb the estimated losses inherent in the loan portfolio.
Both the amount of the  provision and the level of the allowance for loan losses
are impacted by many factors, including general economic conditions,  actual and
expected  credit  losses,  loan  performance  measures,  historical  trends  and
specific  conditions of the individual  borrower.  Due to the  relatively  short
credit history of its subsidiaries Cardinal Bank, N.A. (18 months of operation),
Cardinal Bank - Manassas/Prince  William, N.A. (five months) and Cardinal Bank -
Dulles,  N.A. (five months) management is currently providing for loan losses at
a rate of 1.25% which approximates its peer group average.

         The ratio of the  allowance  for losses to gross loans at December  31,
1999 was 1.07%  compared to 1.30% at December  31,  1998.  While the  calculated
reserve ratio  reflects a 23 basis point decline there are two factors that need
to be taken into account in order to better  understand  the Company's  level of
loan loss coverage.  In the fourth quarter of 1999, the Company purchased a $7.8
million  installment  loan portfolio.  This transaction was structured in such a
way that the seller  absorbs  losses up to 115 basis  points of the  outstanding
balances. Consequently, the Company does not expect losses on this portfolio and
did not add to its allowance for loan losses when this transaction was recorded.
The second factor to be considered is the Company's  Business  Manager  product.
Under this product,  advances to customers are fully  collateralized by customer
receivables and a restricted deposit account equal to at least 10% of the amount
borrowed.

         As a result,  the Company does not expect losses on those  transactions
and therefore  has not added to its allowance for loan losses.  Table 2 reflects
the  components of the allowance  for loan losses and  calculates  the loan loss
ratio two ways:  first,  with total gross  loans,  and second,  with total gross
loans less purchased loans and the Business Manager receivables.

         Non-Interest Income

         Non-interest  income is an important factor in the Company's  operating
results.   Management   continues  to  evaluate  and  identify  new  sources  of
non-interest  income  as well as  enhance  existing  ones.  Non-interest  income
increased to $1,320,485 in 1999 from $34,037 in 1998. The  significant  increase
in



                                       19
<PAGE>

non-interest  income for 1999 was due to  $1,017,924  of  investment  fee income
generated by Cardinal Wealth  Services,  Inc. which began operations on February
1, 1999.  Other  non-interest  income includes loan and deposit service charges,
which  increased to $267,823 in 1999 from $19,533 in 1998.  Table 3 reflects the
components of non-interest income for 1999 and 1998.

         Non-Interest Expense

         Non-interest  expense was  $7,870,069 in 1999 compared to $2,734,269 in
1998.  The  significant  increase in expense can be attributed to the opening of
two bank  subsidiaries and one non-bank  subsidiary during 1999. Total personnel
expense  increased  to  $4,277,231  from  $1,401,117  in 1998 as a result of the
staffing  of  the  above  mentioned  subsidiaries.  Increases  in  depreciation,
occupancy  and  other  operating  expenses  are also  associated  with  start-up
subsidiary  operations.  Footnote 17 of the  Consolidated  Financial  Statements
provides additional details of non-interest expense.

         Income Taxes

         The  Company  has  not  incurred   income  tax  liability  due  to  the
recognition  of net losses in 1999,  1998 and 1997.  The  ability to utilize net
operating  loss  carryforwards  will be  dependent on the  Company's  ability to
generate future earnings.  Footnote 8 of the Consolidated  Financial  Statements
provides  additional  information  with respect to the deferred tax accounts and
the net operating loss carryforward.

         Liquidity

         The  objective  of  liquidity  management  is to ensure the  continuous
availability  of  funds  to  meet  the  demands  of  depositors,  investors  and
borrowers. Stable core deposits and a strong capital position are the components
of a solid foundation for the Company's  liquidity  position.  In addition,  the
availability  of the  investment  portfolio  and access to regional and national
wholesale funding sources including fed funds purchased, negotiable certificates
of deposits,  securities sold under  agreements to repurchase,  and Federal Home
Loan Bank advances enhances the Company's liquidity. Cash flows from operations,
such as loan payments and pay-offs are also a  significant  source of liquidity.
The Company has a contingency  plan that  provides for  continued  monitoring of
liquidity  needs and  available  sources of liquidity.  Management  believes the
Company has the ability to meet its liquidity needs.

         Capital Resources

         Capital  adequacy is an important  measure of financial  stability  and
performance.  Management's  objectives are to maintain a level of capitalization
that is sufficient  to sustain  asset growth and promote  depositor and investor
confidence.

         Regulatory  agencies measure capital adequacy  utilizing a formula that
takes into account the individual risk profiles of financial  institutions.  The
guidelines  define  capital as either  Tier 1  (primarily  common  shareholders'
equity,  defined to include  certain  debt  obligations)  and Tier 2 (to include
certain  other debt  obligations  and a portion of the allowance for loan losses
and 45% of unrealized gains in equity securities).

         At December 31, 1999,  shareholders'  equity was $30.7 million compared
to $34.7 million at December 31, 1998.  The decline in  shareholders'  equity is
attributable  to the net loss incurred in 1999.  Footnote 9 of the  Consolidated
Financial  Statements  shows the minimum capital  requirements and the Company's
capital  position as of December  31, 1999 and 1998.  The  Company's  regulatory
capital levels exceed those established for well-capitalized institutions.



                                       20
<PAGE>

         Lending

         The Company has comprehensive  policies and procedures which cover both
commercial and consumer loan  origination  and management of credit risk.  Loans
are  underwritten  in a manner that focuses on the borrowers'  ability to repay.
The Company's  goal is not to avoid risk, but to manage it and to include credit
risk as part of the pricing decision for each product.

         Total loans, net of fees and premiums and discounts, increased to $68.2
million as of December  31, 1999  compared to $16.3  million as of December  31,
1998.  The increase is the result of a full years  operation  of Cardinal  Bank,
N.A. in addition to the  activity  of Cardinal  Bank  -Manassas/Prince  William,
N.A., and Cardinal Bank -Dulles, N.A., both of which opened in the third quarter
of 1999. There were no non-performing loans at December 31, 1999 and 1998.

         The Company's loan portfolio consists of commercial short-term lines of
credit, term loans, mortgage financing and construction loan funds that are used
by the  borrower  to build or  develop  real  estate  properties.  The  consumer
portfolio  includes  residential real estate  mortgages,  bankcard,  home equity
lines  and  installment  loans.  Table 4  reflects  the  components  of the loan
portfolio as of December 31, 1999 and 1998.  Table 5 reflects the  allocation of
the allowance for loan loss by loan category.

         Securities Available-for-Sale

         The investment  securities portfolio of the Company is used as a source
of income and  liquidity.  The  portfolio  has  declined  to $4.8  million as of
December  31,  1999 from $13.5  million as of  December  31,  1998.  The decline
reflects  liquidity needs associated with funding the loan growth experienced in
1999.  Table 6  reflects  the  composition  of the  investment  portfolio  as of
December 31, 1999 and 1998.

         Interest Rate Sensitivity

         The  most  important  element  of  asset/liability  management  is  the
monitoring of the Company's  sensitivity to interest rate movements.  The income
stream  of  the  Company  is  subject  to  risk  resulting  from  interest  rate
fluctuations  to the  extent  there is a  difference  between  the amount of the
Company's interest earning assets and the amount of interest bearing liabilities
that are prepaid,  mature or reprice in specified periods. The Company's goal is
to maximize net  interest  income with  acceptable  levels of risk to changes in
interest rates.  Management  seeks to meet this goal by influencing the maturity
and re-pricing  characteristics  of the various lending and deposit taking lines
of business  and by managing  discretionary  balance  sheet asset and  liability
portfolios.

         One of the ways the Company  identifies  and manages its interest  rate
risk is through an analysis of the relationship between  interest-earning assets
and  interest-bearing  liabilities  to measure the impact that future changes in
interest rates will have on net interest  income.  The  difference  between rate
sensitive assets and rate sensitive liabilities for specified periods of time is
known  as the  "GAP."  The  data in  Table 7  reflects  re-pricing  or  expected
maturities  of various  assets and  liabilities  at December 31, 1999.  Interest
sensitivity  gap analysis  presents a position  that  existed at one  particular
point  in  time  and  assumes   that  assets  and   liabilities   with   similar
characteristics  will re-price at the same time and to the same degree. As shown
in the table,  the Company was liability  sensitive  (excess of liabilities over
assets)  in the  three  month  to one  year  horizon.  Management  has  included
estimates  in the table with  respect to certain  deposit  balances  of Cardinal
Bank,  N.A. that reflect the fact that not all of these  deposits  re-price on a
contractual basis. Deposit balances for Cardinal Bank -Manassas/Prince  William,
N.A. and Cardinal Bank  -Dulles,  N.A. have not been adjusted due to the lack of
historical data. The result of these



                                       21
<PAGE>

adjustments was to reduce the negative gap in the three-month to one-year period
to that reflected in the table.

1998 Compared to 1997

         The  comparison  of operating  results  between 1998 and 1997 should be
read in the context of the start-up  nature of the Company.  The holding company
began  operations  on  November  24,  1997 and its first bank  subsidiary  began
operations on June 8, 1998.

         Consolidated  net loss for 1998 was  $1,696,345  or $0.64  per  diluted
share compared to a net loss of $145,178 or $0.12 per diluted share in 1997. Net
interest income was $1,216,347 in 1998 compared to $4,317 in 1997.  Non-interest
income  totaled  $34,037  in  1998  compared  to  $0  recorded  in  1997.  Total
non-interest expense increased in 1998 to $2,734,269 from $149,495 in 1997.

         Total  assets  increased  to $57.3  million  in 1998  compared  to $8.8
million in 1997. The increase was due to the Company's  initial public  offering
which generated net proceeds of $26.0 million,  and an increase of $21.9 million
in deposit  balances.  Total  loans were $16.3  million  at  December  31,  1998
compared to zero at  December  31,  1997.  The  remaining  sources of funds were
invested into government agency securities  totaling $13.7 million and fed funds
sold which increased $20.1 million to $24.3 million at December 31, 1998.

Year 2000

         The Company successfully completed the transition to the year 2000 with
no impact to the Company's financial condition.  The Company is not aware of any
significant third party relationships which were negatively impacted by the year
2000 transition.  The cost of year 2000 readiness was minimal to the Company due
to its recent  formation and the ability to incorporate  year 2000 ready systems
and vendors at its inception.



                                       22
<PAGE>

Table 1.

                 Cardinal Financial Corporation and Subsidiaries
                            Rate and Volume Analysis
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                                      Variance
     Average Volume        Average Rate                                           Interest           Increase      Attributable to
    1999       1998      1999       1998                                       1999       1998      (Decrease)     Rate     Volume
---------------------- ---------------------                                --------------------- ----------------------------------
<S>           <C>          <C>       <C>      <C>                              <C>       <C>          <C>          <C>      <C>
                                              Interest Income
                                              Loans:
   $ 11,087   $   529      7.58%     10.01%       Commercial                   $   840   $    53      $   787      $ (270)  $ 1,057
      9,718       287      8.13%      8.01%       Real estate - commercial         790        23          767          12       755
        719        63      9.32%      7.89%       Real estate - construction        67         5           62          10        52
      8,089       768      7.76%      7.42%       Real estate - residential        628        57          571          28       543
      2,340       155      7.17%     10.36%       Home equity lines                168        16          152         (74)      226
      1,724       168      9.75%     13.73%       Consumer                         168        23          145         (69)      214
------------------------------------------------------------------------------------------------------------------------------------
     33,677     1,970      7.90%      8.99%            Total loans               2,661       177        2,484        (363)    2,847

      6,960     5,484      5.83%      5.62%   Investment Securities - AFS          406       308           98          15        83

        504       133      5.74%      5.97%   Other Investments                     29         8           21          (1)       22

          -       764      0.00%      4.17%   Money Market Accounts                  -        32          (32)          -       (32)

     24,804    18,574      4.97%      5.55%   Federal Funds Sold                 1,234     1,031          203        (143)      346

------------------------------------------------------------------------------------------------------------------------------------
   $ 65,945  $ 26,925      6.57%      5.78%   Total interest-earning assets    $ 4,330   $ 1,556      $ 2,774      $ (492)  $ 3,266
====================================================================================================================================

                                              Interest Expense

      2,436       535      2.01%      2.06%       Interest Checking                 49        11           38          (1)       39
      7,168     2,316      3.68%      3.71%       Money Markets                    264        86          178          (2)      180
        239        62      2.93%      3.23%       Statement Savings                  7         2            5          (1)        6
     18,980     4,336      4.67%      5.54%       Certificates of Deposit          887       240          647        (164)      811
------------------------------------------------------------------------------------------------------------------------------------
     28,823     7,249      4.19%      4.68%   Total deposits                     1,207       339          868        (168)    1,036

      1,773         -      5.53%      0.00%   Borrowings                            98         1           97          97         -

------------------------------------------------------------------------------------------------------------------------------------
     30,596     7,249      4.27%      4.69%   Total interest-bearing liabilities 1,305       340          965         (71)    1,036
====================================================================================================================================

     41,151    23,045                         Other Sources
------------------------------------------------------------------------------------------------------------------------------------
     71,747    30,294      1.82%      1.12%   Total Sources of Funds             1,305       340          965         (71)    1,036
------------------------------------------------------------------------------------------------------------------------------------

   $ 35,349  $ 19,676      4.75%      4.66%   Net Interest Margin              $ 3,025   $ 1,216      $ 1,809      $ (421)  $ 2,230
====================================================================================================================================
</TABLE>

No tax equivalent adjustment made to the above table.


                                       23
<PAGE>

Table 2.

                     Cardinal Financial Corporation and Subsidiaries
                            Allowance for Loan Losses
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                       1999                    1998
                                                 -----------------       ------------------
<S>                                                 <C>                     <C>
Beginning balance                                   $         212           $            -

Provision for loan losses                                     514                      212

Loans charged off:
            Commercial                                          -                        -
            Real estate - commercial                            -                        -
            Real estate - construction                          -                        -
            Real estate - residential                           -                        -
            Home equity lines                                   -                        -
            Consumer                                            -                        -
-------------------------------------------------------------------------------------------
            Total loans charged off                             -                        -

Recoveries:
            Commercial                                          -                        -
            Real estate - commercial                            -                        -
            Real estate - construction                          -                        -
            Real estate - residential                           -                        -
            Home equity lines                                   -                        -
            Consumer                                            -                        -
-------------------------------------------------------------------------------------------
            Total recoveries                                    -                        -

Net charge-offs                                                 -                        -

Balance, December 31                                $         726           $          212
===========================================================================================


Loans:
            Balance at year end                     $      68,147           $       16,343
            Allowance for loan losses to
            Year-end loans                                  1.07%                    1.30%

            Less: Business Manager                  $       1,522           $            -
            Less: Purchased Loans                           7,687                        -
                                                 -----------------       ------------------
            Adjusted Loan Balance                   $      58,938           $       16,343

            Allowance for loan losses to
            Year-end adjusted loans                         1.23%                    1.30%
</TABLE>



                                       24
<PAGE>

Table 3.

                 Cardinal Financial Corporation and Subsidiaries
                               Non-interest Income
                 For the years ended December 31, 1999 and 1998

                                                    1999             1998
                                               --------------    -------------
Service charges on deposit accounts                 $ 41,612          $ 3,388
Loan service charges                                 226,211           16,145
Investment fee income                              1,017,924                -
Gain on sale of investment securities                  4,207            8,760
Other income                                          30,531            5,744
                                               --------------    -------------
                                                 $ 1,320,485         $ 34,037
                                               ==============    =============










                                       25
<PAGE>

Table 4.

                 Cardinal Financial Corporation and Subsidiaries
                                      Loans
                             (Dollars in thousands)


                                         December 31,           December 31,
                                            1999                   1998
                                   ----------------------  ---------------------


Commercial                          $ 22,558      33.10%    $  5,138     31.43%
Real estate - commercial              19,780      29.03%       3,507     21.46%
Real estate - construction               870       1.28%         760      4.65%
Real estate - residential             11,851      17.39%       5,529     33.83%
Home equity lines                      3,777       5.54%       1,040      6.37%
Consumer                               9,311      13.66%         369      2.26%
                                   ----------------------  ---------------------

Gross loans                         $ 68,147     100.00%    $ 16,343    100.00%

Less: unearned income, net                20         -           (16)       -
Less: allowance for loan loss           (726)        -          (212)       -
                                   ----------------------  ---------------------

Total loans, net                    $ 67,441         -      $ 16,115        -
                                   ======================  =====================





                                       26
<PAGE>

Table 5.

                    Cardinal Financial Corporation and Subsidiaries
                   Allocation of the Allowance for Loan Losses
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                           December 31,                  December 31,
                                               1999                          1998
                                       --------------------          --------------------

<S>                                        <C>      <C>                   <C>     <C>
Commercial                                 $ 241    33.20%                $ 59    27.83%
Real estate - commercial                     211    29.06%                  40    18.87%
Real estate - construction                     9     1.24%                   9     4.25%
Real estate - residential                    126    17.36%                  64    30.19%
Home equity lines                             40     5.51%                  12     5.66%
Consumer                                      24     3.31%                   4     1.89%
Unallocated                                   75    10.32%                  24    11.31%
                                       --------------------          --------------------

Total allowance for loan losses            $ 726   100.00%               $ 212   100.00%
                                       ====================          ====================
</TABLE>







                                       27
<PAGE>

Table 6.

                 Cardinal Financial Corporation and Subsidiaries
                   Investment Securities - Available-for-Sale
                        As of December 31, 1999 and 1998
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                             Amortized       Fair       Unrealized      Average
As of December 31, 1999                                       Par Value        Cost          Value      Gain/(Loss)      Yield
                                                           ----------------------------------------------------------------------
<S>                                                          <C>                 <C>           <C>             <C>         <C>
U.S. Government Agencies and Enterprises
     Within one year                                         $     2,000         2,000         1,948           (52)        5.99%
     One to five years                                             1,000         1,000           979           (21)        5.74%
     After ten years                                                 500           499           445           (54)        6.26%
---------------------------------------------------------------------------------------------------------------------------------
           Total U.S. Government Agencies                    $     3,500         3,499         3,372          (127)        5.95%
---------------------------------------------------------------------------------------------------------------------------------

Mortgage-Backed Securities
     Within one year                                                 305           305           304            (1)        5.63%
     One to five years                                               367           368           368             -         5.92%
     Five to ten years                                               803           806           763           (43)        5.93%
---------------------------------------------------------------------------------------------------------------------------------
           Total Mortgage-Backed Securities                  $     1,475         1,479         1,435           (44)        5.87%
---------------------------------------------------------------------------------------------------------------------------------

           Total Investment Securities Available-for-Sale    $     4,975         4,978         4,807          (171)        5.93%


                                                                             Amortized       Fair       Unrealized      Average
As of December 31, 1998                                       Par Value        Cost          Value      Gain/(Loss)      Yield
                                                           ----------------------------------------------------------------------
U.S. Government Agencies and Enterprises
     Within one year                                         $       300           300           300             -         5.28%
     One to five years                                             9,000         9,002         9,005             3         5.79%
     Five to ten years                                               500           501           502             1         5.79%
     After ten years                                                 500           499           499             -         6.26%
---------------------------------------------------------------------------------------------------------------------------------
           Total U.S Government Agencies                     $    10,300        10,302        10,306             4         5.78%
---------------------------------------------------------------------------------------------------------------------------------

Mortgage-Backed Securities
     Within one year                                                 -             -             -               -             -
     One to five years                                               437           441           440            (1)        5.43%
     Five to ten years                                               460           460           460             -         5.27%
     After ten years                                               2,278         2,271         2,271             -         5.87%
---------------------------------------------------------------------------------------------------------------------------------
           Total Mortgage-Backed Securities                  $     3,175         3,172         3,171            (1)        5.52%
---------------------------------------------------------------------------------------------------------------------------------

           Total Investment Securities Available-for-Sale    $    13,475        13,474        13,477             3         5.65%
</TABLE>




                                       28
<PAGE>

Table 7.

                 Cardinal Financial Corporation and Subsidiaries
                     Interest Rate Sensitivity Gap Analysis
                             As of December 31, 1999
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                 --------------------------------------------------------------------------------
                                                      1-90         91-180       181-365         1-5         Over 5
                                                      Days          Days          Days         Years        Years         TOTAL
---------------------------------------------------------------------------------------------------------------------------------
                     ASSETS
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>           <C>          <C>           <C>          <C>
Investment securities
U.S. Government agency securities                     1,462           486             -          980           445       $ 3,373
Mortgage-backed securities                               89           215             -          367           763         1,434
---------------------------------------------------------------------------------------------------------------------------------
Total investment securities                           1,551           701             -        1,347         1,208         4,807
---------------------------------------------------------------------------------------------------------------------------------
Federal funds sold                                   13,025                                                               13,025
---------------------------------------------------------------------------------------------------------------------------------
Loans
Commercial -fixed                                       541         1,109         1,133        3,542           237         6,562
Commercial - variable                                11,677           398           295        3,418           208        15,996
Real estate - commercial fixed                            5             3             7          309           175           499
Real estate - commercial variable                       161           131           270       16,096         2,623        19,281
Real estate - construction fixed                          -             -             -            -             -             -
Real estate - construction variable                     870             -             -            -             -           870
Real estate - residential fixed                          10            12            23        1,482            61         1,588
Real estate - residential variable                      280            39            81        9,025           838        10,263
Home equity lines                                     3,691            86             -            -             -         3,777
Consumer - fixed                                        207            52           104          676         7,693         8,732
Consumer - variable                                     442             3             6          128             -           579
---------------------------------------------------------------------------------------------------------------------------------
Loans receivable, net of fees                        17,884         1,833         1,919       34,676        11,835        68,147
---------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets                                 32,460         2,534         1,919       36,023        13,043      $ 85,979
---------------------------------------------------------------------------------------------------------------------------------
Cumulative Rate Sensitive Assets                     32,460        34,994        36,913       72,936        85,979
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
---------------------------------------------------------------------------------------------------------------------------------
Deposits
Demand deposits                                       9,971           337           337          337         1,348      $ 12,330
Interest checking                                     2,607           770           257          257             -         3,891
Statement savings                                       317            43            43           76             -           479
Money market accounts                                 7,660         2,016           672          672             -        11,020
Certificates of deposit - fixed                         558         3,860         5,560        5,404           539        15,921
Certificates of deposit - no penalty                  4,141         1,895         1,793        8,403             -        16,232
---------------------------------------------------------------------------------------------------------------------------------
Total Deposits                                       25,254         8,921         8,662       15,149         1,887        59,873
---------------------------------------------------------------------------------------------------------------------------------
Borrowings - short term                                   -         4,000         2,000            -             -         6,000
---------------------------------------------------------------------------------------------------------------------------------
Total Interest Bearing Liabilities                   25,254        12,921        10,662       15,149         1,887      $ 65,873
---------------------------------------------------------------------------------------------------------------------------------
Cumulative Rate Sensitive Liabilities                25,254        38,175        48,837       63,986        65,873
---------------------------------------------------------------------------------------------------------------------------------

Gap                                                   7,206       (10,387)       (8,743)      20,874        11,156
Cumulative Gap                                        7,206        (3,181)      (11,924)       8,950        20,106
Gap/ Total Assets                                     7.43%       -10.70%        -9.01%       21.51%        11.50%
Cumulative Gap/ Total Assets                          7.43%        -3.28%       -12.29%        9.22%        20.72%
Rate Sensitive Assets/ Rate Sensitive Liabilities      1.29          0.20          0.18         2.38          6.91
Cumulative Rate Sensitive Assets/
         Cumulative Rate Sensitive Liabilities         1.29          0.92          0.76         1.14          1.31

</TABLE>

                                       29
<PAGE>

Item 7.      Financial Statements

         The following  financial  statements are filed as a part of this report
following Item 13 below:

         Independent Auditors' Report

         Financial Statements

                  Consolidated Balance Sheets, December 31, 1999 and 1998

                  Consolidated  Statements of  Operations,  Years Ended December
                  31, 1999 and 1998

                  Consolidated  Statements of Comprehensive Income (Loss), Years
                  Ended December 31, 1999 and 1998

                  Consolidated  Statements of Changes in  Shareholders'  Equity,
                  Years Ended December 31, 1999 and 1998

                  Consolidated  Statements of Cash Flows,  Years Ended  December
                  31, 1999 and 1998

                  Notes to Consolidated Financial Statements


Item 8.      Changes in and  Disagreements  with  Accountants  on Accounting and
             Financial Disclosure

         No changes in the Company's independent accountants or disagreements on
accounting and financial disclosure required to be reported hereunder have taken
place.


                                    PART III

Item 9.      Directors,  Executive  Officers,  Promoters  and  Control  Persons;
             Compliance with Section 16(a) of the Exchange Act

         Information  set forth  under the  headings  "Election  of  Directors,"
"Executive  Officers  Who Are Not  Directors,"  and  "Section  16(a)  Beneficial
Ownership Reporting  Compliance" in the Company's definitive Proxy Statement for
its 2000 Annual  Meeting of  Shareholders,  which Proxy  Statement will be filed
with the  Securities and Exchange  Commission  within 120 days of the end of the
Company's 1999 fiscal year (the "2000 Proxy Statement"),  is hereby incorporated
by reference.


Item 10.     Executive Compensation

         Information as set forth under the headings  "Executive  Compensation -
Summary of Cash and Certain  Other  Compensation,"  "- Stock Option  Grants," "-
Option  Exercises  and  Holdings,"  "-  Directors'   Fees,"  and  "-  Employment
Agreements" in the 2000 Proxy Statement is hereby incorporated by reference.



                                       30
<PAGE>

Item 11.    Security Ownership of Certain Beneficial Owners and Management

         Information  set forth  under the  headings  "Securities  Ownership  of
Management" and "Security  Ownership of Certain  Beneficial  Owners" in the 2000
Proxy Statement is hereby incorporated by reference.


Item 12.     Certain Relationships and Related Transactions

         Information set forth under the heading  "Transactions With Management"
in the 2000 Proxy Statement is hereby incorporated by reference.


Item 13.     Exhibits, List and Reports on Form 8-K

       (a)   Exhibits.

             3.1    Articles of Incorporation of Cardinal Financial Corporation,
                    attached as Exhibit  3.1 to the  Registration  Statement  on
                    Form  SB-2,  Registration  No.  333-52279,  filed  with  the
                    Commission  on May 8, 1998 (the "Form  SB-2"),  incorporated
                    herein by reference.

             3.2    Bylaws  of  Cardinal  Financial  Corporation,   attached  as
                    Exhibit  3.2  to  the  Form  SB-2,  incorporated  herein  by
                    reference.

             4      Form of Stock Certificate, attached as Exhibit 4 to the Form
                    SB-2, incorporated herein by reference.

             10.1   Employment  Agreement,  dated  as  of  September  30,  1997,
                    between   Commercial    Fidelity    Financial    Partnership
                    (predecessor  to  Cardinal  Financial  Corporation)  and  L.
                    Burwell Gunn, Jr.,  attached as Exhibit 10 to the Form SB-2,
                    incorporated herein by reference.

             10.2   Employment Agreement,  dated as of October 13, 1998, between
                    Cardinal Financial  Corporation and Thomas C. Kane, attached
                    as  Exhibit  10.2 to the  Company's  Annual  Report  on Form
                    10-KSB for the year ended  December 31, 1998 (the "1998 Form
                    10-KSB"), incorporated herein by reference.

             10.3   Employment Agreement, dated as of December 17, 1998, between
                    Cardinal  Financial  Corporation and Edgar M. Andrews,  III,
                    attached   as  Exhibit   10.3  to  the  1998  Form   10-KSB,
                    incorporated herein by reference.

             10.4   Employment Agreement, dated as of December 17, 1998, between
                    Cardinal Financial Corporation and Christopher W. Bergstrom,
                    attached   as  Exhibit   10.4  to  the  1998  Form   10-KSB,
                    incorporated herein by reference.

             10.5   Employment Agreement, dated as of February 17, 1999, between
                    Cardinal  Financial  Corporation  and  Joseph  L.  Borrelli,
                    attached   as  Exhibit   10.5  to  the  1998  Form   10-KSB,
                    incorporated herein by reference.



                                       31
<PAGE>

             10.6   Employment Agreement, dated as of February 12, 1999, between
                    Cardinal  Financial   Corporation  and  F.  Kevin  Reynolds,
                    attached   as  Exhibit   10.6  to  the  1998  Form   10-KSB,
                    incorporated herein by reference.

             10.7   Employment  Agreement,  dated as of August 31, 1998, between
                    Cardinal   Financial   Corporation  and  Greg  D.  Wheeless,
                    attached   as  Exhibit   10.7  to  the  1998  Form   10-KSB,
                    incorporated herein by reference.

             21     Subsidiaries of the Registrant.

             27     Financial Data Schedule (filed electronically only).

             (b)    Reports on Form 8-K.

                         No reports on Form 8-K were filed by the Company during
                    the last quarter of the period covered by this report.






                                       32
<PAGE>








                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                        Consolidated Financial Statements

                           December 31, 1999 and 1998

                   (With Independent Auditors' Report Thereon)





<PAGE>






                          Independent Auditors' Report


The Board of Directors and Shareholders
Cardinal Financial Corporation and subsidiaries:


We have  audited  the  accompanying  consolidated  statements  of  condition  of
Cardinal Financial Corporation and subsidiaries (the Company) as of December 31,
1999  and  1998,  and  the  related   consolidated   statements  of  operations,
comprehensive income (loss), changes in shareholders' equity, and cash flows for
the  years  then  ended.  These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Cardinal Financial
Corporation  and  subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.


/s/ KPMG LLP


McLean, Virginia
January 20, 2000

<PAGE>

                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Condition

                           December 31, 1999 and 1998

                                 (In thousands)
<TABLE>
<CAPTION>
                                    Assets                                              1999                1998
                                                                                  -----------------   -----------------
<S>                                                                             <C>                 <C>
Cash & due from banks                                                           $         6,018     $         1,073
Federal funds sold                                                                       13,025              24,277
                                                                                  -----------------   -----------------
                   Total cash and cash equivalents                                       19,043              25,350

Investment securities available-for-sale (Note 3)                                         4,807              13,477
Other investments (Note 3)                                                                1,015                 220
Loans receivable, net of fees (Note 4)                                                   68,167              16,327
Allowance for loan losses (Note 4)                                                         (726)               (212)
                                                                                  -----------------   -----------------
                                                                                         67,441              16,115
Premises and equipment, net (Note 5)                                                      4,203               1,829
Accrued interest and other assets                                                           524                 304
                                                                                  -----------------   -----------------
                   Total assets                                                 $        97,033     $        57,295
                                                                                  =================   =================
                     Liabilities and Shareholders' Equity
Deposits (Note 6)                                                               $        59,873     $        21,867
Borrowings (Note 7)                                                                       6,000                 --
Accrued interest and other liabilities                                                      415                 700
                                                                                  -----------------   -----------------
                   Total liabilities                                                     66,288              22,567
Common stock, $1 par value, 50,000,000 shares authorized,
    shares outstanding 4,242,634 in 1999 and 4,239,509 in 1998                            4,243               4,240
Additional paid in capital                                                               32,496              32,327
Accumulated deficit                                                                      (5,881)             (1,842)
Accumulated other comprehensive income (loss)                                              (113)                  3
                                                                                  -----------------   -----------------
                   Total shareholders' equity                                            30,745              34,728
                                                                                  -----------------   -----------------
                   Total liabilities and shareholders' equity                   $        97,033     $        57,295
                                                                                  =================   =================
See accompanying notes to consolidated financial statements.
</TABLE>



                                       2
<PAGE>

                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Operations

                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                        1999                1998
                                                                                  -----------------   -----------------
<S>                                                                              <C>                 <C>
Interest income:
    Loans receivable                                                             $    2,660,851      $      178,697
    Federal funds sold                                                                1,234,273           1,061,815
    Investment securities                                                               405,604             308,131
    Other investments                                                                    28,902               7,928
                                                                                  -----------------   -----------------
                   Total interest income                                              4,329,630           1,556,571
Interest expense:
    Deposits (Note 6)                                                                 1,206,882             338,608
    Borrowings                                                                           98,036               1,616
                                                                                  -----------------   -----------------
                   Total interest expense                                             1,304,918             340,224
                                                                                  -----------------   -----------------
                   Net interest income                                                3,024,712           1,216,347
Provision for loan losses (Note 4)                                                      513,847             212,460
                                                                                  -----------------   -----------------
                   Net interest income after provision for loan losses                2,510,865           1,003,887
Non-interest income:
    Service charges on deposit accounts                                                  41,612               3,388
    Loan service charges                                                                226,211              16,145
    Investment fee income                                                             1,017,924                 --
    Gains from sale of securities                                                         4,207               8,760
    Other income                                                                         30,531               5,744
                                                                                  -----------------   -----------------
                   Total non-interest income                                          1,320,485              34,037
Non-interest expense:
    Salary and benefits                                                               4,277,231           1,401,117
    Occupancy                                                                           811,578             151,583
    Professional fees                                                                   494,472             463,497
    Depreciation                                                                        356,435             106,653
    Other operating expenses (Note 17)                                                1,930,353             611,419
                                                                                  -----------------   -----------------
                   Total non-interest expense                                         7,870,069           2,734,269
                                                                                  -----------------   -----------------
                   Net loss before income taxes                                      (4,038,719)         (1,696,345)
Provision for income taxes (Note 8)                                                          --                  --
                                                                                  -----------------   -----------------
                   Net loss                                                      $   (4,038,719)     $   (1,696,345)
                                                                                  =================   =================
Basic and diluted loss per share                                                 $        (0.95)     $        (0.64)
                                                                                  =================   =================
Weighted-average shares outstanding                                                   4,240,819           2,646,036
                                                                                  =================   =================
See accompanying notes to consolidated financial statements.
</TABLE>



                                       3
<PAGE>

                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

             Consolidated Statements of Comprehensive Income (Loss)

                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                        1999                1998
                                                                                  -----------------   -----------------
<S>                                                                              <C>                 <C>
Net loss                                                                         $      (4,038,719)  $      (1,696,345)
Other comprehensive income (loss):
    Unrealized holding gain (loss) on available-for-sale
       investment securities, net of tax                                                  (115,491)              2,605
                                                                                  -----------------   -----------------
                   Comprehensive loss                                            $      (4,154,210)  $      (1,693,740)
                                                                                  =================   =================
</TABLE>

See accompanying notes to consolidated financial statements.





                                       4
<PAGE>
                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES
           Consolidated Statements of Changes in Shareholders' Equity
                     Years ended December 31, 1999 and 1998
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                               Accumulated
                                                                      Additional                  Other      Uncollected
                                                            Common      Paid-in   Accumulated Comprehensive  Subscription
                                                  Shares    Stock       Capital     Deficit   Income (Loss)   Receivable    Total
                                                --------- ---------- ------------ ----------- -------------- ------------ ---------
<S>                                                <C>    <C>          <C>         <C>          <C>           <C>         <C>
Balance, December 31, 1997                         1,175  $    1,175   $    7,621  $    (145)   $      --     $    (100)  $  8,551
Issuance of 235 shares of common stock
    at $7.50 per share, net of costs                 235         235        1,525        --            --           --       1,760
Issuance of 2,830 shares of common stock
    at $10.00 per share, net of costs              2,830       2,830       23,181        --            --           --      26,011
Payment of subscription receivable                   --          --           --         --            --           100        100
Change in unrealized holding gain (loss) on
    investment securities available-for-sale         --          --           --         --              3          --           3
Net loss                                             --          --           --      (1,697)          --           --      (1,697)
                                                --------- ---------- ------------ ----------- -------------- ------------ ---------
Balance, December 31, 1998                         4,240       4,240       32,327     (1,842)            3          --      34,728

Issuance of stock awards                               3           3           19        --            --           --          22
Reversal of accrued cost related to public
    offering                                         --          --           138        --            --           --         138
Accrual of stock award                               --          --            12        --            --           --          12
Change in unrealized holding gain (loss) on
    investment securities available-for-sale,
    net of tax                                       --          --           --         --           (116)         --        (116)
Net loss                                             --          --           --      (4,039)          --           --      (4,039)
                                                --------- ---------- ------------ ----------- -------------- ------------ ---------
Balance, December 31, 1999                         4,243  $    4,243   $   32,496  $  (5,881)   $     (113)   $     --    $ 30,745
                                                ========= ========== ============ =========== ============== ============ =========
</TABLE>


See accompanying notes to consolidated financial statements.




                                       5
<PAGE>

                 CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1999 and 1998

                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                         1999                1998
                                                                                   -----------------   -----------------
Cash flows from operating activities:
<S>                                                                               <C>                 <C>
    Net loss                                                                      $          (4,039)  $          (1,697)
    Adjustments to reconcile net loss to net cash used in operating
       activities:
          Depreciation                                                                          356                 107
          Amortization of premium                                                                13                  --
          Provision for loan losses                                                             514                 212
          Gain on sale of securities                                                             (4)                 (9)
          Increase in accrued interest and other assets                                        (220)               (301)
          Increase (decrease) in accrued interest and other liabilities                        (227)                640
          Non-cash charges for issuance of stock award                                           22                  --
          Compensation related to stock awards                                                   12                  --
                                                                                   -----------------   -----------------
                   Net cash used in operating activities                                     (3,573)             (1,048)
                                                                                   -----------------   -----------------
Cash flows from investing activities:
    Purchase of premises and equipment                                                       (2,730)             (1,936)
    Proceeds from sale of securities                                                          7,722               3,460
    Purchase of securities                                                                     (850)            (17,379)
    Redemptions of available-for-sale                                                           820                 234
    Net increase in loan portfolio                                                          (51,840)            (16,327)
                                                                                   -----------------   -----------------
                   Net cash used in investing activities                                    (46,878)            (31,948)
                                                                                   -----------------   -----------------
Cash flows from financing activities:
    Net increase in deposits                                                                 38,006              21,867
    Proceeds from stock issuance, net                                                            --              27,871
    Decrease in subscription receivables                                                         --               4,510
    Proceeds (repayment)  of short-term borrowings                                            6,000                (185)
    Reversal of accrued costs related to public offering                                        138                  --
                                                                                   -----------------   -----------------
               Net cash provided by financing activities                                     44,144              54,063
                                                                                   -----------------   -----------------
Net increase (decrease) in cash and cash equivalents                                         (6,307)             21,067
Cash and cash equivalents at beginning of period                                             25,350               4,283
                                                                                   -----------------   -----------------
Cash and cash equivalents at end of period                                        $          19,043   $          25,350
                                                                                   =================   =================
Supplemental disclosure of cash flow information
    Cash paid during period for interest:                                         $           1,259   $             341
                                                                                   =================   =================
</TABLE>

See accompanying notes to consolidated financial statements.



                                       6






<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(1)    Organization

       Cardinal Financial  Corporation (the "Company") was incorporated November
       24,  1997 under the laws of the  Commonwealth  of  Virginia  as a holding
       company  whose  activities  consist  of  investment  in its  wholly-owned
       subsidiaries.  In addition to Cardinal Bank, N.A. which began  operations
       in 1998, the Company  opened the following  three  subsidiaries  in 1999,
       Cardinal Wealth Services,  Inc. an investment  subsidiary (as of February
       1, 1999),  Cardinal Bank - Manassas/Prince  William, N.A. (as of July 26,
       1999), and Cardinal Bank - Dulles, N.A. (as of August 2, 1999).


(2)    Summary of Significant Accounting Policies

       (a)    Use of Estimates

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and liabilities  and  disclosures of contingent  assets and
              contingent  liabilities at the date of the consolidated  financial
              statements  and the  reported  amounts of  revenues  and  expenses
              during the  reporting  period.  Actual  results  could differ from
              those estimates.

       (b)    Principles of Consolidation

              The consolidated  financial statements include the accounts of the
              Company  and  its  subsidiaries.   All  significant   intercompany
              transactions and balances have been eliminated in consolidation.

       (c)    Cash and Cash Equivalents

              For the purpose of presentation in the consolidated  statements of
              cash flows,  the Company has defined cash and cash  equivalents as
              those amounts  included in cash, due from banks, and Federal funds
              sold.

       (d)    Investment Securities

              The Company  classifies its debt and marketable  equity securities
              in one of two categories:  available-for-sale or held-to-maturity.
              Held-to-maturity  securities  are those  securities  for which the
              Company  has the ability  and intent to hold until  maturity.  All
              other securities not classified as trading or held-to-maturity are
              classified as available-for-sale.

              Available-for-sale   securities   are   recorded  at  fair  value.
              Unrealized   holding   gains   and   losses,   net  of   tax,   on
              available-for-sale  securities are reported in other comprehensive
              income (loss).

              Gains and losses on the sale of securities  are  determined  using
              the specific  identification method. Declines in the fair value of
              individual  held-to-maturity  and  available-for-sale   securities
              below their cost that are deemed other than  temporary are charged
              to earnings as realized losses,  resulting in the establishment of
              a new cost basis for the security.

              Premiums and discounts are recognized in interest income using the
              effective interest method over the period to maturity.  Prepayment
              of the mortgages securing the collateralized  mortgage obligations
              may affect the maturity  date and yield to  maturity.  The Company
              uses actual  principal  prepayment  experience  and  estimates  of
              future principal prepayments in calculating the yield necessary to
              apply the effective interest method.


                                       7
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       (e)    Loans Receivable

              Loans  receivable  that  management  has the intent and ability to
              hold for the  foreseeable  future or until maturity or pay-off are
              reported at their  outstanding  principal balance adjusted for any
              charge-offs,  and net of the  allowance  for loan  losses  and any
              deferred fees or costs on originated loans.

              Loan  origination  fees and certain direct  origination  costs are
              capitalized  and  recognized  as an adjustment of the yield of the
              related loan.

              Loans are placed in  nonaccrual  status when they are  past-due 90
              days as to either principal or interest or when, in the opinion of
              management,  the collection of principal and interest is in doubt.
              A loan remains in  nonaccrual  status until the loan is current as
              to payment of both principal and interest or past-due less than 90
              days, and the borrower  demonstrates the ability to pay and remain
              current. Loans are charged-off when a loan or a portion thereof is
              considered uncollectible.

              The Company determines and recognizes  impairment of certain loans
              when based on current  information and events, it is probable that
              the Company will be unable to collect all amounts due according to
              the  contractual  terms  of the  loan  agreement.  A  loan  is not
              considered  impaired  during a period of delay in  payment  if the
              Company  expects to collect all amounts  due,  including  past-due
              interest. An impaired loan is measured at the present value of its
              expected  future  cash flows  discounted  at the loan's  effective
              interest  rate, or at the loan's  observable  market price or fair
              value of the collateral if the loan is collateral dependent. As of
              December 31, 1999 and 1998, the Company had no impaired loans.

              The allowance for loan losses is increased by provisions  for loan
              losses  and  decreased  by   charge-offs   (net  of   recoveries).
              Management's  periodic evaluation of the adequacy of the allowance
              is based on the  Bank's  past  loan  loss  experience,  known  and
              inherent  risks  in the  portfolio,  adverse  situations  that may
              affect the borrower's ability to repay, the estimated value of any
              underlying  collateral,   and  current  economic  conditions.   In
              addition,  various  regulatory  agencies,  as an integral  part of
              their  examination  process,  periodically  review  the  Company's
              allowance  for loan losses.  Such agencies may require the Company
              to recognize  additions to the allowance  based on their judgments
              about  information   available  to  them  at  the  time  of  their
              examination.  Management  believes that the current  allowance for
              loan losses is adequate to absorb  losses that are inherent in the
              current loan portfolio.

       (f)    Premises and Equipment

              Land is  carried  at cost.  Premises,  furniture,  equipment,  and
              leasehold  improvements  are  carried  at cost,  less  accumulated
              depreciation and amortization. Depreciation of premises, furniture
              and  equipment  is computed  using the  straight-line  method over
              their estimated  useful lives from 3 to 10 years.  Amortization of
              leasehold  improvements is computed using the straight-line method
              over the  useful  lives of the  improvements  or the  lease  term,
              whichever is shorter.

       (g)    Investment Fee Income

              Investment fee income represents  commissions paid by customers of
              Cardinal Wealth Services, Inc. for investment  transactions.  Fees
              are recognized into income when received.

                                       8
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       (h)    Income Taxes

              Deferred  tax assets and  liabilities  are  reflected at currently
              enacted  income  tax rates  applicable  to the period in which the
              deferred tax assets or liabilities  are expected to be realized or
              settled. As changes in tax laws or rates are enacted, deferred tax
              assets and  liabilities  are adjusted  through the  provision  for
              income taxes.

       (i)    Net Income Per Share

              Basic and  diluted  loss per common  share is computed by dividing
              net loss by the weighted  average number of shares of common stock
              outstanding   during  the  periods.   Common   stock   equivalents
              outstanding  at December 31, 1999 and 1998 were  antidilutive  and
              consequently not included in the EPS calculation.

       (j)    Stock Option Plan

              The Company applies the intrinsic value-based method of accounting
              prescribed by Accounting  Principles Board ("APB") Opinion No. 25,
              Accounting   for  Stock   Issued   to   Employees,   and   related
              interpretations,  in accounting  for its fixed plan stock options.
              As such,  compensation  expense is  recorded  only if the  current
              market price of the  underlying  stock exceeded the exercise price
              on the date of grant.

       (k)    New Accounting Standards

              In June 1998,  the  Financial  Accounting  Standards  Board (FASB)
              issued  Statement No. 133,  Accounting for Derivative  Instruments
              and Hedging Activities, effective for fiscal years beginning after
              June 15,  1999.  Statement  No.  133  established  accounting  and
              reporting   standards  for  derivative   instruments  and  hedging
              activities and requires that the Company recognize all derivatives
              as assets  or  liabilities  on the  balance  sheet at fair  market
              value.  In June 1999,  the FASB issued  Statement  No. 137,  which
              deferred the  implementation  of Statement No. 133 to fiscal years
              beginning  after June 15, 2000.  As of December 31, 1999 and 1998,
              the Company had no derivative  instruments  or hedging  activities
              and  therefore  does  not  expect  Statement  No.  133 to have any
              material impact on the Company's  financial position or results of
              operations.

       (l)    Reclassifications

              Certain amounts for 1998 have been  reclassified to conform to the
              presentation for 1999.


                                       9
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(3)    Investment Securities and Other Investments

       The fair value and amortized cost of available-for-sale  securities as of
       December 31, 1999 and 1998 are shown below.

<TABLE>
<CAPTION>
                                                                           1999
                                                           -------------------------------------
                                                                 Fair             Amortized
       (In thousands)                                            value               cost
                                                           -----------------   -----------------
<S>                                                       <C>                 <C>
       Obligations of U.S. government-sponsored
           agencies and enterprises                       $        3,373      $        3,499
       Mortgage - backed securities                                1,434               1,479
                                                           -----------------   -----------------
                          Total                           $        4,807      $        4,978
                                                           =================   =================

                                                                           1998
                                                           -------------------------------------
                                                                 Fair             Amortized
       (In thousands)                                            value               cost
                                                           -----------------   -----------------
       Obligations of U.S. government-sponsored
           agencies and enterprises                       $       10,306      $       10,302
       Mortgage - backed securities                                3,171               3,172
                                                           -----------------   -----------------
                          Total                           $       13,477      $       13,474
                                                           =================   =================
</TABLE>

       The fair value and  amortized  cost of  available-for-sale  securities by
       contractual  maturity  at  December  31,  1999 is shown  below.  Expected
       maturities may differ from  contractual  maturities  because many issuers
       have the  right to call or prepay  obligations  with or  without  call or
       prepayment penalties.

<TABLE>
<CAPTION>
                                                                           1999
                                                           -------------------------------------
                                                                 Fair             Amortized
       (In thousands)                                           value                cost
                                                           -----------------   -----------------
<S>                                                       <C>                 <C>
       Maturing within 1 year                             $        2,252      $        2,305
       After 1 year but within 5 years                             1,347               1,368
       After 5 years but within 10 years                             763                 806
       After 10 years                                                445                 499
       Marketable equity securities
                                                           -----------------   -----------------
                          Total                           $        4,807      $        4,978
                                                           =================   =================
</TABLE>

       Gross   realized   gains   and   gross   realized   losses  on  sales  of
       available-for-sale  securities were $13,532 and $9,325, respectively,  in
       1999 and $12,996  and $4,236,  respectively,  in 1998.  Gross  unrealized
       holding losses in the available-for-sale  securities at December 31, 1999
       and 1998 were $171,348 and $13,348, respectively,  while gross unrealized
       holding gains were $309 and $15,953, respectively.

       Other  investments  include $585 thousand of Federal  Reserve Bank stock,
       $346 thousand of Federal Home Loan Bank stock,  $63 thousand of Community
       Bankers' Bank stock and $21 thousand in other investments.  As members of
       the  Federal  Reserve  Bank of  Richmond  and  Federal  Home Loan Bank of
       Atlanta, the Company's banking subsidiaries are required to hold stock in
       these entities.  Stock

                                       10
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       membership in Community  Bankers' Bank allows the Company to  participate
       in loan  purchases or sales  including  participations.  These stocks are
       carried at cost since no active trading markets exist.

       Securities  available-for-sale  that were  pledged  to secure  short-term
       borrowings had fair values of $2,834,867 at December 31, 1999. There were
       no pledged investment securities as of December 31, 1998.


(4)    Loans Receivable

       The  loan  portfolio  at  December  31,  1999 and  1998  consists  of the
       following:

<TABLE>
<CAPTION>
       (In thousands)                                                                   1999                1998
                                                                                 -----------------  ------------------
<S>                                                                              <C>                <C>
       Commercial                                                                $       22,558     $         5,138
       Real estate - commercial                                                          19,780               3,507
       Real estate - construction                                                           870                 760
       Real estate - residential                                                         11,851               5,529
       Home equity lines                                                                  3,777               1,040
       Consumer                                                                           9,311                 369
                                                                                  -----------------  ------------------
                                                                                         68,147              16,343
       Net deferred loan fees, premiums and discounts                                        20                 (16)
                                                                                  -----------------  ------------------
                          Loans receivable, net of fees                                  68,167              16,327
       Allowance for loan losses                                                           (726)               (212)
                                                                                  -----------------  ------------------
                          Loans receivable, net of fees and allowance            $       67,441      $       16,115
                                                                                  =================  ==================
</TABLE>

       Most of the Company's  loans,  commitments  and standby letters of credit
       have  been  granted  to  customers   located  in  the  Washington,   D.C.
       metropolitan  area. The  concentrations of credit by type of loan are set
       forth above. Cardinal Bank, N.A., Cardinal  Bank-Manassas/Prince William,
       N.A.  and  Cardinal   Bank-Dulles,   N.A.,  as  a  matter  of  regulatory
       restriction,  do not extend credit, net of participated  amounts,  to any
       single  borrower  or group of related  borrowers  in excess of  $855,000,
       $1,004,000, and $975,000, respectively.

       An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
       (In thousands)                                                             1999               1998
                                                                            ----------------   ----------------
<S>                                                                        <C>                <C>
       Balance, beginning of year                                          $          212     $          --
       Provision for loan losses                                                      514                212
       Loans charged off                                                              --                 --
       Recoveries                                                                     --                 --
                                                                            ----------------   ----------------
       Balance, end of year                                                $          726     $          212
                                                                            ================   ================
</TABLE>
       There were no impaired or nonaccrual loans at December 31, 1999 and 1998,
       or during the years then ended.

                                       11
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(5)    Premises and Equipment

       Components  of  premises  and  equipment  included  in  the  consolidated
       statements of condition at December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
                                                                                       1999               1998

                                                                                 -----------------  ------------------
<S>                                                                             <C>                <C>
       Land                                                                     $          197     $            20
       Building                                                                            789                 --
       Furniture and equipment                                                           2,413               1,334
       Leasehold improvements                                                            1,267                 582
                                                                                 -----------------  ------------------
                          Total cost                                                     4,666               1,936
       Less accumulated depreciation and amortization                                      463                 107
                                                                                 -----------------  ------------------
                          Premises and equipment, net                           $        4,203     $         1,829
                                                                                 =================  ==================
</TABLE>

       The Company has entered into leases for office  space over various  terms
       beginning  January  1998.  The leases are subject to annual  increases as
       well as allocations of real estate taxes and certain operating expenses.

       Minimum future rental payments under the noncancelable  operating leases,
       as of  December  31,  1999  for each of the next  five  years  and in the
       aggregate, are as follows:

       Year ending December 31,                                    Amount
                                                              -----------------
       2000                                                  $      720,177
       2001                                                         741,075
       2002                                                         762,288
       2003                                                         784,139
       2004                                                         489,774
       Thereafter                                                 2,997,433
                                                              -----------------
                                                             $    6,494,886
                                                              =================

       The  total  rent  expense  was  $742,179  and  $71,687  in 1999 and 1998,
       respectively.

(6)    Deposits

       Deposits consist of the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
       (In thousands)                                                                    1999                1998
                                                                                   -----------------   -----------------
<S>                                                                               <C>                 <C>
       Demand deposits                                                            $          12,330   $        5,044
       Interest checking                                                                      3,891            1,746
       Money market and statement savings                                                    11,499            3,471
       Certificates of deposit                                                               32,153           11,606
                                                                                   -----------------   -----------------
                                                                                  $          59,873   $       21,867
                                                                                   =================   =================
</TABLE>
                                       12
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Interest expense by deposit categories is as follows:
<TABLE>
<CAPTION>
                                                              1999                1998
                                                        -----------------   -----------------
<S>                                                    <C>                 <C>
       Interest checking                               $          48,527   $          11,088
       Money market and statement savings                        271,140              87,832
       Certificates of deposit                                   887,215             239,688
                                                        -----------------   -----------------
                                                       $       1,206,882   $         338,608
                                                        =================   =================
</TABLE>

       The aggregate amount of time deposits,  each with a minimum  denomination
       of  $100,000  was   $22,290,439   and   $1,056,580   in  1999  and  1998,
       respectively.

       At December 31, 1999, the scheduled maturities of CDs are as follows:

       (In thousands)
       2000                                            $       11,906
       2001                                                    17,195
       2002                                                     1,851
       2003                                                       299
       2004 and thereafter                                        902
                                                        -----------------
                                                       $       32,153
                                                        =================

(7)    Borrowings

       The  Company has  obtained  advances  from the Federal  Home Loan Bank of
       Atlanta  in the  amount  of $6.0  million  in 1999.  The  Company  had no
       advances in 1998. As of December 31, 1999,  the Company had the following
       advances outstanding:
<TABLE>
<CAPTION>

                                                                                                           Amount
            Advance Date           Interest Rate            Term of Advance            Date Due         Outstanding
       -----------------------  ---------------------   -------------------------   ---------------   -----------------
<S>                                            <C>             <C>                     <C>           <C>
             12/09/99                          6.15%            6 months               06/09/00      $       3,000,000
             12/21/99                          6.35%            6 months               06/21/00              1,000,000
             12/23/99                          6.53%           12 months               12/26/00              2,000,000
                                                                                                      -----------------
                                                                                                     $       6,000,000
                                                                                                      =================
</TABLE>

       Total interest expense for the year ended December 31, 1999 was $97,775.

(8)    Income Taxes

       The  Company  and its  subsidiaries  file  consolidated  tax returns on a
       calendar-year  basis.  The  Company  had no  provision  for  current  and
       deferred  income  taxes for the years ended  December  31, 1999 and 1998,
       respectively.

                                       13
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       The provision  for income taxes is  reconciled to the amount  computed by
       applying the federal  corporate tax rate to income before taxes and is as
       follows:
<TABLE>
<CAPTION>
                                                                                         1999                1998
                                                                                   -----------------   -----------------
<S>                                                                               <C>                 <C>
       Income tax (benefit) at federal corporate rate                             $   (1,373,165)     $     (576,757)
       Nondeductible expenses                                                             18,363               1,870
       Change in valuation allowance                                                   1,354,802             574,887
                                                                                   -----------------   -----------------
                                                                                  $           --      $            --
                                                                                   =================   =================
</TABLE>

       The tax benefits of temporary differences between the financial reporting
       basis  and  income  tax  basis of assets  and  liabilities  relate to the
       following:
<TABLE>
<CAPTION>
                                                                                         1999                1998
                                                                                   -----------------   -----------------
<S>                                                                               <C>                 <C>
       Deferred tax assets:
           Bad debts                                                              $      223,126      $       64,465
           Organization and other costs                                                   71,438              18,730
           Net operating loss carryforwards                                            1,765,588             538,901
           Unrealized (gains) losses on investments available-for-sale                    58,153                (886)
           Other                                                                           6,890                 567
                                                                                   -----------------   -----------------
                          Total gross deferred assets                                  2,125,195             621,777
       Less valuation allowance                                                       (2,026,756)           (612,915)
                                                                                   -----------------   -----------------
                          Net deferred tax assets                                         98,439               8,862
                                                                                   -----------------   -----------------
       Deferred tax liabilities:
           Prepaid expenses                                                               (6,960)             (8,862)
           Depreciation                                                                  (91,479)                --
                                                                                   -----------------   -----------------
                          Total gross deferred tax liabilities                    $          --       $          --
                                                                                   =================   =================

</TABLE>

       Deferred income taxes reflect temporary differences in the recognition of
       revenue and expenses for tax reporting and financial  statement purposes,
       principally  because certain items, such as depreciation and amortization
       are  recognized  in different  periods for  financial  reporting  and tax
       return  purposes.  A valuation  allowance in the amount of  $2,026,756 at
       December 31, 1999 and $612,915 at December 31, 1998 has been  established
       for  deferred tax assets as  realization  is  dependent  upon  generating
       future taxable income.

       The  Company  has  net  operating  loss  carryforwards  of  approximately
       $5,192,906  at December  31, 1999 which are  available  to offset  future
       taxable income. There are no annual limitations on utilization of the net
       operating loss carryforwards.


(9)    Regulatory Matters

       The Company's banking  subsidiaries ("the Banks"), as national banks, are
       subject to the dividend  restrictions set forth by the Comptroller of the
       Currency.  Under such restrictions,  the Banks may not, without the prior
       approval of the Comptroller of the Currency,  declare dividends in excess
       of the sum of the current year's  earnings (as defined) plus the retained
       earnings  (as  defined)  from the prior two years.  At December 31, 1999,
       there were no earnings against which dividends could be paid.

                                       14
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       The Banks are required to maintain a minimum average reserve balance with
       the Federal Reserve Bank. The average amount of the required  reserve was
       $150,000 for 1999.  As members of the Federal  Reserve  Bank system,  the
       Banks are  required  to  subscribe  to  shares of $100 par value  Federal
       Reserve Bank stock equal to 6 percent of the Bank's  capital and surplus.
       The Banks are  required  to pay for  one-half  of the  subscription.  The
       remaining amount is subject to call when deemed necessary by the Board of
       Governors of the Federal Reserve.

       The  Federal  Deposit  Insurance  Corporation  Improvement  Act  of  1991
       ("FDICIA")  requires the  regulators to stratify  institutions  into five
       quality tiers based upon their relative capital strengths and to increase
       progressively  the degree of  regulation  over the  weaker  institutions,
       limits the pass through deposit  insurance  treatment of certain types of
       accounts,  adopts a "truth in savings" program, calls for the adoption of
       risk-based  premiums  on  deposit  insurance  and  requires  the Banks to
       observe  insider credit  underwriting  products no less strict than those
       applied to comparable noninsider transactions.

       At  December  31,  1999,  the Company  and its  subsidiary  banks met all
       regulatory  capital  requirements.  The key  measures of capital are: (1)
       total  capital  (Tier I capital plus the  allowance for loan losses up to
       certain limitations) as a percent of total risk-weighted assets, (2) Tier
       I capital  (as  defined) as a percent of total  risk-weighted  assets (as
       defined),  and (3) Tier I capital  (as  defined)  as a  percent  of total
       assets (as defined).
<TABLE>
<CAPTION>
       As of December 31, 1999                                                                            To Be Well
       (in thousands)                                                                                  Capitalized Under
                                                                              For Capital              Prompt Corrective
                                                        Actual             Adequacy Purposes           Action Provisions
                                                 ----------------------  -----------------------   -----------------------
                                                  Amount      Ratio        Amount       Ratio       Amount       Ratio
                                                 ---------- -----------  -----------  ----------   ----------  -----------
<S>                                             <C>           <C>        <C>             <C>      <C>             <C>
       Total capital to risk weighted assets    $  31,585     38.75%     $   6,521  >=   8.00%    $   8,151  >=   10.00%
       Tier I capital to risk weighted assets      30,858     37.86%         3,261  >=   4.00%        4,891  >=    6.00%
       Tier I capital to average assets            30,858     32.55%         3,881  >=   4.00%        4,852  >=    5.00%

       As of December 31, 1998                                                                            To Be Well
       (in thousands)                                                                                  Capitalized Under
                                                                              For Capital              Prompt Corrective
                                                        Actual             Adequacy Purposes           Action Provisions
                                                 ----------------------  -----------------------   -----------------------
                                                  Amount      Ratio        Amount       Ratio       Amount       Ratio
                                                 ---------- -----------  -----------  ----------   ----------  -----------
       Total capital to risk weighted assets    $  34,938      147.80%   $   1,892  >=   8.00%    $   2,365  >=   10.00%
       Tier I capital to risk weighted assets      34,725      146.90%         946  >=   4.00%        1,419  >=    6.00%
       Tier I capital to average assets            34,725       60.20%       2,292  >=   4.00%        2,865  >=    5.00%

</TABLE>

(10)   Related-Party Transactions

       Officers,  directors,  employees and their related business interests are
       loan  customers  in the  ordinary  course of  business.  In  management's
       opinion,  these loans are made on substantially the same terms, including
       interest  rates  and  collateral,  as  those  prevailing  at the time for
       comparable  loans with other  persons and do not involve more than normal
       risk of collectibility or present other unfavorable features.

                                       15
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Analysis of activity for loans to related parties is as follows:
<TABLE>
<CAPTION>
       (In thousands)                                                                   1999                1998
                                                                                  -----------------   -----------------
<S>                                                                             <C>                  <C>
       Balance, beginning of year                                               $           996      $          --
       New loans                                                                          2,336                 999
       Loans paid off or paid down                                                         (456)                 (3)
                                                                                  -----------------   -----------------
       Balance, end of year                                                     $         2,876      $          996
                                                                                  =================   =================
</TABLE>

(11)   Earnings Per Share

       The following discloses the calculation of basic and diluted earnings per
       share.  Because the Company has net losses due to the start-up  nature of
       the  organization,  stock options issued have an anti-dilutive  effect on
       the earnings per share calculation.
<TABLE>
<CAPTION>
                                                                                        1999                1998
                                                                                  -----------------   -----------------
<S>                                                                              <C>                 <C>
       Net loss                                                                  $      (4,038,719)  $      (1,696,345)
       Weighted average shares for basic and diluted                                     4,240,819           2,646,036
       Basic earnings (loss) per share                                           $           (0.95)  $           (0.64)
       Diluted earnings (loss) per share                                         $           (0.95)  $           (0.64)

</TABLE>

(12)   Employee Benefit Plan

       The Company  established  a 401(k) plan in January  1998 for all eligible
       employees. The Company began to match a portion of employee contributions
       beginning January 1, 1999. The Company's match was $60,513 in 1999.

(13)   Director and Employee Stock Compensation Plan

       In 1998, the Company adopted a stock option plan (the "Plan") pursuant to
       which the  Company  may grant  stock  options to  members of its  holding
       company and  subsidiaries'  Board of  Directors.  The Company has granted
       options to purchase up to 178,151  shares of common  stock as of December
       31, 1999.

       The Company  also granted  stock awards to an employee.  The stock awards
       vest ratably over a three year period and are  contingent  upon continued
       employment  of the  individual  and  other  factors  as set  forth in the
       agreement.  As of December 31, 1999,  the Company  recognized  $12,000 in
       compensation expense related to the stock awards.

       Stock  options  are granted  with an exercise  price equal to the stock's
       fair  market  value at the date of grant.  Director  stock  options  have
       10-year terms and vest and become fully exercisable immediately. Employee
       stock  options have 10-year  terms and vest and become fully  exercisable
       after three years.

                                       16
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
                                                                               Weighted
                                                                                Average
                                                          Number of            Exercise
                                                            Shares               Price
                                                       -----------------    ----------------
<S>                                                             <C>                 <C>
       Balance at December 31, 1997                                 --         $        --
       Granted                                                   13,750                6.75
       Exercised                                                    --                  --
       Forfeited                                                    --                  --
       Expired                                                      --                  --
                                                       -----------------    ----------------
       Balance at December 31, 1998                              13,750                6.75
       Granted                                                  164,841                6.84
       Exercised                                                    --                  --
       Forfeited                                                    440                 --
       Expired                                                      --                  --
                                                       -----------------    ----------------
       Balance at December 31, 1999                             178,151        $      6.84
                                                       =================    ================
</TABLE>

       At December 31, 1999, the range of exercise  prices and  weighted-average
       remaining  contractual life of outstanding  options was $6.38 - $7.50 and
       9.2 years, respectively. All outstanding director options are exercisable
       at December 31, 1999.

       At December 31, 1999, there were 221,849  additional shares available for
       grant under the Plan. The per share  weighted-average fair value of stock
       options  granted  during  1999 was  $2.74 on the date of grant  using the
       Black Scholes option-pricing model (using an expected volatility over the
       expected  life  of the  options  of  37.5  percent)  with  the  following
       weighted-average  assumptions:  expected  dividend  yield  0.00  percent,
       risk-free  interest  rate of 4.94  percent,  and an  expected  life of 10
       years.

       The Company  applies APB Opinion No. 25 in  accounting  for its Plan and,
       accordingly,  no  compensation  cost has been  recognized  for its  stock
       options.  Had the Company determined  compensation cost based on the fair
       value at the grant date for its stock  options  under SFAS No.  123,  the
       Company's  net loss would have been  increased  to the pro forma  amounts
       indicated below:
<TABLE>
<CAPTION>
                                                               1999                1998
                                                         -----------------   -----------------
<S>                                                     <C>                 <C>
       Net loss:
           As reported                                  $      (4,038,719)  $      (1,696,345)
           Pro forma                                           (4,490,383)         (1,751,758)
       Loss per share:
           As reported                                  $           (0.95)  $           (0.64)
           Pro forma                                                (1.06)              (0.66)
</TABLE>

                                       17
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


(14)   Segment Reporting

       The Company  operates  and reports in two business  segments,  commercial
       banking and investment advisory services.  The commercial banking segment
       includes both commercial and consumer lending and provides customers such
       products as commercial loans, real estate loans, other business financing
       and consumer  loans.  In addition,  this segment also provides  customers
       with  several  choices  of  deposit  products  including  demand  deposit
       accounts,  savings accounts and  certificates of deposit.  The investment
       advisory  services segment provides  advisory  services to businesses and
       individuals including financial planning and retirement/estate planning.

       Information  about  reportable  segments,   and  reconciliation  of  such
       information to the  consolidated  financial  statements as of and for the
       year ended December 31, 1999 follows:
<TABLE>
<CAPTION>
                                        Commercial        Investment                   Intersegment
                                         Banking           Advisory       Other        Elimination      Consolidated
                                    ------------------  ------------  -------------  ----------------  ---------------
<S>                                  <C>                <C>           <C>              <C>              <C>
       Net interest income           $      2,136,974   $    --       $    887,738     $      --        $   3,024,712
       Provision for loan losses              513,847        --             --                --              513,847
       Non-interest income                    310,441     1,017,924         --                (7,880)       1,320,485
       Non-interest expense                 4,240,540     1,612,411      2,017,118            --            7,870,069
       Net income (loss)                   (2,306,972)     (594,487)    (1,129,380)           (7,880)      (4,038,719)
       Total assets                  $     91,628,884   $   792,792   $ 31,056,219     $ (26,444,928)   $  97,032,967
                                     -----------------  ------------  -------------  ----------------  ---------------
</TABLE>

       The Company does not have operating  segments other than those  reported.
       Parent  Company  financial  information is included in the Other category
       and represents the overhead  function  rather than an operating  segment.
       Comparable  information for December 31, 1998 is not shown as the Company
       had one operating  segment and one  subsidiary,  Cardinal Bank,  N.A. The
       investment advisory segment began operations in February 1999.


(15)   Financial Instruments with Off Balance Sheet Risk

       The Company is a party to financial  instruments  with  off-balance-sheet
       risk in the normal course of business to meet the financing  needs of its
       customers.  These  financial  instruments  include  commitments to extend
       credit  and  standby   letters  of  credit  and   financial   guarantees.
       Commitments to extend credit are agreements to lend to a customer so long
       as there is no violation of any  condition  established  in the contract.
       Commitments  usually have fixed  expiration dates up to one year or other
       termination  clauses and may require  payment of a fee. Since many of the
       commitments  are expected to expire  without being drawn upon,  the total
       commitment amounts do not necessarily represent future cash requirements.

       Standby  letters  of credit  are  conditional  commitments  issued by the
       Company to guarantee the performance of the contractual  obligations by a
       customer to a third party. The majority of these guarantees  extend until
       satisfactory  completion of the customer's contractual  obligations.  All
       standby   letters  of  credit   outstanding  at  December  31,  1999  are
       collateralized.

       Those instruments  represent  obligations of the Company to extend credit
       or  guarantee  borrowings,  therefore,  they  are  not  recorded  on  the
       consolidated  statements of financial  condition.  The rates and terms of
       these  instruments are competitive with others in the market in which the
       Company operates. Almost all of these instruments as of December 31, 1999
       have floating rates, therefore significantly mitigating the market risk.

                                       18
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Those instruments may involve, to varying degrees, elements of credit and
       interest rate risk in excess of the amount recognized in the consolidated
       statements  of  financial  condition.  Credit  risk  is  defined  as  the
       possibility of sustaining a loss because the other parties to a financial
       instrument  fail to perform in accordance with the terms of the contract.
       The Company's  maximum  exposure to credit loss under standby  letters of
       credit and commitments to extend credit is represented by the contractual
       amounts of those instruments.
<TABLE>
<CAPTION>
<S>                                                                            <C>
       (In thousands)
       Financial instruments whose contract amounts represent potential
          credit risk:
              Commitments to extend credit                                     $       19,411
              Standby letters of credit                                                   916
                                                                                ==============
</TABLE>

       The Company  uses the same  credit  policies  in making  commitments  and
       conditional obligations as it does for on-balance-sheet  instruments. The
       Company  evaluates  each  customer's  creditworthiness  on a case-by-case
       basis and  requires  collateral  to support  financial  instruments  when
       deemed  necessary.  The amount of collateral  obtained upon  extension of
       credit  is  based  on  management's   evaluation  of  the   counterparty.
       Collateral  held varies but may  include  deposits  held by the  Company,
       marketable securities,  accounts receivable,  inventory,  property, plant
       and equipment, and income-producing commercial properties.


(16)   Disclosures of Fair Value of Financial Instruments

       The assumptions used and the estimates disclosed  represent  management's
       best judgment of appropriate valuation methods. These estimates are based
       on pertinent information available to management as of December 31, 1999.
       In certain cases,  fair values are not subject to precise  quantification
       or  verification  and may  change as  economic  and market  factors,  and
       management's evaluation of those factors change.

       Although  management  uses its best judgment in estimating the fair value
       of these  financial  instruments,  there are inherent  limitations in any
       estimation  technique.  Therefore,  these  fair value  estimates  are not
       necessarily indicative of the amounts that the Company would realize in a
       market transaction. Because of the wide range of valuation techniques and
       the numerous  estimates  which must be made,  it may be difficult to make
       reasonable comparisons of the Company's fair value information to that of
       other financial institutions. It is important that the many uncertainties
       discussed  above be  considered  when  using  the  estimated  fair  value
       disclosures  and to  realize  that  because of these  uncertainties,  the
       aggregate   fair  value   amount   should  in  no  way  be  construed  as
       representative of the underlying value of the Company.

       Fair Value of Financial Instruments

       The following  summarizes the significant  methodologies  and assumptions
       used in estimating the fair values presented in the accompanying table.

       Cash and Cash Equivalents

       The carrying amount of cash and cash  equivalents is used as a reasonable
       estimate of fair value.

                                       19
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Investment Securities and Other Investments

       Fair values for  investment  securities are based on quoted market prices
       or prices quoted for similar financial instruments.  Fair value for other
       investments  is estimated as their cost since no active  trading  markets
       exist.

       Loans Receivable

       In order to determine the fair market value for loans, the loan portfolio
       was segmented  based on loan type,  credit  quality and  maturities.  For
       certain  variable  rate loans with no  significant  credit  concerns  and
       frequent repricings,  estimated fair values are based on current carrying
       amounts.  The fair values of other loans are estimated  using  discounted
       cash flow  analyses,  using interest  rates  currently  being offered for
       loans with similar terms to borrowers of similar credit quality.

       Deposits

       The fair values  disclosed for demand deposits are, by definition,  equal
       to the amount  payable on demand at the  reporting  date (that is,  their
       carrying  amounts.)  The carrying  amounts of variable  rate,  fixed-term
       money market accounts and certificates of deposit (CDs) approximate their
       fair value at the  reporting  date.  Fair values for  fixed-rate  CDs are
       estimated using a discounted cash flow  calculation that applies interest
       rates currently being offered on certificates to a schedule of aggregated
       expected monthly maturities on time deposits.

       Commitments

       The fair  value of these  financial  instruments  is based on the  credit
       quality and relationship,  fees, interest rates,  probability of funding,
       compensating   balance  and  other  convenants  or  requirements.   These
       commitments  generally have fixed  expiration  dates expiring  within one
       year. Many  commitments are expected to, and typically do, expire without
       being  drawn  upon.  The  rates  and  terms  of  these   instruments  are
       competitive with others in the market in which the Company operates.  The
       carrying  amounts  are  reasonable  estimates  of the fair value of these
       financial instruments. The carrying amounts of these instruments are zero
       at December 31, 1999.

       Accrued Interest

       The carrying amounts of accrued interest approximate their fair values.


                                       20
<PAGE>

                CARDINAL FINANCIAL CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


       Fair Value of Financial Instruments as of December 31, 1999
<TABLE>
<CAPTION>
                                                                                           December 31, 1999
                                                                                  -------------------------------------
                                                                                      Carrying           Estimated
       (In thousands)                                                                  Amount            Fair Value
                                                                                  -----------------   -----------------
<S>                                                                              <C>                 <C>
       Financial assets:
           Cash and cash equivalents                                             $       19,043      $       19,043
           Investment securities and other investments                                    5,822               5,822
           Loans receivable                                                              68,147              67,622
           Accrued interest receivable                                                      351                 351
       Financial liabilities:
           Demand deposits                                                       $       12,330      $       12,330
           Interest checking                                                              3,891               3,891
           Money market and statement savings                                            11,499              11,499
           Certificates of deposit                                                       32,153              32,124
           Accrued interest payable                                                          48                  48
</TABLE>




(17)   Other Operating Expenses

       Other  operating  expenses  for  December  31, 1999 and 1998  include the
       following:
<TABLE>
<CAPTION>
                                                                                        1999                1998
                                                                                  -----------------   -----------------
<S>                                                                             <C>                  <C>
       Data processing                                                          $          353,498   $         104,067
       Stationary and supplies                                                             322,586             133,821
       Brokerage clearing                                                                  197,822                   -
       Advertising and marketing                                                           175,100              82,069
       Telecommunications                                                                  163,481              36,591
       Bank operations                                                                     125,541              38,216
       Premises and equipment                                                              103,739               6,047
       Other taxes                                                                          94,670              11,225
       Insurance                                                                            85,182              36,719
       Travel and entertainment                                                             79,128              54,031
       Dues and membership                                                                  57,959              42,708
       Miscellaneous                                                                       171,647              65,925
                                                                                  -----------------   -----------------
                                                                                $        1,930,353   $         611,419
                                                                                  =================   =================
</TABLE>
                                       21
<PAGE>

                                   SIGNATURES

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934,  as  amended,  the  registrant  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                      CARDINAL FINANCIAL CORPORATION



Date:  March 27, 2000                 By: /s/ L. Burwell Gunn, Jr.
                                          --------------------------------------
                                          L. Burwell Gunn, Jr.
                                          President and Chief Executive Officer


         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
                Signature                                         Title                              Date
                ---------                                         -----                              ----
<S>                                                   <C>                                       <C>

         /s/ L. Burwell Gunn, Jr.                     President and Chief Executive             March 27, 2000
-------------------------------------------               Officer and Director
            L. Burwell Gunn, Jr.                      (Principal Executive Officer)


          /s/ Joseph L. Borrelli                         Chief Financial Officer                March 27, 2000
-------------------------------------------             (Principal Financial and
             Joseph L. Borrelli                            Accounting Officer)


                                                                Director                        March __, 2000
-------------------------------------------
              Robert M. Barlow


          /s/ Wayne W. Broadwater                               Director                        March 27, 2000
-------------------------------------------
             Wayne W. Broadwater


            /s/ Nancy K. Falck                                  Director                        March 27, 2000
-------------------------------------------
               Nancy K. Falck


             /s/ Anne B. Hazel                                  Director                        March 27, 2000
-------------------------------------------
               Anne B. Hazel


         /s/ Harvey W. Huntzinger                               Director                        March 27, 2000
-------------------------------------------
            Harvey W. Huntzinger

<PAGE>

                Signature                                         Title                              Date
                ---------                                         -----                              ----


            /s/ Jones V. Isaac                                  Director                        March 27, 2000
-------------------------------------------
               Jones V. Isaac


             /s/ Dale B. Peck                                   Director                        March 27, 2000
-------------------------------------------
                Dale B. Peck


            /s/ James D. Russo                                  Director                        March 27, 2000
-------------------------------------------
               James D. Russo


           /s/ John H. Rust, Jr.                                Director                        March 27, 2000
-------------------------------------------
              John H. Rust, Jr.


           /s/ J. Hamilton Lambert                              Director                        March 27, 2000
-------------------------------------------
             J. Hamilton Lambert

</TABLE>


<PAGE>

                                  EXHIBIT INDEX

   Number                            Document

     3.1           Articles of Incorporation of Cardinal Financial  Corporation,
                   attached as Exhibit 3.1 to the Registration Statement on Form
                   SB-2,  Registration No. 333-52279,  filed with the Commission
                   on May 8,  1998 (the  "Form  SB-2"),  incorporated  herein by
                   reference.

     3.2           Bylaws of Cardinal Financial Corporation, attached as Exhibit
                   3.2 to the Form SB-2, incorporated herein by reference.

     4             Form of Stock Certificate,  attached as Exhibit 4 to the Form
                   SB-2, incorporated herein by reference.

     10.1          Employment Agreement, dated as of September 30, 1997, between
                   Commercial  Fidelity  Financial  Partnership  (predecessor to
                   Cardinal  Financial  Corporation)  and L. Burwell Gunn,  Jr.,
                   attached as Exhibit 10 to the Form SB-2,  incorporated herein
                   by reference.

     10.2          Employment  Agreement,  dated as of October 13, 1998, between
                   Cardinal Financial  Corporation and Thomas C. Kane,  attached
                   as Exhibit 10.2 to the Company's Annual Report on Form 10-KSB
                   for  the  year  ended  December  31,  1998  (the  "1998  Form
                   10-KSB"), incorporated herein by reference.

     10.3          Employment Agreement,  dated as of December 17, 1998, between
                   Cardinal  Financial  Corporation  and Edgar M. Andrews,  III,
                   attached   as   Exhibit   10.3  to  the  1998  Form   10-KSB,
                   incorporated herein by reference.

     10.4          Employment Agreement,  dated as of December 17, 1998, between
                   Cardinal Financial  Corporation and Christopher W. Bergstrom,
                   attached   as   Exhibit   10.4  to  the  1998  Form   10-KSB,
                   incorporated herein by reference.

     10.5          Employment Agreement,  dated as of February 17, 1999, between
                   Cardinal  Financial   Corporation  and  Joseph  L.  Borrelli,
                   attached   as   Exhibit   10.5  to  the  1998  Form   10-KSB,
                   incorporated herein by reference.

     10.6          Employment Agreement,  dated as of February 12, 1999, between
                   Cardinal   Financial   Corporation  and  F.  Kevin  Reynolds,
                   attached   as   Exhibit   10.6  to  the  1998  Form   10-KSB,
                   incorporated herein by reference.

     10.7          Employment  Agreement,  dated as of August 31, 1998,  between
                   Cardinal Financial Corporation and Greg D. Wheeless, attached
                   as Exhibit 10.7 to the 1998 Form 10-KSB,  incorporated herein
                   by reference.

     21            Subsidiaries of the Registrant.

     27            Financial Data Schedule (filed electronically only).