FIRST CENTURY BANKSHARES, INC.



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2003 Annual Report





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Common Shares



Common shares are not traded on any stock exchange. Quotations may be obtained through the OTC Bulletin Board under the trading symbol FCBS.



Stockholder Inquiries



Communications regarding transfer requirements and lost certificates should be directed to the transfer agent.



Transfer Agent/Registrar



Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016-3572, (800) 368-5948,
www.rtco.com



Form 10-K Information



Copies of the First Century Bankshares, Inc. Annual Report to the Securities and Exchange
Commission, Form 10K, may be obtained by writing J. Ronald Hypes, Treasurer, First Century Bankshares, Inc., P.O. Box 1559, Bluefield, WV 24701.



Annual Meeting



The annual meeting of the stockholders will be held at 11:00 AM, Tuesday, April 20, 2004, at Fincastle Country Club, 1000 Country Club Drive, Bluefield, Virginia. All stockholders are cordially invited to attend.



Table of Contents



|                                                                                      |  |           
|------------------------------------------------------------------------------------- |  | ----------
|Financial Highlights                                                                  |  | 1         
|Letter to the Stockholders                                                            |  | 2         
|Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 3         
|Consolidated Statements of Financial Condition                                        |  | 24        
|Consolidated Statements of Income and Comprehensive Income                            |  | 25        
|Consolidated Statements of Cash Flows                                                 |  | 26        
|Consolidated Statements of Changes in Stockholders Equity                            |  | 27        
|Notes to Consolidated Financial Statements                                            |  | 28        
|Report of Independent Auditors                                                        |  | 50        
|Boards of Directors                                                                   |  | 51        
|Corporate and Bank Officers                                                           |  | 53        
|First Century Bankshares, Inc. Subsidiary Locations                                   |  | Back Cover





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Financial Highlights



|                              |  |                                              |         |      |   |         |  |   |        
|----------------------------- |  | -------------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                              |  | 2003                                         |         | 2002 |   | 2001   
|                              |  | (Dollars in Thousands, Except Per ShareData)
|FOR THE YEAR                  |  |                                              |         |      |   |         |  |   |        
|Total operating income        |  | $                                            | 22,060  |      | $ | 25,785  |  | $ | 29,373 
|Total operating expense       |  |                                              | 17,690  |      |   | 20,435  |  |   | 26,104 
|Net income                    |  |                                              | 2,792   |      |   | 3,375   |  |   | 2,145  
|Cash dividends declared       |  |                                              | 1,692   |      |   | 1,694   |  |   | 1,700  
|                              |  |                                              |         |      |   |         |  |   |        
|AT YEAR END                   |  |                                              |         |      |   |         |  |   |        
|Assets                        |  | $                                            | 363,727 |      | $ | 361,264 |  | $ | 369,203
|Deposits                      |  |                                              | 307,719 |      |   | 307,947 |  |   | 317,373
|Loans                         |  |                                              | 246,950 |      |   | 236,460 |  |   | 244,068
|Securities                    |  |                                              | 78,444  |      |   | 88,949  |  |   | 87,519 
|Stockholders equity          |  |                                              | 34,994  |      |   | 33,818  |  |   | 32,967 
|                              |  |                                              |         |      |   |         |  |   |        
|PER COMMON SHARE              |  |                                              |         |      |   |         |  |   |        
|Net income, basic and diluted |  | $                                            | 1.40    |      | $ | 1.69    |  | $ | 1.07   
|Cash dividends declared       |  |                                              | 0.85    |      |   | 0.85    |  |   | 0.85   
|Book value                    |  |                                              | 17.58   |      |   | 16.99   |  |   | 16.48  



|                                    |  |                                                     
|----------------------------------- |  | ----------------------------------------------------
|LOANS ($ in millions)  [GRAPHIC]    |  | ASSETS ($ in millions)  [GRAPHIC]                   
|DEPOSITS ($ in millions)  [GRAPHIC] |  | BOOK VALUE PER SHARE ($ per common share)  [GRAPHIC]



| |  |        |  |                               
| |  | ------ |  | ------------------------------
| |  | Page 1 |  | First Century Bankshares, Inc.



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Letter to the Stockholders



To Our Stockholders, Customers, and Friends:



The Directors, Officers, and Employees of First Century Bankshares, Inc. and its wholly owned subsidiary, First Century
Bank, N.A., are pleased to present this Annual Report to our stockholders for the year 2003.



First Century Bankshares, Inc. had earnings of $2,792,000 for the year which was a decrease of 17% from the previous years earnings of $3,375,000. On a per share basis, net income decreased to $1.40 from $1.69.
This equated to a return on average assets of 0.77%, and a return on average equity of 8.27%. The information contained in this Annual Report will provide you with the details of the results of our operations for the year.



Total assets for the Corporation increased slightly from $361,264,000 at
December 31, 2002 to $363,727,000 at December 31, 2003. This reflects an increase of 1% for the past year. Management felt that with limited investment opportunities in a low rate environment in both loans and investment securities, that it was
necessary for the bank to maintain a stable asset base.



Managements philosophy has been to stay asset sensitive with variable pricing of loans and short maturities in the investment portfolio. This has allowed for plenty of liquidity on the balance sheet and also offered an opportunity to
re-price assets in a rising rate environment to allow for better management of our interest margin. Our philosophy will remain that we may give up short-term earnings for the long-term ability to re-price assets. Asset quality continues to remain
strong and non-performing assets are at historically low levels for the Corporation. We work everyday to continue to enhance our emerging credit culture that is value driven from the top, down and throughout the organization.



During 2003, we finalized the move from our Virginia Avenue location in
Bluefield, Virginia to Spruce and Spring Street. This new facility will allow us to better serve our customers in an easy access, full service environment. We also now have 24-hour banking with a new ATM at the location. Our staff and the Town of
Bluefield, Virginia are very excited about our expansion. We will continue to look for expansion opportunities in the Commonwealth as we expand our footprint in the future.



On March 15, 2004, we opened our newest location in Princeton, West Virginia. The new office is located at 145 Springhaven
Drive between Princeton Community Hospital and The Princeton Health and Fitness Center. With the reception we have received since moving to Princeton in 1986, we have outgrown our facility on Stafford Drive. We believe Princeton will be a very
strong market for the Corporation, and we believe two offices will better serve this market. This 6,000 square foot building is state of the art and offers a full range of financial services from checking accounts to loans, as well as, insurance and
fiduciary services. We will have a full time trust officer at this location to better serve this market. Please take the opportunity to visit our newest facility and let our very capable staff take care of all your banking needs. We want to continue
to enhance the number of services per household in the markets we serve, and we feel it is necessary to have a delivery system to provide One Stop Shopping for all our customers and prospects.



We believe that we are well positioned for the future to continue to provide
quality financial services to the customers of our region. If you feel we could better serve you please let us know. We ask for your continued support of the Corporation as we move forward. We want to meet your expectations as a full service
financial provider. Your confidence and continued support are greatly appreciated.



|                     
|---------------------
|Sincerely,           
|                     
|/s/ R. W. Wilkinson  
|                     
|R. W. Buz Wilkinson
|President & CEO      



|                               |  |        |  | 
|------------------------------ |  | ------ |  | 
|First Century Bankshares, Inc. |  | Page 2 |  | 



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Managements Discussion and Analysis of Financial Condition and Results of Operations



AVERAGE STATEMENTS OF FINANCIAL CONDITION AND NET INTEREST DIFFERENTIAL



|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|---------------------------------------------------------- |  | ---------------------- | ------- | - | -------------- | - | ---------- | ---- | ---- | -------------- |  | - | -------------- | - | ---------- | - | ------ | -------------- | ---- | - | -------------- | - | ---------- | - |  | - | ------ |  | ---- | -
|                                                           |  | 2003                   |         |   | 2002           |   |            | 2001 |     
|                                                           |  | (Dollars in Thousands) |        
|                                                           |  | AverageBalance         |         |   | Income/Expense |   | Yield/Rate |      |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |   |        | AverageBalance |      |   | Income/Expense |   | Yield/Rate |  
|ASSETS:                                                    |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Interest-bearing deposits with banks                       |  | $                      | 1,762   |   |                | $ | 16         |      | 0.91 | %              |  | $ | 4,407          |   |            | $ | 68     |                | 1.54 | % |                | $ | 6,462      |   |  | $ | 243    |  | 3.76 | %
|Securities available for sale and other equity securities: |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|U. S. Government securities                                |  |                        | 1,733   |   |                |   | 80         |      | 4.62 | %              |  |   | 2,802          |   |            |   | 157    |                | 5.60 | % |                |   | 3,200      |   |  |   | 212    |  | 6.63 | %
|U. S. Government agency securities                         |  |                        | 59,041  |   |                |   | 2,024      |      | 3.43 | %              |  |   | 66,642         |   |            |   | 3,458  |                | 5.19 | % |                |   | 62,994     |   |  |   | 4,120  |  | 6.54 | %
|Other securities                                           |  |                        | 10,204  |   |                |   | 570        |      | 5.59 | %              |  |   | 10,390         |   |            |   | 597    |                | 5.75 | % |                |   | 8,691      |   |  |   | 524    |  | 6.03 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total securities available for sale                        |  |                        | 70,978  |   |                |   | 2,674      |      | 3.77 | %              |  |   | 79,834         |   |            |   | 4,212  |                | 5.28 | % |                |   | 74,885     |   |  |   | 4,856  |  | 6.48 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Securities held to maturity:                               |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|U. S. Government agency securities                         |  |                        |        |   |                |   |           |      |     |                |  |   | 34             |   |            |   | 1      |                | 2.94 | % |                |   | 98         |   |  |   | 5      |  | 5.10 | %
|State and municipal securities                             |  |                        | 10,028  |   |                |   | 454        |      | 4.53 | %              |  |   | 9,942          |   |            |   | 499    |                | 5.02 | % |                |   | 10,784     |   |  |   | 545    |  | 5.05 | %
|Other securities                                           |  |                        | 124     |   |                |   | 9          |      | 7.26 | %              |  |   | 150            |   |            |   | 10     |                | 6.67 | % |                |   | 150        |   |  |   | 10     |  | 6.67 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total securities held to maturity                          |  |                        | 10,152  |   |                |   | 463        |      | 4.56 | %              |  |   | 10,126         |   |            |   | 510    |                | 5.04 | % |                |   | 11,032     |   |  |   | 560    |  | 5.08 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Federal funds sold                                         |  |                        | 4,678   |   |                |   | 50         |      | 1.07 | %              |  |   | 4,255          |   |            |   | 69     |                | 1.62 | % |                |   | 3,646      |   |  |   | 119    |  | 3.26 | %
|Loans                                                      |  |                        | 241,266 |   |                |   | 14,876     |      | 6.17 | %              |  |   | 236,130        |   |            |   | 16,675 |                | 7.06 | % |                |   | 245,606    |   |  |   | 19,829 |  | 8.07 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestearning assets                              |  |                        | 328,836 |   |                |   | 18,079     |      | 5.50 | %              |  |   | 334,752        |   |            |   | 21,534 |                | 6.43 | % |                |   | 341,631    |   |  |   | 25,607 |  | 7.50 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Allowance for loan losses                                  |  |                        | (3,016  | ) |                |   |            |      |      |                |  |   | (3,108         | ) |            |   |        |                |      |   |                |   | (3,132     | ) |  |   |        |  |      |  
|Cash and due from banksdemand                             |  |                        | 12,501  |   |                |   |            |      |      |                |  |   | 13,723         |   |            |   |        |                |      |   |                |   | 13,368     |   |  |   |        |  |      |  
|Premises and equipmentnet                                 |  |                        | 11,089  |   |                |   |            |      |      |                |  |   | 10,423         |   |            |   |        |                |      |   |                |   | 10,686     |   |  |   |        |  |      |  
|Other assets                                               |  |                        | 11,540  |   |                |   |            |      |      |                |  |   | 12,153         |   |            |   |        |                |      |   |                |   | 12,755     |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL ASSETS                                               |  | $                      | 360,950 |   |                |   |            |      |      |                |  | $ | 367,943        |   |            |   |        |                |      |   |                | $ | 375,308    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:                      |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Interestbearing demand deposits                           |  | $                      | 76,398  |   |                |   | 246        |      | 0.32 | %              |  | $ | 73,357         |   |            | $ | 513    |                | 0.70 | % |                | $ | 69,942     |   |  | $ | 890    |  | 1.27 | %
|Savings deposits                                           |  |                        | 69,563  |   |                |   | 601        |      | 0.86 | %              |  |   | 74,264         |   |            |   | 1,065  |                | 1.43 | % |                |   | 77,464     |   |  |   | 1,773  |  | 2.29 | %
|Time deposits                                              |  |                        | 124,104 |   |                |   | 2,990      |      | 2.41 | %              |  |   | 130,469        |   |            |   | 4,149  |                | 3.18 | % |                |   | 141,322    |   |  |   | 7,187  |  | 5.09 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestbearing deposits                            |  |                        | 270,065 |   |                |   | 3,837      |      | 1.42 | %              |  |   | 278,090        |   |            |   | 5,727  |                | 2.06 | % |                |   | 288,728    |   |  |   | 9,850  |  | 3.41 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Short-term debt                                            |  |                        | 15,550  |   |                |   | 75         |      | 0.48 | %              |  |   | 17,366         |   |            |   | 159    |                | 0.92 | % |                |   | 18,077     |   |  |   | 536    |  | 2.97 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Long-term debt                                             |  |                        |        |   |                |   |           |      |     |                |  |   |               |   |            |   |       |                |     |   |                |   |           |   |  |   |       |  |     |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestbearing liabilities                         |  |                        | 285,615 |   |                |   | 3,912      |      | 1.37 | %              |  |   | 295,456        |   |            |   | 5,886  |                | 1.99 | % |                |   | 306,805    |   |  |   | 10,386 |  | 3.39 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Demand deposits                                            |  |                        | 38,682  |   |                |   |            |      |      |                |  |   | 37,461         |   |            |   |        |                |      |   |                |   | 34,361     |   |  |   |        |  |      |  
|Other liabilities                                          |  |                        | 2,900   |   |                |   |            |      |      |                |  |   | 2,156          |   |            |   |        |                |      |   |                |   | 2,321      |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL LIABILITIES                                          |  |                        | 327,197 |   |                |   |            |      |      |                |  |   | 335,073        |   |            |   |        |                |      |   |                |   | 343,487    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Stockholders equity                                       |  |                        | 33,753  |   |                |   |            |      |      |                |  |   | 32,870         |   |            |   |        |                |      |   |                |   | 31,821     |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                 |  | $                      | 360,950 |   |                |   |            |      |      |                |  | $ | 367,943        |   |            |   |        |                |      |   |                | $ | 375,308    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Average rate paid to fund earning assets                   |  |                        |         |   |                |   |            |      | 1.19 | %              |  |   |                |   |            |   |        |                | 1.76 | % |                |   |            |   |  |   |        |  | 3.04 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|NET INTEREST DIFFERENTIAL                                  |  |                        |         |   |                | $ | 14,167     |      | 4.31 | %              |  |   |                |   |            | $ | 15,648 |                | 4.67 | % |                |   |            |   |  | $ | 15,221 |  | 4.46 | %
|                                                           |  |                        |         |   |                |   |            |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  



For purposes of this schedule,
interest on nonaccrual loans have been included only to the extent reflected in the income statement. However, the nonaccrual loan balance is included in the average amount outstanding. Income on loans includes loan fees of $619,000 in 2003,
$394,000 in 2002, and $254,000 in 2001. Average balances of securities available for sale are reported at amortized cost; excludes pretax unrealized gains of $772,000 in 2003, and $1,488,000 in 2002, and unrealized losses of $1,337,000 in 2001.
Interest income on tax exempt securities is shown based on the actual yield.



VOLUME/RATE ANALYSIS



|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | ------------------------------- | ---- | - | ------------------- | - | ------ | ------------------- |  | - | ------ | - |  | ---- | ---- | - | ----- | - | ------ | ------ |  | - | ------ | - |  | ----- | ---- | - |  | - | ------ | - |  | - | ------ | -
|                                                          |  | Increase (Decrease) in Interest |     
|                                                          |  | 2003 vs. 2002                   |      |   | 2002 vs. 2001       |   |        | 2001 vs. 2000       | 
|                                                          |  | (Dollars in Thousands)          |     
|                                                          |  | Due to Change in (1)            |      |   | Due to Change in(1) |   |        | Due to Change in(1) | 
|                                                          |  | Volume                          |      |   | Rate                |   |        | Total               |  |   | Volume |   |  | Rate |      |   | Total |   |        | Volume |  |   | Rate   |   |  | Total |     
|Interest income on:                                       |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Loans                                                     |  | $                               | 340  |   |                     | $ | (2,139 | )                   |  | $ | (1,799 | ) |  | $    | (717 | ) |       | $ | (2,437 | )      |  | $ | (3,154 | ) |  | $     | 262  |   |  | $ | (2,208 | ) |  | $ | (1,946 | )
|Securities available for sale and other equity securities |  |                                 | (400 | ) |                     |   | (1,138 | )                   |  |   | (1,538 | ) |  |      | 291  |   |       |   | (935   | )      |  |   | (644   | ) |  |       | (526 | ) |  |   | (1     | ) |  |   | (527   | )
|Securities held to maturity                               |  |                                 | 1    |   |                     |   | (48    | )                   |  |   | (47    | ) |  |      | (46  | ) |       |   | (4     | )      |  |   | (50    | ) |  |       | 56   |   |  |   | (2     | ) |  |   | 54     |  
|Federal funds sold                                        |  |                                 | 6    |   |                     |   | (25    | )                   |  |   | (19    | ) |  |      | 15   |   |       |   | (65    | )      |  |   | (50    | ) |  |       | 112  |   |  |   | (69    | ) |  |   | 43     |  
|Interest-bearing deposits with banks                      |  |                                 | (32  | ) |                     |   | (20    | )                   |  |   | (52    | ) |  |      | (54  | ) |       |   | (121   | )      |  |   | (175   | ) |  |       | 165  |   |  |   | (105   | ) |  |   | 60     |  
|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|TOTAL INTEREST INCOME                                     |  |                                 | (85  | ) |                     |   | (3,370 | )                   |  |   | (3,455 | ) |  |      | (511 | ) |       |   | (3,562 | )      |  |   | (4,073 | ) |  |       | 69   |   |  |   | (2,385 | ) |  |   | (2,316 | )
|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Interest expense on:                                      |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Interest-bearing demand deposits                          |  |                                 | 16   |   |                     |   | (283   | )                   |  |   | (267   | ) |  |      | 34   |   |       |   | (411   | )      |  |   | (377   | ) |  |       | (2   | ) |  |   | (800   | ) |  |   | (802   | )
|Savings deposits                                          |  |                                 | (54  | ) |                     |   | (410   | )                   |  |   | (464   | ) |  |      | (60  | ) |       |   | (648   | )      |  |   | (708   | ) |  |       | (60  | ) |  |   | (660   | ) |  |   | (720   | )
|Time deposits                                             |  |                                 | (178 | ) |                     |   | (981   | )                   |  |   | (1,159 | ) |  |      | (449 | ) |       |   | (2,589 | )      |  |   | (3,038 | ) |  |       | 122  |   |  |   | (195   | ) |  |   | (73    | )
|Short-term borrowings                                     |  |                                 | (13  | ) |                     |   | (71    | )                   |  |   | (84    | ) |  |      | (14  | ) |       |   | (363   | )      |  |   | (377   | ) |  |       | 57   |   |  |   | (298   | ) |  |   | (241   | )
|Long-term borrowings                                      |  |                                 |     |   |                     |   |       |                     |  |   |       |   |  |      |     |   |       |   |       |        |  |   |       |   |  |       |     |   |  |   |       |   |  |   |       |  
|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|TOTAL INTEREST EXPENSE                                    |  |                                 | (229 | ) |                     |   | (1,745 | )                   |  |   | (1,974 | ) |  |      | (489 | ) |       |   | (4,011 | )      |  |   | (4,500 | ) |  |       | 117  |   |  |   | (1,953 | ) |  |   | (1,836 | )
|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|NET INTEREST INCOME                                       |  | $                               | 144  |   |                     | $ | (1,625 | )                   |  | $ | (1,481 | ) |  | $    | (22  | ) |       | $ | 449    |        |  | $ | 427    |   |  | $     | (48  | ) |  | $ | (432   | ) |  | $ | (480   | )
|                                                          |  |                                 |      |   |                     |   |        |                     |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  



|(1) | Changes due to a combination of volume and rate have
been allocated proportionally to volume and rate.
|--- | ------------------------------------------------------------------------------------------------------



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| |  | Page 3 |  | First Century Bankshares, Inc.



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Managements Discussion and Analysis of Financial Condition and Results of Operations



This narrative will assist readers in their analysis of the accompanying consolidated
financial statements and supplemental financial information. It should be read in conjunction with the audited consolidated financial statements and the notes that follow, along with the selected financial data presented elsewhere in this report.
Management is not aware of any market or institutional trends, events or uncertainties that will have or are reasonably likely to have a material effect on the liquidity, capital resources or operations of the Corporation, except as discussed
herein. Management is also not aware of any current recommendations by any regulatory authorities, which would have such a material effect if implemented.



This report may contain certain forward-looking statements, including certain plans, expectations, goals and projections, which are subject to numerous assumptions, risks
and uncertainties. Actual results could differ materially from those contained in or implied by such statements for a variety of factors including: changes in economic conditions which may affect the Corporations primary market area; rapid
movements in interest rates; competitive pressures on product pricing and services; success and timing of business strategies; the nature and extent of governmental actions and reforms; and rapidly changing technology and evolving financial industry
standards.



Corporate Structure and Acquisitions



First Century Bankshares, Inc. (Corporation) is chartered under the laws of West
Virginia and operates as a financial holding company, headquartered in Bluefield, WV. The Corporation began active operations in March 1984, in a business combination with its then sole subsidiary, The First National Bank of Bluefield. Through a
series of acquisitions and consolidations, the Corporation now operates one subsidiary bank, First Century Bank, N.A., Bluefield, WV (FCBNA). FCBNA is engaged in commercial banking activities that provide financial services to
individuals and businesses. FCBNA operates 11 branch offices and 14 ATM locations throughout southern West Virginia and southwestern Virginia.



During 2001, the Corporation formed a financial subsidiary, First Century Financial Services, LLC, (FCFSLLC). This entity conducts the Corporations
insurance activities through its investment in the Bankers Insurance Corporation, a relationship with 67 community banks, which offers a full range of insurance products and services. Management believes the expansion of nontraditional
financial service offerings to its customers will enhance the Corporations performance, and ultimately, shareholder value. FCFSLLC was formed with a minimal capital investment, which is carried at cost and eliminates upon consolidation.



Critical Accounting Policies



The Corporations accounting policies are an integral part to understanding the results
reported. Accounting policies are described in detail in Note 1 to the Consolidated Financial Statements. The Corporations accounting and reporting policies are in accordance with accounting principles generally accepted in the United States
of America, and they conform to general practices within the financial services industry. The Corporations most complex accounting policies require managements judgment to ascertain the valuation of assets, liabilities, commitments and
contingencies. A variety of factors could affect the ultimate value obtained by the use of assumptions that involve significant uncertainty at the time of estimation. In some instances we use a discount factor to determine the present value of
assets and



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|First Century Bankshares, Inc. |  | Page 4 |  | 



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liabilities. A change in the discount factor could increase or decrease the values of those assets and liabilities, resulting in either a beneficial or
adverse impact on our financial results. The following is a brief description of the Corporations current accounting policies involving significant management valuation judgements.



Allowance for Loan Losses



The Corporation maintains, through its provision, an allowance for loan losses believed by management to be adequate to absorb probable credit losses inherent in the
portfolio. Management continues to enhance the methodology and procedures for determining the adequacy of the allowance for loan losses. The procedures that are utilized entail preparation of a loan watch list and assigning each loan a
classification. For those individually significant loans where it is determined that it is not probable that the borrower will make all payments in accordance with the original loan agreement, management performs an impairment analysis. The
measurement of impaired loans is based on either the fair value of the underlying collateral, the present value of the future cash flows discounted at the historical effective interest rate stipulated in the loan agreement, or the estimated market
value of the loan.



Other classified loans are categorized and allocated
appropriate reserves. Other loans more than 90 days past due that have not been considered in the aforementioned procedures are reserved for accordingly. The remaining portfolio is segregated into consumer, commercial, and residential real estate
loans, and the historical net charge off percentage of each category is applied to the current amount outstanding in those categories. Additionally, concentrations of credit, collateral deficient loans, volume and trends in delinquencies,
off-balance sheet credit risks, loan portfolio composition, loan volume and maturity of the portfolio, national and local economic conditions and the experience, ability and depth of lending management and staff are given consideration.



Pensions



The Corporation has a defined benefit pension plan covering substantially all employees with at least six months of service who are at least
211/2years of age. Pension expense is determined by an actuarial valuation, and it is based on assumptions that
are evaluated annually as of December 31, the measurement date for pension obligations. The most significant assumptions are the long-term expected rate of return on plan assets, the discount rate used to determine the present value of the pension
obligations, and the weighted-average rate of expected increase in future compensation levels. These assumptions are reviewed with the plan actuaries and modified as necessary to reflect current market conditions as well as anticipated long-term
market conditions.



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| |  | Page 5 |  | First Century Bankshares, Inc.



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Balance Sheet Analysis



Loans



The Corporations primary goal is to meet the credit needs of the retail and commercial customers in the Corporations primary markets of southern West Virginia
and southwestern Virginia. Total loans increased approximately $10,490,000, or 4.4%, in 2003, following a 3.1% decrease of $7,608,000 in 2002. Competition in the Corporations market is very aggressive for the acquisition of new loans. Loan
demand was relatively strong during most of 2003, as interest rates remained at historically low levels. Management continued to adhere to its philosophy of not offering long-term fixed-rate commitments in this low trough in the interest cycle. At
December 31, 2003, the loan portfolio comprised 74.7% of total interest-earning assets as compared to 72.3% of total interest-earning assets at December 31, 2002, and contributed 82.3% of total interest income in 2003 and 77.4% in 2002 and 2001.



During 2003, the Corporations emphasis continued to be on strong local
companies with known local management and excellent financial stability. Most of the commercial loans in the portfolio were made at variable rates of interest. Additionally, the Corporation continued to make loans available in an expanding retail
marketplace. Consistent with managements philosophy on relationship banking, most borrowers are also depositors and utilize other banking services. The average yield of the loan portfolio decreased to an average rate of 6.17% in 2003 compared
to 7.06% in 2002. This reflected the historically low interest rate environment during 2003, and the continued repricing of loans at lower interest rates.



The commercial loan portfolio is generally diversified and geographically dispersed within the region. At December 31, 2003, the Corporation had a concentration of
$14,016,000, or 40.1% of stockholders equity in loans to borrowers in the hospitality industry. This concentration is diversified by geography throughout the Mid-Atlantic region. There are no other concentrations of lines of business or
industry that represent greater than 30% of the Corporations equity. Within each specific industry, borrowers are diversified as to specialty, service or other unique feature of the overall industry. A substantial portion of the
customers ability to honor their contractual commitment is largely dependent upon the economic conditions of the respective industry and overall economic conditions of southern West Virginia and southwestern Virginia, which is somewhat less
volatile than many areas of the country.



The consumer portion of the loan
portfolio consists of both secured and unsecured loans made to individuals and families for various reasons including the purchase of automobiles, home improvements, educational expenses and other worthwhile purposes. The Corporation continues to
carefully monitor the consumer sector during this period of economic weakness. As recessionary pressures result in higher levels of unemployment, the likelihood for increased volatility arises in the consumer sector.



Commitments to extend credit are agreements to lend to a customer provided there is no
violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn
upon, the total amount of commitments does not necessarily represent future cash requirements. FCBNA had outstanding commitments to extend credit of approximately $44,439,000 at



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|First Century Bankshares, Inc. |  | Page 6 |  | 



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December 31, 2003, and $42,956,000 at December 31, 2002. These commitments included unfunded loan commitments and unused lines of credit totaling $39,600,000
at December 31, 2003 and $37,951,000 at December 31, 2002. Additionally, standby letters of credit totaled $4,839,000 at December 31, 2003, and $5,005,000 at December 31, 2002. Financial standby letters of credit are conditional commitments issued
by FCBNA to guarantee the financial performance of a customer to a third party. Those guarantees are primarily used to support public and private borrowing arrangements.



The following table details the amount and expected maturities of significant commitments as of December 31, 2003. Further discussion of
these commitments is included in Note 15 to the Consolidated Financial Statements.



COMMITMENTS



|                                                                                 |  |                        |        |             |   |             |  |             |     |       |   |   |  |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ----------- | - | ----------- |  | ----------- | --- | ----- | - | - |  | - | ------
|                                                                                 |  | 1 Year or Less         |        | 1 to 3Years |   | 3 to 5Years |  | Over 5Years |     | Total
|                                                                                 |  | (Dollars in Thousands)
|Unused lines of credit                                                           |  |                        |       
|Home equity lines                                                                |  | $                      | 2,476  |             | $ |            |  | $           |    |       | $ |  |  | $ | 2,476 
|Commercial real estate, construction and land development secured by real estate |  |                        | 14,814 |             |   | 4,331       |  |             |    |       |   |  |  |   | 19,145
|Other unused commitments                                                         |  |                        | 17,979 |             |   |            |  |             |    |       |   |  |  |   | 17,979
|Financial standby letters of credit                                              |  |                        | 4,411  |             |   |            |  |             | 428 |       |   |  |  |   | 4,839 



AMOUNTS OF LOANS OUTSTANDING



|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        
|-------------------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                       |  | December 31,          
|                                       |  | 2003                   |         | 2002 |   | 2001    |  | 2000 |         | 1999
|                                       |  | (Dollars in Thousands)
|Commercial, financial and agricultural |  | $                      | 47,010  |      | $ | 43,725  |  | $    | 49,056  |      | $ | 49,883  |  | $ | 52,872 
|Real estateconstruction               |  |                        | 6,137   |      |   | 12,268  |  |      | 7,755   |      |   | 5,990   |  |   | 5,353  
|Real estatemortgage                   |  |                        | 173,104 |      |   | 159,233 |  |      | 161,074 |      |   | 158,828 |  |   | 149,121
|Installment loans to individuals       |  |                        | 20,699  |      |   | 21,234  |  |      | 26,183  |      |   | 30,026  |  |   | 36,631 
|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        
|TOTAL LOANS OUTSTANDING                |  | $                      | 246,950 |      | $ | 236,460 |  | $    | 244,068 |      | $ | 244,727 |  | $ | 243,977
|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        



MATURITY SCHEDULE OF LOANS



|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|-------------------------------------- |  | --------------------------------------- | ------ | ----------- | - | ------------ |  | ----- | ------ |  | - | -------
|                                       |  | Remaining maturity at December 31, 2003
|                                       |  | (Dollars in Thousands)                 
|                                       |  | 1 Year or Less                          |        | 1 to 5Years |   | After 5Years |  | Total
|Commercial, financial and agricultural |  | $                                       | 25,836 |             | $ | 12,897       |  | $     | 8,277  |  | $ | 47,010 
|Real estateconstruction               |  |                                         | 5,661  |             |   | 476          |  |       |       |  |   | 6,137  
|Real estatemortgage                   |  |                                         | 25,386 |             |   | 59,193       |  |       | 88,525 |  |   | 173,104
|Installment loans to individuals       |  |                                         | 4,806  |             |   | 13,410       |  |       | 2,483  |  |   | 20,699 
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|TOTAL                                  |  | $                                       | 61,689 |             | $ | 85,976       |  | $     | 99,285 |  | $ | 246,950
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|Predetermined interest rates           |  | $                                       | 24,789 |             | $ | 56,473       |  | $     | 55,482 |  | $ | 136,744
|With floating interest rates           |  |                                         | 36,900 |             |   | 29,503       |  |       | 43,803 |  |   | 110,206
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|TOTAL                                  |  | $                                       | 61,689 |             | $ | 85,976       |  | $     | 99,285 |  | $ | 246,950
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        



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| |  | Page 7 |  | First Century Bankshares, Inc.



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NONPERFORMING ASSETS AND LOAN LOSS ANALYSIS



|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                            |  | Years Ended December 31, |        
|                                                            |  | 2003                     |         |   | 2002 |   |         | 2001 |  |   | 2000    |   |  | 1999 |        
|                                                            |  | (Dollars in Thousands)   |        
|Average amount of loans outstanding                         |  | $                        | 241,266 |   |      | $ | 236,130 |      |  | $ | 245,606 |   |  | $    | 242,533 |   |  | $ | 222,837 |  
|Allowance for loan losses:                                  |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Balance at beginning of the year                            |  | $                        | 3,005   |   |      | $ | 3,180   |      |  | $ | 3,180   |   |  | $    | 3,050   |   |  | $ | 2,533   |  
|Additions from acquisitions                                 |  |                          |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   | 497     |  
|Loans charged off                                           |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          | 78      |   |      |   | 532     |      |  |   | 780     |   |  |      | 372     |   |  |   | 84      |  
|Real estatemortgage                                        |  |                          | 272     |   |      |   | 1,157   |      |  |   | 1,199   |   |  |      | 274     |   |  |   | 150     |  
|Installment loans to individuals                            |  |                          | 315     |   |      |   | 477     |      |  |   | 659     |   |  |      | 536     |   |  |   | 480     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL LOANS CHARGED OFF                                     |  |                          | 665     |   |      |   | 2,166   |      |  |   | 2,638   |   |  |      | 1,182   |   |  |   | 714     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Loan recoveries                                             |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          | 4       |   |      |   | 86      |      |  |   | 32      |   |  |      | 12      |   |  |   | 7       |  
|Real estatemortgage                                        |  |                          | 14      |   |      |   | 63      |      |  |   | 239     |   |  |      | 44      |   |  |   | 116     |  
|Installment loans to individuals                            |  |                          | 64      |   |      |   | 57      |      |  |   | 33      |   |  |      | 47      |   |  |   | 56      |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL LOAN RECOVERIES                                       |  |                          | 82      |   |      |   | 206     |      |  |   | 304     |   |  |      | 103     |   |  |   | 179     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net loans charged off                                       |  |                          | (583    | ) |      |   | (1,960  | )    |  |   | (2,334  | ) |  |      | (1,079  | ) |  |   | (535    | )
|Provision for loan losses                                   |  |                          | 653     |   |      |   | 1,785   |      |  |   | 2,334   |   |  |      | 1,209   |   |  |   | 555     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|BALANCE AT END OF THE YEAR                                  |  | $                        | 3,075   |   |      | $ | 3,005   |      |  | $ | 3,180   |   |  | $    | 3,180   |   |  | $ | 3,050   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Ratio of net loans charged off to average loans outstanding |  |                          | 0.24    | % |      |   | 0.83    | %    |  |   | 0.95    | % |  |      | 0.44    | % |  |   | 0.24    | %
|Allowance at year end as a percent of loans                 |  |                          | 1.25    | % |      |   | 1.27    | %    |  |   | 1.30    | % |  |      | 1.30    | % |  |   | 1.25    | %
|Provision for loan losses as a percent of loans             |  |                          | 0.27    | % |      |   | 0.76    | %    |  |   | 0.95    | % |  |      | 0.50    | % |  |   | 0.25    | %
|Nonperforming assets (at year end)                          |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonaccrual                                                  |  | $                        | 2,542   |   |      | $ | 2,819   |      |  | $ | 3,045   |   |  | $    | 5,887   |   |  | $ | 2,390   |  
|Pastdue ninety days or more and still accruing             |  |                          | 400     |   |      |   | 612     |      |  |   | 1,140   |   |  |      | 3,320   |   |  |   | 2,818   |  
|Troubled debt restructurings                                |  |                          | 120     |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Other real estate owned                                     |  |                          | 383     |   |      |   | 793     |      |  |   | 1,279   |   |  |      | 1,001   |   |  |   | 104     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL NONPERFORMING ASSETS                                  |  | $                        | 3,445   |   |      | $ | 4,224   |      |  | $ | 5,464   |   |  | $    | 10,208  |   |  | $ | 5,312   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonperforming assets/total loans                            |  |                          | 1.4     | % |      |   | 1.8     | %    |  |   | 2.2     | % |  |      | 4.2     | % |  |   | 2.2     | %
|Nonperforming assets/total assets                           |  |                          | 0.9     | % |      |   | 1.2     | %    |  |   | 1.5     | % |  |      | 2.7     | % |  |   | 1.4     | %



ALLOCATION OF THE ALLOWANCE FOR
LOAN LOSSES



|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  
|-------------------------------------- |  | ---------------------- | ----- | --------------------------------------------- | ------ | - | ------ | ---- | --------------------------------------------- |  | ------ | ------ |  | --------------------------------------------- | ----- |  | ------ | - | --------------------------------------------- | - | ----- | ------ | ------ | --------------------------------------------- |  | - | ----- |  | ------ | -
|                                       |  | 2003                   |       |                                               | 2002   |   |        | 2001 |                                               |  | 2000   |        |  | 1999                                          |      
|                                       |  | (Dollars in Thousands) |      
|                                       |  | Amount                 |       | Percent ofLoans in EachCategory toTotal Loans |        |   | Amount |      | Percent ofLoans in EachCategory toTotal Loans |  |        | Amount |  | Percent ofLoans in EachCategory toTotal Loans |       |  | Amount |   | Percent ofLoans in EachCategory toTotal Loans |   |       | Amount |        | Percent ofLoans in EachCategory toTotal Loans | 
|Commercial, financial and agricultural |  | $                      | 652   |                                               | 19.04  | % |        | $    | 1,083                                         |  | 18.49  | %      |  | $                                             | 1,143 |  | 20.10  | % |                                               | $ | 343   |        | 20.38  | %                                             |  | $ | 568   |  | 21.67  | %
|Real estateconstruction               |  |                        |      |                                               | 2.48   | % |        |      |                                              |  | 5.19   | %      |  |                                               |      |  | 3.18   | % |                                               |   |      |        | 2.45   | %                                             |  |   |      |  | 2.19   | %
|Real estatemortgage                   |  |                        | 1,964 |                                               | 70.10  | % |        |      | 1,493                                         |  | 67.34  | %      |  |                                               | 1,485 |  | 65.99  | % |                                               |   | 1,654 |        | 64.90  | %                                             |  |   | 834   |  | 61.13  | %
|Installment loans to individuals       |  |                        | 459   |                                               | 8.38   | % |        |      | 429                                           |  | 8.98   | %      |  |                                               | 546   |  | 10.73  | % |                                               |   | 469   |        | 12.27  | %                                             |  |   | 698   |  | 15.01  | %
|Unallocated                            |  |                        |      |                                               | N/A    |   |        |      |                                              |  | N/A    |        |  |                                               | 6     |  | N/A    |   |                                               |   | 714   |        | N/A    |                                               |  |   | 950   |  | N/A    |  
|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  
|TOTAL                                  |  | $                      | 3,075 |                                               | 100.00 | % |        | $    | 3,005                                         |  | 100.00 | %      |  | $                                             | 3,180 |  | 100.00 | % |                                               | $ | 3,180 |        | 100.00 | %                                             |  | $ | 3,050 |  | 100.00 | %
|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  



Nonperforming assets, including
nonaccrual loans, loans past-due 90 days or more, restructured loans and other real estate owned, decreased $779,000, or approximately 18%, from December 31, 2002 to December 31, 2003, following a decrease of $1,240,000, or approximately 23% in
2002. These decreases reflect managements ongoing efforts to enhance the quality of the loan portfolio. This improvement was further enhanced by the Corporation adhering to a stricter set of criteria in the determination of granting renewals
and extensions. The Corporations policy is to discontinue the accrual of interest on loans that are past due more than 90 days, unless such loans are well collateralized and in process of collection. Loans that are on a current payment status
or past due less than 90



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days may also be classified as nonaccrual if repayment of principal or interest is in doubt. The Corporations holdings of other real estate owned
decreased approximately 52%, or $410,000 in 2003, following a decrease of approximately $486,000 in 2002.



The Corporation maintains, through its provision, an allowance for loan losses believed by management to be adequate to absorb probable credit losses inherent in the portfolio. Management is committed to the early
recognition of problem loans, and to an appropriate and adequate level of allowance. The allowance for loan losses was 1.25% of year-end loans at December 31, 2003 and 1.27% at December 31, 2002. The estimation of the adequacy of the allowance for
loan losses is the most significant estimate determined by management. Different amounts could result under different conditions or assumptions.



The Corporation uses an outsourcing arrangement for its loan review function with an independent third-party firm. This process includes a thorough evaluation of the
credit administration systems and personnel. The objective is to have an effective loan review system that provides management with information that will produce a more focused and effective approach in managing credit risk inherent in the loan
portfolio. As a part of this process, a system of loan grades is utilized to further support the adequacy of the loan loss allowance.



In addition to the review of credit quality through the credit review process, the Corporation constructs a comprehensive allowance analysis for its loan portfolio at
least quarterly. The procedures that are utilized entail preparation of a loan watch list and assigning each loan a classification. For those individually significant loans where it is determined that it is not probable that the borrower
will make all payments in accordance with the original loan agreement, management performs an impairment analysis as required by SFAS Nos. 114 and 118. Specific reserves are recorded on impaired loans of $397,000 and $663,000 at December 31, 2003
and 2002, respectively. Other classified loans are categorized and allocated appropriate reserves. Other loans more than 90 days past due that have not been considered in the aforementioned procedures are assigned a classification of Substandard and
are reserved for accordingly. The remaining portfolio is segregated into consumer, commercial, and residential real estate loans, and the historical net charge off percentage of each category is applied to the current amount outstanding in that
category. Also, a review of concentrations of credit, classes of loans and pledged collateral is performed to determine the existence of any deterioration. In addition, volume and trends in delinquencies and nonaccrual loans, off-balance sheet
credit risks, the loan portfolio composition, loan volume and maturity of the portfolio, national and local economic conditions and the experience, ability and depth of lending management and staff are given consideration.



Securities



Securities, the second largest asset of the Corporation, decreased by $10,505,000 or 11.8% during 2003. This decrease was used to fund the
increases in the loan portfolio. At December 31, 2003, securities comprised 23.7% of total interest-earning assets compared to 27.2% of total interest-earning assets at December 31, 2002. The composition of the Corporations securities
portfolio reflects managements investment strategy of maximizing portfolio yields subject to risk and liquidity considerations. The primary objective of the Corporations investment strategy is to maintain an appropriate level of asset
liquidity and provide management a tool to assist in controlling and managing the Corporations interest rate position while at the same time producing appropriate levels of interest



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income. Management of the maturity of the portfolio is necessary to ensure adequate liquidity and manage interest rate risk. During 2003, in order to
maintain liquidity and flexibility, management continued categorizing most investments in the available for sale portfolio. Management believes that the potential for increased loan demand requires maintaining the liquidity of the securities
portfolio.



The remaining securities, primarily state, county and municipal
obligations comprise the held to maturity portfolio. Net unrealized gains in the held to maturity portfolio amounted to approximately $286,000 at December 31, 2003, compared to net unrealized gains of $405,000 at December 31, 2002. The held to
maturity portfolio increased from $9,566,000 at December 31, 2002, to $12,163,000 at December 31, 2003, primarily due to increases in state and municipal obligations. State and municipal securities contained no individual issues in excess of 10% of
stockholders equity.



As of December 31, 2003, the investment portfolio
contained approximately $9,711,000 of corporate debt obligations in the available for sale portfolio. These obligations have an average remaining life of 1.7 years and are primarily in the financial services sector. No investment with an individual
issuer is in excess of 10% of stockholders equity.



Realized gains from
the sale of available for sale securities were approximately $67,000 in 2003. These gains were taken in an effort to restructure a small portion of the portfolio to enhance future returns.



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Securities



SECURITIES



The following table shows the carrying values of securities at the respective periods, which is market value for available for sale securities and amortized cost for securities held to maturity:



|                                       |  |                        |        |      |   |        |  |   |       
|-------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                       |  | December 31,          
|                                       |  | 2003                   |        | 2002 |   | 2001  
|                                       |  | (Dollars in Thousands)
|Securities available for sale:         |  |                        |        |      |   |        |  |   |       
|U. S. Government securities            |  | $                      | 1,004  |      | $ | 3,052  |  | $ | 2,081 
|U. S. Government agency securities     |  |                        | 54,543 |      |   | 65,911 |  |   | 64,065
|Other securities                       |  |                        | 9,711  |      |   | 9,668  |  |   | 9,439 
|                                       |  |                        |        |      |   |        |  |   |       
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 65,258 |      | $ | 78,631 |  | $ | 75,585
|                                       |  |                        |        |      |   |        |  |   |       
|Securities held to maturity:           |  |                        |        |      |   |        |  |   |       
|U. S. Government agency securities     |  | $                      |       |      | $ | 9      |  | $ | 64    
|State, county and municipal securities |  |                        | 12,063 |      |   | 9,407  |  |   | 10,494
|Other securities                       |  |                        | 100    |      |   | 150    |  |   | 150   
|                                       |  |                        |        |      |   |        |  |   |       
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 12,163 |      | $ | 9,566  |  | $ | 10,708
|                                       |  |                        |        |      |   |        |  |   |       



MATURITIES OF SECURITIES



The following table shows the contractual maturities of debt
securities at December 31, 2003 and the weighted average yields of such securities:



|                                       |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|-------------------------------------- |  | ---------------------- | ----- | ----- | ----------------------------- | - | ------ | ----------------------------- | ------ |  | -------------- | ------ |  | ----- | ----- |  | ------ | - | ----- | - | --- | ------ | ---- | ----- |  | - | ------ |  | ---- | -
|                                       |  | WithinOne Year         |       |       | After OneBut WithinFive Years |   |        | After FiveBut WithinTen Years |        |  | AfterTen Years |        |  | Total |      
|                                       |  | Amount                 |       | Yield |                               |   | Amount |                               | Yield  |  |                | Amount |  | Yield |       |  | Amount |   | Yield |   |     | Amount |      | Yield | 
|                                       |  | (Dollars in Thousands) |      
|Securities available for sale:         |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|U. S. Treasury securities              |  | $                      | 1,000 |       | 3.22                          | % |        | $                             |       |  |               |        |  | $     |      |  |       |   |       | $ |    |        |     |       |  | $ | 1,000  |  | 3.22 | %
|U. S. Government agency securities     |  |                        | 4,032 |       | 4.31                          | % |        |                               | 43,022 |  | 3.04           | %      |  |       | 7,236 |  | 4.07   | % |       |   |    |        |     |       |  |   | 54,290 |  | 3.27 | %
|Other securities                       |  |                        | 1,002 |       | 5.86                          | % |        |                               | 8,194  |  | 5.63           | %      |  |       |      |  |       |   |       |   |    |        |     |       |  |   | 9,196  |  | 5.66 | %
|                                       |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 6,034 |       | 4.38                          | % |        | $                             | 51,216 |  | 3.45           | %      |  | $     | 7,236 |  | 4.07   | % |       | $ |    |        |     |       |  | $ | 64,486 |  | 3.61 | %
|                                       |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|Securities held to maturity:           |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|State, county and municipal securities |  | $                      | 1,813 |       | 5.06                          | % |        | $                             | 6,435  |  | 4.18           | %      |  | $     | 3,635 |  | 4.35   | % |       | $ | 180 |        | 3.00 | %     |  | $ | 12,063 |  | 4.35 | %
|Other securities                       |  |                        | 25    |       | 7.80                          | % |        |                               | 75     |  | 7.20           | %      |  |       |      |  |       |   |       |   |    |        |     |       |  |   | 100    |  | 7.35 | %
|                                       |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 1,838 |       | 5.10                          | % |        | $                             | 6,510  |  | 4.22           | %      |  | $     | 3,635 |  | 4.35   | % |       | $ | 180 |        | 3.00 | %     |  | $ | 12,163 |  | 4.37 | %
|                                       |  |                        |       |       |                               |   |        |                               |        |  |                |        |  |       |       |  |        |   |       |   |     |        |      |       |  |   |        |  |      |  



Yields on tax-exempt obligations
have been computed based on tax equivalent yield.



Deposits



Deposits, the Corporations major source of funds, decreased
approximately $228,000 in 2003, following a decrease of $9,426,000 or 3.0% in 2002. These decreases occurred primarily in interest-bearing deposits as management aggressively monitored interest rates and, coupled with weaker loan demand in 2002,
certain price-sensitive certificates of deposit were not retained. The average rate paid on interest-bearing deposits in 2003 was 1.42% and 2.06% in 2002. Strong competition for deposits exists in the Corporations primary markets among
commercial banks, savings banks, thrift institutions, credit unions, mutual funds, brokerage houses, insurance companies, and certain national retailers. Despite this intense competition, management continues to evaluate pricing strategies that will
ensure the Corporations long-term goal of maintaining market share without sacrificing the Corporations profitability.



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AVERAGE DEPOSITS



|                                    |  |                        |         |      |             |   |        |             |         |  |      |        |  |      |         |  |      |  
|----------------------------------- |  | ---------------------- | ------- | ---- | ----------- | - | ------ | ----------- | ------- |  | ---- | ------ |  | ---- | ------- |  | ---- | -
|                                    |  | 2003Average            |         |      | 2002Average |   |        | 2001Average |        
|                                    |  | Amount                 |         | Rate |             |   | Amount |             | Rate    |  |      | Amount |  | Rate |        
|                                    |  | (Dollars in Thousands) |        
|Noninterestbearing demand deposits |  | $                      | 38,682  |      | N/A         |   |        | $           | 37,461  |  | N/A  |        |  | $    | 34,361  |  | N/A  |  
|Interestbearing demand deposits    |  |                        | 76,398  |      | 0.32        | % |        |             | 73,357  |  | 0.70 | %      |  |      | 69,942  |  | 1.27 | %
|Savings deposits                    |  |                        | 69,563  |      | 0.86        | % |        |             | 74,264  |  | 1.43 | %      |  |      | 77,464  |  | 2.29 | %
|Time deposits                       |  |                        | 124,104 |      | 2.41        | % |        |             | 130,469 |  | 3.18 | %      |  |      | 141,322 |  | 5.09 | %
|                                    |  |                        |         |      |             |   |        |             |         |  |      |        |  |      |         |  |      |  
|TOTAL AVERAGE DEPOSITS              |  | $                      | 308,747 |      | 1.24        | % |        | $           | 315,551 |  | 1.81 | %      |  | $    | 323,089 |  | 3.05 | %
|                                    |  |                        |         |      |             |   |        |             |         |  |      |        |  |      |         |  |      |  



There are no foreign offices.
Average balances are computed on daily balances.



MATURITIES OF TIME
CERTIFICATES OF DEPOSIT OF $100,000 OR MORE



|                                                  |  |                        |       
|------------------------------------------------- |  | ---------------------- | ------
|                                                  |  | December 31, 2003     
|                                                  |  | (Dollars in Thousands)
|Under 3 months                                    |  | $                      | 5,054 
|3 to 6 months                                     |  |                        | 5,195 
|6 to 12 months                                    |  |                        | 4,826 
|Over 12 months                                    |  |                        | 16,033
|                                                  |  |                        |       
|TOTAL CERTIFICATES OF DEPOSIT OF $100,000 OR MORE |  | $                      | 31,108
|                                                  |  |                        |       



SHORT-TERM BORROWED FUNDS



|                                               |  |                        |        |      |   |        |  |   |       
|---------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                               |  | December 31,          
|                                               |  | 2003                   |        | 2002 |   | 2001  
|                                               |  | (Dollars in Thousands)
|Securities sold under agreements to repurchase |  | $                      | 19,141 |      | $ | 16,719 |  | $ | 16,994
|Other borrowed funds                           |  |                        | 26     |      |   | 26     |  |   | 26    
|                                               |  |                        |        |      |   |        |  |   |       
|TOTAL BORROWED FUNDS                           |  | $                      | 19,167 |      | $ | 16,745 |  | $ | 17,020
|                                               |  |                        |        |      |   |        |  |   |       



The approximate average interest
rates, average amounts outstanding, and maximum amounts outstanding at any month-end for securities sold under agreements to repurchase are as follows:



|                                             |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                             |  | 2003 |        |   | 2002 |   |        | 2001 | 
|Average interest rates at December 31        |  |      | 0.34   | % |      |   | 0.56   | %    |  |   | 0.88   | %
|Maximum amounts outstanding at any month-end |  | $    | 19,141 |   |      | $ | 20,880 |      |  | $ | 22,506 |  
|Average daily amount outstanding             |  | $    | 15,524 |   |      | $ | 17,340 |      |  | $ | 18,051 |  
|Weighted average interest rates              |  |      | 0.48   | % |      |   | 0.91   | %    |  |   | 2.96   | %



The weighted average interest rates
are calculated by dividing the annual interest expense by the related average daily amounts outstanding.



Capital Resources



Cash
dividends paid to stockholders during 2003 totaled $1,692,000, following $1,694,000 in 2002 and $1,700,000 for 2001. This represents a dividend pay out ratio (dividends divided by net income) of 61% in 2003, 50% in 2002 and 79% in 2001. Cash
dividends per share equaled $0.85 per share in 2003, 2002 and 2001. The Corporation is dependent upon dividends paid by its subsidiary bank to fund dividends to the stockholders and to cover other operating costs. The Corporations board of
directors considers historical financial performance, future prospects, and anticipated needs for capital in formulating the dividend payment policy. Future dividends are dependent upon the Corporations financial results, capital requirements
and general economic conditions.



One of managements primary objectives
is to maintain a strong capital position. Stockholders equity increased $1,176,000 or 3.5% in 2003. This increase resulted primarily from an increase in retained earnings of $1,100,000, further enhanced by an increase in accumulated other
comprehensive income of $76,000. Management currently



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has approval to repurchase 11,000 shares of the Corporations common stock. The percentage of earnings reinvested in the Corporation (net income less
dividends as a percentage of net income) for the years 2003, 2002 and 2001 was 39%, 50% and 21%, respectively. The internal capital formation rate (net income less dividends as a percentage of average stockholders equity) indicates the rate at
which assets can grow while maintaining the current ratio of stockholders equity to assets. The internal capital formation rate was 3.3% in 2003, 5.1% in 2002 and 1.4% in 2001.



REGULATORY CAPITAL



|                         |  |        |   |  |                                     |   |  |          |  
|------------------------ |  | ------ | - |  | ----------------------------------- | - |  | -------- | -
|Entity                   |  | Tier 1 |   |  | Combined Capital(Tier 1 and Tier 2) |   |  | Leverage |  
|Consolidated             |  | 11.03  | % |  | 12.18                               | % |  | 8.30     | %
|First Century Bank, N.A. |  | 10.66  | % |  | 11.82                               | % |  | 8.01     | %



Risk-based capital regulations require
all banks and bank holding companies to have a minimum total risk-based capital ratio of 8% with half of the capital composed of core capital. Conceptually, risk-based capital requirements assess the risk of a financial institutions balance
sheet and off-balance sheet commitments in relation to its capital. Under the guidelines, capital strength is measured in two tiers which are used in conjunction with risk adjusted assets in determining the risk-based capital ratios. The
Corporations Tier I capital, which consists of stockholders equity, adjusted for certain intangible assets, amounted to $29,302,000 at December 31, 2003, or 11.03% of total risk-weighted assets, compared to $27,843,000 at December 31,
2002, or 10.94% of total risk-weighted assets. Tier II capital, or supplementary capital, includes capital components such as qualifying allowance for loan losses, and can equal up to 100% of an institutions Tier I capital with certain
limitations. The Corporations Tier II capital amounted to $3,075,000 at December 31, 2003, or 1.15% of total risk-weighted assets, compared to $3,005,000 at December 31, 2002, or 1.18% of total risk-weighted assets. The Corporations
total consolidated risk-based capital was $32,377,000 at December 31, 2003, or 12.18% of total risk-weighted assets, compared to $30,848,000, or 12.12% of total risk-weighted assets as of December 31, 2002. Additionally, risk-based capital
guidelines require a minimum leverage ratio (Tier I capital divided by average adjusted total consolidated assets) of 4%, which may be increased for institutions with higher levels of risk or that are experiencing or anticipating significant growth.
The Corporation has not been advised by any regulatory agency of any specific minimum leverage ratio applicable to it. As of December 31, 2003 and 2002, the Corporations leverage ratio was 8.30% and 7.75% respectively; therefore, the
Corporation exceeded all current minimum capital requirements.



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Asset and Liability Management and Interest Rate Sensitivity



The income stream of the Corporation is subject to risk resulting from interest rate
fluctuations to the extent there is a difference between the amount of the Corporations interest-earning assets and the amount of interest-bearing liabilities that are prepaid, withdrawn, mature or reprice in specified periods. The goal of
asset and liability management is to maintain high quality and consistent growth of net interest income with acceptable levels of risk to changes in interest rates.



Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds,
on which rates change daily, and loans that are tied to the prime rate differ considerably from long-term securities and fixed rate loans. Similarly, time deposits of $100,000 and over, NOW accounts and money market deposit accounts are much more
interest sensitive than passbook savings accounts and other interest-bearing liabilities. The Corporation uses a number of tools to measure interest rate risk, including simulating net interest income under various rate scenarios, monitoring the
change in present value of the asset and liability portfolios under the same rate scenarios and monitoring the difference or gap between rate sensitive assets and liabilities over various time periods.



Management continues its efforts to generate variable rate loans. However, with strong
competition for loans, and in an historically low interest rate environment, customers are requiring more fixed rate commitments. The results of managements efforts to balance interest-earning assets against interest-bearing liabilities can be
seen in the Analysis of Interest Rate Sensitivity table.



Management continues
to monitor the Corporations asset/liability gap positions, while incorporating more sophisticated risk measurement tools, including simulation modeling which calculates expected net interest income based on projected interest-earning assets,
interest-bearing liabilities and interest rates. Utilizing simulation modeling allows the Corporation to evaluate earnings and capital at risk due to significant changes in interest rates. The Corporation monitors exposure to the effect of an
instantaneous change in rates of 200 basis points up or down over the same period. As of December 31, 2003, simulation indicated the impact of a 200 basis point increase in rates would approximate a 5.5% increase in net interest income, while a 200
basis point decline in rates would approximate an 11.9% decrease from an unchanged rate environment. The change in the falling rate scenario is outside the Corporations policy limit of 10% for the maximum negative impact to net interest income
from a change in interest rates. However, the falling rate scenario is highly unlikely and management has decided to be positioned to take advantage of the potential for rising interest rates.



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ANALYSIS OF INTEREST RATE SENSITIVITY



|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|-------------------------------------------------------------------- |  | ---------------------- | ------- | - | ----- | - | ------- | ------ |  | - | ------- | -- |  | ------ | ------- | -- | ------ | - | -------- | - |  | - | -------
|                                                                     |  | Months                 |         |   | Years |   |         |       
|                                                                     |  | Less Than 3            |         |   | 3  6 |   |         | 6  12 |  |   | 1  5   |    |  | Over 5 |         |    | Totals
|                                                                     |  | (Dollars in Thousands)
|Investment securities                                                |  | $                      | 1,004   |   |       | $ | 3,509   |        |  | $ | 3,442   |    |  | $      | 58,398  |    |        | $ | 12,091   |   |  | $ | 78,444 
|Federal funds sold and interest-bearing balances with banks          |  |                        | 5,002   |   |       |   |        |        |  |   |        |    |  |        |        |    |        |   |         |   |  |   | 5,002  
|Loans                                                                |  |                        | 116,189 |   |       |   | 4,475   |        |  |   | 16,595  |    |  |        | 64,912  |    |        |   | 44,779   |   |  |   | 246,950
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|Interest-earning assets                                              |  | $                      | 122,195 |   |       | $ | 7,984   |        |  | $ | 20,037  |    |  | $      | 123,310 |    |        | $ | 56,870   |   |  | $ | 330,396
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|Time deposits                                                        |  | $                      | 25,155  |   |       | $ | 18,830  |        |  | $ | 37,659  |    |  | $      | 40,617  |    |        | $ |         |   |  | $ | 122,261
|Other interest-bearing deposits                                      |  |                        | 12,696  |   |       |   | 12,987  |        |  |   | 25,973  |    |  |        | 92,638  |    |        |   |         |   |  |   | 144,294
|Other interest-bearing liabilities                                   |  |                        | 17,910  |   |       |   | 1,043   |        |  |   | 188     |    |  |        |        |    |        |   | 26       |   |  |   | 19,167 
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|Interest-bearing liabilities                                         |  | $                      | 55,761  |   |       | $ | 32,859  |        |  | $ | 63,821  |    |  | $      | 133,255 |    |        | $ | 26       |   |  | $ | 285,722
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|Interest sensitivity gap                                             |  | $                      | 66,434  |   |       | $ | (24,875 | )      |  | $ | (43,784 | )  |  | $      | (9,945  | )  |        | $ | 56,844   |   |  | $ | 44,674 
|Cumulative interest sensitivity gap                                  |  | $                      | 66,434  |   |       | $ | 41,559  |        |  | $ | (2,225  | )  |  | $      | (12,170 | )  |        | $ | 44,674   |   |  |   |        
|Ratio of interest-earning assets to interest-bearing liabilities     |  |                        | 2.19x   |   |       |   | 0.24x   |        |  |   | 0.31x   |    |  |        | 0.93x   |    |        |   | 2187.31x |   |  |   |        
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        
|Ratio of cumulative interest sensitivity gap to total earning assets |  |                        | 20.11   | % |       |   | 12.58   | %      |  |   | (0.67   | )% |  |        | (3.68   | )% |        |   | 13.52    | % |  |   |        
|                                                                     |  |                        |         |   |       |   |         |        |  |   |         |    |  |        |         |    |        |   |          |   |  |   |        



Liquidity Management



Liquidity management involves the ability to meet the cash flow
requirements of depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. To ensure the Corporation is positioned to meet immediate and future cash demands, management
relies on liquidity analysis, knowledge of business trends over past economic cycles and forecasts of future conditions.



Liquidity can best be demonstrated by an analysis of the Corporations cash flows. The primary source of cash flows for the Corporation is operating activities.
Operating activities provided $5,467,000 of liquidity for the year ended December 31, 2003, compared to $7,118,000 and $8,252,000 in 2002 and 2001, respectively. The principal elements of these operating flows are net income, increased for
significant non-cash expenses for the provision for loan losses and depreciation and amortization. In 2003, these funds were utilized primarily to fund increased loan demand aggregating $10,607,000. In 2002, these funds were utilized primarily for
withdrawals of deposits, aggregating $9,426,000. Management decided to not retain certain price sensitive certificates of deposit in an environment of weakened loan demand and interest rate volatility in 2002.



A secondary source of liquidity for the Corporation comes from investing activities,
principally the maturities of investment securities. During 2003, due to the continued low interest rate environment, maturities and calls of investment securities amounted to $68,867,000, compared to $57,122,000 in 2002 and $64,490,000 in 2001. As
of December 31, 2003, the Corporation had approximately $34,325,000 of investment securities that mature within 36 months. It is anticipated that as interest rates begin to stabilize, the rapidity of calls in investment securities will decline. For
the year ended December 31, 2003, $60,239,000 of cash was redeployed in investment securities.



Additional sources of liquidity are available to FCBNA through the Federal Reserve System and through membership in the Federal Home Loan Bank system. As of December 31, 2003, FCBNA had a maximum borrowing capacity
exceeding $80,000,000 through the Federal Home Loan Bank of Pittsburgh. These funds can be made available with various maturities and interest rate structures. During 2002, the Federal Home Loan Bank changed



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its capitalization structure, reducing the amount of stock FCBNA is required to own for membership. At December 31, 2003, FCBNA owned $640,300 of stock,
which would allow FCBNA to borrow up to $2,697,000 without acquiring additional stock. Borrowings are collateralized by a blanket lien by the Federal Home Loan Bank on its members qualifying assets. As of December 31, 2003, there were no
outstanding advances from the Federal Home Loan Bank of Pittsburgh. As a member of the Federal Reserve System, FCBNA has access to funding through the Federal Reserve Bank of Richmond. The Federal Reserve requires its members to exhaust other
sources of liquidity before seeking advances, therefore, unless FCBNA would leave the Federal Home Loan Bank of Pittsburgh, borrowing from the Federal Reserve Bank of Richmond would be very unlikely. Any borrowings from the Federal Reserve Bank of
Richmond would require assets of FCBNA to be pledged as collateral, and advances would be expected to be repaid as soon as possible.



Income Statement Analysis



Earnings Overview



Net income for 2003 was $2,792,000 or $1.40 per diluted share, a decrease of $583,000 or 17.3% from the $3,375,000 or $1.69 per diluted share earned in 2002, and $647,000
more than the $2,145,000 or $1.07 per diluted share earned in 2001. These earnings reflect a decrease in net interest income of $1,481,000, or 9.5%, due primarily to limitations in the opportunity to reduce interest expense on deposits in an
historically low interest rate environment relative to the reinvestment options for loans and investment securities. Additionally, pension expense of approximately $743,000 resulted from lump sum distributions made by the Corporations employee
pension plan that triggered recognition of previously deferred actuarial losses, under the accounting provisions set forth in SFAS No.88. Managements ongoing efforts to enhance asset quality partially offset the reduction in net interest
income and additional pension plan expenses for the year ended December 31, 2003, through a decrease in the provision for loan losses of $1,132,000.



Earnings Per Share



The Earnings Per Share Table summarizes the principal sources of changes in earnings per share for 2003. For further details on the computation of earnings per share,
refer to Note 10 of the Notes to Consolidated Financial Statements, presented elsewhere in this report.



EARNINGS PER SHARE



|                                      |  |   |       |  
|------------------------------------- |  | - | ----- | -
|Net income per share  2002           |  | $ | 1.69  |  
|                                      |  |   |       |  
|Increase (decrease) due to change in: |  |   |       |  
|Net interest income                   |  |   | (0.74 | )
|Provision for loan losses             |  |   | 0.57  |  
|Other operating income                |  |   | (0.14 | )
|Personnel expense                     |  |   | (0.24 | )
|Other expense                         |  |   | 0.26  |  
|                                      |  |   |       |  
|Net income per share  2003           |  | $ | 1.40  |  
|                                      |  |   |       |  



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Net Interest Income



The major portion of the Corporations earnings is derived from net interest income, which is the interest income on interest-earning
assets less the interest expense on interest-bearing liabilities. During 2003 net interest income decreased $1,481,000 or 9.5%. This followed a 2.8% increase in 2002, and a 3.1% decrease in 2001. For the year ended December 31, 2003, interest income
decreased $3,455,000, or approximately 16.0%, compared to a decrease of $4,073,000, or 15.9% for 2002, and a decrease of $2,316,000, or 8.3% for 2001. Interest on loans, which decreased $1,799,000 or 10.8%, contributed to the decrease for 2003,
along with interest on securities, which decreased $1,585,000, or 33.5%. The decrease in interest income was accompanied by a decrease in interest expense of $1,974,000 or 33.5% for 2003. This followed a decrease in interest expense of $4,500,000,
or 43.3% for 2002, and a decrease of $1,836,000, or 15.0% for 2001.



Net
interest income is affected by many factors, but most significantly by the prevailing interest rates during the period, the spread between the various sources and uses of funds, and by changes in the volume of various assets and liabilities. The
performance for 2003 is indicative of the historically low interest rate environment that followed the rapid decline in interest rates that prevailed throughout 2001 and early 2002. This is reflected in the volume/rate analysis that shows most
decreases in net interest income were due to decreases in interest rates and not due to the mix of loans, investments or interest-bearing liabilities.



Provision for Loan Losses



The Corporation experienced a 63.4% decrease in the provision for loan losses during 2003. The provision for loan losses was $653,000 for 2003, compared to $1,785,000 for
2002 and $2,334,000 for 2001. Factors contributing to the decreased provision in 2003 included decreased charge-offs of approximately $1,501,000, primarily in certain commercial and commercial mortgage loans, along with fewer charge-offs in the
retail sector. In evaluating the loan portfolio at December 31, 2003, with the improved level of nonaccrual and past-due loans, it is anticipated that loan losses will remain stable in 2004.



Noninterest Income and Expense



Noninterest income decreased $270,000 or 6.4% in 2003, following a $485,000 or 12.9%
increase in 2002, and a $423,000 or 12.7% increase in 2001. The most significant factor contributing to this decrease was a $475,000 one-time recovery that resulted from the settlement of certain litigation surrounding a check-kiting scheme and is
reflected in other noninterest income for 2002. The largest component of noninterest income is fees from fiduciary activities. Fees from fiduciary activities increased approximately $81,000 in 2003 and $7,000 in 2002 after being unchanged in 2001.
The second largest component of non-interest income is service charges on deposit accounts. These fees decreased approximately $59,000 or 4.4% in 2003, after an increase of approximately $85,000 or 6.8% in 2002, and a decrease of approximately
$25,000 or 2.0% in 2001.



Noninterest expense, excluding the provision for loan
losses, increased 2.8% in 2003, following a 4.6% decrease in 2002 and a 2.3% increase in 2001. Personnel expense is the largest component of noninterest expense. Personnel expense increased 7.0% in 2003, following an increase of 6.7% in 2002, and
9.1% in 2001. In 2003, significant lump-sum distributions by the Corporations employee pension plan triggered accelerated



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recognition of previously deferred actuarial losses under the accounting provisions set forth in SFAS No. 88. Significant lump sum payments anticipated to be
made in the second quarter of 2004 will require additional charges to earnings in the periods these payments are made pursuant to SFAS No. 88. Management made modifications to the pension plan in 2003, resulting in the reduction of future benefits,
in order to reduce the volatility of the impact of pension expense to the results of operations. The plan had previously been amended to eliminate lump-sum distributions for employees hired after 1988. In addition to salaries, employee benefits,
which included increased costs for health care benefits and net periodic pension cost, contributed to the increase in personnel expense for 2002 and 2001. For a complete discussion of the Corporations employee benefits, refer to Note 12 of the
Notes to Consolidated Financial Statements, presented elsewhere in this report. Management remains committed to improving operational efficiency throughout the organization while keeping personnel expense at an adequate level to attract and retain
competent staff.



The primary factor contributing to the decrease in
noninterest expense for 2002 was the discontinuance of goodwill amortization of approximately $425,000 upon the adoption of Financial Accounting Standards Board Statement No. 142 Goodwill and Other Intangible Assets,  (SFAS No. 142).
Refer to Note 2 of the Notes to Consolidated Financial Statements, presented elsewhere in this report for a complete discussion of the effects of adopting SFAS No. 142.



Income Taxes



Applicable income taxes for 2003 decreased $397,000 or 20.1%. This followed an $851,000 or 75.7% increase for 2002, and a $541,000 or 32.5% decrease for 2001. Income
taxes computed at the statutory rate are reduced primarily by interest earned on state and municipal obligations. For a complete discussion of the Corporations tax position, refer to Note 13 of the Notes to Consolidated Financial Statements,
presented elsewhere in this report.



RETURN ON EQUITY AND ASSETS



|                                                                                 |  |              |   |  |       |   |  |       |  
|-------------------------------------------------------------------------------- |  | ------------ | - |  | ----- | - |  | ----- | -
|                                                                                 |  | December 31, |  
|                                                                                 |  | 2003         |   |  | 2002  |   |  | 2001  |  
|Percentage of net income to:                                                     |  |              |   |  |       |   |  |       |  
|Average stockholders equity                                                     |  | 8.27         | % |  | 10.27 | % |  | 6.74  | %
|Average total assets                                                             |  | 0.77         | % |  | 0.92  | % |  | 0.57  | %
|Percentage of dividends declared per common share to net income per common share |  | 60.71        | % |  | 50.30 | % |  | 79.44 | %
|Percentage of average stockholders equity to average total assets               |  | 9.35         | % |  | 8.93  | % |  | 8.48  | %



The Effects of Inflation and
Changing Prices



Inflation affects the Corporation in several ways,
but not to the same extent that it does a company that makes large capital expenditures or has a large investment in inventory. The Corporations asset and liability structure is primarily monetary in nature and, therefore, its financial
results are more affected by changes in interest rates than by inflation. However, the actions of the Federal Reserve Board indicate that interest rate management will continue to be the primary tool used to curtail inflationary pressures. Inflation
does affect



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noninterest expense, such as personnel expense and the cost of services and supplies. These increases must be offset to the extent possible, by increases in
noninterest income and by control of noninterest expense.



Accounting,
Legislative and Regulatory Matters



Effective January 1, 2003, the
Corporation adopted the provisions of FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (an interpretation of FASB
Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34). FIN 45 clarifies the requirements of FASB Statement No. 5 (FAS 5), Accounting for Contingencies, relating to a guarantors accounting for, and
disclosure of, the issuance of certain types of guarantees. For guarantees that fall within the scope of FIN 45, the Interpretation requires that guarantors recognize a liability equal to the fair value of the guarantee upon its issuance. The
Corporations primary guarantee included within the scope of FIN 45 relates to financial standby letters of credit issued to commercial customers. FIN 45 requires the liability recognized in standalone arms-length transactions to be the
premium received or receivable by the guarantor. FIN 45 requires disclosure of the nature of the guarantee, the maximum potential amount of future payments the guarantor could be required to make under the guarantee, and the current amount of the
liability, if any, for the guarantors obligations under the guarantee. Implementation of this interpretation did not have a material impact on the Corporations consolidated financial position or consolidated results of operations.



In January 2003 the Financial Accounting Standards Board issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities (an interpretation of ARB No. 51).  FIN 46 addresses the consolidation by business enterprises of certain variable interest entities (VIEs). In
December 2003, the FASB reissued FIN 46 with certain modifications and clarifications. Application of this guidance was effective for interests in certain VIEs commonly referred to as special-purpose entities (SPEs) as of December 31, 2003.
Application for all other types of entities is required for periods ending after March 15, 2004, unless previously applied. Management does not anticipate the implementation of this interpretation to have a material impact on the Corporations
consolidated financial position or consolidated results of operations.



In
April 2003, FASB issued Statement of Financial Accounting Standards No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). FASB Statements No. 133 Accounting for Derivative Instruments and
Hedging Activities and No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, establish accounting and reporting standards for derivative instruments including derivatives embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. This Statement 149 amends Statement 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG) process. This Statement contains amendments
relating to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and FASB Statements No. 65, Accounting for Certain Mortgage Banking Activities, No. 91 Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, No. 95, Statement of Cash Flows, and No. 126, Exemption from Certain Required Disclosures about Financial
Instruments for Certain Nonpublic Entities. In general, SFAS 149 was effective for derivative transactions entered



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into or modified and for hedging relationships designated after June 30, 2003. The adoption of this standard did not have a material impact on the
Corporations consolidated financial position or consolidated results of operations.



In May 2003, FASB issued Statement of Financial Accounting Standards No. 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). This Statement
establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of
Financial Statements. The remaining provisions of this Statement are consistent with the Boards proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity
shares, depending on the nature of the relationship established between the holder and the issuer. While the Board still plans to revise that definition through an amendment to Concepts Statement 6, the Board decided to defer issuing that amendment
until it has concluded its deliberations on the next phase of this project. That next phase will deal with certain compound financial instruments including puttable shares, convertible bonds, and dual-indexed financial instruments. This Statement
was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of
nonpublic entities. Implementation of this statement did not have a material impact on the Corporations consolidated financial position or consolidated results of operations. In December 2003, the FASB deferred for an indefinite period the
application of the guidance in SFAS 150 to noncontrolling interests that are classified as equity in the financial statements of a subsidiary but would be classified as a liability in the parents financial statements under SFAS 150. The
deferral is limited to mandatorily redeemable noncontrolling interests associated with finite-lived subsidiaries. Management does not believe that the Corporation has any such applicable entities as of December 31, 2003.



In December 2003, the FASB revised SFAS 132 Employers Disclosures about Pensions
and Other Postretirement Benefits (SFAS 132). This Statement retains the disclosures required by the original SFAS 132 and requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined
benefit pension and postretirement plans. In addition, this Statement requires interim period disclosure of the components of net period benefit cost and contributions if significantly different from previously reported amounts. See Note 12 for the
additional pension and other postretirement benefit disclosures as the Corporation adopted the provisions of this Statement as of December 31, 2003.



During the first quarter of 2003, the Securities and Exchange Commission promulgated rules to implement several provisions of the Sarbanes-Oxley Act of 2002. These rules
included conditions for using financial measures that exclude information that would be required under generally accepted accounting principles, (non-GAAP financial measures). Additionally, new rules expand the number of events that
require current reporting on Form 8-K. Furthermore, new rules have been issued pertaining to an audit committee and its need for a financial expert and code of ethics requirements for senior



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management. Also, new rules were issued defining audit committee responsibility for external auditor retention and determination of external auditor
independence. Management anticipates additional costs to implement the various provisions of this law; however, it is difficult to determine the full impact of implementation until such time as all rules have been promulgated.



On December 11, 2003, the SEC staff announced its intention to release a Staff Accounting
Bulletin that would require all registrants to account for mortgage loan interest rate lock commitments related to loans held for sale as written options, effective no later than for commitments entered into after March 31, 2004. This guidance, if
issued, would require the Corporation to recognize a liability on its balance sheet equal to the fair value of the commitment at the time the loan commitment is issued. As a result, this guidance would delay the recognition of any revenue related to
these commitments until such time as the loan is sold, however, it would have no effect on the ultimate amount of revenue or cash flows recognized over time. Management does not anticipate this guidance to have a material impact on the
Corporations consolidated financial position or consolidated results of operations.



Per Share Data by Quarter



The
common stock of the Corporation is quoted on the NASD OTC Bulletin Board under the trading symbol FCBS. The per share data by quarter table shows the approximate high and low bid as reported by the transfer agent and market makers for 2003 and 2002.
Also presented below are the dividends paid for those respective years. The number of stockholders of record on December 31, 2002, was 564 and outstanding shares totaled 1,991,000.



PER SHARE DATA BY QUARTER



|               |  |           |      |                   |   |      |  |     |       |      |   |       |  |   |       |  |   |      
|-------------- |  | --------- | ---- | ----------------- | - | ---- |  | --- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|               |  |           |      | Market Quotations
|               |  | Dividends |      | 2003              |   | 2002
|Quarter        |  | 2003      |      | 2002              |   | High |  | Low |       | High |   | Low  
|First Quarter  |  | $         | 0.20 |                   | $ | 0.20 |  | $   | 18.50 |      | $ | 18.00 |  | $ | 16.10 |  | $ | 14.75
|Second Quarter |  |           | 0.20 |                   |   | 0.20 |  | $   | 20.25 |      | $ | 18.10 |  |   | 18.00 |  |   | 15.60
|Third Quarter  |  |           | 0.20 |                   |   | 0.20 |  | $   | 23.25 |      | $ | 20.00 |  |   | 18.25 |  |   | 17.25
|Fourth Quarter |  |           | 0.25 |                   |   | 0.25 |  | $   | 22.50 |      | $ | 20.75 |  |   | 18.50 |  |   | 17.10



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Trust Asset Responsibility



Assets managed by the Trust Division are presented at market value. These assets are not included in the financial statements contained
elsewhere in this report. Trust responsibility, as measured by market value, is substantially greater than book value, which is the Federal income tax basis of the assets.



TRUST ASSETS UNDER ADMINISTRATION

(Market Value  $ in millions)



[GRAPHIC]



Trust account administration
and investment management are linked through the talents of a skilled professional and support staff. Their education and experience through decades of service results in specialization in personal and retirement relationships, foundations,
charitable and endowment purposes.



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CONDENSED STATEMENTS OF FINANCIAL CONDITION



Statistical Summary, 2003  1999



|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|------------------------------------ |  | --------------------------------------------- | ------- | - | - | --- | - | ---- | - | ------- | - |  | --- | ---- |  | - | ------- | - |  | ---- | - |  | - | ------- | - | ---- | --- | - | - | - | ------- | - |  | --- | -
|                                     |  | December 31,                                  |        
|                                     |  | 2003                                          |         |   | % |     |   | 2002 |   |         | % |  |     | 2001 |  |   | %       |   |  | 2000 |   |  | % |         |   | 1999 |     |   | % |  
|                                     |  | (Dollars in Thousands, Except Per Share Data) |        
|Loans                                |  | $                                             | 246,950 |   |   | 68  |   |      | $ | 236,460 |   |  | 65  |      |  | $ | 244,068 |   |  | 66   |   |  | $ | 244,727 |   |      | 65  |   |   | $ | 243,977 |   |  | 66  |  
|Securities                           |  |                                               | 78,444  |   |   | 22  |   |      |   | 88,949  |   |  | 25  |      |  |   | 87,519  |   |  | 24   |   |  |   | 92,770  |   |      | 25  |   |   |   | 85,131  |   |  | 23  |  
|Federal funds sold                   |  |                                               | 4,000   |   |   | 1   |   |      |   |        |   |  |    |      |  |   | 2,000   |   |  | 1    |   |  |   |        |   |      |    |   |   |   |        |   |  |    |  
|Interestbearing deposits with banks |  |                                               | 1,002   |   |   |    |   |      |   | 1,871   |   |  | 1   |      |  |   | 862     |   |  |     |   |  |   | 1,627   |   |      |    |   |   |   | 3,239   |   |  | 1   |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|INTEREST-EARNING ASSETS              |  |                                               | 330,396 |   |   | 91  |   |      |   | 327,280 |   |  | 91  |      |  |   | 334,449 |   |  | 91   |   |  |   | 339,124 |   |      | 90  |   |   |   | 332,347 |   |  | 90  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Cash and due from banks              |  |                                               | 14,576  |   |   | 4   |   |      |   | 14,947  |   |  | 4   |      |  |   | 15,427  |   |  | 4    |   |  |   | 14,118  |   |      | 4   |   |   |   | 15,372  |   |  | 4   |  
|Premises and equipment               |  |                                               | 11,697  |   |   | 3   |   |      |   | 10,500  |   |  | 3   |      |  |   | 10,651  |   |  | 3    |   |  |   | 10,487  |   |      | 3   |   |   |   | 10,712  |   |  | 3   |  
|Other assets                         |  |                                               | 10,133  |   |   | 3   |   |      |   | 11,542  |   |  | 3   |      |  |   | 11,856  |   |  | 3    |   |  |   | 13,627  |   |      | 4   |   |   |   | 12,197  |   |  | 4   |  
|Allowance for loan losses            |  |                                               | (3,075  | ) |   | (1  | ) |      |   | (3,005  | ) |  | (1  | )    |  |   | (3,180  | ) |  | (1   | ) |  |   | (3,180  | ) |      | (1  | ) |   |   | (3,050  | ) |  | (1  | )
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL ASSETS                         |  | $                                             | 363,727 |   |   | 100 |   |      | $ | 361,264 |   |  | 100 |      |  | $ | 369,203 |   |  | 100  |   |  | $ | 374,176 |   |      | 100 |   |   | $ | 367,578 |   |  | 100 |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Savings deposits                     |  | $                                             | 144,294 |   |   | 40  |   |      | $ | 143,931 |   |  | 40  |      |  | $ | 145,130 |   |  | 39   |   |  | $ | 148,572 |   |      | 40  |   |   | $ | 152,088 |   |  | 41  |  
|Time deposits                        |  |                                               | 122,262 |   |   | 34  |   |      |   | 124,814 |   |  | 34  |      |  |   | 135,252 |   |  | 37   |   |  |   | 143,253 |   |      | 38  |   |   |   | 136,064 |   |  | 37  |  
|Other interestbearing liabilities   |  |                                               | 19,167  |   |   | 5   |   |      |   | 16,745  |   |  | 5   |      |  |   | 17,020  |   |  | 5    |   |  |   | 13,487  |   |      | 4   |   |   |   | 16,958  |   |  | 5   |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|INTEREST-BEARING LIABILITIES         |  |                                               | 285,723 |   |   | 79  |   |      |   | 285,490 |   |  | 79  |      |  |   | 297,402 |   |  | 81   |   |  |   | 305,312 |   |      | 82  |   |   |   | 305,110 |   |  | 83  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Demand deposits                      |  |                                               | 41,163  |   |   | 11  |   |      |   | 39,202  |   |  | 11  |      |  |   | 36,991  |   |  | 10   |   |  |   | 35,511  |   |      | 10  |   |   |   | 31,743  |   |  | 9   |  
|Other liabilities                    |  |                                               | 1,847   |   |   |    |   |      |   | 2,754   |   |  | 1   |      |  |   | 1,843   |   |  |     |   |  |   | 1,671   |   |      |    |   |   |   | 1,851   |   |  |    |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL LIABILITIES                    |  |                                               | 328,733 |   |   | 90  |   |      |   | 327,446 |   |  | 91  |      |  |   | 336,236 |   |  | 91   |   |  |   | 342,494 |   |      | 92  |   |   |   | 338,704 |   |  | 92  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|STOCKHOLDERS EQUITY                 |  |                                               | 34,994  |   |   | 10  |   |      |   | 33,818  |   |  | 9   |      |  |   | 32,967  |   |  | 9    |   |  |   | 31,682  |   |      | 8   |   |   |   | 28,874  |   |  | 8   |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL LIABILITIES & EQUITY           |  | $                                             | 363,727 |   |   | 100 |   |      | $ | 361,264 |   |  | 100 |      |  | $ | 369,203 |   |  | 100  |   |  | $ | 374,176 |   |      | 100 |   |   | $ | 367,578 |   |  | 100 |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL DEPOSITS                       |  | $                                             | 307,719 |   |   |     |   |      | $ | 307,947 |   |  |     |      |  | $ | 317,373 |   |  |      |   |  | $ | 327,336 |   |      |     |   |   | $ | 319,895 |   |  |     |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|BOOK VALUE PER SHARE                 |  | $                                             | 17.58   |   |   |     |   |      | $ | 16.99   |   |  |     |      |  | $ | 16.48   |   |  |      |   |  | $ | 15.84   |   |      |     |   |   | $ | 14.44   |   |  |     |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  



SUMMARY OF OPERATIONS



Statistical Summary, 2003  1999



|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|-------------------------- |  | --------------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                           |  | Years Ended December 31,                      |       
|                           |  | 2003                                          |        |   | 2002 |   |        | 2001 |  |   | 2000   |   |  | 1999 |       
|                           |  | (Dollars in Thousands, Except Per Share Data) |       
|Interest income            |  | $                                             | 18,079 |   |      | $ | 21,534 |      |  | $ | 25,607 |   |  | $    | 27,923 |   |  | $ | 24,775 |  
|Interest expense           |  |                                               | 3,912  |   |      |   | 5,886  |      |  |   | 10,386 |   |  |      | 12,222 |   |  |   | 11,054 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|NET INTEREST MARGIN        |  |                                               | 14,167 |   |      |   | 15,648 |      |  |   | 15,221 |   |  |      | 15,701 |   |  |   | 13,721 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Provision for loan losses  |  |                                               | 653    |   |      |   | 1,785  |      |  |   | 2,334  |   |  |      | 1,209  |   |  |   | 555    |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Net credit margin          |  |                                               | 13,514 |   |      |   | 13,863 |      |  |   | 12,887 |   |  |      | 14,492 |   |  |   | 13,166 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Noninterest income         |  |                                               | 3,981  |   |      |   | 4,251  |      |  |   | 3,766  |   |  |      | 3,343  |   |  |   | 3,192  |  
|Noninterest expense        |  |                                               | 13,125 |   |      |   | 12,764 |      |  |   | 13,384 |   |  |      | 13,089 |   |  |   | 11,104 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|INCOME BEFORE INCOME TAXES |  |                                               | 4,370  |   |      |   | 5,350  |      |  |   | 3,269  |   |  |      | 4,746  |   |  |   | 5,254  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Provision for income taxes |  |                                               | 1,578  |   |      |   | 1,975  |      |  |   | 1,124  |   |  |      | 1,665  |   |  |   | 1,838  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|NET INCOME                 |  | $                                             | 2,792  |   |      | $ | 3,375  |      |  | $ | 2,145  |   |  | $    | 3,081  |   |  | $ | 3,416  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|EARNINGS PER COMMON SHARE: |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Basic                      |  | $                                             | 1.40   |   |      | $ | 1.69   |      |  | $ | 1.07   |   |  | $    | 1.54   |   |  | $ | 1.71   |  
|Diluted                    |  | $                                             | 1.40   |   |      | $ | 1.69   |      |  | $ | 1.07   |   |  | $    | 1.54   |   |  | $ | 1.71   |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Dividends per common share |  | $                                             | 0.85   |   |      | $ | 0.85   |      |  | $ | 0.85   |   |  | $    | 0.85   |   |  | $ | 0.80   |  
|Payout ratio               |  |                                               | 61     | % |      |   | 50     | %    |  |   | 79     | % |  |      | 55     | % |  |   | 47     | %



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 23 |  | First Century Bankshares, Inc.



---

Consolidated Statements of Financial Condition



|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                  |  | December 31,           |        
|                                                                                                                                                                                  |  | 2003                   |         |   | 2002 |  
|                                                                                                                                                                                  |  | (Dollars in Thousands) |        
|ASSETS                                                                                                                                                                            |  |                        |         |   |      |   |         |  
|Cash and due from banks                                                                                                                                                           |  | $                      | 14,576  |   |      | $ | 14,947  |  
|Interest-bearing balances with banks                                                                                                                                              |  |                        | 1,002   |   |      |   | 1,871   |  
|Securities available for sale                                                                                                                                                     |  |                        | 65,258  |   |      |   | 78,631  |  
|Securities held to maturity (estimated market value of $12,449 in 2003 and $9,971 in 2002)                                                                                        |  |                        | 12,163  |   |      |   | 9,566   |  
|Federal Home Loan Bank and Federal Reserve Bank Stock                                                                                                                             |  |                        | 1,023   |   |      |   | 752     |  
|Federal funds sold                                                                                                                                                                |  |                        | 4,000   |   |      |   |        |  
|Loans                                                                                                                                                                             |  |                        | 246,950 |   |      |   | 236,460 |  
|Less allowance for loan losses                                                                                                                                                    |  |                        | 3,075   |   |      |   | 3,005   |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|Net loans                                                                                                                                                                         |  |                        | 243,875 |   |      |   | 233,455 |  
|Premises and equipment, net                                                                                                                                                       |  |                        | 11,697  |   |      |   | 10,500  |  
|Other assets                                                                                                                                                                      |  |                        | 10,133  |   |      |   | 11,542  |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|TOTAL ASSETS                                                                                                                                                                      |  | $                      | 363,727 |   |      | $ | 361,264 |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                              |  |                        |         |   |      |   |         |  
|Deposits:                                                                                                                                                                         |  |                        |         |   |      |   |         |  
|Noninterest-bearing                                                                                                                                                               |  | $                      | 41,163  |   |      | $ | 39,202  |  
|Interest-bearing                                                                                                                                                                  |  |                        | 266,556 |   |      |   | 268,745 |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|Total deposits                                                                                                                                                                    |  |                        | 307,719 |   |      |   | 307,947 |  
|Short-term borrowings                                                                                                                                                             |  |                        | 19,167  |   |      |   | 16,745  |  
|Other liabilities                                                                                                                                                                 |  |                        | 1,847   |   |      |   | 2,754   |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|TOTAL LIABILITIES                                                                                                                                                                 |  |                        | 328,733 |   |      |   | 327,446 |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|Commitments and contigencies (see Notes 14 and 15)                                                                                                                                |  |                        |         |   |      |   |         |  
|STOCKHOLDERS EQUITY                                                                                                                                                              |  |                        |         |   |      |   |         |  
|Common stock-$1.25 par value; 10,000,000 shares authorized and 2,000,000 shares issued at December 31, 2003 and 2002; 1,991,000 shares
outstanding at December 31, 2003 and 2002: |  |                        | 2,500   |   |      |   | 2,500   |  
|Paid-in capital                                                                                                                                                                   |  |                        | 785     |   |      |   | 785     |  
|Retained earnings                                                                                                                                                                 |  |                        | 31,347  |   |      |   | 30,247  |  
|Treasury stock, at cost; 9,000 shares                                                                                                                                             |  |                        | (147    | ) |      |   | (147    | )
|Accumulated other comprehensive income, net of tax                                                                                                                                |  |                        | 509     |   |      |   | 433     |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                        |  |                        | 34,994  |   |      |   | 33,818  |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                        |  | $                      | 363,727 |   |      | $ | 361,264 |  
|                                                                                                                                                                                  |  |                        |         |   |      |   |         |  



The accompanying notes are an
integral part of the consolidated financial statements.



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 24 |  | 



---

Consolidated Statements of Income and Comprehensive Income



|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|-------------------------------------------------------------------------------------- |  | --------------------------------------------- | --------- | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                       |  | Years Ended December 31,                      |          
|                                                                                       |  | 2003                                          |           | 2002 |   |           | 2001 | 
|                                                                                       |  | (Dollars in Thousands, Except Per Share Data) |          
|INTEREST INCOME                                                                        |  |                                               |           |      |   |           |      |  |   |           |  
|Interest and fees on loans                                                             |  | $                                             | 14,876    |      | $ | 16,675    |      |  | $ | 19,829    |  
|Interest on balances with banks                                                        |  |                                               | 16        |      |   | 68        |      |  |   | 243       |  
|Interest and dividends from securities available for sale:                             |  |                                               |           |      |   |           |      |  |   |           |  
|Taxable                                                                                |  |                                               | 2,674     |      |   | 4,212     |      |  |   | 4,856     |  
|Interest and dividends from securities held to maturity:                               |  |                                               |           |      |   |           |      |  |   |           |  
|Taxable                                                                                |  |                                               | 47        |      |   | 78        |      |  |   | 69        |  
|Tax-exempt                                                                             |  |                                               | 416       |      |   | 432       |      |  |   | 491       |  
|Interest on federal funds sold                                                         |  |                                               | 50        |      |   | 69        |      |  |   | 119       |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|TOTAL INTEREST INCOME                                                                  |  |                                               | 18,079    |      |   | 21,534    |      |  |   | 25,607    |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|INTEREST EXPENSE                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|Interest on time certificates of $100,000 or more                                      |  |                                               | 875       |      |   | 1,082     |      |  |   | 1,877     |  
|Interest on other deposits                                                             |  |                                               | 2,962     |      |   | 4,645     |      |  |   | 7,973     |  
|Interest on federal funds purchased and securities sold under agreements to repurchase |  |                                               | 73        |      |   | 157       |      |  |   | 534       |  
|Interest on demand notes to U. S. Treasury and other indebtedness                      |  |                                               | 2         |      |   | 2         |      |  |   | 2         |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|TOTAL INTEREST EXPENSE                                                                 |  |                                               | 3,912     |      |   | 5,886     |      |  |   | 10,386    |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|Net interest income                                                                    |  |                                               | 14,167    |      |   | 15,648    |      |  |   | 15,221    |  
|Provision for loan losses                                                              |  |                                               | 653       |      |   | 1,785     |      |  |   | 2,334     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|Net interest income after provision for loan losses                                    |  |                                               | 13,514    |      |   | 13,863    |      |  |   | 12,887    |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|NONINTEREST INCOME                                                                     |  |                                               |           |      |   |           |      |  |   |           |  
|Income from fiduciary activities                                                       |  |                                               | 1,488     |      |   | 1,407     |      |  |   | 1,400     |  
|Service charges on deposit accounts                                                    |  |                                               | 1,271     |      |   | 1,330     |      |  |   | 1,245     |  
|Other noninterest income                                                               |  |                                               | 1,155     |      |   | 1,514     |      |  |   | 1,164     |  
|Securities gains (losses)                                                              |  |                                               | 67        |      |   |          |      |  |   | (43       | )
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|TOTAL NONINTEREST INCOME                                                               |  |                                               | 3,981     |      |   | 4,251     |      |  |   | 3,766     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|NONINTEREST EXPENSE                                                                    |  |                                               |           |      |   |           |      |  |   |           |  
|Salaries, wages, and other employee benefits                                           |  |                                               | 7,449     |      |   | 6,960     |      |  |   | 6,523     |  
|Premises and equipment expense                                                         |  |                                               | 1,964     |      |   | 1,869     |      |  |   | 1,768     |  
|Data processing expense                                                                |  |                                               | 708       |      |   | 788       |      |  |   | 781       |  
|Advertising and public relations                                                       |  |                                               | 202       |      |   | 205       |      |  |   | 277       |  
|Postage                                                                                |  |                                               | 246       |      |   | 258       |      |  |   | 290       |  
|Intangible amortization                                                                |  |                                               |          |      |   |          |      |  |   | 444       |  
|Supplies and printing                                                                  |  |                                               | 290       |      |   | 344       |      |  |   | 407       |  
|Other noninterest expense                                                              |  |                                               | 2,266     |      |   | 2,340     |      |  |   | 2,894     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|TOTAL NONINTEREST EXPENSE                                                              |  |                                               | 13,125    |      |   | 12,764    |      |  |   | 13,384    |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|Income before income taxes                                                             |  |                                               | 4,370     |      |   | 5,350     |      |  |   | 3,269     |  
|Provision for income taxes                                                             |  |                                               | 1,578     |      |   | 1,975     |      |  |   | 1,124     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|NET INCOME                                                                             |  |                                               | 2,792     |      |   | 3,375     |      |  |   | 2,145     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|Other comprehensive income (loss), net of tax                                          |  |                                               | 76        |      |   | (683      | )    |  |   | 840       |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|COMPREHENSIVE INCOME                                                                   |  | $                                             | 2,868     |      | $ | 2,692     |      |  | $ | 2,985     |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|NET INCOME PER COMMON SHARE:                                                           |  |                                               |           |      |   |           |      |  |   |           |  
|Basic                                                                                  |  | $                                             | 1.40      |      | $ | 1.69      |      |  | $ | 1.07      |  
|Diluted                                                                                |  | $                                             | 1.40      |      | $ | 1.69      |      |  | $ | 1.07      |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  
|AVERAGE SHARES OUTSTANDING:                                                            |  |                                               |           |      |   |           |      |  |   |           |  
|Basic                                                                                  |  |                                               | 1,991,000 |      |   | 1,994,648 |      |  |   | 2,000,000 |  
|Diluted                                                                                |  |                                               | 1,995,642 |      |   | 1,994,648 |      |  |   | 2,000,000 |  
|                                                                                       |  |                                               |           |      |   |           |      |  |   |           |  



The accompanying notes are an
integral part of the consolidated financial statements.



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 25 |  | First Century Bankshares, Inc.



---

Consolidated Statements of Cash Flows



|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                    |  | Years Ended December 31, |        
|                                                                                                    |  | 2003                     |         |   | 2002 |   |         | 2001 | 
|                                                                                                    |  | (Dollars in Thousands)   |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Net income before adjustments to reconcile net income to net cash provided by operating activities: |  | $                        | 2,792   |   |      | $ | 3,375   |      |  | $ | 2,145   |  
|Provision for loan losses                                                                           |  |                          | 653     |   |      |   | 1,785   |      |  |   | 2,334   |  
|Depreciation and amortization                                                                       |  |                          | 800     |   |      |   | 828     |      |  |   | 1,289   |  
|Deferred income tax expense (benefit)                                                               |  |                          | 257     |   |      |   | 214     |      |  |   | (88     | )
|Securities (gains) losses                                                                           |  |                          | (67     | ) |      |   |        |      |  |   | 43      |  
|Decrease in interest receivable                                                                     |  |                          | 310     |   |      |   | 426     |      |  |   | 969     |  
|Net investment amortization and (accretion)                                                         |  |                          | 427     |   |      |   | 95      |      |  |   | (124    | )
|Net decrease in other assets                                                                        |  |                          | 561     |   |      |   | 480     |      |  |   | 1,536   |  
|Net increase (decrease) in interest payable and other liabilities                                   |  |                          | (266    | ) |      |   | (85     | )    |  |   | 148     |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                           |  |                          | 5,467   |   |      |   | 7,118   |      |  |   | 8,252   |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Purchases of securities held to maturity                                                            |  |                          | (3,734  | ) |      |   | (1,013  | )    |  |   | (2,657  | )
|Purchases of securities available for sale                                                          |  |                          | (56,505 | ) |      |   | (58,247 | )    |  |   | (60,266 | )
|Redemptions (purchases) of Federal Home Loan Bank stock                                             |  |                          | (271    | ) |      |   | 474     |      |  |   | (46     | )
|Proceeds from maturities and calls of securities held to maturity                                   |  |                          | 1,104   |   |      |   | 2,176   |      |  |   | 1,891   |  
|Proceeds from maturities and calls of securities available for sale                                 |  |                          | 67,763  |   |      |   | 54,946  |      |  |   | 62,599  |  
|Proceeds from sales of securities available for sale                                                |  |                          | 1,072   |   |      |   |        |      |  |   | 1,862   |  
|Proceeds from sales of securities held to maturity                                                  |  |                          |        |   |      |   |        |      |  |   | 313     |  
|Net (increase) decrease in loans                                                                    |  |                          | (10,607 | ) |      |   | 5,296   |      |  |   | (317    | )
|Acquisition of premises and equipment                                                               |  |                          | (2,031  | ) |      |   | (679    | )    |  |   | (1,161  | )
|Proceeds from disposal of premises and equipment                                                    |  |                          |        |   |      |   |        |      |  |   | 204     |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                                    |  |                          | (3,209  | ) |      |   | 2,953   |      |  |   | 2,422   |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in demand and savings deposits                                              |  |                          | 2,324   |   |      |   | 1,012   |      |  |   | (1,962  | )
|Net decrease in time deposits                                                                       |  |                          | (2,552  | ) |      |   | (10,438 | )    |  |   | (8,001  | )
|Net increase (decrease) in short-term borrowings                                                    |  |                          | 2,422   |   |      |   | (275    | )    |  |   | 3,533   |  
|Purchase of treasury stock                                                                          |  |                          |        |   |      |   | (147    | )    |  |   |        |  
|Cash dividends paid                                                                                 |  |                          | (1,692  | ) |      |   | (1,694  | )    |  |   | (1,700  | )
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                    |  |                          | 502     |   |      |   | (11,542 | )    |  |   | (8,130  | )
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                                |  |                          | 2,760   |   |      |   | (1,471  | )    |  |   | 2,544   |  
|Cash and cash equivalents at beginning of year                                                      |  |                          | 16,818  |   |      |   | 18,289  |      |  |   | 15,745  |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of year                                                            |  | $                        | 19,578  |   |      | $ | 16,818  |      |  | $ | 18,289  |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid during the year for:                                                                      |  |                          |         |   |      |   |         |      |  |   |         |  
|Interest                                                                                            |  | $                        | 3,981   |   |      | $ | 6,020   |      |  | $ | 10,547  |  
|Income taxes                                                                                        |  | $                        | 1,118   |   |      | $ | 2,004   |      |  | $ | 1,013   |  



The accompanying notes are an
integral part of the consolidated financial statements.



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Consolidated Statements of Changes in Stockholders Equity



|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|----------------------------------------- |  | --------------------------------------------- | ----- | -------------- | - | ---------------- |  | - | ------------- | - |  | ----------------------------------------------------- | ---- | - |  | - | ----- | -
|                                          |  | CommonStock                                   |       | Paid-InCapital |   | RetainedEarnings |  |   | TreasuryStock |   |  | AccumulatedOtherComprehensiveIncome (Loss),Net of tax |     
|                                          |  | (Dollars in Thousands, Except Per Share Data) |      
|YEAR ENDED DECEMBER 31, 2001              |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Balance at January 1, 2001                |  | $                                             | 2,500 |                | $ | 785              |  | $ | 28,121        |   |  | $                                                     |     |   |  | $ | 276   |  
|Net income                                |  |                                               |      |                |   |                 |  |   | 2,145         |   |  |                                                       |     |   |  |   |      |  
|Other comprehensive income, net of tax    |  |                                               |      |                |   |                 |  |   |              |   |  |                                                       |     |   |  |   | 840   |  
|Cash dividends declared  $0.85 per share |  |                                               |      |                |   |                 |  |   | (1,700        | ) |  |                                                       |     |   |  |   |      |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Balance at December 31, 2001              |  |                                               | 2,500 |                |   | 785              |  |   | 28,566        |   |  |                                                       |     |   |  |   | 1,116 |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|YEAR ENDED DECEMBER 31, 2002              |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Net income                                |  |                                               |      |                |   |                 |  |   | 3,375         |   |  |                                                       |     |   |  |   |      |  
|Purchase 9,000 shares of treasury stock   |  |                                               |      |                |   |                 |  |   |              |   |  |                                                       | (147 | ) |  |   |      |  
|Other comprehensive loss, net of tax      |  |                                               |      |                |   |                 |  |   |              |   |  |                                                       |     |   |  |   | (683  | )
|Cash dividends declared  $0.85 per share |  |                                               |      |                |   |                 |  |   | (1,694        | ) |  |                                                       |     |   |  |   |      |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Balance at December 31, 2002              |  |                                               | 2,500 |                |   | 785              |  |   | 30,247        |   |  |                                                       | (147 | ) |  |   | 433   |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|YEAR ENDED DECEMBER 31, 2003              |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Net income                                |  |                                               |      |                |   |                 |  |   | 2,792         |   |  |                                                       |     |   |  |   |      |  
|Other comprehensive loss, net of tax      |  |                                               |      |                |   |                 |  |   |              |   |  |                                                       |     |   |  |   | 76    |  
|Cash dividends declared  $0.85 per share |  |                                               |      |                |   |                 |  |   | (1,692        | ) |  |                                                       |     |   |  |   |      |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  
|Balance at December 31, 2003              |  | $                                             | 2,500 |                | $ | 785              |  | $ | 31,347        |   |  | $                                                     | (147 | ) |  | $ | 509   |  
|                                          |  |                                               |       |                |   |                  |  |   |               |   |  |                                                       |      |   |  |   |       |  



The accompanying notes are an
integral part of the consolidated financial statements.



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| |  | Page 27 |  | First Century Bankshares, Inc.



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Notes to Consolidated Financial Statements



1. Summary of Significant Accounting and Reporting Policies



First Century Bankshares, Inc. (the Corporation), and its wholly owned subsidiaries, First Century Bank, N.A. and First Century
Financial Services, LLC, operate eleven branches in southern West Virginia and southwestern Virginia. The Corporations primary source of revenue is derived from loans to customers who are predominately small to medium size businesses and
middle income individuals. The accounting and reporting policies of the Corporation conform to generally accepted accounting principles and to general practices within the banking industry. Certain reclassifications have been made to the prior
years financial statements to place them on a comparable basis with the current years financial statements. The following is a summary of the more significant accounting and reporting policies:



Management 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 disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Principles of Consolidation The consolidated financial statements include the accounts of First Century Bankshares, Inc. and its wholly owned subsidiaries.
All significant intercompany balances and transactions have been eliminated in consolidation.



Cash and cash equivalents For purposes of reporting cash flows, cash equivalents include cash on hand and amounts due from banks (including cash items in process of collection); interestbearing
balances with banks and federal funds sold. To comply with Federal Reserve regulations, the subsidiary bank is required to maintain reserve balances with the Federal Reserve Bank of Richmond. The amount of those reserve balances at December 31,
2003, was approximately $481,000.



Securities Securities are
classified as either held to maturity, available for sale or trading. Classification of securities is determined on the date of purchase. In determining such classification, debt securities that the Corporation has the positive intent and ability to
hold to maturity are classified as held to maturity and are carried at amortized cost. All other securities are classified as available for sale and are carried at fair value with unrealized gains and losses included in comprehensive income. The
Corporation has no securities classified as trading.



Realized gains and
losses, determined using the specific identification method, and declines in value judged to be other than temporary are included in noninterest income. Premiums and discounts are amortized into interest income using a level yield method.



Loans Loans are reported at their principal outstanding balance
net of charge-offs and certain other deferred or unearned income. Interest income is recognized as earned using the interest method.



Allowance for loan losses The adequacy of the allowance for loan losses is periodically evaluated by the Corporation in order to maintain the allowance at a
level that is sufficient to absorb probable credit losses. Managements evaluation of the adequacy of the allowance



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---

Notes to Consolidated Financial Statements



1. Summary of Significant Accounting and Reporting Policies (continued)



is based on a review of the Corporations historical loss experience, known and inherent risks in the loan portfolio, including adverse circumstances
that may affect the ability of the borrower to repay interest and/or principal, the estimated value of collateral, and an analysis of the levels and trends of delinquencies, charge-offs, and the risk ratings of the various loan categories. Such
factors as the level and trend of interest rates and the condition of the national and local economies are also considered. Estimates may change at some point in the future.



The allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. Increases and decreases
in the allowance due to changes in the measurement of impaired loans are included in the provision for loan losses. Loans continue to be classified as impaired unless they are brought fully current and the collection of scheduled interest and
principal is considered probable.



A loan is considered impaired, based on
current information and events, if it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans
that are collateral dependent is based on the fair value of the collateral. The measurement of other impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate.



The Corporation uses several factors in determining if a loan is impaired. The
internal asset classification procedures include a thorough review of significant loans and lending relationships and include the accumulation of related data. This data includes loan payment status, borrowers financial data and
borrowers operating factors such as cash flows, operating income or loss, etc.



When a loan or portion of a loan is determined to be uncollectible, the portion deemed uncollectible is charged against the allowance and subsequent recoveries, if any, are credited to the allowance.



Income recognition on impaired and nonaccrual loans Loans, including impaired
loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-collateralized and in the process of collection. If a loan or a
portion of a loan is classified as doubtful or is partially charged off, the loan is classified as nonaccrual. Loans that are on a current payment status or past due less than 90 days may also be classified as nonaccrual if repayment in full of
principal and/or interest is in doubt.



Loans may be returned to accrual status
when all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment within an acceptable period of time, and there is a sustained period of repayment performance by the borrower, in accordance with
the contractual terms of interest and principal.



While a loan is classified as
nonaccrual and the future collectibility of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding. When the future collectibility of the recorded loan balance is
expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan had been partially charged off, recognition of interest on a cash basis is



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---

1. Summary of Significant Accounting and Reporting Policies (continued)



limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash receipts in excess of that amount are
recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered.



Other Real Estate Owned  Other real estate owned includes properties on which the Corporations subsidiary has foreclosed and taken title. Real estate properties acquired as a result of foreclosures
are carried at the lower of the recorded investment in the loan or the fair value less estimated selling costs. Any excess of the outstanding principal loan balance over the fair value less estimated selling costs of the foreclosed property is
charged to the allowance for loan losses. Any subsequent fair value adjustments and net operating expenses are charged to noninterest expense.



Premises and Equipment  Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed by the straightline method
based upon the estimated useful lives of the assets. Buildings and improvements have estimated useful lives of 20 to 40 years. Equipment and fixtures have estimated useful lives of 3 to 10 years. The cost of major improvements is capitalized. The
expenditures for maintenance and repairs are charged to expense as incurred. Gains or losses on assets sold are included in other operating income.



Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities  The Corporation applies a financial-components approach that
focuses on control when accounting and reporting for transfers and servicing of financial assets and extinguishments of liabilities. Under that approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets
it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. This approach provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings.



Goodwill
And Other Intangibles  Prior to December 31, 2001, the cost of the investments in acquired institutions in excess of amounts attributable to tangible and identified intangible assets at dates of acquisition was recorded as goodwill and
amortized to operations over periods from 15 - 25 years using the straightline method. A portion of the cost of purchased subsidiaries represented the value associated with the future earnings potential of the acquired core deposit base and
was being amortized over eight years through December 31, 2000, the estimated life of the deposit base. The unamortized balance of intangibles totaled approximately $5,183,000 at December 31, 2001, representing only goodwill and unidentified
intangibles, net of accumulated amortization of $1,555,000 and is included in other assets. In 2002, under Statement of Financial Accounting Standards (SFAS) No. 142, goodwill and unidentified intangible assets are no longer amortized, but are
reviewed at least annually for impairment using the discounted cash flow method. Impaired goodwill or unidentified intangible assets are written down to fair value, calculated using the discounted cash flow method. The unimpaired balance of
intangibles totaled approximately $5,183,000 at December 31, 2003, and $5,542,000 at December 31, 2002.



Income Taxes  The Corporation files a consolidated federal income tax return. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences
between the financial statement carrying amounts of



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1. Summary of Significant Accounting and Reporting Policies (continued)



existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the
enactment date.



Segment Information  Operating segments are
components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Corporation has determined
that it has one significant operating segment, the providing of general commercial financial services to customers located in the geographic areas of southern West Virginia and southwestern Virginia. The various products are those generally offered
by community banks, and the allocation of resources is based on the overall performance of the institution, versus the individual branches or products.



Comprehensive Income  The Company classifies items of other comprehensive income by their nature in the financial statements and displays accumulated other
comprehensive income separately from retained earnings in the equity section of the balance sheet. Unrealized gains and losses on available for sale securities and net accrued pension benefit liability are the components of the Companys other
comprehensive income.



New Accounting Pronouncements  Effective
January 1, 2003, the Corporation adopted the provisions of FASB Interpretation No.45 (FIN 45), Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (an
interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34). FIN 45 clarifies the requirements of FASB Statement No. 5 (FAS 5), Accounting for Contingencies, relating to a guarantors
accounting for, and disclosure of, the issuance of certain types of guarantees. For guarantees that fall within the scope of FIN 45, the Interpretation requires that guarantors recognize a liability equal to the fair value of the guarantee upon its
issuance. The Corporations primary guarantee included within the scope of FIN 45 relates to financial standby letters of credit issued to commercial customers. FIN 45 requires the liability recognized in standalone arms-length
transactions to be the premium received or receivable by the guarantor. FIN 45 requires disclosure of the nature of the guarantee, the maximum potential amount of future payments the guarantor could be required to make under the guarantee, and the
current amount of the liability, if any, for the guarantors obligations under the guarantee. Implementation of this interpretation did not have a material impact on the Corporations consolidated financial position or consolidated results
of operations.



In January 2003 the Financial Accounting Standards Board issued
FASB Interpretation No.46 (FIN 46), Consolidation of Variable Interest Entities (an interpretation of ARB No. 51). FIN 46 addresses the consolidation by business enterprises of certain variable interest entities (VIEs). In
December 2003, the FASB reissued FIN 46 with certain modifications and clarifications. Application of this guidance was effective for interests in certain VIEs commonly referred to as special-purpose entities (SPEs) as of December 31, 2003.
Application for all other types of entities is required for periods ending after March 15, 2004, unless previously applied. Management does not anticipate the implementation of this interpretation to have a material impact on the Corporations
consolidated financial position or consolidated results of operations.



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1. Summary of Significant Accounting and Reporting Policies (continued)



In December 2002, the Financial Accounting Standards Board issued FASB Statement No.148, Accounting for
Stock-Based Compensation-Transition and Disclosure (SFAS 148). In light of recent conversions by a number of companies to the recognition and measurement provisions of SFAS 123, Accounting for Stock-Based Compensation, (and of
announcements by other entities of their intentions to change), the FASB has amended SFAS 123 to add two new transitional approaches when changing from the APB Opinion 25 intrinsic value method of accounting for stock-based employee compensation to
the SFAS 123 fair value method, if a company so elects. In addition, SFAS 123 has been amended to require disclosure of additional information concerning the effects of stock-based employee compensation on earnings. Finally, SFAS 148 amends APB
Opinion 28, Interim Financial Reporting, to call for disclosure of SFAS 123 pro forma information on a quarterly basis. Implementation of this statement did not have a material impact on the Corporations consolidated financial
position or consolidated results of operations.



In April 2003, FASB issued
Statement of Financial Accounting Standards No.149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). FASB Statements No.133 Accounting for Derivative Instruments and Hedging Activities
and No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, establish accounting and reporting standards for derivative instruments including derivatives embedded in other contracts (collectively referred
to as derivatives) and for hedging activities. This Statement 149 amends Statement 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG) process. This Statement contains amendments relating to FASB
Concepts Statement No.7, Using Cash Flow Information and Present Value in Accounting Measurements, and FASB Statements No.65, Accounting for Certain Mortgage Banking Activities, No. 91 Accounting for Nonrefundable Fees
and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, No. 95, Statement of Cash Flows, and No. 126, Exemption from Certain Required Disclosures about Financial Instruments for Certain
Nonpublic Entities. In general, SFAS 149 was effective for derivative transactions entered into or modified and for hedging relationships designated after June 30, 2003. The adoption of this standard did not have a material impact on the
Corporations consolidated financial position or consolidated results of operations.



In May 2003, FASB issued Statement of Financial Accounting Standards No. 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150). This Statement
establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of
Financial Statements. The remaining provisions of this Statement are consistent with the Boards proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity shares,
depending on the nature of the relationship established between the holder and the issuer. While the Board still plans to revise that definition through an amendment to Concepts Statement 6, the Board decided to defer issuing that amendment until it
has concluded its deliberations on the next phase of this project. That next phase will deal with certain compound financial instruments including puttable



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|First Century Bankshares, Inc. |  | Page 32 |  | 



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1. Summary of Significant Accounting and Reporting Policies (continued)



shares, convertible bonds, and dual-indexed financial instruments. This Statement was effective for financial instruments entered into or modified after May
31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. Implementation of this statement did not have a material
impact on the Corporations consolidated financial position or consolidated results of operations. In December 2003, the FASB deferred for an indefinite period the application of the guidance in SFAS 150 to non-controlling interests that are
classified as equity in the financial statements of a subsidiary but would be classified as a liability in the parents financial statements under SFAS 150. The deferral is limited to mandatorily redeemable noncontrolling interests associated
with finite-lived subsidiaries. Management does not believe any such applicable entities exist as of December 31, 2003.



In December 2003, the FASB revised SFAS 132 Employers Disclosures about Pensions and Other Postretirement Benefits (SFAS 132). This Statement retains
the disclosures required by the original SFAS 132 and requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension and postretirement plans. In addition, this Statement requires
interim period disclosure of the components of net period benefit cost and contributions if significantly different from previously reported amounts. See Note 12 for the additional pension and other postretirement benefit disclosures as the
Corporation adopted the provisions of this Statement as of December 31, 2003.



During the first quarter of 2003, the Securities and Exchange Commission promulgated rules to implement several provisions of the Sarbanes-Oxley Act of 2002. These rules included conditions for using financial measures that exclude
information that would be required under generally accepted accounting principles, (non-GAAP financial measures). Additionally, new rules expand the number of events that require current reporting on Form 8-K. Furthermore, new rules have
been issued pertaining to an audit committee and its need for a financial expert and code of ethics requirements for senior management. Also, new rules were issued defining audit committee responsibility for external auditor retention and
determination of external auditor independence. Management anticipates additional costs to implement the various provisions of this law; however, it is difficult to determine the full impact of implementation until such time as all rules have been
promulgated.



On December 11, 2003, the SEC staff announced its intention to
release a Staff Accounting Bulletin that would require all registrants to account for mortgage loan interest rate lock commitments related to loans held for sale as written options, effective no later than for commitments entered into after March
31, 2004. This guidance, if issued, would require the Corporation to recognize a liability on its balance sheet equal to the fair value of the commitment at the time the loan commitment is issued. As a result, this guidance would delay the
recognition of any revenue related to these commitments until such time as the loan is sold, however, it would have no effect on the ultimate amount of revenue or cash flows recognized over time. Management does not anticipate this guidance to have
a material impact on the Corporations consolidated financial position or consolidated results of operations.



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2. Goodwill and Other Intangible Assets-Adoption of Statement 142



Effective January 1, 2002, the Corporation adopted the provisions of Financial Accounting
Standards Board Statement No. 142 Goodwill and Other Intangible Assets, (SFAS 142). As of January 1, 2002, the Corporation had approximately $5,183,000 in unamortized goodwill from previous acquisitions. SFAS 142 requires a transitional
impairment test be performed within six-months of adoption. The initial valuation of the Corporations goodwill pursuant to this pronouncement resulted in no write-downs for impairment. Subsequent impairment testing in 2003 resulted in no
write-downs in the valuation of the Corporations goodwill. Additionally, SFAS 142 requires a reconciliation of previously reported net income and earnings per share, adjusted for changes pursuant to this statement. Following is the pro forma
effect of adoption of SFAS 142:



|                                  |  |                                                 |       |      |   |       |  |   |      
|--------------------------------- |  | ----------------------------------------------- | ----- | ---- | - | ----- |  | - | -----
|                                  |  | Years Ended December 31,                       
|                                  |  | 2003                                            |       | 2002 |   | 2001 
|                                  |  | (Dollars in Thousands, exceptper share amounts)
|Reported net income               |  | $                                               | 2,792 |      | $ | 3,375 |  | $ | 2,145
|Goodwill amortization, net of tax |  |                                                 |      |      |   |      |  |   | 280  
|                                  |  |                                                 |       |      |   |       |  |   |      
|Adjusted net income               |  | $                                               | 2,792 |      | $ | 3,375 |  | $ | 2,425
|                                  |  |                                                 |       |      |   |       |  |   |      
|Basic earnings per share:         |  |                                                 |       |      |   |       |  |   |      
|Reported net income               |  | $                                               | 1.40  |      | $ | 1.69  |  | $ | 1.07 
|Goodwill amortization, net of tax |  |                                                 |      |      |   |      |  |   | 0.14 
|                                  |  |                                                 |       |      |   |       |  |   |      
|Adjusted net income               |  | $                                               | 1.40  |      | $ | 1.69  |  | $ | 1.21 
|                                  |  |                                                 |       |      |   |       |  |   |      
|Diluted earnings per share:       |  |                                                 |       |      |   |       |  |   |      
|Reported net income               |  | $                                               | 1.40  |      | $ | 1.69  |  | $ | 1.07 
|Goodwill amortization, net of tax |  |                                                 |      |      |   |      |  |   | 0.14 
|                                  |  |                                                 |       |      |   |       |  |   |      
|Adjusted net income               |  | $                                               | 1.40  |      | $ | 1.69  |  | $ | 1.21 
|                                  |  |                                                 |       |      |   |       |  |   |      



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|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 34 |  | 



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3. Securities



Securities available for sale at December 31, 2003 and 2002 are summarized as follows:



|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|------------------------------------------------------------------------------------ |  | ---------------------- | ------ | -------------------- | - | --------------------- |  | -------------------- | --- |  | - | ------
|                                                                                     |  | 2003                  
|                                                                                     |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedMarketValue
|                                                                                     |  | (Dollars in Thousands)
|U.S. Government obligations                                                          |  | $                      | 1,000  |                      | $ | 4                     |  | $                    |    |  | $ | 1,004 
|U.S. Government agency obligations                                                   |  |                        | 45,202 |                      |   | 424                   |  |                      | 113 |  |   | 45,513
|Mortgage-backed securities                                                           |  |                        | 9,088  |                      |   | 23                    |  |                      | 81  |  |   | 9,030 
|Other debt securities                                                                |  |                        | 9,196  |                      |   | 515                   |  |                      |    |  |   | 9,711 
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|TOTAL SECURITIES AVAILABLE FOR SALE                                                  |  | $                      | 64,486 |                      | $ | 966                   |  | $                    | 194 |  | $ | 65,258
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|                                                                                     | 
|                                                                                     |  | 2002                  
|                                                                                     |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedMarketValue
|                                                                                     |  | (Dollars in Thousands)
|U.S. Government obligations                                                          |  | $                      | 2,989  |                      | $ | 63                    |  | $                    |    |  | $ | 3,052 
|U.S. Government agency obligations                                                   |  |                        | 62,058 |                      |   | 905                   |  |                      | 1   |  |   | 62,962
|Mortgage-backed securities                                                           |  |                        | 2,897  |                      |   | 52                    |  |                      |    |  |   | 2,949 
|Other debt securities                                                                |  |                        | 9,188  |                      |   | 499                   |  |                      | 19  |  |   | 9,668 
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|TOTAL SECURITIES AVAILABLE FOR SALE                                                  |  | $                      | 77,132 |                      | $ | 1,519                 |  | $                    | 20  |  | $ | 78,631
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|Securities held to maturity at December 31, 2003 and
2002 are summarized as follows:
|                                                                                     | 
|                                                                                     |  | 2003                  
|                                                                                     |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedMarketValue
|                                                                                     |  | (Dollars in Thousands)
|State and municipal obligations                                                      |  | $                      | 12,063 |                      | $ | 330                   |  | $                    | 44  |  | $ | 12,349
|Other debt securities                                                                |  |                        | 100    |                      |   |                      |  |                      |    |  |   | 100   
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|TOTAL SECURITIES HELD TO MATURITY                                                    |  | $                      | 12,163 |                      | $ | 330                   |  | $                    | 44  |  | $ | 12,449
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|                                                                                     | 
|                                                                                     |  | 2002                  
|                                                                                     |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | EstimatedMarketValue
|                                                                                     |  | (Dollars in Thousands)
|Mortgage-backed securities                                                           |  | $                      | 9      |                      | $ |                      |  | $                    |    |  | $ | 9     
|State and municipal obligations                                                      |  |                        | 9,407  |                      |   | 451                   |  |                      | 46  |  |   | 9,812 
|Other debt securities                                                                |  |                        | 150    |                      |   |                      |  |                      |    |  |   | 150   
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       
|TOTAL SECURITIES HELD TO MATURITY                                                    |  | $                      | 9,566  |                      | $ | 451                   |  | $                    | 46  |  | $ | 9,971 
|                                                                                     |  |                        |        |                      |   |                       |  |                      |     |  |   |       



Securities with an aggregate value of
$42,252,000 at December 31, 2003 and $40,597,000 at December 31, 2002, were pledged to secure public and trust deposits and for other purposes required or permitted by law, including approximately $20,412,000 at December 31, 2003 and $18,571,000 at
December 31, 2002 pledged to secure repurchase agreements.



Gross gains of
$67,000 were recognized on sales of available for sale securities for the year ended December 31, 2003. There were no sales of securities for the year ended December 31, 2002.



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3. Securities (continued)



Gross gains of $17,000 and gross losses of $30,000 were recognized on sales of available for sale securities for the
year ended December 31, 2001. Additionally, during the year ended December 31, 2001, approximately $343,000 in held to maturity securities were sold as the result of significant deterioration in the issuers creditworthiness.



The amortized cost and estimated market value for securities available for sale and
securities held to maturity by contractual maturities at December 31, 2003 are shown in the following tables. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.



|                                       |  |                        |        |                      |   |                    |  |   |    
|-------------------------------------- |  | ---------------------- | ------ | -------------------- | - | ------------------ |  | - | ---
|                                       |  | AmortizedCost          |        | EstimatedMarketValue |   | NetUnrealizedGains
|                                       |  | (Dollars in Thousands)
|Due in one year or less                |  | $                      | 6,033  |                      | $ | 6,117              |  | $ | 84 
|Due after one year through five years  |  |                        | 51,216 |                      |   | 51,888             |  |   | 672
|Due after five years through ten years |  |                        | 7,237  |                      |   | 7,253              |  |   | 16 
|                                       |  |                        |        |                      |   |                    |  |   |    
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 64,486 |                      | $ | 65,258             |  | $ | 772
|                                       |  |                        |        |                      |   |                    |  |   |    



|                                       |  |                        |        |                      |   |                    |  |   |    
|-------------------------------------- |  | ---------------------- | ------ | -------------------- | - | ------------------ |  | - | ---
|                                       |  | AmortizedCost          |        | EstimatedMarketValue |   | NetUnrealizedGains
|                                       |  | (Dollars in Thousands)
|Due in one year or less                |  | $                      | 1,838  |                      | $ | 1,875              |  | $ | 37 
|Due after one year through five years  |  |                        | 6,510  |                      |   | 6,684              |  |   | 174
|Due after five years through ten years |  |                        | 3,635  |                      |   | 3,710              |  |   | 75 
|Due after ten years                    |  |                        | 180    |                      |   | 180                |  |   |   
|                                       |  |                        |        |                      |   |                    |  |   |    
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 12,163 |                      | $ | 12,449             |  | $ | 286
|                                       |  |                        |        |                      |   |                    |  |   |    



4. Loans



Loans at December 31, 2003 and 2002 consisted of the following:



|                                                  |  |                        |         |      |   |        
|------------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                                  |  | December 31,          
|                                                  |  | 2003                   |         | 2002
|                                                  |  | (Dollars in Thousands)
|Commercial, financial and agricultural            |  | $                      | 47,010  |      | $ | 43,725 
|Real estateconstruction                          |  |                        | 6,137   |      |   | 12,268 
|Real estatemortgage (residential and commercial) |  |                        | 173,104 |      |   | 159,233
|Installment loans to individuals                  |  |                        | 20,699  |      |   | 21,234 
|                                                  |  |                        |         |      |   |        
|Total loans                                       |  |                        | 246,950 |      |   | 236,460
|Less: allowance for loan losses                   |  |                        | 3,075   |      |   | 3,005  
|                                                  |  |                        |         |      |   |        
|NET LOANS                                         |  | $                      | 243,875 |      | $ | 233,455
|                                                  |  |                        |         |      |   |        



The Corporations subsidiary has
had and can be expected to have in the future various banking transactions with directors, executive officers, their immediate families and affiliated companies in which they are principal stockholders (commonly referred to as related parties). The
total amount of these loans was $8,992,000 and $13,796,000 at December 31, 2003 and 2002, respectively. During 2003, $19,670,000 in loan advances or reclassifications were made and repayments were $24,474,000.



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5. Allowance for Loan Losses



An analysis of changes in the allowance for loan losses for 2003, 2002 and 2001 is as follows:



|                                           |  |                          |       |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | Years Ended December 31, |      
|                                           |  | 2003                     |       |   | 2002 |   |        | 2001 | 
|                                           |  | (Dollars in Thousands)   |      
|Balance at beginning of year               |  | $                        | 3,005 |   |      | $ | 3,180  |      |  | $ | 3,180  |  
|Provision for loan losses                  |  |                          | 653   |   |      |   | 1,785  |      |  |   | 2,334  |  
|Recoveries on loans previously charged off |  |                          | 82    |   |      |   | 206    |      |  |   | 304    |  
|Loans charged off                          |  |                          | (665  | ) |      |   | (2,166 | )    |  |   | (2,638 | )
|                                           |  |                          |       |   |      |   |        |      |  |   |        |  
|BALANCE AT END OF YEAR                     |  | $                        | 3,075 |   |      | $ | 3,005  |      |  | $ | 3,180  |  
|                                           |  |                          |       |   |      |   |        |      |  |   |        |  



The following is a summary of loans
considered impaired:



|                                       |  |                        |       |      |   |      
|-------------------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                                       |  | December 31,          
|                                       |  | 2003                   |       | 2002
|                                       |  | (Dollars in Thousands)
|Gross impaired loans                   |  | $                      | 2,542 |      | $ | 3,375
|Valuation allowance for impaired loans |  |                        | 397   |      |   | 663  
|                                       |  |                        |       |      |   |      
|Recorded investment in impaired loans  |  | $                      | 2,145 |      | $ | 2,712
|                                       |  |                        |       |      |   |      



The average recorded investment in
impaired loans for the years ended December 31, 2003, 2002 and 2001 was $2,438,000, $2,959,000 and $5,586,000, respectively. There was no interest income recognized on impaired loans (during the portion of the year they were impaired) for the years
ended December 31, 2003, 2002 and 2001. At December 31, 2003, 2002 and 2001, the Corporation had nonaccrual loans of $2,542,000, $2,819,000 and $3,045,000, respectively. Interest income of $241,000, $157,000 and $46,000 was recognized on these loans
in 2003, 2002 and 2001, respectively. Had these loans performed in accordance with their original terms, additional interest income of $203,000, $184,000 and $484,000 would have been recorded in 2003,2002 and 2001, respectively.



At December 31, 2003, 2002 and 2001, the Corporation had loans past-due 90 days or more and
still in accrual status of $400,000, $612,000 and $1,140,000, respectively. Additionally, at December 31, 2003, 2002 and 2001, the Corporation had other real estate owned of $383,000, $793,000 and $1,279,000, respectively.



6. Premises and Equipment



Premises and equipment at December 31, 2003 and 2002 consisted of the following:



|                              |  |                        |        |      |   |       
|----------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                              |  | December 31,          
|                              |  | 2003                   |        | 2002
|                              |  | (Dollars in Thousands)
|Land                          |  | $                      | 1,956  |      | $ | 1,856 
|Buildings and improvements    |  |                        | 10,593 |      |   | 10,005
|Equipment and fixtures        |  |                        | 6,860  |      |   | 5,627 
|                              |  |                        |        |      |   |       
|Total                         |  |                        | 19,409 |      |   | 17,488
|                              |  |                        |        |      |   |       
|Less accumulated depreciation |  |                        | 7,712  |      |   | 6,988 
|                              |  |                        |        |      |   |       
|NET PREMISES AND EQUIPMENT    |  | $                      | 11,697 |      | $ | 10,500
|                              |  |                        |        |      |   |       



Depreciation charged to operating
expense amounted to $800,000 in 2003, $828,000 in 2002, and $844,000 in 2001.



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7. Deposits



Deposits at December 31, 2003 and 2002 were as follows:



|                                            |  |                        |         |      |   |        
|------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                            |  | December 31,          
|                                            |  | 2003                   |         | 2002
|                                            |  | (Dollars in Thousands)
|Individuals, partnerships and corporations: |  |                        |         |      |   |        
|Demand deposits                             |  | $                      | 40,174  |      |   | 35,097 
|Time and savings deposits                   |  |                        | 256,532 |      |   | 261,403
|U.S. Government                             |  |                        | 127     |      |   | 307    
|States and political subdivisions           |  |                        | 8,822   |      |   | 8,865  
|Certified and official checks               |  |                        | 2,064   |      |   | 2,275  
|                                            |  |                        |         |      |   |        
|TOTAL DEPOSITS                              |  | $                      | 307,719 |      | $ | 307,947
|                                            |  |                        |         |      |   |        



The scheduled maturities of time
deposits at December 31, 2003 were as follows:



|                       |  |   |        
|---------------------- |  | - | -------
|(Dollars in Thousands) |  |  
|2004                   |  | $ | 81,214 
|2005                   |  |   | 18,411 
|2006                   |  |   | 5,424  
|2007                   |  |   | 3,902  
|Thereafter             |  |   | 13,311 
|                       |  |   |        
|TOTAL TIME DEPOSITS    |  | $ | 122,262
|                       |  |   |        



Time deposits included certificates of
deposit issued in amounts of $100,000 or more totaling approximately $31,108,000 and $29,888,000 at December 31, 2003 and 2002, respectively.



8. Short-term Borrowings



Short-term borrowings consist of securities sold under agreements to repurchase. Securities sold under agreements to repurchase generally mature within one to four days
from the transaction date. Information concerning securities sold under agreements to repurchase at December 31, 2003 and 2002 is summarized as follows:



|                                          |  |                        |        |   |      |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                          |  | 2003                   |        |   | 2002 |  
|                                          |  | (Dollars in Thousands) |       
|Average balance during the year           |  | $                      | 15,524 |   |      | $ | 17,340 |  
|Average interest rate during the year     |  |                        | 0.48   | % |      |   | 0.91   | %
|Maximum month-end balance during the year |  | $                      | 19,141 |   |      | $ | 20,880 |  



9. Other Comprehensive Income



Other comprehensive income is defined as comprehensive income
exclusive of net income. Other comprehensive income (loss) consists of the following:



|                                                                                   |  |                          |      |   |      |   |        |      |  |   |       |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ---- | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                                                                   |  | Years Ended December 31, |     
|                                                                                   |  | 2003                     |      |   | 2002 |   |        | 2001 | 
|Unrealized gains (losses) on available for sale securities arising during the year |  | $                        | (659 | ) |      | $ | (192   | )    |  | $ | 1,203 |  
|Reclassification adjustment for (gains) losses included in net income              |  |                          | (67  | ) |      |   |       |      |  |   | 43    |  
|Minimum pension liability adjustment                                               |  |                          | 890  |   |      |   | (890   | )    |  |   |      |  
|                                                                                   |  |                          |      |   |      |   |        |      |  |   |       |  
|Other comprehensive income (loss) before tax                                       |  |                          | 164  |   |      |   | (1,082 | )    |  |   | 1,246 |  
|Income tax (expense) benefit related to other comprehensive income                 |  |                          | (88  | ) |      |   | 399    |      |  |   | (406  | )
|                                                                                   |  |                          |      |   |      |   |        |      |  |   |       |  
|Other comprehensive income (loss), net of tax                                      |  | $                        | 76   |   |      | $ | (683   | )    |  | $ | 840   |  
|                                                                                   |  |                          |      |   |      |   |        |      |  |   |       |  



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|First Century Bankshares, Inc. |  | Page 38 |  | 



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10. Earnings Per Share



The following table reconciles the numerator and denominator of the basic and diluted computations for net income per common share for the
years ended December 31, 2003, 2002 and 2001:



|                                                                |  |                   |           |                     |           |                 |   |     
|--------------------------------------------------------------- |  | ----------------- | --------- | ------------------- | --------- | --------------- | - | ----
|                                                                |  | 2003             
|                                                                |  | Weighted Average 
|                                                                |  | Income(Numerator) |           | Shares(Denominator) |           | Per-ShareAmount
|Basic EPS:                                                      |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders                         |  | $                 | 2,792,000 |                     | 1,991,000 |                 | $ | 1.40
|Diluted EPS:                                                    |  |                   |           |                     |           |                 |   |     
|Effect of dilutive securitiesStock options                     |  |                   |          |                     | 4,642     |                 |   |     
|                                                                |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders and assumed conversions |  | $                 | 2,792,000 |                     | 1,995,642 |                 | $ | 1.40
|                                                                |  |                   |           |                     |           |                 |   |     



|                                                                |  |                   |           |                     |           |                 |   |     
|--------------------------------------------------------------- |  | ----------------- | --------- | ------------------- | --------- | --------------- | - | ----
|                                                                |  | 2002             
|                                                                |  | Weighted Average 
|                                                                |  | Income(Numerator) |           | Shares(Denominator) |           | Per-ShareAmount
|Basic EPS:                                                      |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders                         |  | $                 | 3,375,000 |                     | 1,994,648 |                 | $ | 1.69
|Diluted EPS:                                                    |  |                   |           |                     |           |                 |   |     
|Effect of dilutive securitiesStock options                     |  |                   |          |                     |          |                 |   |     
|                                                                |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders and assumed conversions |  | $                 | 3,375,000 |                     | 1,994,648 |                 | $ | 1.69
|                                                                |  |                   |           |                     |           |                 |   |     



|                                                                |  |                   |           |                     |           |                 |   |     
|--------------------------------------------------------------- |  | ----------------- | --------- | ------------------- | --------- | --------------- | - | ----
|                                                                |  | 2001             
|                                                                |  | Weighted Average 
|                                                                |  | Income(Numerator) |           | Shares(Denominator) |           | Per-ShareAmount
|Basic EPS:                                                      |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders                         |  | $                 | 2,145,000 |                     | 2,000,000 |                 | $ | 1.07
|Diluted EPS:                                                    |  |                   |           |                     |           |                 |   |     
|Effect of dilutive securitiesStock options                     |  |                   |          |                     |          |                 |   |     
|                                                                |  |                   |           |                     |           |                 |   |     
|Income available to common shareholders and assumed conversions |  | $                 | 2,145,000 |                     | 2,000,000 |                 | $ | 1.07
|                                                                |  |                   |           |                     |           |                 |   |     



11. Stock Option Plans



The Corporations 1998 Officer Stock Option Plan (the
Officer Plan) provides for the issuance of 170,000 options to purchase shares of the Corporations common stock to officers of the Corporation. The options can have an original term of up to ten years with an exercise price equal to
the market price of the common stock on the date of grant, as defined by the Officer Plan. The options vest 20% per year after their date of grant. At December 31, 2003, the weighted average remaining contractual life of the outstanding options was
60 months. At December 31, 2003, options for 81,780 shares of common stock were reserved for future issuance for the Officer Plan.



The Corporations 1998 Director Stock Option Plan (the Director Plan) provides for the issuance of 30,000 options to purchase shares of the
Corporations common stock to directors of the Corporation and its subsidiaries. The options can have an original term of up to ten years with an exercise price equal to the market price of the common stock on the date of grant, as defined by
the Director Plan. The options are fully vested upon their



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---

11. Stock Option Plans (continued)



date of grant. At December 31, 2003, the weighted average remaining contractual life of the outstanding options was 59 months. At December 31, 2003, options
for 11,000 shares of common stock were reserved for future issuance for the Director Plan.



The Corporation accounts for the Officer Plan and the Director Plan under the provisions of SFAS No.123, Accounting for Stock Based Compensation. As permitted by SFAS No. 123, the Corporation has chosen to
apply APB Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for options granted under the plans. Had compensation cost
for the Corporations plans been determined based on the fair value at the grant dates for awards under the plans consistent with the method of SFAS No.123, the Corporations net income and net income per share for the years ended December
31, 2003, 2002 and 2001, would have been decreased to the pro forma amounts indicated below.



|                                       |  |             |           |           |   |          
|-------------------------------------- |  | ----------- | --------- | --------- | - | ---------
|                                       |  | 2003       
|                                       |  | As Reported |           | Pro Forma
|Net income                             |  | $           | 2,792,000 |           | $ | 2,756,000
|                                       |  |             |           |           |   |          
|Net income per shareBasic and diluted |  | $           | 1.40      |           | $ | 1.38     
|                                       |  |             |           |           |   |          





|                                       |  |             |           |           |   |          
|-------------------------------------- |  | ----------- | --------- | --------- | - | ---------
|                                       |  | 2002       
|                                       |  | As Reported |           | Pro Forma
|Net income                             |  | $           | 3,375,000 |           | $ | 3,329,000
|                                       |  |             |           |           |   |          
|Net income per shareBasic and diluted |  | $           | 1.69      |           | $ | 1.67     
|                                       |  |             |           |           |   |          





|                                       |  |             |           |           |   |          
|-------------------------------------- |  | ----------- | --------- | --------- | - | ---------
|                                       |  | 2001       
|                                       |  | As Reported |           | Pro Forma
|Net income                             |  | $           | 2,145,000 |           | $ | 2,131,000
|                                       |  |             |           |           |   |          
|Net income per shareBasic and diluted |  | $           | 1.07      |           | $ | 1.06     
|                                       |  |             |           |           |   |          



The fair value of each option grant is
estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for the 2002 grants: 5% dividend growth rate; expected volatility of 26.41%; risk-free interest rate of 3.84%; and
expected life of seven years.



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 40 |  | 



---

11. Stock Option Plans (continued)



A summary of the Corporations stock option activity, and related information for the years ended December 31,
is as follows:



|                                                               |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|-------------------------------------------------------------- |  | ------------ | ------ | ----------------------------- | - | ------------ |  | ----------------------------- | ------ | ------------ | - | ----------------------------- |  | - | ------ |  | - | -----
|                                                               |  | 2003         |        | 2002                          |   | 2001        
|                                                               |  | OptionShares |        | Weighted-AverageExercisePrice |   | OptionShares |  | Weighted-AverageExercisePrice |        | OptionShares |   | Weighted-AverageExercisePrice
|Officer stock options:                                         |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Outstanding, beginning of year                                 |  |              | 88,220 |                               | $ | 19.33        |  |                               | 52,220 |              | $ | 20.25                         |  |   | 52,220 |  | $ | 20.25
|Granted                                                        |  |              |       |                               |   |             |  |                               | 36,000 |              |   | 18.00                         |  |   |       |  |   |     
|Exercised                                                      |  |              |       |                               |   |             |  |                               |       |              |   |                              |  |   |       |  |   |     
|Forfeited                                                      |  |              |       |                               |   |             |  |                               |       |              |   |                              |  |   |       |  |   |     
|                                                               |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Outstanding, end of year                                       |  |              | 88,220 |                               | $ | 19.33        |  |                               | 88,220 |              | $ | 19.33                         |  |   | 52,220 |  | $ | 20.25
|                                                               |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Exercisable at end of year                                     |  |              | 59,420 |                               | $ | 19.98        |  |                               | 41,776 |              | $ | 20.25                         |  |   | 31,332 |  | $ | 20.25
|Weighted-average fair value of options granted during the year |  | $            |       |                               |   |              |  | $                             | 2.51   |              |   |                               |  | $ |       |  |   |      
|Director stock options:                                        |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Outstanding, beginning of year                                 |  |              | 20,000 |                               | $ | 19.46        |  |                               | 13,000 |              | $ | 20.25                         |  |   | 14,000 |  | $ | 20.25
|Granted                                                        |  |              |       |                               |   |             |  |                               | 7,000  |              |   | 18.00                         |  |   |       |  |   |     
|Exercised                                                      |  |              |       |                               |   |             |  |                               |       |              |   |                              |  |   |       |  |   |     
|Forfeited                                                      |  |              | 1,000  |                               |   | 20.25        |  |                               |       |              |   |                              |  |   | 1,000  |  |   | 20.25
|                                                               |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Outstanding, end of year                                       |  |              | 19,000 |                               | $ | 19.42        |  |                               | 20,000 |              | $ | 19.46                         |  |   | 13,000 |  | $ | 20.25
|                                                               |  |              |        |                               |   |              |  |                               |        |              |   |                               |  |   |        |  |   |      
|Exercisable at end of year                                     |  |              | 19,000 |                               | $ | 19.42        |  |                               | 20,000 |              | $ | 19.46                         |  |   | 13,000 |  | $ | 20.25
|Weighted-average fair value of options granted during the year |  | $            |       |                               |   |              |  | $                             | 2.51   |              |   |                               |  | $ |       |  |   |      



12. Post Employment Benefits



The Corporation has a noncontributory pension plan covering all
eligible employees with six months of service who have attained the age of twenty and one-half. Contributions to the plan are based on computations by independent actuarial consultants. The plans assets include common stock, fixed income
securities, short-term investments and cash.



The Corporation sponsors two
defined benefit post retirement plans that cover both salaried and nonsalaried employees. One plan provides medical benefits, and the other provides life insurance benefits. The post retirement health care plan is contributory and the life insurance
plan is noncontributory. The health plan has an annual limitation (a cap) on the dollar amount of the employers share of the cost of covered benefits incurred by a plan participant. The retiree is responsible, therefore, for the
amount by which the cost of the benefit coverage under the plan incurred during a year exceeds that cap. No health care cost increases have been factored into the health plans actuarial calculations due to this cap.



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 41 |  | First Century Bankshares, Inc.



---

12. Post Employment Benefits (continued)



The following table outlines the changes in the Corporations postemployment benefit plan obligations, assets
and funded status for the years ended December 31, 2003 and 2002, and the assumptions and components of net periodic benefit costs for the three years in the period ended December 31, 2003.



|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|--------------------------------------------------------------------- |  | ---------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ---- | - |  | - | ---- | -
|                                                                      |  | Pension Benefits       |        |   | OtherPostretirementBenefits |  
|                                                                      |  | 2003                   |        |   | 2002                        |   |        | 2003 |  |   | 2002 |  
|                                                                      |  | (Dollars in Thousands) |       
|Change in benefit obligation                                          |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Benefit obligation at beginning of year                               |  | $                      | 9,321  |   |                             | $ | 8,577  |      |  | $ | 840  |   |  | $ | 864  |  
|Service cost                                                          |  |                        | 220    |   |                             |   | 429    |      |  |   | 13   |   |  |   | 14   |  
|Interest cost                                                         |  |                        | 448    |   |                             |   | 549    |      |  |   | 53   |   |  |   | 54   |  
|Actuarial (gain) loss                                                 |  |                        | (242   | ) |                             |   | (117   | )    |  |   |     |   |  |   | (42  | )
|Benefits paid                                                         |  |                        | (2,439 | ) |                             |   | (117   | )    |  |   | (40  | ) |  |   | (50  | )
|Adjustment in cost of settlement                                      |  |                        | 334    |   |                             |   |       |      |  |   |     |   |  |   |     |  
|Prior service cost established this year                              |  |                        | (1,702 | ) |                             |   |       |      |  |   |     |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Benefit obligation at end of year                                     |  |                        | 5,940  |   |                             |   | 9,321  |      |  |   | 866  |   |  |   | 840  |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Change in plan asset                                                  |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Fair value of plan assets at beginning of year                        |  |                        | 7,250  |   |                             |   | 8,314  |      |  |   |     |   |  |   |     |  
|Actual return on plan assets                                          |  |                        | 1,004  |   |                             |   | (1,187 | )    |  |   |     |   |  |   |     |  
|Employer contribution                                                 |  |                        | 800    |   |                             |   | 240    |      |  |   | 40   |   |  |   | 50   |  
|Benefits paid                                                         |  |                        | (2,439 | ) |                             |   | (117   | )    |  |   | (40  | ) |  |   | (50  | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Fair value of plan assets at end of year                              |  |                        | 6,614  |   |                             |   | 7,250  |      |  |   |     |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Funded status                                                         |  |                        | 674    |   |                             |   | (2,071 | )    |  |   | (866 | ) |  |   | (840 | )
|Unrecognized net actuarial (gain) loss                                |  |                        | 1,677  |   |                             |   | 2,923  |      |  |   | (621 | ) |  |   | (668 | )
|Unrecognized prior service cost                                       |  |                        | (1,253 | ) |                             |   | 359    |      |  |   |     |   |  |   |     |  
|Unrecognized transition obligation                                    |  |                        | (92    | ) |                             |   | (194   | )    |  |   | 498  |   |  |   | 553  |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Net amount recognized                                                 |  | $                      | 1,006  |   |                             | $ | 1,017  |      |  | $ | (989 | ) |  | $ | (955 | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Amounts recognized in the statement of financial position consist of: |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Prepaid (accrued) benefit cost                                        |  | $                      | 1,006  |   |                             | $ | 1,017  |      |  | $ | (989 | ) |  | $ | (955 | )
|Accrued benefit liability                                             |  |                        |       |   |                             |   | (1,249 | )    |  |   |     |   |  |   |     |  
|Intangible asset                                                      |  |                        |       |   |                             |   | 359    |      |  |   |     |   |  |   |     |  
|Accumulated other comprehensive income                                |  |                        |       |   |                             |   | 890    |      |  |   |     |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  
|Net amount recognized                                                 |  | $                      | 1,006  |   |                             | $ | 1,017  |      |  | $ | (989 | ) |  | $ | (955 | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |      |   |  |   |      |  



|                                                |  |                  |      |   |                              |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|----------------------------------------------- |  | ---------------- | ---- | - | ---------------------------- | - | ---- | ---- |  | - | ---- | - |  | ---- | ---- | - | ---- | - | ---- | - |  | - | ---- | -
|                                                |  | Pension Benefits |      |   | Other PostretirementBenefits |  
|                                                |  | 2003             |      |   | 2002                         |   |      | 2001 |  |   | 2003 |   |  | 2002 |      |   | 2001 |  
|Weighted-average assumptions as of 12/31        |  |                  |      |   |                              |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Discount rate                                   |  |                  | 6.50 | % |                              |   | 6.50 | %    |  |   | 6.50 | % |  |      | 6.50 | % |      |   | 6.50 | % |  |   | 6.50 | %
|Expected return on plan assets                  |  |                  | 8.00 | % |                              |   | 8.00 | %    |  |   | 9.00 | % |  |      | N/A  |   |      |   | N/A  |   |  |   | N/A  |  
|Rate of compensation increase                   |  |                  | 3.00 | % |                              |   | 3.00 | %    |  |   | 3.00 | % |  |      | N/A  |   |      |   | N/A  |   |  |   | N/A  |  
|Components of net periodic benefit cost         |  |                  |      |   |                              |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Service cost                                    |  | $                | 220  |   |                              | $ | 429  |      |  | $ | 417  |   |  | $    | 13   |   |      | $ | 14   |   |  | $ | 13   |  
|Interest cost                                   |  |                  | 448  |   |                              |   | 549  |      |  |   | 493  |   |  |      | 53   |   |      |   | 54   |   |  |   | 54   |  
|Expected return on plan assets                  |  |                  | (574 | ) |                              |   | (736 | )    |  |   | (806 | ) |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of prior service cost              |  |                  | (89  | ) |                              |   | 44   |      |  |   | 44   |   |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of transition obligation           |  |                  | (59  | ) |                              |   | (65  | )    |  |   | (65  | ) |  |      | 55   |   |      |   | 56   |   |  |   | 56   |  
|Recognized net actuarial (gain) loss            |  |                  | 122  |   |                              |   | 17   |      |  |   |     |   |  |      | (47  | ) |      |   | (43  | ) |  |   | (43  | )
|Net periodic (benefit) cost                     |  |                  | 68   |   |                              |   | 238  |      |  |   | 83   |   |  |      | 74   |   |      |   | 81   |   |  |   | 80   |  
|Settlement (gain) loss                          |  |                  | 743  |   |                              |   |     |      |  |   |     |   |  |      |     |   |      |   |     |   |  |   |     |  
|                                                |  |                  |      |   |                              |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Net periodic (benefit) cost, net of adjustments |  | $                | 811  |   |                              | $ | 238  |      |  | $ | 83   |   |  | $    | 74   |   |      | $ | 81   |   |  | $ | 80   |  
|                                                |  |                  |      |   |                              |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 42 |  | 



---

12. Post Employment Benefits (continued)



The asset allocation for the defined benefit pension plan for the years ended December 31, 2003 and 2002, by asset
category, is as follows:



ASSET CATEGORY



|                  |  |                          |   |  |      |  
|----------------- |  | ------------------------ | - |  | ---- | -
|                  |  | Percentage ofPlan Assets |  
|                  |  | 2003                     |   |  | 2002 |  
|Equity securities |  | 70                       | % |  | 57   | %
|Debt securities   |  | 8                        |   |  | 19   |  
|Real estate       |  | 10                       |   |  | 13   |  
|Other             |  | 12                       |   |  | 11   |  
|                  |  |                          |   |  |      |  
|Total             |  | 100                      | % |  | 100  | %
|                  |  |                          |   |  |      |  



The investment objective for the
defined benefit pension plan is to maximize total return with tolerance for slightly above average risk. Asset allocation strongly favors equities, with a target allocation of approximately 75% equity securities, 20% fixed income securities, and 5%
cash and cash equivalents. Due to volatility in the market, the target allocation is not always desirable and asset allocations will fluctuate between the acceptable ranges. A core equity position of large cap stocks will be maintained. However,
more aggressive or volatile sectors will be meaningfully represented in the asset mix in pursuit of higher returns. Higher volatility investment strategies such as real estate mortgages, limited partnerships, and international equities will be
appropriate strategies in conjunction with the core position. It is managements intent to give the investment managers flexibility within the overall guidelines with respect to investment decisions and their timing. The defined benefit pension
plan holds no investments in the Corporations common stock.



During 2003,
significant lump-sum distributions by the Corporations employee pension plan triggered accelerated recognition of previously deferred actuarial losses under the accounting provisions set forth in SFAS No. 88. The Corporation recognized
$743,000 in additional settlement charges pursuant to the requirements of SFAS No. 88 for the year ended December 31, 2003. Significant lump sum payments anticipated to be made in the second quarter of 2004 will require additional charges to
earnings in the periods these payments are made pursuant to SFAS No. 88. The Corporation expects to contribute $675,000 to the pension plan in 2004.



In December 2003, President Bush signed into law a bill that expands Medicare benefits, primarily adding a prescription drug benefit for Medicare-eligible retirees
beginning in 2006. The law also provides a federal subsidy to companies that sponsor postretirement benefit plans that provide prescription drug coverage. FASB Staff Position 106-1, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 permits deferring the recognition of the new Medicare provisions impact due to lack of specific authoritative guidance on accounting for the federal subsidy. The Corporation has
elected to defer accounting for the effects of this new legislation until the specific authoritative guidance is issued. Because the Corporation caps the amount paid for its postretirement benefit plan at $1,200 per year per employee, the adoption
of this standard is not expected to have a material impact on results of operations, financial position, or liquidity. The Corporation expects to contribute $42,000 to the postretirement benefit plan in 2004.



| |  |         |  |                               
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| |  | Page 43 |  | First Century Bankshares, Inc.



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12. Post Employment Benefits (continued)



The Corporation maintains a qualified 401(k) retirement savings plan. All full time employees are eligible to
participate on a voluntary basis, after completing their first year of service. All employees may elect to make pretax contributions up to a maximum of fifteen percent (15%) of their salary, which are matched fifty percent (50%) by the Corporation.
Total amounts charged to operating expense for payments pursuant to this plan were approximately $136,000 in 2003, $128,000 in 2002 and $127,000 in 2001.



13. Income Taxes



The provision for income taxes consisted of the following:



|                                                    |  |                          |       |      |   |       |  |   |       |  
|--------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ----- |  | - | ----- | -
|                                                    |  | Years Ended December 31, |      
|                                                    |  | 2003                     |       | 2002 |   | 2001  | 
|                                                    |  | (Dollars in Thousands)   |      
|Tax provision attributed to income from operations: |  |                          |       |      |   |       |  |   |       |  
|Current:                                            |  |                          |       |      |   |       |  |   |       |  
|Federal                                             |  | $                        | 975   |      | $ | 1,340 |  | $ | 897   |  
|State                                               |  |                          | 346   |      |   | 421   |  |   | 315   |  
|Deferred expense (benefit)                          |  |                          | 257   |      |   | 214   |  |   | (88   | )
|                                                    |  |                          |       |      |   |       |  |   |       |  
|PROVISION FOR INCOME TAX                            |  | $                        | 1,578 |      | $ | 1,975 |  | $ | 1,124 |  
|                                                    |  |                          |       |      |   |       |  |   |       |  



The components of deferred tax assets
and liabilities at December 31, 2003 and 2002 were as follows:



|                                                            |  |                        |      |   |      |   |       |  
|----------------------------------------------------------- |  | ---------------------- | ---- | - | ---- | - | ----- | -
|                                                            |  | 2003                   |      |   | 2002 |  
|                                                            |  | (Dollars in Thousands) |     
|Allowance for loan losses                                   |  | $                      | 673  |   |      | $ | 696   |  
|Retirement plans                                            |  |                        | 3    |   |      |   | 323   |  
|Marketable equity securities and capital loss carryforwards |  |                        | 59   |   |      |   | 48    |  
|Other reserves                                              |  |                        | 10   |   |      |   | 47    |  
|                                                            |  |                        |      |   |      |   |       |  
|Gross deferred tax assets                                   |  |                        | 745  |   |      |   | 1,114 |  
|Valuation allowance                                         |  |                        | (59  | ) |      |   | (48   | )
|                                                            |  |                        |      |   |      |   |       |  
|Deferred tax assets                                         |  |                        | 686  |   |      |   | 1,066 |  
|                                                            |  |                        |      |   |      |   |       |  
|Depreciation                                                |  |                        | (331 | ) |      |   | (289  | )
|Goodwill                                                    |  |                        | (317 | ) |      |   | (159  | )
|Unrealized gains on securities available for sale           |  |                        | (262 | ) |      |   | (510  | )
|                                                            |  |                        |      |   |      |   |       |  
|Gross deferred tax liabilities                              |  |                        | (910 | ) |      |   | (958  | )
|                                                            |  |                        |      |   |      |   |       |  
|NET DEFERRED TAX ASSET (LIABILITY)                          |  | $                      | (224 | ) |      | $ | 108   |  
|                                                            |  |                        |      |   |      |   |       |  



A valuation allowance was established
for the writedowns of marketable equity securities and capital loss carryforwards because their recognition is limited to future capital gains generated by the Corporation. No tax benefit has been recognized in the financial statements for the
writedowns or capital loss carryforwards.



The principal differences between
the effective tax rate and the federal statutory rate were as follows:



|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  
|----------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | -- | - | ------ | - | ----- | - |  | -- | ------ |  | - | ----- | - |  | -- | -
|                                                                        |  | Years Ended December 31, |      
|                                                                        |  | 2003                     |       |   | 2002 |    |   | 2001   |  
|                                                                        |  | (Dollars in Thousands)   |      
|                                                                        |  | Amount                   |       |   | %    |    |   | Amount |   |       | % |  |    | Amount |  |   | %     |  
|Provision at statutory rate                                             |  | $                        | 1,486 |   |      | 34 |   |        | $ | 1,819 |   |  | 34 |        |  | $ | 1,112 |   |  | 34 |  
|Tax-exempt interest income from certain investment securities and loans |  |                          | (162  | ) |      | (4 | ) |        |   | (168  | ) |  | (3 | )      |  |   | (178  | ) |  | (6 | )
|State income tax expense, net of federal benefit                        |  |                          | 228   |   |      | 5  |   |        |   | 287   |   |  | 5  |        |  |   | 199   |   |  | 6  |  
|Other, net                                                              |  |                          | 26    |   |      | 1  |   |        |   | 37    |   |  | 1  |        |  |   | (9    | ) |  |   |  
|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  
|PROVISION FOR INCOME TAXES                                              |  | $                        | 1,578 |   |      | 36 |   |        | $ | 1,975 |   |  | 37 |        |  | $ | 1,124 |   |  | 34 |  
|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 44 |  | 



---

14. Commitments and Contingencies



In the normal course of business, the Corporation is involved in various legal suits and proceedings. In the opinion of management, based on
the advice of legal counsel, these suits are without substantial merit and should not result in judgments which in the aggregate would have a material adverse effect on the Corporations financial statements.



15. Financial Instruments, Concentrations of Credit and Fair Values



The subsidiary of the Corporation is party to various financial instruments with
off-balance sheet risk arising in the normal course of business to meet the financing needs of its customers. Those financial instruments include commitments to extend credit in the form of unused lines of credit and financial standby letters of
credit. These instruments contain various elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition.



Unused lines of credit represent agreements to lend to a customer as long as there is no violation of any condition established in the
contract, and generally have fixed expiration dates or other termination clauses and may require payment of a fee. Financial standby letters of credit are conditional commitments issued by the subsidiary to guarantee the financial performance of a
customer to a third party. Those guarantees are primarily used to support public and private borrowing arrangements.



The subsidiarys exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby
letters of credit, is the contractual amount of those instruments. The subsidiary uses the same credit policies in making commitments and conditional obligations that it does for on-balance sheet instruments.



The components of the Corporations off-balance sheet financial commitments at December
31, 2003 and 2002 are as follows:



|                                                                                 |  |                        |        |      |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                                                                                 |  | December 31,          
|                                                                                 |  | 2003                   |        | 2002
|                                                                                 |  | (Dollars in Thousands)
|Unused lines of credit                                                           |  |                        |       
|Home equity lines                                                                |  | $                      | 2,476  |      | $ | 2,430 
|Commercial real estate, construction and land development secured by real estate |  |                        | 19,145 |      |   | 19,632
|Other unused commitments                                                         |  |                        | 17,979 |      |   | 15,889
|                                                                                 |  |                        |        |      |   |       
|Total unused lines of credit                                                     |  | $                      | 39,600 |      | $ | 37,951
|Financial standby letters of credit                                              |  | $                      | 4,839  |      | $ | 5,005 



The Corporations subsidiary
grants various types of credit including, but not limited to, agriculture, commercial, consumer, and residential loans to customers primarily located throughout southern West Virginia and southwestern Virginia. Each customers creditworthiness
is examined on a case by case basis. The amount of collateral obtained, if any, is determined by managements credit evaluation of the customer. Collateral held varies, but may include property, accounts receivable, inventory, plant and
equipment, securities, or other income producing property. The loan portfolio is generally well diversified and geographically dispersed within the region. Within each specific industry, borrowers are well diversified as to specialty, service, or
other unique feature of the overall industry.



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 45 |  | First Century Bankshares, Inc.



---

15. Financial Instruments, Concentrations of Credit and Fair Values (continued)



A substantial portion of the customers ability to honor their contractual commitment is largely dependent upon
the economic conditions of the respective industry and overall economic conditions of the region. At December 31, 2003, the Corporation had a concentration of $14,016,000, or 40.1% of stockholders equity in loans to borrowers in the
hospitality industry. This concentration is diversified by geography throughout the Mid-Atlantic region.



SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires the disclosure of the estimated fair value of on and off-balance sheet financial instruments. For the Corporation, as for most
financial institutions, approximately 90% of its assets and liabilities are considered financial instruments as defined by SFAS 107. Most of the Corporations financial instruments, however, lack an available trading market characterized by a
willing buyer and a willing seller engaging in an exchange transaction. It is also the Corporations general practice and intent to hold its financial instruments to maturity and not to engage in trading or sales activities. Therefore,
significant estimations and present value calculations were used by the Corporation for the purposes of this disclosure.



Estimated fair values have been determined by the Corporation using the best available data and an estimation methodology suitable for each category of financial
instruments.



The estimated fair value and the recorded book balances at
December 31, 2003 and 2002 were as follows:



|                                                      |  |                        |         |                        |   |                     |  |                |         |  |   |        
|----------------------------------------------------- |  | ---------------------- | ------- | ---------------------- | - | ------------------- |  | -------------- | ------- |  | - | -------
|                                                      |  | 2003                   |         | 2002                  
|                                                      |  | EstimatedFair Value    |         | CarryingAmount         |   | EstimatedFair Value |  | CarryingAmount
|                                                      |  | (Dollars in Thousands) |         | (Dollars in Thousands)
|Assets:                                               |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Cash and due from banks                               |  | $                      | 15,578  |                        | $ | 15,578              |  | $              | 16,818  |  | $ | 16,818 
|Securities available for sale                         |  |                        | 65,258  |                        |   | 65,258              |  |                | 78,631  |  |   | 78,631 
|Securities held to maturity                           |  |                        | 12,449  |                        |   | 12,163              |  |                | 9,971   |  |   | 9,566  
|Federal Home Loan Bank and Federal Reserve Bank stock |  |                        | 1,023   |                        |   | 1,023               |  |                | 752     |  |   | 752    
|Federal funds sold                                    |  |                        | 4,000   |                        |   | 4,000               |  |                |        |  |   |       
|Net loans                                             |  |                        | 247,115 |                        |   | 243,875             |  |                | 243,589 |  |   | 233,455
|Liabilities:                                          |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Deposits with no stated maturities                    |  |                        | 144,294 |                        |   | 144,294             |  |                | 183,133 |  |   | 183,133
|Deposits with stated maturities                       |  |                        | 122,776 |                        |   | 122,262             |  |                | 126,258 |  |   | 124,814
|Short-term borrowings                                 |  |                        | 19,167  |                        |   | 19,167              |  |                | 16,745  |  |   | 16,745 



The estimation methodologies used to
determine fair value are as follows: For those loans and deposits with floating interest rates it was presumed that the estimated fair value generally approximated the recorded book balances. Securities actively traded in a secondary market have
been valued using quoted available market prices. Deposits with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market rates for similar assets and liabilities. Deposits with
no stated maturities have an estimated fair value equal to the amount payable on demand which is the recorded book balance. The net loan portfolio has been valued using a present value discounted cash flow. The discount rate used in these
calculations is the federal funds sold rate adjusted for noninterest operating costs, credit losses, and assumed prepayment risk. Fair values for nonperforming loans are estimated using discounted cash flow analysis, or underlying collateral values,
where applicable. Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values.



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 46 |  | 



---

16. Regulatory Matters



The Corporations principal source of funds for dividend payment and debt service is dividends received from the subsidiary bank.



Under applicable Federal laws, the Comptroller of the Currency, the primary
regulator of First Century Bank, N.A., restricts the total dividend payments of a national bank in any calendar year to the net profits of that year, as defined, combined with the retained net profits of the two preceding years. At December 31,2003,
retained net profits for the years 2003 and 2002, which were free of such regulatory restrictions, aggregated approximately $2,430,000.



The Corporation and its subsidiary are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Corporations financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the Corporation and its subsidiary must meet specific capital guidelines that involve quantitative measures of the Corporations assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Corporations capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.



Quantitative measures established by regulation to ensure capital adequacy require the
Corporation and its subsidiary to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to riskweighted assets (as defined), and Tier I capital to average assets (as
defined). Management believes, as of December 31, 2003, that the Corporation and its subsidiary meet all capital adequacy requirements to which they are subject.



As of December 31, 2003, First Century Bank, N.A. has received notification from the Office of the Comptroller of the Currency that it is
wellcapitalized under the regulatory framework for prompt corrective action. To be adequately capitalized, minimum total riskbased, Tier I riskbased, and Tier I leverage ratios as set forth in the following table must be
maintained. There are no conditions or events since the recent notification that management believes have changed the institutions category.



|                                          |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|----------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------- |  | - | ------ | - | ----- | - | ------- |  | - | ----- | -
|                                          |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |        
|                                          |  | Amount |        | Ratio |                              |   | Amount |                                                               | Ratio   |  |   | Amount |   | Ratio |  
|As of December 31, 2003:                  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Total Capital (to Risk Weighted Assets):  | 
|Consolidated                              |  | $      | 32,377 |       | 12.18                        | % |        | 3                                                             | $21,257 |  | 3 | 8.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 31,350 |       | 11.82                        | % |        | 3                                                             | $21,225 |  | 3 | 8.00   | % |       | 3 | $26,531 |  | 3 | 10.00 | %
|Tier I Capital (to Risk Weighted Assets): | 
|Consolidated                              |  | $      | 29,302 |       | 11.03                        | % |        | 3                                                             | $10,628 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 28,275 |       | 10.66                        | % |        | 3                                                             | $10,612 |  | 3 | 4.00   | % |       | 3 | $15,919 |  | 3 | 6.00  | %
|Tier I Capital (to Average Assets):       | 
|Consolidated                              |  | $      | 29,302 |       | 8.30                         | % |        | 3                                                             | $14,120 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 28,275 |       | 8.01                         | % |        | 3                                                             | $14,123 |  | 3 | 4.00   | % |       | 3 | $17,654 |  | 3 | 5.00  | %



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 47 |  | First Century Bankshares, Inc.



---

16. Regulatory Matters (continued)



|                                          |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|----------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------- |  | - | ------ | - | ----- | - | ------- |  | - | ----- | -
|                                          |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |        
|                                          |  | Amount |        | Ratio |                              |   | Amount |                                                               | Ratio   |  |   | Amount |   | Ratio |  
|As of December 31, 2002:                  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Total Capital (to Risk Weighted Assets):  | 
|Consolidated                              |  | $      | 30,848 |       | 12.12                        | % |        | 3                                                             | $20,369 |  | 3 | 8.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 30,012 |       | 11.81                        | % |        | 3                                                             | $20,335 |  | 3 | 8.00   | % |       | 3 | $25,419 |  | 3 | 10.00 | %
|Tier I Capital (to Risk Weighted Assets): | 
|Consolidated                              |  | $      | 27,843 |       | 10.94                        | % |        | 3                                                             | $10,185 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 27,007 |       | 10.62                        | % |        | 3                                                             | $10,168 |  | 3 | 4.00   | % |       | 3 | $15,252 |  | 3 | 6.00  | %
|Tier I Capital (to Average Assets):       | 
|Consolidated                              |  | $      | 27,843 |       | 7.75                         | % |        | 3                                                             | $14,368 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 27,007 |       | 7.53                         | % |        | 3                                                             | $14,350 |  | 3 | 4.00   | % |       | 3 | $17,937 |  | 3 | 5.00  | %



17. Quarterly Financial Data
(Unaudited)



The summary financial data by quarter for the years ended
December 31, 2003, 2002 and 2001 was as follows:



|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|---------------------------------- |  | --------------------------------------------- | ----- | ------- | - | -------- |  | ------- | ----- |  | - | ----- | -
|                                   |  | Quarter Ended                                 |      
|                                   |  | Mar. 31                                       |       | June 30 |   | Sept. 30 |  | Dec. 31 |      
|                                   |  | (Dollars in Thousands, Except Per Share Data) |      
|2003                               |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|Interest income                    |  | $                                             | 4,653 |         | $ | 4,563    |  | $       | 4,483 |  | $ | 4,380 |  
|Net interest income                |  |                                               | 3,531 |         |   | 3,512    |  |         | 3,570 |  |   | 3,554 |  
|Provision for possible loan losses |  |                                               | 177   |         |   | 238      |  |         | 156   |  |   | 82    |  
|Securities gains (losses)          |  |                                               |      |         |   | 67       |  |         |      |  |   |      |  
|Income before taxes                |  |                                               | 1,321 |         |   | 613      |  |         | 1,299 |  |   | 1,137 |  
|Net income                         |  |                                               | 839   |         |   | 393      |  |         | 824   |  |   | 736   |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|NET INCOME PER SHARE               |  | $                                             | 0.42  |         | $ | 0.20     |  | $       | 0.41  |  | $ | 0.37  |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|2002                               |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|Interest income                    |  | $                                             | 5,463 |         | $ | 5,563    |  | $       | 5,338 |  | $ | 5,170 |  
|Net interest income                |  |                                               | 3,750 |         |   | 4,086    |  |         | 3,909 |  |   | 3,903 |  
|Provision for possible loan losses |  |                                               | 263   |         |   | 743      |  |         | 439   |  |   | 340   |  
|Securities gains (losses)          |  |                                               |      |         |   |         |  |         |      |  |   |      |  
|Income before taxes                |  |                                               | 1,301 |         |   | 1,695    |  |         | 1,272 |  |   | 1,082 |  
|Net income                         |  |                                               | 832   |         |   | 1,042    |  |         | 813   |  |   | 688   |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|NET INCOME PER SHARE               |  | $                                             | 0.42  |         | $ | 0.52     |  | $       | 0.41  |  | $ | 0.34  |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|2001                               |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|Interest income                    |  | $                                             | 6,613 |         | $ | 6,547    |  | $       | 6,398 |  | $ | 6,049 |  
|Net interest income                |  |                                               | 3,594 |         |   | 3,770    |  |         | 3,912 |  |   | 3,945 |  
|Provision for possible loan losses |  |                                               | 195   |         |   | 842      |  |         | 915   |  |   | 382   |  
|Securities gains (losses)          |  |                                               |      |         |   |         |  |         | 1     |  |   | (44   | )
|Income before taxes                |  |                                               | 1,149 |         |   | 533      |  |         | 503   |  |   | 1,084 |  
|Net income                         |  |                                               | 755   |         |   | 366      |  |         | 329   |  |   | 695   |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  
|NET INCOME PER SHARE               |  | $                                             | 0.38  |         | $ | 0.18     |  | $       | 0.16  |  | $ | 0.35  |  
|                                   |  |                                               |       |         |   |          |  |         |       |  |   |       |  



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 48 |  | 



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18. Parent Company Financial Data



Condensed financial information of First Century Bankshares, Inc. (parent company only) is presented below:



STATEMENTS OF FINANCIAL CONDITION



|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                                  |  | December 31,           |       
|                                                                                                                                                                                  |  | 2003                   |        |   | 2002 |  
|                                                                                                                                                                                  |  | (Dollars in Thousands) |       
|Assets:                                                                                                                                                                           |  |                        |        |  
|Cash                                                                                                                                                                              |  | $                      | 196    |   |      | $ | 95     |  
|Investment in subsidiaries at equity                                                                                                                                              |  |                        | 34,404 |   |      |   | 33,382 |  
|Other assets                                                                                                                                                                      |  |                        | 612    |   |      |   | 364    |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|TOTAL ASSETS                                                                                                                                                                      |  | $                      | 35,212 |   |      | $ | 33,841 |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|Liabilities:                                                                                                                                                                      |  |                        |        |   |      |   |        |  
|Other liabilities                                                                                                                                                                 |  | $                      | 218    |   |      | $ | 23     |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|TOTAL LIABILITIES                                                                                                                                                                 |  |                        | 218    |   |      |   | 23     |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|Stockholders Equity:                                                                                                                                                             |  |                        |        |   |      |   |        |  
|Common stock$1.25 par value; 10,000,000 shares authorized and 2,000,000 shares issued at December 31, 2003 and 2002; 1,991,000 shares
outstanding at December 31, 2003 and 2002; |  |                        | 2,500  |   |      |   | 2,500  |  
|Paid-in capital                                                                                                                                                                   |  |                        | 785    |   |      |   | 785    |  
|Retained earnings                                                                                                                                                                 |  |                        | 31,347 |   |      |   | 30,680 |  
|Treasury stock, at cost; 9,000 shares                                                                                                                                             |  |                        | (147   | ) |      |   | (147   | )
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                        |  |                        | 34,994 |   |      |   | 33,818 |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                        |  | $                      | 35,212 |   |      | $ | 33,841 |  
|                                                                                                                                                                                  |  |                        |        |   |      |   |        |  



STATEMENTS OF INCOME



|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                 |  | Years Ended December 31, |      
|                                                                 |  | 2003                     |       |   | 2002 |   |       | 2001 | 
|                                                                 |  | (Dollars in Thousands)   |      
|Income:                                                          |  |                          |       |   |      |   |       |      |  |   |       |  
|Dividends from subsidiary bank                                   |  | $                        | 1,900 |   |      | $ | 1,900 |      |  | $ | 2,100 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|TOTAL INCOME                                                     |  |                          | 1,900 |   |      |   | 1,900 |      |  |   | 2,100 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Expenses:                                                        |  |                          |       |   |      |   |       |      |  |   |       |  
|Other                                                            |  |                          | 82    |   |      |   | 73    |      |  |   | 67    |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|TOTAL EXPENSES                                                   |  |                          | 82    |   |      |   | 73    |      |  |   | 67    |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Applicable income taxes (benefits)                               |  |                          | (29   | ) |      |   | (25   | )    |  |   | (23   | )
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Income before equity in undistributed net income of subsidiaries |  |                          | 1,847 |   |      |   | 1,852 |      |  |   | 2,056 |  
|Equity in undistributed net income of subsidiaries               |  |                          | 945   |   |      |   | 1,523 |      |  |   | 89    |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|NET INCOME                                                       |  | $                        | 2,792 |   |      | $ | 3,375 |      |  | $ | 2,145 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  



STATEMENT OF CASH FLOWS



|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                  |  | Years Ended December 31, |       
|                                                                                  |  | 2003                     |        |   | 2002 |   |        | 2001 | 
|                                                                                  |  | (Dollars in Thousands)   |       
|Cash flows from operating activities                                              |  |                          |        |  
|Net income                                                                        |  | $                        | 2,792  |   |      | $ | 3,375  |      |  | $ | 2,145  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |        |   |      |   |        |      |  |   |        |  
|Equity in undistributed net income of subsidiary                                  |  |                          | (945   | ) |      |   | (1,523 | )    |  |   | (89    | )
|Other adjustments, net                                                            |  |                          | (54    | ) |      |   | (29    | )    |  |   | 6      |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |  |                          | 1,793  |   |      |   | 1,823  |      |  |   | 2,062  |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash flows from investing activities                                              |  |                          |        |   |      |   |        |      |  |   |        |  
|Investment in subsidiary                                                          |  |                          |       |   |      |   |       |      |  |   | (400   | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH USED BY INVESTING ACTIVITIES                                             |  |                          |       |   |      |   |       |      |  |   | (400   | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash flows from financing activities                                              |  |                          |        |   |      |   |        |      |  |   |        |  
|Purchase of treasury stock                                                        |  |                          |       |   |      |   | (147   | )    |  |   |       |  
|Cash dividends paid                                                               |  |                          | (1,692 | ) |      |   | (1,694 | )    |  |   | (1,700 | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH USED BY FINANCING ACTIVITIES                                             |  |                          | (1,692 | ) |      |   | (1,841 | )    |  |   | (1,700 | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Net increase (decrease) in cash                                                   |  |                          | 101    |   |      |   | (18    | )    |  |   | (38    | )
|Cash at January 1,                                                                |  |                          | 95     |   |      |   | 113    |      |  |   | 151    |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash at December 31,                                                              |  | $                        | 196    |   |      | $ | 95     |      |  | $ | 113    |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  



| |  |         |  |                               
| |  | ------- |  | ------------------------------
| |  | Page 49 |  | First Century Bankshares, Inc.



---

Report of Independent Auditors



The Board of Directors and Stockholders



First Century Bankshares, Inc.:



In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income and comprehensive income, of changes in
stockholders equity and of cash flows present fairly, in all material respects, the financial position of First Century Bankshares, Inc. and Subsidiary (the Corporation) at December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the
Corporations management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States
of America which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
the opinion expressed above.



As discussed in Note 2 to the consolidated
financial statements, in 2002 the Company changed its method of accounting for goodwill and intangible assets.



PricewaterhouseCoopers LLP



Greensboro, North Carolina

February 27, 2004



|                               |  |         |  | 
|------------------------------ |  | ------- |  | 
|First Century Bankshares, Inc. |  | Page 50 |  | 



---

Boards of Directors



FIRST CENTURY BANKSHARES, INC.



W. Paul Cole, Jr.

President, Cole

Motor & Cole

Chevrolet-Cadillac



Eustace Frederick

Retired, Senior Vice President-

Mining, Consolidation Coal Co.,

Southern Appalachia Region



B. L. Jackson, Jr.

Chairman of the Board

First Century Bankshares, Inc.



Robert M.
Jones, Jr., M.D.

Physician; Vice Chairman, First

Century
Bankshares, Inc.



Marshall S. Miller

President, Marshall Miller

& Associates



Charles A. Peters

President,

Peters Equipment, Inc.

Secretary, First Century

Bankshares, Inc.



Byron K. Satterfield

Executive Vice President

& Chairman of the Trust

Investment Committee



John H. Shott

Attorney



Scott H. Shott

Shott Foundation



Walter L. Sowers

President,

Pemco Corporation



William Chandler Swope

President,

Swope Construction

Services, Inc.



J. Brookins Taylor, M.D.

Physician



Frank W. Wilkinson

Executive Vice
President &

Chief Operating Officer

First Century Bank,
N.A.



R. W. Wilkinson

President & Chief Executive

Officer, First Century

Bankshares, Inc.,

First Century Bank, N.A.



FIRST CENTURY BANK, N.A.



J. J. Booker, III, M.D.

Physician



C. Scott Briers

President,

Briers, Inc.



W. Paul Cole, Jr.

President,

Cole Motor & Cole

Chevrolet-Cadillac



Eustace Frederick

Retired, Senior Vice President-

Mining, Consolidation Coal Co.,

Southern Appalachia Region



B. L. Jackson, Jr.

Chairman of the Board

First Century Bankshares, Inc.



Robert M.
Jones, Jr., MD

Physician; Vice Chairman,

First Century
Bankshares, Inc.



Marshall S. Miller

President, Marshall Miller

& Associates



Charles A. Peters

President,

Peters Equipment, Inc.

Secretary, First Century

Bankshares, Inc.



Byron K. Satterfield

Executive Vice President

& Chairman of the Trust

Investment Committee



John H. Shott

Attorney



Walter L. Sowers

President,

Pemco Corporation



William Chandler Swope

President,

Swope Construction

Services, Inc.



J. Brookins Taylor, M.D.

Physician



Frank W. Wilkinson

Executive Vice President &

Chief Operating Officer

First Century Bank, N.A.



R. W. Wilkinson

President & Chief
Executive

Officer, First Century

Bankshares, Inc.,

First Century Bank, N.A.



FIRST CENTURY BANK, N.A.

WYOMING COUNTY OPERATIONS
ADVISORY BOARD



Michelle Brown, DDS

Oceana Dental Clinic



Tom Evans, Jr.

President, Evans Funeral

Home



Debra L. Brunty

Vice President-Loans

Wyoming County Operations,

First Century Bank, N.A.



Frank W. Wilkinson

Executive Vice President &

Chief Operating Officer,

First Century Bank, N.A.



R. W. Wilkinson

President & Chief
Executive

Officer, First Century

Bankshares, Inc.,

First Century Bank, N.A.



Dennis Worrell

Partner, Worrell Exxon &

Owner, D & T Car Wash



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Boards of Directors



FIRST CENTURY BANK, N.A.

WYTHE COUNTY OPERATIONS ADVISORY BOARD



J. J.
Booker, III, M.D.

Physician



James W. Caudill

President, R.P.Johnson & Sons



Robert T. Dupuis

President, P & T Products, Inc.



Samuel
V. Jones, CPA

Hodges, Jones & Mabry, PC



Stephen A. Lester

Ewald-Lester Insurance

Agency, Inc.



W. Edward Smith

Vice President, Wythe

County Operations

First Century Bank, N.A.



Frank W. Wilkinson

Executive Vice
President &

Chief Operating Officer

First Century Bank,
N.A.



R. W. Wilkinson

President & Chief Executive

Officer, First Century

Bankshares, Inc.,

First Century Bank, N.A.



FIRST CENTURY BANK, N.A.

SUMMERS COUNTY OPERATIONS ADVISORY BOARD



C. Scott Briers

President,

Briers, Inc.



James S. Kerr

Owner

Kerr Realty



David L. Parmer

Attorney at Law



Bob F. Richmond

Vice President,

Summers County Operations

First Century Bank N.A.



Frank W. Wilkinson

Executive Vice President &

Chief Operating Officer

First Century Bank, N.A.



R. W. Wilkinson

President & Chief

Executive Officer

First Century Bankshares, Inc.,

First Century Bank, N.A.



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Officers



FIRST CENTURY BANKSHARES, INC.



B. L. Jackson, Jr.

Chairman of the Board



R. W. Wilkinson

President & Chief Executive

Officer



Robert M. Jones, Jr., MD

Vice Chairman
of the Board



Charles A. Peters

Secretary



W. E. Albert

Assistant Secretary



J. Ronald Hypes

Treasurer



FIRST CENTURY BANK, N.A.



ADMINISTRATION



R. W. Wilkinson

President & Chief
Executive

Officer



Frank W. Wilkinson

Executive Vice President

& Chief Operating Officer



J. Ronald Hypes

Senior Vice President &

Chief Financial Officer



Kenneth W. Beard

Vice President &

Compliance Officer



John D. Lay

Vice President & Controller



Wayne L.
Blevins

Assistant Controller & Trust

Officer



Barbara Moore-Ray

Community Development

Officer



Cynthia L. Higgins

Auditor



Lisa A. Huff

Director of Human Resources



Jason Farmer

IT Manager



Deborah L. Bowman

Marketing Director



BRANCH ADMINISTRATION



Christina H. Naylor

Senior Vice
President,

Branch Administration



Bob F. Richmond

Vice President,

Summers County Operations



W. Edward Smith

Vice President,

Wythe County Operations



Karen R. Kidd

Branch Manager/

Assistant Cashier,

College Avenue Office



Jean F. Stanley

Assistant Cashier,

Princeton Office



Brenda G. Davidson

Branch Manager &

Loan Officer,

Bluefield, Virginia Office



Sandra K. Taylor

Branch Manager,

Pineville Office



Rebecca Lynn Daniels

Branch Manager,

Oceana Office



Stephanie Bailey

Assistant Branch Manager,

Oceana Office



Zerna A. Felts

Branch Manager &

Security Officer,

Fort Chiswell Office



Linda C. Hamer

Customer Service Manager



Kathy L. Peters

Teller Manager



Michelle L. Thompson

Assistant Vice President,

Princeton Office



Linda C. Rider

IRA Coordinator



Ronnie M. Hamlin

Facilities Manager
&

Assistant Security Officer



Cathy M. Laxton

Bank Security Officer



Nancy M. Cales

Assistant Cashier



Rita Goodman

Customer Service Officer



Brenda Richmond

Assistant Cashier



LOANS



Jeffrey L. Forlines

Senior Vice
President,

Chief Credit Officer



Garnett L. Little

Vice President, Loans



L. Mori Williams

Vice President &

City Executive,

Princeton Office



Randall D. Price

Vice President, Credit

Administration Officer



Hal L. Absher

Director of Secondary

Mortgage Lending



Debra L. Brunty

Vice President-Loans,

Wyoming County Operations



Gregory Shupe

Assistant Vice President,

Princeton Office



Randy N. Bowles

Assistant Vice President,

Summers County Office



Bill J. Keaton

Assistant Vice President,

Summers County Office



Marshall V. Lytton

Assistant Vice President,

Loans Bluefield Office



Barry W. Whitt

Assistant Vice President,

Loans



Wanda Blair

Loan Officer,

Wytheville Office



Louise S. Bowen

Loan Officer,

Secondary Mortage Lending



Shela D. Acord

Consumer Loan Officer,

Pineville Office



Charlene R. Maynard

Consumer Loan Officer,

Oceana Office



Vicky C. Eggleston

Consumer Loan
Officer,

Bluefield Office



Charles E. Lester

Collection Officer



Rick D. Blevins

Consumer Loan Officer/Collection



Sharon K.
Cole

Assistant Cashier



Janet L. Whitten

Assistant Cashier



OPERATIONS



W. E. Albert

Senior Vice President
& Cashier



Lonnie E. Cochran

Vice President, Operations



Martha B. Cooper

Assistant Vice President,

Operations



Harold A. Mitchell

Assistant Vice President,

Imaging



Judy A. Cecil

Assistant Cashier



TRUST



John P. Beckett, Jr.

Senior Vice President &

Trust Officer



Patsy R. Sykes

Vice President &

Trust Officer



Elizabeth M. Pruett

Vice President &

Trust Officer



Julie H. Johnson

Vice President &

Trust Officer



Angela M. James

Trust Officer,

Employee Benefits



Carol A. Oliver

Trust Operations

Officer



Mary A. Musser

Trust Officer



Mary Sue Anderson

Assistant Trust Officer



Byron K. Satterfield

Executive Vice President &

Chairman of the Trust

Investment Committee



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First Century Bankshares, Inc.



First Century Bank, N.A.

Locations



500 Federal
Street

Bluefield, WV 24701

(304) 3258181



525 Federal Street

Bluefield, WV 24701

(304) 3256600



2020 College Avenue

Bluefield, WV 24701

(304) 3275660



1223 Stafford Drive

Pine Plaza, Princeton, WV 24740

(304)
4250856



145 Springhaven Drive

Princeton, WV 24740

(304) 431-7617



108 Spruce Street

Bluefield, VA 24605

(276) 326-2606



Rt. 10, Cook Parkway

Oceana, WV 24870

(304) 6826221



Rt. 10, East Pineville

Pineville, WV 24874

(304) 7328850



321 Temple Street

Hinton, WV 25951

(304) 466-2311



200 Peppers Ferry Road

Wytheville, VA 24382

(276) 2231115



148 Ivanhoe Road

Max Meadows, VA 24360

(276) 6373100