LOGO



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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 19, 2005, 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                                                     |  | 25        
|Consolidated Statements of Changes in Stockholders Equity                            |  | 26        
|Consolidated Statements of Cash Flows                                                 |  | 27        
|Notes to Consolidated Financial Statements                                            |  | 28        
|Report of Independent Registered Public Accounting Firm                               |  | 48        
|Boards of Directors                                                                   |  | 49        
|Corporate and Bank Officers                                                           |  | 51        
|First Century Bankshares, Inc. Subsidiary Locations                                   |  | Back Cover





---

Financial Highlights



|                              |  |                                               |         |      |   |         |  |   |        
|----------------------------- |  | --------------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                              |  | 2004                                          |         | 2003 |   | 2002   
|                              |  | (Dollars in Thousands, Except Per Share Data)
|FOR THE YEAR                  |  |                                               |         |      |   |         |  |   |        
|Total operating income        |  | $                                             | 21,605  |      | $ | 22,060  |  | $ | 25,785 
|Total operating expense       |  |                                               | 16,816  |      |   | 17,690  |  |   | 20,435 
|Net income                    |  |                                               | 3,055   |      |   | 2,792   |  |   | 3,375  
|Cash dividends declared       |  |                                               | 1,752   |      |   | 1,692   |  |   | 1,694  
|AT YEAR END                   |  |                                               |         |      |   |         |  |   |        
|Assets                        |  | $                                             | 378,079 |      | $ | 363,727 |  | $ | 361,264
|Deposits                      |  |                                               | 321,251 |      |   | 307,719 |  |   | 307,947
|Loans                         |  |                                               | 247,808 |      |   | 246,950 |  |   | 236,460
|Securities                    |  |                                               | 94,152  |      |   | 78,444  |  |   | 88,949 
|Stockholders equity          |  |                                               | 35,789  |      |   | 34,994  |  |   | 33,818 
|PER COMMON SHARE              |  |                                               |         |      |   |         |  |   |        
|Net income, basic and diluted |  | $                                             | 1.53    |      | $ | 1.40    |  | $ | 1.69   
|Cash dividends declared       |  |                                               | 0.88    |      |   | 0.85    |  |   | 0.85   
|Book value                    |  |                                               | 17.98   |      |   | 17.58   |  |   | 16.99  



|     |  |     
|---- |  | ----
|LOGO |  | LOGO
|     | 
|LOGO |  | LOGO



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



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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 2004.



First Century Bankshares, Inc. had earnings of $3,055,000 for the year. This was an increase of 9.4% from the previous years earnings of $2,792,000. On a per share basis, net income increased to $1.53 in 2004 up
from $1.40 in 2003. This equated to a return on average assets (ROAA) of 0.83% and a return on average equity (ROAE) of 8.67% for 2004. The information contained in this Annual Report will provide you with the details of the financial condition and
results of operations for the year.



Total assets for the
Corporation grew approximately 3.9% during 2004. At year-end 2004 total assets were $378,079,000 compared to $363,727,000 at year-end 2003. We are working hard to grow the asset base of the Corporation to meet the goals of our five year strategic
plan. Enhancing a corporate calling program to expand our customer relationships, and paying competitive rates for deposits in the markets we serve are essential to meeting our objectives.



During the year, we have been able to adjust our pricing during a rising rate
environment, as we have maintained a philosophy of variable rate pricing in our loan portfolio. We have also maintained a short maturity schedule in our bond portfolio in anticipation of loan growth opportunities and re-investment opportunities in
the bond market. We believe that this allows for better management of our interest margin for the long-term stability of our corporation. We are pleased that asset quality continues to improve. Non performing assets as a percentage of total loans
improved to 1.3% in 2004 down from 1.4% in 2003.



As we look
back over the year, we feel we have had many successes to be proud of in our expansion efforts. Our newest location at 145 Springhaven Drive in Princeton, West Virginia continues to see new customer opportunities and increased volumes daily. It is
the first step in our strategic efforts to expand our footprint to better serve our customers throughout the region. We look to make an announcement in the near future as we plan on entering new markets that will support our growth efforts for the
corporation.



We have seen additional opportunities in our
Trust and Investment Services Department with a capable staff and new product offerings. We are making every effort to provide a full menu of services to our clients from estate planning, personal trusts, retirement plans, financial planning,
IRAs, and brokerage services. We will continue to look for opportunities to expand our relationships in this area and are proud that assets under management has exceeded $340,000,000. We are working with clients throughout the region to
provide a plan that meets their investment objectives so they can plan for the future with confidence.



We believe we have achieved the year one goals of our strategic plan presented to you at the 2004 Annual Meeting. We will keep you fully apprised as we
continue through 2005 and keep you updated as to our progress. We have set lofty goals to enhance shareholder value with the corporation through the year 2008 and beyond, and that includes enhancing the shareholder dividend as we did in 2004. We
feel the corporation is on the right track for success and with your support, I am confident that we will stay on our course of remaining a locally owned and locally managed community bank serving southern West Virginia and southwest Virginia.



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



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



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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



|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|---------------------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ----------- | ---- | ---- | -------------- |  | - | -------------- | - | ---------- | - | ------ | -------------- | ---- | - | -------------- | - | ---------- | - |  | - | ------ |  | ---- | -
|                                                           |  | 2004                   |         |   | 2003                   |   |             | 2002 |     
|                                                           |  | (Dollars in Thousands) |         |   | (Dollars in Thousands) |  
|                                                           |  | AverageBalance         |         |   | Interest               |   | AverageRate |      |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |   |        | AverageBalance |      |   | Income/Expense |   | Yield/Rate |  
|ASSETS:                                                    |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Interest-bearing deposits with banks                       |  | $                      | 1,142   |   |                        | $ | 14          |      | 1.23 | %              |  | $ | 1,762          |   |            | $ | 16     |                | 0.91 | % |                | $ | 4,407      |   |  | $ | 68     |  | 1.54 | %
|Securities available for sale and other equity securities: |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|U. S. Treasury securities                                  |  |                        | 1,017   |   |                        |   | 19          |      | 1.87 | %              |  |   | 1,733          |   |            |   | 80     |                | 4.62 | % |                |   | 2,802      |   |  |   | 157    |  | 5.60 | %
|U. S. Government agency securities                         |  |                        | 63,743  |   |                        |   | 2,141       |      | 3.36 | %              |  |   | 59,041         |   |            |   | 2,024  |                | 3.43 | % |                |   | 66,642     |   |  |   | 3,458  |  | 5.19 | %
|Other securities                                           |  |                        | 9,657   |   |                        |   | 515         |      | 5.33 | %              |  |   | 10,204         |   |            |   | 570    |                | 5.59 | % |                |   | 10,390     |   |  |   | 597    |  | 5.75 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total securities available for sale                        |  |                        | 74,417  |   |                        |   | 2,675       |      | 3.59 | %              |  |   | 70,978         |   |            |   | 2,674  |                | 3.77 | % |                |   | 79,834     |   |  |   | 4,212  |  | 5.28 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Securities held to maturity:                               |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|U. S. Government agency securities                         |  |                        |        |   |                        |   |            |      |     |                |  |   |               |   |            |   |       |                |     |   |                |   | 34         |   |  |   | 1      |  | 2.94 | %
|State and municipal securities                             |  |                        | 12,983  |   |                        |   | 523         |      | 4.03 | %              |  |   | 10,028         |   |            |   | 454    |                | 4.53 | % |                |   | 9,942      |   |  |   | 499    |  | 5.02 | %
|Other securities                                           |  |                        | 86      |   |                        |   | 6           |      | 6.98 | %              |  |   | 124            |   |            |   | 9      |                | 7.26 | % |                |   | 150        |   |  |   | 10     |  | 6.67 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total securities held to maturity                          |  |                        | 13,069  |   |                        |   | 529         |      | 4.05 | %              |  |   | 10,152         |   |            |   | 463    |                | 4.56 | % |                |   | 10,126     |   |  |   | 510    |  | 5.04 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Federal funds sold                                         |  |                        | 2,722   |   |                        |   | 35          |      | 1.29 | %              |  |   | 4,678          |   |            |   | 50     |                | 1.07 | % |                |   | 4,255      |   |  |   | 69     |  | 1.62 | %
|Loans                                                      |  |                        | 246,814 |   |                        |   | 14,618      |      | 5.92 | %              |  |   | 241,266        |   |            |   | 14,876 |                | 6.17 | % |                |   | 236,130    |   |  |   | 16,675 |  | 7.06 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestearning assets                              |  |                        | 338,164 |   |                        |   | 17,871      |      | 5.28 | %              |  |   | 328,836        |   |            |   | 18,079 |                | 5.50 | % |                |   | 334,752    |   |  |   | 21,534 |  | 6.43 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Allowance for loan losses                                  |  |                        | (3,040  | ) |                        |   |             |      |      |                |  |   | (3,016         | ) |            |   |        |                |      |   |                |   | (3,108     | ) |  |   |        |  |      |  
|Cash and due from banksdemand                             |  |                        | 10,683  |   |                        |   |             |      |      |                |  |   | 12,501         |   |            |   |        |                |      |   |                |   | 13,723     |   |  |   |        |  |      |  
|Bank Premises and equipmentnet                            |  |                        | 12,397  |   |                        |   |             |      |      |                |  |   | 11,089         |   |            |   |        |                |      |   |                |   | 10,423     |   |  |   |        |  |      |  
|Other assets                                               |  |                        | 9,975   |   |                        |   |             |      |      |                |  |   | 11,540         |   |            |   |        |                |      |   |                |   | 12,153     |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL ASSETS                                               |  | $                      | 368,179 |   |                        |   |             |      |      |                |  | $ | 360,950        |   |            |   |        |                |      |   |                | $ | 367,943    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:                      |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Interestbearing demand deposits                           |  | $                      | 78,546  |   |                        | $ | 190         |      | 0.24 | %              |  | $ | 76,398         |   |            | $ | 246    |                | 0.32 | % |                | $ | 73,357     |   |  | $ | 513    |  | 0.70 | %
|Savings deposits                                           |  |                        | 68,575  |   |                        |   | 499         |      | 0.73 | %              |  |   | 69,563         |   |            |   | 601    |                | 0.86 | % |                |   | 74,264     |   |  |   | 1,065  |  | 1.43 | %
|Time deposits                                              |  |                        | 125,546 |   |                        |   | 2,724       |      | 2.17 | %              |  |   | 124,104        |   |            |   | 2,990  |                | 2.41 | % |                |   | 130,469    |   |  |   | 4,149  |  | 3.18 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestbearing deposits                            |  |                        | 272,667 |   |                        |   | 3,413       |      | 1.25 | %              |  |   | 270,065        |   |            |   | 3,837  |                | 1.42 | % |                |   | 278,090    |   |  |   | 5,727  |  | 2.06 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Short-term debt                                            |  |                        | 16,723  |   |                        |   | 87          |      | 0.52 | %              |  |   | 15,550         |   |            |   | 75     |                | 0.48 | % |                |   | 17,366     |   |  |   | 159    |  | 0.92 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Long-term debt                                             |  |                        |        |   |                        |   |            |      |     |                |  |   |               |   |            |   |       |                |     |   |                |   |           |   |  |   |       |  |     |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Total interestbearing liabilities                         |  |                        | 289,390 |   |                        |   | 3,500       |      | 1.21 | %              |  |   | 285,615        |   |            |   | 3,912  |                | 1.37 | % |                |   | 295,456    |   |  |   | 5,886  |  | 1.99 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Demand deposits                                            |  |                        | 41,153  |   |                        |   |             |      |      |                |  |   | 38,682         |   |            |   |        |                |      |   |                |   | 37,461     |   |  |   |        |  |      |  
|Other liabilities                                          |  |                        | 2,411   |   |                        |   |             |      |      |                |  |   | 2,900          |   |            |   |        |                |      |   |                |   | 2,156      |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL LIABILITIES                                          |  |                        | 332,954 |   |                        |   |             |      |      |                |  |   | 327,197        |   |            |   |        |                |      |   |                |   | 335,073    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Stockholders equity                                       |  |                        | 35,225  |   |                        |   |             |      |      |                |  |   | 33,753         |   |            |   |        |                |      |   |                |   | 32,870     |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                 |  | $                      | 368,179 |   |                        |   |             |      |      |                |  | $ | 360,950        |   |            |   |        |                |      |   |                | $ | 367,943    |   |  |   |        |  |      |  
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|Average rate paid to fund earning assets                   |  |                        |         |   |                        |   |             |      | 1.04 | %              |  |   |                |   |            |   |        |                | 1.19 | % |                |   |            |   |  |   |        |  | 1.76 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|NET INTEREST DIFFERENTIAL                                  |  |                        |         |   |                        | $ | 14,371      |      | 4.25 | %              |  |   |                |   |            | $ | 14,167 |                | 4.31 | % |                |   |            |   |  | $ | 15,648 |  | 4.67 | %
|                                                           |  |                        |         |   |                        |   |             |      |      |                |  |   |                |   |            |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  



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 $432,000
in 2004, $619,000 in 2003, and $394,000 in 2002. Average balances of securities available for sale are reported at amortized cost; excludes pretax unrealized gains of $8,000 in 2004, $772,000 in 2003, and $1,488,000 in 2002. Interest income on tax
exempt securities is shown based on the actual yield.



VOLUME/RATE
ANALYSIS



|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | ------------------------------------------ | --- | - | ------------------------------------------ | - | ---- | -------------------- |  | - | ------ | - |  | ---- | ---- | - | ----- | - | ------ | ------ |  | - | ------ | - |  | ----- | ---- | - |  | - | ------ | - |  | - | ------ | -
|                                                          |  | Increase (Decrease) in Interest            |    
|                                                          |  | 2004 vs. 2003                              |     |   | 2003 vs. 2002                              |   |      | 2002 vs. 2001        | 
|                                                          |  | (Dollars in Thousands)Due to Change in (1) |     |   | (Dollars in Thousands)Due to Change in (1) |   |      | Due to Change in (1) | 
|                                                          |  | Volume                                     |     |   | Rate                                       |   |      | Total                |  |   | Volume |   |  | Rate |      |   | Total |   |        | Volume |  |   | Rate   |   |  | Total |     
|Interest income on:                                       |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Loans                                                     |  | $                                          | 335 |   |                                            | $ | (593 | )                    |  | $ | (258   | ) |  | $    | 340  |   |       | $ | (2,139 | )      |  | $ | (1,799 | ) |  | $     | (717 | ) |  | $ | (2,437 | ) |  | $ | (3,154 | )
|Securities available for sale and other equity securities |  |                                            | 127 |   |                                            |   | (126 | )                    |  |   | 1      |   |  |      | (400 | ) |       |   | (1,138 | )      |  |   | (1,538 | ) |  |       | 291  |   |  |   | (935   | ) |  |   | (644   | )
|Securities held to maturity                               |  |                                            | 126 |   |                                            |   | (60  | )                    |  |   | 66     |   |  |      | 1    |   |       |   | (48    | )      |  |   | (47    | ) |  |       | (46  | ) |  |   | (4     | ) |  |   | (50    | )
|Federal funds sold                                        |  |                                            | (23 | ) |                                            |   | 8    |                      |  |   | (15    | ) |  |      | 6    |   |       |   | (25    | )      |  |   | (19    | ) |  |       | 15   |   |  |   | (65    | ) |  |   | (50    | )
|Interest-bearing deposits with banks                      |  |                                            | (7  | ) |                                            |   | 5    |                      |  |   | (2     | ) |  |      | (32  | ) |       |   | (20    | )      |  |   | (52    | ) |  |       | (54  | ) |  |   | (121   | ) |  |   | (175   | )
|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|TOTAL INTEREST INCOME                                     |  |                                            | 558 |   |                                            |   | (766 | )                    |  |   | (208   | ) |  |      | (85  | ) |       |   | (3,370 | )      |  |   | (3,455 | ) |  |       | (511 | ) |  |   | (3,562 | ) |  |   | (4,073 | )
|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Interest expense on:                                      |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|Interest-bearing demand deposits                          |  |                                            | 6   |   |                                            |   | (62  | )                    |  |   | (56    | ) |  |      | 16   |   |       |   | (283   | )      |  |   | (267   | ) |  |       | 34   |   |  |   | (411   | ) |  |   | (377   | )
|Savings deposits                                          |  |                                            | (8  | ) |                                            |   | (94  | )                    |  |   | (102   | ) |  |      | (54  | ) |       |   | (410   | )      |  |   | (464   | ) |  |       | (60  | ) |  |   | (648   | ) |  |   | (708   | )
|Time deposits                                             |  |                                            | 33  |   |                                            |   | (299 | )                    |  |   | (266   | ) |  |      | (178 | ) |       |   | (981   | )      |  |   | (1,159 | ) |  |       | (449 | ) |  |   | (2,589 | ) |  |   | (3,038 | )
|Short-term borrowings                                     |  |                                            | 6   |   |                                            |   | 6    |                      |  |   | 12     |   |  |      | (13  | ) |       |   | (71    | )      |  |   | (84    | ) |  |       | (14  | ) |  |   | (363   | ) |  |   | (377   | )
|Long-term borrowings                                      |  |                                            |    |   |                                            |   |     |                      |  |   |       |   |  |      |     |   |       |   |       |        |  |   |       |   |  |       |     |   |  |   |       |   |  |   |       |  
|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|TOTAL INTEREST EXPENSE                                    |  |                                            | 37  |   |                                            |   | (449 | )                    |  |   | (412   | ) |  |      | (229 | ) |       |   | (1,745 | )      |  |   | (1,974 | ) |  |       | (489 | ) |  |   | (4,011 | ) |  |   | (4,500 | )
|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  
|NET INTEREST INCOME                                       |  | $                                          | 521 |   |                                            | $ | (317 | )                    |  | $ | 204    |   |  | $    | 144  |   |       | $ | (1,625 | )      |  | $ | (1,481 | ) |  | $     | (22  | ) |  | $ | 449    |   |  | $ | 427    |  
|                                                          |  |                                            |     |   |                                            |   |      |                      |  |   |        |   |  |      |      |   |       |   |        |        |  |   |        |   |  |       |      |   |  |   |        |   |  |   |        |  



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



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| |  | First Century Bankshares, Inc.    Page 3



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



This narrative will assist you in your 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. We are 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. We are also not
aware of any current recommendations by any regulatory authorities, which would have such a material effect if implemented.



This report contains certain forward-looking statements (as defined in the Private Securities Litigation Act of 1995), including certain plans, expectations, goals and
projections, which are inherently 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 but not limited to: changes
in economic conditions which may affect our 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; continuing consolidation on the financial services industry; 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. We began active operations in March 1984, in a business combination with our then sole subsidiary, The First National Bank of Bluefield. Through a series of acquisitions and consolidations, we now operate 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 16 ATM locations throughout southern West
Virginia and southwestern Virginia.



During 2001, we formed a financial
subsidiary, First Century Financial Services, LLC, (FCFSLLC). This entity conducts our insurance activities through its investment in the Bankers Insurance Corporation, a relationship among several community banks, which offers a
full range of insurance products and services. We believe the expansion of nontraditional financial service offerings to our 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



Our 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. Our consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, and follow general practices within the financial services industry. Our most complex accounting policies require us to make estimates, assumptions and judgments to ascertain the valuation of
assets, liabilities, commitments and contingencies reported in our financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of



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|Page 4    First Century Bankshares, Inc. |  | 



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the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and
judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.



Allowance for Loan Losses



The Corporation maintains, through its provision, an allowance for loan losses that we
believe to be adequate to absorb probable credit losses inherent in the portfolio. We are continually seeking ways to enhance the methodology and procedures for determining the adequacy of the allowance for loan losses. The procedures that we use
entail preparation of a loan watch list and assigning each loan a credit risk rating. 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, we perform 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 fair value of the loan.



Other classified loans are categorized and allocated appropriate reserves. We also reserve for other loans more than 90 days past due that have not been considered in the aforementioned procedures. 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 our lending management
and staff are given consideration.



Pensions



We have 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. We review these assumptions with the plan actuaries and modify them as necessary to reflect current market
conditions as well as anticipated long-term market conditions.



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



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Balance Sheet Analysis



Loans



Our primary goal is to meet the credit needs of the retail and commercial customers in our primary markets of southern West Virginia and southwestern Virginia. Total
loans increased approximately $858,000, or 0.4%, in 2004, following a 4.4% increase of $10,490,000 in 2003. Competition in our market is very aggressive for the acquisition of new loans. Loan demand began to show signs of weakness during the second
half of 2004, as interest rates began to increase from historically low levels. We continued to adhere to our philosophy of not offering long-term fixed-rate commitments in order to take advantage of the anticipated rising rate environment. At
December 31, 2004, the loan portfolio comprised 71.0% of total interest earning assets as compared to 74.7% of total interest earning assets at December 31, 2003, and contributed 81.8% of total interest income in 2004, 82.3% in 2003 and 77.4% in
2002.



During 2004, our 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, we continued to make loans available in an expanding retail marketplace. We also continued
to develop relationships with other community banks to seek loan participation opportunities outside of our existing footprint. Consistent with our philosophy on relationship banking, most of our borrowers are also depositors and utilize other
banking services. The average yield of the loan portfolio decreased to an average rate of 5.92% in 2004 compared to 6.17% in 2003. This reflected the historically low interest rate environment during 2003 and early 2004, and the continued repricing
of loans at lower interest rates.



Our commercial loan portfolio is generally
diversified and geographically dispersed within the region. At December 31, 2004, we had concentrations of $17,265,000, or 48.2% of stockholders equity in loans to lessors of real property, and $14,314,000, or 40.0% of stockholders
equity in loans to borrowers in the hospitality industry. These concentrations are 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
stockholders equity. Within each specific industry, our borrowers are diversified as to specialty, service or other unique feature of the overall industry. A substantial portion of our 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 our 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. We will continue to carefully monitor the consumer sector during this period of
economic recovery. Inflationary pressures beginning to appear may have a negative impact on this sectors ability to service higher levels of debt.



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|Page 6    First Century Bankshares, Inc. |  | 



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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. We had outstanding commitments to extend credit of approximately $46,605,000 at December 31, 2004, and $44,439,000 at December 31, 2003. These commitments included unfunded loan
commitments and unused lines of credit totaling $41,404,000 at December 31, 2004 and $39,600,000 at December 31, 2003. Additionally, standby letters of credit totaled $5,201,000 at December 31, 2004, and $4,839,000 at December 31, 2003. Financial
standby letters of credit are conditional commitments that we issue 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, 2004. Further discussion of these commitments is included in Note 13 to the Consolidated Financial Statements.



COMMITMENTS



|                                                                                 |  |                        |        |             |   |             |  |             |       |       |   |       |  |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ----------- | - | ----------- |  | ----------- | ----- | ----- | - | ----- |  | - | ------
|                                                                                 |  | 1 Yearor Less          |        | 1 to 3Years |   | 3 to 5Years |  | Over 5Years |       | Total
|                                                                                 |  | (Dollars in Thousands)
|Unused lines of credit                                                           |  |                        |        |             |   |             |  |             |       |       |   |       |  |   |       
|Home equity lines                                                                |  | $                      | 7      |             | $ | 82          |  | $           | 1,254 |       | $ | 1,946 |  | $ | 3,289 
|Commercial real estate, construction and land development secured by real estate |  |                        | 15,896 |             |   | 7,395       |  |             |      |       |   |      |  |   | 23,291
|Other unused commitments                                                         |  |                        | 14,824 |             |   |            |  |             |      |       |   |      |  |   | 14,824
|Financial standby letters of credit                                              |  |                        | 4,733  |             |   | 462         |  |             | 6     |       |   |      |  |   | 5,201 



AMOUNTS OF LOANS OUTSTANDING



|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        
|-------------------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                       |  | December 31,          
|                                       |  | 2004                   |         | 2003 |   | 2002    |  | 2001 |         | 2000
|                                       |  | (Dollars in Thousands)
|Commercial, financial and agricultural |  | $                      | 41,497  |      | $ | 47,010  |  | $    | 43,725  |      | $ | 49,056  |  | $ | 49,883 
|Real estateconstruction               |  |                        | 11,037  |      |   | 6,137   |  |      | 12,268  |      |   | 7,755   |  |   | 5,990  
|Real estatemortgage                   |  |                        | 175,487 |      |   | 173,104 |  |      | 159,233 |      |   | 161,074 |  |   | 158,828
|Installment loans to individuals       |  |                        | 19,787  |      |   | 20,699  |  |      | 21,234  |      |   | 26,183  |  |   | 30,026 
|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        
|TOTAL LOANS OUTSTANDING                |  | $                      | 247,808 |      | $ | 246,950 |  | $    | 236,460 |      | $ | 244,068 |  | $ | 244,727
|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        



MATURITY SCHEDULE OF LOANS



|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|-------------------------------------- |  | --------------------------------------- | ------ | ----------- | - | ------------ |  | ----- | ------ |  | - | -------
|                                       |  | Remaining maturity at December 31, 2004
|                                       |  | (Dollars in Thousands)                 
|                                       |  | 1 Yearor Less                           |        | 1 to 5Years |   | After 5Years |  | Total
|Commercial, financial and agricultural |  | $                                       | 21,469 |             | $ | 15,986       |  | $     | 4,042  |  | $ | 41,497 
|Real estateconstruction               |  |                                         | 10,962 |             |   | 75           |  |       | 0      |  |   | 11,037 
|Real estatemortgage                   |  |                                         | 32,731 |             |   | 50,937       |  |       | 91,819 |  |   | 175,487
|Installment loans to individuals       |  |                                         | 4,949  |             |   | 12,150       |  |       | 2,688  |  |   | 19,787 
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|TOTAL                                  |  | $                                       | 70,111 |             | $ | 79,148       |  | $     | 98,549 |  | $ | 247,808
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|With Predetermined interest rates      |  | $                                       | 24,831 |             | $ | 56,448       |  | $     | 55,436 |  | $ | 136,715
|With floating interest rates           |  |                                         | 45,280 |             |   | 22,700       |  |       | 43,113 |  |   | 111,093
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        
|TOTAL                                  |  | $                                       | 70,111 |             | $ | 79,148       |  | $     | 98,549 |  | $ | 247,808
|                                       |  |                                         |        |             |   |              |  |       |        |  |   |        



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| |  | First Century Bankshares, Inc.    Page 7



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NONPERFORMING ASSETS AND LOAN LOSS ANALYSIS



|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                            |  | Years Ended December 31, |        
|                                                            |  | 2004                     |         |   | 2003 |   |         | 2002 |  |   | 2001    |   |  | 2000 |        
|                                                            |  | (Dollars in Thousands)   |        
|Average amount of loans outstanding                         |  | $                        | 246,814 |   |      | $ | 241,266 |      |  | $ | 236,130 |   |  | $    | 245,606 |   |  | $ | 242,533 |  
|Allowance for loan losses:                                  |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Balance at beginning of the year                            |  | $                        | 3,075   |   |      | $ | 3,005   |      |  | $ | 3,180   |   |  | $    | 3,180   |   |  | $ | 3,050   |  
|Loans charged off                                           |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          | 121     |   |      |   | 78      |      |  |   | 532     |   |  |      | 780     |   |  |   | 372     |  
|Real estateconstruction                                    |  |                          | 234     |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Real estatemortgage                                        |  |                          | 30      |   |      |   | 272     |      |  |   | 1,157   |   |  |      | 1,199   |   |  |   | 274     |  
|Installment loans to individuals                            |  |                          | 165     |   |      |   | 315     |      |  |   | 477     |   |  |      | 659     |   |  |   | 536     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL LOANS CHARGED OFF                                     |  |                          | 550     |   |      |   | 665     |      |  |   | 2,166   |   |  |      | 2,638   |   |  |   | 1,182   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Loan recoveries                                             |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          |        |   |      |   | 4       |      |  |   | 86      |   |  |      | 32      |   |  |   | 12      |  
|Real estatemortgage                                        |  |                          | 95      |   |      |   | 14      |      |  |   | 63      |   |  |      | 239     |   |  |   | 44      |  
|Installment loans to individuals                            |  |                          | 56      |   |      |   | 64      |      |  |   | 57      |   |  |      | 33      |   |  |   | 47      |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL LOAN RECOVERIES                                       |  |                          | 151     |   |      |   | 82      |      |  |   | 206     |   |  |      | 304     |   |  |   | 103     |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net loans charged off                                       |  |                          | (399    | ) |      |   | (583    | )    |  |   | (1,960  | ) |  |      | (2,334  | ) |  |   | (1,079  | )
|Provision for loan losses                                   |  |                          | 224     |   |      |   | 653     |      |  |   | 1,785   |   |  |      | 2,334   |   |  |   | 1,209   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|BALANCE AT END OF THE YEAR                                  |  | $                        | 2,900   |   |      | $ | 3,075   |      |  | $ | 3,005   |   |  | $    | 3,180   |   |  | $ | 3,180   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Ratio of net loans charged off to average loans outstanding |  |                          | 0.16    | % |      |   | 0.24    | %    |  |   | 0.83    | % |  |      | 0.95    | % |  |   | 0.44    | %
|Allowance at year end as a percent of loans                 |  |                          | 1.17    | % |      |   | 1.25    | %    |  |   | 1.27    | % |  |      | 1.30    | % |  |   | 1.30    | %
|Provision for loan losses as a percent of loans             |  |                          | 0.09    | % |      |   | 0.27    | %    |  |   | 0.76    | % |  |      | 0.95    | % |  |   | 0.50    | %
|Nonperforming assets (at year end)                          |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonaccrual                                                  |  | $                        | 2,493   |   |      | $ | 2,542   |      |  | $ | 2,819   |   |  | $    | 3,045   |   |  | $ | 5,887   |  
|Pastdue ninety days or more and still accruing             |  |                          | 423     |   |      |   | 400     |      |  |   | 612     |   |  |      | 1,140   |   |  |   | 3,320   |  
|Troubled debt restructurings                                |  |                          | 149     |   |      |   | 120     |      |  |   |        |   |  |      |        |   |  |   |        |  
|Other real estate owned                                     |  |                          | 112     |   |      |   | 383     |      |  |   | 793     |   |  |      | 1,279   |   |  |   | 1,001   |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|TOTAL NONPERFORMING ASSETS                                  |  | $                        | 3,177   |   |      | $ | 3,445   |      |  | $ | 4,224   |   |  | $    | 5,464   |   |  | $ | 10,208  |  
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonperforming assets/total loans                            |  |                          | 1.3     | % |      |   | 1.4     | %    |  |   | 1.8     | % |  |      | 2.2     | % |  |   | 4.2     | %
|Nonperforming assets/total assets                           |  |                          | 0.8     | % |      |   | 0.9     | %    |  |   | 1.2     | % |  |      | 1.5     | % |  |   | 2.7     | %
|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  



ALLOCATION OF THE ALLOWANCE FOR
LOAN LOSSES



|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  
|-------------------------------------- |  | ---------------------- | ----- | --------------------------------------------- | ------ | - | ------ | ---- | --------------------------------------------- |  | ------ | ------ |  | --------------------------------------------- | ----- |  | ------ | - | --------------------------------------------- | - | ----- | ------ | ------ | --------------------------------------------- |  | - | ----- |  | ------ | -
|                                       |  | 2004                   |       |                                               | 2003   |   |        | 2002 |                                               |  | 2001   |        |  | 2000                                          |      
|                                       |  | (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 |  | $                      | 534   |                                               | 16.75  | % |        | $    | 652                                           |  | 19.04  | %      |  | $                                             | 1,083 |  | 18.49  | % |                                               | $ | 1,143 |        | 20.10  | %                                             |  | $ | 343   |  | 20.38  | %
|Real estateconstruction               |  |                        | 37    |                                               | 4.45   | % |        |      |                                              |  | 2.48   | %      |  |                                               |      |  | 5.19   | % |                                               |   |      |        | 3.18   | %                                             |  |   |      |  | 2.45   | %
|Real estatemortgage                   |  |                        | 1,715 |                                               | 70.82  | % |        |      | 1,964                                         |  | 70.10  | %      |  |                                               | 1,493 |  | 67.34  | % |                                               |   | 1,485 |        | 65.99  | %                                             |  |   | 1,654 |  | 64.90  | %
|Installment loans to individuals       |  |                        | 404   |                                               | 7.98   | % |        |      | 459                                           |  | 8.38   | %      |  |                                               | 429   |  | 8.98   | % |                                               |   | 546   |        | 10.73  | %                                             |  |   | 469   |  | 12.27  | %
|Unallocated                            |  |                        | 210   |                                               | N/A    |   |        |      |                                              |  | N/A    |        |  |                                               |      |  | N/A    |   |                                               |   | 6     |        | N/A    |                                               |  |   | 714   |  | N/A    |  
|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  
|TOTAL                                  |  | $                      | 2,900 |                                               | 100.00 | % |        | $    | 3,075                                         |  | 100.00 | %      |  | $                                             | 3,005 |  | 100.00 | % |                                               | $ | 3,180 |        | 100.00 | %                                             |  | $ | 3,180 |  | 100.00 | %
|                                       |  |                        |       |                                               |        |   |        |      |                                               |  |        |        |  |                                               |       |  |        |   |                                               |   |       |        |        |                                               |  |   |       |  |        |  



Nonperforming assets, including
nonaccrual loans, loans past due 90 days or more, restructured loans and other real estate owned, decreased $268,000, or 7.8%, from December 31, 2003 to December 31, 2004, following a decrease of $779,000, or 18.4% in 2003. These decreases reflect
our ongoing efforts to enhance the quality of the loan portfolio. This also shows improvements we have made in the criteria we use in the determination of granting renewals and extensions. Our policy is to discontinue the accrual of interest on
loans that are past due more than 90 days, unless those loans are well collateralized and in process of collection. We may also classify loans that are on a current payment status or past due less than 90 days as nonaccrual if the repayment of
principal or interest is in doubt. Our holdings of other real estate owned decreased 70.8% or $271,000 in 2004, following a decrease of $410,000 in 2003.



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We maintain an allowance for loan losses that we believe to be adequate to absorb probable credit losses inherent in the
portfolio. We are committed to the early recognition of problem loans, and to an appropriate and adequate level of allowance. The allowance for loan losses was 1.17% of year end loans at December 31, 2004 and 1.25% at December 31, 2003. The
estimation of the adequacy of the allowance for loan losses is the most significant estimate that we determine. Different amounts could result under different conditions or assumptions.



We use an outsourcing arrangement for our loan review function with an independent third-party firm. This process includes a thorough
evaluation of our credit administration systems and personnel. The objective is to have an effective loan review system that provides us 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 used to further support the adequacy of the loan loss allowance.



In addition to the review of credit quality through the credit review process, we construct a comprehensive allowance analysis for the loan portfolio at least quarterly.
The procedures that we use 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, we perform an impairment analysis. Specific reserves are recorded on impaired loans of $459,000 and $397,000 at December 31 2004 and 2003, respectively. Other classified loans are categorized and
allocated appropriate reserves. Other loans more than 90 days past due that have not been considered in these 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 our lending management and staff are considered.



Securities



During 2004, securities, our second largest asset, increased by $15,708,000 or 20.0%. We were able to increase the securities portfolio early in 2004 as interest rates in the 3-5 year horizon became more attractive
relative to short-term fed funds rates. At December 31, 2004, securities comprised 27.0% of total interest earning assets compared to 23.7% of total interest earning assets at December 31, 2003. The composition of our securities portfolio reflects
our investment strategy of maximizing portfolio yields subject to risk and liquidity considerations. The primary objective of our investment strategy is to maintain an appropriate level of asset liquidity and provide us with a tool to assist in
controlling and managing our interest rate position while at the same time producing appropriate levels of interest income. Managing the average maturity and optionality of the portfolio is necessary to ensure adequate liquidity and acceptable
interest rate risk. In order to maintain liquidity and flexibility, we categorize most investments in the available for sale portfolio. We believe that the potential for increased loan demand requires maintaining adequate liquidity in the securities
portfolio.



| |  |                                         
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| |  | First Century Bankshares, Inc.    Page 9



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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 $189,000 at December 31, 2004, compared to net unrealized gains of $286,000 at December 31, 2003. The held to maturity portfolio increased from $12,163,000 at December 31,
2003, to $12,957,000 at December 31, 2004, 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, 2004, the investment portfolio contained $8,302,000 of corporate debt
obligations in the available for sale portfolio. These obligations have an average remaining life of less than one year and are primarily in the financial services sector. No investment with an individual issuer is in excess of 10% of
stockholders equity.



Realized losses from the sale of available for sale
securities were approximately $16,000 in 2004. These losses were taken in an effort to restructure a small portion of the portfolio to enhance future returns.



On December 31, 2004, we held certain investments having continuous unrealized loss positions for more than 12 months totaling $4,865,000. The majority of these
investments were in U.S. Treasuries and U.S. government agency obligations, the cash flows of which are guaranteed by the U.S. government or its agencies; therefore, we expect that the securities would not be settled at a price less than their
amortized cost. Because the decline in the market value was caused by interest rate increases and not credit quality, and because we have the ability and intent to hold these investments until a recovery of fair value, which may be maturity, we have
not recognized any other-than-temporary impairment in connection with these investments.



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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,          
|                                       |  | 2004                   |        | 2003 |   | 2002  
|                                       |  | (Dollars in Thousands)
|Securities available for sale:         |  |                        |        |      |   |        |  |   |       
|U. S. Government securities            |  | $                      | 991    |      | $ | 1,004  |  | $ | 3,052 
|U. S. Government agency securities     |  |                        | 70,720 |      |   | 54,543 |  |   | 65,911
|Other securities                       |  |                        | 8,302  |      |   | 9,711  |  |   | 9,668 
|                                       |  |                        |        |      |   |        |  |   |       
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 80,013 |      | $ | 65,258 |  | $ | 78,631
|                                       |  |                        |        |      |   |        |  |   |       
|Securities held to maturity:           |  |                        |        |      |   |        |  |   |       
|U. S. Government agency securities     |  | $                      |       |      | $ |       |  | $ | 9     
|State, county and municipal securities |  |                        | 12,882 |      |   | 12,063 |  |   | 9,407 
|Other securities                       |  |                        | 75     |      |   | 100    |  |   | 150   
|                                       |  |                        |        |      |   |        |  |   |       
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 12,957 |      | $ | 12,163 |  | $ | 9,566 
|                                       |  |                        |        |      |   |        |  |   |       



MATURITIES OF SECURITIES



The following table shows the contractual maturities of debt
securities at December 31, 2004 and the weighted average yields of such securities:



|                                       |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|-------------------------------------- |  | ---------------------- | ----- | ----- | ------------------------------- | - | ------ | ------------------------------- | ------ |  | --------------- | ------ |  | ----- | ----- |  | ------ | - | ----- | - | - | ------ | ---- | ----- |  | - | ------ |  | ---- | -
|                                       |  | Within One Year        |       |       | After One But Within Five Years |   |        | After Five But Within Ten Years |        |  | After Ten Years |        |  | Total |      
|                                       |  | Amount                 |       | Yield |                                 |   | Amount |                                 | Yield  |  |                 | Amount |  | Yield |       |  | Amount |   | Yield |   |   | Amount |      | Yield | 
|                                       |  | (Dollars in Thousands) |      
|Securities available for sale:         |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|U. S. Treasury securities              |  | $                      | 1,003 |       | 1.60                            | % |        | $                               |       |  | 0.00            | %      |  | $     |      |  | 0.00   | % |       | $ |  |        | 0.00 | %     |  | $ | 1,003  |  | 1.60 | %
|U. S. Government agency securities     |  |                        | 3,025 |       | 5.75                            | % |        |                                 | 60,709 |  | 3.21            | %      |  |       | 7,153 |  | 3.76   | % |       |   |  |        | 0.00 | %     |  |   | 70,887 |  | 3.38 | %
|Other securities                       |  |                        | 4,104 |       | 5.33                            | % |        |                                 | 4,011  |  | 6.15            | %      |  |       |      |  | 0.00   | % |       |   |  |        | 0.00 | %     |  |   | 8,115  |  | 5.73 | %
|                                       |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 8,132 |       | 5.03                            | % |        | $                               | 64,720 |  | 3.39            | %      |  | $     | 7,153 |  | 3.76   | % |       | $ |  |        |     |       |  | $ | 80,005 |  | 3.59 | %
|                                       |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|Securities held to maturity:           |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|State, county and municipal securities |  | $                      | 1,216 |       | 3.92                            | % |        | $                               | 8,222  |  | 3.88            | %      |  | $     | 3,444 |  | 4.39   | % |       | $ |  |        | 0.00 | %     |  | $ | 12,882 |  | 4.02 | %
|Other Debt securities                  |  |                        |      |       | 0.00                            | % |        |                                 | 75     |  | 7.20            | %      |  |       |      |  | 0.00   | % |       |   |  |        | 0.00 | %     |  |   | 75     |  | 7.20 | %
|                                       |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 1,216 |       | 3.92                            | % |        | $                               | 8,297  |  | 3.91            | %      |  | $     | 3,444 |  | 4.39   | % |       | $ |  |        |     |       |  | $ | 12,957 |  | 4.04 | %
|                                       |  |                        |       |       |                                 |   |        |                                 |        |  |                 |        |  |       |       |  |        |   |       |   |   |        |      |       |  |   |        |  |      |  



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



Deposits



Deposits, our major source of funds, increased approximately
$13,532,000 in 2004, following a decrease of $228,000 in 2003. This increase occurred in both interest-bearing and noninterest-bearing deposits as we began a strategy to regain market share that we had lost over the previous two years to the
entrance of new competitors in the market-place. The average rate paid on interest bearing deposits in 2004 was 1.25% and 1.42% in 2003. Strong competition for deposits exists in our primary market among commercial banks, savings banks, thrift
institutions, credit unions, mutual funds, brokerage houses, insurance companies, and certain national retailers. Despite this intense competition, we continue to evaluate pricing strategies that will insure our long-term benefit of maintaining
market share without sacrificing profitability.



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| |  | First Century Bankshares, Inc.    Page 11



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AVERAGE DEPOSITS



|                                    |  |                        |         |      |              |   |        |              |         |  |      |        |  |      |         |  |      |  
|----------------------------------- |  | ---------------------- | ------- | ---- | ------------ | - | ------ | ------------ | ------- |  | ---- | ------ |  | ---- | ------- |  | ---- | -
|                                    |  | 2004 Average           |         |      | 2003 Average |   |        | 2002 Average |        
|                                    |  | Amount                 |         | Rate |              |   | Amount |              | Rate    |  |      | Amount |  | Rate |        
|                                    |  | (Dollars in Thousands) |        
|Noninterestbearing demand deposits |  | $                      | 41,153  |      | N/A          |   |        | $            | 38,682  |  | N/A  |        |  | $    | 37,461  |  | N/A  |  
|Interestbearing demand deposits    |  |                        | 78,546  |      | 0.24         | % |        |              | 76,398  |  | 0.32 | %      |  |      | 73,357  |  | 0.70 | %
|Savings deposits                    |  |                        | 68,575  |      | 0.73         | % |        |              | 69,563  |  | 0.86 | %      |  |      | 74,264  |  | 1.43 | %
|Time deposits                       |  |                        | 125,546 |      | 2.17         | % |        |              | 124,104 |  | 2.41 | %      |  |      | 130,469 |  | 3.18 | %
|                                    |  |                        |         |      |              |   |        |              |         |  |      |        |  |      |         |  |      |  
|TOTAL AVERAGE DEPOSITS              |  | $                      | 313,820 |      | 1.09         | % |        | $            | 308,747 |  | 1.24 | %      |  | $    | 315,551 |  | 1.81 | %
|                                    |  |                        |         |      |              |   |        |              |         |  |      |        |  |      |         |  |      |  



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, 2004     
|                                                  |  | (Dollars in Thousands)
|Under 3 months                                    |  | $                      | 2,630 
|3 to 6 months                                     |  |                        | 4,844 
|6 to 12 months                                    |  |                        | 7,794 
|Over 12 months                                    |  |                        | 18,068
|                                                  |  |                        |       
|TOTAL CERTIFICATES OF DEPOSIT OF $100,000 OR MORE |  | $                      | 33,336
|                                                  |  |                        |       



SHORT-TERM BORROWED FUNDS



|                                               |  |                        |        |      |   |        |  |   |       
|---------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                               |  | December 31,          
|                                               |  | 2004                   |        | 2003 |   | 2002  
|                                               |  | (Dollars in Thousands)
|Securities sold under agreements to repurchase |  | $                      | 18,947 |      | $ | 19,141 |  | $ | 16,719
|Other borrowed funds                           |  |                        | 26     |      |   | 26     |  |   | 26    
|                                               |  |                        |        |      |   |        |  |   |       
|TOTAL BORROWED FUNDS                           |  | $                      | 18,973 |      | $ | 19,167 |  | $ | 16,745
|                                               |  |                        |        |      |   |        |  |   |       



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:



|                                             |  |      |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                             |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Average interest rates at December 31        |  |      | 1.07   | % |      |   | 0.34   | %    |  |   | 0.56   | %
|Maximum amounts outstanding at any month-end |  | $    | 20,024 |   |      | $ | 19,141 |      |  | $ | 20,880 |  
|Average daily amount outstanding             |  | $    | 16,697 |   |      | $ | 15,524 |      |  | $ | 17,340 |  
|Weighted average interest rates              |  |      | 0.52   | % |      |   | 0.48   | %    |  |   | 0.91   | %



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



Capital Resources



We increased
the total per share dividend for 2004 to $0.88 per share, an increase of 3.5%, from the $0.85 per share paid in 2003 and 2002. Cash dividends paid to stockholders during 2004 totaled $1,752,000, following $1,692,000 in 2003 and $1,694,000 for 2002.
This represents a dividend pay out ratio (dividends divided by net income) of 58% in 2004, 61% in 2003 and 50% in 2002. We are dependent upon dividends paid by FCBNA to fund dividends to the stockholders and to cover other operating costs. Our 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 our financial results, capital requirements and general
economic conditions.



One of our primary objectives is to maintain a strong
capital position. Stockholders equity increased $795,000 or 2.3% in 2004. This increase resulted primarily from an increase in retained earnings of $1,303,000; offset by a decrease in accumulated other comprehensive income of $503,000. At
December 31, 2004, we had approval to repurchase 10,800 shares



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of the Corporations common stock. This was increased to 30,800 shares in the first quarter of 2005. The percentage of earnings reinvested in the
Corporation (net income less dividends as a percentage of net income) for the years 2004, 2003 and 2002 was 42%, 39% and 50%, 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 3.7% in 2004, 3.3% in 2003 and 5.1% in 2002.



REGULATORY CAPITAL



|                         |  |        |   |  |                                      |   |  |          |  
|------------------------ |  | ------ | - |  | ------------------------------------ | - |  | -------- | -
|Entity                   |  | Tier 1 |   |  | Combined Capital (Tier 1 and Tier 2) |   |  | Leverage |  
|Consolidated             |  | 11.47  | % |  | 12.58                                | % |  | 8.26     | %
|First Century Bank, N.A. |  | 11.02  | % |  | 12.13                                | % |  | 7.94     | %



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. Our Tier I
capital, which consists of stockholders equity, adjusted for certain intangible assets, amounted to $30,600,000 at December 31, 2004, or 11.47% of total risk-weighted assets, compared to $29,302,000 at December 31, 2003, or 11.03% 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. Our Tier II capital
amounted to $2,957,000 at December 31, 2004, or 1.11% of total risk-weighted assets, compared to $3,075,000 at December 31, 2003, or 1.15% of total risk-weighted assets. Our total consolidated risk-based capital was $33,557,000 at December 31, 2004,
or 12.58% of total risk-weighted assets, compared to $32,377,000, or 12.18% of total risk-weighted assets as of December 31, 2003. Additionally, risk-based capital guidelines require that we maintain 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. We have not been advised by any regulatory agency of any additional
specific minimum leverage ratio applicable to us. As of December 31, 2004 and 2003, the Corporations leverage ratio was 8.26% and 8.30% respectively; therefore, we exceeded all current minimum capital requirements.



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| |  | First Century Bankshares, Inc.    Page 13



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Asset and Liability Management and Interest Rate Sensitivity



Our income stream is subject to risk resulting from interest rate fluctuations to the extent
there is a difference between the amount of our interest-earning assets and the amount of our 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. We use 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.



We continue our efforts to generate variable rate loans. However, with strong competition for loans, and with the potential for rising interest rates, customers are
demanding more fixed rate commitments. The results of our efforts to balance interest-earning assets against interest-bearing liabilities can be seen in the Analysis of Interest Rate Sensitivity table.



We continue to monitor 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. Using simulation modeling allows us to evaluate earnings
and capital at risk due to significant changes in interest rates. We monitor 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, 2004, simulation indicated the impact of
a 200 basis point increase in rates would result in a 3.0% increase in net interest income, while a 200 basis point decline in rates would result in a 7.1% decrease in net interest income from an unchanged rate environment. These changes fall within
our policy limit of 10% for the maximum negative impact to net interest income from a change in interest rates.



|                                          |  | 
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ANALYSIS OF INTEREST RATE SENSITIVITY



An analysis of interest rate sensitivity as of December 31, 2004, is shown below.



|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|-------------------------------------------------------------------- |  | ---------------------- | ------- | - | ------ | - | ------- | ----- |  | - | ------- | - |  | ------ | ------- | - |  | - | -------
|                                                                     |  | Months                 |         |   | Years  |   |         |      
|                                                                     |  | Less Than 3            |         |   | 3  12 |   |         | 1  5 |  |   | Over 5  |   |  | Totals
|                                                                     |  | (Dollars in Thousands)
|Investment securities                                                |  | $                      | 12,694  |   |        | $ | 20,864  |       |  | $ | 55,289  |   |  | $      | 5,305   |   |  | $ | 94,152 
|Federal funds sold and interest-bearing balances with banks          |  |                        | 7,042   |   |        |   |        |       |  |   |        |   |  |        |        |   |  |   | 7,042  
|Loans                                                                |  |                        | 94,485  |   |        |   | 52,802  |       |  |   | 75,004  |   |  |        | 25,517  |   |  |   | 247,808
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|Interest-earning assets                                              |  | $                      | 114,221 |   |        | $ | 73,666  |       |  | $ | 130,293 |   |  | $      | 30,822  |   |  | $ | 349,002
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|Time deposits                                                        |  | $                      | 17,136  |   |        | $ | 56,061  |       |  | $ | 56,223  |   |  | $      |        |   |  | $ | 129,420
|Other interest-bearing deposits                                      |  |                        | 12,947  |   |        |   | 39,718  |       |  |   | 94,079  |   |  |        |        |   |  |   | 146,744
|Other interest-bearing liabilities                                   |  |                        | 16,742  |   |        |   | 2,205   |       |  |   | 0       |   |  |        | 26      |   |  |   | 18,973 
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|Interest-bearing liabilities                                         |  | $                      | 46,825  |   |        | $ | 97,984  |       |  | $ | 150,302 |   |  | $      | 26      |   |  | $ | 295,137
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|Interest sensitivity gap                                             |  | $                      | 67,396  |   |        | $ | (24,318 | )     |  | $ | (20,009 | ) |  | $      | 30,796  |   |  | $ | 53,865 
|Cumulative interest sensitivity gap                                  |  | $                      | 67,396  |   |        | $ | 43,078  |       |  | $ | 23,069  |   |  | $      | 53,865  |   |  |   |        
|Ratio of interest-earning assets to interest-bearing liabilities     |  |                        | 2.44    | x |        |   | 0.75    | x     |  |   | 0.87    | x |  |        | 1185.46 | x |  |   |        
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        
|Ratio of cumulative interest sensitivity gap to total earning assets |  |                        | 19.31   | % |        |   | 12.34   | %     |  |   | 6.61    | % |  |        | 15.43   | % |  |   |        
|                                                                     |  |                        |         |   |        |   |         |       |  |   |         |   |  |        |         |   |  |   |        



Liquidity Management



Liquidity management involves our 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 that we are positioned to meet immediate and future cash demands, we rely 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 cash flows. Our primary source of cash flows is from operating activities. Operating activities provided $4,929,000 of liquidity for the year ended December 31,
2004, compared to $5,467,000 and $7,118,000 in 2003 and 2002, 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 2004, cash flows from financing activities increased
$11,581,000, primarily due to increased deposits of $13,532,000. These funds were utilized primarily to fund increased loan demand of $778,000, and net additions to investment securities of $15,708,000.



A secondary source of liquidity comes from investing activities, principally the maturities
of investment securities. During 2004, interest rates stabilized in the first half of the year and began to rise during the second half of the year. This resulted in maturities and calls of investment securities decreasing to $33,344,000, compared
to $68,867,000 in 2003 and $57,122,000 in 2002. As of December 31, 2004, we had approximately $50,849,000 of investment securities that mature within 36 months.



We also have access to additional sources of liquidity through the Federal Reserve System and through our membership in the Federal Home Loan Bank system. As of
December 31, 2004, 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. As a member, we are required to
own stock in the Federal Home Loan Bank of Pittsburgh. The amount of stock we own is based on the amount of outstanding borrowings at any given point in time. Borrowings are also collateralized by a blanket lien by the Federal Home Loan Bank on its
members qualifying assets.



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| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 15



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At December 31, 2004, FCBNA owned $799,100 of stock for which we had $2,941,000 outstanding from our overnight repo
account. We had no other outstanding advances from the Federal Home Loan Bank of Pittsburgh as of December 31, 2004.



As a member of the Federal Reserve System, we have 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 we would discontinue our membership in 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 us to pledge assets of FCBNA as collateral, and we would be expected to repay any borrowings as soon as possible.



Income Statement Analysis



Earnings Overview



Net income for 2004 was $3,055,000 or $1.53 per diluted share, an increase of $263,000 or 9.4% from the $2,792,000 or $1.40 per diluted share earned in 2003, but $320,000
less than the $3,375,000 or $1.69 per diluted share earned in 2002. Earnings for 2004 reflect an increase in net interest income of $204,000, or 1.4%, due primarily to our ability to reduce net interest expense on deposits in a historically low
interest rate environment relative to the reinvestment options for loans and investment securities. Additionally, pension expense of approximately $433,000 for 2004, compared with $743,000 for 2003, resulted from lump sum distributions from our
employee pension plan that triggered recognition of previously deferred actuarial losses, under the accounting provisions set forth in SFAS No. 88. Our ongoing efforts to enhance asset quality further enhanced earnings for the year ended December
31, 2004, through a decrease in the provision for loan losses of $429,000.



Earnings for 2004 resulted in a return on average assets (ROAA) of 0.83%, compared with 0.77% for 2003, and 0.92% for 2002. Our return on average equity (ROAE) was 8.67% for 2004, compared with 8.27% for 2003, and 10.27% for 2002.



Earnings Per Share



The Earnings Per Share Table summarizes the principal sources of changes in earnings per
share for 2004. For further details on the computation of earnings per share, refer to Note 9 of the Notes to Consolidated Financial Statements, presented elsewhere in this report.



EARNINGS PER SHARE



|                                      |  |   |       |  
|------------------------------------- |  | - | ----- | -
|Net income per share  2003           |  | $ | 1.40  |  
|                                      |  |   |       |  
|Increase (decrease) due to change in: |  |   |       |  
|Net interest income                   |  |   | 0.10  |  
|Provision for loan losses             |  |   | 0.22  |  
|Other operating income                |  |   | (0.12 | )
|Personnel expense                     |  |   | 0.19  |  
|Other expense                         |  |   | (0.26 | )
|                                      |  |   |       |  
|Net income per share  2004           |  | $ | 1.53  |  
|                                      |  |   |       |  



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|----------------------------------------- |  | 
|Page 16    First Century Bankshares, Inc. |  | 



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Net Interest Income



The major portion of our 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 2004 net interest income increased $204,000 or 1.4%. This followed a 9.5% decrease in 2003, and a 2.8% increase in 2002. Net interest income resulted in a net interest margin of 4.25% for
2004, compared with 4.31% for 2003, and 4.67% for 2002.



For the year ended
December 31, 2004, interest income decreased $208,000, or approximately 1.2%, compared to a decrease of $3,455,000, or 16.0% for 2003, and a decrease of $4,073,000, or 15.9% for 2002. Interest on loans, which decreased $258,000 or 1.7%, contributed
to the decrease for 2004. Interest on securities increased $67,000, or 2.1% for 2004. Interest income reflects a yield on average earnings assets of 5.28% for 2004, compared with 5.50% for 2003 and 6.43% for 2002.



The decrease in interest income was accompanied by a decrease in interest expense of $412,000
or 10.5% for 2004. This followed a decrease in interest expense of $1,974,000, or 33.5% for 2003, and a decrease of $4,500,000, or 43.3% for 2002. Interest expense reflects a cost on average interest-bearing liabilities of 1.21% for 2004, compared
with 1.37% for 2003 and 1.99% for 2002.



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 2004 illustrates
the asset sensitive structure of our balance sheet as repricing opportunities occurred in our loan portfolio during the second half of 2004. It also reflects the income provided by having additional assets in investment securities.



Provision for Loan Losses



We experienced a 65.7% decrease in the provision for loan losses during 2004. The provision
for loan losses was $224,000 for 2004, compared to $653,000 for 2003 and $1,785,000 for 2002. The provision for loan losses as a percentage of average loans was 0.09% for 2004, compared with 0.27% for 2003, and 0.76% for 2002. Several factors
contributed to the decreased provision in 2004, including decreased charge-offs of approximately $115,000, primarily in certain consumer and commercial mortgage loans, along with additional recoveries of $69,000 in the commercial mortgage sector.
The ratio of net charge offs to average loans outstanding was 0.16% for 2004, compared with 0.24% for 2003, and 0.83% for 2002. In evaluating the loan portfolio at December 31, 2004, with the improved level of nonaccrual and past-due loans, we
anticipated that loan losses will remain stable in 2005.



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| |  | First Century Bankshares, Inc.    Page 17



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Noninterest Income and Expense



Noninterest income net of securities gains and losses decreased $164,000 or 4.2% in 2004, following a $337,000 or 17.9% decrease in 2003,
and a $485,000 or 12.9% increase in 2002. The largest component of noninterest income is fees from fiduciary activities. Fees from fiduciary activities decreased approximately $78,000 in 2004, following increases of $81,000 in 2003 and $7,000 in
2002. The fluctuation in fiduciary fees can be attributed by the timing of the receipt of fees from estate settlements. The second largest component of noninterest income is service charges on deposit accounts. These fees decreased approximately
$69,000, or 5.4% in 2004 and $59,000 or 4.4% in 2003, after an increase of approximately $85,000 or 6.8% in 2002. We are evaluating our pricing and product lines to find ways to improve our performance in this area. The most significant factor
contributing to the decreases from 2002 was a $475,000 one-time recovery that resulted from the settlement of certain litigation surrounding a check-kiting scheme that is reflected in other noninterest income for 2002.



Noninterest expense, excluding the provision for loan losses, decreased 0.3% in 2004,
following a 2.8% decrease in 2003 and a 4.6% decrease in 2002. Personnel expense is the largest component of noninterest expense. Personnel expense decrease 5.2% in 2004, following increases of 7.0% in 2003, and 6.7% in 2002. In 2004 and 2003,
significant lump-sum distributions from our pension plan triggered accelerated recognition of previously deferred actuarial losses under the accounting provisions set forth in 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.
For additional discussion of our employee benefit programs, refer to Note 11 of the Notes to Consolidated Financial Statements, presented elsewhere in this report. We were successful in 2004 in reducing our staffing levels through attrition which
further reduced our personnel related expenses. We remain committed to improving operational efficiency throughout the organization while keeping personnel expense at an adequate level to attract and retain competent staff. The reductions in
personnel expense for 2004 generally offset increases in the various other components of noninterest expense.



Income Taxes



Applicable income
taxes for 2004 increased $156,000 or 9.9%. This followed a $397,000 or 20.1% decrease for 2003, and an $851,000 or 75.7% increase for 2002. Income taxes computed at the statutory rate are reduced primarily by interest earned on state and municipal
obligations. For additional discussion of the Corporations tax position, refer to Note 12 of the Notes to Consolidated Financial Statements, presented elsewhere in this report.



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RETURN ON EQUITY AND ASSETS



|                                                                                 |  |              |   |  |       |   |  |       |  
|-------------------------------------------------------------------------------- |  | ------------ | - |  | ----- | - |  | ----- | -
|                                                                                 |  | December 31, |  
|                                                                                 |  | 2004         |   |  | 2003  |   |  | 2002  |  
|Percentage of net income to:                                                     |  |              |   |  |       |   |  |       |  
|Average stockholders equity                                                     |  | 8.67         | % |  | 8.27  | % |  | 10.27 | %
|Average total assets                                                             |  | 0.83         | % |  | 0.77  | % |  | 0.92  | %
|Percentage of dividends declared per common share to net income per common share |  | 57.52        | % |  | 60.71 | % |  | 50.30 | %
|Percentage of average stockholders equity to average total assets               |  | 9.57         | % |  | 9.35  | % |  | 8.93  | %



The Effects of Inflation and
Changing Prices



Our company is affected by inflation in several ways,
but not to the same extent as a company that makes large capital expenditures or has a large investment in inventory. Our 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 our 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 controlling noninterest expense.



Accounting, Legislative and Regulatory Matters



In March 2004, the Financial Accounting Standards Board (FASB) Emerging Issues Task Force
(EITF) released Issue 03-01, Meaning of Other Than Temporary Impairment, which addressed other-than-temporary impairment for certain debt and equity investments. The recognition and measurement requirements of Issue 03-01, and other
disclosure requirements not already implemented, were effective for periods beginning after June 15, 2004. In September 2004, the FASB staff issued FASB Staff Position (FSP) EITF 03-1-1, which delayed the effective date for certain measurement and
recognition guidance contained in Issue 03-1. The FSP requires the application of pre-existing other-than-temporary guidance during the period of delay until a final consensus is reached. We do not anticipate the issuance of the final consensus will
have a material impact on our financial condition, the results of operations, or liquidity.



On March 9, 2004, the SEC issued Staff Accounting Bulletin 105 (SAB 105), Application of Accounting Principles to Loan Commitments. SAB 105 provides guidance on the initial recognition and measurement of
loan commitments that meet the definition of a derivative in paragraph 6 of FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133), as amended by SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities, and summarizes the related disclosure requirements. SAB 105 applies to all loan commitments accounted for as derivatives as of April 1, 2004. Adopting the provisions of SAB 105 did not have a
material impact on our financial condition, results of operations or liquidity.



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| |  | First Century Bankshares, Inc.    Page 19



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In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) is a revision of SFAS
No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95 Statement of Cash
Flows. SFAS No. 123(R) eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25 and requires all share-based payments to employees, including grants of employee stock options, to be recognized in the
financial statements using a fair value-based method. SFAS No. 123(R) is effective as of the beginning of the first interim period that begins after June 15, 2005. We do not expect the adoption of the provisions of SFAS No. 123(R) to have a
significant impact on our financial condition, results of operations or liquidity.



In December 2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. This statement amends the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets exchanged and more broadly provides for exceptions regarding exchanges of nonmonetary assets that do not have commercial substance. This Statement is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. We do not expect the adoption of this standard to have a material impact on our financial condition, results of operations, or liquidity.



On March 2, 2005, the Securities and Exchange Commission extended the compliance dates for
non-accelerated filers and regarding amendments to its rules under the Securities Exchange Act of 1934 that were adopted on June 5, 2003, pursuant to Section 404 of the Sarbanes-Oxley Act. The amendments require a company to include in its annual
reports a report by management on the companys internal control over financial reporting and an accompanying auditors report. Under the latest extension, we must begin to comply with the internal control over financial reporting
requirements for our first fiscal year ending on or after July 15, 2006. This is a one-year extension from the previously established July 15, 2005, compliance date. The Commission similarly has extended the compliance date relating to requirements
regarding evaluation of internal control over financial reporting and management certification requirements. We do not believe this extension will significantly affect our efforts to comply with Section 404, other than to delay the expense of the
independent accountants report for one year.



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|Page 20    First Century Bankshares, Inc. |  | 



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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 2004 and 2003. Also presented below are the dividends paid for those respective years. The number of stockholders of record on December 31, 2004,
was 530 and outstanding shares totaled 1,990,800.



PER SHARE DATA BY
QUARTER



|               |  |           |      |      |   |                   |  |     |       |      |   |       |  |   |       |  |   |      
|-------------- |  | --------- | ---- | ---- | - | ----------------- |  | --- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|               |  |           |      |      |   | Market Quotations
|               |  | Dividends |      | 2004 |   | 2003             
|               |  | 2004      |      | 2003 |   | High              |  | Low |       | High |   | Low  
|Quarter        |  |           |      |      |   |                   |  |     |       |      |   |       |  |   |       |  |   |      
|First Quarter  |  | $         | 0.21 |      | $ | 0.20              |  | $   | 22.00 |      | $ | 20.75 |  | $ | 18.50 |  | $ | 18.00
|Second Quarter |  |           | 0.21 |      |   | 0.20              |  |     | 21.98 |      |   | 20.15 |  |   | 20.25 |  |   | 18.10
|Third Quarter  |  |           | 0.21 |      |   | 0.20              |  |     | 22.75 |      |   | 21.00 |  |   | 23.25 |  |   | 20.00
|Fourth Quarter |  |           | 0.25 |      |   | 0.25              |  |     | 25.50 |      |   | 21.35 |  |   | 22.50 |  |   | 20.75



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| |  | First Century Bankshares, Inc.    Page 21



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Trust Asset Responsibility



Assets managed by our Trust and Investment Services Department are presented in the graph below at market value. These assets are not
included in the financial statements contained elsewhere in this report.



LOGO



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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|Page 22    First Century Bankshares, Inc. |  | 



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CONDENSED STATEMENTS OF FINANCIAL CONDITION



Statistical Summary, 2004  2000



|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|------------------------------------ |  | --------------------------------------------- | ------- | - | - | --- | - | ---- | - | ------- | - |  | --- | ---- |  | - | ------- | - |  | ---- | - |  | - | ------- | - | ---- | --- | - | - | - | ------- | - |  | --- | -
|                                     |  | December 31,                                  |        
|                                     |  | 2004                                          |         |   | % |     |   | 2003 |   |         | % |  |     | 2002 |  |   | %       |   |  | 2001 |   |  | % |         |   | 2000 |     |   | % |  
|                                     |  | (Dollars in Thousands, Except per share Data) |        
|Loans                                |  | $                                             | 247,808 |   |   | 66  |   |      | $ | 246,950 |   |  | 68  |      |  | $ | 236,460 |   |  | 65   |   |  | $ | 244,068 |   |      | 66  |   |   | $ | 244,727 |   |  | 65  |  
|Securities                           |  |                                               | 94,152  |   |   | 25  |   |      |   | 78,444  |   |  | 22  |      |  |   | 88,949  |   |  | 25   |   |  |   | 87,519  |   |      | 24  |   |   |   | 92,770  |   |  | 25  |  
|Federal funds sold                   |  |                                               | 4,000   |   |   | 1   |   |      |   | 4,000   |   |  | 1   |      |  |   |        |   |  |     |   |  |   | 2,000   |   |      | 1   |   |   |   |        |   |  |    |  
|Interestbearing deposits with banks |  |                                               | 3,042   |   |   | 1   |   |      |   | 1,002   |   |  |    |      |  |   | 1,871   |   |  | 1    |   |  |   | 862     |   |      |    |   |   |   | 1,627   |   |  |    |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|INTEREST-EARNING ASSETS              |  |                                               | 349,002 |   |   | 93  |   |      |   | 330,396 |   |  | 91  |      |  |   | 327,280 |   |  | 91   |   |  |   | 334,449 |   |      | 91  |   |   |   | 339,124 |   |  | 90  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Cash and due from banks              |  |                                               | 9,974   |   |   | 3   |   |      |   | 14,576  |   |  | 4   |      |  |   | 14,947  |   |  | 4    |   |  |   | 15,427  |   |      | 4   |   |   |   | 14,118  |   |  | 4   |  
|Premises and equipment               |  |                                               | 12,268  |   |   | 3   |   |      |   | 11,697  |   |  | 3   |      |  |   | 10,500  |   |  | 3    |   |  |   | 10,651  |   |      | 3   |   |   |   | 10,487  |   |  | 3   |  
|Other assets                         |  |                                               | 9,735   |   |   | 2   |   |      |   | 10,133  |   |  | 3   |      |  |   | 11,542  |   |  | 3    |   |  |   | 11,856  |   |      | 3   |   |   |   | 13,627  |   |  | 4   |  
|Allowance for loan losses            |  |                                               | (2,900  | ) |   | (1  | ) |      |   | (3,075  | ) |  | (1  | )    |  |   | (3,005  | ) |  | (1   | ) |  |   | (3,180  | ) |      | (1  | ) |   |   | (3,180  | ) |  | (1  | )
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL ASSETS                         |  | $                                             | 378,079 |   |   | 100 |   |      | $ | 363,727 |   |  | 100 |      |  | $ | 361,264 |   |  | 100  |   |  | $ | 369,203 |   |      | 100 |   |   | $ | 374,176 |   |  | 100 |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Savings deposits                     |  | $                                             | 146,744 |   |   | 39  |   |      | $ | 144,294 |   |  | 40  |      |  | $ | 143,931 |   |  | 40   |   |  | $ | 145,130 |   |      | 39  |   |   | $ | 148,572 |   |  | 40  |  
|Time deposits                        |  |                                               | 129,420 |   |   | 34  |   |      |   | 122,262 |   |  | 34  |      |  |   | 124,814 |   |  | 34   |   |  |   | 135,252 |   |      | 37  |   |   |   | 143,253 |   |  | 38  |  
|Other interestbearing liabilities   |  |                                               | 18,973  |   |   | 5   |   |      |   | 19,167  |   |  | 5   |      |  |   | 16,745  |   |  | 5    |   |  |   | 17,020  |   |      | 5   |   |   |   | 13,487  |   |  | 4   |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|INTEREST-BEARING LIABILITIES         |  |                                               | 295,137 |   |   | 78  |   |      |   | 285,723 |   |  | 79  |      |  |   | 285,490 |   |  | 79   |   |  |   | 297,402 |   |      | 81  |   |   |   | 305,312 |   |  | 82  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|Demand deposits                      |  |                                               | 45,087  |   |   | 12  |   |      |   | 41,163  |   |  | 11  |      |  |   | 39,202  |   |  | 11   |   |  |   | 36,991  |   |      | 10  |   |   |   | 35,511  |   |  | 10  |  
|Other liabilities                    |  |                                               | 2,066   |   |   | 1   |   |      |   | 1,847   |   |  |    |      |  |   | 2,754   |   |  | 1    |   |  |   | 1,843   |   |      |    |   |   |   | 1,671   |   |  |    |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL LIABILITIES                    |  |                                               | 342,290 |   |   | 91  |   |      |   | 328,733 |   |  | 90  |      |  |   | 327,446 |   |  | 91   |   |  |   | 336,236 |   |      | 91  |   |   |   | 342,494 |   |  | 92  |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|STOCKHOLDERS EQUITY                 |  |                                               | 35,789  |   |   | 9   |   |      |   | 34,994  |   |  | 10  |      |  |   | 33,818  |   |  | 9    |   |  |   | 32,967  |   |      | 9   |   |   |   | 31,682  |   |  | 8   |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL LIABILITIES & EQUITY           |  | $                                             | 378,079 |   |   | 100 |   |      | $ | 363,727 |   |  | 100 |      |  | $ | 361,264 |   |  | 100  |   |  | $ | 369,203 |   |      | 100 |   |   | $ | 374,176 |   |  | 100 |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|TOTAL DEPOSITS                       |  | $                                             | 321,251 |   |   |     |   |      | $ | 307,719 |   |  |     |      |  | $ | 307,947 |   |  |      |   |  | $ | 317,373 |   |      |     |   |   | $ | 327,336 |   |  |     |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|BOOK VALUE PER SHARE                 |  | $                                             | 17.98   |   |   |     |   |      | $ | 17.58   |   |  |     |      |  | $ | 16.99   |   |  |      |   |  | $ | 16.48   |   |      |     |   |   | $ | 15.84   |   |  |     |  
|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  



SUMMARY OF OPERATIONS



Statistical Summary, 2004  2000



|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|-------------------------- |  | --------------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                           |  | Years Ended December 31,                      |       
|                           |  | 2004                                          |        |   | 2003 |   |        | 2002 |  |   | 2001   |   |  | 2000 |       
|                           |  | (Dollars in Thousands, Except per share Date) |       
|Interest income            |  | $                                             | 17,871 |   |      | $ | 18,079 |      |  | $ | 21,534 |   |  | $    | 25,607 |   |  | $ | 27,923 |  
|Interest expense           |  |                                               | 3,500  |   |      |   | 3,912  |      |  |   | 5,886  |   |  |      | 10,386 |   |  |   | 12,222 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|NET INTEREST MARGIN        |  |                                               | 14,371 |   |      |   | 14,167 |      |  |   | 15,648 |   |  |      | 15,221 |   |  |   | 15,701 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Provision for loan losses  |  |                                               | 224    |   |      |   | 653    |      |  |   | 1,785  |   |  |      | 2,334  |   |  |   | 1,209  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Net credit margin          |  |                                               | 14,147 |   |      |   | 13,514 |      |  |   | 13,863 |   |  |      | 12,887 |   |  |   | 14,492 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Noninterest income         |  |                                               | 3,734  |   |      |   | 3,981  |      |  |   | 4,251  |   |  |      | 3,766  |   |  |   | 3,343  |  
|Noninterest expense        |  |                                               | 13,092 |   |      |   | 13,125 |      |  |   | 12,764 |   |  |      | 13,384 |   |  |   | 13,089 |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|INCOME BEFORE INCOME TAXES |  |                                               | 4,789  |   |      |   | 4,370  |      |  |   | 5,350  |   |  |      | 3,269  |   |  |   | 4,746  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Provision for income taxes |  |                                               | 1,734  |   |      |   | 1,578  |      |  |   | 1,975  |   |  |      | 1,124  |   |  |   | 1,665  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|NET INCOME                 |  | $                                             | 3,055  |   |      | $ | 2,792  |      |  | $ | 3,375  |   |  | $    | 2,145  |   |  | $ | 3,081  |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|EARNINGS PER COMMON SHARE: |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Basic                      |  | $                                             | 1.53   |   |      | $ | 1.40   |      |  | $ | 1.69   |   |  | $    | 1.07   |   |  | $ | 1.54   |  
|Diluted                    |  | $                                             | 1.53   |   |      | $ | 1.40   |      |  | $ | 1.69   |   |  | $    | 1.07   |   |  | $ | 1.54   |  
|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Dividends per common share |  | $                                             | 0.88   |   |      | $ | 0.85   |      |  | $ | 0.85   |   |  | $    | 0.85   |   |  | $ | 0.85   |  
|Payout ratio               |  |                                               | 58     | % |      |   | 61     | %    |  |   | 50     | % |  |      | 79     | % |  |   | 55     | %



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



---

Consolidated Statements of Financial Condition



|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                 |  | December 31,                                 |        
|                                                                                                                                                                                                                                 |  | 2004                                         |         |   | 2003 |  
|                                                                                                                                                                                                                                 |  | (Dollars in Thousands,Except Per Share Data) |        
|ASSETS                                                                                                                                                                                                                           |  |                                              |         |  
|Cash and due from banks                                                                                                                                                                                                          |  | $                                            | 9,974   |   |      | $ | 14,576  |  
|Interest-bearing balances with banks                                                                                                                                                                                             |  |                                              | 3,042   |   |      |   | 1,002   |  
|Federal funds sold                                                                                                                                                                                                               |  |                                              | 4,000   |   |      |   | 4,000   |  
|Securities available for sale                                                                                                                                                                                                    |  |                                              | 80,013  |   |      |   | 65,258  |  
|Securities held to maturity (estimated fair value of $13,146 in 2004 and $12,449 in 2003)                                                                                                                                        |  |                                              | 12,957  |   |      |   | 12,163  |  
|Federal Home Loan Bank and Federal Reserve Bank Stock                                                                                                                                                                            |  |                                              | 1,182   |   |      |   | 1,023   |  
|Loans                                                                                                                                                                                                                            |  |                                              | 247,808 |   |      |   | 246,950 |  
|Less allowance for loan losses                                                                                                                                                                                                   |  |                                              | 2,900   |   |      |   | 3,075   |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|Net loans                                                                                                                                                                                                                        |  |                                              | 244,908 |   |      |   | 243,875 |  
|Premises and equipment, net                                                                                                                                                                                                      |  |                                              | 12,268  |   |      |   | 11,697  |  
|Other assets                                                                                                                                                                                                                     |  |                                              | 9,735   |   |      |   | 10,133  |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|TOTAL ASSETS                                                                                                                                                                                                                     |  | $                                            | 378,079 |   |      | $ | 363,727 |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                             |  |                                              |         |   |      |   |         |  
|Deposits:                                                                                                                                                                                                                        |  |                                              |         |   |      |   |         |  
|Noninterest-bearing                                                                                                                                                                                                              |  | $                                            | 45,087  |   |      | $ | 41,163  |  
|Interest-bearing                                                                                                                                                                                                                 |  |                                              | 276,164 |   |      |   | 266,556 |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|Total deposits                                                                                                                                                                                                                   |  |                                              | 321,251 |   |      |   | 307,719 |  
|Short-term borrowings                                                                                                                                                                                                            |  |                                              | 18,973  |   |      |   | 19,167  |  
|Other liabilities                                                                                                                                                                                                                |  |                                              | 2,066   |   |      |   | 1,847   |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|TOTAL LIABILITIES                                                                                                                                                                                                                |  |                                              | 342,290 |   |      |   | 328,733 |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|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, 2004 and 2003; 1,990,800 shares
outstanding at December 31, 2004, and 1,991,000 shares outstanding at December 31, 2003 |  |                                              | 2,500   |   |      |   | 2,500   |  
|Paid-in capital                                                                                                                                                                                                                  |  |                                              | 785     |   |      |   | 785     |  
|Retained earnings                                                                                                                                                                                                                |  |                                              | 32,650  |   |      |   | 31,347  |  
|Accumulated other comprehensive income, net of tax                                                                                                                                                                               |  |                                              | 6       |   |      |   | 509     |  
|Treasury stock, at cost; 9,200 shares at December 31, 2004 and 9,000 shares at December 31, 2003                                                                                                                                 |  |                                              | (152    | ) |      |   | (147    | )
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                       |  |                                              | 35,789  |   |      |   | 34,994  |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                       |  | $                                            | 378,079 |   |      | $ | 363,727 |  
|                                                                                                                                                                                                                                 |  |                                              |         |   |      |   |         |  



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



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



---

Consolidated Statements of Income



|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|-------------------------------------------------------------------------------------- |  | --------------------------------------------- | --------- | - | ---- | - | --------- |  | - | ---------
|                                                                                       |  | Years Ended December 31,                     
|                                                                                       |  | 2004                                          |           |   | 2003 |   | 2002     
|                                                                                       |  | (Dollars in Thousands, Except Per Share Data)
|INTEREST INCOME                                                                        |  |                                               |           |   |      |   |           |  |   |          
|Interest and fees on loans                                                             |  | $                                             | 14,618    |   |      | $ | 14,876    |  | $ | 16,675   
|Interest on balances with banks                                                        |  |                                               | 14        |   |      |   | 16        |  |   | 68       
|Interest and dividends from securities available for sale:                             |  |                                               |           |   |      |   |           |  |   |          
|Taxable                                                                                |  |                                               | 2,675     |   |      |   | 2,674     |  |   | 4,212    
|Interest and dividends from securities held to maturity:                               |  |                                               |           |   |      |   |           |  |   |          
|Taxable                                                                                |  |                                               | 73        |   |      |   | 47        |  |   | 78       
|Tax-exempt                                                                             |  |                                               | 456       |   |      |   | 416       |  |   | 432      
|Interest on federal funds sold                                                         |  |                                               | 35        |   |      |   | 50        |  |   | 69       
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|TOTAL INTEREST INCOME                                                                  |  |                                               | 17,871    |   |      |   | 18,079    |  |   | 21,534   
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|INTEREST EXPENSE                                                                       |  |                                               |           |   |      |   |           |  |   |          
|Interest on time certificates of $100,000 or more                                      |  |                                               | 813       |   |      |   | 875       |  |   | 1,082    
|Interest on other deposits                                                             |  |                                               | 2,600     |   |      |   | 2,962     |  |   | 4,645    
|Interest on federal funds purchased and securities sold under agreements to repurchase |  |                                               | 76        |   |      |   | 73        |  |   | 157      
|Interest on demand notes to U. S. Treasury and other indebtedness                      |  |                                               | 11        |   |      |   | 2         |  |   | 2        
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|TOTAL INTEREST EXPENSE                                                                 |  |                                               | 3,500     |   |      |   | 3,912     |  |   | 5,886    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|Net interest income                                                                    |  |                                               | 14,371    |   |      |   | 14,167    |  |   | 15,648   
|Provision for loan losses                                                              |  |                                               | 224       |   |      |   | 653       |  |   | 1,785    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|Net interest income after provision for loan losses                                    |  |                                               | 14,147    |   |      |   | 13,514    |  |   | 13,863   
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|NONINTEREST INCOME                                                                     |  |                                               |           |   |      |   |           |  |   |          
|Income from fiduciary activities                                                       |  |                                               | 1,410     |   |      |   | 1,488     |  |   | 1,407    
|Service charges on deposit accounts                                                    |  |                                               | 1,202     |   |      |   | 1,271     |  |   | 1,330    
|Other noninterest income                                                               |  |                                               | 1,138     |   |      |   | 1,155     |  |   | 1,514    
|Securities gains (losses)                                                              |  |                                               | (16       | ) |      |   | 67        |  |   |         
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|TOTAL NONINTEREST INCOME                                                               |  |                                               | 3,734     |   |      |   | 3,981     |  |   | 4,251    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|NONINTEREST EXPENSE                                                                    |  |                                               |           |   |      |   |           |  |   |          
|Salaries, wages, and other employee benefits                                           |  |                                               | 7,062     |   |      |   | 7,449     |  |   | 6,960    
|Premises and equipment                                                                 |  |                                               | 2,122     |   |      |   | 1,964     |  |   | 1,869    
|Data processing                                                                        |  |                                               | 735       |   |      |   | 708       |  |   | 788      
|Advertising and public relations                                                       |  |                                               | 221       |   |      |   | 202       |  |   | 205      
|Postage                                                                                |  |                                               | 232       |   |      |   | 246       |  |   | 258      
|Telephone                                                                              |  |                                               | 280       |   |      |   | 235       |  |   | 182      
|Supplies and printing                                                                  |  |                                               | 293       |   |      |   | 290       |  |   | 344      
|Other noninterest expense                                                              |  |                                               | 2,147     |   |      |   | 2,031     |  |   | 2,158    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|TOTAL NONINTEREST EXPENSE                                                              |  |                                               | 13,092    |   |      |   | 13,125    |  |   | 12,764   
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|Income before income taxes                                                             |  |                                               | 4,789     |   |      |   | 4,370     |  |   | 5,350    
|Provision for income taxes                                                             |  |                                               | 1,734     |   |      |   | 1,578     |  |   | 1,975    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|NET INCOME                                                                             |  | $                                             | 3,055     |   |      | $ | 2,792     |  | $ | 3,375    
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|NET INCOME PER COMMON SHARE:                                                           |  |                                               |           |   |      |   |           |  |   |          
|Basic                                                                                  |  | $                                             | 1.53      |   |      | $ | 1.40      |  | $ | 1.69     
|Diluted                                                                                |  | $                                             | 1.53      |   |      | $ | 1.40      |  | $ | 1.69     
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          
|AVERAGE SHARES OUTSTANDING:                                                            |  |                                               |           |   |      |   |           |  |   |          
|Basic                                                                                  |  |                                               | 1,990,991 |   |      |   | 1,991,000 |  |   | 1,994,648
|Diluted                                                                                |  |                                               | 1,998,397 |   |      |   | 1,995,642 |  |   | 1,994,648
|                                                                                       |  |                                               |           |   |      |   |           |  |   |          



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



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



---

Consolidated Statements of Changes in Stockholders Equity



|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------- |  | -------------- | ----- | ---------------- | - | --- | ------------------------------------------ | - | ------ | ------------- |  | - | ----- | - |  | - | ---- | - |  | - | ------ | -
|                                                                                                                         |  | Common Stock                                  |  | Paid-inCapital |       | RetainedEarnings |   |     | AccumulatedOtherComprehensiveIncome (loss) |   |        | TreasuryStock |  |   | Total |  
|                                                                                                                         |  | Shares                                        |  | Amount         |       |                  |   |     |                                           
|                                                                                                                         |  | (Dollars in Thousands, Except Per Share Data) | 
|Balance at December 31, 2001                                                                                             |  | 2,000,000                                     |  | $              | 2,500 |                  | $ | 785 |                                            | $ | 28,566 |               |  | $ | 1,116 |   |  | $ |     |   |  | $ | 32,967 |  
|Comprehensive income:                                                                                                    |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Net income                                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 3,375  |               |  |   |      |   |  |   |     |   |  |   | 3,375  |  
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification adjustment and tax effect |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   | (127  | ) |  |   |     |   |  |   | (127   | )
|Minimum pension liability, net of tax effect                                                                             |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   | (556  | ) |  |   |     |   |  |   | (556   | )
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Total comprehensive income                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 3,375  |               |  |   | (683  | ) |  |   |     |   |  |   | 2,692  |  
|Purchase 9,000 shares of treasury stock                                                                                  |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   |      |   |  |   | (147 | ) |  |   | (147   | )
|Cash dividends declared - $0.85 per share                                                                                |  |                                              |  |                |      |                  |   |    |                                            |   | (1,694 | )             |  |   |      |   |  |   |     |   |  |   | (1,694 | )
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Balance at December 31, 2002                                                                                             |  | 2,000,000                                     |  |                | 2,500 |                  |   | 785 |                                            |   | 30,247 |               |  |   | 433   |   |  |   | (147 | ) |  |   | 33,818 |  
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Comprehensive income:                                                                                                    |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Net income                                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 2,792  |               |  |   |      |   |  |   |     |   |  |   | 2,792  |  
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification adjustment and tax effect |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   | (480  | ) |  |   |     |   |  |   | (480   | )
|Minimum pension liability, net of tax effect                                                                             |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   | 556   |   |  |   |     |   |  |   | 556    |  
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Total comprehensive income                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 2,792  |               |  |   | 76    |   |  |   |     |   |  |   | 2,868  |  
|Cash dividends declared - $0.85 per share                                                                                |  |                                              |  |                |      |                  |   |    |                                            |   | (1,692 | )             |  |   |      |   |  |   |     |   |  |   | (1,692 | )
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Balance at December 31, 2003                                                                                             |  | 2,000,000                                     |  |                | 2,500 |                  |   | 785 |                                            |   | 31,347 |               |  |   | 509   |   |  |   | (147 | ) |  |   | 34,994 |  
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Comprehensive income:                                                                                                    |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Net income                                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 3,055  |               |  |   |      |   |  |   |     |   |  |   | 3,055  |  
|Change in net unrealized gain (loss) on securities available for sale, net of reclassification adjustment and tax effect |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   | (503  | ) |  |   |     |   |  |   | (503   | )
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Total comprehensive income                                                                                               |  |                                              |  |                |      |                  |   |    |                                            |   | 3,055  |               |  |   | (503  | ) |  |   |     |   |  |   | 2,552  |  
|Purchase 200 shares of treasury stock                                                                                    |  |                                              |  |                |      |                  |   |    |                                            |   |       |               |  |   |      |   |  |   | (5   | ) |  |   | (5     | )
|Cash dividends declared - $0.88 per share                                                                                |  |                                              |  |                |      |                  |   |    |                                            |   | (1,752 | )             |  |   |      |   |  |   |     |   |  |   | (1,752 | )
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  
|Balance at December 31, 2004                                                                                             |  | 2,000,000                                     |  | $              | 2,500 |                  | $ | 785 |                                            | $ | 32,650 |               |  | $ | 6     |   |  | $ | (152 | ) |  | $ | 35,789 |  
|                                                                                                                         |  |                                               |  |                |       |                  |   |     |                                            |   |        |               |  |   |       |   |  |   |      |   |  |   |        |  



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



|                                          |  | 
|----------------------------------------- |  | 
|Page 26    First Century Bankshares, Inc. |  | 



---

Consolidated Statements of Cash Flows



|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                    |  | Years Ended December 31, |        
|                                                                                                    |  | 2004                     |         |   | 2003 |   |         | 2002 | 
|                                                                                                    |  | (Dollars in Thousands)   |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Net income before adjustments to reconcile net income to net cash provided by operating activities: |  | $                        | 3,055   |   |      | $ | 2,792   |      |  | $ | 3,375   |  
|Provision for loan losses                                                                           |  |                          | 224     |   |      |   | 653     |      |  |   | 1,785   |  
|Depreciation and amortization                                                                       |  |                          | 873     |   |      |   | 800     |      |  |   | 828     |  
|Deferred income tax expense                                                                         |  |                          | 254     |   |      |   | 257     |      |  |   | 214     |  
|Securities (gains) losses                                                                           |  |                          | 16      |   |      |   | (67     | )    |  |   |        |  
|(Gain) loss on sale of fixed assets                                                                 |  |                          | 86      |   |      |   |        |      |  |   |        |  
|(Increase) decrease in interest receivable                                                          |  |                          | (165    | ) |      |   | 310     |      |  |   | 426     |  
|Net investment amortization                                                                         |  |                          | 285     |   |      |   | 427     |      |  |   | 95      |  
|Net decrease in other assets                                                                        |  |                          | 483     |   |      |   | 561     |      |  |   | 480     |  
|Net increase (decrease) in interest payable and other liabilities                                   |  |                          | 225     |   |      |   | (266    | )    |  |   | (85     | )
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                           |  |                          | 5,336   |   |      |   | 5,467   |      |  |   | 7,118   |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Purchases of securities held to maturity                                                            |  |                          | (3,168  | ) |      |   | (3,734  | )    |  |   | (1,013  | )
|Purchases of securities available for sale                                                          |  |                          | (48,618 | ) |      |   | (56,505 | )    |  |   | (58,247 | )
|Redemptions (purchases) of Federal Home Loan Bank stock                                             |  |                          | (159    | ) |      |   | (271    | )    |  |   | 474     |  
|Proceeds from maturities and calls of securities held to maturity                                   |  |                          | 2,330   |   |      |   | 1,104   |      |  |   | 2,176   |  
|Proceeds from maturities and calls of securities available for sale                                 |  |                          | 30,861  |   |      |   | 67,763  |      |  |   | 54,946  |  
|Proceeds from sales of securities available for sale                                                |  |                          | 1,982   |   |      |   | 1,072   |      |  |   |        |  
|Net (increase) decrease in loans                                                                    |  |                          | (1,177  | ) |      |   | (10,607 | )    |  |   | 5,296   |  
|Acquisition of premises and equipment                                                               |  |                          | (1,674  | ) |      |   | (2,031  | )    |  |   | (679    | )
|Proceeds from disposal of premises and equipment                                                    |  |                          | 144     |   |      |   |        |      |  |   |        |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                                    |  |                          | (19,479 | ) |      |   | (3,209  | )    |  |   | 2,953   |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Net increase in demand and savings deposits                                                         |  |                          | 6,374   |   |      |   | 2,324   |      |  |   | 1,012   |  
|Net increase (decrease) in time deposits                                                            |  |                          | 7,158   |   |      |   | (2,552  | )    |  |   | (10,438 | )
|Net increase (decrease) in short-term borrowings                                                    |  |                          | (194    | ) |      |   | 2,422   |      |  |   | (275    | )
|Purchase of treasury stock                                                                          |  |                          | (5      | ) |      |   |        |      |  |   | (147    | )
|Cash dividends paid                                                                                 |  |                          | (1,752  | ) |      |   | (1,692  | )    |  |   | (1,694  | )
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                    |  |                          | 11,581  |   |      |   | 502     |      |  |   | (11,542 | )
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                                |  |                          | (2,562  | ) |      |   | 2,760   |      |  |   | (1,471  | )
|Cash and cash equivalents at beginning of year                                                      |  |                          | 19,578  |   |      |   | 16,818  |      |  |   | 18,289  |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of year                                                            |  | $                        | 17,016  |   |      | $ | 19,578  |      |  | $ | 16,818  |  
|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid during the year for:                                                                      |  |                          |         |   |      |   |         |      |  |   |         |  
|Interest                                                                                            |  | $                        | 3,483   |   |      | $ | 3,981   |      |  | $ | 6,020   |  
|Income taxes                                                                                        |  | $                        | 1,560   |   |      | $ | 1,118   |      |  | $ | 2,004   |  



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



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



---

Notes to Consolidated Financial Statements



1. Summary of Significant Accounting and Reporting Policies



First Century Bankshares, Inc. (the Corporation or the Company), 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 accounting principles generally accepted in the United States of America 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. The more significant estimates relate to the calculation of the allowance for loan losses, valuation of impaired loans, goodwill impairment
and valuation of pension and postretirement benefits. 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, 2004 and 2003, was approximately $663,000 and
$481,000, respectively.



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 and Reserve for Unfunded Lending Commitments It is the policy of the Corporation to maintain an allowance for loan losses and a
reserve for unfunded lending commitments that equals managements best estimate of probable credit losses that are inherent in the portfolio at the balance sheet date. 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 is based on a review of the



|                                          |  | 
|----------------------------------------- |  | 
|Page 28    First Century Bankshares, Inc. |  | 



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Notes to Consolidated Financial Statements



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



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 and industry concentrations are also considered. The methodology used to determine an estimate for
the reserve for unfunded lending commitments is inherently similar to the methodology used in calculating the allowance for loan losses adjusted for factors specific to binding commitments, including the probability of funding and exposure at the
time of funding. The reserve for unfunded lending commitments is included in other liabilities with increases or decreases included in noninterest expense. At December 31, 2004, the reserve for unfunded lending commitments was $57,000. 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 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



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 29



---

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



had been partially charged off, recognition of interest on a cash basis is 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 Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed at least annually for impairment using
the discounted cash flow method. If impaired, goodwill or indefinite-lived intangible assets are written down to fair value, calculated using the discounted cash flow method. The unimpaired balance of goodwill and indefinite-lived intangibles
totaled approximately $5,183,000 at December 31, 2004 and 2003.



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 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.



|                                          |  | 
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|Page 30    First Century Bankshares, Inc. |  | 



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



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.



Stock Based Compensation  The Corporation maintains two stock-based compensation plans that provide for grants of stock options to selected employees and directors. These plans have been presented to and approved by the
Corporations shareholders. The Corporation accounts for the stock option plans 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,
2004, 2003 and 2002, would have been decreased to the pro forma amounts indicated below.



|                                       |  |             |           |           |   |          
|-------------------------------------- |  | ----------- | --------- | --------- | - | ---------
|                                       |  | 2004       
|                                       |  | As Reported |           | Pro Forma
|Net income                             |  | $           | 3,055,000 |           | $ | 3,036,000
|                                       |  |             |           |           |   |          
|Net income per shareBasic and diluted |  | $           | 1.53      |           | $ | 1.52     
|                                       |  |             |           |           |   |          
|                                       | 
|                                       |  | 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     
|                                       |  |             |           |           |   |          



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, the last grants made from either plan: 5% dividend growth rate; expected volatility of 26.41%;
risk-free interest rate of 3.84%; and expected life of seven years.



New
Accounting Pronouncements  In March 2004, the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) released Issue 03-01, Meaning of Other Than Temporary Impairment, which addressed other-than-temporary
impairment for certain debt and equity investments. The recognition and measurement requirements of Issue 03-01, and other disclosure requirements not already implemented, were effective for periods beginning after June 15, 2004. In September 2004,
the FASB staff issued FASB Staff Position (FSP) EITF 03-1-1, which delayed the effective date for certain measurement and recognition guidance contained in Issue 03-1. The FSP requires the application of pre-existing other-than-temporary guidance
during the period of delay until a final consensus is reached. We do not anticipate the issuance of the final consensus will have a material impact on our financial condition, the results of operations, or liquidity.



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 31



---

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



On March 9, 2004, the SEC issued Staff Accounting Bulletin 105 (SAB 105), Application of Accounting Principles
to Loan Commitments. SAB 105 provides guidance on the initial recognition and measurement of loan commitments that meet the definition of a derivative in paragraph 6 of FASB Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities (SFAS No. 133), as amended by SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, and summarizes the related disclosure requirements. SAB 105 applies to all loan commitments
accounted for as derivatives as of April 1, 2004. Adopting the provisions of SAB 105 did not have a material impact on our financial condition, results of operations or liquidity.



In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) is a revision of SFAS No. 123,
Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95 Statement of Cash Flows. SFAS
No. 123(R) eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25 and requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial
statements using a fair value-based method. SFAS No. 123(R) is effective as of the beginning of the first interim period that begins after June 15, 2005. We do not expect the adoption of the provisions of SFAS No. 123(R) to have a significant impact
on our financial condition, results of operations or liquidity.



In December
2004, the FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.  This statement amends the principle that exchanges of nonmonetary assets should be
measured based on the fair value of the assets exchanged and more broadly provides for exceptions regarding exchanges of nonmonetary assets that do not have commercial substance. This Statement is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after June 15, 2005. We do not expect the adoption of this standard to have a material impact on our financial condition, results of operations, or liquidity.



2. Securities



Securities available for sale at December 31, 2004 and 2003 are summarized as follows:



|                                    |  |                        |        |                      |   |                       |  |           |     |  |   |       
|----------------------------------- |  | ---------------------- | ------ | -------------------- | - | --------------------- |  | --------- | --- |  | - | ------
|                                    |  | 2004                  
|                                    |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                    |  | (Dollars in Thousands)
|U.S. Government obligations         |  | $                      | 1,003  |                      | $ |                      |  | $         | 12  |  | $ | 991   
|U.S. Government agency obligations  |  |                        | 63,536 |                      |   | 144                   |  |           | 256 |  |   | 63,424
|Mortgage-backed securities          |  |                        | 7,352  |                      |   | 18                    |  |           | 74  |  |   | 7,296 
|Other debt securities               |  |                        | 8,114  |                      |   | 188                   |  |           |    |  |   | 8,302 
|                                    |  |                        |        |                      |   |                       |  |           |     |  |   |       
|TOTAL SECURITIES AVAILABLE FOR SALE |  | $                      | 80,005 |                      | $ | 350                   |  | $         | 342 |  | $ | 80,013
|                                    |  |                        |        |                      |   |                       |  |           |     |  |   |       
|                                    | 
|                                    |  | 2003                  
|                                    |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                    |  | (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
|                                    |  |                        |        |                      |   |                       |  |           |     |  |   |       



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



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2. Securities (continued)



Securities held to maturity at December 31, 2004 and 2003 are summarized as follows:



|                                  |  |                        |        |                      |   |                       |  |           |    |  |   |       
|--------------------------------- |  | ---------------------- | ------ | -------------------- | - | --------------------- |  | --------- | -- |  | - | ------
|                                  |  | 2004                  
|                                  |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                  |  | (Dollars in Thousands)
|State and municipal obligations   |  | $                      | 12,882 |                      | $ | 283                   |  | $         | 94 |  | $ | 13,071
|Other debt securities             |  |                        | 75     |                      |   |                      |  |           |   |  |   | 75    
|                                  |  |                        |        |                      |   |                       |  |           |    |  |   |       
|TOTAL SECURITIES HELD TO MATURITY |  | $                      | 12,957 |                      | $ | 283                   |  | $         | 94 |  | $ | 13,146
|                                  |  |                        |        |                      |   |                       |  |           |    |  |   |       
|                                  | 
|                                  |  | 2003                  
|                                  |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                  |  | (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
|                                  |  |                        |        |                      |   |                       |  |           |    |  |   |       



Securities with an aggregate fair
value of $37,320,000 at December 31, 2004 and $42,252,000 at December 31, 2003, were pledged to secure public and trust deposits and for other purposes required or permitted by law, including approximately $16,007,000 at December 31, 2004 and
$20,412,000 at December 31, 2003 pledged to secure repurchase agreements.



Gross losses of $16,000 were recognized on sales of available for sale securities for the year ended December 31, 2004. 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.



The
amortized cost and estimated fair value for securities available for sale and securities held to maturity by contractual maturities at December 31, 2004 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          |        | FairValue |   | NetUnrealizedGains(losses) | 
|                                       |  | (Dollars in Thousands) |       
|Due in one year or less                |  | $                      | 7,129  |           | $ | 7,212                      |  | $ | 83  |  
|Due after one year through five years  |  |                        | 65,722 |           |   | 65,640                     |  |   | (82 | )
|Due after five years through ten years |  |                        | 7,154  |           |   | 7,161                      |  |   | 7   |  
|                                       |  |                        |        |           |   |                            |  |   |     |  
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 80,005 |           | $ | 80,013                     |  | $ | 8   |  
|                                       |  |                        |        |           |   |                            |  |   |     |  
|                                       |  |                        |       
|                                       |  | AmortizedCost          |        | FairValue |   | NetUnrealizedGains         | 
|                                       |  | (Dollars in Thousands) |       
|Due in one year or less                |  | $                      | 1,216  |           | $ | 1,223                      |  | $ | 7   |  
|Due after one year through five years  |  |                        | 8,296  |           |   | 8,397                      |  |   | 101 |  
|Due after five years through ten years |  |                        | 3,445  |           |   | 3,526                      |  |   | 81  |  
|                                       |  |                        |        |           |   |                            |  |   |     |  
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 12,957 |           | $ | 13,146                     |  | $ | 189 |  
|                                       |  |                        |        |           |   |                            |  |   |     |  



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 33



---

2. Securities (continued)



The following table shows the gross unrealized losses and fair value of the Corporations investments with
unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category at December 31, 2004:



|                                                                             |  |                         |     |                    |   |                       |  |           |    |  |   |      
|---------------------------------------------------------------------------- |  | ----------------------- | --- | ------------------ | - | --------------------- |  | --------- | -- |  | - | -----
|                                                                             |  | Less Than Twelve Months |     | Over Twelve Months
|                                                                             |  | (Dollars in Thousands) 
|Description of Security                                                      |  | GrossUnrealizedLosses   |     | FairValue          |   | GrossUnrealizedLosses |  | FairValue
|Securities available for sale:                                               |  |                         |     |                    |   |                       |  |           |    |  |   |      
|U.S. Treasury obligations and direct obligations of U.S. government agencies |  | $                       | 246 |                    | $ | 40,112                |  | $         | 22 |  | $ | 978  
|Federal agency mortgage-backed securities                                    |  |                         | 26  |                    |   | 3,525                 |  |           | 48 |  |   | 2,614
|Investments in equity securities carried at cost                             |  |                         |    |                    |   |                      |  |           |   |  |   |     
|                                                                             |  |                         |     |                    |   |                       |  |           |    |  |   |      
|Total securities available for sale                                          |  | $                       | 272 |                    | $ | 43,637                |  | $         | 70 |  | $ | 3,592
|                                                                             |  |                         |     |                    |   |                       |  |           |    |  |   |      
|Securities held to maturity:                                                 |  |                         |     |                    |   |                       |  |           |    |  |   |      
|Municipal bonds                                                              |  | $                       | 59  |                    | $ | 2,879                 |  | $         | 35 |  | $ | 1,273
|                                                                             |  |                         |     |                    |   |                       |  |           |    |  |   |      
|Total securities held to maturity                                            |  | $                       | 59  |                    | $ | 2,879                 |  | $         | 35 |  | $ | 1,273
|                                                                             |  |                         |     |                    |   |                       |  |           |    |  |   |      



U. S. Treasury Obligations and
Government Agency Obligations. The unrealized losses on the Corporations investments in U.S. Treasury obligations and direct obligations of U.S. government agencies were the result of interest rate increases. The contractual terms of these
investments do not permit the issuer to settle the securities at a price materially less than the amortized cost of the investment.



Federal Agency Mortgage-Backed Securities. The unrealized losses on the Corporations investment in agency mortgage-backed securities issued by FNMA and FHLMC were
caused by interest rate increases. The Corporation purchased these investments, most at a premium relative to their face amount, and the contractual cash flows of these investments are guaranteed by the issuer organization. Accordingly, it is
expected that the securities would not be settled at a price materially less than the amortized cost of the Corporations investment.



Municipal Bonds. The unrealized losses on the Corporations municipal bonds were caused by interest rate increases. The contractual cash flows of these investments
are guaranteed by the issuer organization. Accordingly, it is expected that the securities would not be settled at a price materially less than the amortized cost of the Corporations investment.



For all of these securities, because the decline in market value is attributable to changes
in interest rates and not credit quality and because the Corporation has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, the Corporation does not consider these investments to be
other-than-temporarily impaired at December 31, 2004.



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



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3. Loans



Loans at December 31, 2004 and 2003 consisted of the following:



|                                                  |  |                        |         |      |   |        
|------------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                                  |  | December 31,          
|                                                  |  | 2004                   |         | 2003
|                                                  |  | (Dollars in Thousands)
|Commercial, financial and agricultural            |  | $                      | 41,497  |      | $ | 47,010 
|Real estateconstruction                          |  |                        | 11,037  |      |   | 6,137  
|Real estatemortgage (residential and commercial) |  |                        | 175,487 |      |   | 173,104
|Installment loans to individuals                  |  |                        | 19,787  |      |   | 20,699 
|                                                  |  |                        |         |      |   |        
|Total loans                                       |  |                        | 247,808 |      |   | 246,950
|Less: allowance for loan losses                   |  |                        | 2,900   |      |   | 3,075  
|                                                  |  |                        |         |      |   |        
|NET LOANS                                         |  | $                      | 244,908 |      | $ | 243,875
|                                                  |  |                        |         |      |   |        



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 $14,556,000 and $19,499,000 at December 31, 2004 and 2003, respectively. During 2004, $11,753,000 in loan advances were made and repayments were $16,696,000.



4. Allowance for Loan Losses



An analysis of changes in the allowance for loan losses for 2004, 2003 and 2002 is as
follows:



|                                           |  |                          |       |   |      |   |       |      |  |   |        |  
|------------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                           |  | Years Ended December 31, |      
|                                           |  | 2004                     |       |   | 2003 |   |       | 2002 | 
|                                           |  | (Dollars in Thousands)   |      
|Balance at beginning of year               |  | $                        | 3,075 |   |      | $ | 3,005 |      |  | $ | 3,180  |  
|Provision for loan losses                  |  |                          | 224   |   |      |   | 653   |      |  |   | 1,785  |  
|Recoveries on loans previously charged off |  |                          | 151   |   |      |   | 82    |      |  |   | 206    |  
|Loans charged off                          |  |                          | (550  | ) |      |   | (665  | )    |  |   | (2,166 | )
|                                           |  |                          |       |   |      |   |       |      |  |   |        |  
|BALANCE AT END OF YEAR                     |  | $                        | 2,900 |   |      | $ | 3,075 |      |  | $ | 3,005  |  
|                                           |  |                          |       |   |      |   |       |      |  |   |        |  



The following is a summary of loans
considered impaired:



|                                       |  |                        |       |      |   |      
|-------------------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                                       |  | December 31,          
|                                       |  | 2004                   |       | 2003
|                                       |  | (Dollars in Thousands)
|Gross impaired loans                   |  | $                      | 2,493 |      | $ | 2,542
|Valuation allowance for impaired loans |  |                        | 514   |      |   | 397  
|                                       |  |                        |       |      |   |      
|Recorded investment in impaired loans  |  | $                      | 1,979 |      | $ | 2,145
|                                       |  |                        |       |      |   |      



The average recorded investment in
impaired loans for the years ended December 31, 2004, 2003 and 2002 was $2,122,000, $2,438,000 and $2,959,000, 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, 2004, 2003 and 2002. At December 31, 2004, 2003 and 2002, the Corporation had nonaccrual loans of $2,493,000, $2,542,000 and $2,819,000, respectively. Interest income of $19,000, $241,000 and $157,000 was recognized on these loans
in 2004, 2003 and 2002, respectively. Had these loans performed in accordance with their original terms, additional interest income of $175,000, $203,000 and $184,000 would have been recorded in 2004, 2003 and 2002, respectively.



At December 31, 2004, 2003 and 2002, the Corporation had loans past-due 90 days or more and
still in accrual status of $423,000, $400,000 and $612,000, respectively. Additionally, at December 31, 2004, 2003 and 2002, the Corporation had other real estate owned of $112,000, $383,000 and $793,000, respectively.



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 35



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5. Premises and Equipment



Premises and equipment at December 31, 2004 and 2003 consisted of the following:



|                              |  |                        |        |      |   |       
|----------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                              |  | December 31,          
|                              |  | 2004                   |        | 2003
|                              |  | (Dollars in Thousands)
|Land                          |  | $                      | 1,898  |      | $ | 1,956 
|Buildings and improvements    |  |                        | 12,056 |      |   | 10,593
|Equipment and fixtures        |  |                        | 6,547  |      |   | 6,860 
|                              |  |                        |        |      |   |       
|Total                         |  |                        | 20,501 |      |   | 19,409
|                              |  |                        |        |      |   |       
|Less accumulated depreciation |  |                        | 8,233  |      |   | 7,712 
|                              |  |                        |        |      |   |       
|NET PREMISES AND EQUIPMENT    |  | $                      | 12,268 |      | $ | 11,697
|                              |  |                        |        |      |   |       



Depreciation charged to operating
expense amounted to $873,000 in 2004, $800,000 in 2003, and $828,000 in 2002.



6. Deposits



Deposits at December 31, 2004 and 2003
were as follows:



|                                            |  |                        |         |      |   |        
|------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                            |  | December 31,          
|                                            |  | 2004                   |         | 2003
|                                            |  | (Dollars in Thousands)
|Individuals, partnerships and corporations: |  |                        |         |      |   |        
|Demand deposits                             |  | $                      | 42,724  |      | $ | 40,174 
|Time and savings deposits                   |  |                        | 266,626 |      |   | 256,532
|U.S. Government                             |  |                        | 41      |      |   | 127    
|States and political subdivisions           |  |                        | 10,487  |      |   | 8,822  
|Certified and official checks               |  |                        | 1,373   |      |   | 2,064  
|                                            |  |                        |         |      |   |        
|TOTAL DEPOSITS                              |  | $                      | 321,251 |      | $ | 307,719
|                                            |  |                        |         |      |   |        



The scheduled maturities of time
deposits at December 31, 2004 were as follows:



|                       |  |   |        
|---------------------- |  | - | -------
|(Dollars in Thousands)
|2005                   |  | $ | 72,667 
|2006                   |  |   | 14,449 
|2007                   |  |   | 26,320 
|2008                   |  |   | 13,108 
|Thereafter             |  |   | 2,876  
|                       |  |   |        
|TOTAL TIME DEPOSITS    |  | $ | 129,420
|                       |  |   |        



Time deposits included certificates of
deposit issued in amounts of $100,000 or more totaling approximately $33,336,000 and $31,108,000 at December 31, 2004 and 2003, respectively.



7. 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, 2004 and 2003 is summarized as follows:



|                                          |  |                        |        |   |      |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                          |  | 2004                   |        |   | 2003 |  
|                                          |  | (Dollars in Thousands) |       
|Average balance during the year           |  | $                      | 16,697 |   |      | $ | 15,524 |  
|Average interest rate during the year     |  |                        | 0.52   | % |      |   | 0.48   | %
|Maximum month-end balance during the year |  | $                      | 20,024 |   |      | $ | 19,167 |  



|                                          |  | 
|----------------------------------------- |  | 
|Page 36    First Century Bankshares, Inc. |  | 



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8. 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, |     
|                                                                                   |  | 2004                     |      |   | 2003 |   |      | 2002 | 
|Unrealized gains (losses) on available for sale securities arising during the year |  | $                        | (779 | ) |      | $ | (659 | )    |  | $ | (192   | )
|Reclassification adjustment for (gains) losses included in net income              |  |                          | 16   |   |      |   | (67  | )    |  |   |       |  
|Minimum pension liability adjustment                                               |  |                          |     |   |      |   | 890  |      |  |   | (890   | )
|                                                                                   |  |                          |      |   |      |   |      |      |  |   |        |  
|Other comprehensive income (loss) before tax                                       |  |                          | (763 | ) |      |   | 164  |      |  |   | (1,082 | )
|Income tax (expense) benefit related to other comprehensive income                 |  |                          | 260  |   |      |   | (88  | )    |  |   | 399    |  
|                                                                                   |  |                          |      |   |      |   |      |      |  |   |        |  
|Other comprehensive income (loss), net of tax                                      |  | $                        | (503 | ) |      | $ | 76   |      |  | $ | (683   | )
|                                                                                   |  |                          |      |   |      |   |      |      |  |   |        |  



9. 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, 2004, 2003 and 2002:



|                                                                |  |                   |           |                                     |           |                 |   |     
|--------------------------------------------------------------- |  | ----------------- | --------- | ----------------------------------- | --------- | --------------- | - | ----
|                                                                |  | 2004             
|                                                                |  | Income(Numerator) |           | Weighted AverageShares(Denominator) |           | Per-ShareAmount
|Basic EPS:                                                      |  |                   |           |                                     |           |                 |   |     
|Income available to common shareholders                         |  | $                 | 3,055,000 |                                     | 1,990,991 |                 | $ | 1.53
|Diluted EPS:                                                    |  |                   |           |                                     |           |                 |   |     
|Effect of dilutive securitiesStock options                     |  |                   |          |                                     | 7,406     |                 |   |     
|                                                                |  |                   |           |                                     |           |                 |   |     
|Income available to common shareholders and assumed conversions |  | $                 | 3,055,000 |                                     | 1,998,397 |                 | $ | 1.53
|                                                                |  |                   |           |                                     |           |                 |   |     
|                                                                | 
|                                                                |  | 2003             
|                                                                |  | Income(Numerator) |           | Weighted AverageShares(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             
|                                                                |  | Income(Numerator) |           | Weighted AverageShares(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
|                                                                |  |                   |           |                                     |           |                 |   |     



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 37



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10. Stockholders Equity



The authorized capital stock of the Corporation consists of 10,000,000 shares of $1.25 par value common stock. At December 31, 2004,
2,000,000 shares were issued and 1,990,800 shares were outstanding.



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, 2004, the weighted average remaining contractual life of the
outstanding options was 49 months. At December 31, 2004, options for 89,675 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 date of grant. At December 31, 2004, the weighted average remaining contractual life of the outstanding options was 47 months. At December 31, 2004, options for 11,500 shares of common stock
were reserved for future issuance for the Director Plan.



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



|                                                               |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|-------------------------------------------------------------- |  | ------------ | ------ | ------------------------------- | - | ------------ |  | ------------------------------- | ------ | ------------ | - | ------------------------------- |  | - | ------ |  | - | -----
|                                                               |  | 2004         |        | 2003                            |   | 2002        
|                                                               |  | OptionShares |        | Weighted- AverageExercise Price |   | OptionShares |  | Weighted- AverageExercise Price |        | OptionShares |   | Weighted- AverageExercise Price
|Officer stock options:                                         |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Outstanding, beginning of year                                 |  |              | 88,220 |                                 | $ | 19.33        |  |                                 | 88,220 |              | $ | 19.33                           |  |   | 52,220 |  | $ | 20.25
|Granted                                                        |  |              |       |                                 |   |             |  |                                 |       |              |   |                                |  |   | 36,000 |  |   | 18.00
|Exercised                                                      |  |              |       |                                 |   |             |  |                                 |       |              |   |                                |  |   |       |  |   |     
|Forfeited                                                      |  |              | 7,895  |                                 |   | 20.11        |  |                                 |       |              |   |                                |  |   |       |  |   |     
|                                                               |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Outstanding, end of year                                       |  |              | 80,325 |                                 | $ | 19.26        |  |                                 | 88,220 |              | $ | 19.33                           |  |   | 88,220 |  | $ | 19.33
|                                                               |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Exercisable at end of year                                     |  |              | 59,025 |                                 | $ | 19.71        |  |                                 | 59,420 |              | $ | 19.98                           |  |   | 41,776 |  | $ | 20.25
|Weighted-average fair value of options granted during the year |  | $            |       |                                 |   |              |  | $                               |       |              |   |                                 |  | $ | 2.51   |  |   |      
|                                                               |  |              |        |                                 |   |             
|Director stock options:                                        |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Outstanding, beginning of year                                 |  |              | 19,000 |                                 | $ | 19.42        |  |                                 | 20,000 |              | $ | 19.46                           |  |   | 13,000 |  | $ | 20.25
|Granted                                                        |  |              |       |                                 |   |             |  |                                 |       |              |   |                                |  |   | 7,000  |  |   | 18.00
|Exercised                                                      |  |              |       |                                 |   |             |  |                                 |       |              |   |                                |  |   |       |  |   |     
|Forfeited                                                      |  |              | 500    |                                 |   | 18.00        |  |                                 | 1,000  |              |   | 20.25                           |  |   |       |  |   |     
|                                                               |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Outstanding, end of year                                       |  |              | 18,500 |                                 | $ | 19.46        |  |                                 | 19,000 |              | $ | 19.42                           |  |   | 20,000 |  | $ | 19.46
|                                                               |  |              |        |                                 |   |              |  |                                 |        |              |   |                                 |  |   |        |  |   |      
|Exercisable at end of year                                     |  |              | 18,500 |                                 | $ | 19.46        |  |                                 | 19,000 |              | $ | 19.42                           |  |   | 20,000 |  | $ | 19.46
|Weighted-average fair value of options granted during the year |  | $            |       |                                 |   |              |  | $                               |       |              |   |                                 |  | $ | 2.51   |  |   |      



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



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SHARE REPURCHASE ACTIVITY



During the year ended December 31, 2004, the Corporation repurchased 200 shares, following no repurchases in 2003, and 9,000 shares
repurchased for the year ended December 31, 2002. At December 31, 2004, management was authorized to repurchase 10,800 shares, which was increased to 30,800 shares in February 2005.



11. 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.



| |  |                                          
| |  | -----------------------------------------
| |  | First Century Bankshares, Inc.    Page 39



---

11. 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, 2004 and 2003, and the assumptions and components of net periodic benefit costs for the three years in the period ended December 31, 2004.



|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|--------------------------------------------------------------------- |  | ---------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ---- | -
|                                                                      |  | Pension Benefits       |        |   | OtherPostretirementBenefits |  
|                                                                      |  | 2004                   |        |   | 2003                        |   |        | 2004 |  |   | 2003   |  
|                                                                      |  | (Dollars in Thousands) |       
|Change in benefit obligation                                          |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Benefit obligation at beginning of year                               |  | $                      | 5,940  |   |                             | $ | 9,321  |      |  | $ | 866    |   |  | $ | 840  |  
|Service cost                                                          |  |                        | 225    |   |                             |   | 220    |      |  |   | 17     |   |  |   | 13   |  
|Interest cost                                                         |  |                        | 337    |   |                             |   | 448    |      |  |   | 63     |   |  |   | 53   |  
|Actuarial (gain) loss                                                 |  |                        | 691    |   |                             |   | (242   | )    |  |   | 202    |   |  |   |     |  
|Benefits paid                                                         |  |                        | (1,484 | ) |                             |   | (2,439 | )    |  |   | (55    | ) |  |   | (40  | )
|Adjustment in cost of settlement                                      |  |                        | 176    |   |                             |   | 334    |      |  |   |       |   |  |   |     |  
|Prior service cost established this year                              |  |                        |       |   |                             |   | (1,702 | )    |  |   |       |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Benefit obligation at end of year                                     |  |                        | 5,885  |   |                             |   | 5,940  |      |  |   | 1,093  |   |  |   | 866  |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Change in plan asset                                                  |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Fair value of plan assets at beginning of year                        |  |                        | 6,614  |   |                             |   | 7,250  |      |  |   |       |   |  |   |     |  
|Actual return on plan assets                                          |  |                        | 374    |   |                             |   | 1,004  |      |  |   |       |   |  |   |     |  
|Employer contribution                                                 |  |                        | 300    |   |                             |   | 800    |      |  |   | 55     |   |  |   | 40   |  
|Benefits paid                                                         |  |                        | (1,484 | ) |                             |   | (2,439 | )    |  |   | (55    | ) |  |   | (40  | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Fair value of plan assets at end of year                              |  |                        | 5,804  |   |                             |   | 6,614  |      |  |   |       |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Funded status                                                         |  |                        | (81    | ) |                             |   | 674    |      |  |   | (1,093 | ) |  |   | (866 | )
|Unrecognized net actuarial (gain) loss                                |  |                        | 2,118  |   |                             |   | 1,677  |      |  |   | (387   | ) |  |   | (621 | )
|Unrecognized prior service cost                                       |  |                        | (1,164 | ) |                             |   | (1,253 | )    |  |   |       |   |  |   |     |  
|Unrecognized transition obligation                                    |  |                        | (36    | ) |                             |   | (92    | )    |  |   | 443    |   |  |   | 498  |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Net amount recognized                                                 |  | $                      | 837    |   |                             | $ | 1,006  |      |  | $ | (1,037 | ) |  | $ | (989 | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Amounts recognized in the statement of financial position consist of: |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Prepaid (accrued) benefit cost                                        |  | $                      | 837    |   |                             | $ | 1,006  |      |  | $ | (1,037 | ) |  | $ | (989 | )
|Accrued benefit liability                                             |  |                        |       |   |                             |   |       |      |  |   |       |   |  |   |     |  
|Intangible asset                                                      |  |                        |       |   |                             |   |       |      |  |   |       |   |  |   |     |  
|Accumulated other comprehensive income                                |  |                        |       |   |                             |   |       |      |  |   |       |   |  |   |     |  
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  
|Net amount recognized                                                 |  | $                      | 837    |   |                             | $ | 1,006  |      |  | $ | (1,037 | ) |  | $ | (989 | )
|                                                                      |  |                        |        |   |                             |   |        |      |  |   |        |   |  |   |      |  



|                                                |  |                  |      |   |                             |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|----------------------------------------------- |  | ---------------- | ---- | - | --------------------------- | - | ---- | ---- |  | - | ---- | - |  | ---- | ---- | - | ---- | - | ---- | - |  | - | ---- | -
|                                                |  | Pension Benefits |      |   | OtherPostretirementBenefits |  
|                                                |  | 2004             |      |   | 2003                        |   |      | 2002 |  |   | 2004 |   |  | 2003 |      |   | 2002 |  
|Weighted-average assumptions as of 12/31        |  |                  |      |   |                             |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Discount rate                                   |  |                  | 5.75 | % |                             |   | 6.50 | %    |  |   | 6.50 | % |  |      | 5.75 | % |      |   | 6.50 | % |  |   | 6.50 | %
|Expected return on plan assets                  |  |                  | 8.00 | % |                             |   | 8.00 | %    |  |   | 8.00 | % |  |      | 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                                    |  | $                | 225  |   |                             | $ | 220  |      |  | $ | 429  |   |  | $    | 17   |   |      | $ | 13   |   |  | $ | 14   |  
|Interest cost                                   |  |                  | 337  |   |                             |   | 448  |      |  |   | 549  |   |  |      | 63   |   |      |   | 53   |   |  |   | 54   |  
|Expected return on plan assets                  |  |                  | (460 | ) |                             |   | (574 | )    |  |   | (736 | ) |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of prior service cost              |  |                  | (90  | ) |                             |   | (89  | )    |  |   | 44   |   |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of transition obligation           |  |                  | (44  | ) |                             |   | (59  | )    |  |   | (65  | ) |  |      | 55   |   |      |   | 55   |   |  |   | 56   |  
|Recognized net actuarial (gain) loss            |  |                  | 68   |   |                             |   | 122  |      |  |   | 17   |   |  |      | (32  | ) |      |   | (47  | ) |  |   | (43  | )
|Net periodic (benefit) cost                     |  |                  | 36   |   |                             |   | 68   |      |  |   | 238  |   |  |      | 103  |   |      |   | 74   |   |  |   | 81   |  
|Settlement (gain) loss                          |  |                  | 433  |   |                             |   | 743  |      |  |   |     |   |  |      |     |   |      |   |     |   |  |   |     |  
|                                                |  |                  |      |   |                             |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|Net periodic (benefit) cost, net of adjustments |  | $                | 505  |   |                             | $ | 811  |      |  | $ | 238  |   |  | $    | 103  |   |      | $ | 74   |   |  | $ | 81   |  
|                                                |  |                  |      |   |                             |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  



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



---

11. Post Employment Benefits (continued)



The asset allocation for the defined benefit pension plan for the years ended December 31, 2004 and 2003, by asset category, is as follows:



ASSET CATEGORY



|                  |  |                          |   |  |      |  
|----------------- |  | ------------------------ | - |  | ---- | -
|                  |  | Percentage ofPlan Assets |  
|                  |  | 2004                     |   |  | 2003 |  
|Equity securities |  | 72                       | % |  | 70   | %
|Debt securities   |  | 7                        |   |  | 8    |  
|Real estate       |  | 10                       |   |  | 10   |  
|Other             |  | 11                       |   |  | 12   |  
|                  |  |                          |   |  |      |  
|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 2004
and 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 Employers
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits. The Corporation recognized additional settlement charges pursuant to the requirements of SFAS No. 88 of $424,000 for the year ended
December 31, 2004, and $743,000 for the year ended December 31, 2003. The Corporation contributed $300,000 to the pension plan in 2004, and $800,000 in 2003.



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 $74,000 to the postretirement benefit plan in 2005.



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



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11. 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 $128,000 in 2004, $136,000 in 2003 and $128,000 in 2002.



12. Income Taxes



The provision for income taxes consisted of the following:



|                                                    |  |                          |       |      |   |       |  |   |      
|--------------------------------------------------- |  | ------------------------ | ----- | ---- | - | ----- |  | - | -----
|                                                    |  | Years Ended December 31,
|                                                    |  | 2004                     |       | 2003 |   | 2002 
|                                                    |  | (Dollars in Thousands)  
|Tax provision attributed to income from operations: |  |                          |       |      |   |       |  |   |      
|Current:                                            |  |                          |      
|Federal                                             |  | $                        | 1,111 |      | $ | 975   |  | $ | 1,340
|State                                               |  |                          | 369   |      |   | 346   |  |   | 421  
|Deferred expense (benefit)                          |  |                          | 254   |      |   | 257   |  |   | 214  
|                                                    |  |                          |       |      |   |       |  |   |      
|PROVISION FOR INCOME TAX                            |  | $                        | 1,734 |      | $ | 1,578 |  | $ | 1,975
|                                                    |  |                          |       |      |   |       |  |   |      



The components of deferred tax assets
and liabilities at December 31, 2004 and 2003 were as follows:



|                                                            |  |                        |      |   |      |   |      |  
|----------------------------------------------------------- |  | ---------------------- | ---- | - | ---- | - | ---- | -
|                                                            |  | 2004                   |      |   | 2003 |  
|                                                            |  | (Dollars in Thousands) |     
|Allowance for loan losses                                   |  | $                      | 605  |   |      | $ | 673  |  
|Retirement plans                                            |  |                        | 81   |   |      |   | 3    |  
|Marketable equity securities and capital loss carryforwards |  |                        | 11   |   |      |   | 59   |  
|Other                                                       |  |                        | 14   |   |      |   | 10   |  
|                                                            |  |                        |      |   |      |   |      |  
|Gross deferred tax assets                                   |  |                        | 711  |   |      |   | 745  |  
|Valuation allowance                                         |  |                        | (11  | ) |      |   | (59  | )
|                                                            |  |                        |      |   |      |   |      |  
|Deferred tax assets                                         |  |                        | 700  |   |      |   | 686  |  
|                                                            |  |                        |      |   |      |   |      |  
|Depreciation                                                |  |                        | (440 | ) |      |   | (331 | )
|Goodwill                                                    |  |                        | (476 | ) |      |   | (317 | )
|Unrealized gains on securities available for sale           |  |                        | (3   | ) |      |   | (262 | )
|                                                            |  |                        |      |   |      |   |      |  
|Gross deferred tax liabilities                              |  |                        | (919 | ) |      |   | (910 | )
|                                                            |  |                        |      |   |      |   |      |  
|NET DEFERRED TAX ASSET (LIABILITY)                          |  | $                      | (219 | ) |      | $ | (224 | )
|                                                            |  |                        |      |   |      |   |      |  



A valuation allowance was established
for the 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 capital loss carryforwards. Total capital loss
carryforwards equal $29,000 and expire in 2005.



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



|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  
|----------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | -- | - | ------ | - | ----- | - |  | -- | ------ |  | - | ----- | - |  | -- | -
|                                                                        |  | Years Ended December 31, |      
|                                                                        |  | 2004                     |       |   | 2003 |    |   | 2002   |  
|                                                                        |  | (Dollars in Thousands)   |      
|                                                                        |  | Amount                   |       |   | %    |    |   | Amount |   |       | % |  |    | Amount |  |   | %     |  
|Provision at statutory rate                                             |  | $                        | 1,628 |   |      | 34 |   |        | $ | 1,486 |   |  | 34 |        |  | $ | 1,819 |   |  | 34 |  
|Tax-exempt interest income from certain investment securities and loans |  |                          | (180  | ) |      | (4 | ) |        |   | (162  | ) |  | (4 | )      |  |   | (168  | ) |  | (3 | )
|State income tax expense, net of federal benefit                        |  |                          | 263   |   |      | 5  |   |        |   | 228   |   |  | 5  |        |  |   | 287   |   |  | 5  |  
|Other, net                                                              |  |                          | 23    |   |      | 1  |   |        |   | 26    |   |  | 1  |        |  |   | 37    |   |  | 1  |  
|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  
|PROVISION FOR INCOME TAXES                                              |  | $                        | 1,734 |   |      | 36 |   |        | $ | 1,578 |   |  | 36 |        |  | $ | 1,975 |   |  | 37 |  
|                                                                        |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  



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



---

13. 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.



14. 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, 2004 and 2003 are as follows:



|                                                                                 |  |                        |        |      |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                                                                                 |  | December 31,          
|                                                                                 |  | 2004                   |        | 2003
|                                                                                 |  | (Dollars in Thousands)
|Unused lines of credit                                                           |  |                        |        |      |   |       
|Home equity lines                                                                |  | $                      | 3,289  |      | $ | 2,476 
|Commercial real estate, construction and land development secured by real estate |  |                        | 23,291 |      |   | 19,145
|Other unused commitments                                                         |  |                        | 14,824 |      |   | 17,979
|                                                                                 |  |                        |        |      |   |       
|Total unused lines of credit                                                     |  | $                      | 41,404 |      | $ | 39,600
|Financial standby letters of credit                                              |  | $                      | 5,201  |      | $ | 4,839 



At December 31, 2004 and 2003, the
carrying amount and fair value of financial standby letters of credit was $8,000 and $6,000, respectively. Also, at December 31, 2004, the Corporation had residential mortgage loan commitments outstanding of $634,000.



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.



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



---

14. 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, 2004, the Corporation had concentrations of $17,265,000, or 48.2% of stockholders equity in loans to
lessors of real property, and $14,314,000, or 40.0% of stockholders equity in loans to borrowers in the hospitality industry. These concentrations are 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, most 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, 2004 and 2003 were as follows:



|                                                      |  |                        |         |                        |   |                     |  |                |         |  |   |        
|----------------------------------------------------- |  | ---------------------- | ------- | ---------------------- | - | ------------------- |  | -------------- | ------- |  | - | -------
|                                                      |  | 2004                   |         | 2003                  
|                                                      |  | EstimatedFair Value    |         | CarryingAmount         |   | EstimatedFair Value |  | CarryingAmount
|                                                      |  | (Dollars in Thousands) |         | (Dollars in Thousands)
|Assets:                                               |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Cash and due from banks                               |  | $                      | 13,016  |                        | $ | 13,016              |  | $              | 15,578  |  | $ | 15,578 
|Securities available for sale                         |  |                        | 80,013  |                        |   | 80,013              |  |                | 65,258  |  |   | 65,258 
|Securities held to maturity                           |  |                        | 13,146  |                        |   | 12,957              |  |                | 12,449  |  |   | 12,163 
|Federal Home Loan Bank and Federal Reserve Bank stock |  |                        | 1,182   |                        |   | 1,182               |  |                | 1,023   |  |   | 1,023  
|Federal funds sold                                    |  |                        | 4,000   |                        |   | 4,000               |  |                | 4,000   |  |   | 4,000  
|Net loans                                             |  |                        | 248,679 |                        |   | 244,908             |  |                | 247,115 |  |   | 243,875
|                                                      |  |                        |         |                       
|Liabilities:                                          |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Noninterest-bearing deposits                          |  |                        | 45,087  |                        |   | 45,087              |  |                | 41,163  |  |   | 41,163 
|Deposits with no stated maturities                    |  |                        | 146,744 |                        |   | 146,744             |  |                | 144,294 |  |   | 144,294
|Deposits with stated maturities                       |  |                        | 128,881 |                        |   | 129,420             |  |                | 122,776 |  |   | 122,262
|Short-term borrowings                                 |  |                        | 18,973  |                        |   | 18,973              |  |                | 19,167  |  |   | 19,167 



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.



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



---

15. 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,
2004, retained net profits for the years 2004 and 2003, which were free of such regulatory restrictions, aggregated approximately $2,005,000.



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, 2004, that the Corporation and its subsidiary meet all capital adequacy requirements to which they are subject.



As of December 31, 2004, 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 Capital AdequacyPurposes |   |        | To Be Well CapitalizedUnder PromptCorrective ActionProvisions |        
|                                          |  | Amount |        | Ratio |                              |   | Amount |                                                               | Ratio   |  |   | Amount |   | Ratio |  
|As of December 31, 2004:                  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Total Capital (to Risk Weighted Assets):  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Consolidated                              |  | $      | 33,557 |       | 12.58                        | % |        | 3                                                             | $21,348 |  | 3 | 8.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 32,329 |       | 12.13                        | % |        | 3                                                             | $21,316 |  | 3 | 8.00   | % |       | 3 | $26,644 |  | 3 | 10.00 | %
|Tier I Capital (to Risk Weighted Assets): |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Consolidated                              |  | $      | 30,600 |       | 11.47                        | % |        | 3                                                             | $10,674 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 29,372 |       | 11.02                        | % |        | 3                                                             | $10,658 |  | 3 | 4.00   | % |       | 3 | $15,987 |  | 3 | 6.00  | %
|Tier I Capital (to Average Assets):       |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Consolidated                              |  | $      | 30,600 |       | 8.26                         | % |        | 3                                                             | $14,821 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 29,372 |       | 7.94                         | % |        | 3                                                             | $14,804 |  | 3 | 4.00   | % |       | 3 | $18,506 |  | 3 | 5.00  | %



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



---

15. Regulatory Matters (continued)



|                                          |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|----------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------- |  | - | ------ | - | ----- | - | ------- |  | - | ----- | -
|                                          |  | Actual |        |       | For Capital AdequacyPurposes |   |        | To Be Well CapitalizedUnder PromptCorrective ActionProvisions |        
|                                          |  | 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  | %



16. Parent Company Financial
Data



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



STATEMENTS OF FINANCIAL
CONDITION



|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                                                                                |  | December 31,           |       
|                                                                                                                                                                                                                                |  | 2004                   |        |   | 2003 |  
|                                                                                                                                                                                                                                |  | (Dollars in Thousands) |       
|Assets:                                                                                                                                                                                                                         |  |                        |        |   |      |   |        |  
|Cash                                                                                                                                                                                                                            |  | $                      | 346    |   |      | $ | 196    |  
|Investment in subsidiaries at equity                                                                                                                                                                                            |  |                        | 35,006 |   |      |   | 34,404 |  
|Other assets                                                                                                                                                                                                                    |  |                        | 610    |   |      |   | 612    |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|TOTAL ASSETS                                                                                                                                                                                                                    |  | $                      | 35,962 |   |      | $ | 35,212 |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|Liabilities:                                                                                                                                                                                                                    |  |                        |        |   |      |   |        |  
|Other liabilities                                                                                                                                                                                                               |  | $                      | 173    |   |      | $ | 218    |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|TOTAL LIABILITIES                                                                                                                                                                                                               |  |                        | 173    |   |      |   | 218    |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|Stockholders Equity:                                                                                                                                                                                                           |  |                        |        |   |      |   |        |  
|Common stock$1.25 par value; 10,000,000 shares authorized and 2,000,000 shares issued at December 31, 2004 and 2003; 1,990,800 shares
outstanding at December 31, 2004, and 1,991,000 shares outstanding at December 31, 2003; |  |                        | 2,500  |   |      |   | 2,500  |  
|Paid-in capital                                                                                                                                                                                                                 |  |                        | 785    |   |      |   | 785    |  
|Retained earnings                                                                                                                                                                                                               |  |                        | 32,656 |   |      |   | 31,347 |  
|Treasury stock, at cost; 9,200 shares at December 31, 2004, and 9,000 shares at December 31, 2003                                                                                                                               |  |                        | (152   | ) |      |   | (147   | )
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                      |  |                        | 35,789 |   |      |   | 34,994 |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                      |  | $                      | 35,962 |   |      | $ | 35,212 |  
|                                                                                                                                                                                                                                |  |                        |        |   |      |   |        |  



STATEMENTS OF INCOME



|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                 |  | Years Ended December 31, |      
|                                                                 |  | 2004                     |       |   | 2003 |   |       | 2002 | 
|                                                                 |  | (Dollars in Thousands)   |      
|Income:                                                          |  |                          |       |   |      |   |       |      |  |   |       |  
|Dividends from subsidiary bank                                   |  | $                        | 2,025 |   |      | $ | 1,900 |      |  | $ | 1,900 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|TOTAL INCOME                                                     |  |                          | 2,025 |   |      |   | 1,900 |      |  |   | 1,900 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Expenses:                                                        |  |                          |       |   |      |   |       |      |  |   |       |  
|Other                                                            |  |                          | 118   |   |      |   | 82    |      |  |   | 73    |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|TOTAL EXPENSES                                                   |  |                          | 118   |   |      |   | 82    |      |  |   | 73    |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Applicable income taxes (benefits)                               |  |                          | (42   | ) |      |   | (29   | )    |  |   | (25   | )
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|Income before equity in undistributed net income of subsidiaries |  |                          | 1,949 |   |      |   | 1,847 |      |  |   | 1,852 |  
|Equity in undistributed net income of subsidiaries               |  |                          | 1,106 |   |      |   | 945   |      |  |   | 1,523 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  
|NET INCOME                                                       |  | $                        | 3,055 |   |      | $ | 2,792 |      |  | $ | 3,375 |  
|                                                                 |  |                          |       |   |      |   |       |      |  |   |       |  



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



---

16. Parent Company Financial Data (continued)



STATEMENT OF CASH FLOWS



|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                  |  | Years Ended December 31, |       
|                                                                                  |  | 2004                     |        |   | 2003 |   |        | 2002 | 
|                                                                                  |  | (Dollars in Thousands)   |       
|Cash flows from operating activities                                              |  |                          |        |   |      |   |        |      |  |   |        |  
|Net income                                                                        |  | $                        | 3,055  |   |      | $ | 2,792  |      |  | $ | 3,375  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |        |   |      |   |        |      |  |   |        |  
|Equity in undistributed net income of subsidiary                                  |  |                          | (1,106 | ) |      |   | (945   | )    |  |   | (1,523 | )
|Other adjustments, net                                                            |  |                          | (42    | ) |      |   | (54    | )    |  |   | (29    | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |  |                          | 1,907  |   |      |   | 1,793  |      |  |   | 1,823  |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash flows from investing activities                                              |  |                          |        |   |      |   |        |      |  |   |        |  
|Investment in subsidiary                                                          |  |                          |       |   |      |   |       |      |  |   |       |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH USED BY INVESTING ACTIVITIES                                             |  |                          |       |   |      |   |       |      |  |   |       |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash flows from financing activities                                              |  |                          |        |   |      |   |        |      |  |   |        |  
|Purchase of treasury stock                                                        |  |                          | (5     | ) |      |   |       |      |  |   | (147   | )
|Cash dividends paid                                                               |  |                          | (1,752 | ) |      |   | (1,692 | )    |  |   | (1,694 | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|NET CASH USED BY FINANCING ACTIVITIES                                             |  |                          | (1,757 | ) |      |   | (1,692 | )    |  |   | (1,841 | )
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Net increase (decrease) in cash                                                   |  |                          | 150    |   |      |   | 101    |      |  |   | (18    | )
|Cash at January 1,                                                                |  |                          | 196    |   |      |   | 95     |      |  |   | 113    |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  
|Cash at December 31,                                                              |  | $                        | 346    |   |      | $ | 196    |      |  | $ | 95     |  
|                                                                                  |  |                          |        |   |      |   |        |      |  |   |        |  



17. Quarterly Financial Data
(Unaudited)



The summary financial data by quarter for the years ended
December 31, 2004, 2003 and 2002 was as follows:



|                                   |  |                                               |       |   |         |   |          |  |         |       |  |   |      
|---------------------------------- |  | --------------------------------------------- | ----- | - | ------- | - | -------- |  | ------- | ----- |  | - | -----
|                                   |  | Quarter Ended                                
|                                   |  | Mar. 31                                       |       |   | June 30 |   | Sept. 30 |  | Dec. 31
|                                   |  | (Dollars in Thousands, Except Per Share Data)
|2004                               |  |                                               |       |   |         |   |          |  |         |       |  |   |      
|Interest income                    |  | $                                             | 4,327 |   |         | $ | 4,410    |  | $       | 4,466 |  | $ | 4,668
|Net interest income                |  |                                               | 3,504 |   |         |   | 3,570    |  |         | 3,581 |  |   | 3,716
|Provision for possible loan losses |  |                                               | (26   | ) |         |   | 39       |  |         | 53    |  |   | 158  
|Securities gains (losses)          |  |                                               | (16   | ) |         |   |         |  |         |      |  |   |     
|Income before taxes                |  |                                               | 1,098 |   |         |   | 1,092    |  |         | 1,118 |  |   | 1,481
|Net income                         |  |                                               | 701   |   |         |   | 700      |  |         | 715   |  |   | 939  
|                                   |  |                                               |       |   |         |   |          |  |         |       |  |   |      
|NET INCOME PER SHARE               |  | $                                             | 0.35  |   |         | $ | 0.35     |  | $       | 0.36  |  | $ | 0.47 
|                                   |  |                                               |       |   |         |   |          |  |         |       |  |   |      
|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 
|                                   |  |                                               |       |   |         |   |          |  |         |       |  |   |      



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



---

Report of Independent Registered Public Accounting Firm



To 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, of changes in stockholders equity
and of cash flows present fairly, in all material respects, the financial position of First Century Bankshares, Inc. and its subsidiaries (the Corporation) at December 31, 2004 and December 31, 2003, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2004, 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 the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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 our opinion.



LOGO



Greensboro, North Carolina

March 10, 2005



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



---

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.                                                                                    |  | 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. WilkinsonExecutive Vice President &Chief Operating OfficerFirst Century Bank, N.A.  R. W. WilkinsonPresident & Chief ExecutiveOfficer, First CenturyBankshares, 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. |  | 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. WilkinsonExecutive Vice President &Chief Operating
OfficerFirst Century Bank, N.A.  R. W. WilkinsonPresident & Chief ExecutiveOfficer, First CenturyBankshares, 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. Private Investor                                                                                                                                                                                                                                                                    |  | 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.                                                                                                                 |  | Dennis WorrellPartner, Worrell Exxon &Owner, D & T Car Wash                                                                                                                                           



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



---

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. |  |                                                                                               
|                                                                                                                                    
|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.



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



---

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  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  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, Princeton Office |  | 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  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 & Compliance Officer  Mary A.
Musser Trust Officer  Mary Sue Anderson Assistant Trust Officer



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| |  | First Century Bankshares, Inc.    Page 51



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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