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Exhibit 13

LOGO







FIRST CENTURY BANKSHARES, INC.

---

2005 Annual Report



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Common Shares

Common shares are not traded on any stock exchange. Quotations may be

obtained through the OTC Bulletin Board under the trading symbol FCBS.



Stockholder Inquiries

Communications regarding transfer requirements
and lost certificates

should be directed to the transfer agent.



Transfer Agent/Registrar

Registrar and Transfer Company, 10 Commerce
Drive,

Cranford, NJ 07016-3572, (800) 368-5948, www.rtco.com



Form 10-K Information

Copies of the First Century Bankshares, Inc.
Annual Report to the

Securities and Exchange Commission, Form 10K, may be obtained by

writing J. Ronald Hypes, Treasurer, First Century Bankshares, Inc.,

P.O. Box 1559, Bluefield, WV 24701.



Annual Meeting

The annual meeting of the stockholders will be held at 11:00 AM, Tuesday,

April 18, 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 |  | 23

|                                  |  |   
|--------------------------------- |  | --
|Consolidated Statements of Income |  | 24

|                                                           |  |   
|---------------------------------------------------------- |  | --
|Consolidated Statements of Changes in Stockholders Equity |  | 25

|                                      |  |   
|------------------------------------- |  | --
|Consolidated Statements of Cash Flows |  | 26

|                                           |  |   
|------------------------------------------ |  | --
|Notes to Consolidated Financial Statements |  | 27

|                                                          |  |   
|--------------------------------------------------------- |  | --
|Reports of Independent Registered Public Accounting Firms |  | 49

|                    |  |   
|------------------- |  | --
|Boards of Directors |  | 51

|                            |  |   
|--------------------------- |  | --
|Corporate and Bank Officers |  | 53

|                                                    |  |           
|--------------------------------------------------- |  | ----------
|First Century Bankshares, Inc. Subsidiary Locations |  | Back Cover



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##### Table of Contents

Financial

Highlights



|                        |  |                                               |         |      |   |         |  |   |        
|----------------------- |  | --------------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                        |  | 2005                                          |         | 2004 |   | 2003   
|                        |  | (Dollars in Thousands, Except Per Share Data)
|FOR THE YEAR            |  |                                               |         |      |   |         |  |   |        
|Total operating income  |  | $                                             | 24,755  |      | $ | 21,605  |  | $ | 22,060 
|Total operating expense |  |                                               | 18,607  |      |   | 16,946  |  |   | 17,806 
|Net income              |  |                                               | 4,004   |      |   | 3,055   |  |   | 2,792  
|Cash dividends declared |  |                                               | 1,968   |      |   | 1,752   |  |   | 1,692  
|AT YEAR END             |  |                                               |         |      |   |         |  |   |        
|Assets                  |  | $                                             | 390,789 |      | $ | 378,079 |  | $ | 363,727
|Deposits                |  |                                               | 332,791 |      |   | 321,251 |  |   | 307,719
|Loans                   |  |                                               | 257,732 |      |   | 247,808 |  |   | 246,950
|Securities              |  |                                               | 99,101  |      |   | 94,152  |  |   | 78,444 
|Stockholders equity    |  |                                               | 35,953  |      |   | 35,789  |  |   | 34,994 
|PER COMMON SHARE        |  |                                               |         |      |   |         |  |   |        
|Net income, basic       |  | $                                             | 2.03    |      | $ | 1.53    |  | $ | 1.40   
|Net income, diluted     |  |                                               | 2.02    |      |   | 1.53    |  |   | 1.40   
|Cash dividends declared |  |                                               | 1.00    |      |   | 0.88    |  |   | 0.85   
|Book value              |  |                                               | 18.36   |      |   | 17.98   |  |   | 17.58  



|     |  |     
|---- |  | ----
|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 2005.

First Century Bankshares, Inc. had earnings of
$4,004,000 for the year ended 2005, which was an increase of 31.1% over the previous years earnings of $3,055,000. Earnings for the year ended 2005 reflect a return on average assets (ROAA) of 1.04% compared to 0.83% for year ended 2004. Also,
these earnings reflect an annualized return on average equity (ROAE) of 10.97% compared to 8.67% for year ended 2004. Management is pleased with the continued improvement of our company, and the returns are within the parameters of year two of our
board approved strategic plan.

I am also pleased that during 2005 we were able to increase the dividend paid to our shareholders by 13.6 %.
Total dividends paid for 2005 were $1.00 per share compared to $0.88 per share in 2004. This also is on target with our corporate strategic plan to enhance shareholder value. We believe that the efforts that have been made to improve credit quality,
as well as, expanding our corporate footprint will enhance our opportunity to grow the assets and earnings for the corporation.

During
2005, the corporation announced plans to expand into the Beckley, West Virginia market. We believe this is a natural extension of our corporate footprint, and staffing has already been added to ensure success in this market. In early 2006 we opened
a leased space full service facility (1408 Harper Road) while a full service branch location is constructed. We would anticipate being in our new location in late 2006, and we will keep you informed of our progress. We are
excited about this opportunity and feel it will be a strong market for growth potential while supporting our current customers throughout southern West Virginia.

Credit quality continues to be a primary focus for the corporation. Properly structured transactions with strong cash flow and terms will remain our focus. Our primary customer niche is the small to medium sized
business, and we pride ourselves with giving quality service and a quick response to every request. As we experience pressure on our margin from both sides of the balance sheet, we feel we need to have proper controls in place with credit analysis,
credit review and risk rating systems, and pricing to ensure proper management of our processes. During the last year we have benefited from our asset sensitive pricing models which have allowed us to re-price our assets in a rising rate
environment.

We are also expanding the offerings of our First Century Financial Services Group (formerly known as the Trust Department), to
better serve our clients needs. We have a well trained staff of officers and employees who are eager to meet the ever changing needs of their clients. If we can be of service to you, please let us know. With expanded capabilities and product
offerings, we continue to see increases in new business opportunities and growth in our total assets under management. We believe we are well positioned for future growth and providing value to our clients.

During late 2005 plans were made to enhance our ATM network in southern West Virginia. In early 2006, we installed two new ATMs to better serve our
customers. One site selection is in Bluewell, West Virginia at 3722 Coal Heritage Road. The other site is on the east end of Princeton, West Virginia at 2000 Athens Road heading toward Concord University. Both of these sites will compliment our
efforts throughout the region. We currently have 17 locations including these two new additions.

We believe we have successfully achieved
the year two goals of our corporate strategic plan that has a timeline from 2004-2008. We plan to keep you fully advised as to our progress as we move forward. We have set high expectations for our corporation, and we have every reason to believe we
will achieve our goals. We feel the corporation is on the right track for success and with your support, I am confident that we will stay on course of remaining a locally owned and locally managed community bank serving southern West Virginia and
southwest Virginia.



Sincerely,



/s/ R. W. Wilkinson



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



|                                                           |  |                        |         |   |                        |   |             |                        |      |                |  |   |          |   |             |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|---------------------------------------------------------- |  | ---------------------- | ------- | - | ---------------------- | - | ----------- | ---------------------- | ---- | -------------- |  | - | -------- | - | ----------- | - | ------ | -------------- | ---- | - | -------------- | - | ---------- | - |  | - | ------ |  | ---- | -
|                                                           |  | 2005                   |         |   | 2004                   |   |             | 2003                   |     
|                                                           |  | (Dollars in Thousands) |         |   | (Dollars in Thousands) |   |             | (Dollars in Thousands) |     
|ASSETS:                                                    |  | AverageBalance         |         |   | Interest               |   | AverageRate |                        |      | AverageBalance |  |   | Interest |   | AverageRate |   |        | AverageBalance |      |   | Income/Expense |   | Yield/Rate |  
|Interest-bearing deposits with banks                       |  | $                      | 943     |   |                        | $ | 26          |                        | 2.76 | %              |  | $ | 1,142    |   |             | $ | 14     |                | 1.23 | % |                | $ | 1,762      |   |  | $ | 16     |  | 0.91 | %
|Securities available for sale and other equity securities: |  |                        |         |   |                        |   |             |                        |      |                |  |   |          |   |             |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|U. S. Treasury securities                                  |  |                        | 999     |   |                        |   | 20          |                        | 2.00 | %              |  |   | 1,017    |   |             |   | 19     |                | 1.87 | % |                |   | 1,733      |   |  |   | 80     |  | 4.62 | %
|U. S. Government agency securities                         |  |                        | 76,581  |   |                        |   | 2,685       |                        | 3.51 | %              |  |   | 63,743   |   |             |   | 2,141  |                | 3.36 | % |                |   | 59,041     |   |  |   | 2,024  |  | 3.43 | %
|Other securities                                           |  |                        | 6,961   |   |                        |   | 377         |                        | 5.42 | %              |  |   | 9,657    |   |             |   | 515    |                | 5.33 | % |                |   | 10,204     |   |  |   | 570    |  | 5.59 | %
|Total securities available for sale                        |  |                        | 84,541  |   |                        |   | 3,082       |                        | 3.65 | %              |  |   | 74,417   |   |             |   | 2,675  |                | 3.59 | % |                |   | 70,978     |   |  |   | 2,674  |  | 3.77 | %
|Securities held to maturity:                               |  |                        |         |   |                        |   |             |                        |      |                |  |   |          |   |             |   |        |                |      |   |                |   |            |   |  |   |        |  |      |  
|State and municipal securities                             |  |                        | 13,071  |   |                        |   | 509         |                        | 3.89 | %              |  |   | 12,983   |   |             |   | 523    |                | 4.03 | % |                |   | 10,028     |   |  |   | 454    |  | 4.53 | %
|Other securities                                           |  |                        | 75      |   |                        |   | 5           |                        | 6.67 | %              |  |   | 86       |   |             |   | 6      |                | 6.98 | % |                |   | 124        |   |  |   | 9      |  | 7.26 | %
|Total securities held to maturity                          |  |                        | 13,146  |   |                        |   | 514         |                        | 3.91 | %              |  |   | 13,069   |   |             |   | 529    |                | 4.05 | % |                |   | 10,152     |   |  |   | 463    |  | 4.56 | %
|Federal funds sold                                         |  |                        | 2,620   |   |                        |   | 81          |                        | 3.09 | %              |  |   | 2,722    |   |             |   | 35     |                | 1.29 | % |                |   | 4,678      |   |  |   | 50     |  | 1.07 | %
|Loans                                                      |  |                        | 253,621 |   |                        |   | 16,715      |                        | 6.59 | %              |  |   | 246,814  |   |             |   | 14,618 |                | 5.92 | % |                |   | 241,266    |   |  |   | 14,876 |  | 6.17 | %
|Total interest-earning assets                              |  |                        | 354,871 |   |                        |   | 20,418      |                        | 5.75 | %              |  |   | 338,164  |   |             |   | 17,871 |                | 5.28 | % |                |   | 328,836    |   |  |   | 18,079 |  | 5.50 | %
|Allowance for loan losses                                  |  |                        | (2,792  | ) |                        |   |             |                        |      |                |  |   | (3,040   | ) |             |   |        |                |      |   |                |   | (3,016     | ) |  |   |        |  |      |  
|Cash and due from banksdemand                             |  |                        | 11,232  |   |                        |   |             |                        |      |                |  |   | 10,683   |   |             |   |        |                |      |   |                |   | 12,501     |   |  |   |        |  |      |  
|Bank Premises and equipmentnet                            |  |                        | 12,065  |   |                        |   |             |                        |      |                |  |   | 12,397   |   |             |   |        |                |      |   |                |   | 11,089     |   |  |   |        |  |      |  
|Other assets                                               |  |                        | 9,783   |   |                        |   |             |                        |      |                |  |   | 9,975    |   |             |   |        |                |      |   |                |   | 11,540     |   |  |   |        |  |      |  
|TOTAL ASSETS                                               |  | $                      | 385,159 |   |                        |   |             |                        |      |                |  | $ | 368,179  |   |             |   |        |                |      |   |                | $ | 360,950    |   |  |   |        |  |      |  
|LIABILITIES AND STOCKHOLDERS EQUITY:                      |  |                        |         |   |                        |   |             |                        |      |                |  |   |          |   |             |   |        |                |      |   |                |   |            |   |  |   |       
|Interest-bearing demand deposits                           |  | $                      | 78,343  |   |                        | $ | 352         |                        | 0.45 | %              |  | $ | 78,546   |   |             | $ | 190    |                | 0.24 | % |                | $ | 76,398     |   |  | $ | 246    |  | 0.32 | %
|Savings deposits                                           |  |                        | 65,113  |   |                        |   | 521         |                        | 0.80 | %              |  |   | 68,575   |   |             |   | 499    |                | 0.73 | % |                |   | 69,563     |   |  |   | 601    |  | 0.86 | %
|Time deposits                                              |  |                        | 136,285 |   |                        |   | 3,689       |                        | 2.71 | %              |  |   | 125,546  |   |             |   | 2,724  |                | 2.17 | % |                |   | 124,104    |   |  |   | 2,990  |  | 2.41 | %
|Total interest-bearing deposits                            |  |                        | 279,741 |   |                        |   | 4,562       |                        | 1.63 | %              |  |   | 272,667  |   |             |   | 3,413  |                | 1.25 | % |                |   | 270,065    |   |  |   | 3,837  |  | 1.42 | %
|Short-term debt                                            |  |                        | 18,073  |   |                        |   | 335         |                        | 1.85 | %              |  |   | 16,723   |   |             |   | 87     |                | 0.52 | % |                |   | 15,550     |   |  |   | 75     |  | 0.48 | %
|Total interest-bearing liabilities                         |  |                        | 297,814 |   |                        |   | 4,897       |                        | 1.64 | %              |  |   | 289,390  |   |             |   | 3,500  |                | 1.21 | % |                |   | 285,615    |   |  |   | 3,912  |  | 1.37 | %
|Demand deposits                                            |  |                        | 48,423  |   |                        |   |             |                        |      |                |  |   | 41,153   |   |             |   |        |                |      |   |                |   | 38,682     |   |  |   |        |  |      |  
|Other liabilities                                          |  |                        | 2,408   |   |                        |   |             |                        |      |                |  |   | 2,411    |   |             |   |        |                |      |   |                |   | 2,900      |   |  |   |        |  |      |  
|TOTAL LIABILITIES                                          |  |                        | 348,645 |   |                        |   |             |                        |      |                |  |   | 332,954  |   |             |   |        |                |      |   |                |   | 327,197    |   |  |   |        |  |      |  
|Stockholders equity                                       |  |                        | 36,514  |   |                        |   |             |                        |      |                |  |   | 35,225   |   |             |   |        |                |      |   |                |   | 33,753     |   |  |   |        |  |      |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                 |  | $                      | 385,159 |   |                        |   |             |                        |      |                |  | $ | 368,179  |   |             |   |        |                |      |   |                | $ | 360,950    |   |  |   |        |  |      |  
|Average rate paid to fund earning assets                   |  |                        |         |   |                        |   |             |                        | 1.38 | %              |  |   |          |   |             |   |        |                | 1.04 | % |                |   |            |   |  |   |        |  | 1.19 | %
|NET INTEREST DIFFERENTIAL                                  |  |                        |         |   |                        | $ | 15,521      |                        | 4.37 | %              |  |   |          |   |             | $ | 14,371 |                | 4.25 | % |                |   |            |   |  | $ | 14,167 |  | 4.31 | %

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 $257,000 in 2005, $432,000 in 2004, and $619,000 in 2003. Average balances of
securities available for sale are reported at amortized cost; excludes pretax unrealized losses of $1,769,000 in 2005 and unrealized gains of $8,000 in 2004, and $772,000 in 2003. Interest income on tax exempt securities is shown based on the actual
yield.



VOLUME/RATE ANALYSIS



|                                                          |  |                                 |     |   |                        |   |       |                        |  |   |        |   |  |      |     |   |       |   |      |        |  |   |      |   |  |       |      |   |  |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | ------------------------------- | --- | - | ---------------------- | - | ----- | ---------------------- |  | - | ------ | - |  | ---- | --- | - | ----- | - | ---- | ------ |  | - | ---- | - |  | ----- | ---- | - |  | - | ------ | - |  | - | ------ | -
|                                                          |  | Increase (Decrease) in Interest |    
|                                                          |  | 2005 vs. 2004                   |     |   | 2004 vs. 2003          |   |       | 2003 vs. 2002          | 
|                                                          |  | (Dollars in Thousands)          |     |   | (Dollars in Thousands) |   |       | (Dollars in Thousands) | 
|                                                          |  | Due to Change in (1)            |     |   | Due to Change in (1)   |   |       | Due to Change in (1)   | 
|Interest income on:                                       |  | Volume                          |     |   | Rate                   |   |       | Total                  |  |   | Volume |   |  | Rate |     |   | Total |   |      | Volume |  |   | Rate |   |  | Total |     
|Loans                                                     |  | $                               | 426 |   |                        | $ | 1,671 |                        |  | $ | 2,097  |   |  | $    | 335 |   |       | $ | (593 | )      |  | $ | (258 | ) |  | $     | 340  |   |  | $ | (2,139 | ) |  | $ | (1,799 | )
|Securities available for sale and other equity securities |  |                                 | 366 |   |                        |   | 41    |                        |  |   | 407    |   |  |      | 127 |   |       |   | (126 | )      |  |   | 1    |   |  |       | (400 | ) |  |   | (1,138 | ) |  |   | (1,538 | )
|Securities held to maturity                               |  |                                 | 3   |   |                        |   | (18   | )                      |  |   | (15    | ) |  |      | 126 |   |       |   | (60  | )      |  |   | 66   |   |  |       | 1    |   |  |   | (48    | ) |  |   | (47    | )
|Federal funds sold                                        |  |                                 | (2  | ) |                        |   | 48    |                        |  |   | 46     |   |  |      | (23 | ) |       |   | 8    |        |  |   | (15  | ) |  |       | 6    |   |  |   | (25    | ) |  |   | (19    | )
|Interest-bearing deposits with banks                      |  |                                 | (4  | ) |                        |   | 16    |                        |  |   | 12     |   |  |      | (7  | ) |       |   | 5    |        |  |   | (2   | ) |  |       | (32  | ) |  |   | (20    | ) |  |   | (52    | )
|TOTAL INTEREST INCOME                                     |  |                                 | 789 |   |                        |   | 1,758 |                        |  |   | 2,547  |   |  |      | 558 |   |       |   | (766 | )      |  |   | (208 | ) |  |       | (85  | ) |  |   | (3,370 | ) |  |   | (3,455 | )
|Interest expense on:                                      |  |                                 |     |   |                        |   |       |                        |  |   |        |   |  |      |     |   |       |   |      |        |  |   |      |   |  |       |      |   |  |   |        |   |  |   |        |  
|Interest-bearing demand deposits                          |  |                                 | (1  | ) |                        |   | 163   |                        |  |   | 162    |   |  |      | 6   |   |       |   | (62  | )      |  |   | (56  | ) |  |       | 16   |   |  |   | (283   | ) |  |   | (267   | )
|Savings deposits                                          |  |                                 | (26 | ) |                        |   | 48    |                        |  |   | 22     |   |  |      | (8  | ) |       |   | (94  | )      |  |   | (102 | ) |  |       | (54  | ) |  |   | (410   | ) |  |   | (464   | )
|Time deposits                                             |  |                                 | 262 |   |                        |   | 703   |                        |  |   | 965    |   |  |      | 33  |   |       |   | (299 | )      |  |   | (266 | ) |  |       | (178 | ) |  |   | (981   | ) |  |   | (1,159 | )
|Short-term borrowings                                     |  |                                 | 16  |   |                        |   | 232   |                        |  |   | 248    |   |  |      | 6   |   |       |   | 6    |        |  |   | 12   |   |  |       | (13  | ) |  |   | (71    | ) |  |   | (84    | )
|TOTAL INTEREST EXPENSE                                    |  |                                 | 251 |   |                        |   | 1,146 |                        |  |   | 1,397  |   |  |      | 37  |   |       |   | (449 | )      |  |   | (412 | ) |  |       | (229 | ) |  |   | (1,745 | ) |  |   | (1,974 | )
|NET INTEREST INCOME                                       |  | $                               | 539 |   |                        | $ | 611   |                        |  | $ | 1,150  |   |  | $    | 521 |   |       | $ | (317 | )      |  | $ | 204  |   |  | $     | 144  |   |  | $ | (1,625 | ) |  | $ | (1,481 | )

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



First Century Bankshares, Inc.     Page 3



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##### Table of Contents

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 12 branch offices and 17 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 the date of the financial statements; accordingly, as this information changes, the financial



Page 4     First Century Bankshares, Inc.



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##### Table of Contents

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 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. We use procedures that 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.



First Century Bankshares, Inc.     Page 5



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Balance Sheet Analysis



Loans



AMOUNTS OF LOANS OUTSTANDING



|                                       |  |                        |         |      |   |         |  |      |         |      |   |         |  |   |        
|-------------------------------------- |  | ---------------------- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                       |  | December 31,          
|                                       |  | 2005                   |         | 2004 |   | 2003    |  | 2002 |         | 2001
|                                       |  | (Dollars in Thousands)
|Commercial, financial and agricultural |  | $                      | 44,721  |      | $ | 41,497  |  | $    | 47,010  |      | $ | 43,725  |  | $ | 49,056 
|Real estateconstruction               |  |                        | 11,654  |      |   | 11,037  |  |      | 6,137   |      |   | 12,268  |  |   | 7,755  
|Real estatemortgage                   |  |                        | 181,551 |      |   | 175,487 |  |      | 173,104 |      |   | 159,233 |  |   | 161,074
|Installment loans to individuals       |  |                        | 19,806  |      |   | 19,787  |  |      | 20,699  |      |   | 21,234  |  |   | 26,183 
|TOTAL LOANS OUTSTANDING                |  | $                      | 257,732 |      | $ | 247,808 |  | $    | 246,950 |      | $ | 236,460 |  | $ | 244,068



MATURITY SCHEDULE OF LOANS



|                                       |  |                                         |        |              |   |               |  |       |        |  |   |        
|-------------------------------------- |  | --------------------------------------- | ------ | ------------ | - | ------------- |  | ----- | ------ |  | - | -------
|                                       |  | Remaining maturity at December 31, 2005
|                                       |  | (Dollars in Thousands)                 
|                                       |  | 1 Year or Less                          |        | 1 to 5 Years |   | After 5 Years |  | Total
|Commercial, financial and agricultural |  | $                                       | 28,293 |              | $ | 12,765        |  | $     | 3,663  |  | $ | 44,721 
|Real estateconstruction               |  |                                         | 10,782 |              |   | 872           |  |       | 0      |  |   | 11,654 
|Real estatemortgage                   |  |                                         | 28,761 |              |   | 66,615        |  |       | 86,175 |  |   | 181,551
|Installment loans to individuals       |  |                                         | 4,117  |              |   | 12,923        |  |       | 2,766  |  |   | 19,806 
|TOTAL                                  |  | $                                       | 71,953 |              | $ | 93,175        |  | $     | 92,604 |  | $ | 257,732
|                                       |  |                                         |        |             
|With Predetermined interest rates      |  | $                                       | 18,449 |              | $ | 68,893        |  | $     | 52,821 |  | $ | 140,163
|With floating interest rates           |  |                                         | 53,504 |              |   | 24,282        |  |       | 39,783 |  |   | 117,569
|TOTAL                                  |  | $                                       | 71,953 |              | $ | 93,175        |  | $     | 92,604 |  | $ | 257,732



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 $9,924,000, or 4.0%, in 2005, following a 0.4% increase of $858,000 in 2004. 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, 2005, the loan portfolio comprised 72.2% of total interest-earning assets as compared to 71.0% of total
interest-earning assets at December 31, 2004, and contributed 81.9% of total interest income in 2005, 81.8% in 2004 and 82.3% in 2003.



During 2005, 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 have variable rates of interest, however, with the rising interest rate environment, our customers are seeking more fixed rate financing. 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 increased to an average rate of 6.59% in 2005 compared to 5.92% in 2004. This reflected the rising interest rate environment during 2005, and our ability to reprice loans at higher
interest rates.



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Our commercial loan portfolio is generally diversified and geographically dispersed within the region. At December 31,
2005, we had concentrations of $14,294,000, or 39.8% of stockholders equity in loans to lessors of real property, and $12,131,000, or 33.7% 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.



We also
are continuing to monitor the residential housing market for signs of deterioration. Rising interest rates traditionally have a negative impact on housing prices, as well as, produce an overall slowing of demand for residential mortgages, home
equity loans and lines of credit.



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 $61,016,000 at December 31, 2005, and $46,605,000
at December 31, 2004. This included $10,530,000 of commitments at December 31, 2005 from the implementation of a new overdraft protection product during 2005. This also included unfunded loan commitments and unused lines of credit totaling
$45,874,000 at December 31, 2005 and $41,404,000 at December 31, 2004. Additionally, standby letters of credit totaled $4,612,000 at December 31, 2005, and $5,201,000 at December 31, 2004. 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, 2005. Further discussion of
these commitments is included in Note 14 to the Consolidated Financial Statements.



COMMITMENTS



|                                                                                 |  |                        |        |              |   |              |  |              |       |       |   |       |  |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ------------ | - | ------------ |  | ------------ | ----- | ----- | - | ----- |  | - | ------
|                                                                                 |  | 1 Year or Less         |        | 1 to 3 Years |   | 3 to 5 Years |  | Over 5 Years |       | Total
|Unused lines of credit                                                           |  | (Dollars in Thousands)
|Home equity lines                                                                |  | $                      |       |              | $ | 1,040        |  | $            | 497   |       | $ | 1,994 |  | $ | 3,531 
|Commercial real estate, construction and land development secured by real estate |  |                        | 18,149 |              |   | 426          |  |              | 1,569 |       |   | 2,019 |  |   | 22,163
|Other unused commitments                                                         |  |                        | 30,710 |              |   |             |  |              |      |       |   |      |  |   | 30,710
|Financial standby letters of credit                                              |  |                        | 3,878  |              |   | 464          |  |              | 270   |       |   |      |  |   | 4,612 



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NONPERFORMING ASSETS AND LOAN LOSS
ANALYSIS



|                                                            |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                            |  | Years Ended December 31, |        
|                                                            |  | 2005                     |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                            |  | (Dollars in Thousands)   |        
|Average amount of loans outstanding                         |  | $                        | 253,621 |   |      | $ | 246,814 |      |  | $ | 241,266 |   |  | $    | 236,130 |   |  | $ | 245,606 |  
|Allowance for loan losses:                                  |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Balance at beginning of the year                            |  | $                        | 2,900   |   |      | $ | 3,075   |      |  | $ | 3,005   |   |  | $    | 3,180   |   |  | $ | 3,180   |  
|Loans charged off                                           |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          | 105     |   |      |   | 121     |      |  |   | 78      |   |  |      | 532     |   |  |   | 780     |  
|Real estateconstruction                                    |  |                          |        |   |      |   | 234     |      |  |   |        |   |  |      |        |   |  |   |        |  
|Real estatemortgage                                        |  |                          | 424     |   |      |   | 30      |      |  |   | 272     |   |  |      | 1,157   |   |  |   | 1,199   |  
|Installment loans to individuals                            |  |                          | 232     |   |      |   | 165     |      |  |   | 315     |   |  |      | 477     |   |  |   | 659     |  
|TOTAL LOANS CHARGED OFF                                     |  |                          | 761     |   |      |   | 550     |      |  |   | 665     |   |  |      | 2,166   |   |  |   | 2,638   |  
|Loan recoveries                                             |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Commercial, financial and agricultural                      |  |                          | 15      |   |      |   |        |      |  |   | 4       |   |  |      | 86      |   |  |   | 32      |  
|Real estatemortgage                                        |  |                          | 40      |   |      |   | 95      |      |  |   | 14      |   |  |      | 63      |   |  |   | 239     |  
|Installment loans to individuals                            |  |                          | 33      |   |      |   | 56      |      |  |   | 64      |   |  |      | 57      |   |  |   | 33      |  
|TOTAL LOAN RECOVERIES                                       |  |                          | 88      |   |      |   | 151     |      |  |   | 82      |   |  |      | 206     |   |  |   | 304     |  
|Net loans charged off                                       |  |                          | (673    | ) |      |   | (399    | )    |  |   | (583    | ) |  |      | (1,960  | ) |  |   | (2,334  | )
|Provision for loan losses                                   |  |                          | 434     |   |      |   | 224     |      |  |   | 653     |   |  |      | 1,785   |   |  |   | 2,334   |  
|BALANCE AT END OF THE YEAR                                  |  | $                        | 2,661   |   |      | $ | 2,900   |      |  | $ | 3,075   |   |  | $    | 3,005   |   |  | $ | 3,180   |  
|Ratio of net loans charged off to average loans outstanding |  |                          | 0.27    | % |      |   | 0.16    | %    |  |   | 0.24    | % |  |      | 0.83    | % |  |   | 0.95    | %
|                                                            |  |                          |         |   |     
|Allowance at year end as a percent of loans                 |  |                          | 1.03    | % |      |   | 1.17    | %    |  |   | 1.25    | % |  |      | 1.27    | % |  |   | 1.30    | %
|Provision for loan losses as a percent of loans             |  |                          | 0.17    | % |      |   | 0.09    | %    |  |   | 0.27    | % |  |      | 0.76    | % |  |   | 0.95    | %
|Nonperforming assets (at year end)                          |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Nonaccrual                                                  |  | $                        | 2,173   |   |      | $ | 2,493   |      |  | $ | 2,542   |   |  | $    | 2,819   |   |  | $ | 3,045   |  
|Pastdue ninety days or more and still accruing             |  |                          | 517     |   |      |   | 423     |      |  |   | 400     |   |  |      | 612     |   |  |   | 1,140   |  
|Troubled debt restructurings                                |  |                          | 133     |   |      |   | 149     |      |  |   | 120     |   |  |      |        |   |  |   |        |  
|Other real estate owned                                     |  |                          | 316     |   |      |   | 112     |      |  |   | 383     |   |  |      | 793     |   |  |   | 1,279   |  
|TOTAL NONPERFORMING ASSETS                                  |  | $                        | 3,139   |   |      | $ | 3,177   |      |  | $ | 3,445   |   |  | $    | 4,224   |   |  | $ | 5,464   |  
|Nonperforming assets/total loans                            |  |                          | 1.2     | % |      |   | 1.3     | %    |  |   | 1.4     | % |  |      | 1.8     | % |  |   | 2.2     | %
|Nonperforming assets/total assets                           |  |                          | 0.8     | % |      |   | 0.8     | %    |  |   | 0.9     | % |  |      | 1.2     | % |  |   | 1.5     | %



ALLOCATION OF THE ALLOWANCE FOR
LOAN LOSSES



|                                       |  |                        |       |                                                  |        |   |        |      |                                                  |  |        |        |  |                                                  |       |  |        |   |                                                  |   |       |        |        |                                                  |  |   |       |  |        |  
|-------------------------------------- |  | ---------------------- | ----- | ------------------------------------------------ | ------ | - | ------ | ---- | ------------------------------------------------ |  | ------ | ------ |  | ------------------------------------------------ | ----- |  | ------ | - | ------------------------------------------------ | - | ----- | ------ | ------ | ------------------------------------------------ |  | - | ----- |  | ------ | -
|                                       |  | 2005                   |       |                                                  | 2004   |   |        | 2003 |                                                  |  | 2002   |        |  | 2001                                             |      
|                                       |  | (Dollars in Thousands) |      
|                                       |  | Amount                 |       | Percent of Loans in Each Category to Total Loans |        |   | Amount |      | Percent of Loans in Each Category to Total Loans |  |        | Amount |  | Percent of Loans in Each Category to Total Loans |       |  | Amount |   | Percent of Loans in Each Category to Total Loans |   |       | Amount |        | Percent of Loans in Each Category to Total Loans | 
|Commercial, financial and agricultural |  | $                      | 495   |                                                  | 17.35  | % |        | $    | 534                                              |  | 16.75  | %      |  | $                                                | 652   |  | 19.04  | % |                                                  | $ | 1,083 |        | 18.49  | %                                                |  | $ | 1,143 |  | 20.10  | %
|Real estateconstruction               |  |                        | 15    |                                                  | 4.52   | % |        |      | 37                                               |  | 4.45   | %      |  |                                                  |      |  | 2.48   | % |                                                  |   |      |        | 5.19   | %                                                |  |   |      |  | 3.18   | %
|Real estatemortgage                   |  |                        | 1,422 |                                                  | 70.45  | % |        |      | 1,715                                            |  | 70.82  | %      |  |                                                  | 1,964 |  | 70.10  | % |                                                  |   | 1,493 |        | 67.34  | %                                                |  |   | 1,485 |  | 65.99  | %
|Installment loans to individuals       |  |                        | 484   |                                                  | 7.68   | % |        |      | 404                                              |  | 7.98   | %      |  |                                                  | 459   |  | 8.38   | % |                                                  |   | 429   |        | 8.98   | %                                                |  |   | 546   |  | 10.73  | %
|Unallocated                            |  |                        | 245   |                                                  | N/A    |   |        |      | 210                                              |  | N/A    |        |  |                                                  |      |  | N/A    |   |                                                  |   |      |        | N/A    |                                                  |  |   | 6     |  | N/A    |  
|TOTAL                                  |  | $                      | 2,661 |                                                  | 100.00 | % |        | $    | 2,900                                            |  | 100.00 | %      |  | $                                                | 3,075 |  | 100.00 | % |                                                  | $ | 3,005 |        | 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 $38,000, or 1.2%, from December 31, 2004 to December 31, 2005, following a decrease of $268,000, or 7.8% in 2004. 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



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than 90 days as nonaccrual if the repayment of principal or interest is in doubt. Our holdings of other real estate owned increased $204,000 in 2005,
following a decrease of $271,000 in 2004. Other real estate owned consists entirely of residential real estate and is recorded at fair value less estimated selling costs.



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 1.03% of year-end loans at December 31, 2005 and 1.17% at December 31, 2004. 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 further supports the adequacy of the loan loss allowance. Loans are categorized into one of nine loan grades with grades 1 through 5 representing various levels of acceptable loans and grades 6 through 9
representing various levels of credit deterioration.



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 $418,000 and $514,000 at December 31 2005 and 2004, 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 2005, securities, our second largest asset, increased by $4,949,000 or 5.3%,
reflecting additional liquidity over the level of loan production for the year. At December 31, 2005, securities comprised 27.8% of total interest-earning assets compared to 27.0% of total interest-earning assets at December 31, 2004. 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 manag
-



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ing 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 as we expand our market footprint requires maintaining adequate liquidity in the securities portfolio.



The remaining securities, primarily state, county and municipal obligations comprise the held to maturity portfolio. Net unrealized gains in the held to maturity
portfolio amounted to approximately $74,000 at December 31, 2005, compared to net unrealized gains of $189,000 at December 31, 2004. The held to maturity portfolio increased from $12,957,000 at December 31, 2004, to $13,217,000 at December 31, 2005,
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, 2005, the investment portfolio contained $5,000,000 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 $60,000 in
2005 and $16,000 in 2004. We took these losses in an effort to restructure small portions of the portfolio to enhance future returns.



At December 31, 2005, we held certain investments having continuous unrealized loss positions for more than 12 months totaling $50,009,000. The majority of these
investments were in U.S. Treasury 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,          
|                                       |  | 2005                   |        | 2004 |   | 2003  
|                                       |  | (Dollars in Thousands)
|Securities available for sale:         |  |                        |        |      |   |        |  |   |       
|U. S. Government securities            |  | $                      | 986    |      | $ | 991    |  | $ | 1,004 
|U. S. Government agency securities     |  |                        | 78,802 |      |   | 70,720 |  |   | 54,543
|Other securities                       |  |                        | 5,000  |      |   | 8,302  |  |   | 9,711 
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 84,788 |      | $ | 80,013 |  | $ | 65,258
|Securities held to maturity:           |  |                        |        |      |   |        |  |   |       
|State, county and municipal securities |  | $                      | 13,142 |      | $ | 12,882 |  | $ | 12,063
|Other securities                       |  |                        | 75     |      |   | 75     |  |   | 100   
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 13,217 |      | $ | 12,957 |  | $ | 12,163



MATURITIES OF SECURITIES



The following table shows the contractual maturities of debt
securities at December 31, 2005 and the weighted average yields of such securities:



|                                       |  |                        |        |       |                               |   |        |                               |        |  |       |        |  |       |       |  |        |   |       |   |        |  |      |  
|-------------------------------------- |  | ---------------------- | ------ | ----- | ----------------------------- | - | ------ | ----------------------------- | ------ |  | ----- | ------ |  | ----- | ----- |  | ------ | - | ----- | - | ------ |  | ---- | -
|                                       |  | WithinOne Year         |        |       | After OneBut WithinFive Years |   |        | After FiveBut WithinTen Years |        |  | Total |       
|                                       |  | Amount                 |        | Yield |                               |   | Amount |                               | Yield  |  |       | Amount |  | Yield |       |  | Amount |   | Yield |  
|                                       |  | (Dollars in Thousands) |       
|Securities available for sale:         |  |                        |        |       |                               |   |        |                               |        |  |       |        |  |       |       |  |        |   |       |   |        |  |      |  
|U. S. Treasury securities              |  | $                      | 986    |       | 4.43                          | % |        | $                             |       |  |      |        |  | $     |      |  |       |   |       | $ | 986    |  | 4.43 | %
|U. S. Government agency securities     |  |                        | 8,199  |       | 3.01                          | % |        |                               | 67,964 |  | 3.72  | %      |  |       | 4,334 |  | 5.00   | % |       |   | 80,497 |  | 3.72 | %
|Other securities                       |  |                        | 3,001  |       | 6.08                          | % |        |                               | 2,000  |  | 4.56  | %      |  |       |      |  |       |   |       |   | 5,001  |  | 5.47 | %
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 12,186 |       | 3.88                          | % |        | $                             | 69,964 |  | 3.74  | %      |  | $     | 4,334 |  | 5.00   | % |       | $ | 86,484 |  | 3.83 | %
|Securities held to maturity:           |  |                        |        |       |                               |   |        |                               |        |  |       |        |  |       |       |  |        |   |       |   |        |  |      |  
|State, county and municipal securities |  | $                      | 1,874  |       | 3.35                          | % |        | $                             | 7,793  |  | 4.09  | %      |  | $     | 3,475 |  | 4.14   | % |       | $ | 13,142 |  | 4.00 | %
|Other Debt securities                  |  |                        |       |       |                              |   |        |                               | 75     |  | 7.20  | %      |  |       |      |  |       |   |       |   | 75     |  | 7.20 | %
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 1,874  |       | 3.35                          | % |        | $                             | 7,868  |  | 4.12  | %      |  | $     | 3,475 |  | 4.14   | % |       | $ | 13,217 |  | 4.01 | %



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



Deposits



Deposits, our major source of funds, increased approximately $11,540,000 in 2005,
following an increase of $13,532,000 in 2004. These increases occurred in both interest-bearing and noninterest-bearing deposits as we continued a strategy we began in 2004 to regain market share that we had lost over the previous two years to the
entrance of new competitors in the marketplace. In 2005, this strategy included the introduction of a no service charge checking account and a new overdraft protection product. The average rate paid on interest-bearing deposits in 2005 was 1.63% and
1.25% in 2004. 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 the long-term benefit of maintaining market share without sacrificing profitability.



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##### Table of Contents



AVERAGE DEPOSITS



|                                    |  |              |                        |      |              |    |              |   |         |  |        |  |      |         |  |      
|----------------------------------- |  | ------------ | ---------------------- | ---- | ------------ | -- | ------------ | - | ------- |  | ------ |  | ---- | ------- |  | -----
|                                    |  | 2005 Average |                        |      | 2004 Average |    | 2003 Average
|                                    |  | Amount       |                        | Rate |              |    | Amount       |   | Rate    |  | Amount |  | Rate
|                                    |  |              | (Dollars in Thousands)
|Noninterestbearing demand deposits |  | $            | 48,423                 |      | N            | /A |              | $ | 41,153  |  | N/A    |  | $    | 38,682  |  | N/A  
|Interestbearing demand deposits    |  |              | 78,343                 |      | 0.45         | %  |              |   | 78,546  |  | 0.24%  |  |      | 76,398  |  | 0.32%
|Savings deposits                    |  |              | 65,113                 |      | 0.80         | %  |              |   | 68,575  |  | 0.73%  |  |      | 69,563  |  | 0.86%
|Time deposits                       |  |              | 136,285                |      | 2.71         | %  |              |   | 125,546 |  | 2.17%  |  |      | 124,104 |  | 2.41%
|TOTAL AVERAGE DEPOSITS              |  | $            | 328,164                |      | 1.39         | %  |              | $ | 313,820 |  | 1.09%  |  | $    | 308,747 |  | 1.24%



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, 2005     
|                                                  |  | (Dollars in Thousands)
|Under 3 months                                    |  | $                      | 7,769 
|3 to 6 months                                     |  |                        | 6,054 
|6 to 12 months                                    |  |                        | 7,567 
|Over 12 months                                    |  |                        | 19,539
|TOTAL CERTIFICATES OF DEPOSIT OF $100,000 OR MORE |  | $                      | 40,929



SHORT-TERM BORROWED FUNDS



|                                                                           |  |                        |        |      |   |        |  |   |       
|-------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                                                           |  | December 31,          
|                                                                           |  | 2005                   |        | 2004 |   | 2003  
|                                                                           |  | (Dollars in Thousands)
|Federal funds purchased and securities sold under agreements to repurchase |  | $                      | 19,656 |      | $ | 18,947 |  | $ | 19,141
|Other borrowed funds                                                       |  |                        | 26     |      |   | 26     |  |   | 26    
|TOTAL BORROWED FUNDS                                                       |  | $                      | 19,682 |      | $ | 18,973 |  | $ | 19,167



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



|                                             |  |      |        |      |   |        |  |   |       
|-------------------------------------------- |  | ---- | ------ | ---- | - | ------ |  | - | ------
|                                             |  | 2005 |        | 2004 |   | 2003  
|Average interest rates at December 31        |  |      | 3.03%  |      |   | 1.07%  |  |   | 0.34% 
|Maximum amounts outstanding at any month-end |  | $    | 23,536 |      | $ | 20,024 |  | $ | 19,141
|Average daily amount outstanding             |  | $    | 18,047 |      | $ | 16,697 |  | $ | 15,524
|Weighted average interest rates              |  |      | 1.85%  |      |   | 0.52%  |  |   | 0.48% 



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 2005 to $1.00 per share, an increase of 13.6%, from the $0.88 per share paid in 2004. Cash dividends paid to stockholders during 2005 totaled $1,968,000, following $1,752,000 in 2004 and $1,692,000 for 2003. This represents a
dividend pay out ratio (dividends divided by net income) of 49% in 2005, 58% in 2004 and 61% in 2003. 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.



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##### Table of Contents

One of our primary objectives is to maintain a strong capital position. Stockholders equity increased $164,000 or
0.5% in 2005. This increase resulted primarily from an increase in retained earnings of $2,036,000; offset by a decrease in accumulated other comprehensive income of $1,125,000. Additionally, during 2005 we acquired 33,027 treasury shares for a
total of $756,000 through our stock repurchase program. At December 31, 2005, we had approval to repurchase 17,773 shares of the Corporations common stock. We will continue to evaluate capital utilization to provide the most long-term value
for our shareholders. The percentage of earnings reinvested in the Corporation (net income less dividends as a percentage of net income) for the years 2005, 2004 and 2003 was 51%, 42% and 39%, 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 5.6% in 2005,
3.7% in 2004 and 3.3% in 2003.



REGULATORY CAPITAL



|                         |  |        |  |                                     |  |         
|------------------------ |  | ------ |  | ----------------------------------- |  | --------
|Entity                   |  | Tier 1 |  | Combined Capital(Tier 1 and Tier 2) |  | Leverage
|Consolidated             |  | 11.57% |  | 12.55%                              |  | 8.37%   
|First Century Bank, N.A. |  | 11.14% |  | 12.12%                              |  | 8.06%   



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 $31,889,000 at December 31, 2005, or 11.57% of total risk-weighted assets, compared to $30,600,000 at December 31, 2004, or 11.47% 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 $2,708,000 at December 31, 2005, or 0.98% of total risk-weighted assets, compared to $2,957,000 at December 31, 2004, or 1.11% of total risk-weighted assets. Our total consolidated risk-based capital was $34,597,000 at December 31, 2005,
or 12.55% of total risk-weighted assets, compared to $33,557,000, or 12.58% of total risk-weighted assets as of December 31, 2004. 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, 2005 and 2004, the Corporations leverage ratio was 8.37% and 8.26% respectively; therefore, we exceeded all current minimum capital requirements.



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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, 2005, simulation indicated the impact of
a 200 basis point increase in rates would result in a 2.7% increase in net interest income, while a 200 basis point decline in rates would result in a 6.4% 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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##### Table of Contents

ANALYSIS OF INTEREST RATE SENSITIVITY



An analysis of interest rate sensitivity as of December 31, 2005, is shown below.



|                                                                    |  |                        |         |   |        |   |         |       |  |   |         |   |  |   |         |   |  |   |        
|------------------------------------------------------------------- |  | ---------------------- | ------- | - | ------ | - | ------- | ----- |  | - | ------- | - |  | - | ------- | - |  | - | -------
|                                                                    |  | Months                 |         |   |        |   |         | Years |  |   | Totals 
|                                                                    |  | Less Than 3            |         |   | 3  12 |   |         | 1  5 |  |   | Over 5  |   | 
|                                                                    |  | (Dollars in Thousands) |         |   |       
|Investment securities                                               |  | $                      | 2,243   |   |        | $ | 12,679  |       |  | $ | 75,304  |   |  | $ | 8,875   |   |  | $ | 99,101 
|Federal funds sold and interest-bearingbalances with banks          |  |                        | 6       |   |        |   |        |       |  |   |        |   |  |   |        |   |  |   | 6      
|Loans                                                               |  |                        | 110,211 |   |        |   | 45,055  |       |  |   | 82,578  |   |  |   | 19,888  |   |  |   | 257,732
|Interest-earning assets                                             |  |                        | 112,460 |   |        |   | 57,734  |       |  |   | 157,882 |   |  |   | 28,763  |   |  |   | 356,839
|Time deposits                                                       |  |                        | 25,412  |   |        |   | 58,579  |       |  |   | 60,740  |   |  |   |        |   |  |   | 144,731
|Other interest-bearing deposits                                     |  |                        | 56,133  |   |        |   | 28,066  |       |  |   | 53,216  |   |  |   |        |   |  |   | 137,415
|Other interest-bearing liabilities                                  |  |                        | 15,306  |   |        |   | 4,350   |       |  |   |        |   |  |   | 26      |   |  |   | 19,682 
|Interest-bearing liabilities                                        |  |                        | 96,851  |   |        |   | 90,995  |       |  |   | 113,956 |   |  |   | 26      |   |  |   | 301,828
|Interest sensitivity gap                                            |  | $                      | 15,609  |   |        | $ | (33,261 | )     |  | $ | 43,926  |   |  | $ | 28,737  |   |  | $ | 55,011 
|Cumulative interest sensitivity gap                                 |  | $                      | 15,609  |   |        | $ | (17,652 | )     |  | $ | 26,274  |   |  | $ | 55,011  |   |  |   |        
|Ratio of interest-earning assets tointerest-bearing liabilities     |  |                        | 1.16    | x |        |   | 0.63    | x     |  |   | 1.39    | x |  |   | 1106.27 | x |  |   |        
|Ratio of cumulative interest sensitivitygap to total earning assets |  |                        | 4.37    | % |        |   | (4.95   | )%    |  |   | 7.36    | % |  |   | 15.42   | % |  |   |        



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 $5,931,000 of liquidity for the year ended December 31, 2005, compared to
$5,336,000 and $5,467,000 in 2004 and 2003, 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 2005, cash flows from financing activities increased $9,534,000, primarily due to
increased time deposits of $15,311,000. These funds were used primarily to fund increased loan demand of $10,821,000, and net additions to investment securities of $6,792,000.



A secondary source of liquidity comes from investing activities, principally the maturities of investment securities. The rising interest
rate environment during 2005 resulted in maturities and calls of investment securities decreasing to $12,238,000, compared to $33,191,000 in 2004 and $68,867,000 in 2003. As of December 31, 2005, we had approximately $61,903,000 of investment
securities that mature within 36 months.



We also have access to additional
sources of liquidity through the Federal Reserve System, through our membership in the Federal Home Loan Bank system and through The Bankers Bank, Atlanta, GA. As of December 31, 2005, FCBNA had a maximum borrowing capacity exceeding $100,000,000
through the Federal Home Loan Bank of Pittsburgh. These funds



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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. At
December 31, 2005, FCBNA owned $713,400 of stock for which we had $5,800,000 outstanding from our overnight repo account. We had no other outstanding advances from the Federal Home Loan Bank of Pittsburgh as of December 31, 2005.



At December 31, 2005, we also had outstanding $700,000 in federal funds purchased from The
Bankers Bank from our $6,000,000 federal funds line.



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 the three years ended December 31, 2005, 2004 and 2003, was $4,004,000,
$3,055,000, and $2,792,000, respectively. On a per share basis, diluted net income was $2.02 in 2005 compared to $1.53 in 2004, and $1.40 in 2003. Return on average equity was 10.97% in 2005 compared to 8.67% in 2004, and 8.27% in 2003. Return on
average assets for the year ended December 31, 2005 was 1.04% compared to 0.83% in 2004 and 0.77% in 2003. A summary of the significant factors influencing our results of operations and related ratios is included in the following discussion.



Earnings Per Share



The Earnings Per Share Table summarizes the principal sources of changes in earnings per
share for 2005. 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  2004           |  | $ | 1.53  |  
|Increase (decrease) due to change in: |  |   |       |  
|Net interest income                   |  |   | 0.58  |  
|Provision for loan losses             |  |   | (0.11 | )
|Other operating income                |  |   | 0.31  |  
|Personnel expense                     |  |   | 0.08  |  
|Other expense                         |  |   | (0.36 | )
|Net income per share  2005           |  | $ | 2.03  |  



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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 2005 net interest income increased $1,150,000 or 8.0%. This followed a 1.4% increase in 2004, and a 9.5% decrease in 2003. Net interest income resulted in a net interest margin of 4.37% for 2005, compared with
4.25% for 2004, and 4.31% for 2003.



For the year ended December 31, 2005,
interest income increased $2,547,000, or approximately 14.3%, compared to a decrease of $208,000, or 1.2% for 2004, and a decrease of $3,455,000, or 16.0% for 2003. Interest on loans, which increased $2,097,000 or 14.3%, contributed to the increase
in 2005. Interest on securities increased $392,000, or 12.2% for 2005. Interest income reflects a yield on average earnings assets of 5.75% for 2005, compared with 5.28% for 2004 and 5.50% for 2003.



The increase in interest income was accompanied by an increase in interest expense of
$1,397,000 or 39.9% for 2005. This followed a decrease in interest expense of $412,000, or 10.5% for 2004, and a decrease of $1,974,000, or 33.5% for 2003. Interest expense reflects a cost on average interest-bearing liabilities of 1.64% for 2005,
compared with 1.21% for 2004 and 1.37% for 2003.



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 2005
illustrates the asset sensitive structure of our balance sheet as repricing opportunities occurred in our loan portfolio during 2005. It also reflects the income provided by having additional assets in investment securities. The increase in interest
expense reflects the effects of rising interest rates for certificates of deposit and other savings deposits as well as our pricing strategy for regaining market share.



Provision for Loan Losses



We experienced a $210,000 increase in the provision for loan losses during 2005. The provision for loan losses was $434,000 for 2005, compared to $224,000 for 2004 and
$653,000 for 2003. The provision for loan losses as a percentage of average loans was 0.17% for 2005, compared with 0.09% for 2004, and 0.27% for 2003. The increased provision in 2005, was primarily the result of increased charge-offs of
approximately $211,000, mostly in certain residential and commercial mortgage loans. Additionally, reductions in recoveries of $63,000, primarily in the commercial mortgage sector, further affected the provision. The ratio of net charge offs to
average loans outstanding was 0.27% for 2005, compared with 0.16% for 2004, and 0.24% for 2003. In evaluating the loan portfolio at December 31, 2005, with the improved level of nonaccrual and past-due loans, we anticipate that loan losses will
remain stable in 2006.



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##### Table of Contents



Noninterest Income and Expense



Noninterest income net of securities gains and losses increased
$647,000 or 17.3% in 2005, following a $164,000 or 4.2% decrease in 2004, and a $337,000 or 17.9% decrease in 2003. The largest component of noninterest income is service charges on deposit accounts. These fees increased approximately $429,000 or
35.7% in 2005, following decreases of $69,000 or 5.4% in 2004, and $59,000 or 4.4% in 2003. During 2005, we implemented a new overdraft protection product with resulted in additional income of $486,000 compared with 2004. The second largest
component of noninterest income is fees from fiduciary activities. Fees from fiduciary activities increased approximately $13,000 in 2005, following a decrease of $78,000 in 2004 and an increase of $81,000 in 2003. The fluctuations in fiduciary fees
are attributed to the timing of the receipt of fees from estate settlements.



Noninterest expense, excluding the provision for loan losses, increased 0.4% in 2005, following a 0.1% decrease in 2004 and a 2.9% decrease in 2003. Personnel expense is the largest component of noninterest expense. Personnel expense
decreased 2.2% in 2005, following decreases of 5.2% in 2004, and 7.0% in 2003. 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 1995. For a complete 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 2005 in maintaining our staffing levels. With the opening of a new office in Beckley, WV, we expect personnel expenses along with other noninterest expenses to be higher in 2006. We remain committed to improving
operational efficiency throughout the organization while keeping compensation levels adequate to attract and retain competent staff. The reductions in personnel expense for 2005 generally offset increases in the various other components of
noninterest expense.



Income Taxes



Applicable income taxes for 2005 increased $540,000 or 33.7%. This followed a $142,000 or
9.7% increase for 2004, and a $408,000 or 21.8% decrease for 2003. Income taxes computed at the statutory rate are reduced primarily by interest earned on state and municipal obligations. For a complete discussion of the Corporations tax
position, refer to Note 12 of the Notes to Consolidated Financial Statements, presented elsewhere in this report.



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RETURN ON EQUITY AND ASSETS



|                                                                                 |  |              |   |  |       |   |  |       |  
|-------------------------------------------------------------------------------- |  | ------------ | - |  | ----- | - |  | ----- | -
|                                                                                 |  | December 31, |  
|                                                                                 |  | 2005         |   |  | 2004  |   |  | 2003  |  
|Percentage of net income to:                                                     |  |              |   |  |       |   |  |       |  
|Average stockholders equity                                                     |  | 10.97        | % |  | 8.67  | % |  | 8.27  | %
|Average total assets                                                             |  | 1.04         | % |  | 0.83  | % |  | 0.77  | %
|Percentage of dividends declared per common share to net income per common share |  | 49.26        | % |  | 57.52 | % |  | 60.71 | %
|Percentage of average stockholders equity to average total assets               |  | 9.48         | % |  | 9.57  | % |  | 9.35  | %



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 December 2004, the FASB issued SFAS 123(R), Share-Based Payment. SFAS 123(R) is a
revision of SFAS 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS 95 Statement of Cash Flows.
SFAS 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. The provisions of SFAS 123(R) were initially effective as of the beginning of the first interim period beginning after June 15, 2005. However, on April 15, 2005, the Securities and Exchange Commission
issued release number 33-8568 which delayed the effective date of SFAS 123(R) an additional six months, requiring that companies adopt the provisions of SFAS 123(R) for annual periods beginning after June 15, 2005. We do not believe the adoption of
the provisions of SFAS 123(R) will differ materially from the pro-forma disclosures included elsewhere in Note 1 in the Notes to Consolidated Financial Statements.



In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections, a Replacement of APB Opinion 20 and FASB Statement No.
3. SFAS 154 amends the existing guidance and applies to the accounting for and reporting of a change in accounting principle. Additionally, SFAS 154 applies to changes required by accounting pronouncements when the pronouncement does not include
explicit transition provisions. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after December 15, 2005. Management does not believe the adoption of this standard will have a material impact on the
financial condition or the results of operation of the Company.



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##### Table of Contents



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 2005 and 2004. Also presented below are the dividends paid for those respective years. The number
of stockholders of record on December 31, 2005, was 508 and outstanding shares totaled 1,958,273.



PER SHARE DATA BY QUARTER



|               |  |           |      |      |   |                   |  |     |       |      |   |       |  |   |       |  |   |      
|-------------- |  | --------- | ---- | ---- | - | ----------------- |  | --- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|               |  |           |      |      |   | Market Quotations
|               |  | Dividends |      | 2005 |   | 2004             
|Quarter        |  | 2005      |      | 2004 |   | High              |  | Low |       | High |   | Low  
|First Quarter  |  | $         | 0.23 |      | $ | 0.21              |  | $   | 26.50 |      | $ | 22.25 |  | $ | 22.00 |  | $ | 20.75
|Second Quarter |  |           | 0.23 |      |   | 0.21              |  |     | 24.50 |      |   | 21.75 |  |   | 21.98 |  |   | 20.15
|Third Quarter  |  |           | 0.24 |      |   | 0.21              |  |     | 25.25 |      |   | 22.00 |  |   | 22.75 |  |   | 21.00
|Fourth Quarter |  |           | 0.30 |      |   | 0.25              |  |     | 24.50 |      |   | 22.30 |  |   | 25.50 |  |   | 21.35



Page 20     First Century Bankshares, Inc.



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##### Table of Contents

Trust Asset Responsibility



Assets managed by our Trust Division 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.



First Century Bankshares, Inc.     Page 21



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##### Table of Contents



CONDENSED STATEMENTS OF FINANCIAL
CONDITION

Statistical Summary, 2005  2001



|                                     |  |                                               |         |   |   |     |   |      |   |         |   |  |     |      |  |   |         |   |  |      |   |  |   |         |   |      |     |   |   |   |         |   |  |     |  
|------------------------------------ |  | --------------------------------------------- | ------- | - | - | --- | - | ---- | - | ------- | - |  | --- | ---- |  | - | ------- | - |  | ---- | - |  | - | ------- | - | ---- | --- | - | - | - | ------- | - |  | --- | -
|                                     |  | December 31,                                  |        
|                                     |  | 2005                                          |         |   | % |     |   | 2004 |   |         | % |  |     | 2003 |  |   | %       |   |  | 2002 |   |  | % |         |   | 2001 |     |   | % |  
|                                     |  | (Dollars in Thousands, Except Per Share Data) |        
|Loans                                |  | $                                             | 257,732 |   |   | 66  |   |      | $ | 247,808 |   |  | 66  |      |  | $ | 246,950 |   |  | 68   |   |  | $ | 236,460 |   |      | 65  |   |   | $ | 244,068 |   |  | 66  |  
|Securities                           |  |                                               | 99,101  |   |   | 25  |   |      |   | 94,152  |   |  | 25  |      |  |   | 78,444  |   |  | 22   |   |  |   | 88,949  |   |      | 25  |   |   |   | 87,519  |   |  | 24  |  
|Federal funds sold                   |  |                                               |        |   |   |    |   |      |   | 4,000   |   |  | 1   |      |  |   | 4,000   |   |  | 1    |   |  |   |        |   |      |    |   |   |   | 2,000   |   |  | 1   |  
|Interestbearing deposits with banks |  |                                               | 6       |   |   |    |   |      |   | 3,042   |   |  | 1   |      |  |   | 1,002   |   |  |     |   |  |   | 1,871   |   |      | 1   |   |   |   | 862     |   |  |    |  
|INTEREST-EARNING ASSETS              |  |                                               | 356,839 |   |   | 91  |   |      |   | 349,002 |   |  | 93  |      |  |   | 330,396 |   |  | 91   |   |  |   | 327,280 |   |      | 91  |   |   |   | 334,449 |   |  | 91  |  
|Cash and due from banks              |  |                                               | 14,293  |   |   | 4   |   |      |   | 9,974   |   |  | 3   |      |  |   | 14,576  |   |  | 4    |   |  |   | 14,947  |   |      | 4   |   |   |   | 15,427  |   |  | 4   |  
|Premises and equipment               |  |                                               | 11,816  |   |   | 3   |   |      |   | 12,268  |   |  | 3   |      |  |   | 11,697  |   |  | 3    |   |  |   | 10,500  |   |      | 3   |   |   |   | 10,651  |   |  | 3   |  
|Other assets                         |  |                                               | 10,502  |   |   | 3   |   |      |   | 9,735   |   |  | 2   |      |  |   | 10,133  |   |  | 3    |   |  |   | 11,542  |   |      | 3   |   |   |   | 11,856  |   |  | 3   |  
|Allowance for loan losses            |  |                                               | (2,661  | ) |   | (1  | ) |      |   | (2,900  | ) |  | (1  | )    |  |   | (3,075  | ) |  | (1   | ) |  |   | (3,005  | ) |      | (1  | ) |   |   | (3,180  | ) |  | (1  | )
|TOTAL ASSETS                         |  | $                                             | 390,789 |   |   | 100 |   |      | $ | 378,079 |   |  | 100 |      |  | $ | 363,727 |   |  | 100  |   |  | $ | 361,264 |   |      | 100 |   |   | $ | 369,203 |   |  | 100 |  
|Savings deposits                     |  | $                                             | 137,415 |   |   | 35  |   |      | $ | 146,744 |   |  | 39  |      |  | $ | 144,294 |   |  | 40   |   |  | $ | 143,931 |   |      | 40  |   |   | $ | 145,130 |   |  | 39  |  
|Time deposits                        |  |                                               | 144,731 |   |   | 37  |   |      |   | 129,420 |   |  | 34  |      |  |   | 122,262 |   |  | 34   |   |  |   | 124,814 |   |      | 34  |   |   |   | 135,252 |   |  | 37  |  
|Other interestbearing liabilities   |  |                                               | 19,682  |   |   | 5   |   |      |   | 18,973  |   |  | 5   |      |  |   | 19,167  |   |  | 5    |   |  |   | 16,745  |   |      | 5   |   |   |   | 17,020  |   |  | 5   |  
|INTEREST-BEARING LIABILITIES         |  |                                               | 301,828 |   |   | 77  |   |      |   | 295,137 |   |  | 78  |      |  |   | 285,723 |   |  | 79   |   |  |   | 285,490 |   |      | 79  |   |   |   | 297,402 |   |  | 81  |  
|Demand deposits                      |  |                                               | 50,645  |   |   | 13  |   |      |   | 45,087  |   |  | 12  |      |  |   | 41,163  |   |  | 11   |   |  |   | 39,202  |   |      | 11  |   |   |   | 36,991  |   |  | 10  |  
|Other liabilities                    |  |                                               | 2,363   |   |   | 1   |   |      |   | 2,066   |   |  | 1   |      |  |   | 1,847   |   |  |     |   |  |   | 2,754   |   |      | 1   |   |   |   | 1,843   |   |  |    |  
|TOTAL LIABILITIES                    |  |                                               | 354,836 |   |   | 91  |   |      |   | 342,290 |   |  | 91  |      |  |   | 328,733 |   |  | 90   |   |  |   | 327,446 |   |      | 91  |   |   |   | 336,236 |   |  | 91  |  
|STOCKHOLDERS EQUITY                 |  |                                               | 35,953  |   |   | 9   |   |      |   | 35,789  |   |  | 9   |      |  |   | 34,994  |   |  | 10   |   |  |   | 33,818  |   |      | 9   |   |   |   | 32,967  |   |  | 9   |  
|TOTAL LIABILITIES & EQUITY           |  | $                                             | 390,789 |   |   | 100 |   |      | $ | 378,079 |   |  | 100 |      |  | $ | 363,727 |   |  | 100  |   |  | $ | 361,264 |   |      | 100 |   |   | $ | 369,203 |   |  | 100 |  
|TOTAL DEPOSITS                       |  | $                                             | 332,791 |   |   |     |   |      | $ | 321,251 |   |  |     |      |  | $ | 307,719 |   |  |      |   |  | $ | 307,947 |   |      |     |   |   | $ | 317,373 |   |  |     |  
|BOOK VALUE PER SHARE                 |  | $                                             | 18.36   |   |   |     |   |      | $ | 17.98   |   |  |     |      |  | $ | 17.58   |   |  |      |   |  | $ | 16.99   |   |      |     |   |   | $ | 16.48   |   |  |     |  



SUMMARY OF OPERATIONS

Statistical Summary, 2005  2001



|                           |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|-------------------------- |  | --------------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------ | - |  | - | ------ | -
|                           |  | Years Ended December 31,                      |       
|                           |  | 2005                                          |        |   | 2004 |   |        | 2003 |  |   | 2002   |   |  | 2001 |       
|                           |  | (Dollars in Thousands, Except Per Share Data) |       
|Interest income            |  | $                                             | 20,418 |   |      | $ | 17,871 |      |  | $ | 18,079 |   |  | $    | 21,534 |   |  | $ | 25,607 |  
|Interest expense           |  |                                               | 4,897  |   |      |   | 3,500  |      |  |   | 3,912  |   |  |      | 5,886  |   |  |   | 10,386 |  
|NET INTEREST MARGIN        |  |                                               | 15,521 |   |      |   | 14,371 |      |  |   | 14,167 |   |  |      | 15,648 |   |  |   | 15,221 |  
|Provision for loan losses  |  |                                               | 434    |   |      |   | 224    |      |  |   | 653    |   |  |      | 1,785  |   |  |   | 2,334  |  
|Net credit margin          |  |                                               | 15,087 |   |      |   | 14,147 |      |  |   | 13,514 |   |  |      | 13,863 |   |  |   | 12,887 |  
|Noninterest income         |  |                                               | 4,337  |   |      |   | 3,734  |      |  |   | 3,981  |   |  |      | 4,251  |   |  |   | 3,766  |  
|Noninterest expense        |  |                                               | 13,276 |   |      |   | 13,222 |      |  |   | 13,241 |   |  |      | 12,869 |   |  |   | 13,474 |  
|INCOME BEFORE INCOME TAXES |  |                                               | 6,148  |   |      |   | 4,659  |      |  |   | 4,254  |   |  |      | 5,245  |   |  |   | 3,179  |  
|Provision for income taxes |  |                                               | 2,144  |   |      |   | 1,604  |      |  |   | 1,462  |   |  |      | 1,870  |   |  |   | 1,034  |  
|NET INCOME                 |  | $                                             | 4,004  |   |      | $ | 3,055  |      |  | $ | 2,792  |   |  | $    | 3,375  |   |  | $ | 2,145  |  
|EARNINGS PER COMMON SHARE: |  |                                               |        |   |      |   |        |      |  |   |        |   |  |      |        |   |  |   |        |  
|Basic                      |  | $                                             | 2.03   |   |      | $ | 1.53   |      |  | $ | 1.40   |   |  | $    | 1.69   |   |  | $ | 1.07   |  
|Diluted                    |  | $                                             | 2.02   |   |      | $ | 1.53   |      |  | $ | 1.40   |   |  | $    | 1.69   |   |  | $ | 1.07   |  
|Dividends per common share |  | $                                             | 1.00   |   |      | $ | 0.88   |      |  | $ | 0.85   |   |  | $    | 0.85   |   |  | $ | 0.85   |  
|Payout ratio               |  |                                               | 49     | % |      |   | 58     | %    |  |   | 61     | % |  |      | 50     | % |  |   | 79     | %



Page 22     First Century Bankshares, Inc.



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##### Table of Contents

Consolidated

Statements of Financial Condition



|                                                                                                                                                                                                                               |  |                                              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                               |  | December 31,                                 |        
|                                                                                                                                                                                                                               |  | 2005                                         |         |   | 2004 |  
|ASSETS                                                                                                                                                                                                                         |  | (Dollars in Thousands,Except Per Share Data) |        
|Cash and due from banks                                                                                                                                                                                                        |  | $                                            | 14,293  |   |      | $ | 9,974   |  
|Interest-bearing balances with banks                                                                                                                                                                                           |  |                                              | 6       |   |      |   | 3,042   |  
|Federal funds sold                                                                                                                                                                                                             |  |                                              |        |   |      |   | 4,000   |  
|Securities available for sale                                                                                                                                                                                                  |  |                                              | 84,788  |   |      |   | 80,013  |  
|Securities held to maturity (estimated fair value of $13,143in 2005 and $13,146 in 2004)                                                                                                                                       |  |                                              | 13,217  |   |      |   | 12,957  |  
|Federal Home Loan Bank and Federal Reserve Bank Stock                                                                                                                                                                          |  |                                              | 1,096   |   |      |   | 1,182   |  
|Loans                                                                                                                                                                                                                          |  |                                              | 257,732 |   |      |   | 247,808 |  
|Less allowance for loan losses                                                                                                                                                                                                 |  |                                              | 2,661   |   |      |   | 2,900   |  
|Net loans                                                                                                                                                                                                                      |  |                                              | 255,071 |   |      |   | 244,908 |  
|Premises and equipment, net                                                                                                                                                                                                    |  |                                              | 11,816  |   |      |   | 12,268  |  
|Other assets                                                                                                                                                                                                                   |  |                                              | 10,502  |   |      |   | 9,735   |  
|TOTAL ASSETS                                                                                                                                                                                                                   |  | $                                            | 390,789 |   |      | $ | 378,079 |  
|                                                                                                                                                                                                                               |  |                                             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                           |  |                                              |         |   |      |   |         |  
|Deposits:                                                                                                                                                                                                                      |  |                                              |         |   |      |   |         |  
|Noninterest-bearing                                                                                                                                                                                                            |  | $                                            | 50,645  |   |      | $ | 45,087  |  
|Interest-bearing                                                                                                                                                                                                               |  |                                              | 282,146 |   |      |   | 276,164 |  
|Total deposits                                                                                                                                                                                                                 |  |                                              | 332,791 |   |      |   | 321,251 |  
|Short-term borrowings                                                                                                                                                                                                          |  |                                              | 19,682  |   |      |   | 18,973  |  
|Other liabilities                                                                                                                                                                                                              |  |                                              | 2,363   |   |      |   | 2,066   |  
|TOTAL LIABILITIES                                                                                                                                                                                                              |  |                                              | 354,836 |   |      |   | 342,290 |  
|Commitments and contingencies (see Notes 14 and 15)                                                                                                                                                                            |  |                                              |         |   |      |   |         |  
|STOCKHOLDERS EQUITY                                                                                                                                                                                                           |  |                                              |         |   |      |   |         |  
|Common stock - $1.25 par value; 10,000,000 shares authorized and2,000,000 shares issued at December 31, 2005 and 2004;1,958,273 shares outstanding at December 31, 2005,
and1,990,800 shares outstanding at December 31, 2004. |  |                                              | 2,500   |   |      |   | 2,500   |  
|Paid-in capital                                                                                                                                                                                                                |  |                                              | 785     |   |      |   | 785     |  
|Retained earnings                                                                                                                                                                                                              |  |                                              | 34,686  |   |      |   | 32,650  |  
|Accumulated other comprehensive income, net of tax                                                                                                                                                                             |  |                                              | (1,119  | ) |      |   | 6       |  
|Treasury stock, at cost; 41,727 shares at December 31, 2005 and                                                                                                                                                                |  |                                              |         |   |      |   |         |  
|9,200 shares at December 31, 2004                                                                                                                                                                                              |  |                                              | (899    | ) |      |   | (152    | )
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                                                     |  |                                              | 35,953  |   |      |   | 35,789  |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                     |  | $                                            | 390,789 |   |      | $ | 378,079 |  



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



First Century Bankshares, Inc.     Page 23



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##### Table of Contents

Consolidated

Statements of Income



|                                                                                      |  |                                               |           |   |      |   |           |      |  |   |          
|------------------------------------------------------------------------------------- |  | --------------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | ---------
|                                                                                      |  | Years Ended December 31,                     
|                                                                                      |  | 2005                                          |           |   | 2004 |   |           | 2003
|INTEREST INCOME                                                                       |  | (Dollars in Thousands, Except Per Share Data)
|Interest and fees on loans                                                            |  | $                                             | 16,715    |   |      | $ | 14,618    |      |  | $ | 14,876   
|Interest on balances with banks                                                       |  |                                               | 26        |   |      |   | 14        |      |  |   | 16       
|Interest and dividends from securities available for sale:                            |  |                                               |           |   |      |   |           |      |  |   |          
|Taxable                                                                               |  |                                               | 3,082     |   |      |   | 2,675     |      |  |   | 2,674    
|Interest and dividends from securities held to maturity:                              |  |                                               |           |   |      |   |           |      |  |   |          
|Taxable                                                                               |  |                                               | 64        |   |      |   | 73        |      |  |   | 47       
|Tax-exempt                                                                            |  |                                               | 450       |   |      |   | 456       |      |  |   | 416      
|Interest on federal funds sold                                                        |  |                                               | 81        |   |      |   | 35        |      |  |   | 50       
|TOTAL INTEREST INCOME                                                                 |  |                                               | 20,418    |   |      |   | 17,871    |      |  |   | 18,079   
|INTEREST EXPENSE                                                                      |  |                                               |           |   |      |   |           |      |  |   |          
|Interest on time certificates of $100,000 or more                                     |  |                                               | 1,091     |   |      |   | 813       |      |  |   | 875      
|Interest on other deposits                                                            |  |                                               | 3,471     |   |      |   | 2,600     |      |  |   | 2,962    
|Interest on federal funds purchased and securitiessold under agreements to repurchase |  |                                               | 296       |   |      |   | 76        |      |  |   | 73       
|Interest on demand notes to U. S. Treasury and other indebtedness                     |  |                                               | 39        |   |      |   | 11        |      |  |   | 2        
|TOTAL INTEREST EXPENSE                                                                |  |                                               | 4,897     |   |      |   | 3,500     |      |  |   | 3,912    
|Net interest income                                                                   |  |                                               | 15,521    |   |      |   | 14,371    |      |  |   | 14,167   
|Provision for loan losses                                                             |  |                                               | 434       |   |      |   | 224       |      |  |   | 653      
|Net interest income after provision for loan losses                                   |  |                                               | 15,087    |   |      |   | 14,147    |      |  |   | 13,514   
|NONINTEREST INCOME                                                                    |  |                                               |           |   |      |   |           |      |  |   |          
|Income from fiduciary activities                                                      |  |                                               | 1,423     |   |      |   | 1,410     |      |  |   | 1,488    
|Service charges on deposit accounts                                                   |  |                                               | 1,631     |   |      |   | 1,202     |      |  |   | 1,271    
|Other noninterest income                                                              |  |                                               | 1,343     |   |      |   | 1,138     |      |  |   | 1,155    
|Securities gains (losses)                                                             |  |                                               | (60       | ) |      |   | (16       | )    |  |   | 67       
|TOTAL NONINTEREST INCOME                                                              |  |                                               | 4,337     |   |      |   | 3,734     |      |  |   | 3,981    
|NONINTEREST EXPENSE                                                                   |  |                                               |           |   |      |   |           |      |  |   |          
|Salaries, wages, and other employee benefits                                          |  |                                               | 6,906     |   |      |   | 7,062     |      |  |   | 7,449    
|Premises and equipment                                                                |  |                                               | 2,174     |   |      |   | 2,122     |      |  |   | 1,964    
|Data processing                                                                       |  |                                               | 779       |   |      |   | 735       |      |  |   | 708      
|Advertising and public relations                                                      |  |                                               | 245       |   |      |   | 221       |      |  |   | 202      
|Postage                                                                               |  |                                               | 234       |   |      |   | 232       |      |  |   | 246      
|Telephone                                                                             |  |                                               | 186       |   |      |   | 280       |      |  |   | 235      
|Supplies and printing                                                                 |  |                                               | 298       |   |      |   | 293       |      |  |   | 290      
|Other taxes                                                                           |  |                                               | 283       |   |      |   | 262       |      |  |   | 252      
|Other noninterest expense                                                             |  |                                               | 2,171     |   |      |   | 2,015     |      |  |   | 1,895    
|TOTAL NONINTEREST EXPENSE                                                             |  |                                               | 13,276    |   |      |   | 13,222    |      |  |   | 13,241   
|Income before income taxes                                                            |  |                                               | 6,148     |   |      |   | 4,659     |      |  |   | 4,254    
|Provision for income taxes                                                            |  |                                               | 2,144     |   |      |   | 1,604     |      |  |   | 1,462    
|NET INCOME                                                                            |  | $                                             | 4,004     |   |      | $ | 3,055     |      |  | $ | 2,792    
|                                                                                      |  |                                               |          
|NET INCOME PER COMMON SHARE:                                                          |  |                                               |           |   |      |   |           |      |  |   |          
|Basic                                                                                 |  | $                                             | 2.03      |   |      | $ | 1.53      |      |  | $ | 1.40     
|Diluted                                                                               |  | $                                             | 2.02      |   |      | $ | 1.53      |      |  | $ | 1.40     
|                                                                                      |  |                                               |          
|AVERAGE SHARES OUTSTANDING:                                                           |  |                                               |           |   |      |   |           |      |  |   |          
|Basic                                                                                 |  |                                               | 1,972,233 |   |      |   | 1,990,991 |      |  |   | 1,991,000
|Diluted                                                                               |  |                                               | 1,983,015 |   |      |   | 1,998,397 |      |  |   | 1,995,642



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



Page 24     First Century Bankshares, Inc.



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##### Table of Contents

Consolidated

Statements of Changes in Stockholders Equity



|                                                                                                                        |  |                                               |       |                |   |                  |  |   |                                           |   |  |               |        |   |       |   |      |   |  |   |        |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ----- | -------------- | - | ---------------- |  | - | ----------------------------------------- | - |  | ------------- | ------ | - | ----- | - | ---- | - |  | - | ------ | -
|                                                                                                                        |  | CommonStock                                   |       | Paid-inCapital |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome(loss) |   |  | TreasuryStock |        |   | Total |  
|                                                                                                                        |  | (Dollars in Thousands, Except Per Share Data) |      
|Balance at December 31, 2002                                                                                            |  | $                                             | 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                                                                                            |  |                                               | 2,500 |                |   | 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 treasury shares at $24.25 per share                                                                        |  |                                               |      |                |   |                 |  |   |                                          |   |  |               |       |   |       |   | (5   | ) |  |   | (5     | )
|Cash dividends declared$0.88 per share                                                                                 |  |                                               |      |                |   |                 |  |   | (1,752                                    | ) |  |               |       |   |       |   |     |   |  |   | (1,752 | )
|Balance at December 31, 2004                                                                                            |  |                                               | 2,500 |                |   | 785              |  |   | 32,650                                    |   |  |               | 6      |   |       |   | (152 | ) |  |   | 35,789 |  
|                                                                                                                        |  |                                               |       |                |   |                 
|Comprehensive income:                                                                                                   |  |                                               |       |                |   |                  |  |   |                                           |   |  |               |        |   |       |   |      |   |  |   |        |  
|Net income                                                                                                              |  |                                               |      |                |   |                 |  |   | 4,004                                     |   |  |               |       |   |       |   |     |   |  |   | 4,004  |  
|Change in net unrealized gain(loss) on securities available for sale, net of reclassification adjustment and tax effect |  |                                               |      |                |   |                 |  |   |                                          |   |  |               | (1,125 | ) |       |   |     |   |  |   | (1,125 | )
|Total comprehensive income                                                                                              |  |                                               |      |                |   |                 |  |   | 4,004                                     |   |  |               | (1,125 | ) |       |   |     |   |  |   | 2,879  |  
|Purchase 33,027 treasury shares at $22.89 per share                                                                     |  |                                               |      |                |   |                 |  |   |                                          |   |  |               |       |   |       |   | (756 | ) |  |   | (756   | )
|Option exercises 500 shares                                                                                             |  |                                               |      |                |   |                 |  |   |                                          |   |  |               |       |   |       |   | 9    |   |  |   | 9      |  
|Cash dividends declared$1.00 per share                                                                                 |  |                                               |      |                |   |                 |  |   | (1,968                                    | ) |  |               |       |   |       |   |     |   |  |   | (1,968 | )
|Balance at December 31, 2005                                                                                            |  | $                                             | 2,500 |                | $ | 785              |  | $ | 34,686                                    |   |  | $             | (1,119 | ) |       | $ | (899 | ) |  | $ | 35,953 |  



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



First Century Bankshares, Inc.     Page 25



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##### Table of Contents

Consolidated

Statements of Cash Flows



|                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                    |  | Years Ended December 31, |        
|                                                                                                    |  | 2005                     |         |   | 2004 |   |         | 2003 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                |  | (Dollars in Thousands)   |        
|Net income before adjustments to reconcile net income to net cash provided by operating activities: |  | $                        | 4,004   |   |      | $ | 3,055   |      |  | $ | 2,792   |  
|Provision for loan losses                                                                           |  |                          | 434     |   |      |   | 224     |      |  |   | 653     |  
|Depreciation and amortization                                                                       |  |                          | 952     |   |      |   | 873     |      |  |   | 800     |  
|Deferred income tax expense                                                                         |  |                          | 264     |   |      |   | 254     |      |  |   | 257     |  
|Securities (gains) losses                                                                           |  |                          | 60      |   |      |   | 16      |      |  |   | (67     | )
|(Gain) loss on disposal of fixed assets                                                             |  |                          | 69      |   |      |   | 86      |      |  |   |        |  
|(Increase) decrease in interest receivable                                                          |  |                          | (216    | ) |      |   | (165    | )    |  |   | 310     |  
|Net investment amortization                                                                         |  |                          | 79      |   |      |   | 285     |      |  |   | 427     |  
|Net (increase) decrease in other assets                                                             |  |                          | (234    | ) |      |   | 483     |      |  |   | 561     |  
|Net increase (decrease) in interest payable and other liabilities                                   |  |                          | 519     |   |      |   | 225     |      |  |   | (266    | )
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                           |  |                          | 5,931   |   |      |   | 5,336   |      |  |   | 5,467   |  
|                                                                                                    |  |                          |        
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Purchases of securities held to maturity                                                            |  |                          | (1,585  | ) |      |   | (3,168  | )    |  |   | (3,734  | )
|Purchases of securities available for sale                                                          |  |                          | (22,475 | ) |      |   | (48,618 | )    |  |   | (56,505 | )
|Redemptions (purchases) of Federal Home Loan Bank stock                                             |  |                          | 86      |   |      |   | (159    | )    |  |   | (271    | )
|Proceeds from maturities and calls of securities held to maturity                                   |  |                          | 1,290   |   |      |   | 2,330   |      |  |   | 1,104   |  
|Proceeds from maturities and calls of securities available for sale                                 |  |                          | 10,948  |   |      |   | 30,861  |      |  |   | 67,763  |  
|Proceeds from sales of securities available for sale                                                |  |                          | 4,944   |   |      |   | 1,982   |      |  |   | 1,072   |  
|Net (increase) decrease in loans                                                                    |  |                          | (10,821 | ) |      |   | (1,177  | )    |  |   | (10,607 | )
|Acquisition of premises and equipment                                                               |  |                          | (569    | ) |      |   | (1,674  | )    |  |   | (2,031  | )
|Proceeds from disposal of premises and equipment                                                    |  |                          |        |   |      |   | 144     |      |  |   |        |  
|NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                                    |  |                          | (18,182 | ) |      |   | (19,479 | )    |  |   | (3,209  | )
|                                                                                                    |  |                          |        
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Net (decrease) increase in demand and savings deposits                                              |  |                          | (3,771  | ) |      |   | 6,374   |      |  |   | 2,324   |  
|Net increase (decrease) in time deposits                                                            |  |                          | 15,311  |   |      |   | 7,158   |      |  |   | (2,552  | )
|Net increase (decrease) in short-term borrowings                                                    |  |                          | 709     |   |      |   | (194    | )    |  |   | 2,422   |  
|Cash received from stock option exercise                                                            |  |                          | 9       |   |      |   |        |      |  |   |        |  
|Purchase of treasury stock                                                                          |  |                          | (756    | ) |      |   | (5      | )    |  |   |        |  
|Cash dividends paid                                                                                 |  |                          | (1,968  | ) |      |   | (1,752  | )    |  |   | (1,692  | )
|NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                    |  |                          | 9,534   |   |      |   | 11,581  |      |  |   | 502     |  
|Net increase (decrease) in cash and cash equivalents                                                |  |                          | (2,717  | ) |      |   | (2,562  | )    |  |   | 2,760   |  
|Cash and cash equivalents at beginning of year                                                      |  |                          | 17,016  |   |      |   | 19,578  |      |  |   | 16,818  |  
|Cash and cash equivalents at end of year                                                            |  | $                        | 14,299  |   |      | $ | 17,016  |      |  | $ | 19,578  |  
|                                                                                                    |  |                         
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                   |  |                          |         |   |      |   |         |      | 
|Cash paid during the year for:                                                                      |  |                          |         |   |      |   |         |      |  |   |         |  
|Interest                                                                                            |  | $                        | 4,825   |   |      | $ | 3,483   |      |  | $ | 3,981   |  
|Income taxes                                                                                        |  | $                        | 1,940   |   |      | $ | 1,560   |      |  | $ | 1,118   |  



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



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##### Table of Contents

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 twelve 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, 2005 and 2004, was approximately $632,000 and
$663,000, 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



First Century Bankshares, Inc.     Page 27



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##### Table of Contents

Notes to

Consolidated Financial Statements

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



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 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 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.



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, 2005 and 2004, the reserve for unfunded lending commitments was
$47,000 and $57,000, respectively. Estimates may change at some point in the future.



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.



Page 28     First Century Bankshares, Inc.



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##### Table of Contents

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



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 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.



Loan Servicing  During 2005, the Corporation serviced the home mortgage loans of approximately 1,100 borrowers. Loans are serviced for the Federal
National Mortgage Association (Fannie Mae). As of December 31, 2005, the Corporation serviced approximately 1,100 loans with an aggregate principal amount of approximately $90,086,000. The average annual servicing fee on its servicing portfolio was
0.244% of the principal amount of each loan it services. The Corporations servicing business collects mortgage payments, administers tax and insurance escrows, and seeks to mitigate losses on defaulted loans and responds to borrower inquiries.
During 2005, the loan servicing function generated approximately $225,000 in fees for the Bank.



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 noninterest income or expense.



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.



First Century Bankshares, Inc.     Page 29



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##### Table of Contents

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



Goodwill And Other Intangibles Goodwill and indefinite-lived intangible assets
are not amortized, but are reviewed at least annually for impairment. 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, 2005 and 2004.



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.



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



Page 30     First Century Bankshares, Inc.



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##### Table of Contents

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



income and net income per share for the years ended December 31, 2005, 2004 and 2003, would have been decreased to the pro forma amounts indicated
below.



|                                                              |  |                          |       |   |      |   |       |      |  |   |       |  
|------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                              |  | Years Ended December 31, |      
|(Dollars in Thousands, Except Per Share Data)                 |  | 2005                     |       |   | 2004 |   |       | 2003 | 
|Net Income, as reported                                       |  | $                        | 4,004 |   |      | $ | 3,055 |      |  | $ | 2,792 |  
|Less pro forma expense related to options granted, net of tax |  |                          | (19   | ) |      |   | (19   | )    |  |   | (36   | )
|Pro forma net income                                          |  | $                        | 3,985 |   |      | $ | 3,036 |      |  | $ | 2,756 |  
|Pro forma net income per share:                               |  |                          |       |   |      |   |       |      |  |   |       |  
|Basicas reported                                             |  | $                        | 2.03  |   |      | $ | 1.53  |      |  | $ | 1.40  |  
|Basicpro forma                                               |  | $                        | 2.02  |   |      | $ | 1.52  |      |  | $ | 1.38  |  
|                                                              |  |                          |      
|Dilutedas reported                                           |  | $                        | 2.02  |   |      | $ | 1.53  |      |  | $ | 1.40  |  
|Dilutedpro forma                                             |  | $                        | 2.01  |   |      | $ | 1.52  |      |  | $ | 1.38  |  



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 December 2004, the FASB issued SFAS 123(R), Share-Based Payment. SFAS 123(R) is a revision of SFAS 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS 95 Statement of Cash Flows. SFAS 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. The provisions of SFAS 123(R) were initially effective as of the beginning
of the first interim period beginning after June 15, 2005. However, on April 15, 2005, the Securities and Exchange Commission issued release number 33-8568 which delayed the effective date of SFAS 123(R) an additional six months, requiring that
companies adopt the provisions of SFAS 123(R) for annual periods beginning after June 15, 2005. We do not believe the adoption of the provisions of SFAS 123(R) will differ materially from the pro-forma disclosures included elsewhere in Note 1 in the
Notes to Consolidated Financial Statements.



In May 2005, the FASB issued SFAS
154, Accounting Changes and Error Corrections, a Replacement of APB Opinion 20 and FASB Statement No. 3. SFAS 154 amends the existing guidance and applies to the accounting for and reporting of a change in accounting principle. Additionally,
SFAS 154 applies to changes required by accounting pronouncements when the pronouncement does not include explicit transition provisions. SFAS 154 is effective for accounting changes and error corrections made in fiscal years beginning after
December 15, 2005. Management does not believe the adoption of this standard will have a material impact on the financial condition or the results of operation of the Company.



First Century Bankshares, Inc.     Page 31



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##### Table of Contents

2. Securities



Securities available for sale at December 31, 2005 and 2004 are summarized as follows:



|                                    |  |                        |        |                      |   |                       |  |           |       |  |   |       
|----------------------------------- |  | ---------------------- | ------ | -------------------- | - | --------------------- |  | --------- | ----- |  | - | ------
|                                    |  | 2005                  
|                                    |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                    |  | (Dollars in Thousands)
|U.S. Government obligations         |  | $                      | 986    |                      | $ |                      |  | $         |      |  | $ | 986   
|U.S. Government agency obligations  |  |                        | 70,679 |                      |   |                      |  |           | 1,451 |  |   | 69,228
|Mortgage-backed securities          |  |                        | 9,818  |                      |   | 4                     |  |           | 248   |  |   | 9,574 
|Other debt securities               |  |                        | 5,001  |                      |   | 6                     |  |           | 7     |  |   | 5,000 
|TOTAL SECURITIES AVAILABLE FOR SALE |  | $                      | 86,484 |                      | $ | 10                    |  | $         | 1,706 |  | $ | 84,788
|                                    | 
|                                    |  | 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



Securities held to maturity at
December 31, 2005 and 2004 are summarized as follows:



|                                  |  |                        |        |                      |   |                       |  |           |     |  |   |       
|--------------------------------- |  | ---------------------- | ------ | -------------------- | - | --------------------- |  | --------- | --- |  | - | ------
|                                  |  | 2005                  
|                                  |  | AmortizedCost          |        | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | FairValue
|                                  |  | (Dollars in Thousands)
|State and municipal obligations   |  | $                      | 13,142 |                      | $ | 92                    |  | $         | 166 |  | $ | 13,068
|Other debt securities             |  |                        | 75     |                      |   |                      |  |           |    |  |   | 75    
|TOTAL SECURITIES HELD TO MATURITY |  | $                      | 13,217 |                      | $ | 92                    |  | $         | 166 |  | $ | 13,143
|                                  | 
|                                  |  | 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



Securities with an aggregate fair
value of $33,896,000 at December 31, 2005 and $37,320,000 at December 31, 2004, were pledged to secure public and trust deposits and for other purposes required or permitted by law, including approximately $13,156,000 at December 31,
2005 and $16,007,000 at December 31, 2004 pledged to secure repurchase agreements.



Gross gains of $10,000 and gross losses of $70,000 were recognized on sales of available for sale securities for the year ended December 31, 2005. 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.



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2. Securities (continued)



The amortized cost and estimated fair value for securities available for sale and securities held to maturity by contractual maturities at December 31, 2005 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 |   | NetUnrealizedLosses 
|                                       |  | (Dollars in Thousands)
|Due in one year or less                |  | $                      | 12,186 |           | $ | 12,049               |  | $ | 137  
|Due after one year through five years  |  |                        | 69,964 |           |   | 68,435               |  |   | 1,529
|Due after five years through ten years |  |                        | 4,334  |           |   | 4,304                |  |   | 30   
|TOTAL SECURITIES AVAILABLE FOR SALE    |  | $                      | 86,484 |           | $ | 84,788               |  | $ | 1,696
|                                       |  |                        |       
|                                       |  | AmortizedCost          |        | FairValue |   | Net UnrealizedLosses
|                                       |  | (Dollars in Thousands)
|Due in one year or less                |  | $                      | 1,874  |           | $ | 1,872                |  | $ | 2    
|Due after one year through five years  |  |                        | 7,868  |           |   | 7,819                |  |   | 49   
|Due after five years through ten years |  |                        | 3,475  |           |   | 3,452                |  |   | 23   
|TOTAL SECURITIES HELD TO MATURITY      |  | $                      | 13,217 |           | $ | 13,143               |  | $ | 74   



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, 2005:



|                                                                            |  |                         |     |           |   |        |  |                    |  |                       |  |           |       |  |   |       
|--------------------------------------------------------------------------- |  | ----------------------- | --- | --------- | - | ------ |  | ------------------ |  | --------------------- |  | --------- | ----- |  | - | ------
|                                                                            |  | 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 directobligations of U.S. government agencies |  | $                       | 376 |           | $ | 25,826 |  |                    |  |                       |  | $         | 1,075 |  | $ | 44,388
|Federal agency mortgage-backed securities                                   |  |                         | 49  |           |   | 4,995  |  |                    |  |                       |  |           | 199   |  | $ | 1,443 
|Other debt securities                                                       |  |                         | 7   |           |   | 2,993  |  |                    |  |                       |  |           |      |  |   |      
|Total securities available for sale                                         |  | $                       | 432 |           | $ | 33,814 |  |                    |  |                       |  | $         | 1,274 |  | $ | 45,831
|Securities held to maturity:                                                |  |                         |     |           |   |        |  |                    |  |                       |  |           |       |  |   |       
|Municipal bonds                                                             |  | $                       | 37  |           | $ | 3,280  |  |                    |  |                       |  | $         | 129   |  | $ | 4,178 
|Total securities held to maturity                                           |  | $                       | 37  |           | $ | 3,280  |  |                    |  |                       |  | $         | 129   |  | $ | 4,178 



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



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##### Table of Contents

2. Securities (continued)



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.



Other Debt Securities: The unrealized losses on the Corporations other debt securities were caused by increases in market interest rates. The contractual cash flows of these investments are guaranteed by the
issuer corporation, all of which are in the financial services sector. 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, 2005.



3. Loans



Loans at December 31, 2005 and 2004 consisted of the following:



|                                                  |  |                        |         |      |   |        
|------------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                                  |  | December 31,          
|                                                  |  | 2005                   |         | 2004
|                                                  |  | (Dollars in Thousands)
|Commercial, financial and agricultural            |  | $                      | 44,721  |      | $ | 41,497 
|Real estateconstruction                          |  |                        | 11,654  |      |   | 11,037 
|Real estatemortgage (residential and commercial) |  |                        | 181,551 |      |   | 175,487
|Installment loans to individuals                  |  |                        | 19,806  |      |   | 19,787 
|Total loans                                       |  |                        | 257,732 |      |   | 247,808
|Less: allowance for loan losses                   |  |                        | 2,661   |      |   | 2,900  
|NET LOANS                                         |  | $                      | 255,071 |      | $ | 244,908



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 $14,453,000 and $14,556,000 at December 31, 2005 and 2004, respectively. During 2005, $14,275,000 in loan advances were made and repayments were $14,378,000.



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4. Allowance for Loan Losses



An analysis of changes in the allowance for loan losses for 2005, 2004 and 2003 is as follows:



|                                           |  |                          |       |   |      |   |       |      |  |   |       |  
|------------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                           |  | Years Ended December 31, |      
|                                           |  | 2005                     |       |   | 2004 |   |       | 2003 | 
|                                           |  | (Dollars in Thousands)   |      
|Balance at beginning of year               |  | $                        | 2,900 |   |      | $ | 3,075 |      |  | $ | 3,005 |  
|Provision for loan losses                  |  |                          | 434   |   |      |   | 224   |      |  |   | 653   |  
|Recoveries on loans previously charged off |  |                          | 88    |   |      |   | 151   |      |  |   | 82    |  
|Loans charged off                          |  |                          | (761  | ) |      |   | (550  | )    |  |   | (665  | )
|BALANCE AT END OF YEAR                     |  | $                        | 2,661 |   |      | $ | 2,900 |      |  | $ | 3,075 |  



The following is a summary of loans
considered impaired:



|                                       |  |                        |       |      |   |      
|-------------------------------------- |  | ---------------------- | ----- | ---- | - | -----
|                                       |  | December 31,          
|                                       |  | 2005                   |       | 2004
|                                       |  | (Dollars in Thousands)
|Gross impaired loans                   |  | $                      | 2,173 |      | $ | 2,493
|Valuation allowance for impaired loans |  |                        | 418   |      |   | 514  
|Recorded investment in impaired loans  |  | $                      | 1,755 |      | $ | 1,979



The average recorded investment in
impaired loans for the years ended December 31, 2005, 2004 and 2003 was $1,903,000, $2,122,000 and $2,438,000, 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, 2005, 2004 and 2003. At December 31, 2005, 2004 and 2003, the Corporation had nonaccrual loans of $2,173,000, $2,493,000 and $2,542,000, respectively. Interest income of $26,000, $19,000 and $241,000 was recognized
on these loans in 2005, 2004 and 2003, respectively. Had these loans performed in accordance with their original terms, additional interest income of $164,000, $175,000 and $203,000 would have been recorded in 2005, 2004 and 2003, respectively.



At December 31, 2005, 2004 and 2003, the Corporation had loans past-due
90 days or more and still in accrual status of $517,000, $423,000 and $400,000, respectively. Additionally, at December 31, 2005, 2004 and 2003, the Corporation had other real estate owned of $316,000, $112,000 and $383,000, respectively.



5. Premises and Equipment



Premises and equipment at December 31, 2005 and 2004 consisted of the following:



|                              |  |                        |        |      |   |       
|----------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                              |  | December 31,          
|                              |  | 2005                   |        | 2004
|                              |  | (Dollars in Thousands)
|Land                          |  | $                      | 1,898  |      | $ | 1,898 
|Buildings and improvements    |  |                        | 12,096 |      |   | 12,056
|Equipment and fixtures        |  |                        | 6,232  |      |   | 6,547 
|Total                         |  |                        | 20,226 |      |   | 20,501
|Less accumulated depreciation |  |                        | 8,410  |      |   | 8,233 
|NET PREMISES AND EQUIPMENT    |  | $                      | 11,816 |      | $ | 12,268



Depreciation charged to operating
expense amounted to $952,000 in 2005, $873,000 in 2004, and $800,000 in 2003.



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5. Premises and Equipment (continued)



Certain premises and equipment are utilized under long-term operating
leases. The aggregate minimum annual rental commitments under those leases total approximately $70,000 in 2006, $37,000 in 2007, $35,000 in 2008, $30,000 in 2009, and $19,000 in 2010. Total net rent expense included in the accompanying consolidated
financial statements was $44,000 in 2005, $36,000 in 2004 and $38,000 in 2003.



6.
Deposits



Deposits at December 31, 2005 and 2004 were as follows:



|                                            |  |                        |         |      |   |        
|------------------------------------------- |  | ---------------------- | ------- | ---- | - | -------
|                                            |  | December 31,          
|                                            |  | 2005                   |         | 2004
|                                            |  | (Dollars in Thousands)
|Individuals, partnerships and corporations: |  |                        |         |      |   |        
|Demand deposits                             |  | $                      | 46,613  |      | $ | 42,724 
|Time and savings deposits                   |  |                        | 273,334 |      |   | 266,626
|U.S. Government                             |  |                        | 100     |      |   | 41     
|States and political subdivisions           |  |                        | 10,954  |      |   | 10,487 
|Certified and official checks               |  |                        | 1,790   |      |   | 1,373  
|TOTAL DEPOSITS                              |  | $                      | 332,791 |      | $ | 321,251



The scheduled maturities of time
deposits at December 31, 2005 were as follows:



|                    |  |                        |        
|------------------- |  | ---------------------- | -------
|                    |  | (Dollars in Thousands)
|2006                |  | $                      | 83,324 
|2007                |  |                        | 32,395 
|2008                |  |                        | 19,986 
|2009                |  |                        | 6,103  
|2010                |  |                        | 2,884  
|Thereafter          |  |                        | 39     
|TOTAL TIME DEPOSITS |  | $                      | 144,731



Time deposits included certificates of
deposit issued in amounts of $100,000 or more totaling approximately $40,929,000 and $33,336,000 at December 31, 2005 and 2004, respectively.



7. Short-term Borrowings



Short-term borrowings consist of securities sold under agreements to repurchase. Federal funds purchased and securities sold under agreements to repurchase generally mature within one to four days from the transaction
date. Information concerning federal funds purchased and securities sold under agreements to repurchase at December 31, 2005 and 2004 is summarized as follows:



|                                          |  |                        |        |   |      |   |        |  
|----------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                          |  | 2005                   |        |   | 2004 |  
|                                          |  | (Dollars in Thousands) |       
|Average balance during the year           |  | $                      | 18,047 |   |      | $ | 16,697 |  
|Average interest rate during the year     |  |                        | 1.85   | % |      |   | 0.52   | %
|Maximum month-end balance during the year |  | $                      | 23,536 |   |      | $ | 20,024 |  



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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, |       
|                                                                                   |  | 2005                     |        |   | 2004 |   |      | 2003 | 
|Unrealized gains (losses) on available for sale securities arising during the year |  | $                        | (1,764 | ) |      | $ | (779 | )    |  | $ | (659 | )
|Reclassification adjustment for (gains) losses included in net income              |  |                          | 60     |   |      |   | 16   |      |  |   | (67  | )
|Minimum pension liability adjustment                                               |  |                          |       |   |      |   |     |      |  |   | 890  |  
|Other comprehensive income (loss) before tax                                       |  |                          | (1,704 | ) |      |   | (763 | )    |  |   | 164  |  
|Income tax (expense) benefit related to other comprehensive income                 |  |                          | 579    |   |      |   | 260  |      |  |   | (88  | )
|Other comprehensive income (loss), net of tax                                      |  | $                        | (1,125 | ) |      | $ | (503 | )    |  | $ | 76   |  



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, 2005, 2004 and 2003:



|                                                                |  |                   |           |                                     |           |                   |   |     
|--------------------------------------------------------------- |  | ----------------- | --------- | ----------------------------------- | --------- | ----------------- | - | ----
|                                                                |  | 2005             
|                                                                |  | Income(Numerator) |           | Weighted AverageShares(Denominator) |           | Per-Share  Amount
|Basic EPS:                                                      |  |                   |           |                                     |           |                   |   |     
|Income available to common shareholders                         |  | $                 | 4,004,000 |                                     | 1,972,233 |                   | $ | 2.03
|Diluted EPS:                                                    |  |                   |           |                                     |           |                   |   |     
|Effect of dilutive securitiesStock options                     |  |                   |          |                                     | 10,782    |                   |   |     
|Income available to common shareholders and assumed conversions |  | $                 | 4,004,000 |                                     | 1,983,015 |                   | $ | 2.02
|                                                                | 
|                                                                |  | 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



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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, 2005 and 2004, 2,000,000 shares were issued. At December 31, 2005, 1,958,273 shares were outstanding compared to 1,990,800 shares at December 31, 2004.



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, 2005, the weighted average remaining contractual life of the outstanding options was 37 months. At
December 31, 2005, 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, 2005, the weighted average remaining contractual life of the outstanding options was 35 months. At December 31, 2005, options for 12,000 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:



|                                                               |  |              |  |                                |       |              |        |                                |   |              |  |                                |  |   |      
|-------------------------------------------------------------- |  | ------------ |  | ------------------------------ | ----- | ------------ | ------ | ------------------------------ | - | ------------ |  | ------------------------------ |  | - | -----
|                                                               |  | 2005         |  | 2004                           |       | 2003        
|                                                               |  | OptionShares |  | Weighted-AverageExercise Price |       | OptionShares |        | Weighted-AverageExercise Price |   | OptionShares |  | Weighted-AverageExercise Price
|Officer stock options:                                         |  |              |  |                                |       |              |        |                                |   |              |  |                                |  |   |      
|Outstanding, beginning of year                                 |  | 80,325       |  | $                              | 19.26 |              | 88,220 |                                | $ | 19.33        |  | 88,220                         |  | $ | 19.33
|Granted                                                        |  |             |  |                                |      |              |       |                                |   |             |  |                               |  |   |     
|Exercised                                                      |  |             |  |                                |      |              |       |                                |   |             |  |                               |  |   |     
|Forfeited                                                      |  |             |  |                                |      |              | 7,895  |                                |   | 20.11        |  |                               |  |   |     
|Outstanding, end of year                                       |  | 80,325       |  | $                              | 19.26 |              | 80,325 |                                | $ | 19.26        |  | 88,220                         |  | $ | 19.33
|Exercisable at end of year                                     |  | 66,125       |  | $                              | 19.53 |              | 59,025 |                                | $ | 19.71        |  | 59,420                         |  | $ | 19.98
|Weighted-average fair value of options granted during the year |  | $           |  |                                |       |              | $     |                                |   |              |  | $                             |  |   |      
|                                                               |  |              |  |                                |       |             
|Director stock options:                                        |  |              |  |                                |       |              |        |                                |   |              |  |                                |  |   |      
|Outstanding, beginning of year                                 |  | 18,500       |  | $                              | 19.46 |              | 19,000 |                                | $ | 19.42        |  | 20,000                         |  | $ | 19.46
|Granted                                                        |  |             |  |                                |      |              |       |                                |   |             |  |                               |  |   |     
|Exercised                                                      |  | 500          |  |                                | 18.00 |              |       |                                |   |             |  |                               |  |   |     
|Forfeited                                                      |  |             |  |                                |      |              | 500    |                                |   | 18.00        |  | 1,000                          |  |   | 20.25
|Outstanding, end of year                                       |  | 18,000       |  | $                              | 19.50 |              | 18,500 |                                | $ | 19.46        |  | 19,000                         |  | $ | 19.42
|Exercisable at end of year                                     |  | 18,000       |  | $                              | 19.50 |              | 18,500 |                                | $ | 19.46        |  | 19,000                         |  | $ | 19.42
|Weighted-average fair value of options granted during the year |  | $           |  |                                |       |              | $     |                                |   |              |  | $                             |  |   |      



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10. Stockholders Equity (continued)



SHARE REPURCHASE ACTIVITY



During the years ended December 31, 2005 and 2004, the Corporation repurchased 33,027 shares and 200 shares, respectively following no repurchases in 2003. At
December 31, 2005, management was authorized to repurchase 17,773 shares.



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.



The following table outlines the changes in the Corporations
postemployment benefit plan obligations, assets and funded status for the years ended December 31, 2005 and 2004, and the assumptions and components of net periodic benefit costs for the three years in the period ended December 31, 2005.



|                                               |  |                        |        |   |                               |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------- |  | ---------------------- | ------ | - | ----------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                               |  | Pension Benefits       |        |   | Other Postretirement Benefits |  
|                                               |  | 2005                   |        |   | 2004                          |   |        | 2005 |  |   | 2004   |  
|                                               |  | (Dollars in Thousands) |       
|Change in benefit obligation                   |  |                        |        |   |                               |   |        |      |  |   |        |   |  |   |        |  
|Benefit obligation at beginning of year        |  | $                      | 5,885  |   |                               | $ | 5,940  |      |  | $ | 1,093  |   |  | $ | 866    |  
|Service cost                                   |  |                        | 228    |   |                               |   | 225    |      |  |   | 17     |   |  |   | 17     |  
|Interest cost                                  |  |                        | 332    |   |                               |   | 337    |      |  |   | 61     |   |  |   | 63     |  
|Actuarial (gain) loss                          |  |                        | (127   | ) |                               |   | 691    |      |  |   | (59    | ) |  |   | 202    |  
|Benefits paid                                  |  |                        | (167   | ) |                               |   | (1,484 | )    |  |   | (74    | ) |  |   | (55    | )
|Adjustment in cost of settlement               |  |                        |       |   |                               |   | 176    |      |  |   |       |   |  |   |       |  
|Benefit obligation at end of year              |  |                        | 6,151  |   |                               |   | 5,885  |      |  |   | 1,038  |   |  |   | 1,093  |  
|                                               |  |                        |        |  
|Change in plan asset                           |  |                        |        |   |                               |   |        |      |  |   |        |   |  |   |        |  
|Fair value of plan assets at beginning of year |  |                        | 5,804  |   |                               |   | 6,614  |      |  |   |       |   |  |   |       |  
|Actual return on plan assets                   |  |                        | 226    |   |                               |   | 374    |      |  |   |       |   |  |   |       |  
|Employer contribution                          |  |                        | 300    |   |                               |   | 300    |      |  |   | 74     |   |  |   | 55     |  
|Benefits paid                                  |  |                        | (167   | ) |                               |   | (1,484 | )    |  |   | (74    | ) |  |   | (55    | )
|Fair value of plan assets at end of year       |  |                        | 6,163  |   |                               |   | 5,804  |      |  |   |       |   |  |   |       |  
|Funded status                                  |  |                        | 12     |   |                               |   | (81    | )    |  |   | (1,038 | ) |  |   | (1,093 | )
|Unrecognized net actuarial (gain) loss         |  |                        | 2,125  |   |                               |   | 2,118  |      |  |   | (422   | ) |  |   | (387   | )
|Unrecognized prior service cost                |  |                        | (1,075 | ) |                               |   | (1,164 | )    |  |   |       |   |  |   |       |  
|Unrecognized transition obligation             |  |                        |       |   |                               |   | (36    | )    |  |   | 387    |   |  |   | 443    |  
|Prepaid (accrued) benefit cost                 |  | $                      | 1,062  |   |                               | $ | 837    |      |  | $ | (1,073 | ) |  | $ | (1,037 | )



First Century Bankshares, Inc.     Page 39



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##### Table of Contents

11. Post Employment Benefits (continued)



|                                                |  |                  |      |   |                               |   |      |      |  |   |      |   |  |      |      |   |      |   |      |   |  |   |      |  
|----------------------------------------------- |  | ---------------- | ---- | - | ----------------------------- | - | ---- | ---- |  | - | ---- | - |  | ---- | ---- | - | ---- | - | ---- | - |  | - | ---- | -
|                                                |  | Pension Benefits |      |   | Other Postretirement Benefits |  
|Weighted-average assumptions as of 12/31        |  | 2005             |      |   | 2004                          |   |      | 2003 |  |   | 2005 |   |  | 2004 |      |   | 2003 |  
|Discount rate                                   |  |                  | 5.75 | % |                               |   | 5.75 | %    |  |   | 6.50 | % |  |      | 5.75 | % |      |   | 5.75 | % |  |   | 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                                    |  | $                | 228  |   |                               | $ | 225  |      |  | $ | 220  |   |  | $    | 17   |   |      | $ | 17   |   |  | $ | 13   |  
|Interest cost                                   |  |                  | 332  |   |                               |   | 337  |      |  |   | 448  |   |  |      | 61   |   |      |   | 63   |   |  |   | 53   |  
|Expected return on plan assets                  |  |                  | (455 | ) |                               |   | (460 | )    |  |   | (574 | ) |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of prior service cost              |  |                  | (90  | ) |                               |   | (90  | )    |  |   | (89  | ) |  |      |     |   |      |   |     |   |  |   |     |  
|Amortization of transition obligation           |  |                  | (37  | ) |                               |   | (44  | )    |  |   | (59  | ) |  |      | 55   |   |      |   | 55   |   |  |   | 55   |  
|Recognized net actuarial (gain) loss            |  |                  | 96   |   |                               |   | 68   |      |  |   | 122  |   |  |      | (24  | ) |      |   | (32  | ) |  |   | (47  | )
|Net periodic (benefit) cost                     |  |                  | 74   |   |                               |   | 36   |      |  |   | 68   |   |  |      | 109  |   |      |   | 103  |   |  |   | 74   |  
|Settlement (gain) loss                          |  |                  |     |   |                               |   | 433  |      |  |   | 743  |   |  |      |     |   |      |   |     |   |  |   |     |  
|Net periodic (benefit) cost, net of adjustments |  | $                | 74   |   |                               | $ | 505  |      |  | $ | 811  |   |  | $    | 109  |   |      | $ | 103  |   |  | $ | 74   |  



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 |  
|                  |  | 2005                     |   |  | 2004 |  
|Equity securities |  | 67                       | % |  | 72   | %
|Debt securities   |  | 10                       |   |  | 7    |  
|Real estate       |  | 6                        |   |  | 10   |  
|Other             |  | 17                       |   |  | 11   |  
|Total             |  | 100                      | % |  | 100  | %



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



During 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



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11. Post Employment Benefits (continued)



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 2005 and 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 2006.



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 $131,000 in 2005, $128,000 in 2004 and $136,000 in 2003.



12. Income Taxes



The provision for income
taxes consisted of the following:



|                                                    |  |                         |       |      |   |       |  |   |      
|--------------------------------------------------- |  | ----------------------- | ----- | ---- | - | ----- |  | - | -----
|                                                    |  | Years EndedDecember 31,
|Tax provision attributed to income from operations: |  | 2005                    |       | 2004 |   | 2003 
|Current:                                            |  | (Dollars in Thousands) 
|Federal                                             |  | $                       | 1,581 |      | $ | 1,111 |  | $ | 975  
|State                                               |  |                         | 299   |      |   | 239   |  |   | 230  
|Deferred expense (benefit)                          |  |                         | 264   |      |   | 254   |  |   | 257  
|PROVISION FOR INCOME TAX                            |  | $                       | 2,144 |      | $ | 1,604 |  | $ | 1,462



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12. Income Taxes (continued)



The components of deferred tax assets and liabilities at December 31, 2005 and 2004 were as follows:



|                                                            |  |                        |        |   |      |   |      |  
|----------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ---- | -
|                                                            |  | 2005                   |        |   | 2004 |  
|                                                            |  | (Dollars in Thousands) |       
|Allowance for loan losses                                   |  | $                      | 525    |   |      | $ | 605  |  
|Retirement plans                                            |  |                        | 4      |   |      |   | 81   |  
|Unrealized losses on securities available for sale          |  |                        | 577    |   |      |   |     |  
|Marketable equity securities and capital loss carryforwards |  |                        |       |   |      |   | 11   |  
|Other                                                       |  |                        | 70     |   |      |   | 14   |  
|Gross deferred tax assets                                   |  |                        | 1,176  |   |      |   | 711  |  
|Valuation allowance                                         |  |                        |       |   |      |   | (11  | )
|Deferred tax assets                                         |  |                        | 1,176  |   |      |   | 700  |  
|Depreciation                                                |  |                        | (367   | ) |      |   | (440 | )
|Goodwill                                                    |  |                        | (635   | ) |      |   | (476 | )
|Unrealized gains on securities available for sale           |  |                        |       |   |      |   | (3   | )
|Other                                                       |  |                        | (80    | ) |      |   |     |  
|Gross deferred tax liabilities                              |  |                        | (1,082 | ) |      |   | (919 | )
|NET DEFERRED TAX ASSET (LIABILITY)                          |  | $                      | 94     |   |      | $ | (219 | )



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 expired in 2005.



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



|                                                                       |  |                          |       |   |      |    |   |        |   |       |   |  |    |        |  |   |       |   |  |    |  
|---------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | -- | - | ------ | - | ----- | - |  | -- | ------ |  | - | ----- | - |  | -- | -
|                                                                       |  | Years Ended December 31, |      
|                                                                       |  | 2005                     |       |   | 2004 |    |   | 2003   |  
|                                                                       |  | (Dollars in Thousands)   |      
|                                                                       |  | Amount                   |       |   | %    |    |   | Amount |   |       | % |  |    | Amount |  |   | %     |  
|Provision at statutory rate                                            |  | $                        | 2,090 |   |      | 34 |   |        | $ | 1,584 |   |  | 34 |        |  | $ | 1,446 |   |  | 34 |  
|Tax-exempt interest income from certain investmentsecurities and loans |  |                          | (176  | ) |      | (3 | ) |        |   | (180  | ) |  | (4 | )      |  |   | (162  | ) |  | (4 | )
|State income tax expense, net of federal benefit                       |  |                          | 222   |   |      | 4  |   |        |   | 177   |   |  | 3  |        |  |   | 152   |   |  | 3  |  
|Other, net                                                             |  |                          | 8     |   |      |   |   |        |   | 23    |   |  | 1  |        |  |   | 26    |   |  | 1  |  
|PROVISION FOR INCOME TAXES                                             |  | $                        | 2,144 |   |      | 35 |   |        | $ | 1,604 |   |  | 34 |        |  | $ | 1,462 |   |  | 34 |  



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.



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



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, 2005 and 2004 are as follows:



|                                                                                 |  |                        |        |      |   |       
|-------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------
|                                                                                 |  | December 31,          
|                                                                                 |  | 2005                   |        | 2004
|Unused lines of credit                                                           |  | (Dollars in Thousands)
|Home equity lines                                                                |  | $                      | 3,531  |      | $ | 3,289 
|Commercial real estate, construction and land development secured by real estate |  |                        | 22,163 |      |   | 23,291
|Other unused commitments                                                         |  |                        | 30,710 |      |   | 14,824
|Total unused lines of credit                                                     |  |                        | 56,404 |      | $ | 41,404
|Financial standby letters of credit                                              |  | $                      | 4,612  |      | $ | 5,201 



At December 31, 2005 and 2004,
the carrying amount and fair value of financial standby letters of credit was $6,000 and $8,000, respectively. Also, at December 31, 2005 and 2004, the Corporation had residential mortgage loan commitments outstanding of $819,000 and $634,000,
respectively.



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 creditwor-thiness 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.



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, 2005, the Corporation had concentrations of $14,294,000, or 39.8% of
stockholders equity in loans to lessors of real property, and $12,131,000, or 33.7% 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



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



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, 2005 and 2004 were as follows:



|                                                      |  |                        |         |                        |   |                     |  |                |         |  |   |        
|----------------------------------------------------- |  | ---------------------- | ------- | ---------------------- | - | ------------------- |  | -------------- | ------- |  | - | -------
|                                                      |  | 2005                   |         | 2004                  
|                                                      |  | EstimatedFair Value    |         | CarryingAmount         |   | EstimatedFair Value |  | CarryingAmount
|                                                      |  | (Dollars in Thousands) |         | (Dollars in Thousands)
|Assets:                                               |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Cash and due from banks                               |  | $                      | 14,299  |                        | $ | 14,299              |  | $              | 13,016  |  | $ | 13,016 
|Securities available for sale                         |  |                        | 84,788  |                        |   | 84,788              |  |                | 80,013  |  |   | 80,013 
|Securities held to maturity                           |  |                        | 13,143  |                        |   | 13,217              |  |                | 13,146  |  |   | 12,957 
|Federal Home Loan Bank and Federal Reserve Bank stock |  |                        | 1,096   |                        |   | 1,096               |  |                | 1,182   |  |   | 1,182  
|Federal funds sold                                    |  |                        |        |                        |   |                    |  |                | 4,000   |  |   | 4,000  
|Net loans                                             |  |                        | 257,337 |                        |   | 255,071             |  |                | 248,679 |  |   | 244,908
|                                                      |  |                        |         |                       
|Liabilities:                                          |  |                        |         |                        |   |                     |  |                |         |  |   |        
|Noninterest-bearing deposits                          |  |                        | 50,645  |                        |   | 50,645              |  |                | 45,087  |  |   | 45,087 
|Deposits with no stated maturities                    |  |                        | 137,415 |                        |   | 137,415             |  |                | 146,744 |  |   | 146,744
|Deposits with stated maturities                       |  |                        | 143,273 |                        |   | 144,731             |  |                | 128,881 |  |   | 129,420
|Short-term borrowings                                 |  |                        | 19,682  |                        |   | 19,682              |  |                | 18,973  |  |   | 18,973 



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.



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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, 2005,
retained net profits for the years 2005 and 2004, which were free of such regulatory restrictions, aggregated approximately $2,390,000.



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, 2005, that the Corporation and its subsidiary meet all capital adequacy requirements to which they are subject.



As of December 31, 2005, First Century Bank, N.A. has received notification from the Office of the Comptroller of the Currency that it
is wellcapitalized under the regulatory framework for prompt corrective action. To be adequately capitalized, minimum total riskbased, Tier I riskbased, and Tier I leverage ratios as set forth in the following table must be
maintained. There are no conditions or events since the recent notification that management believes have changed the institutions category.



|                                          |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|----------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------- |  | - | ------ | - | ----- | - | ------- |  | - | ----- | -
|                                          |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |        
|                                          |  | Amount |        | Ratio |                              |   | Amount |                                                               | Ratio   |  |   | Amount |   | Ratio |  
|As of December 31, 2005:                  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|Total Capital (to Risk Weighted Assets):  |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         | 
|Consolidated                              |  | $      | 34,597 |       | 12.55                        | % |        | 3                                                             | $22,057 |  | 3 | 8.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 33,373 |       | 12.12                        | % |        | 3                                                             | $22,028 |  | 3 | 8.00   | % |       | 3 | $27,535 |  | 3 | 10.00 | %
|Tier I Capital (to Risk Weighted Assets): |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         | 
|Consolidated                              |  | $      | 31,889 |       | 11.57                        | % |        | 3                                                             | $11,028 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 30,665 |       | 11.14                        | % |        | 3                                                             | $11,014 |  | 3 | 4.00   | % |       | 3 | $16,521 |  |   | 36.00 | %
|Tier I Capital (to Average Assets):       |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         | 
|Consolidated                              |  | $      | 31,889 |       | 8.37                         | % |        | 3                                                             | $15,234 |  | 3 | 4.00   | % |       |   |         |  |   |       |  
|First Century Bank, N.A.                  |  | $      | 30,665 |       | 8.06                         | % |        | 3                                                             | $15,218 |  | 3 | 4.00   | % |       | 3 | $19,022 |  |   | 35.00 | %



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15. Regulatory Matters (continued)



|                                          |  |        |        |       |                              |   |        |                                                               |         |  |   |        |   |       |   |         |  |   |       |  
|----------------------------------------- |  | ------ | ------ | ----- | ---------------------------- | - | ------ | ------------------------------------------------------------- | ------- |  | - | ------ | - | ----- | - | ------- |  | - | ----- | -
|                                          |  | Actual |        |       | For CapitalAdequacy Purposes |   |        | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |        
|                                          |  | 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  | %



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,           |       
|                                                                                                                      |  |  |  | 2005                   |        |   | 2004 |  
|Assets:                                                                                                               |  |  |  | (Dollars in Thousands) |       
|Cash                                                                                                                  |  |  |  | $                      | 289    |   |      | $ | 346    |  
|Investment in subsidiaries at equity                                                                                  |  |  |  |                        | 35,198 |   |      |   | 35,006 |  
|Other assets                                                                                                          |  |  |  |                        | 586    |   |      |   | 610    |  
|TOTAL ASSETS                                                                                                          |  |  |  | $                      | 36,073 |   |      | $ | 35,962 |  
|Liabilities:                                                                                                          |  |  |  |                        |        |   |      |   |        |  
|Other liabilities                                                                                                     |  |  |  | $                      | 120    |   |      | $ | 173    |  
|TOTAL LIABILITIES                                                                                                     |  |  |  |                        | 120    |   |      |   | 173    |  
|Stockholders Equity:                                                                                                 |  |  |  |                        |        |   |      |   |        |  
|Common stock$1.25 par value; 10,000,000 shares authorized and 2,000,000 shares issued at December 31, 2005 and
2004; |  |  |  |                        |        |   |      |   |        |  
|1,958,273 shares outstanding at December 31, 2005, and                                                                |  |  |  |                        |        |   |      |   |        |  
|1,990,800 shares outstanding at December 31, 2004;                                                                    |  |  |  |                        | 2,500  |   |      |   | 2,500  |  
|Paid-in capital                                                                                                       |  |  |  |                        | 785    |   |      |   | 785    |  
|Retained earnings                                                                                                     |  |  |  |                        | 33,567 |   |      |   | 32,656 |  
|Treasury stock, at cost; 41,727 shares at December 31, 2005, and 9,200 shares at
December 31, 2004                    |  |  |  |                        | (899   | ) |      |   | (152   | )
|TOTAL STOCKHOLDERS EQUITY                                                                                            |  |  |  |                        | 35,953 |   |      |   | 35,789 |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            |  |  |  | $                      | 36,073 |   |      | $ | 35,962 |  



Page 46     First Century Bankshares, Inc.



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##### Table of Contents

16. Parent Company Financial Data (continued)



|                                                                |  |                          |       |   |      |   |       |      |  |   |       |  
|--------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                |  |                          |      
|STATEMENTS OF INCOME                                            |  |                          |       |   |      |   |       |      |  |   |       |  
|                                                                |  | Years Ended December 31, |      
|                                                                |  | 2005                     |       |   | 2004 |   |       | 2003 | 
|                                                                |  | (Dollars in Thousands)   |      
|Income:                                                         |  |                          |       |   |      |   |       |      |  |   |       |  
|Dividends from subsidiary bank                                  |  | $                        | 2,790 |   |      | $ | 2,025 |      |  | $ | 1,900 |  
|TOTAL INCOME                                                    |  |                          | 2,790 |   |      |   | 2,025 |      |  |   | 1,900 |  
|Expenses:                                                       |  |                          |       |   |      |   |       |      |  |   |       |  
|Other                                                           |  |                          | 166   |   |      |   | 118   |      |  |   | 82    |  
|TOTAL EXPENSES                                                  |  |                          | 166   |   |      |   | 118   |      |  |   | 82    |  
|Applicable income taxes (benefits)                              |  |                          | (63   | ) |      |   | (42   | )    |  |   | (29   | )
|Income before equity in undistributednet income of subsidiaries |  |                          | 2,687 |   |      |   | 1,949 |      |  |   | 1,847 |  
|Equity in undistributed net income of subsidiaries              |  |                          | 1,317 |   |      |   | 1,106 |      |  |   | 945   |  
|NET INCOME                                                      |  | $                        | 4,004 |   |      | $ | 3,055 |      |  | $ | 2,792 |  



STATEMENT OF CASH FLOWS



|                                                                                 |  |                          |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                 |  | Years Ended December 31, |       
|                                                                                 |  | 2005                     |        |   | 2004 |   |        | 2003 | 
|Cash flows from operating activities                                             |  | (Dollars in Thousands)   |       
|Net income                                                                       |  | $                        | 4,004  |   |      | $ | 3,055  |      |  | $ | 2,792  |  
|Adjustments to reconcile net income to net cashprovided by operating activities: |  |                          |        |   |      |   |        |      |  |   |        |  
|Equity in undistributed net income of subsidiary                                 |  |                          | (1,317 | ) |      |   | (1,106 | )    |  |   | (945   | )
|Other adjustments, net                                                           |  |                          | (29    | ) |      |   | (42    | )    |  |   | (54    | )
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                        |  |                          | 2,658  |   |      |   | 1,907  |      |  |   | 1,793  |  
|Cash flows from investing activities                                             |  |                          |        |   |      |   |        |      |  |   |        |  
|Investment in subsidiary                                                         |  |                          |       |   |      |   |       |      |  |   |       |  
|NET CASH USED BY INVESTING ACTIVITIES                                            |  |                          |       |   |      |   |       |      |  |   |       |  
|Cash flows from financing activities                                             |  |                          |        |   |      |   |        |      |  |   |        |  
|Purchase of treasury stock                                                       |  |                          | (756   | ) |      |   | (5     | )    |  |   |       |  
|Cash received from stock option exercise                                         |  |                          | 9      |   |      |   |       |      |  |   |       |  
|Cash dividends paid                                                              |  |                          | (1,968 | ) |      |   | (1,752 | )    |  |   | (1,692 | )
|NET CASH USED BY FINANCING ACTIVITIES                                            |  |                          | (2,715 | ) |      |   | (1,757 | )    |  |   | (1,692 | )
|Net increase (decrease) in cash                                                  |  |                          | (57    | ) |      |   | 150    |      |  |   | 101    |  
|Cash at January 1,                                                               |  |                          | 346    |   |      |   | 196    |      |  |   | 95     |  
|Cash at December 31,                                                             |  | $                        | 289    |   |      | $ | 346    |      |  | $ | 196    |  



First Century Bankshares, Inc.     Page 47



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##### Table of Contents

17. Quarterly Financial Data (Unaudited)



The summary financial data by quarter for the years ended December 31, 2005, 2004 and 2003 was as follows:



|                                   |  |                                               |       |   |         |   |          |  |         |       |  |   |       |  
|---------------------------------- |  | --------------------------------------------- | ----- | - | ------- | - | -------- |  | ------- | ----- |  | - | ----- | -
|                                   |  | Quarter Ended                                 |      
|                                   |  | Mar. 31                                       |       |   | June 30 |   | Sept. 30 |  | Dec. 31 |      
|                                   |  | (Dollars in Thousands, Except Per Share Data) |      
|2005                               |  |                                               |       |   |         |   |          |  |         |       |  |   |       |  
|Interest income                    |  | $                                             | 4,771 |   |         | $ | 5,067    |  | $       | 5,173 |  | $ | 5,407 |  
|Net interest income                |  |                                               | 3,777 |   |         |   | 3,950    |  |         | 3,844 |  |   | 3,950 |  
|Provision for possible loan losses |  |                                               | 68    |   |         |   | 38       |  |         | 180   |  |   | 148   |  
|Securities gains (losses)          |  |                                               | 10    |   |         |   |         |  |         |      |  |   | (70   | )
|Income before taxes                |  |                                               | 1,381 |   |         |   | 1,610    |  |         | 1,568 |  |   | 1,589 |  
|Net income                         |  |                                               | 885   |   |         |   | 1,063    |  |         | 1,020 |  |   | 1,036 |  
|NET INCOME PER SHARE               |  | $                                             | 0.44  |   |         | $ | 0.54     |  | $       | 0.52  |  | $ | 0.53  |  
|                                   |  |                                               |       |  
|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                |  |                                               | 1,064 |   |         |   | 1,059    |  |         | 1,086 |  |   | 1,450 |  
|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                |  |                                               | 1,293 |   |         |   | 584      |  |         | 1,270 |  |   | 1,107 |  
|Net income                         |  |                                               | 839   |   |         |   | 393      |  |         | 824   |  |   | 736   |  
|NET INCOME PER SHARE               |  | $                                             | 0.42  |   |         | $ | 0.20     |  | $       | 0.41  |  | $ | 0.37  |  



Page 48     First Century Bankshares, Inc.



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##### Table of Contents

Report of

Independent Registered Public Accounting Firm





To the Board of Directors and Stockholders

First Century
Bankshares, Inc.

Bluefield, WV



We have audited the accompanying consolidated statement of financial condition of First Century Bankshares, Inc. and Subsidiaries as of December 31, 2005, and the
related consolidated statements of income, changes in stockholders equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audit. The accompanying consolidated statement of financial condition of First Century Bankshares, Inc. and Subsidiaries as of December 31, 2004, and the related consolidated
statements of income, changes in stockholders equity, and cash flows for the years ended December 31, 2004 and 2003 were audited by other auditors whose report dated March 10, 2005, expressed an unqualified opinion on those
statements.



We conducted our audit 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. The company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First Century Bankshares, Inc.
and Subsidiaries as of December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.



/s/ Brown, Edwards & Company, L.L.P.



CERTIFIED PUBLIC ACCOUNTANTS



Bluefield, West Virginia

March 3, 2006





First Century Bankshares, Inc.     Page 49



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##### Table of Contents

Report of

Independent Registered Public Accounting Firm



To the Board of Directors and Stockholders

First Century Bankshares, Inc.



In our opinion, the accompanying consolidated statement 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 the results of their operations and their cash
flows for each of the two 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.



/s/ PricewaterhouseCoopers LLP



Greensboro, North Carolina

March 10, 2005



Page 50     First Century Bankshares, Inc



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##### Table of Contents

Boards of

Directors



FIRST CENTURY BANKSHARES, INC.



|                                                                                                                                                                                                                                                                              |  |                                                                                                                           |  |                                                                                                                                                                                                                 |  |                                                                                                                                                                                                                                                                         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|W. Paul Cole, Jr. President, Cole Chevrolet-Cadillac  Eustace Frederick Member, West VirginiaHouse of Delegates  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 Formerly, President, Peters
Equipment, 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. Wilkinson President & Chief Operating Officer, First Century Bank, NA,Secretary, First Century
Bankshares, Inc.,  R. W. Wilkinson President & ChiefExecutive Officer, First Century Bankshares, Inc., Chairman & Chief Executive Officer, First CenturyBank, NA



FIRST CENTURY BANK, N.A.



|                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|J. J. Booker, III, M.D. Physician  C. Scott Briers President, Briers, Inc.  W. Paul Cole, Jr. President, Cole Chevrolet-Cadillac  Eustace Frederick Member, West VirginiaHouse of Delegates  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 Formerly, 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. Wilkinson President & Chief Operating Officer, First Century Bank, NA,Secretary, First Century
Bankshares, Inc.,  R. W. Wilkinson President & ChiefExecutive Officer, First Century Bankshares, Inc., Chairman & Chief Executive Officer, First CenturyBank, NA



FIRST CENTURY BANK, N.A.

WYOMING COUNTY OPERATIONS ADVISORY BOARD



|                                                                          |  |                                                                                          |  |                                                                                                                           |  |                                                              
|------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------
|Michelle Brown, DDS Oceana Dental Center  Tom Evans, Jr. Private Investor |  | Debra L. Brunty Vice President-Loans Wyoming County Operations, First Century Bank, N.A. |  | Frank W. Wilkinson President & Chief Operating Officer, First Century Bank, NA,Secretary, First Century
Bankshares, Inc., |  | Dennis Worrell Partner, Worrell Exxon & Owner, D & T Car Wash



First Century Bankshares, Inc.     Page 51



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##### Table of Contents

Boards of

Directors



FIRST CENTURY BANK, N.A.

WYTHE COUNTY OPERATIONS ADVISORY BOARD



---



|                                                                                    |  |                                                                              |  |                                                                                                                                                                                                       |  |                                                                                                                                          
|----------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|J. J. Booker, III, M.D. Physician  Robert T. Dupuis President, P & T Products, Inc. |  | Samuel V. Jones, CPA Hodges, Jones & Mabry, PC  Stephen A. Lester Wordsprint |  | W. Edward SmithVice President, WytheCounty OperationsFirst Century Bank, N.A.  Frank W. WilkinsonPresident & Chief
OperatingOfficer, First Century Bank, NA,Secretary, First CenturyBankshares, Inc., |  | R. W. WilkinsonPresident & ChiefExecutive Officer, FirstCentury Bankshares, Inc.,Chairman & Chief ExecutiveOfficer, First CenturyBank, NA



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. RichmondVice President,Summers County OperationsFirst Century Bank N.A.  Frank W. WilkinsonPresident & Chief OperatingOfficer, First Century Bank, NA,Secretary, First CenturyBankshares, Inc., |  | R. W. WilkinsonPresident & ChiefExecutive Officer, FirstCentury Bankshares, Inc.,Chairman & Chief ExecutiveOfficer, First CenturyBank, NA



Page 52     First Century Bankshares, Inc.



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##### Table of Contents

Officers



FIRST CENTURY
BANKSHARES, INC.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|B. L. Jackson, Jr.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Robert M. Jones, Jr., MD                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | W. E. Albert                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | J. Ronald Hypes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Chairman of the Board                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Vice Chairman of the Board                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Assistant Secretary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Treasurer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 
|R. W. Wilkinson                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | Frank W. Wilkinson                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|President and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Secretary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|FIRST CENTURY BANK, N.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|ADMINISTRATION  R. W. Wilkinson Chairman and Chief
Executive Officer  Frank W. Wilkinson 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 Vice President Internal Audit & Compliance  Lisa A. Huff Director of Human Resources  Jason Farmer IT Manager  Deborah L. Bowman Marketing Director  Matthew W. Barnett CRM
Administrator  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  Michael R. Mays Vice President & City Executive Beckley Office  Hal L. Absher Director of
Secondary Mortgage Lending  Debra L. Brunty Vice
President-Loans, Wyoming County Operations  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  J.W. Kiser Assistant Vice President, LoansWytheville Office  Louise S. Bowen Loan
Officer, Secondary Mortage Lending  Shela D. Acord Consumer Loan
Officer, Pineville Office  Charlene R. Maynard Assistant Vice
President, LoansOceana Office  Vicky C.
Eggleston Consumer Loan Officer, Bluefield
Office  Charles E. Lester Collections 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  Mary A. Musser Trust Officer
 Mary Sue Anderson Assistant Trust Officer  Thomas H. Evans, III Financial Services
Executive



First Century Bankshares, Inc.     Page 53



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##### Table of Contents

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) 324-3286



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



1408 Harper Road

Beckley, WV 25801

(304) 255-45600