Exhibit 13

REPORT OF INDEPENDENT AUDITORS

Board of Directors

Bank Building Corporation

We have audited the accompanying consolidated balance sheets of Bank Building Corporation and Subsidiary as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in equity and cash flows for each of
the three years in the period ended December 31, 2002. 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 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Bank Building Corporation and Subsidiary as of December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

/s/ Goodman & Company, L. L. P.

Goodman & Company, L. L. P.

Danville, Virginia

April 11, 2003



19



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Bank Building Corporation

Consolidated Balance Sheets

December 31, 2002 and 2001



|                                                                                             |  |      |            |      |   |           
|-------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                             |  | 2002 |            | 2001
|ASSETS:                                                                                      |  |      |            |      |   |           
|Current assets                                                                               |  |      |            |      |   |           
|Cash                                                                                         |  | $    | 82,790     |      | $ | 97,560    
|                                                                                             |  |      |            |      |   |           
|Property - net                                                                               |  |      | 34,381,002 |      |   | 35,090,085
|                                                                                             |  |      |            |      |   |           
|Other assets                                                                                 |  |      | 243,816    |      |   | 284,338   
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  | $    | 34,707,608 |      | $ | 35,471,983
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  |     
|LIABILITIES AND SHAREHOLDERS EQUITY                                                         |  |      |            |      |   |           
|Current liabilities                                                                          |  |      |            |      |   |           
|Accounts payable                                                                             |  | $    | 15,584     |      | $ | 4,282     
|Accrued interest                                                                             |  |      | 216,670    |      |   | 228,984   
|Income taxes payable                                                                         |  |      | 141,939    |      |   |          
|Current portion of long-term debt                                                            |  |      | 868,125    |      |   | 804,047   
|Notes Payable                                                                                |  |      |           |      |   | 325,000   
|                                                                                             |  |      |            |      |   |           
|Total current liabilities                                                                    |  |      | 1,242,318  |      |   | 1,362,313 
|                                                                                             |  |      |            |      |   |           
|Long-term liabilities                                                                        |  |      |            |      |   |           
|Long-term debt-net of current portion                                                        |  |      | 33,011,514 |      |   | 33,888,836
|Deferred income taxes                                                                        |  |      | 90,560     |      |   | 91,600    
|                                                                                             |  |      |            |      |   |           
|Total long-term liabilities                                                                  |  |      | 33,102,074 |      |   | 33,980,436
|                                                                                             |  |      |            |      |   |           
|Total liabilities                                                                            |  |      | 34,344,392 |      |   | 35,342,749
|                                                                                             |  |      |            |      |   |           
|Stockholders equity                                                                         |  |      |            |      |   |           
|Common Stock, no par value, 400,000 shares authorized; 398,244 shares issued and outstanding |  |      |           |      |   |          
|Retained earnings                                                                            |  |      | 363,216    |      |   | 129,234   
|                                                                                             |  |      |            |      |   |           
|Total stockholders equity                                                                   |  |      | 363,216    |      |   | 129,234   
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  | $    | 34,707,608 |      | $ | 35,471,983
|                                                                                             |  |      |            |      |   |           

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



20



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Consolidated Statements of Operations



|                                            |  |      |           |      |   |           |  |   |           |  
|------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | --------- | -
|                                            |  | 2002 |           | 2001 |   | 2000      | 
|Years Ended December 31,                    |  |      |           |      |   |           |  |   |           |  
|OPERATING REVENUES:                         |  |      |           |      |   |           |  |   |           |  
|Lease income                                |  | $    | 3,946,580 |      | $ | 3,427,608 |  | $ | 2,102,807 |  
|Gain on sale of property                    |  |      | 131,317   |      |   | 154,852   |  |   |          |  
|Other income                                |  |      | 49,183    |      |   | 73,599    |  |   | 51,420    |  
|                                            |  |      |           |      |   |           |  |   |           |  
|Total income                                |  |      | 4,127,080 |      |   | 3,656,059 |  |   | 2,154,227 |  
|                                            |  |      |           |      |   |           |  |   |           |  
|OPERATING EXPENSES:                         |  |      |           |      |   |           |  |   |           |  
|Interest                                    |  |      | 2,714,012 |      |   | 2,496,172 |  |   | 1,626,138 |  
|Depreciation                                |  |      | 674,584   |      |   | 551,346   |  |   | 413,866   |  
|Amortization                                |  |      | 17,134    |      |   | 14,116    |  |   | 13,813    |  
|Taxes and insurance                         |  |      | 65,402    |      |   | 91,165    |  |   | 48,803    |  
|Repairs                                     |  |      | 153,641   |      |   | 142,372   |  |   | 49,279    |  
|Professional fees                           |  |      | 14,297    |      |   | 7,419     |  |   | 7,440     |  
|Other                                       |  |      | 112,539   |      |   | 110,145   |  |   | 29,653    |  
|                                            |  |      |           |      |   |           |  |   |           |  
|Total operating expense                     |  |      | 3,751,609 |      |   | 3,412,735 |  |   | 2,188,992 |  
|                                            |  |      |           |      |   |           |  |   |           |  
|Income (loss) before income taxes           |  |      | 375,471   |      |   | 243,324   |  |   | (34,765   | )
|Income taxes                                |  |      | 141,489   |      |   | 91,600    |  |   |          |  
|                                            |  |      |           |      |   |           |  |   |           |  
|Net income (loss)                           |  | $    | 233,982   |      | $ | 151,724   |  | $ | (34,765   | )
|                                            |  |      |           |      |   |           |  |   |           |  
|Basic and diluted earnings (loss) per share |  | $    | 0.59      |      | $ | 0.38      |  | $ | (0.09     | )
|                                            |  |      |           |      |   |           |  |   |           |  
|Weighted average shares outstanding         |  |      | 398,244   |      |   | 398,244   |  |   | 398,244   |  
|                                            |  |      |           |      |   |           |  |   |           |  

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



21



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Consolidated Statements of Cash Flows



|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                           |  | 2002 |            |   | 2001 |   |            | 2000 | 
|Years ended December 31,                                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from operating activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Net income (loss)                                                          |  | $    | 233,982    |   |      | $ | 151,724    |      |  | $ | (34,765    | )
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                               |  |      | 674,584    |   |      |   | 551,346    |      |  |   | 413,866    |  
|Amortization                                                               |  |      | 17,134     |   |      |   | 14,116     |      |  |   | 13,813     |  
|Gain on sale of property                                                   |  |      | (131,317   | ) |      |   | (154,852   | )    |  |   |           |  
|Deferred income taxes                                                      |  |      | (1,040     | ) |      |   | 91,600     |      |  |   |           |  
|Changes in:                                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Prepaid expenses                                                           |  |      |           |   |      |   |           |      |  |   | 7,466      |  
|Other assets                                                               |  |      | 23,388     |   |      |   | (79,739    | )    |  |   | (116,929   | )
|Accounts payable                                                           |  |      | 11,302     |   |      |   | 7          |      |  |   | 4,275      |  
|Income taxes payable                                                       |  |      | 141,939    |   |      |   |           |      |  |   |           |  
|Loan origination fees payable                                              |  |      |           |   |      |   | (66,929    | )    |  |   |           |  
|Accrued interest                                                           |  |      | (12,314    | ) |      |   | 87,924     |      |  |   | 34,595     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from operating activities                                         |  |      | 957,658    |   |      |   | 595,197    |      |  |   | 322,321    |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from investing activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Purchase of property                                                       |  |      | (42,084    | ) |      |   | (9,398,123 | )    |  |   | (7,172,553 | )
|Proceeds from sale of property                                             |  |      | 207,900    |   |      |   | 348,684    |      |  |   |           |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from investing activities                                         |  |      | 165,816    |   |      |   | (9,049,439 | )    |  |   | (7,172,553 | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from financing activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Proceeds from long-term debt                                               |  |      |           |   |      |   | 10,424,000 |      |  |   | 6,692,900  |  
|Repayment of long-term debt                                                |  |      | (813,244   | ) |      |   | (548,025   | )    |  |   | (427,825   | )
|Proceeds from notes payable                                                |  |      |           |   |      |   |           |      |  |   | 628,796    |  
|Repayment of notes payable                                                 |  |      | (325,000   | ) |      |   | (1,392,296 | )    |  |   |           |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from financing activities                                         |  |      | (1,138,244 | ) |      |   | 8,483,679  |      |  |   | 6,843,871  |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net change in cash                                                         |  |      | (14,770    | ) |      |   | 29,437     |      |  |   | 43,639     |  
|Cash at beginning of year                                                  |  |      | 97,560     |   |      |   | 68,123     |      |  |   | 24,484     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash at end of year                                                        |  | $    | 82,790     |   |      | $ | 97,560     |      |  | $ | 68,123     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                           |  |      |           
|Supplemental disclosures of cash flow information                          |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                           |  |      |           
|Cash paid for interest                                                     |  | $    | 2,726,326  |   |      | $ | 2,408,248  |      |  | $ | 1,591,543  |  
|Cash paid for income taxes                                                 |  | $    |           |   |      | $ |           |      |  | $ |           |  

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



22



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Consolidated Statements of Changes in Equity (Deficit)

Years Ended December 31, 2002, 2001 and 2000



|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|------------------------------------- |  | ------- | - | -------------- | - | ------------------------- |  | - | ------- | - |  | - | ------- | -
|                                      |  | Capital |   | Paid-inCapital |   | RetainedEarnings(Deficit) |  |   | Total   |  
|Balance (deficit) - December 31, 1999 |  | $       |  |                | $ |                          |  | $ | 12,275  |   |  | $ | 12,275  |  
|Net Loss                              |  |         |  |                |   |                          |  |   | (34,765 | ) |  |   | (34,765 | )
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|Balance - December 31, 2000           |  |         |  |                |   |                          |  |   | (22,490 | ) |  |   | (22,490 | )
|Net Income                            |  |         |   |                |   |                           |  |   | 151,724 |   |  |   | 151,724 |  
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|Balance - December 31, 2001           |  |         |  |                |   |                          |  |   | 129,234 |   |  |   | 129,234 |  
|Net Income                            |  |         |  |                |   |                          |  |   | 233,982 |   |  |   | 233,982 |  
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|Balance - December 31, 2002           |  | $       |  |                | $ |                          |  | $ | 363,216 |   |  | $ | 363,216 |  
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  

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



23



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Notes to Consolidated Financial Statements

December 31, 2002, 2001, and 2000

Note 1 - ORGANIZATION AND NATURE OF BUSINESS

Bank Building Corporation (the Corporation) conducts its business from its office located in Bassett, Virginia. The primary purpose of Bank Building
Corporation (the Corporation) is to acquire and develop property for lease as bank offices to the Participating Banks. As of March 27, 2003, the Participating Banks consisted of Blue Ridge Bank, National Association, Floyd, Virginia; Central
National Bank, Lynchburg, Virginia; Community National Bank, South Boston, Virginia; First National Bank, Rocky Mount, Virginia; First National Exchange Bank, Roanoke, Virginia; Mountain National Bank, Galax, Virginia; Patrick Henry National Bank,
Bassett, Virginia; Patriot Bank, National Association, Fredericksburg, Virginia; Peoples National Bank, Danville, Virginia; and Shenandoah National Bank, Staunton, Virginia. The Corporation also acquires funds for site acquisition and development
from banks that are not Participating Banks. The Corporation and its subsidiary also own and lease two shopping centers, a restaurant and an office park.

The Corporation does not have any paid employees or directors. All of its accounting, other professional services, record keeping and other operational needs will be met by other organizations on a fee-for-service basis. It is contemplated
that such fees will be based on time expended plus reimbursable expenses. It is anticipated that such costs and expenses will be covered by the lease payments from the lease of the bank branches. At the present time, Bank Services of Virginia, Inc.
provides these services. Bank Services also currently provides various bookkeeping and related services for the Participating Banks.

In 1998, the
Corporation formed a wholly owned subsidiary, Blackstone Properties, LLC (Blackstone). All intercompany transactions between the Corporation and Blackstone have been eliminated in these consolidated financial statements.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Leases and
Other Income

The Corporation leases its properties under non-cancellable operating leases. Lease income is recognized ratably over the lease term.
Other income represents fees charged to tenants for maintenance, insurance, and taxes as incurred.

Accounts Receivable and Bad Debts

Receivables are charged to bad debt expense when they are determined to be uncollectible, based upon a periodic review of the accounts by management.

Other Assets

Other assets represent loan origination fees being
ratably amortized over the life of the loan. Accumulated amortization of loan fees amounted to $49,339 and $30,881 at December 31, 2002 and 2001, respectively.

Property

Property is stated at cost and is depreciated using the straight-line method over the estimated useful
lives (40 years) of the assets.

FASB Statement No. 144 Accounting for Impairment of Disposal of Long-Lived Assets,  requires that
long-lived assets held and used by an entity be reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This Statement also specifies criteria for reclassification
and measurement of long-lived assets held for sale.



24



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Estimates

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

Income Taxes

Deferred taxes are provided on the asset and liability
method. Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax return basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The only significant timing differences consists of loan origination fees, that are expensed,
for income tax purposes, when incurred, but amortized over the life of the rebated loan for financial reporting purposes.

Earnings Per Share

Basic earnings per share (EPS) exclude dilution and are computed by dividing income available to common shareholders by the weighted average number of
shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were issued, converted into common stock or resulted in the issuance of common stock that then
shared in the earnings of the entity. The Corporation had no common stock equivalents during the periods ended December 31, 2002, 2001, and 2000; therefore, diluted earnings per share equals basic earnings per share.

Acquisition and Classification of Real Estate Assets

Substantially
all of the Corporations properties are acquired from the Participating Banks at carrying value. Each acquisition from the Participating Banks is evaluated under SFAS No. 98, Accounting for Leases; Sale-Leaseback Transactions
Involving Real Estate; Sales-Type Leases of Real Estate; Definition of the Lease Term; Initial Direct Costs of Direct Financing Lease, to determine whether the transfer qualifies as an accounting sale from and leaseback to the Participating
Bank. Once Management determines that sale leaseback accounting is appropriate, directly owned and leased assets are classified as real estate held and leased under the operating method, or as net investment in at the inception of a lease, for
financial reporting purposes. This classification is based on several criteria, including, but not limited to, estimates of the remaining economic life of the leased assets and the calculation of the present value of future minimum rents. The
classification criteria are intended to indicate whether the risks and rewards of ownership are retained by the lessor or substantially transferred to the lessee.

Dispositions and Impairment of Real Estate

Gains and losses on disposition of real estate are recognized upon sale of the underlying
project in accordance with Statement of Financial Accounting Standards No. 66, Accounting for Sales of Real Estate. The Corporation evaluates each real estate sale transaction to determine if it qualifies for gain recognition
under the full accrual method. If the transaction does not meet the criteria for the full accrual method of profit recognition based on the Corporations assessment, the Corporation accounts for a sale based on an appropriate deferral method
determined by the nature and extent of the buyers investment and the Corporations continuing involvement.



25



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FASB Statement No. 144 Accounting for Impairment of Disposal of Long-Lived Assets,  requires that
long-lived assets held and used by an entity be reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This Statement also specifies criteria for reclassification
and measurement for long-lived assets held for sale.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:



|                                |  |      |            |   |      |   |            |  
|------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                |  | 2002 |            |   | 2001 |  
|Land                            |  | $    | 10,368,837 |   |      | $ | 10,403,336 |  
|Building                        |  |      | 26,414,832 |   |      |   | 26,414,832 |  
|                                |  |      |            |   |      |   |            |  
|                                |  |      | 36,783,669 |   |      |   | 36,818,168 |  
|Less  accumulated depreciation |  |      | (2,402,667 | ) |      |   | (1,728,083 | )
|                                |  |      |            |   |      |   |            |  
|                                |  | $    | 34,381,002 |   |      | $ | 35,090,085 |  
|                                |  |      |            |   |      |   |            |  

NOTE 4 - LEASES

The primary purpose of Bank Building Corporation is to acquire and develop property for lease as bank offices to a number of Participating Banks. The selection of sites and construction of the offices is performed by the Participating Banks
that will lease the site to insure the needs of the bank are met. There are, however, no commitments on the part of any of the Participating Banks to present prospective office properties to Bank Building Corporation, nor are there any commitments
on the part of Bank Building Corporation to accept any prospective office properties offered by any of the Participating Banks. The acquisition and development of property is financed through loans from various sources.

At December 31, 2002, the Corporation owned 46 offices, that are leased to various banks (as disclosed in Note 8) under triple net operating leases. The leasing
bank is responsible for all property taxes, insurance and maintenance costs on each leased office. The Corporation incurs interest and depreciation expenses related to each office as well as other, minimal operating costs. In addition, the
Corporation and its subsidiary own four non-bank commercial properties.

The Corporation leases substantially all of its property under long-term
non-cancellable operating leases. Future minimum payments, due under existing leases at December 31, 2002 were as follows:



|           |  |   |           
|---------- |  | - | ----------
|2003       |  | $ | 3,698,296 
|2004       |  |   | 3,506,241 
|2005       |  |   | 3,385,309 
|2006       |  |   | 3,292,888 
|2007       |  |   | 3,292,888 
|Thereafter |  | $ | 23,755,147
|           |  |   |           
|           |  | $ | 40,930,769

A number of tenants leasing the Corporations non-bank commercial properties have leases that expire over the
next five years. Most of these have renewal options that may be exercised. If this occurs, the lease payments over the next five years will be higher than the amounts listed above.

NOTE 5 - INVESTMENT IN WATERLICK, L.L.C.

The Corporation is a 50% limited partner in Waterlick, L. L. C. Waterlick
owns and leases certain commercial properties in Lynchburg, Virginia. This investment is accounted for by the equity method. As no funds were invested in or advanced to Waterlick, its losses are not reflected in the Corporations financial
statements.



26



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Condensed (unaudited) financial data for Waterlick is as follows:

Balance Sheets



|                             |  |             |         |   |      |   |         |  
|---------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                             |  | December 31 |        
|                             |  | 2002        |         |   | 2001 |  
|Current assets               |  | $           | 11,556  |   |      | $ | 7,934   |  
|Property and equipment  net |  |             | 210,706 |   |      |   | 213,787 |  
|                             |  |             |         |   |      |   |         |  
|                             |  |             | 222,262 |   |      | $ | 221,721 |  
|                             |  |             |         |   |      |   |         |  
|Liabilities                  |  |             | 287,100 |   |      |   | 280,300 |  
|Owners equity (deficit)     |  |             | (64,838 | ) |      |   | (58,579 | )
|                             |  |             |         |   |      |   |         |  
|                             |  | $           | 222,262 |   |      | $ | 221,721 |  
|                             |  |             |         |   |      |   |         |  

Statements of Operations



|         |  |                        |         |   |      |   |         |      |  |   |         |  
|-------- |  | ---------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|         |  | Year Ended December 31 |        
|         |  | 2002                   |         |   | 2001 |   |         | 2000 | 
|Revenues |  | $                      | 29,800  |   |      | $ | 26,750  |      |  | $ | 24,800  |  
|Expenses |  |                        | (36,059 | ) |      |   | (35,062 | )    |  |   | (32,925 | )
|         |  |                        |         |   |      |   |         |      |  |   |         |  
|Net Loss |  | $                      | (6,259  | ) |      | $ | (8,312  | )    |  | $ | (8,125  | )
|         |  |                        |         |   |      |   |         |      |  |   |         |  

NOTE 6 - DEBT

Long-term debt consists of the following at December 31:



|                                                                                                                                                                                           |  |      |           |      |   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | --------- | ---- | - | ---------
|                                                                                                                                                                                           |  | 2002 |           | 2001
|Mortgage loan secured by real estate (shopping center) and related leases. Monthly payments are $19,403, including principal and interest at 8.25%, with the final payment due in 2012     |  | $    | 1,493,957 |      | $ | 1,598,798
|                                                                                                                                                                                           |  |     
|Mortgage loan secured by real estate (shopping center) and related leases. Monthly payments are $8,418, including principal and interest at 7.00%, with the final payment in 2011.         |  |      | 664,082   |      |   | 716,598  
|                                                                                                                                                                                           |  |     
|Mortgage loan secured by real estate (shopping center) and related leases. Monthly payments are $20,394, including principal and interest at 8.50%, with the final payment due in
2018.    |  |      | 2,099,012 |      |   | 2,162,368
|                                                                                                                                                                                           |  |     
|Mortgage loan secured by real estate and lease for a Golden Corral restaurant. Monthly payments are $16,302, including principal and interest at 6.0%, with the final payment due in
2004. |  |      | 1,597,103 |      |   | 1,693,726
|                                                                                                                                                                                           |  |     
|Mortgage loan secured by real estate (office park) and related leases. Monthly payments are $17,444, including principal and interest at 7.00%, with the final payment due in 2006.        |  |      | 2,187,184 |      |   | 2,241,336



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|                                                                                                                                                                                                                                                                                                                                                  |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------- | - |  | - | ---------- | -
|Balance Forward                                                                                                                                                                                                                                                                                                                                   |  | $ | 8,041,338  |   |  | $ | 8,412,826  |  
|                                                                                                                                                                                                                                                                                                                                                  |  |  
|Mortgage loans secured by real estate (branch bank facilities) and related leases. Monthly payments at December 31, 2002 are $212,379, including aggregate principal and interest, with the final
payments due from 2009 to 2017. Interest rates range from 5.50% to 8.75% at December 31, 2002, and are subject to adjustments at various times. |  |   | 25,838,301 |   |  |   | 26,280,057 |  
|                                                                                                                                                                                                                                                                                                                                                  |  |   |            |   |  |   |            |  
|                                                                                                                                                                                                                                                                                                                                                  |  |   | 33,879,639 |   |  |   | 34,692,883 |  
|Less current portion                                                                                                                                                                                                                                                                                                                              |  |   | (868,125   | ) |  |   | (804,047   | )
|                                                                                                                                                                                                                                                                                                                                                  |  |   |            |   |  |   |            |  
|                                                                                                                                                                                                                                                                                                                                                  |  | $ | 33,011,514 |   |  | $ | 33,888,836 |  
|                                                                                                                                                                                                                                                                                                                                                  |  |   |            |   |  |   |            |  

Maturities of long-term debt at December 31, 2002 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2003       |  | $ | 868,125   
|2004       |  |   | 2,322,982 
|2005       |  |   | 896,583   
|2006       |  |   | 2,896,388 
|2007       |  |   | 1,103,035 
|Thereafter |  |   | 25,792,526
|           |  |   |           
|           |  | $ | 33,879,639
|           |  |   |           

At December 31, 2001, the Corporation had unsecured demand notes payable of $325,000 (9% interest) with
certain of the banks discussed in note 8. These notes were paid in full during 2002.

NOTE 7 - INCOME TAXES

The income tax benefit (expense) consists of the following:



|         |  |      |         |   |      |   |        |  |   |        |  
|-------- |  | ---- | ------- | - | ---- | - | ------ |  | - | ------ | -
|         |  | 2002 |         |   | 2001 |   | 2000   | 
|Current  |  | $    | 142,529 |   |      | $ |       |  | $ | (6,592 | )
|Deferred |  |      | (1,040  | ) |      |   | 91,600 |  |   | 6,592  |  
|         |  |      |         |   |      |   |        |  |   |        |  
|         |  | $    | 141,489 |   |      | $ | 91,600 |  | $ |       |  
|         |  |      |         |   |      |   |        |  |   |        |  

Income tax expense (benefit) differs from the amount of income tax determined by applying the U.S. federal income
tax rate to pretax income due to the following:



|                                                                                                |  |      |         |      |   |        |  |   |         |  
|----------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------ |  | - | ------- | -
|                                                                                                |  | 2002 |         | 2001 |   | 2000   | 
|Tax expense (benefit) computed by applying federal statutoryrates to income before income taxes |  | $    | 127,660 |      | $ | 82,730 |  | $ | (11,820 | )
|State income taxes                                                                              |  |      | 13,829  |      |   | 8,870  |  |   | (1,377  | )
|Effect of surtax exemptions                                                                     |  |      |        |      |   |       |  |   | 6,605   |  
|Valuation allowance                                                                             |  |      |        |      |   |       |  |   | 6,592   |  
|                                                                                                |  |      |         |      |   |        |  |   |         |  
|                                                                                                |  | $    | 141,489 |      | $ | 91,600 |  | $ |        |  
|                                                                                                |  |      |         |      |   |        |  |   |         |  

NOTE 8 - RELATED PARTY TRANSACTIONS

The Chairman of the Board and President of the Corporation serves in a similar capacity for ten commercial banks throughout Virginia: Blue Ridge Bank, N.A., Central National Bank, Community National Bank, First
National Bank, First National Exchange Bank, Mountain National Bank, Patrick Henry National Bank, Patriot Bank, N.A., Peoples National Bank, and Shenandoah National Bank.

The Corporation had outstanding mortgage loans with certain of these banks at December 31, 2002 totaling $32,385,682 and $33,094,085 at December 31, 2001. Bank Building Corporation is directly obligated on
these loans; however,



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mortgage loans are not obtained from the same affiliated bank leasing the property servicing the loan. The Corporation
also leases branch-banking locations to certain of these banks. Lease income received from these banks was $2,601,275 in 2002, $2,222,122 in 2001, and $1,281,466 in 2000.

At December 31, 2002, the Corporation accrued interest of $206,399 and $217,935 at December 31, 2001. Total interest expense paid to these banks was $2,578,436 for 2002, $2,384,257 for 2001 and $1,507,463
for 2000.

NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosures about Fair Values of Financial Instruments requires the Corporation to disclose the estimated fair values of its financial assets and liabilities. The
estimated fair values were determined using the following assumptions:

Cash:    The carrying value of cash
approximates fair value.

Notes Payable and Long-term Debt:    The fair value of long-term debt and notes
payable is estimated by discounting the anticipated cash flows using estimated market rates for similar loans available in the Corporations market area.



|                      |  |                |            |            |   |                |  |            |            |  |   |           
|--------------------- |  | -------------- | ---------- | ---------- | - | -------------- |  | ---------- | ---------- |  | - | ----------
|                      |  | 2002           |            | 2001      
|                      |  | Carrying Value |            | Fair Value |   | Carrying Value |  | Fair Value
|Financial assets      |  |                |            |            |   |                |  |            |            |  |   |           
|Cash                  |  | $              | 82,790     |            | $ | 82,790         |  | $          | 97,560     |  | $ | 97,560    
|                      |  |                |            |            |   |                |  |            |            |  |   |           
|Financial liabilities |  |                |            |            |   |                |  |            |            |  |   |           
|Notes payable         |  |                |           |            |   |               |  |            | 325,000    |  |   | 325,000   
|Long-term debt        |  |                | 33,879,639 |            |   | 32,892,854     |  |            | 34,692,883 |  |   | 33,652,097
|                      |  |                |            |            |   |                |  |            |            |  |   |           
|                      |  | $              | 33,879,639 |            | $ | 32,892,854     |  | $          | 35,017,883 |  | $ | 33,977,097
|                      |  |                |            |            |   |                |  |            |            |  |   |           

NOTE 10 - COMMITMENTS AND SUBSEQUENT EVENT

On July 30, 2002, Congress passed the Sarbanes-Oxley Act. This law will potentially affect the Corporation through enhanced corporate governance and Board oversight, as well as increased timeliness of required
SEC filings.

The 2001 annual reports on Form 10-KSB and the quarterly report on Form 10-QSB for March 31, 2002 were not filed timely. The quarterly
reports on Form 10-QSB for June 30, 2002 and September 30, 2002 had not been filed as of the date of the report of the independent auditors, but management is in the process of preparing these filings. Management is unable to determine the
extent of contingent monetary effects, if any, of late filing (including fines, penalties and damages) on the financial statements of the Corporation.

NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

The following paragraphs outline several accounting pronouncements that became effective in 2002
or will become effective in 2003.

SFAS No. 145

In April
2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard SFAS No. 145, Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. The rescission of SFAS No. 4, Reporting Gains and Losses from Extinguishments, and SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking Fund Requirements, which amended SFAS No. 4
will affect income statement classification of gains and losses from extinguishments of debt. SFAS No. 4 requires that gains and losses from extinguishments of debt be classified as an extraordinary item, if material. Under SFAS No. 145,
extinguishments of debt is now considered a risk management strategy by the reporting enterprise and the FASB does not believe it should be



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considered extraordinary under the criteria in APB Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraodinary, Unusual and Infrequently Occurring Events and Transactions, unless the debt extinguishments meets the unusual in nature and infrequency of occurrence
criteria in APB Opinion No. 30. SFAS No. 145 will be effective for fiscal years beginning after May 15, 2002.

SFAS No. 146

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities and nullified Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity
(including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. A fundamental conclusion reached by the
FASB in this statement is that an entitys commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for initial
measurement of the liability. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early adoption encouraged.

FIN No. 46

In January 2003, the FASB issued Interpretation
(FIN) No. 46, Consolidation of Variable Interest Entities and in December 2003, a revised interpretation was issued (FIN No. 46( R)). In general, a variable interest entity (VIE) is a corporation,
partnership, trust, or any other legal structure used for business purposes that either does not have equity investors with voting rights nor has equity investors providing sufficient financial resources for the entity to support its activities. FIN
No. 46 requires a VIE to be consolidated by a company if that company is designated as the primary beneficiary. Generally, the interpretation applies to VIEs created after January 31, 2003, and for all financial statements issued after
December 15, 2003, for VIEs in which an enterprise held a variable interest that it acquired before February 1, 2003. The adoption of this standard did not have a material effect on the financial statements.

FASB 150

In May 2003, the FASB issued Statement No. 150,
Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. Statement No. 150 clarifies the definition of a liability as currently defined in FASB Concepts Statement No. 6, Elements
of Financial Statements, as well as other planned revisions. This statement requires a financial instrument that embodies an obligation of an issuer to be classified as a liability. In addition, the instruments and disclosure requirements.
Generally Statement No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and for all other matters, for the first interim period beginning after June 15, 2003. The adoption of this standard did
not have a material effect on the financial statements.

FASB 149

In April 2003, the FASB issued Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. Statement No. 149 amends Statement No. 133 for decisions made as part of the
FASBs Derivatives Implementation Group process, other FASB projects dealing with financial instruments, and in connection with implementation issues raised in relation to the application of the definition of a derivative. This statement
clarifies that mortgage loan commitments relating to the origination of mortgage loans held for sale should be accounted for as derivative instruments by the issuer of the loan commitment. This statement is generally effective for contracts entered
into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of this standard did not have a material effect on the financial statements.

FASB 144-1

FASB issued FASB Staff Position
(FSP) 144-1, Determination of Cost Basis for Foreclosed Assets under FASB Statement No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings, and the Measurement of Cumulative Losses Previously Recognized
under Paragraph 37 of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Uner FSP 144-1, the lender is required to measure the foreclosure on a long-lived asset (e.g. real estate) at fair value
less cost to sell on the foreclosure date, which establishes a new cost basis such that any loan valuation allowance is not retained. Thereafter, the lender would follow the impairment guidance in Statement No. 144, and could not reflect any
recovery in value of the property beyond the cost basis established upon foreclosure of the loan. The adoption of this standard did not have a material effect on the financial statements.



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