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, 2003 and 2002, 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, 2003. 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, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.



|                                 
|---------------------------------
|/s/ Goodman & Company, L.L.P     
|                                 
|Goodman & Company, L. L. P.      
|Danville, Virginia April 19,
2004



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Bank Building Corporation

Consolidated Balance Sheets

December 31, 2003 and 2002



|                                                       |  |      |            |      |   |           
|------------------------------------------------------ |  | ---- | ---------- | ---- | - | ----------
|                                                       |  | 2003 |            | 2002
|Assets                                                 |  |      |            |      |   |           
|Current assets                                         |  |      |            |      |   |           
|Cash                                                   |  | $    | 79,069     |      | $ | 82,790    
|Property  net of depreciation                         |  |      | 33,721,682 |      |   | 34,381,002
|Other assets                                           |  |      | 226,894    |      |   | 243,816   
|                                                       |  |      |            |      |   |           
|                                                       |  | $    | 34,027,645 |      | $ | 34,707,608
|                                                       |  |      |            |      |   |           
|Liabilities and Stockholders Equity                   |  |      |            |      |   |           
|Current liabilities                                    |  |      |            |      |   |           
|Accounts payable                                       |  | $    | 2,070      |      | $ | 15,584    
|Accrued interest                                       |  |      | 208,216    |      |   | 216,670   
|Income taxes payable                                   |  |      | 135,214    |      |   | 141,939   
|Current portion of long-term debt                      |  |      | 1,184,899  |      |   | 868,125   
|Notes payable                                          |  |      | 60,000     |      |   |          
|                                                       |  |      |            |      |   |           
|Total current liabilities                              |  |      | 1,590,399  |      |   | 1,242,318 
|                                                       |  |      |            |      |   |           
|Long-term liabilities                                  |  |      |            |      |   |           
|Long-term debt - net of current portion                |  |      | 31,789,652 |      |   | 33,011,514
|Deferred income taxes                                  |  |      | 80,042     |      |   | 90,560    
|                                                       |  |      |            |      |   |           
|Total long-term liabilities                            |  |      | 31,869,694 |      |   | 33,102,074
|                                                       |  |      |            |      |   |           
|Total liabilities                                      |  |      | 33,460,093 |      |   | 34,344,392
|                                                       |  |      |            |      |   |           
|Stockholders equity                                   |  |      |            |      |   |           
|Common Stock, no par value, 400,000 shares authorized; |  |      |            |      |   |           
|398,244 shares issued and outstanding                  |  |      |           |      |   |          
|Retained earnings                                      |  |      | 567,552    |      |   | 363,216   
|                                                       |  |      |            |      |   |           
|Total stockholders equity                             |  |      | 567,552    |      |   | 363,216   
|                                                       |  |      |            |      |   |           
|                                                       |  | $    | 34,027,645 |      | $ | 34,707,608
|                                                       |  |      |            |      |   |           

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



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Consolidated Statements of Operations and Retained Earnings

Years ended December 31,



|                                        |  |      |           |      |   |           |  |   |          
|--------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                        |  | 2003 |           | 2002 |   | 2001     
|Operating Revenues                      |  |      |           |      |   |           |  |   |          
|Lease income                            |  | $    | 3,919,163 |      | $ | 3,946,580 |  | $ | 3,427,608
|Gain on sale of property                |  |      |          |      |   | 131,317   |  |   | 154,852  
|Gain on sale of investment in Waterlick |  |      | 86,000    |      |   |          |  |   |         
|Other income                            |  |      | 802       |      |   | 49,183    |  |   | 73,599   
|                                        |  |      |           |      |   |           |  |   |          
|Total income                            |  |      | 4,005,965 |      |   | 4,127,080 |  |   | 3,656,059
|                                        |  |      |           |      |   |           |  |   |          
|Operating Expenses                      |  |      |           |      |   |           |  |   |          
|Interest                                |  |      | 2,564,035 |      |   | 2,714,012 |  |   | 2,496,172
|Depreciation                            |  |      | 674,583   |      |   | 674,584   |  |   | 551,346  
|Amortization                            |  |      | 17,046    |      |   | 17,134    |  |   | 14,116   
|Taxes and insurance                     |  |      | 86,191    |      |   | 65,402    |  |   | 91,165   
|Repairs                                 |  |      | 168,764   |      |   | 153,641   |  |   | 142,372  
|Professional fees                       |  |      | 24,375    |      |   | 14,297    |  |   | 7,419    
|Other                                   |  |      | 131,421   |      |   | 112,539   |  |   | 110,145  
|                                        |  |      |           |      |   |           |  |   |          
|Total operating expenses                |  |      | 3,666,415 |      |   | 3,751,609 |  |   | 3,412,735
|                                        |  |      |           |      |   |           |  |   |          
|Income before income taxes              |  |      | 339,550   |      |   | 375,471   |  |   | 243,324  
|Income taxes                            |  |      | 135,214   |      |   | 141,489   |  |   | 91,600   
|                                        |  |      |           |      |   |           |  |   |          
|Net income                              |  | $    | 204,336   |      | $ | 233,982   |  | $ | 151,724  
|                                        |  |      |           |      |   |           |  |   |          
|Basic and diluted earnings per share    |  | $    | 0.51      |      | $ | 0.59      |  | $ | 0.38     
|                                        |  |      |           |      |   |           |  |   |          
|Weighted average shares outstanding     |  |      | 398,244   |      |   | 398,244   |  |   | 398,244  
|                                        |  |      |           |      |   |           |  |   |          

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



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Consolidated Statements of Cash Flows

Years Ended December 31,



|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                           |  | 2003 |           |   | 2002 |   |            | 2001 | 
|Cash flows from operating activities                                       |  |      |           |   |      |   |            |      |  |   |            |  
|Net Income                                                                 |  | $    | 204,336   |   |      | $ | 233,982    |      |  | $ | 151,724    |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |           |   |      |   |            |      |  |   |            |  
|Depreciation                                                               |  |      | 674,583   |   |      |   | 674,584    |      |  |   | 551,346    |  
|Amortization                                                               |  |      | 17,046    |   |      |   | 17,134     |      |  |   | 14,116     |  
|Gain on sale of investment in Waterlick                                    |  |      | (86,000   | ) |      |   |           |      |  |   |           |  
|Gain on sale of property                                                   |  |      |          |   |      |   | (131,317   | )    |  |   | (154,852   | )
|Deferred income taxes                                                      |  |      | (10,518   | ) |      |   | (1,040     | )    |  |   | 91,600     |  
|Change in:                                                                 |  |      |           |   |      |   |            |      |  |   |            |  
|Other assets                                                               |  |      | (124      | ) |      |   | 23,388     |      |  |   | (79,739    | )
|Accounts payable                                                           |  |      | (13,514   | ) |      |   | 11,302     |      |  |   | 7          |  
|Income taxes payable                                                       |  |      | (6,725    | ) |      |   | 141,939    |      |  |   |           |  
|Loan origination fees payable                                              |  |      |          |   |      |   |           |      |  |   | (66,929    | )
|Accrued interest                                                           |  |      | (8,454    | ) |      |   | (12,314    | )    |  |   | 87,924     |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Net cash from operating activities                                         |  |      | 770,630   |   |      |   | 957,658    |      |  |   | 595,197    |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Cash flows from investing activities                                       |  |      |           |   |      |   |            |      |  |   |            |  
|Purchase of property                                                       |  |      | (75,263   | ) |      |   | (42,084    | )    |  |   | (9,398,123 | )
|Proceeds from sale of property                                             |  |      | 60,000    |   |      |   | 207,900    |      |  |   | 348,684    |  
|Proceeds from sale of investment in Waterlick                              |  |      | 86,000    |   |      |   |           |      |  |   |           |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Net cash from investing activities                                         |  |      | 70,737    |   |      |   | 165,816    |      |  |   | (9,049,439 | )
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Cash flows from financing activities                                       |  |      |           |   |      |   |            |      |  |   |            |  
|Proceeds from long-term debt                                               |  |      |          |   |      |   |           |      |  |   | 10,424,000 |  
|Repayment of long-term debt                                                |  |      | (905,088  | ) |      |   | (813,244   | )    |  |   | (548,025   | )
|Proceeds from notes payable                                                |  |      | 60,000    |   |      |   |           |      |  |   |           |  
|Repayment of notes payable                                                 |  |      |          |   |      |   | (325,000   | )    |  |   | (1,392,296 | )
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Net cash from financing activities                                         |  |      | (845,088  | ) |      |   | (1,138,244 | )    |  |   | 8,483,679  |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Net change in cash                                                         |  |      | (3,721    | ) |      |   | (14,770    | )    |  |   | 29,437     |  
|Cash - beginning of year                                                   |  |      | 82,790    |   |      |   | 97,560     |      |  |   | 68,123     |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Cash - end of year                                                         |  | $    | 79,069    |   |      | $ | 82,790     |      |  | $ | 97,560     |  
|                                                                           |  |      |           |   |      |   |            |      |  |   |            |  
|Supplemental disclosures of cash flow information                          |  |      |           |   |      |   |            |      |  |   |            |  
|Cash paid for interest                                                     |  | $    | 2,572,489 |   |      | $ | 2,726,326  |      |  | $ | 2,408,248  |  
|Cash paid for income taxes                                                 |  | $    | 141,939   |   |      | $ |           |      |  | $ |           |  

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



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Consolidated Statements of Changes in Equity

Years Ended December 31, 2003, 2002, and 2001



|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|------------------------------------- |  | ------- | - | -------------- | - | ------------------------- |  | - | ------- | - |  | - | ------- | -
|                                      |  | Capital |   | Paid-inCapital |   | RetainedEarnings(Deficit) |  |   | Total   |  
|Balance (deficit) - 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 |  
|Net Income                            |  |         |  |                |   |                          |  |   | 204,336 |   |  |   | 204,336 |  
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  
|Balance - December 31, 2003           |  | $       |  |                | $ |                          |  | $ | 567,552 |   |  | $ | 567,552 |  
|                                      |  |         |   |                |   |                           |  |   |         |   |  |   |         |  

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



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Notes to Consolidated Financial Statements

December 31, 2003, 2002, and 2001

Note 1 - ORGANIZATION AND NATURE OF BUSINESS

Bank Building Corporation (the Corporation) conducts its business from its office
located in Martinsville, 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, 2004, 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.

Other Assets

Other assets represent loan origination fees being
ratably amortized over the life of the loan and are included in other assets. Accumulated amortization of loan fees amounted to $66,385 and $49,339 at December 31, 2003 and 2002, 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.

Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the
date of the



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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 bases. 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, which are expensed, for income tax purposes, when incurred, but amortized over the life of the related loan for financial reporting purposes.

Earnings Per Share

Basic earnings per share (EPS) excludes dilution and is 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, 2003, 2002, and 2001; 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 financing leases, 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
dispositions 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.

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.



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NOTE 3  PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:



|                                |  |      |            |   |      |   |            |  
|------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                |  | 2003 |            |   | 2002 |  
|Land                            |  | $    | 10,384,100 |   |      | $ | 10,368,837 |  
|Buildings                       |  |      | 26,414,832 |   |      |   | 26,414,832 |  
|                                |  |      |            |   |      |   |            |  
|                                |  |      | 36,798,932 |   |      |   | 36,783,669 |  
|Less  accumulated depreciation |  |      | (3,077,250 | ) |      |   | (2,402,667 | )
|                                |  |      |            |   |      |   |            |  
|                                |  | $    | 33,721,682 |   |      | $ | 34,381,002 |  
|                                |  |      |            |   |      |   |            |  

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 premises to ensure 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.

At
December 31, 2003, the Corporation owned 46 offices that are leased to various Participating 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 both 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 non-cancellable long term operating leases. Future minimum payments, due under existing
leases at December 31, 2003 were as follows:



|           |  |   |           
|---------- |  | - | ----------
|2004       |  | $ | 3,506,241 
|2005       |  |   | 3,385,309 
|2006       |  |   | 3,292,888 
|2007       |  |   | 3,292,888 
|2008       |  |   | 3,292,888 
|Thereafter |  |   | 20,056,851
|           |  |   |           
|           |  | $ | 36,827,065
|           |  |   |           

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 was a 50% limited partner in Waterlick, L.L.C. This
partnership was dissolved in 2003 and a gain of $86,000 was recognized by the Corporation. Waterlick owned and leased certain commercial properties in Lynchburg, Virginia, that were liquidated during 2003.



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NOTE 6  DEBT

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



|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                                                                                                                                                                                                        |  | 2003 |            |   | 2002 |  
|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                                                                                                                                                  |  | $    | 1,380,132  |   |      | $ | 1,493,957  |  
|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.                                                                                                                                                      |  |      | 607,770    |   |      |   | 664,082    |  
|Mortgage loan secured by real estate (shopping center) and related leases. Monthly payments are $20,394, including principal and interest at
8.5%, with the final payment due in 2018.                                                                                                                                                  |  |      | 2,022,447  |   |      |   | 2,099,012  |  
|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.                                                                                                                                              |  |      | 1,494,520  |   |      |   | 1,597,103  |  
|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.                                                                                                                                                     |  |      | 2,129,116  |   |      |   | 2,187,184  |  
|Mortgage loans secured by real estate (branch bank facilities) and related leases. Monthly payments at December 31, 2003 are $212,379,
including principal and interest, with the final payments due from 2009 to 2017. Interest rates range from 5.50% to 8.75% at December 31, 2003, and are subject to adjustments at various times. |  |      | 25,340,566 |   |      |   | 25,838,301 |  
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|                                                                                                                                                                                                                                                                                                                                        |  |      | 32,974,551 |   |      |   | 33,879,639 |  
|Less current portion                                                                                                                                                                                                                                                                                                                    |  |      | (1,184,899 | ) |      |   | (868,125   | )
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|                                                                                                                                                                                                                                                                                                                                        |  | $    | 32,789,652 |   |      | $ | 33,011,514 |  
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  

Maturities of long-term debt at December 31, 2003 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2004       |  | $ | 1,184,899 
|2005       |  |   | 1,256,847 
|2006       |  |   | 3,276,893 
|2007       |  |   | 1,356,287 
|2008       |  |   | 1,447,035 
|Thereafter |  |   | 24,452,590
|           |  |   |           
|           |  | $ | 32,974,551
|           |  |   |           



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NOTE 7  INCOME TAXES

The income tax expense consists of the following:



|         |  |      |         |   |      |   |         |      |  |   |       
|-------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------
|         |  | 2003 |         |   | 2002 |   |         | 2001
|Current  |  | $    | 145,732 |   |      | $ | 142,529 |      |  | $ |      
|Deferred |  |      | (10,518 | ) |      |   | (1,040  | )    |  |   | 91,600
|         |  |      |         |   |      |   |         |      |  |   |       
|         |  | $    | 135,214 |   |      | $ | 141,489 |      |  | $ | 91,600
|         |  |      |         |   |      |   |         |      |  |   |       

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



|                                                                                       |  |      |         |      |   |         |  |   |       
|-------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------
|                                                                                       |  | 2003 |         | 2002 |   | 2001   
|Tax expense computed by applying federal statutory rates to income before income taxes |  | $    | 115,447 |      | $ | 127,660 |  | $ | 82,730
|State income taxes                                                                     |  |      | 19,767  |      |   | 13,829  |  |   | 8,870 
|                                                                                       |  |      |         |      |   |         |  |   |       
|                                                                                       |  | $    | 135,214 |      | $ | 141,489 |  | $ | 91,600
|                                                                                       |  |      |         |      |   |         |  |   |       

There were no significant deferred tax assets or liabilities at December 31,
2003 or 2002.

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.

At
December 31, 2003 and 2002, the Corporation had outstanding mortgage loans with certain of these banks totaling $31,594,419 and $32,385,682, respectively. The Corporation is directly obligated on these loans, and mortgage loans are not obtained
(or guaranteed) from the same affiliated bank leasing the property securing the loan. No mortgage loans were obtained from these banks in 2003; principal payments on these loans were $791,263 for 2003, $708,403 for 2002, and $450,460 for 2001. The
Corporation also leases branch-banking locations to certain of these banks. Lease income received from these banks was $2,562,393 in 2003, $2,601,275 in 2002 and $2,222,122 in 2001.

At December 31, 2003, the Corporation had accrued interest to these banks of $198,728 at December 31, 2003 and $206,399 at December 31, 2002. Total interest expense paid to these banks was $2,450,179
for 2003, $2,578,436 for 2002 and $2,384,257 for 2001.

At December 31, 2003, the Corporation was the obligor on a $60,000 demand note (4.0% interest)
payable to Worth Harris Carter, Jr., Chairman of the Board and President of the Corporation. The note was issued to fund operating expenses. This note was paid in March 2004. The Corporation paid $747.00 in total interest on the note
over the life of the note.

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.



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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.



|                      |  |               |            |            |   |               |  |            |            |  |   |           
|--------------------- |  | ------------- | ---------- | ---------- | - | ------------- |  | ---------- | ---------- |  | - | ----------
|                      |  | 2003          |            | 2002      
|                      |  | CarryingValue |            | Fair Value |   | CarryingValue |  | Fair Value
|Financial assets      |  |               |            |            |   |               |  |            |            |  |   |           
|Cash                  |  | $             | 79,069     |            | $ | 79,069        |  | $          | 82,790     |  | $ | 82,790    
|                      |  |               |            |            |   |               |  |            |            |  |   |           
|Financial liabilities |  |               |            |            |   |               |  |            |            |  |   |           
|Notes payable         |  |               | 60,000     |            |   | 60,000        |  |            |           |  |   |          
|Long-term debt        |  |               | 32,974,551 |            |   | 31,325,823    |  |            | 33,879,639 |  |   | 32,892,854
|                      |  |               |            |            |   |               |  |            |            |  |   |           
|                      |  | $             | 33,034,551 |            | $ | 31,385,823    |  | $          | 33,879,639 |  | $ | 32,892,854
|                      |  |               |            |            |   |               |  |            |            |  |   |           

NOTE 10  COMMITMENTS AND CONTINGENCIES

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 2003, 2002, and 2001 annual reports on Form 10-KSB and the quarterly report on Form 10-QSB on March 31, 2002 were not filed timely.
The quarterly reports on Form 10-QSB for June 30, 2002, September 30, 2002, March 31, 2003, June 30, 2003 and September 30, 2003 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 2003 or will be effective in 2004. The Corporation had no transactions in 2003 that were related to these new pronouncements.

SFAS Statement No. 145

In April 2002, the Financial Accounting
Standard 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, extinguishment of debt is now considered a
risk management strategy by the reporting enterprise and the FASB does not believe it should be 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 Extraordinary, 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 Statement 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 an 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.

FASB Interpretation 45

In
November 2002, the FASB issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 elaborates on the
disclosures to be made by a guarantor in its financial statements under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. FIN 45 requires disclosure of the nature of the guarantee, the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, and the current amount of
the liability, if any, for the guarantors obligations under the guarantee. The recognition requirements of the Interpretation were effective beginning January 1, 2003, and had no impact on the 2003 financial statements.

FASB Interpretation 46

The FASB also revised FASB Interpretation
No. 46, Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51 (FIN 46). FIN 46 provides a framework for identifying variable interest entities (VIEs), and determining when a company should include the
assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements. As revised, FIN 46 is effective beginning in the first quarter of 2004 for all VIEs (other than what is commonly referred to
as special purpose entities, VIEs of small business issuers, and VIEs of nonpublic entities). The Corporation does not currently utilize VIEs or so called special purpose entities.

FASB Statement No. 149

In April 2003, the FASB issued Statement No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement was effective for contracts entered into or modified after June 30, 2003, and had no impact
on the 2003 financial statements.

FASB Statement No.150

In May 2003, the FASB issued Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after
June 15, 2003, and had no impact on the 2003 financial statements.

FSP 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. Under 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 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.