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, 2006 and 2005, 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, 2006. 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, 2006 and 2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, 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             
|March 27, 2007                 



19



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Bank Building Corporation

Consolidated Balance Sheets

December 31, 2006 and 2005



|                                                                                             |  |      |            |      |   |           
|-------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                             |  | 2006 |            | 2005
|Assets                                                                                       |  |      |            |      |   |           
|Current assets                                                                               |  |      |            |      |   |           
|Cash                                                                                         |  | $    | 88,277     |      | $ | 110,119   
|Accounts receivable                                                                          |  |      | 54,242     |      |   |          
|                                                                                             |  |      |            |      |   |           
|Total current assets                                                                         |  |      | 142,519    |      |   | 110,119   
|Property  net                                                                               |  |      | 31,656,245 |      |   | 32,266,395
|                                                                                             |  |     
|Other assets                                                                                 |  |      | 179,806    |      |   | 194,709   
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  | $    | 31,978,570 |      | $ | 32,571,223
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  |     
|Liabilities and Stockholders Equity                                                         |  |      |            |      |   |           
|Current liabilities                                                                          |  |      |            |      |   |           
|Accounts payable                                                                             |  |      | 1,820      |      |   | 58,048    
|Accrued interest                                                                             |  |      | 196,452    |      |   | 195,492   
|Income taxes payable                                                                         |  |      |           |      |   | 184,839   
|Current portion of long-term debt                                                            |  |      | 1,619,268  |      |   | 3,373,848 
|Notes payable                                                                                |  |      | 565,000    |      |   | 25,000    
|                                                                                             |  |      |            |      |   |           
|Total current liabilities                                                                    |  |      | 2,382,540  |      |   | 3,837,227 
|                                                                                             |  |      |            |      |   |           
|Long-term liabilities                                                                        |  |      |            |      |   |           
|Long-term debt - net of current portion                                                      |  |      | 28,146,414 |      |   | 27,505,964
|Deferred income taxes                                                                        |  |      | 62,445     |      |   | 66,313    
|                                                                                             |  |      |            |      |   |           
|Total long-term liabilities                                                                  |  |      | 28,208,859 |      |   | 27,572,277
|                                                                                             |  |      |            |      |   |           
|Total liabilities                                                                            |  |      | 30,591,399 |      |   | 31,409,504
|                                                                                             |  |      |            |      |   |           
|Stockholders equity                                                                         |  |      |            |      |   |           
|Common Stock, no par value, 400,000 shares authorized; 398,244 shares issued and outstanding |  |      |           |      |   |          
|Retained earnings                                                                            |  |      | 1,387,171  |      |   | 1,161,719 
|                                                                                             |  |      |            |      |   |           
|Total stockholders equity                                                                   |  |      | 1,387,171  |      |   | 1,161,719 
|                                                                                             |  |      |            |      |   |           
|                                                                                             |  | $    | 31,978,570 |      | $ | 32,571,223
|                                                                                             |  |      |            |      |   |           

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



20



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Consolidated Statements of Income



|                                     |  |      |           |      |   |           |  |   |          
|------------------------------------ |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|Years ended December 31,             |  | 2006 |           | 2005 |   | 2004     
|Operating Revenues                   |  |      |           |      |   |           |  |   |          
|Lease income                         |  | $    | 3,909,676 |      | $ | 3,813,319 |  | $ | 3,906,992
|Gain on sale of property             |  |      |          |      |   | 46,494    |  |   | 58,847   
|Other income                         |  |      | 11,427    |      |   | 17        |  |   |         
|                                     |  |      |           |      |   |           |  |   |          
|Total income                         |  |      | 3,921,103 |      |   | 3,859,830 |  |   | 3,965,839
|                                     |  |      |           |      |   |           |  |   |          
|                                     |  |      |          
|Operating Expenses                   |  |      |           |      |   |           |  |   |          
|Interest                             |  |      | 2,372,893 |      |   | 2,253,235 |  |   | 2,423,659
|Depreciation                         |  |      | 667,713   |      |   | 672,690   |  |   | 663,930  
|Amortization                         |  |      | 16,914    |      |   | 16,914    |  |   | 16,914   
|Taxes and insurance                  |  |      | 92,066    |      |   | 85,828    |  |   | 84,806   
|Repairs                              |  |      | 124,590   |      |   | 136,332   |  |   | 157,347  
|Professional fees                    |  |      | 104,559   |      |   | 71,594    |  |   | 31,556   
|Other                                |  |      | 170,426   |      |   | 111,691   |  |   | 121,911  
|                                     |  |      |           |      |   |           |  |   |          
|Total operating expenses             |  |      | 3,549,161 |      |   | 3,348,284 |  |   | 3,500,123
|                                     |  |      |           |      |   |           |  |   |          
|                                     |  |      |          
|Income before income taxes           |  |      | 371,942   |      |   | 511,546   |  |   | 465,716  
|                                     |  |      |          
|Income taxes                         |  |      | 146,490   |      |   | 189,943   |  |   | 193,152  
|                                     |  |      |           |      |   |           |  |   |          
|                                     |  |      |          
|Net income                           |  | $    | 225,452   |      | $ | 321,603   |  | $ | 272,564  
|                                     |  |      |           |      |   |           |  |   |          
|                                     |  |      |          
|Basic and diluted earnings per share |  | $    | 0.57      |      | $ | 0.81      |  | $ | 0.68     
|                                     |  |      |           |      |   |           |  |   |          
|                                     |  |      |          
|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



|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|-------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|Years Ended December 31,                                                   |  | 2006 |            |   | 2005 |   |            | 2004 | 
|Cash flows from operating activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                 |  | $    | 225,452    |   |      | $ | 321,603    |      |  | $ | 272,564    |  
|Adjustments to reconcile net income to net cash from operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                               |  |      | 667,713    |   |      |   | 672,690    |      |  |   | 663,930    |  
|Amortization                                                               |  |      | 16,914     |   |      |   | 16,914     |      |  |   | 16,914     |  
|Gain on sale of property                                                   |  |      |           |   |      |   | (46,494    | )    |  |   | (58,847    | )
|Deferred income taxes                                                      |  |      | (3,868     | ) |      |   | (12,667    | )    |  |   | (1,052     | )
|Change in:                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts receivable                                                        |  |      |           |   |      |   | 158,035    |      |  |   | (158,035   | )
|Income taxes receivable                                                    |  |      | (54,242    | ) |      |   |           |      |  |   |           |  
|Other assets                                                               |  |      | (2,011     | ) |      |   | 95         |      |  |   | (1,738     | )
|Accounts payable                                                           |  |      | (56,228    | ) |      |   | 56,228     |      |  |   | (250       | )
|Income taxes payable                                                       |  |      | (184,839   | ) |      |   | (9,365     | )    |  |   | 58,990     |  
|Accrued interest                                                           |  |      | 960        |   |      |   | 15,284     |      |  |   | (28,007    | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from operating activities                                         |  |      | 609,851    |   |      |   | 1,172,323  |      |  |   | 764,469    |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from investing activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Purchase of property                                                       |  |      | (57,563    | ) |      |   | (207,358   | )    |  |   | (91,348    | )
|Proceeds from sale of property                                             |  |      |           |   |      |   | 224,692    |      |  |   | 298,012    |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from investing activities                                         |  |      | (57,563    | ) |      |   | 17,334     |      |  |   | 206,664    |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from financing activities                                       |  |      |            |   |      |   |            |      |  |   |            |  
|Repayment of long-term debt                                                |  |      | (1,114,130 | ) |      |   | (1,100,760 | )    |  |   | (993,980   | )
|Proceeds from notes payable                                                |  |      | 940,000    |   |      |   | 25,000     |      |  |   |           |  
|Repayment of notes payable                                                 |  |      | (400,000   | ) |      |   |           |      |  |   | (60,000    | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash from financing activities                                         |  |      | (574,130   | ) |      |   | (1,075,760 | )    |  |   | (1,053,980 | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Net change in cash                                                         |  |      | (21,842    | ) |      |   | 113,897    |      |  |   | (82,847    | )
|Cash at beginning of year                                                  |  |      | 110,119    |   |      |   | (3,778     | )    |  |   | 79,069     |  
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Cash (overdraft) at end of year                                            |  | $    | 88,277     |   |      | $ | 110,119    |      |  | $ | (3,778     | )
|                                                                           |  |      |            |   |      |   |            |      |  |   |            |  
|Supplemental disclosures of cash flow information                          |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                           |  |      |           
|Cash Paid for interest                                                     |  | $    | 2,371,933  |   |      | $ | 2,237,952  |      |  | $ | 2,451,668  |  
|Cash paid for income taxes                                                 |  | $    | 389,439    |   |      | $ | 207,550    |      |  | $ | 145,767    |  

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



22



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Consolidated Statements of Changes in Equity

Years Ended December 31, 2006, 2005 and 2004



|                            |  |         |   |                |   |                  |  |       |           |  |   |          
|--------------------------- |  | ------- | - | -------------- | - | ---------------- |  | ----- | --------- |  | - | ---------
|                            |  | Capital |   | Paid-inCapital |   | RetainedEarnings |  | Total
|Balance - December 31, 2003 |  | $       |  |                | $ |                 |  | $     | 567,552   |  | $ | 567,552  
|Net Income                  |  |         |  |                |   |                 |  |       | 272,564   |  |   | 272,564  
|                            |  |         |   |                |   |                  |  |       |           |  |   |          
|Balance - December 31, 2004 |  |         |  |                |   |                 |  |       | 840,116   |  |   | 840,116  
|Net Income                  |  |         |  |                |   |                 |  |       | 321,603   |  |   | 321,603  
|                            |  |         |   |                |   |                  |  |       |           |  |   |          
|Balance - December 31, 2005 |  | $       |  |                | $ |                 |  | $     | 1,161,719 |  | $ | 1,161,719
|Net Income                  |  |         |  |                |   |                 |  |       | 225,452   |  |   | 225,452  
|                            |  |         |   |                |   |                  |  |       |           |  |   |          
|Balance - December 31, 2006 |  | $       |  |                | $ |                 |  | $     | 1,387,171 |  | $ | 1,387,171
|                            |  |         |   |                |   |                  |  |       |           |  |   |          

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



23



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Notes to Consolidated Financial Statements

December 31, 2006, 2005, and 2004

Note 1 - ORGANIZATION AND NATURE OF BUSINESS

Bank Building Corporation (the Corporation) conducts its business from its office located in Martinsville, Virginia. The principal business activity of the Corporation is
to acquire and develop property for lease as bank offices to Carter Bank & Trust. Carter Bank & Trust consists of ten banks that merged December 29, 2006. These banks were 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 other than Carter Bank & Trust. The Corporation and its subsidiary Blackstone Properties, LLC (Blackstone) 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 Carter Bank & Trust.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of
Presentation and Consolidation

All intercompany transactions between the Corporation and Blackstone have been eliminated in these consolidated
financial statements.

Cash and Cash Equivalents

The
Corporation considers all highly liquid investments with a purchased maturity of three months or less to be cash and cash equivalents.

Leases and Other
Income

The Corporation leases its properties under noncancellable 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 and are included in other assets. Accumulated amortization of loan fees amounted to $117,233 and $100,319 at December 31, 2006 and 2005, 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.



24



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In accordance with FASB Statement No. 144 Accounting for Impairment of Disposal of Long-Lived Assets the
Corporation reviews long-lived assets held and used by it 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 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, that 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, 2006, 2005, and 2004; therefore, diluted earnings per share equals basic earnings per share.

Acquisition and
Classification of Real Estate Assets

The majority (80%) of the Corporations properties are acquired from Carter Bank & Trust at
carrying value. Each acquisition from Carter Bank & Trust 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. As Management has determined that the criteria for classification as an operating lease are met, and that the Corporation retains the risks and rewards of ownership, all of the
Corporations leases are currently classified as operating leases.

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. All of the Corporations sales are recorded under the full accrual method.



25



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Recent Accounting Pronouncements

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement requires
retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to
determine the period-specific effects of an accounting change on one or more individual prior periods presented, this Statement requires that the new accounting principle be applied to the balance of assets and liabilities as of the beginning of the
earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings. This Statement improves financial reporting because its requirement to report voluntary
changes in accounting principles via retrospective application, unless impracticable, enhances the consistency of the financial information between periods. This Statement is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. Adoption of this statement had no material impact on the Corporations financial condition or results of operations or cash flows.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments  an amendment of FASB Statements No. 133 and 140. This statement amends Statements
No. 133 and 140 by: permitting fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation; clarifying which interest-only strips and principal-only strips are not subject to
the requirements of Statement No. 133; establishing a requirement to evaluate interests in securitized financial assets to identify interest that are freestanding derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation; clarifying that concentrations of credit risk in the form of subordination are not embedded derivatives; and amending Statement No. 140 to eliminate the prohibition on a qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. The statement is effective for fiscal years beginning after September 15, 2006. The adoption of this standard
is not anticipated to have a material impact on financial condition, result of operations or cash flows.

In July 2006, the FASB issued FASB Interpretation
No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement 109, which provides guidance on the measurement, recognition, and disclosure of tax positions taken or expected to be taken in a
tax return. The interpretation also provides guidance on derecognition, classification, interest and penalties, and disclosure, FIN 48 prescribes that a tax position should only be recognized if it is more-likely-than-not that the position will be
sustained upon examination by the appropriate taxing authority. A tax position that meets this threshold is measured as the largest amount of benefit that is more-likely-than-not (greater than 50 percent) realized upon ultimate settlement. The
cumulative effect of applying FIN 48 is to be reported as an adjustment to the beginning balance of retained earnings in the period of adoption. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Corporation is
assessing the impact, if any, that adoption may have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements, SFAS 157 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. While the Statement applies under other accounting
prouncements that require or permit fair value measurements, it does not require any new fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit
price) in an orderly transaction between market participants at the measurement date. In addition, the Statement establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad
levels. Lastly, SFAS No. 157 requires additional disclosures for each interim and annual period separately for each major category of assets and liabilities. The Statement is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. Managements does not expect the adoption of this Statement to have a material impact on the Corporations financial statements.

In September 2006, the Securities and Exchange Commission (the SEC) released Staff Accounting Bulletin No. 108 (SAB 108), which provides
detail in the quantification and correction of financial statement misstatements. SAB 108 specifies that companies should apply a combination of the rollover and iron curtain methodologies when making determinations of
materiality. The rollover method quantifies a misstatement based on the amount of the error originating in the current year income statement. The iron curtain approach quantifies misstatements based on the effects of correcting the misstatement
existing in the balance sheet at the end of the current year, regardless of the year (s) of origination. SAB 108 instructs companies to quantify the misstatement under both



26



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methodologies and if either method results in the determination of a material error, then the company must adjust its financial statements to correct the
error. SAB 108 also reminds preparers that a change from an accounting principle that is not generally accepted to a principle that is generally accepted is a correction of an error. The Bulletin is effective for annual financial statements covering
the first fiscal year ending after November 15, 2006. Management does not expect the adoption of this Bulletin to have a material impact on the Corporations consolidated financial statements.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of
the following at December 31:



|                                |  |      |            |   |      |   |            |  
|------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                |  | 2006 |            |   | 2005 |  
|Land                            |  | $    | 10,133,050 |   |      | $ | 10,130,519 |  
|Buildings                       |  |      | 26,596,568 |   |      |   | 26,541,536 |  
|                                |  |      |            |   |      |   |            |  
|                                |  |      | 36,729,618 |   |      |   | 36,672,055 |  
|Less  accumulated depreciation |  |      | (5,073,373 | ) |      |   | (4,405,660 | )
|                                |  |      |            |   |      |   |            |  
|                                |  | $    | 31,656,245 |   |      | $ | 32,266,395 |  
|                                |  |      |            |   |      |   |            |  

NOTE 4 - LEASES

The primary purpose of the Corporation is to acquire and develop property for lease as bank offices to Carter Bank & Trust. The selection of sites and construction of the offices is performed by Carter Bank & Trust to
ensure the needs of the Bank are met. There are, however, no commitments on the part of Carter Bank & Trust to present prospective office properties to the Corporation, nor are there any commitments on the part of the Corporation to accept
any prospective office properties offered by Carter Bank & Trust.

At December 31, 2006, the Corporation owned 46 offices that are leased to
Carter Bank and Trust under triple net operating leases. The Bank is responsible for all property taxes, insurance and maintenance costs on each leased office. The Corporation incurs both interest and depreciation expense related to each office as
well as other, minimal operating costs. In addition, the Corporation and its subsidiary own several non-bank commercial properties.

The Corporation leases
substantially all of its property under noncancellable long-term operating leases. Future minimum payments due under existing leases were as follows at December 31, 2006:



|           |  |   |           
|---------- |  | - | ----------
|2007       |  |   | 3,716,304 
|2008       |  |   | 3,771,102 
|2009       |  |   | 3,774,765 
|2010       |  |   | 3,778,464 
|2011       |  |   | 3,782,201 
|Thereafter |  |   | 14,428,838
|           |  |   |           
|           |  | $ | 33,251,674
|           |  |   |           

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.



27



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NOTE 5 - LONG-TERM DEBT

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



|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                                                                                                                                                                                                        |  | 2006 |            |   | 2005 |  
|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.                                                                                                                                                 |  | $    | 976,720    |   |      | $ | 1,122,386  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|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.                                                                                                                                                      |  |      | 413,209    |   |      |   | 482,638    |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loan secured by real estate (shopping center) and related leases. Monthly payments are $18,175, including principal and interest at 8.38%, with the final payment due in
2018.                                                                                                                                                 |  |      | 1,738,602  |   |      |   | 1,830,305  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|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
2013.                                                                                                                                              |  |      | 1,147,225  |   |      |   | 1,269,984  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|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 2021.                                                                                                                                                     |  |      | 1,928,492  |   |      |   | 2,000,085  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loans secured by real estate (branch bank facilities) and related leases. Monthly payments at December 31, 2006 are $212,379, including principal and interest, with the final
payments due from 2017 to 2024. Interest rates range from 6.00% to 8.75% at December 31, 2006, and are subject to adjustments at various times. |  |      | 23,561,434 |   |      |   | 24,174,414 |  
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|                                                                                                                                                                                                                                                                                                                                        |  |      | 29,765,682 |   |      |   | 30,879,812 |  
|Less current portion                                                                                                                                                                                                                                                                                                                    |  |      | (1,619,268 | ) |      |   | (3,373,848 | )
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|                                                                                                                                                                                                                                                                                                                                        |  | $    | 28,146,414 |   |      | $ | 27,505,964 |  
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  

Maturities of long-term debt at December 31, 2006 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2007       |  |   | 1,619,268 
|2008       |  |   | 1,752,639 
|2009       |  |   | 1,897,122 
|2010       |  |   | 2,053,651 
|2011       |  |   | 2,197,465 
|Thereafter |  |   | 20,245,537
|           |  |   |           
|           |  | $ | 29,765,682
|           |  |   |           

NOTE 6 - INCOME TAXES

The income tax expense consists of the following:



|         |  |      |         |   |      |   |         |      |  |   |         |  
|-------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|         |  | 2006 |         |   | 2005 |   |         | 2004 | 
|Current  |  | $    | 150,358 |   |      | $ | 202,620 |      |  | $ | 194,204 |  
|Deferred |  |      | (3,868  | ) |      |   | (12,677 | )    |  |   | (1,052  | )
|         |  |      |         |   |      |   |         |      |  |   |         |  
|         |  | $    | 146,490 |   |      | $ | 189,943 |      |  | $ | 193,152 |  
|         |  |      |         |   |      |   |         |      |  |   |         |  



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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:



|                                                                                       |  |      |         |      |   |         |  |   |        
|-------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                                                       |  | 2006 |         | 2005 |   | 2004   
|Tax expense computed by applying federal statutory rates to income before income taxes |  | $    | 125,504 |      | $ | 159,277 |  | $ | 160,928
|State income taxes                                                                     |  |      | 21,436  |      |   | 30,666  |  |   | 32,224 
|                                                                                       |  |      |         |      |   |         |  |   |        
|                                                                                       |  | $    | 146,940 |      | $ | 189,943 |  | $ | 193,152
|                                                                                       |  |      |         |      |   |         |  |   |        

There were no significant deferred tax assets or liabilities at December 31, 2006 or 2005.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Chairman of the Board and
President of the Corporation serves in a similar capacity for Carter Bank & Trust.

At December 31, 2006 and 2005, the Corporation had
outstanding mortgage loans with the Banks totaling $28,788,961 and $29,757,426, respectively. The largest aggregate amount outstanding under mortgage loans with the Bank for 2006 and 2005 was $29,757,426 and $30,724,017, respectively. The
Corporation is directly obligated on these loans. No mortgage loans were obtained from the Bank in 2006; principal payments on these loans were $968,464 for 2006, and $985,132 for 2005. The Corporation also leases branch-banking locations to the
Bank. Lease income received from the Bank was $2,761,592 in 2006, and $2,641,855 in 2005.

At December 31, 2006, the Corporation had accrued interest
to the Bank of $196,452 and $187,773 at December 31, 2005. Total interest expense paid to the Bank was $2,275,686 for 2006, and $2,139,285 for 2005.

Information regarding the interest rates payable on these mortgage loans is contained under the caption Properties in Item 6 hereof and such information is incorporated herein by reference.

At December 31, 2006, the Corporation had a demand note payable to Carter Bank & Trust for $475,000 at 8% interest entered into on December 29, 2006
and a note for $90,000 payable to the Mortgage Company of Virginias non-qualified plan for the benefit of the President at 8% entered into on November 29, 2006. Interest paid on these loans for the year ended December 31, 2006
amounted to $839. The Corporation had a demand note payable to the President at December 31, 2005 of $25,000 at 6% interest entered into on December 19, 2005 paid in full on September 15, 2006 and a demand note payable entered into on
September 15, 2006 for $300,000 at 8% interest paid in full on December 28, 2006. Interest on the two notes paid in full during 2006 was $8,014. The Corporation entered into a demand note payable to Patrick Henry National Bank (merged into
Carter Bank & Trust-see Note 1) on September 29, 2006 for $75,000 at 8% interest paid in full on November 17, 2006. The interest paid on this note for the year ended December 31, 2006 was $1,183. These funds were used for
operations.

NOTE 8 - 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: The carrying value of the notes payable approximates fair value.

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



29



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|                      |  |                |            |            |   |                |  |            |            |  |   |           
|--------------------- |  | -------------- | ---------- | ---------- | - | -------------- |  | ---------- | ---------- |  | - | ----------
|                      |  | 2006           |            | 2005      
|                      |  | Carrying Value |            | Fair Value |   | Carrying Value |  | Fair Value
|Financial assets      |  |                |            |            |   |                |  |            |            |  |   |           
|Cash                  |  | $              | 88,277     |            | $ | 88,277         |  | $          | $110,119   |  | $ | 110,119   
|                      |  |                |            |            |   |                |  |            |            |  |   |           
|Financial liabilities |  |                |            |            |   |                |  |            |            |  |   |           
|Notes payable         |  | $              | 565,000    |            | $ | 565,000        |  | $          | 25,000     |  | $ | 25,000    
|Long-term debt        |  |                | 29,765,682 |            |   | 28,969,100     |  |            | 30,879,812 |  |   | 31,584,017
|                      |  |                |            |            |   |                |  |            |            |  |   |           
|                      |  | $              | 30,330,682 |            | $ | 29,534,100     |  | $          | 30,904,812 |  | $ | 31,609,017
|                      |  |                |            |            |   |                |  |            |            |  |   |           



30