##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---

FORM 10-KSB



---



|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------

For the fiscal year ended December 31, 2006



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 33-64520



---

BANK BUILDING CORPORATION

(Name of small business issuer in its charter)



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Virginia                                                       |  | 54-1714800                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|1300 Kings Mountain Road Martinsville, VA                      |  | 24112                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Issuers telephone number: (276) 656-1776

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: common stock, no par value per share



---

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x

The
issuers revenues for the fiscal year ended December 31, 2006 were $3,921,103.

As of March 27, 2007, there were issued and outstanding
398,244 shares of the issuers common stock. These shares are not believed to have any current market value.

Portions of the 2006 Annual Report to
Shareholders, which is attached hereto as Exhibit 13, are incorporated by reference in Part II of this report.

Transitional Small Business Disclosure
Format:    Yes ̈No  x



---



---

##### Table of Contents

BANK BUILDING CORPORATION

2007 ANNUAL REPORT ON FORM 10-KSB

TABLE OF CONTENTS



|         |  |                                                                                                                                         |  |     
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                                         |  | PAGE
|PART I   |  | 3                                                                                                                                      
|         |  |                                                                                                                                        
|ITEM 1.  |  | DESCRIPTION OF BUSINESS.                                                                                                                |  | 3   
|ITEM 2.  |  | DESCRIPTION OF PROPERTY.                                                                                                                |  | 4   
|ITEM 3.  |  | LEGAL PROCEEDINGS.                                                                                                                      |  | 5   
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                                                                    |  | 5   
|         | 
|PART II  |  | 6                                                                                                                                      
|         |  |                                                                                                                                        
|ITEM 5.  |  | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.                                                                               |  | 6   
|ITEM 6.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.                                                                              |  | 6   
|ITEM 7.  |  | FINANCIAL STATEMENTS.                                                                                                                   |  | 10  
|ITEM 8.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.                                                   |  | 11  
|ITEM 8A. |  | CONTROLS AND PROCEDURES.                                                                                                                |  | 11  
|ITEM 8B. |  | OTHER INFORMATION.                                                                                                                      |  | 11  
|         | 
|PART III |  | 11                                                                                                                                     
|         |  |                                                                                                                                        
|ITEM 9.  |  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. |  | 11  
|ITEM 10. |  | EXECUTIVE COMPENSATION.                                                                                                                 |  | 14  
|ITEM 11. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.                                         |  | 14  
|ITEM 12. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.                                                              |  | 15  
|ITEM 13. |  | EXHIBITS.                                                                                                                               |  | 16  
|ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                                                                                 |  | 16  



2



---

##### Table of Contents

PART I

FORWARDLOOKING STATEMENTS

This report contains statements concerning the Corporations expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements may constitute
forward-looking statements as defined by federal securities laws. In some cases, readers can identify the forward-looking statements by the use of words such as may,  will, should, could,
expect, plan, intend, anticipate, believe, estimate, predict, potential or continue or the negative or other variations of these words, or
other comparable words or phrases. These statements may address issues that involve estimates and assumptions made by management, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by
such statements. Factors that could have a material adverse effect on the Corporations operations and future prospects include, but are not limited to: desired business strategies, general economic conditions, interest rates, developments in
local and national markets, and other matters, which, by their nature, are subject to significant uncertainties. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are
cautioned not to place undue reliance on such statements, which speak only as of the date of this report.

ITEM 1. DESCRIPTION OF BUSINESS.

Bank Building Corporation was incorporated under Virginia law in 1988. Bank Building
Corporation is located at 1300 Kings Mountain Road, Martinsville, Virginia 24112.

The primary purpose of Bank Building Corporation (the Corporation) is to
acquire and develop property for lease as bank offices to Carter Bank & Trust (the Bank). Carter Bank & Trust commenced business on December 29, 2006, with the concurrent merging of the following ten Banks (the Merger): 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 (collectively,
the Merged Banks). The Corporation also acquires funds for site acquisition and development from banks other than the Bank.

Prior to the Merger, the
primary purpose of the Corporation was to acquire and develop property for lease as bank offices to the Merged Banks. The Corporation intends to continue conducting its business in substantially the same manner as it did prior to the Merger.

The selection of sites and construction of the offices is performed by the Bank to insure the needs of the Bank are met. Should the Corporation decide to
participate in the particular project, the site is titled in the name of the Corporation and all loans in connection with the site are made to the Corporation. There are, however, no commitments on the part of the Bank 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 the Bank.

Following construction of a bank branch, the property is leased to the Bank under a triple net operating lease. The Bank is responsible for all property taxes, insurance and maintenance costs on that office. It is anticipated that the lease
payments and other costs approximate the cost which would have been experienced by the Bank had the office been developed by the Bank or leased from a third party. The lease payments cover all acquisition and loan costs and other costs associated
with the site (just as though the Bank had acquired the site itself) plus a small additional fee to cover the accounting and processing costs.

In order to
obtain the most desirable branch locations it is often necessary to acquire more property than will be required for an individual office. Currently, banking regulations restrict the ability of banks to acquire such property if it is not used for
banking purposes. The Corporation is not subject to such restrictions and can acquire the most desirable property and either sell any excess property or develop it for subsequent sale or lease to other parties.

Regardless of the size of any given property purchased by the Corporation, the lease with the Bank includes only the portion of the property utilized for the branch. The
allocation of costs between the branch site and other property is based on the relative size and market value of each segment. Any property other than that used for the branch will be developed, leased or sold by the Corporation. Any buildings or
other developments on this property will be compatible with the design of the bank office and consistent with the conduct of the business of banking.



3



---

##### Table of Contents

Both interest and depreciation expenses are incurred on each office as well as other, minimal operating costs. These
expenses will result in net operating losses during the initial years of each project although adequate cash flow from rental payments is expected to be available to meet all cash needs. During the initial lease term, all leases will be structured
for the adjustments to the monthly lease payments to track adjustments in the payments required by the underlying mortgage. After the initial period of the lease, terms will be renegotiated. Such terms could provide for lease payments in excess of
or less than payments required by the underlying mortgage and operating expenses. Additionally, the Bank may determine not to renew its lease on a particular branch. Under these circumstances, such branch could be sold or leased to another tenant.
Such sale or lease could be profitable, although there can be no assurance that this will occur.

While it is anticipated that renewed leases with the Bank
will produce sufficient rental payments to cover mortgage payments and other costs, there can be no assurance that this will, in fact, be accomplished. Failure to obtain renewal lease payments sufficient to cover these costs may result in a forced
sale or foreclosure of the particular branch at a loss.

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 of Virginia, Inc. is a bank service corporation owned by the
Bank that currently provides various bookkeeping and related services to the Bank. Bank Services of Virginia, Inc. is a subsidiary of The Mortgage Company of Virginia, which is the wholly-owned subsidiary of Carter Bank & Trust.

ITEM 2. DESCRIPTION OF PROPERTY.

As of December 31, 2006, the Corporation owned the following offices which are
leased to the Bank under triple net operating leases:



|                                              |  | 
|--------------------------------------------- |  | 
|Address                                       |  | 
|105 King Street, Blacksburg, VA 24060         |  | 
|325 Spring Street, Wytheville, VA 24382       |  | 
|370 Arbor Drive, Christiansburg, VA 24073     |  | 
|3008 Waterlick Road, Lynchburg, VA 24502      |  | 
|2018 Tate Springs Road, Lynchburg, VA 24501   |  | 
|1728 Graves Mill Road, Lynchburg, VA 24502    |  | 
|1002 Virginia Avenue, Clarksville, VA 23927   |  | 
|749 East 2ndStreet, Chase City, VA 23924      |  | 
|222 Main Street, South Boston, VA 24592       |  | 
|300 Dabney Drive Ext., Henderson, NC 27536    |  | 
|205 South Bickett Street, Louisburg, NC 27549 |  | 
|823 North Main Street, Roxboro, NC 27573      |  | 
|302 E. Atlantic Street, South Hill, VA 23970  |  | 
|4251 North Roxboro Road, Durham, NC 27704     |  | 
|550 Blue Ridge Avenue, Bedford, VA 24523      |  | 
|135 Scruggs Road, Moneta, VA 24121            |  | 
|9440 Franklin Street, Ferrum, VA 24088        |  | 
|301 Carbon City Road, Morganton, NC 28655     |  | 
|821 4thStreet Drive, SW, Hickory, NC 28602    |  | 
|704 Oak Street, Forest City, NC 28043         |  | 
|721 Blue Ridge Boulevard, Roanoke, VA 24012   |  | 
|3132 Electric Road, Roanoke, VA 24018         |  | 
|8334 Moneta Road, Bedford, VA 24523           |  | 



4



---

##### Table of Contents

|                                                   
|---------------------------------------------------
|2728 Lee Highway South, Troutville, VA 24175       
|4143 Franklin Road, SW, Roanoke, VA 24014          
|507 Willow Street, Mt. Airy, NC 27030              
|345 North Bridge Street, Jonesville, NC 28642      
|1606 Curtis Bridge Road, Wilkesboro, NC 28697      
|630 Fagg Drive, Eden, NC 27288                     
|900 Washington Street, Eden, NC 27288              
|100 Turner Drive, Reidsville, NC 27320             
|305 South Main Street, Reidsville, NC 27320        
|4004 West Wendover Avenue, Greensboro, NC 27407    
|5715 High Point Road, Greensboro, NC 27407         
|70 Chatham Heights Road, Fredericksburg, VA 22405  
|55 Worth Avenue, Stafford, VA 22554                
|8402 Sudley Road, Manassas, VA 20109               
|903 South Main Street, Danville, VA 24541          
|5406 U. S. Highway 29 North, Danville, VA 24527    
|697 Country Club Drive, Fayetteville, NC 28301     
|2803 Ward Boulevard, Wilson, NC 27893              
|123 Rowan Street, Fayetteville, NC 28301           
|1001 South Horner Road, Sanford, NC 27330          
|2100 West Arlington Boulevard, Greenville, NC 27834
|75 North Mason Street, Harrisonburg, VA 22802      
|2782 Stuarts Draft Highway, Stuarts Draft, VA 24477

The Bank is responsible for all property taxes, insurance and maintenance costs on each leased office. The
Corporation incurs interest and depreciation expenses related to each office as well as other, minimal operating costs.

In addition to the bank offices,
as of December 31, 2006, the Corporation also owned the following properties which it leases to third parties:



|                                |  |                |  | 
|------------------------------- |  | -------------- |  | 
|Description                     |  | Location       |  | 
|Golden Corral Restaurant        |  | Raleigh, NC    |  | 
|Westlake Corner Shopping Center |  | Moneta, VA     |  | 
|Blackstone Shopping Center      |  | Blackstone, VA |  | 
|Executive Office Park           |  | Roanoke, VA    |  | 

As of December 31, 2006, management considered all of the Corporations properties to be in good
condition, and maintained adequate insurance on each of these properties.

ITEM 3. LEGAL PROCEEDINGS.

As of March 27, 2007, there were no material pending legal proceedings to which the
Corporation was a party or to which the property of the Corporation was subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Bank Building Corporations annual meeting was held
on Thursday, December 28, 2006. A total of 262,197 shares, or 65.84% of the 398,244 outstanding shares, were voted either in person or by proxy.



5



---

##### Table of Contents

The following matters were acted on at the meeting:



|                                                      |  |           |  |               |  |        
|----------------------------------------------------- |  | --------- |  | ------------- |  | -------
|Item                                                  |  | Votes For |  | Votes Against |  | Abstain
|1. Set the number of Directors to be elected at five. |  | 261,690   |  | 176           |  | 331    
|                                                      |  |           | 
|2. Election of the following directors:               |  |           |  |               |  |        
|Worth Harris Carter, Jr.                              |  | 262,121   |  | 2,145         |  |        
|Robert W. Conner                                      |  | 262,121   |  | 2,234         |  |        
|Charles E. Hall                                       |  | 262,121   |  | 2,145         |  |        
|Haller G. Prillaman                                   |  | 262,121   |  | 2,145         |  |        
|R. E. Williams                                        |  | 262,121   |  | 2,160         |  |        

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Corporation is authorized to issue 400,000
shares of common stock, with no par value. On February 28, 1995, the Corporation distributed 398,244 shares of its common stock to approximately 3,000 shareholders for no consideration. As of December 31, 2006, the Corporation had
approximately 2,650 shareholders of record and 398,244 shares outstanding.

The Corporation is not aware of any brokerage firms making a market in the
Corporations common stock or any securities professionals following the Corporation, and no public trading market for the stock has developed. Management believes that the consideration for any shares of stock that may have been traded in
recent years has been minimal.

The Corporation has not paid dividends since its incorporation and no dividends are anticipated in the foreseeable future.

ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

The following discussion should be read in
conjunction with our Description of Business and our audited financial statements and accompanying notes included elsewhere in this report.

Overview

The primary purpose of the Corporation is to acquire and develop property for lease as bank offices to Carter Bank & Trust. As discussed in
Item 1, Carter Bank & Trust commenced business on December 29, 2006 with the concurrent merging of the ten Merged Banks.

Prior to the
Merger, the primary purpose of the Corporation was to acquire and develop property for lease as bank offices to the Merged Banks. The Corporation intends to continue conducting its business in substantially the same manner as it did prior to the
Merger.

The selection of sites and construction of the offices is done by the Bank to insure the needs of the Bank are met. There are, however, no
commitments on the part of the Bank 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 the Bank.

The initial lease terms for a bank office are set to cover all carrying costs of the particular site plus a small amount for the accounting and record keeping costs of
the Corporation. Subsequent lease terms are negotiated between the Bank and the Corporation based on the conditions in the relevant market at that time.

Regardless of the size of any given property purchased by the Corporation, the lease with the Bank includes only the portion of the property utilized for the branch. The allocation of costs between the branch site and other property is
based on the relative size and



6



---

##### Table of Contents

market value of each segment. Any property other than that used for the branch will be developed, leased or sold by the Corporation. Any buildings or other
developments on this property will be compatible with the design of the bank office and consistent with the conduct of the business of banking.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Critical accounting policies are defined as those that require management to make estimates, judgments and assumptions, giving due consideration to materiality, in certain circumstances that affect amounts reported in the
financial statements, and potentially result in materially different results under different conditions and assumptions. The Corporation considers the following accounting policies to be critical policies which involve various estimation
processes: accounting for the acquisition and classification of real estate assets, and accounting for the disposition and impairment of real estate assets.

Acquisition and Classification of Real Estate Assets

The majority (80%) of the Corporations properties are acquired from the
Bank at carrying value. Each acquisition from the Bank 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 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 financing leases 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.

Properties

The Corporation did not acquire additional properties during 2006. As of December 31, 2006, the Corporation owned 46 offices that were leased to the Bank under triple net operating leases. The Bank is responsible
for all property taxes, insurance and maintenance costs on each leased office. The Corporation incurs interest and depreciation expenses related to each office as well as other, minimal operating costs.

The Corporation also owns the Westlake Corner Shopping Center near Smith Mountain Lake. This center consists of 50,000 square feet of space on 29 acres. The anchor
tenants for the center are Food Lion, Revco, and Family Dollar Store. First National Bank (one of the Merged Banks), Rocky Mount, Virginia opened an office on a 10 acre tract of this property, on June 5, 1998; this office is now a branch of
Carter Bank & Trust.

The Corporation also owns Blackstone Properties L.L.C, a wholly-owned subsidiary. Blackstone Properties owns two properties:
Blackstone Shopping Center, Virginia and Executive Office Park, an office complex located in Roanoke, Virginia. The shopping



7



---

##### Table of Contents

center maintains various retail tenants. Executive Office Park is an office complex consisting of six separate buildings containing approximately 54,000
square feet of space divided into 28 suites. The Corporation also owns a Golden Corral Restaurant in Raleigh, North Carolina, which it leases to a third party.

Long-term mortgages payable by the Corporation as of December 31, 2006 and 2005 consisted of the following:



|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                                                                                                                                                                                                        |  | 2006 |            |   | 2005 |  
|Mortgage loan secured by real estate (Lake Shopping Center) and related leases. Monthly payments are $19,403, including principal and interest at 8.25% at December 31, 2006, with the final
payment due in 2012.                                                                                                                       |  | $    | 976,720    |   |      | $ | 1,122,386  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loan secured by real estate (Westlake Shopping Center) and related leases. Monthly payments are $8,418, including principal and interest at 7.00% as of December 31, 2006, with the
final payment in 2011.                                                                                                                     |  |      | 413,209    |   |      |   | 482,638    |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loan secured by real estate (Blackstone Shopping Center) and related leases. Monthly payments are $18,175, including principal and interest at 8.38% as of December 31, 2006, with
the final payment due in 2018.                                                                                                              |  |      | 1,738,602  |   |      |   | 1,830,305  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loan secured by real estate (Golden Corral Restaurant) and related lease. Monthly payments are $16,302, including principal and interest at 6.0% as of December 31, 2006, with the
final payment due in 2013.                                                                                                                  |  |      | 1,147,225  |   |      |   | 1,269,984  |  
|                                                                                                                                                                                                                                                                                                                                        |  |     
|Mortgage loan secured by real estate (Executive Office Park) and related leases. Monthly payments are $17,444 at December 31, 2006, 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 |  
|                                                                                                                                                                                                                                                                                                                                        |  |      |            |   |      |   |            |  

Operating Results

Net Income.The Corporation generated net income in 2006 of $225,452, or $0.57 per share, compared to net income in 2005 of $321,603, or $.81 per share, and net income in 2004 of $272,564, or $0.68 per share. The decrease of $96,151,
from 2005 to 2006 is primarily due to the increase of legal and professional fees and several other operating expenses while the increase of $49,039 from 2004 to 2005 is attributable to the decrease in several operating expenses, interest expense
being the largest decrease. This decrease was due to lower interest payments on variable rate mortgages. Lease income, which has historically been the Corporations principal source of revenue, was $3,909,676 in 2006, an increase of 2.5% from
lease income in 2005 of $3,813,319. In comparison, the lease income in 2004 decreased 2% to $3,813,319 from $3,906,992 in 2004. Lease income accounted for 99.7% of total income in 2006, 98.8% in 2005 and 98.5% in 2004.

Operating Expenses. Operating expenses for 2006 were $3,549,161 compared to $3,348,284 for 2005. This increase of $200,877, or 6%, is due mainly to a increases in
legal and professional fees and several other operating expenses. Repairs and depreciation decreased. In comparison, operating expenses for 2004 of $3,500,123 decreased to $3,348,284 in 2005, mainly due to the decrease in interest expense.



8



---

##### Table of Contents

Interest expense increased to $2,372,893 in 2006 from $2,253,235 in 2005, an increase of $119,658 or 5.3%. Interest
expense for 2005, when compared to 2004, decreased $170,424, or 7%.

Depreciation decreased from $672,690 in 2005 to $667,713 in 2006 and increased from
$663,930 in 2004 to $672,690 in 2005. The increase of $8,760 from 2004 to 2005 was the result of the capitalization of property improvements for the year.

Operating expenses, other than depreciation and interest, consist largely of amortization, real estate taxes and insurance, repairs and the cost of corporate functions, including legal and accounting fees. These expenses increased to
$508,555 in 2006 from $422,359 in 2005, for a increase of $86,196 or 20.4%. The increase in professional fees were principally attributable to additional professional services rendered in connection with the review of multiple delinquent periodic
reports. All other categories also increased from 2005 to 2006 with the exception of repairs which decreased slightly. In comparison, these other operating expenses rose to $422,359 in 2005 from $412,534 in 2004, for an increase of $9,825, or 2.4%.
Expenses for taxes, insurance and professional fees rose from 2004 to 2005, while repair and other expenses decreased.

The effective income tax rate was
39.4% in 2006, 37.1% in 2005, and 41.5% in 2004. The changes each year were due to changes in components of income, primary tax on regular income, capital gains on sales of property and investments and the effect of these items on deferred tax.

Analysis of Financial Condition, Liquidity and Capital Resources

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of business operations. The Corporations main source of liquidity is lease income. Lease income was
$3,909,676 in 2006, $3,813,319 in 2005, and $3,906,992 in 2004. Cash outflows consist of payments for operating expenses, interest expense, income taxes, and mortgage borrowings. The Corporations cash flow from operations was $609,851 for 2006
compared to $1,171,323 for 2005, and $764,469 for 2004.

As of December 31, 2006, the Corporations other sources of liquidity consist of $88,277
in cash and potential sales proceeds from real estate having an aggregate book value of approximately $31,656,245 at December 31, 2006. Management believes that its cash flow from operations and these other potential sources of cash will be
sufficient to finance current and projected operations.

The Corporation has not paid dividends to its shareholders.

Off-Balance Sheet Arrangements

The Corporation does not have any
off-balance sheet arrangements.

Recent Accounting Pronouncements

The following paragraphs outline several accounting pronouncements that will become effective in future years.

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.



9



---

##### Table of Contents

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 valuemeasurements. 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 ot quanitify the misstatements under both 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 Bulleting to have a material impact on the Corporations consolidated financial statements.

ITEM 7. FINANCIAL STATEMENTS.

The report of the independent registered public accounting firm and audited financial
statements of the Corporation and accompanying notes required by this Item are included in the Corporations Annual Report, which is attached hereto as Exhibit 13 and is incorporated herein by reference.



10



---

##### Table of Contents

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 8A. CONTROLS AND PROCEDURES.

The Corporation maintains a system of disclosure controls and procedures that is
designed to ensure that material information is accumulated and communicated to management, including the Corporations president (who is currently the Corporations principal executive officer and principal financial officer), as
appropriate to allow timely decisions regarding required disclosure. As required, during the preparation of this report, management, with the participation of the Corporations president, evaluated the effectiveness of the design and operation
of the Corporations disclosure controls and procedures.

Based on this evaluation, the Corporations president concluded that the
Corporations disclosure controls and procedures were operating effectively as of the end of the period covered by this report.

Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Corporations disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the
Corporation to disclose material information otherwise required to be set forth in the Corporations periodic reports.

The Corporations
management is also responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles.

There were no changes in the Corporations internal control over
financial reporting during the fourth quarter of 2006 that materially affected, or are reasonably likely to materially affect, the Corporations internal control over financial reporting.

ITEM 8B. OTHER INFORMATION.

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following information is provided as of March 29, 2007.

Directors Until Next Annual Meeting



|                              |  |                |  |                                                                                                                                                                                                 
|----------------------------- |  | -------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name (Age)                    |  | Director Since |  | Principal Occupation During Past Five Years                                                                                                                                                     
|Worth Harris Carter, Jr. (69) |  | 1988           |  | Chairman of the Board and President  Worth Harris Carter, Jr. is also a director and officer of the following companies:  Chairman of the Board and President of Carter Bank & Trust since 2006;



11



---

##### Table of Contents

|                       |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---------------------- |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                       |  |      |  | Chairman of the Board and President of TheMortgage Company of Virginia since 1984;  Chairman of the Board and President of BankServices Insurance, Inc. since 2003;  Chairman of the Board and President of Coresoft, Inc.since 2004;  Chairman of the Board and President of BankServices of Virginia, Inc. since 1984; and
 Manager of Blackstone Properties, L.L.C. since 1998.  Worth Harris Carter, Jr. was also a director andofficer of the following companies prior to
theMerger on December 29, 2006:  Chairman of the Board of First National Bank
since1976, President since 1986;  Chairman of the Board and President of
FirstNational Exchange Bank since 1998;  Chairman of the Board and President of
PatrickHenry National Bank since 1977;  Chairman of the Board of Peoples National
Banksince 1976, President since 1981;  Chairman of the Board of Blue Ridge Bank
since1982, President since 2004;  Chairman of the Board and President of
CommunityNational Bank since 1985;  Chairman of the Board and President of
CentralNational Bank since 1996;   Chairman of the Board and President of MountainNational Bank since 1996;  Chairman of the Board and President of ShenandoahNational Bank since 1996; and,  Chairman of the Board and President of Patriot Banksince 1996.
|                       |  |     
|Conner, Robert W. (67) |  | 1995 |  | Robert W. Conner is and has been Clerk of the Circuit Court of Halifax County for more than five years. He currently serves on the Board of Directors of Carter Bank & Trust. Prior to the
Merger, he served on the Board of Directors of Community National Bank, South Boston, Virginia since 1985. He has served on the Boards of Directors of both Bank Services of Virginia and The Mortgage Company of Virginia.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   



12



---

##### Table of Contents

|                          |  |      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------------- |  | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Hall, Charles E. (65)     |  | 1995 |  | Charles E. Hall is and has been a Farmer for morethan five years. He currently serves on the Board ofDirectors of Carter Bank & Trust. Prior to theMerger, he served on the Board
of Directors for BlueRidge Bank, N.A., Floyd, Virginia since 1978. He hasserved on the Boards of Directors of both BankServices of Virginia and The Mortgage Company ofVirginia.                                                                                                                          
|                          |  |     
|Prillaman, Haller G. (73) |  | 1995 |  | Haller G. Prillaman has been President of Prillaman Brothers, Inc., Martinsville, Virginia for more than five years. Prior to the Merger, he served on the Board of Directors for Patrick Henry
National Bank, Bassett, Virginia, since 1976 and Mountain National Bank, Galax, Virginia, since 1996. He has served on the Boards of Directors of both Bank Services of Virginia and The Mortgage Company of Virginia.                                                                      
|                          |  |     
|Williams, R. E. (72)      |  | 1995 |  | R. E. Williams is retired. Previously he was President of Dry Fork Milling Company, Inc., Danville, Virginia for more than five years. He currently serves on the Board of Directors of Carter
Bank and Trust. Prior to the Merger, he served as a Director of Central National Bank, Lynchburg, Virginia, since 1996 and of Patriot Bank, National Association since 1996. He has served on the Boards of Directors of both Bank Services of Virginia
and The Mortgage Company of Virginia.

Executive Officers

Mr. Carter is Chairman of the Board and President and is discussed above.

Jane Ann Davis (44) has served as
Secretary Treasurer of the Corporation since 1995. Mrs. Davis also serves as an officer and director of both Bank Services of Virginia, Inc. and The Mortgage Company of Virginia.

There are no family relationships between any director or executive officer of the Corporation; nor is the Board of Directors aware of any involvement in legal proceedings that would be material to an evaluation of
the ability or integrity of any director or executive officer.

Code of Ethics

The Corporation has not adopted a Code of Ethics for its directors, executives and employees, primarily because management of the Corporation believes and understands that our officers and directors adhere to and
follow ethical standards without the necessity of a written policy. The Corporations Board of Directors will revisit this issue in the future to determine if adoption of a code of ethics is appropriate. In the meantime, the Corporations
management requires and promotes honest and ethical conduct, full and fair disclosure in its reports to the SEC, and compliance with applicable governmental laws and regulations.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange
Act of 1934 requires the Corporations directors and certain of its officers to file reports with the Securities and Exchange Commission indicating their holdings of, or transactions in, the Corporations equity securities. Based on a
review of these reports and written representations furnished to the Corporation, the Corporation believes that, during fiscal year 2006, its directors and officers complied with all Section 16(a) filing requirements.



13



---

##### Table of Contents

Audit Committee

The entire Board of Directors functions as the Corporations Audit Committee. All of the Corporations directors, with the exception of Chairman of the Board and President Carter, are independent for the purposes of
the NASDAQ listing standards. The Board has not adopted a written charter setting forth the responsibilities and authority of the Board in its capacity as the Audit Committee. Although Mr. Carter is not independent under the NASDAQ listing
standards, the Board has determined that Mr. Carter possesses the knowledge and experience required to be considered an audit committee financial expert. The Board of Directors believes that all of the Corporations directors possess the
financial knowledge and expertise necessary to protect the Corporations shareholders in performing the functions of the Audit Committee.

Shareholder Recommendations of Director Nominees

There have been no material changes to the process by which shareholders may submit
director recommendations to the Board of Directors since the Corporations proxy statement for its 2006 annual meeting of shareholders.

ITEM 10. EXECUTIVE COMPENSATION.

The following information is provided as of December 31, 2006.

Executive Compensation

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 of
Virginia, Inc. is a bank service corporation owned by the Bank that currently provides various bookkeeping and related services to the Bank. Bank Services of Virginia, Inc. is a subsidiary of The Mortgage Company of Virginia, which is the
wholly-owned subsidiary of Carter Bank & Trust.

The Corporation does not have any equity compensation plans or employment or change in control
agreements.

Mr. Worth Harris Carter, Jr., Chairman of the Board and President, serves as the principal executive, principal financial and principal
accounting officer of the Corporation.

Director Compensation

The Directors receive no compensation for Board service or for committee meetings attended.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The
following table shows, as of December 31, 2006, the beneficial ownership of the Corporations common stock of each director, the executive officer identified above under the caption Executive Compensation and the
Corporations directors and executive officers as a group. To the Corporations knowledge, Mr. Carter is the Corporations only shareholder beneficially holding more than 5% of the Corporations outstanding common stock. As
of December 31, 2006, the Corporations directors and executive officers as a group, beneficially owned 52,077 shares or 13.08% of the Corporations outstanding common stock.



14



---

##### Table of Contents

|                                                               |  |                                                    |     |  |                                    |  
|-------------------------------------------------------------- |  | -------------------------------------------------- | --- |  | ---------------------------------- | -
|                                                               |  | Amount and Nature ofBeneficial Ownership (1)(2)(3) |     |  | Percent of CommonStock Outstanding |  
|Worth Harris Carter, Jr.                                       |  | 46,428                                             | (4) |  | 11.66                              | %
|Robert W. Conner                                               |  | 900                                                | (5) |  | 0.23                               | %
|Charles E. Hall                                                |  | 123                                                | (6) |  | 0.03                               | %
|Haller G. Prillaman                                            |  | 3,470                                              |     |  | 0.87                               | %
|R.E. Williams                                                  |  | 1,156                                              |     |  | 0.29                               | %
|All Directors and Executive Officer as a Group (6 persons) (7) |  | 52,077                                             |     |  | 13.08                              | %

---

|(1) | For purposes of this table, beneficial ownership has been determined in accordance with the provisions of Rule 13d-3 of the Securities Exchange Act of 1934 under which, in general,
a person is deemed to be the beneficial owner of a security if he has or shares the power to vote or direct the voting of the security or the power to dispose of or direct the disposition of the security, or if he has the right to acquire beneficial
ownership of the security within sixty days.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes shares held by affiliated corporations, spouses, minor or dependent children, relatives sharing the individuals home, and shares held as custodian or trustee.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Unless otherwise indicated, the shares listed in the table represent sole voting and investment power.
|--- | ------------------------------------------------------------------------------------------------------

|(4) | Includes the following shares with respect to which Mr. Carter is deemed to be the beneficial owner: 4,714 shares held by Mr. Carter as custodian for his children and
grandchildren, 363 shares held in Qualified Profit-Sharing Plan, and 538 shares held by C & C Realty, Inc., of which Mr. Carter is President and a 50% owner.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 839 shares with respect to which Mr. Conner shares voting and investment power.
|--- | ----------------------------------------------------------------------------------------

|(6) | Includes 41 shares with respect to which Mr. Hall shares voting and investment power.
|--- | -------------------------------------------------------------------------------------

|(7) | Includes share held by Jane Ann Davis, Secretary and Treasurer of the Company.
|--- | ------------------------------------------------------------------------------

The Corporation knows of no arrangements, including any pledge by any person of securities of the Corporation, which may at a subsequent date result in a change in control of the Corporation.

Equity Compensation Plans.No disclosure regarding equity compensation plans has been provided because the Corporation does not have any outstanding equity
compensation plans or arrangements that would be covered by Item 201(d) of Regulation S-B.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information provided in Note
7 of the financial statements accompanying this report is incorporated herein by reference.

All of the Corporations directors, with the exception of
Chairman of the Board and President Carter, are independent for the purposes of both board and audit committee membership under the NASDAQ listing standards.



15



---

##### Table of Contents

ITEM 13. EXHIBITS.

The following exhibits are filed as part of this Form 10-KSB:

Exhibits:



|    |  |                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 |  | Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form SB-2 filed with the SEC on June 16, 1993)                           
|    | 
|3.2 |  | Bylaws (incorporated by reference to Exhibit 3.2 to Form SB-2 filed with the SEC on June 16, 1993)                                              
|    | 
|13  |  | Portion of 2006 Annual Report to Shareholders                                                                                                   
|    | 
|21  |  | Subsidiaries (incorporated by reference to Exhibit 21 to Form 10-KSB, for the period ended December 31, 2000, filed with the SEC on May 5, 2006)
|    | 
|31  |  | Certification by principal executive officer and principal financial officer pursuant to Rule 13a-14(a)                                         
|    | 
|32  |  | Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. § 1350                                       

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table presents the fees for professional audit
services rendered by Goodman & Company, L.L.P. for the audit of the Corporations annual financial statements for the years ended December 31, 2006 and December 31, 2005 and fees billed for other services rendered by
Goodman & Company during those periods. All services reflected in the following fee table for 2006 and 2005 were pre-approved, respectively, in accordance with the policy of the Board of Directors.



|                   |  |                         |        |      |   |       
|------------------ |  | ----------------------- | ------ | ---- | - | ------
|                   |  | Year Ended December 31,
|                   |  | 2006                    |        | 2005
|Audit fees1        |  | $                       | 14,480 |      | $ | 40,190
|                   |  |                        
|Audit-related fees |  |                         |       |      |   |      
|                   |  |                        
|Tax fees2          |  |                         | 1,875  |      |   | 1,710 
|                   |  |                        
|All other fees     |  |                         |       |      |   |      
|                   |  |                         |        |      |   |       
|Total Fees         |  | $                       | 16,355 |      | $ | 41,900
|                   |  |                         |        |      |   |       



|1 | Audit fees consist of audit and
review services, consents and review of documents to be filed with the SEC. The decrease in audit fees billed to the Corporation from 2005 to 2006 was principally attributable to additional professional services rendered in connection with the
review during 2005 of multiple delinquent periodic reports that were subsequently filed in the second quarter of 2006.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Tax fees consist of preparation of federal and state tax returns and consultation concerning tax
compliance issues.
|- | -------------------------------------------------------------------------------------------------------------------

In its capacity as the Audit Committee, the Board of Directors considered the compatibility of the non-audit-related
services performed by and fees paid to Goodman & Company in 2006 and 2005, and proposed non-audit-related services and proposed fees for 2007, and determined that such services and fees are compatible with the independence of
Goodman & Company as the Corporations independent auditors.

Also in its capacity as the Audit Committee, the Board of Directors
pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the independent auditors. The Board of Directors annually approves the scope and fee estimates for the year-end audit to be performed by the
Corporations independent auditors for the fiscal year. With respect to other permitted services, the Board of Directors pre-approves specific engagements, projects and categories of services on a fiscal year basis, subject to individual
project and annual maximums.



16



---

##### Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                                    
|-------------------- |  | -----------------------------------
|                     |  | BANK BUILDING CORPORATION          
|                     | 
|Date: March 29, 2007 |  | /s/ Worth Harris Carter, Jr.       
|                     |  | Worth Harris Carter, Jr.           
|                     |  | Chairman of the Board and President

In accordance with the Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.



|                             |  |                                           |  |               
|---------------------------- |  | ----------------------------------------- |  | --------------
|Signature                    |  | Capacity                                  |  | Date          
|/s/ Worth Harris Carter, Jr. |  | Chairman of the Board and President       |  | March 29, 2007
|Worth Harris Carter, Jr.     |  | (principal executive, principal financial |  |               
|                             |  | and principal accounting officer)         |  |               
|                             |  |                                          
|/s/ Robert W. Conner         |  | Director                                  |  | March 29, 2007
|Robert W. Conner             |  |                                           |  |               
|                             |  |                                          
|/s/ Charles E. Hall          |  | Director                                  |  | March 29, 2007
|Charles E. Hall              |  |                                           |  |               
|                             |  |                                          
|/s/ Haller G. Prillaman      |  | Director                                  |  | March 29, 2007
|Haller G. Prillaman          |  |                                           |  |               
|                             |  |                                          
|/s/ R. E. Willliams          |  | Director                                  |  | March 29, 2007
|R.E. Williams                |  |                                           |  |               



17