<PAGE>

                    U.S. Securities And Exchange Commission
                           Washington, D.C.  20549

                                  Form 10-KSB
(Mark One)
_X_ Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
    1934 (Fee required) For the fiscal year ended December 31, 2001
                                        or
___ Transition Report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934 (No fee required) For the transition period from ____to ____

       Commission file no. 0-28780

                        Cardinal Bankshares Corporation
                        -------------------------------
                (Name of small business issuer in its charter)

                Virginia                             54-1804471
                --------                             ----------
           (State or other jurisdiction               (IRS Employer
        of incorporation or organization)           Identification No.)

             101 Jacksonville Circle
             Floyd, Virginia                                24091
             ---------------                                -----
(Address of principal executive offices)                 (Zip Code)

                                (540) 745-4191
                                --------------
               (Issuer's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $10.00 per share
                    ----------------------------------------
                                Title of Class

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 past 90 days.
      Yes __X__ No_____

Check if there is no disclosure of delinquent filers in response to Item 405 of
regulation S-B is not 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]

The issuer's revenues for its most recent fiscal year were $13,166,538.

The aggregate market value of the voting stock as of March 22, 2002, held by
non-affiliates of the registrant computed by reference to the price at which
the stock was sold, or the average bid and asked prices of such stock, as of a
specified date within the last 60 days was $23,035,995.

1,535,733 shares of the Issuer's common stock were issued and outstanding as of
March 22, 2002.

Transitional Small Business Disclosure Format. (Check one):  Yes___  No _X_

                      DOCUMENTS INCORPORATED BY REFERENCE

The annual report to security holders for fiscal year ended December 31, 2001
is incorporated by reference into Form 10-KSB Part II, Items 7 and 8, and Part
III, Item 13. The issuer's Proxy Statement dated March 25, 2002 is incorporated
by reference into Form 10-KSB Part III, Items 9, 10, 11 and 12.

<PAGE>

                                    PART I
                                    ------

ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------

    (A) BUSINESS DEVELOPMENT

    Cardinal Bankshares Corporation (the Company) was incorporated as a
    Virginia corporation on March 12, 1996 to acquire the stock of The Bank of
    Floyd (the Bank). The Bank was acquired by the Company on June 30, 1996.

    The Bank was organized as a state chartered bank on February 24, 1951
    through the consummation of a plan of consolidation between two state
    chartered community banks then operating in Floyd County, Virginia.

    The Bank and its wholly-owned subsidiary, FBC, Inc., are incorporated and
    operate under the laws of the Commonwealth of Virginia. As a state
    chartered Federal Reserve member, the Bank is subject to regulation by the
    Virginia Bureau of Financial Institutions and the Federal Reserve. FBC,
    Inc.'s assets and operations consist primarily of annuity sales and
    minority interests in title insurance companies.

    (B) DESCRIPTION OF THE BUSINESS

    The principle business of the Company and Bank is to provide comprehensive
    individual and corporate banking services through the Bank's main office in
    Floyd, Virginia, and branch offices in Hillsville, Christiansburg, Roanoke
    and Willis, Virginia. The Bank's wholly-owned subsidiary, FBC, Inc., has
    interests in Virginia Title Center, LLC as well as Virginia Bankers
    Insurance Center, LLC, both of which act as title insurance companies. FBC,
    Inc. also has an interest in VBA Investment Services, LLC.

    (1) SERVICES

    The Bank is a full service retail commercial bank offering a wide range of
    services, including demand and time deposits as well as installment,
    mortgage and other consumer lending services. The Bank makes seasonal and
    term commercial loans, both alone and in conjunction with other banks or
    governmental agencies.

    (2) COMPETITIVE CONDITIONS

    The bank business is highly competitive. The Company competes as a
    financial intermediary with other commercial banks, savings and loan
    associations, credit unions and money market mutual funds operating in its
    trade area and elsewhere. As of December 31, 2001, there were two
    commercial banks (one of which is the Bank) operating a total of three
    offices in Floyd County, Virginia. The competing institution is not locally
    owned.

    Floyd County generates approximately 80% of the Bank's total deposits. In
    the other parts of the Bank's trade area (the Virginia counties of Roanoke,
    Montgomery, and Carroll and the City of Roanoke, Virginia), there are a
    number of locally owned community banks, statewide banking organizations,
    and affiliate banks of southeast regional bank holding companies in
    operation.

    (3) MATERIAL CUSTOMERS

    Deposits are derived from a broad base of customers in its trade area. No
    material portion of deposits have been obtained from a single person or a
    few persons (including Federal, State, and local governments and agencies
    thereunder), the loss of which would have a materially adverse effect on
    the business of the Bank.

<PAGE>

    The majority of loans, commitments to extend credit, and standby letters of
    credit have been granted to customers in the Company's market area. The
    majority of such customers are depositors. The Company generally does not
    extend credit to any single borrower or group of related borrowers in
    excess of approximately $2,000,000. Although the Company has a reasonably
    diversified loan portfolio, it has a loan concentration relating to
    customers who are motel and bed-and-breakfast owners and operators. Total
    loans and loan commitments to this industrial group amounted to
    approximately $16,600,000 and $13,200,000 at December 31, 2001 and 2000,
    respectively.

    (4) RIGHTS

    No patents, trademarks, licenses, franchises or concessions held are of
    material significance to the Company.

    (5) NEW SERVICES

    The Company has expended no material dollars on research activities
    relating to new lines of business in the last two years. However, in the
    year 2002, the Company will continue to weigh the opportunities now
    available after passage of the Gramm-Leach-Bliley Act in 1999. Some of the
    products and services that now may be offered by the Company are property,
    casualty, life, automobile, disability, and group insurance products as
    well as brokerage services and others.

    (6) ENVIRONMENTAL LAWS

    Compliance with Federal, State, or Local provisions regulating the
    discharge of materials into the environment has not had, nor is it expected
    to have in the future, a material effect upon the Company's capital
    expenditures, earnings or competitive position.

    (7) EMPLOYEES

    The Bank had 27 officers, 60 full-time employees and 3 part-time employees
    as of December 31, 2001. Employee relations have been good.

ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------

    The present headquarters of the Company consists of a three-story brick
    building, with approximately 21,200 square feet of floor space located at
    101 Jacksonville Circle, Floyd, Virginia. The Bank also owns its branch
    offices in Hillsville and Roanoke, Virginia which have drive-up facilities.
    The Bank's Willis and Christiansburg, Virginia offices operate from leased
    facilities.

    The Bank also owns a three-story brick building adjacent to its main office
    which serves as the Bank's conference room, training room and which
    provides space for expansion of the financial services now offered.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

    Neither the Company nor the Bank or its subsidiary are a party to, nor is
    any of their property the subject of, any material pending legal
    proceedings incidental to the business of the Company or the Bank or its
    subsidiary.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
----------------------------------------------------------

    No matter was submitted to a vote of security holders during the fourth
    quarter of the fiscal year covered by this report.

<PAGE>

                                    PART II

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

     (A)  Beginning in 1997, the Company's stock was listed on the NASDAQ
          Bulletin Board under the symbol CDBK.OB. Prior to 1997, no active
          public market existed for the common stock of the bank. Transfer of
          the common stock occurred from time to time, but management had no
          direct access to the prices realized in those trades. Based on
          information available to the Bank concerning such trading, the
          following table shows the trading ranges of the Common Stock for the
          previous five years. The table has been adjusted for the effects of a
          10% stock dividend in 1997 and a three for one stock split in 2001.

                         Year               High               Low
                     -----------         ----------        ----------

                         2001            $    16.00        $    12.00
                         2000            $    12.25        $    10.33
                         1999            $    17.00        $    13.33
                         1998            $    18.00        $    16.17
                         1997            $    15.67        $    14.67

     (B)  The approximate number of holders of the Bank's 1,535,733 Common
          Stock Securities as of December 31, 2001, is 600.

     (C)  Dividends paid for 2001 were $0.42 and 2000 were $0.39 per share
          owned. The Company's ability to declare and pay dividends in the
          future will be dependent upon its consolidation income and fiscal
          condition, tax considerations, and general business condition.
          Subject to these considerations, dividends may be declared only at
          the discretion of the Board of Directors. The Company presently
          expects that dividends will continue to be paid in the future.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------

    The information required under this item is incorporated by reference to
    the Company's Annual Report to Stockholders, Exhibit 13.1, pages 26-41 and
    page 3.

ITEM 7. FINANCIAL STATEMENTS
----------------------------

    The following consolidated financial statements of the registrant and the
    Independent Auditor's Report set forth on pages 5 through 25 of the
    Company's 2001 Annual Report to Stockholders are incorporated herein by
    reference:

    (1)   Independent Auditor's Report

    (2)   Consolidated Balance Sheets as of December 31, 2001 and 2000

    (3)   Consolidated Statements of Income for the years ended December 31,
          2001, 2000, and 1999

    (4)   Consolidated Statements of Stockholders' Equity for the years ended
          December 31, 2001, 2000, and 1999.

    (5)   Consolidated Statements of Cash Flows for the years ended December
          31, 2001, 2000, and 1999.

    (6)   Notes to Consolidated Financial Statements

<PAGE>

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

    NONE

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

    The Executive Officer of the Company as of December 31, 2001 is listed on
    page 3 of the Company's Proxy statement dated March 25, 2002 and is
    incorporated herein by reference. Information with respect to the directors
    of the Company is set out under the caption "Election of Directors" on page
    2 of the Company's Proxy statement dated March 25, 2002, which information
    is incorporated herein by reference.

    The disclosure required by item 405 of regulation S-K is set out under the
    caption "Beneficial Ownership Reporting Compliance" section 16(a) on page 5
    of the Company's Proxy Statement dated March 25, 2002, which information is
    incorporated by reference.

ITEM 10. EXECUTIVE COMPRENSATION
--------------------------------

    The information set forth under "Executive Compensation" and "Directors
    Meetings, Committees and Fees" on page 4 of the Company's Proxy Statement
    dated March 25, 2002 is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

    The information set forth under "Ownership of Common Stock" on pages 3, 4
    and 5 of the Company's Proxy Statement dated March 25, 2002 is incorporated
    herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

    The information contained under "Certain Transactions" on page 5 of the
    Company's Proxy Statement dated March 25, 2002 is incorporated herein by
    reference.

<PAGE>

                                    PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------

     (a) The following documents are filed as part of the report:

                                                2001 Annual Report
                                            To Stockholders Pages (s)*
                                            ----------------------------

     1.  Financial Statements:
         --------------------

     Independent Auditors' Report                        5

     Consolidated Balance Sheets
     December 31, 2001 and 2000                          6

     Consolidated Statements of Income
     years ended December 31, 2001
     2000, and 1999                                      7

     Consolidated Statements of Stock-
     holders' Equity years ended
     December 31, 2001, 2000, and 1999                   8

     Consolidated Statements of Cash
     Flows years ended December 31,
     2001, 2000, and 1999                                9

     Notes to Consolidated Financial
     Statements                                       10 - 25

*  Incorporated by reference from the indicated pages of the 2001 Annual Report
   to Stockholders

     2.  Financial Statement Schedules:
         -----------------------------

         All schedules are omitted as the required information is inapplicable
         or the information is presented in the Consolidated Financial
         Statements or related notes.

     3.  Exhibits:
         --------

         The exhibits filed as part of this report and exhibits incorporated
         herein by reference to other documents are listed in the Index to
         Exhibits to this Annual Report on Form 10-KSB.

         REPORTS ON FORM 8-K
         -------------------

         None.

         EXHIBITS
         --------

         See Item 13(a)3 above.

         FINANCIAL STATEMENT SCHEDULES
         -----------------------------

         See Item 13(a)2 above.

<PAGE>

                                  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.

                                     CARDINAL BANKSHARES CORPORATION

Date:   March 26, 2002              By: /s/ Ronald Leon Moore
                                        ---------------------
                                         Ronald Leon Moore
                                        President and CEO

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

       Signature                      Title                     Date
       ---------                      -----                     ----

/s/Ronald Leon Moore
-------------------------    Director, President and      March 25, 2002
                             Chief Executive Officer

Ronald Leon Moore

/s/K. Venson Bolt
-------------------------             Director            March 25, 2002
K. Venson Bolt

/s/W. R. Gardner, Jr.
-------------------------             Director            March 25, 2002
W. R. Gardner, Jr.

/s/C. W. Harman
-------------------------             Director            March 25, 2002
C. W. Harman

/s/Kevin D. Mitchell
-------------------------             Director            March 25, 2002
Kevin D. Mitchell

/s/Dorsey H. Thompson
-------------------------             Director            March 25, 2002
Dorsey H. Thompson

<PAGE>

                               INDEX TO EXHIBITS

                                                          PAGE NO. IN
EXHIBIT NO.               DESCRIPTION                  EQUENTIAL SYSTEM
-----------  ----------------------------------------  -----------------

  13.1       2001 Annual Report to Stock-
             holders (Such Report, except
             to the extent incorporated herein
             by reference, is being furnished
             for the information of the Commission
             only and is not deemed to be filed
             as part of this Report on Form 10-KSB)           ---