SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-K



ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES

EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2004

Commission file number:  000-24002



CENTRAL VIRGINIA BANKSHARES, INC.

(Name of registrant in its charter)



|Virginia
      (State or other jurisdiction of
      incorporation or organization)                                                  | 54-1467806
      (I.R.S. Employer
      Identification No.)
|------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------
|                                                                                                                                     |                                                            
|2036 New Dorset Road, Post Office Box 39, Powhatan,
      Virginia 23139-0039
 (Address of principal executive offices) (Zip   Code)
|Registrants telephone number, including area code:
       (804) 403-2000                                                           



Securities registered under Section 12(b) of the Exchange
Act:

None



Securities registered under Section 12(g) of the Exchange
Act:

Common Stock, $1.25 par value



Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [
   ]



Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not 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-K
or any amendment to this Form 10-K. [    ]



Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes [    ]
   No [ X ]



The aggregate market value of the Common Stock held by
non-affiliates, computed by reference to the closing sale price of the Common
Stock as reported on The Nasdaq National Market on June 30, 2004, the last
business day of the registrants most recently completed second fiscal quarter,
was $55,780,517.



At March 15, 2005, there were 2,261,926 shares of the registrants
Common Stock outstanding.





DOCUMENTS INCORPORATED BY REFERENCE



Portions of the 2005 definitive proxy statement for the 2005 Annual Meeting of
Shareholders are incorporated by reference into Part III of this
report.

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TABLE OF CONTENTS



PART I



ITEM 1.

BUSINESS

1



ITEM
2.

PROPERTIES

8



ITEM 3.

LEGAL
PROCEEDINGS

8



ITEM
4.

SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

8



PART II



ITEM
5.

MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED

STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY

SECURITIES

9



ITEM
6.

SELECTED
FINANCIAL DATA

10



ITEM
7.

MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION
AND RESULTS OF OPERATION

11



ITEM
7A.

QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT

MARKET
RISK

28



ITEM
8.

FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

30



ITEM
9.

CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING
AND FINANCIAL DISCLOSURE

30



ITEM
9A.

CONTROLS
AND PROCEDURES

30



ITEM 9B.

OTHER
INFORMATION

31



PART
III



ITEM
10.

DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

31



ITEM
11.

EXECUTIVE
COMPENSATION

31



ITEM
12.

SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

31



ITEM
13.

CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

31



ITEM
14.

PRINCIPAL
ACCOUNTING FEES AND SERVICES

31



PART
IV



ITEM
15.

EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES

32

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PART I



ITEM
1.

BUSINESS



General



The Company and the Bank.  Central Virginia
Bankshares, Inc. (the Company) was incorporated as a Virginia corporation on
March 7, 1986, solely to acquire all of the issued and outstanding shares
of Central Virginia Banks (the Bank).  The Bank was incorporated on
June 1, 1972 under the laws of the Commonwealth ofVirginia and, since opening for business on September 17, 1973, its
main and administrative office has been located on U.S. Route 60 at
Flat Rock, in Powhatan County, Virginia.  In May 1996, the administrative
offices were relocated to the Corporate Center in the Powhatan Commercial Center
on New Dorset Road located off Route 60 less than one mile from the main office.



The Company maintains an internet website at
www.centralvabank.com, which contains information relating to it and its
business. The Company makes available free of charge through its website its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and any amendments to these documents as soon as reasonably practicable
after it electronically files such material with, or furnishes it to, the
Securities and Exchange Commission. Copies of the Companys Audit Committee
Charter, Nominating Committee Charter and Code of Conduct are available upon
written request to the Companys Corporate Secretary.



Principal Market Area.  The Banks primary service
areas are Powhatan and Cumberland Counties, Goochland County and western
Chesterfield and western Henrico Counties. These counties had populations of
22,377; 9,017; 16,863; 259,903 and 262,300 respectively, according to the 2000
census.  The growth rate of these counties was 46.0%, 15.2%, 19.1%, 24.2%,
and 20.4%, respectively, from the 1990 census.  Similar growth rates are
expected for the foreseeable future. The Banks main office is located in the
Village of Flat Rock in Powhatan County, which is on U.S. Route 60,
eight miles west of the Village of Midlothian in Chesterfield County.  Flat
Rock is the commercial hub of Powhatan County.  Two of the Banks branch
offices are located in Chesterfield County, one in the Village Marketplace
Shopping Center in the Village of Midlothia n and the other in the Market Square
Shopping Center in Brandermill, two are in Cumberland County on U.S.
Route 60 near the courthouse and in Cartersville, and there is one branch
in Wellesley in the Short Pump area of western Henrico County.  The Wellesley location was acquired
from another financial institution and opened in July 2001 while the Bellgrade location was
acquired from another financial institution in October 2003 and was opened for
business in March 2004.  The Banks present intention is to continue its
activities in its current service area, and expand its franchise in the higher
growth areas of the markets it serves. The Banks primary markets are considered
to be an attractive and desirable area in which to operate.



Banking Services.  The principal business of the Bank
is to attract deposits and to loan or invest those deposits on profitable terms.
 The Bank engages in a general community and commercial banking business,
targeting the banking needs of individuals and small to medium sized businesses
in its primary service area.  The Bank offers all traditional loan and
deposit banking services as well as newer services such as Internet banking,
telephone banking, debit cards, and other ancillary services such as the sales
of non-deposit investment products through a partnership with UVEST, a
registered broker-dealer and member of NASD, SIPC.  The Bank makes seasonal
and term loans, both alone and in conjunction with other banks or governmental
agencies.  The Bank also offers other related services, such as ATMs,
travelers checks, safe deposit boxes, deposit transfer, notary public, escrow,
drive-in facilities and other customary banking services.  The Banks
lending policies, deposit products and related services are intended to meet the
needs of individuals and businesses in its market area.  The Bank may
provide trust services to its customers through an affiliation with The Trust
Company of Virginia.



The Banks plan of operation for future periods is to continue to
operate as a community bank and to focus its lending and deposit activities in
its primary service area.  As the Banks primary service area shifts from
rural to suburban in nature, the Bank will compete aggressively for customers
through its traditional personal service and extended hours of operation.
 The Bank will also emphasize the origination of residential mortgages and
construction loans as the area becomes more developed.  Consistent with its







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focus on providing community based financial services, the Bank
does not plan to diversify its loan portfolio geographically by making
significant loans outside of its primary service area.  While the Bank and
its borrowers will be directly affected by the economic conditions and the
prevailing real estate market in the area, the Bank is better able to monitor
the financial condition of its borrowers by concentrating its lending activities
in its primary service area.  The Bank will continue to evaluate the
feasibility of entering into other markets as opportunities to do so become
available.



Lending Activities



Loan Portfolio.  The Company is an active residential
mortgage and residential construction lender and also extends consumer loans to
individuals and commercial loans to small and medium sized businesses within its
primary service area.  The Companys commercial lending activity extends
across its primary service area of Powhatan, Cumberland, Goochland,
western Chesterfield and western Henrico Counties.  Consistent with its focus on
providing community-based financial services, the Company does not attempt to
diversify its loan portfolio geographically by making significant amounts of
loans to borrowers outside of its primary service area, however, there are a
number of lending relationships outside of the primary service area.  The principal
 risks associated with each of the categories of loans
in the Companys portfolio is the creditworthiness of its borrowers, followed
closely by the general local economic environment.  In an effort to manage
this risk, the Banks policy gives loan approval limits to individual
loan officers based on their level of experience.  Loans where the total
borrower exposure to the Bank is less than $1,250,000 may be approved by the
Banks Senior Loan Committee.  The Board of Directors of the Bank must approve
 loans where the total borrower
exposure is in excess of $1,250,000.
 The risk associated with real estate mortgage loans and installment loans
to individuals varies based upon employment levels, consumer confidence,
fluctuations in value of residential real estate and other conditions that
affect the ability of consumers to repay indebtedness.  The risk associated
with commercial, financial and agricultural loans varies based upon the strength
and activity of the local economies of the Companys primary market areas.
 The risk associated with real estate construction loans varies based upon
the supply of and demand for the type of real estate under construction,
 the mortgage loan interest rate environment and the number of speculative properties under constructions.
The Bank manages that risk by focusing on pre-sold or contract homes and limiting
 the number of speculative homes in its portfolio.



Residential Mortgage Loans.  Residential
mortgage loans are made in amounts generally up to 80.0% of the appraised value
of the property pledged as security for the loan.  Residential mortgage
loans are underwritten using specific qualification guidelines that are intended
to assure that such loans may be eligible for sale into the secondary mortgage
market.  The Bank generally requires an appraisal by a licensed outside
appraiser for all loans secured by real estate.  In some isolated instances
where the Bank is familiar with the subject property, the current localitys tax
assessed value or an assessment by Bank lenders may be accepted.  The Bank
requires that the borrower obtain title, fire and casualty insurance coverage in
an amount equal to the loan amount and in a form acceptable to the Bank.
 The Bank originates residential mortga ge loans that are sold in the
secondary market, or are carried in the Banks loan portfolio.  These loans
are generally either one-year, three-year, or five-year adjustable rate
mortgages (ARMs) or fifteen to thirty year fixed rate mortgages.
 Substantially all permanent owner occupied residential mortgages made for
the Banks own portfolio are made as three-year and five-year ARMs.



The Banks ARMs generally are subject to limitations of 2.0% per three-year
period on interest rate adjustments over the life of the loan with rate changes not to exceed 6.0%.  All changes in the interest rate
are based on the movement of an external index contractually agreed to by
the Bank and the borrower at the origination of the loan.



There are risks to the Bank resulting from increased costs to a
borrower as a result of the periodic repricing mechanisms of these loans.
 Despite the benefits of ARMs to an institutions asset/liability
management, they may pose additional risks, primarily because as interest rates
rise, the underlying

2





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payments by the borrower rise, increasing the potential for
default.  At the same time, the marketability of the underlying property
may be adversely affected by higher interest rates.



The Bank charges origination fees on its residential mortgage
loans.  These fees vary among loan products and with market conditions.
 Generally such fees amount to .5% to 3.0% of the loan principal amount.
 In addition, the Bank charges fees to its borrowers to cover the cost of
appraisals, credit reports and certain expenses related to the documentation and
closing of loans.



Commercial Mortgage Loans. The Bank
does not actively seek commercial permanent mortgage loans on income-producing
properties such as apartments, shopping centers, hotels and office buildings.
 Any such requests from Bank customers concerning properties in the Banks
established trade area are considered.



Real Estate Construction Lending. In general, the Bank does not actively solicit or originate
construction loans on income-producing properties such as apartments, shopping
centers, hotels and office buildings.



In order to promote its permanent mortgage lending business and
because of the attractive adjustable interest rates available, the Bank makes
construction and small development loans for residential housing purposes.
 The large majority of the Banks construction loans are to experienced
builders.  Such loans normally carry an interest rate of .5% to 1.5% over
the prime bank lending rate, adjusted daily. Construction lending entails
significant risk as compared with residential mortgage lending.
 Construction loans typically involve larger loan balances concentrated
with single borrowers or groups of related borrowers.  Construction loans
involve additional risks attributable to the fact that loan funds are advanced
upon the security of the home under construction, which is of uncertain value
prior to the completion of construction.  Thus, it is more difficult to
evaluate accurately the total loan funds required to complete a project and
related loan-to-value ratios.  To minimize risks associated with
construction lending, the Bank, as a rule limits loan amounts to 75.0% of
appraised value on unsold homes and 80.0% of appraised value on pre-sold homes,
and performs or causes to be performed periodic inspections of the construction
to ensure there are sufficient undisbursed loan proceeds in order to complete
the building, in addition to its usual credit analysis of its borrowers.
 The Bank always obtains a first lien on the property as security for its
construction loans.



Consumer Lending.  The Bank currently offers most
types of consumer demand, time and installment loans for a variety of purposes,
including automobile loans, home equity lines of credit, and credit cards.



Commercial Business Lending.  As a full-service
community bank, the Bank makes commercial loans to qualified small businesses in
the Banks market area.  At December 31, 2004, commercial business
loans were $34.1 million or18.9% of the Banks total loan
portfolio. Commercial business loans generally have a higher degree of risk than
residential mortgage loans but have commensurately higher yields.  To
manage these risks, the Bank secures appropriate collateral and monitors the
financial condition of its business borrowers and the concentration of such
loans in the Banks portfolio.  Residential mortgage loans generally are
made on the basis of the borrowers ability to make repayment from employment
income and other sources and are secured by real property whose value tends to
be easily ascertainable.  In contrast, commercia l business loans typically
are made on the basis of the borrowers ability to make repayment from the cash
flow of its business and are either unsecured or secured by business assets,
such as accounts receivable, equipment and inventory.  As a result, the
availability of funds for the repayment of commercial business loans may be
substantially dependent on the success of the business itself.  Further,
the collateral for secured commercial business loans may depreciate over time,
and cannot be appraised with as much precision as residential real estate. At
December 31, 2004, the Bank had approximately $19,000 of non-performing
commercial loans.



3





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Competition



Based on FDIC deposit statistics as of June 30, 2004, the Bank dominates both Powhatan and Cumberland Counties with greater than 50% of the deposits in each locality.
However, in both Chesterfield and Henrico Counties, the Bank encounters stronger
competition for its banking services from larger banks and other community banks located in
the Richmond metropolitan area.  In addition, financial companies, mortgage companies,
credit unions and savings and loan associations also compete with the Bank for
loans and deposits.  The Bank must also compete for deposits with
money market mutual funds that are marketed nationally.  Many of the Banks
competitors have substantially greater resources than the Bank.
 The internet is also providing an increasing amount of
price oriented competition which the Bank anticipates to become more intense.
 The success of the Bank in the past and its plans for success in the
future is dependent upon providing superior customer service and convenience.



Employees



The Company and the Bank had 103 full-time and 19 part-time
employees at December 31, 2004.  Employee relations have and continue to be
good.  The Bank sponsors a qualified discretionary Profit Sharing/Retirement Plan for its employees
as well as a 401(k) plan, in addition, the Company subsidizes a short-term disability plan, group term life insurance, and group medical, dental, and vision insurance.



Regulation and Supervision



General.  As a bank holding company, the Company is
subject to regulation under the Bank Holding Company Act of 1956, as amended
(the BHCA), and the examination and reporting requirements of the Board of
Governors of the Federal Reserve System (the Federal Reserve Board).
 Under the BHCA, a bank holding company may not directly or indirectly
acquire ownership or control of more than 5% of the voting shares or
substantially all of the assets of any bank or merge or consolidate with another
bank holding company without the prior approval of the Federal Reserve Board.
 The BHCA also generally limits the activities of a bank holding company to
that of banking, managing or controlling banks, or any other activity which is
determined to be so closely related to banking or to managing or controlling
banks that an exception is allowed for those activities.



As a state-chartered commercial bank, the Bank is subject to
regulation, supervision and examination by the Virginia State Corporation
Commissions Bureau of Financial Institutions.  It also is subject to
regulation, supervision and examination by the Federal Reserve Board.
 State and federal law also governs the activities in which the Bank
engages, the investments that it makes and the aggregate amount of loans that
may be granted to one borrower.  Various consumer and compliance laws and
regulations also affect the Banks operations.



The earnings of the Companys subsidiaries, and therefore the
earnings of the Company, are affected by general economic conditions, management
policies, changes in state and federal legislation and actions of various
regulatory authorities, including those referred to above.  The following
description summarizes the significant state and federal laws to which the
Company and the Bank are subject.  To the extent that statutory or
regulatory provisions or proposals are described, the description is qualified
in its entirety by reference to the particular statutory or regulatory
provisions or proposals.



Payment of Dividends.  The Company is a legal entity
separate and distinct from the Bank.  The majority of the Companys revenue
will result from dividends paid to the Company by the Bank.  The Bank is
subject to laws and regulations that limit the amount of dividends that it can
pay.  In addition, both the Company and the Bank are subject to various
regulatory restrictions relating to the payment of dividends, including
requirements to maintain capital at or above regulatory minimums.  Banking
regulators have indicated that banking organizations should generally pay
dividends only if the organizations net income available to common shareholders
over the past year has been sufficient to

4





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fully fund the dividends, and the prospective rate of earnings
retention appears consistent with the organizations capital needs, asset
quality and overall financial condition.  The Company does not expect that
any of these laws, regulations or policies will materially affect the ability of
the Bank to pay dividends.  During the year ended December 31, 2004, due to the cash on hand and proceeds
 from the sale of marketable securities held by the Company, it was not necessary for the Bank to declare
dividends payable to the Company.



Insurance of Accounts and Regulation by the FDIC.The deposits of the Bank are insured by the FDIC up to the limits set
forth under applicable law. The deposits of the Bank are subject to the deposit
insurance assessments of the Bank Insurance Fund (BIF) of the Federal Deposit
Insurance Corporation (the FDIC).



The FDIC is authorized to prohibit any BIF-insured institution
from engaging in any activity that the FDIC determines by regulation or order to
pose a serious threat to the respective insurance fund.  Also, the FDIC may
initiate enforcement actions against banks, after first giving the institutions
primary regulatory authority an opportunity to take such action.  The FDIC
may terminate the deposit insurance of any depository institution if it
determines, after a hearing, that the institution has engaged or is engaging in
unsafe or unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, order or any
condition imposed in writing by the FDIC.  It also may suspend deposit
insurance temporarily during the hearing process for the permanent termination
of insurance, if the institution has no tangible capital.  If deposit
insurance is terminated, the deposits at the institution at the time of
termination, less subsequent withdrawals, shall continue to be insured for a
period from six months to two years, as determined by the FDIC.  Management
is not aware of any existing circumstances that could result in termination of
any Banks deposit insurance.



Capital.  The Federal Reserve Board has issued
risk-based and leverage capital guidelines applicable to banking organizations
that it supervises.  Under the risk-based capital requirements, the Company
and the Bank are each generally required to maintain a minimum ratio of total
capital to risk-weighted assets (including certain off-balance sheet activities,
such as standby letters of credit) of 8%.  At least half of the total
capital must be composed of common equity, retained earnings, qualifying
perpetual preferred stock and minority interests in common equity accounts of
consolidated subsidiaries, less certain intangibles (Tier 1 capital).
 The remainder may consist of specific subordinated debt, some hybrid
capital instruments and other qualifying preferred stock and a limited amount of
loan loss allowance and pre-tax net unrealized holding gain s on certain equity
securities (Tier 2 capital, which, together with Tier 1 capital, composes
total capital).



On December 17, 2003, Central Virginia Bankshares, Inc. issued a
$5 million debenture to its single purpose capital trust subsidiary, which in
turn issued $5 million in trust preferred securities. With the proceeds of this
issuance, the Company made a $5 million capital injection to its
principal subsidiary, Central Virginia Bank.



In addition, each of the federal banking regulatory agencies has
established minimum leverage capital requirements for banking organizations.
 Under these requirements, banking organizations must maintain a minimum
ratio of Tier 1 capital to adjusted average quarterly assets equal to 3% to 5%,
subject to federal bank regulatory evaluation of an organizations overall
safety and soundness.



The risk-based capital standards of the Federal Reserve Board
explicitly identify concentrations of credit risk and the risk arising from
non-traditional activities, as well as an institutions ability to manage these
risks, as important factors to be taken into account by the agency in assessing
an institutions overall capital adequacy.  The capital guidelines also
provide that an institutions exposure to a decline in the economic value of its
capital due to changes in interest rates be considered by the agency as a factor
in evaluating a banking organizations capital adequacy.



5





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Other Safety and Soundness Regulations.  There are a
number of obligations and restrictions imposed on bank holding companies and
their depository institution subsidiaries by federal law and regulatory policy
that are designed to reduce potential loss exposure to the depositors of such
depository institutions and to the FDIC insurance funds in the event that the
depository institution is insolvent or is in danger of becoming insolvent.
 For example, under the requirements of the Federal Reserve Board with
respect to bank holding company operations, a bank holding company is required
to serve as a source of financial strength to its subsidiary depository
institutions and to commit resources to support such institutions in
circumstances where it might not do so otherwise.  In addition, the
cross-guarantee provisions of federal law require insured depository inst
itutions under common control to reimburse the FDIC for any loss suffered or
reasonably anticipated by the FDIC as a result of the insolvency of commonly
controlled insured depository institutions or for any assistance provided by the
FDIC to commonly controlled insured depository institutions in danger of
failure.  The FDIC may decline to enforce the cross-guarantee provision if
it determines that a waiver is in the best interests of the deposit insurance
funds.  The FDICs claim for reimbursement under the cross guarantee
provisions is superior to claims of shareholders of the insured depository
institution or its holding company but is subordinate to claims of depositors,
secured creditors and nonaffiliated holders of subordinated debt of the commonly
controlled insured depository institutions.



The federal banking agencies also have broad powers under current
federal law to take prompt corrective action to resolve problems of insured
depository institutions.  The extent of these powers depends upon whether
the institution in question is well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically undercapitalized,
as defined by the law.  As of December 31, 2004, the Company and the Bank
were classified as well capitalized.



State
banking regulators also have broad enforcement powers over the Bank, including
the power to impose fines and other civil and criminal penalties, and to appoint
a conservator.



The Bank Secrecy Act.  Under the Bank Secrecy Act
(BSA), a financial institution is required to have systems in place to detect
certain transactions, based on the size and nature of the transaction.
 Financial institutions are generally required to report cash transactions
involving more than $10,000 to the United States Treasury.  In addition,
financial institutions are required to file suspicious activity reports for
transactions that involve more than $5,000 and which the financial institution
knows, suspects or has reason to suspect, involves illegal funds, is designed to
evade the requirements of the BSA or has no lawful purpose.  The USA
PATRIOT Act of 2001, enacted in response to the September 11, 2001 terrorist
attacks, requires bank regulators to consider a financial institutions
compliance with the BSA when reviewing applications from a fi nancial
institution.  As part of its BSA program, the USA PATRIOT Act also requires
a financial institution to follow recently implemented customer identification
procedures when opening accounts for new customers and to review lists of
individuals and entities who are prohibited from opening accounts at financial
institutions.



Interstate Banking and Branching.  Current federal law
authorizes interstate acquisitions of banks and bank holding companies without
geographic limitation.  Effective June 1, 1997, a bank headquartered in one
state was authorized to merge with a bank headquartered in another state, as
long as neither of the states had opted out of such interstate merger authority
prior to such date.  After a bank has acquired a branch in a state through
an interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where a bank headquartered in that state
could have established or acquired branches under applicable federal or state
law.



Gramm-Leach-Bliley Act of 1999.  The
Gramm-Leach-Bliley Act of 1999 (the Act) was signed into law on November 12,
1999.  The Act covers a broad range of issues, including a repeal of most
of the restrictions on affiliations among depository institutions, securities
firms and insurance companies.  The following description summarizes some
of its significant provisions.



6





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The Act repeals sections 20 and 32 of the Glass-Stegall Act, thus
permitting unrestricted affiliations between banks and securities firms.
 The Act also permits bank holding companies to elect to become financial
holding companies.  A financial holding company may engage in or acquire
companies that engage in a broad range of financial services, including
securities activities such as underwriting, dealing, brokerage, investment and
merchant banking; and insurance underwriting, sales and brokerage activities.
 In order to become a financial holding company, the bank holding company
and all of its affiliated depository institutions must be well-capitalized,
well-managed, and have at least a satisfactory Community Reinvestment Act
rating.



The Act provides that the states continue to have the authority to
regulate insurance activities, but prohibits the states in most instances from
preventing or significantly interfering with the ability of a bank, directly or
through an affiliate, to engage insurance sales, solicitations or
cross-marketing activities.  Although the states generally must regulate
bank insurance activities in a nondiscriminatory manner, the states may continue
to adopt and enforce rules that specifically regulate bank insurance activities
in certain areas identified in the Act.  The Act directs the federal bank
regulatory agencies to adopt insurance consumer protection regulations that
apply to sales practices, solicitations, advertising and disclosures.



The Act adopts a system of functional regulation under which the
Federal Reserve Board is confirmed as the umbrella regulator for financial
holding companies, but financial holding company affiliates are to be
principally regulated by functional regulators such as the FDIC for state
nonmember bank affiliates, the Securities and Exchange Commission for securities
affiliates and state insurance regulators for insurance affiliates.  The
Act repeals the broad exemption of banks from the definitions of broker and
dealer for purposes of the Securities Exchange Act of 1934, as amended, but
identifies a set of specific activities, including traditional bank trust and
fiduciary activities, in which a bank may engage without being deemed a
broker, and a set of activities in which a bank may engage without being
deemed a dealer.  The Act also make s conforming changes in the
definitions of broker and dealer for purposes of the Investment Company Act
of 1940, as amended, and the investment Advisers Act of 1940, as amended.



The Act contains extensive customer privacy protection provisions.
 Under these provisions, a financial institution must provide to its
customers, at the inception of the customer relationship and annually
thereafter, the institutions policies and procedures regarding the handling of
customers nonpublic personal financial information.  The Act provides
that, except for certain limited exceptions, an institution may not provide such
personal information to unaffiliated third parties unless the institution
discloses to the customer that such information may be so provided and the
customer is given the opportunity to opt out of such disclosure.  An
institution may not disclose to a non-affiliated third party, other than to a
consumer reporting agency, customer account numbers or other similar account
identifiers for marketing purposes.  The Act also provides that t he states
may adopt customer privacy protections that are more strict than those contained
in the Act.  The Act also makes a criminal offense, except in limited
circumstances, obtaining or attempting to obtain customer information of a
financial nature by fraudulent or deceptive means.

7

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ITEM 2.

PROPERTIES



The main office of the Company and the Bank was built in 1978 and
is a two-story building of brick construction, with approximately 8,500 square
feet of floor space.  It is located on Route 60 in the Village of Flat
Rock in Powhatan County. The Cartersville location, in Cumberland County, which originally opened in 1985,
 was replaced in mid-1994 with a one-story brick building with approximately 1,600 square feet.  The
 Midlothian branch is located in Chesterfield County at the Village Marketplace shopping center and was built in 1988
 and opened in May of that year.  It is a one and one-half story building with approximately
3,000 square feet.  On March 6, 1992, the Bank purchased the
deposits of the Powhatan office of the former Coreast Federal Savings Bank from
the Resolution Trust Corporation assuming approximately $9.0 million in
deposit liabilities.  The Bank also negotiated the purchase of that branch
site and its furniture and equipment at a price at or slightly below market
value.  The branch facility is located in the Village of Flat Rock across
Route 60 from the Banks main office.  This facility allows the Bank
to service westbound traffic on Route 60 with its drive-in teller facility,
and also houses the Banks secondary mortgage market
loan origination operation.  In April 1993, the Bank acquired
the branch facility of the former Investors Federal Savings Bank located in the
Market Square Shopping Center in Brandermill in Chesterfield County, through the
Resolution Trust Corporation. This one-story building contains approximately
1,600 square feet and opened for business on November 1, 1993.  In June 1998 the Bank
completed construction of and opened a 4,800 square foot branch located on U. S. Route 60
(Anderson Highway) near the courthouse in Cumberland County, Virginia.  In
July 2001, the Bank acquired a one-story, 2,800 square foot, two-year old branch
facility from another financial institution located on Lauderdale Drive in
Wellesley in Henrico County.  In December 2003, the Bank purchased a 2,800
square foot, seven-year old branch bank building from another financial
institution.  This branch is located at 2500 Promenade Parkway in the
Bellgrade shopping center located in the Midlothian area of Chesterfield
County.



In May 1996 the Company moved its administrative staff to a 15,000
square foot two-story Corporate Center in the Powhatan Commercial Center located
off U.S. Route 60 near the main office.  The Corporate Center houses
the executive offices, finance and accounting, computer operations, loan
administration and bookkeeping departments all of which were formerly located in
the main office.



In January 2003 the Company
 acquired a 6.95 acre tract if land at the intersection of New Dorset Road and Route 60 in Powhatan County.  Construction of a
 16,000 square foot building to relocate the Main Office as well as house all lending operations began in August 2004.  It is anticipated that the building will be completed and occupied in June 2005.



ITEM 3.

LEGAL PROCEEDINGS



There are no material pending legal proceedings to which the
Company is a party or of which the property of the Company is subject.



ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



No matters were submitted to a vote of securities holders through
the solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.



8

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PART II



ITEM 5.

MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Common Stock and Dividends



Central Virginia Bankshares, Inc common stock trades on The Nasdaq
National Market (Nasdaq) under the symbol CVBK.



The following table sets forth the high and low trade prices of
the Companys Common Stock on Nasdaq, based on published financial sources, and
the dividends paid on the Common Stock for each calendar quarter indicated.



|                     | 2004       |           | 2003          
|-------------------- | ---------- | --------- | --------------
|                     | High Trade | Low Trade | Dividends
Paid
|                     |            |           |               
|First Quarter        | $30.50     | $26.00    | $.145         
|Second
      Quarter | 30.00      | 26.54     | .145          
|Third Quarter        | 28.30      | 23.95     | .145          
|Fourth Quarter       | 30.18      | 25.30     | .145          



The Companys future dividend policy is subject to the discretion
of the board of directors and will depend upon a number of factors, including
future consolidated earnings, financial condition, liquidity and capital
requirements of the Company and the Bank, applicable governmental regulations
and policies and other factors deemed relevant by the board of directors.



The Companys ability to distribute cash dividends will depend
primarily on the abilities of its subsidiary bank to pay dividends to the
Company. As a state member bank, the Bank is subject to certain restrictions
imposed by the reserve and capital requirements of federal and Virginia banking
statutes and regulations. Furthermore, neither the Company nor the Bank may
declare or pay a cash dividend on any capital stock if it is insolvent or if the
payment of the dividend would render it insolvent or unable to pay its
obligations as they become due in the ordinary course of business. For
additional information on these limitations, see Regulation and Supervision -
Payment of Dividends in Item 1 above.



9





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ITEM 6.

SELECTED
FINANCIAL DATA



|                            |                                                                               |         |          | 2004     | 2003     | 2002     | 2001     | 2000
|--------------------------- | ----------------------------------------------------------------------------- | ------- | -------- | -------- | -------- | -------- | -------- | ----
|Balance Sheet
      Data    |                                                                               |         |          |          |          |         
|                            | Total Assets                                                                  |         | $379,276 | $365,835 | $285,086 | $246,423 | $200,933
|                            | Total Deposits                                                                |         | 309,947  | 300,720  | 237,988  | 208,027  | 165,811 
|                            | Loans Receivable,
      net                                                   | 177,234 | 156,050  | 139,392  | 139,411  | 132,383 
|                            | Stockholders'
      Equity                                                    |         | 31,381   | 28,343   | 24,499   | 20,828   | 19,177  
|                            |                                                                               |         |          |          |          |          |          |     
|Income Statement
      Data |                                                                               |         |          |          |         
|                            | Net Interest
      Income                                                     |         | $12,972  | $11,891  | $9,861   | $7,876   | $7,917  
|                            | Provision for Loan
      Losses                                               | 415     | 410      | 440      | 288      | 402     
|                            | Net Interest Income
      After                                               |         |          |          |          |         
|                            | Provision
      for Loan Losses                                               | 12,557  | 11,481   | 9,421    | 7,588    | 7,516   
|                            | Non-interest
      Income                                                     |         | 2,838    | 3,004    | 2,547    | 1,849    | 1,584   
|                            | Non-interest
      Expense                                                    | 9,975   | 9,134    | 7,832    | 6,670    | 6,307   
|                            | Income Before Income
      Taxes                                              | 5,421   | 5,351    | 4,136    | 2,767    | 2,793   
|                            | Income Taxes                                                                  |         | 1,056    | 1,437    | 1,131    | 747      | 733     
|                            | Net Income                                                                    |         | 4,364    | 3,914    | 3,005    | 2,019    | 2,060   
|                            |                                                                               |         |          |          |          |          |          |     
|Per Share Data
      (1)    |                                                                               |         |          |          |          |         
|                            | Net Income
- Basic                                                            |         | $1.95    | $1.79    | $1.39    | $0.94    | $0.97   
|                            | - Diluted                                                                     |         | 1.91     | 1.72     | 1.33     | 0.94     | 0.97    
|                            | Cash Dividends                                                                |         | 0.58     | 0.51     | 0.47     | 0.44     | 0.41    
|                            | Book Value                                                                    |         | 13.87    | 12.77    | 11.33    | 9.69     | 8.99    
|                            |                                                                               |         |          |          |          |          |          |     
|Ratios                      |                                                                               |         |          |          |          |          |         
|                            | Return on Average Assets                                                      | 1.18%   | 1.22%    | 1.12%    | 0.93%    | 1.06%   
|                            | Return on Average Equity                                                      | 14.80%  | 14.66%   | 13.50%   | 10.00%   | 11.52%  
|                            | Average Equity to Assets                                                      | 7.98%   | 8.32%    | 8.33%    | 9.34%    | 9.24%   
|                            | Dividend Payout                                                               |         | 29.48%   | 27.13%   | 30.95%   | 42.29%   | 38.38%  
|                            |                                                                               |         |          |          |          |          |          |     
|                            | (1) Adjusted for 5% stock dividends paid in June 2004 and December
      2002 |         |         

10





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ITEM 7.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



Results of Operations



Net income for the year ended December 31, 2004 increased
$450,559, or 11.5%, to $4,364,324. This increase was primarily due to an
increase in net interest income, which increased 9.1% to $13.0 million as
interest rates began to rise during the last half of the year.  Total
interest income increased $1.8 million, or 9.6%, as the Companys average
interest-earning assets, primarily loans and investment securities, increased by
45.5 million or 15.4% from December 31, 2003.  Interest expense increased
10.4% to $7.3 million from $6.7 million in 2003.  This increase is
reflective of a 10.4% increase in average interest-bearing deposits as well as a
full year of expense related to the $5 million trust preferred securities issued
in December 2003.  Other income decreased 5.5% in 2004 as mortgage loan
refinancing slowed resulting in a 32.6%, or $115,118 decrease in secondary
mortgage market loan income. Also decreasing in 2004 compared to 2003 were
deposit fees and charges, income from the investment in bank-owned life
insurance, and commissions from the sale of non-deposit investment products.
 Non-interest expenses increased 9.2% primarily due to increases in
salaries and benefits, in addition, other areas contributing to the increase
were occupancy expense, advertising, and office supplies principally due to the
opening of the Bellgrade branch in March 2004.



For the year ended December 31, 2003, net income increased $908,601, or 30.2%, to $3,913,765. The major source of this
increase was net interest income, which increased 20.6% to $11.9 million due to
the steady, but lower, interest rate environment throughout the year.
 Total interest income increased $1.1 million, or 6.5%, as the
Companys interest-earning assets, most notably loans and investment securities,
rose 30.0% from December 31, 2002.  Funding for this asset growth was
provided by a $62.7 million, or 26.4%, increase in deposits, as well as a
$5 million increase in Federal Home Loan Bank advances and $5 million in
proceeds from the issuance of trust preferred securities.  Also showing an
increase for the year was other income, which rose 17.9% reflecting increased
activity in the secondary mortgage market loan area as well as in co mmissions
from the sales of non-deposit investment products.  Non-interest expenses
increased 16.6% primarily due to increases in salaries and benefits as the
Company added personnel to support the growth.



Basic earnings per share in 2004 were $1.95 compared to $1.79 in
2003 and $1.39 in 2002.  Diluted earnings per share were $1.91, $1.72, and $1.33, respectively, for the same periods.  All per share amounts presented reflect the 5% stock dividend paid June 15, 2004.



The Companys return on average equity was 14.8% in 2004, compared
to 14.7% and 13.5% in 2003 and 2002, respectively.  Return on average assets amounted to 1.18%, 1.22%, and 1.12% for these same periods.



Net Interest Income. The Companys net interest income was
$12,971,996 in 2004, compared to $11,891,356 and $9,860,808 for 2003 and 2002,
respectively.  The 9.1% increase in 2004 reflects an increase in the
average balance of interest-earning assets, while the 20.6% increase in 2003
reflects the effects of declining interest rates over the previous two years.
  Total interest income increased 9.6% to $20.3 million in 2004 as the
average balance of interest-earning assets increased 15.4% to
$341.8 million while the taxable equivalent yield dropped to 6.20% from
6.46% in 2003.  Total interest expense increased 10.4% to $7.3 million
in 2004 as a full year of interest expense was recognized related to the capital
trust preferred securities issued in December 2003.  In addition, the
Company increased its borrowings from the Federal Home Loan Bank to $30.5 million from $26.0 million in 2003.  In 2003, net interest
income increased 6.5% as interest rates declined throughout the year.



11





---





The following table sets forth the Companys average interest
earning assets (on a tax-equivalent basis) and average interest bearing
liabilities, the average yields earned on such assets and rates paid on such
liabilities, and the net interest margin, all for the periods indicated.



|                                             | Year Ended December 31,
|-------------------------------------------- | -----------------------
|                                             | 2004                   
|                                             | Average                
|                                             | Balance                
|                                             | (Dollars in Thousands) 
|Interest
       earning assets:              |                        
|Federal funds sold                           | $2,767                 
|Securities: (5)                              |                        
|U. S. Treasury and other U. S. government    |                        
|agency and corporations                      | $77,533                
|States
      and political subdivisions (3)  | 31,169                 
|Other securities  (3)                        | 58,569                 
|Total securities   (3)                       | 167,271                
|                                             |                        
|Loans (1)(2)(3)(4)(6)                        | 171,801                
|Total interest-earning assets  (3)           | $341,839               
|                                             |                        
|Interest bearing liabilities:                |                        
|Deposits:                                    |                        
|Interest bearing demand                      | $51,821                
|Savings                                      | 51,328                 
|Other
      time                             | 159,057                
|Total
      deposits                         | 262,206                
|Federal
      funds purchased and securities |                        
|sold
      under repurchase agreements       | 2,895                  
|FHLB
      advances                          |                        
|Overnight                                    | 5,252                  
|                                             |                        
|Term                                         | 24,940                 
|                                             |                        
|Trust
      preferred obligation             | 5,000                  
|                                             |                        
|Total
      interest-bearing liabilities     | $300,293               
|Net
      interest spread                    |                        
|Net
      interest margin                    |                        

____________________

(1)  Installment loans are stated net of unearned income.

(2)  Average loan balances include nonaccrual loans.

(3)  Tax-exempt income has been adjusted to a tax-equivalent
basis using an incremental rate of 34%.

(4)  Interest income on loans includes loan fees of $418,884
in 2004, $543,756 in 2003 and $565,453 in 2002.

(5)  Includes securities available for sale and securities
held to maturity.

(6)  Includes mortgage loans held for sale.



The tax-equivalent net interest margin is a measure of net
interest income performance. It represents the difference between interest
income with any non-taxable interest adjusted to a fully tax-equivalent basis,
including net loan fees earned, and interest expense, reflected as a percentage
of average interest earning assets. The Companys tax-equivalent net interest
margin was 4.05% in 2004, compared to 4.21% in 2003 and 4.11% in 2002. The net
interest margin decreased in 2004 as the tax-equivalent yield on
interest-earning assets fell from 6.46% in 2003 to 6.20% in 2004, while the
yield on interest-bearing liabilities only decreased 10 basis points from 2.55%
in 2003 to 2.45% in 2004.  The tax-equivalent yield on securities dropped
from 6.12% in 2003 to 5.99% in 2004 as higher-yielding securities were called
and were replaced with securities bearing the lower current market interest
rates. In 2003, interest rates were relatively stable compared to the continual
reduction of rates during 2002.  The tax-equivalent yield on average
interest-earning assets was 6.46% in 2003 compared to 7.17% in 2002 while the
average balance of interest-earning assets increased 20.2% to $296.2 million.



12





---





Net interest income is affected by changes in both average
interest rates and average volumes of interest-earning assets and
interest-bearing liabilities. The following table sets forth the amounts of the
total change in interest income that can be attributed to rate (change in rate
multiplied by old volume) and volume (change in volume multiplied by old rate)
for the periods indicated. The amount of change not solely due to rate or volume
changes was allocated between the change due to rate and the change due to
volume based on the relative size of the rate and volume changes.



|                                               | 2004
      Compared to 2003 |        | 2003
      Compared to 2002
|---------------------------------------------- | --------------------------- | ------ | ---------------------------
|                                               | Volume                      | Rate   | Net                        
|                                               |                             |        |                            
|Interest
      income                          |                             |        |                            
|Federal funds
    sold                         | $(2)                        | $9     | $7                         
|Securities:
       (1)                         |                             |        |                            
|U. S.
      Treasury and other U.S. government |                             |        |                            
|agencies
      and corporations                | 424                         | (39)   | 385                        
|States
      and political subdivisions (2)    | 286                         | (6)    | 280                        
|Other
      securities                         | 805                         | (179)  | 626                        
|Total
       securities                        | 1,515                       | (224)  | 1,291                      
|                                               |                             |        |                            
|Loans
 (2)                                     | 1,312                       | (550)  | 762                        
|Total
      interest income                    | $2,825                      | $(765) | $2,060                     
|                                               |                             |        |                            
|Interest
      expense:                        |                             |        |                            
|Deposits:                                      |                             |        |                            
|Interest
      bearing demand                  | $55                         | $(75)  | $(20)                      
|Savings                                        | 1                           | (146)  | (144)                      
|Other
      time                               | 537                         | (320)  | 217                        
|Total
      deposits                           | 594                         | (541)  | 53                         
|Federal funds
      purchased and securities   |                             |        |                            
|sold
      under repurchase agreements         | 22                          | 5      | 27                         
|FHLB advances                                  |                             |        |                            
|Overnight                                      | 3                           | 11     | 14                         
|Term                                           | 304                         | (16)   | 288                        
|Trust preferred
      obligation               | 312                         | -      | 312                        
|Total
      interest expense                   | $1,235                      | $(541) | $694                       
|Increase (decrease)
      in net               |                             |        |                            
|interest
      income                          | $1,590                      | $(224) | $1,366                     

____________________

(1)
 Includes securities available for sale and securities held to
maturity.

(2)
 Fully taxable equivalent basis.



13





---





Non-Interest Income.  Non-interest income decreased
$165,407, or 5.5%, in 2004 from 2003 for various reasons.  Deposit fees and
charges were down 7.1% as fees charged on overdrawn checking accounts declined.
 The increase in cash surrender value of bank-owned life insurance declined
3.9%, reflecting decreases in interest rates.  A downturn in mortgage loan
refinancing activity resulted in a decline of 32.6% in income and fees from the
sale of mortgage loans in the secondary market.  Commissions earned from
the sales of non-deposit investment products decreased 10.6% in spite of an
increase in overall activity as the 2003 results included one large
non-recurring commission.  These decreases were partially offset by a 16.9%
increase in bank card fees, a 7.9% increase in gains realized on the sale of
securities and a 12.6% increase in other income.



During 2003, increased mortgage loan refinancing activity resulted
in a 26.4% increase in secondary mortgage market fees for the year compared to
2002.  In addition, the efforts of the Companys investment personnel
resulted in an increase in investment and insurance commissions of $284,137, or
162.8% over 2002.  These increases along with an increase in gains on sales
of securities helped offset a small 9.7% decrease in deposit fees and charges as
total non-interest income increased $456,311 or 17.9% for the year.



Non-Interest Expenses.Total non-interest expenses
increased $840,746 or 9.2% for the year ended December 31, 2004.  Increases
in salaries, employee benefits, occupancy expense, equipment depreciation,
advertising, and office supplies were all impacted by the addition of the
Bellgrade branch in March 2004.  Employee benefit expense, up 11.3%, also
reflected a general increase in the cost of group insurance coverage.  The
25.7% increase in occupancy expense also reflected the costs of building repairs
necessitated by weather-related damage as well as routine maintenance such as
painting.  Taxes and license expense, which increased 39.7%, reflects the
additional state taxes paid on the capital of the Bank after the addition of the
$5 million capital contribution from the Company in December 2003.



For the year ended December 31, 2003, a modest
decrease of $13,875, or 8.6%, in legal and professional fees was the only
category of non-interest expenses not to show an increase.  However, the
overall increase in non-interest expenses for the year of $1,302,648, or 16.6%,
was not unexpected given the growth of the Company.  The largest dollar and
percentage increases occurred in the salary and benefits categories as the
Company added lending staff in the middle of 2002 as well as other staff
necessary to support the growth of the Company.  Also, benefit costs, such
as health care, continued to rise.  Salaries and benefits combined rose
$1,001,993 or 23.1%.  This also represented 76.9% of the total increase in
non-interest expenses for the year.



Income Taxes.  The Company reported income taxes of
$1,056,351 in 2004, compared to $1,436,923 in 2003 and $1,131,313 in 2002. These
amounts yielded effective tax rates of 19.5%, 26.9%, and 27.4%, respectively.
 The 2004 effective tax rate was positively impacted by increased
investments in various securities where a significant amount of the dividends
received were not subject to income taxes and the recognition of certain annual
tax credits resulting from the Companys investment in a Community Reinvestment
Act eligible housing project in December 2003.



Financial Condition



Loan Portfolio.  The Company is an active residential
mortgage and residential construction lender and generally extends commercial
loans to small and medium sized businesses within its primary service area. The
Companys commercial lending activity extends across its primary service area of
Powhatan, Cumberland, western Chesterfield, and western Henrico Counties.
Consistent with its focus on providing community-based financial services, the
Company generally does not attempt to diversify its loan portfolio
geographically by making significant amounts of loans to borrowers outside of
its primary service area.



14





---

The principal economic risk associated with each of the categories of loans in the Companys
portfolio is the creditworthiness of its borrowers. Within each
category, such risk is increased or decreased depending on prevailing economic
conditions. The risk associated with the real estate mortgage loans and
installment loans to individuals varies based upon employment levels, consumer
confidence, fluctuations in value of residential real estate and other
conditions that affect the ability of consumers to repay indebtedness. The risk
associated with commercial, financial and agricultural loans varies based upon
the strength and activity of the local economies of the Companys market areas.
The risk associated with real estate construction loans varies based upon the
supply of and demand for the type of real estate under construction. Many of the
Companys real estate construction loans are for pre-sold or contract homes.
Builders are limited as to the number and dollar amount of loans for speculative
home construction based on the financial strength of the borrower and the
prevailing market conditions.



Net loans outstanding increased $21.2 million from year-end
2003 to year-end 2004 compared to an increase of $16.7 million from
year-end 2002 to year-end 2003.  The loan to deposit ratio was 58.1% at
December 31, 2004, compared to 52.7% at December 31, 2003 and 59.5% at December
31, 2002.



The following table summarizes the Companys loan portfolio, net
of unearned income:



|                                | At December 31,       
|------------------------------- | ----------------------
|                                | 2004                  
|                                | (Dollars in Thousands)
|Commercial                      | $33,251               
|Real
      Estate:              |                       
|Mortgage                        | 77,153                
|Home
      equity               | 7,952                 
|Construction                    | 49,788                
|Total
      real estate         | 134,893               
|Bank
      cards                | 881                   
|Installment                     | 11,007                
|                                | $180,032              
|Less
      unearned income      | (100)                 
|                                | 179,932               
|Allowance
      for loan losses | (2,698)               
|Loans,
      net                | $177,234              



As shown in the above table, the total amount of real estate loans
outstanding increased by $17.4 million in 2004 and by $15.1 million in
2003. During 2004, the amount of installment loans increased by $715 thousand
from 2003, compared to a decrease of $1.3 million in 2003 from 2002.
Commercial, financial and agricultural production loans increased by
$3.4 million in 2004 compared to an increase of $3.1 million in
2003.



At December 31, 2004, no concentrations of loans exceeding 10.0%
of total loans existed which were not disclosed as a separate category of
loans.



15





---





The following table shows the contractual maturity distribution of
loan balances outstanding as of December 31, 2004. Also provided are the amounts
due classified according to the sensitivity to changes in interest rates.



|                        |        | Maturing              
|----------------------- | ------ | ----------------------
|                        |        |                       
|                        |        | Within                
|                        |        | One Year              
|                        |        | (Dollars in Thousands)
|                        |        |                       
|Commercial              | $7,229 |                       
|Real
      Estate:      |        |                       
|Mortgage                |        | 376                   
|Home
      equity       | 107    |                       
|Construction            | 33,275 |                       
|Total
      real estate | 33,758 |                       
|Bank
      cards        |        | -                     
|Installment             |        | 3,243                 
|                        |        | $44,230               
|                        |        |                       







|                              |  |  | Maturing
|----------------------------- |  |  | --------
|                              |  |  | Within  
|                              |  |  | One Year
|Loans
      maturing with:    |  |  |         
|Fixed
      interest rates    |  |  | $1,410  
|Variable
      interest rates |  |  | 42,820  
|                              |  |  |         



Asset Quality.  Non-performing loans include
non-accrual loans, loans 90 days or more past due and restructured loans.
Non-accrual loans are loans on which interest accruals have been discontinued.
Loans which reach non-accrual status may not be restored to accrual status until
all delinquent principal and interest has been paid, or the loan becomes both
well secured and in the process of collection. Restructured loans are loans with
respect to which a borrower has been granted a concession on the interest rate
or the original repayment terms because of financial difficulties.



Non-performing loans totaled $875,329 at December 31, 2004,
compared to $1,723,421 at December 31, 2003 and $1,229,609 at December 31, 2002.
 Non-performing loans decreased in 2004 primarily due to a decline in loans
past due 90 days or more from $1.7 million in 2003 to $604,783 in
2004.  The higher level of non-performing loans in both 2003 and 2002 is
reflective of an increase in loans 90 days past due and still accruing interest.
 There were $270,546 in loans classified as non-accrual at
December 31, 2004 compared to none at December 31, 2003 and $258,281 at
December 31, 2002.  The majority of these loans are well secured by
real estate and no significant losses are anticipated regardless of the resolution.



16

---





Other non-performing assets consist of a Virginia Small Business
Financing Authority Industrial Development Revenue bond where the underlying business, in 2001,
defaulted on its interest payments.  The trustee, in accordance with the
terms of the indenture, subsequently foreclosed on the underlying real estate
collateral securing the bond and the property was listed for sale.  The
security was initially placed in non-accrual status, but is currently classified
as a component of other assets at a value approximating its anticipated
liquidation value.  The property is presently leased to a tenant who has a
multi-year lease-purchase option on the property.  The original principal
investment was $190,000 and has been written down to a value of $140,000.
 Rental payments from the lessee were received in 2004 totaling $15,480
that was applied to reduce the carrying value to its present balance of
$124,520.  Management anticipates future lease payments will be received
and applied t o further reduce the principal carrying value, accordingly, there
are no additional write-downs contemplated.



Management forecloses on delinquent real estate loans when all
other repayment possibilities have been exhausted. There was no real estate
acquired through foreclosure (OREO) at December 31, 2004 compared to
$97,000 at both December 31, 2003 and 2002.  Sales of the properties held
at December 31, 2003 resulted in net losses of approximately $1,380.  The
Bank has incurred current period expenses related to carrying OREO on its books
of $780 in 2004, $1,200 in 2003, and $2,400 in 2002. The Banks practice is to
value real estate acquired through foreclosure at the lower of (i) an
independent current appraisal or market analysis less anticipated costs of
disposal, or (ii) the existing loan balance.



Management does not believe that the level of non-performing loans
in 2004 reflects any systemic problem in the Companys loan portfolio.  At
December 31, 2004, there were $270,546 in non-accrual loans compared to none at
December 31, 2003 and $258,281 at December 31, 2002. Based on our present
knowledge of the status of individual and corporate creditors and the overall
economy, management does not anticipate a material increase in non-performing
assets, although it may move to foreclose on borrowers whose loans are placed on
a non-accrual status.



The following table summarizes non-performing assets:



|                                                                                                                                                                                 | At December 31,      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------
|                                                                                                                                                                                 | 2004                 
|                                                                                                                                                                                 | (Dollars in Thousand)
|Loans
      accounted for on a non-accrual basis                                                                                                                                 | $270                 
|Loans
      contractually past due 90 days or more as to interest or
      principal
      payments (not included in non-accrual loans above)                                    | 605                  
|Loans
      restructured and in compliance with modified terms (not
      included
      in non-accrual loans or loans contractually past due
      90
      days or more above) | -                    
|Total
      non-performing loans                                                                                                                                                 | $875                 
|Other
      real estate owned                                                                                                                                                    | -                    
|Other
      non-performing assets                                                                                                                                                | 125                  
|Total
      non-performing assets                                                                                                                                                | $1,000               



Loans 90 days or more past due are placed on non-accrual status
unless well secured and in the process of collection.



In 2004, $8,165 of interest income was reversed when loans were
placed on non-accrual status. In 2003 and 2002, $0 and $5,952 of interest income
was reversed under the same circumstances, respectively. Since the Company
operates in a rural to suburban area, it has generally been well acquainted with
its principal borrowers and has not had such a large number of problem credits
that management has not been able to stay well informed about, and in contact
with, troubled borrowers. Additionally, because the Company generally requires
collateral for loans, the Company has been able to

17

---

recover a sufficient amount of loans previously charged off so that the provision for loan losses each year usually exceeds net charge-offs.



The following table sets forth the amounts of contracted interest income and interest income reflected in income on loans accounted for on a non-accrual basis and loans restructured and in compliance with modified terms:



|                                                                                                                                                | For the Year Ended December 31,
|----------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------
|                                                                                                                                                | 2004                           
|                                                                                                                                                | (Dollars in Thousands)         
|Gross
      interest income that would have been recorded if the loans
      had
      been current and in accordance with their original terms | $12                            
|Interest
      income included in income on the loans                                                                                           | -                              



Management is not aware of any other loans at December 31, 2004,
which involve serious doubts as to the ability of such borrowers to comply with
the existing payment terms.



Management has analyzed the potential risk of loss within the
Companys loan portfolio, given the loan balances, quality trends, value of the
underlying collateral, and current local market economic and business conditions
and has recognized losses where appropriate. Loans, including non-performing
loans are monitored on an ongoing basis as part of the Companys periodic loan
review process. Management reviews the adequacy of its loan loss allowance at
the end of each month. Based primarily on the Companys loan risk classification
system, which classifies all loans, including problem credits as substandard,
doubtful, or loss, according to a scale of 1-8 with 8 being a loss, additional
provisions for losses may be made monthly. Management evaluates non-performing
loans relative to their collateral value and makes appropriate reductions in the
carrying value of those loans based on that review.  Furthermore, past
experiences had led management to conclude that as a general matter it is
prudent to operate with a high level of reserves. The ratio of the allowance for
loan losses to total loans was 1.50% at December 31, 2004, compared to 1.55% at
December 31, 2003 and 1.49% at December 31, 2002.  Management feels
that the growth of the allowance for loan losses, while not at the same rate as
the portfolio growth, is adequate to provide for future losses. At December 31,
2004, the ratio of the allowance for loan losses to non-performing loans was
308.3%, compared to 142.4% and 171.0% at December 31, 2003 and 2002,
respectively. Management evaluates non-performing loans relative to their
collateral value and makes appropriate reductions in the carrying value of those
loans based on that review.



18





---





The following table summarizes changes in the allowance for loan
losses:



|                                                                   |  |  |         |         | 2004                   | 2003    | 2002    | 2001    | 2000   
|------------------------------------------------------------------ |  |  | ------- | ------- | ---------------------- | ------- | ------- | ------- | -------
|                                                                   |  |  |         |         | (Dollars in Thousands)
|Balance
      at beginning of period                               |  |  | $2,454  | $2,102  | $1,839                 | $1,658  | $1,487 
|                                                                   |  |  |         |         |                        |         |         |         |        
|Charge-offs:                                                       |  |  |         |         |                        |         |         |        
|Commercial                                                         |  |  |         | 69      | 2                      | 131     | -       | 74     
|Real
      estate                                                  |  |  |         |         |                        |         |         |        
|Mortgage                                                           |  |  |         | 8       | -                      | -       | 28      | 54     
|Home
      equity                                                  |  |  |         | -       | 19                     | 3       | 18      | -      
|Construction                                                       |  |  |         | -       | -                      | -       | -       | -      
|Bank
      cards                                                   |  |  |         | 17      | 51                     | 24      | 27      | 22     
|Installment                                                        |  |  |         | 120     | 40                     | 51      | 157     | 143    
|Total                                                              |  |  |         |         | 214                    | 112     | 209     | 230     | 293    
|Recoveries
      on previous loan losses:                          |  |  |         |         |                        |        
|Commercial                                                         |  |  |         | -       | 3                      | -       | 48      | 6      
|Real
      estate                                                  |  |  |         |         |                        |         |         |        
|Mortgage                                                           |  |  |         | -       | -                      | -       | 24      | -      
|Home
      equity                                                  |  |  |         | -       | 5                      | -       | -       | -      
|Construction                                                       |  |  |         | -       | -                      | -       | -       | -      
|Bank
      cards                                                   |  |  |         | 6       | 5                      | 6       | 7       | 4      
|Installment                                                        |  |  |         | 37      | 41                     | 26      | 44      | 52     
|Total                                                              |  |  |         |         | 43                     | 54      | 32      | 123     | 62     
|Net
      charge-offs                                              |  |  |         | (171)   | (58)                   | (177)   | (107)   | (231)  
|Provision
      charged to operations                              |  |  | 415     | 410     | 440                    | 288     | 402    
|Balance
      at end of period                                     |  |  | $2,698  | $2,454  | $2,102                 | $1,839  | $1,658 
|Ratio
      of net loan losses to average net loans outstanding:  
|Net
      charge-offs                                              |  |  |         | $171    | $58                    | $177    | $107    | $231   
|Average
      net loans                                            |  |  |         | 168,660 | 147,352                | 141,576 | 132,934 | 131,587
|                                                                   |  |  |         |         | 0.10%                  | 0.04%   | 0.13%   | 0.08%   | 0.18%  
|Ratio
      of allowance for loan losses to total loans, net of   
|unearned
      income:                                             |  |  |         |         |                        |         |         |        
|Allowance
      for loan losses                                    |  |  | $2,698  | $2,454  | $2,102                 | $1,839  | $1,658 
|Total
      loans at period end                                    |  |  | 179,932 | 158,504 | 141,494                | 141,250 | 134,042
|                                                                   |  |  |         |         | 1.50%                  | 1.55%   | 1.49%   | 1.30%   | 1.24%  
|Ratio
      of allowance for loan losses  to non-performing loans:
|Allowance
      for loan losses                                    |  |  | $2,698  | $2,454  | $2,102                 | $1,839  | $1,658 
|Non-performing
      loans                                         |  |  | 875     | 1,732   | 1,229                  | 866     | 1,333  
|                                                                   |  |  |         |         | 308.34%                | 142.43% | 171.03% | 212.36% | 124.38%



For each period presented, the provision for loan losses charged
to operations is based on managements judgment after taking into consideration
all factors connected with the collectability of the existing portfolio.
Management evaluates the loan portfolio in light of local business and economic
conditions, changes in the nature and value of the portfolio, industry standards
and other relevant factors.

19





---





Assumptions and factors considered by management in determining
the amounts charged to operations include internally generated loan review
reports, previous loan loss experience with the borrower, the status of past due
interest and principal payments on the loan, the quality of financial
information supplied by the borrower and the general financial condition of the
borrower.  Despite managements best efforts, the reserve may be adjusted
in future periods if there are significant changes in the assumptions or factors
utilized when making valuations, or conditions differ materially from the
assumptions originally utilized.  Any such adjustments are made in the
reporting period when the relevant factor(s) become known and when applied as
part of the analysis indicate a change in the level of potential loss is
warranted.



The provision for loan losses totaled $414,500 for the year ended
December 31, 2004, $410,000 and $440,000 for the years ended December 31, 2003
and 2002, respectively. In the opinion of management, the provision charged to
operations has been sufficient to absorb the current years net loan losses
while continuing to provide for potential future loan losses in view of a
somewhat uncertain economy.



The following table shows the balance and percentage of the
Companys allowance for loan losses allocated to each category of loans:



|                               | At December 31,       
|------------------------------ | ----------------------
|                               | 2004                  
|                               |                       
|                               |                       
|                               | Reserve               
|                               | for Loan              
|                               | Losses                
|                               | (Dollars in Thousands)
|Commercial                     | $921                  
|Real
      estate-construction | 608                   
|Real
      estate-mortgage (1) | 1,028                 
|Installment
      (2)          | 141                   
|                               | $2,698                



20





---







|                               | At December 31,        |           
|------------------------------ | ---------------------- | ----------
|                               | 2001                   |           
|                               |                        |           
|                               |                        | Percentage
|                               | Reserve                | of Reserve
|                               | for Loan               | for Loan  
|                               | Losses                 | Losses    
|                               | (Dollars in Thousands) |           
|Commercial                     | $531                   | 29%       
|Real
      estate-construction | 242                    | 13%       
|Real
      estate-mortgage (1) | 830                    | 45%       
|Installment
      (2)          | 236                    | 13%       
|                               | $1,839                 | 100%      



____________________

(1)
 Includes home-equity loans.

(2)
 Includes bank cards.



The Company has allocated the allowance according to the amount
deemed to be reasonably necessary to provide for the possibility of losses being
incurred within each of the above categories of loans. The allocation of the
allowance as shown in the table above should not be interpreted as an indication
that loan losses in future years will occur in the same proportions or that the
allocation indicates future loss trends. Furthermore, the portion allocated to
each loan category is not the total amount available for future losses that
might occur within such categories since the total allowance is a general
allowance applicable to the entire portfolio.



Securities



The Companys investment securities portfolio serves several
purposes, primarily, liquidity, safety and yield. Certain of the securities are
pledged to secure public deposits and others are specifically identified as
collateral for repurchase agreements with customers. The remaining portion of
the portfolio is held for investment yield, availability for sale in the event
liquidity is needed and for general asset liability management purposes. During
2004, total securities decreased $7.9 million, or 4.5%, to $169.0 million,
or 44.6% of total assets, principally due to the $21.5 million, or 13.5%,
increase in loans. In prior years, the Company had consciously increased its
marketable securities holdings supported by deposit growth and borrowings, in
light of weak loan demand and growth, and the historically low interest rate
environment, to increase net interest income. During the prior year 2003, total
securities increased by 56.9% to $177.0 million, or 48.4% of total assets.



The securities portfolio consists of two components, securities
available for sale and securities held to maturity. Securities are classified as
held to maturity when management has the intent and the Company has the ability
at the time of purchase to hold the securities to maturity. Securities so
classified are carried at cost adjusted for amortization of premiums and
accretion of discounts. Securities to be held for indefinite periods of time are
classified as available for sale and accounted for at market value. Securities
available for sale include securities that may be sold in response to changes in
market interest rates, changes in the securitys prepayment risk, increases in
loan demand, general liquidity needs and other similar factors. The Companys
recent purchases of securities have generally been limited to securities of
investment grade credit quality with short to intermediate term maturities.



21





---



The following table summarizes the book value of the Companys securities held to maturity at the date indicated:



| |                                   | Book Value at December 31, |        
| | --------------------------------- | -------------------------- | -------
| |                                   | 2004                       | 2003   
| |                                   | (Dollars in Thousands)     |        
| |                                   |                            |        
| | States and political subdivisions | $8,820                     | $11,152



The following table summarizes the book value of the Companys securities available for sale at the dates indicated.



| |                                                  | Book Value at December 31, |         
| | ------------------------------------------------ | -------------------------- | --------
| |                                                  | 2004                       | 2003    
| |                                                  | (Dollars in Thousands)     |         
| | U.
      S. Treasuries                           | $
            -            | $  8,006
| | U.
      S. government agencies and corporations | 74,479                     | 70,732  
| | Bank
      eligible preferred and equities       | 20,546                     | 21,466  
| | Mortgage-backed
      securities                 | 8,335                      | 8,287   
| | Corporate
      and other debt                   | 34,658                     | 34,723  
| | States
      and political subdivisions          | 21,354                     | 20,453  
| |                                                  | $159,372                   | $163,667



The book value and average yield of the Companys securities,
including securities available for sale, at December 31, 2004 by contractual
maturity are reflected in the following table. Actual maturities, and the
resulting cashflows, can differ significantly from contractual maturities
because certain issuers may have the right to call or prepay debt obligations
with or without call or prepayment penalties. The table below categorizes
securities according to their contractual maturity, without regard for certain
issuers having unilateral optional call provisions prior to the bonds
contractual maturity, which they may or may not exercise depending on the
overall market level of interest rates at the call date.  Mortgage-backed
securities are also reported according to the contractual final maturity,
without regard for the pre-payment characteristics of the underlying mortgages.

22





---







|                                             |  | States and Political
Subdivisions(1) |                        | Mortgage-Backed
Securities |        | U. S. Treasury and
other U. S. Agencies
and Corporations
|-------------------------------------------- |  | ------------------------------------ | ---------------------- | -------------------------- | ------ | --------------------------------------------------------
|                                             |  | Amount                               | Weighted
Average
Yield |                            | Amount | Weighted
Average
Yield                                  
|                                             |  | (Dollars in thousands)              
|Due       in one year or less                |  | $200                                 | 5.50%                  |                            | $88    | 6.26%                                                   
|Due
      after one year through five years  |  | 4,299                                | 4.96%                  |                            | 11     | 8.08%                                                   
|Due
      after five years through ten years |  | 8,350                                | 5.28%                  |                            | 46     | 8.27%                                                   
|Due
      after ten years                    |  | 17,325                               | 4.83%                  |                            | 8,190  | 4.31%                                                   
|Total                                        |  | $30,174                              | 4.98%                  |                            | $8,335 | 4.36%                                                   



|                                             |  | Corporate
      Debt   |                                    | Totals
|-------------------------------------------- |  | ---------------------- | ---------------------------------- | ------
|                                             |  | Amount                 | Weighted
      Average
      Yield |       
|                                             |  | (Dollars in thousands)
|Due
      in one year or less                |  | $100                   | 7.40%                              |       
|Due
      after one year through five years  |  | 10,754                 | 7.22%                              |       
|Due
      after five years through ten years |  | 7,180                  | 7.44%                              |       
|Due
      after ten years                    |  | 16,624                 | 6.52%                              |       
|Total                                        |  | $34,658                | 6.94%                              |       

____________________

(1)
 Yield on tax-exempt obligations have not been computed on a tax-equivalent
basis.



As shown in the table above, approximately $388 thousand, or 0.3%,
of the total portfolio will mature in one year or less while $18 million, or
12.2%, will mature after one year but within five years. The fully taxable
equivalent average yield on the entire portfolio was 5.99% for 2004, compared to
6.12% for 2003 and 6.93% for 2002. The market value of the entire portfolio
exceeded the book value by approximately $1.2 million at December 31, 2004
compared to approximately $2.6 million and $2.5 million at December 31, 2003 and
December 31, 2002, respectively.



Deposits and Short-Term Borrowings



The Companys predominate source of funds is deposit accounts. The
Companys deposit base is comprised of demand deposits, savings and money market
accounts and other time deposits. The Companys deposits are provided by
individuals and businesses generally located within the principal markets
served.



As shown in the following table, average total deposits grew by
11.2% in 2004 and 21.74% in 2003. The average aggregate interest rate paid on
deposits was 1.99% in 2004, compared to 2.19% in 2003 and 3.07% in 2002. The
majority (52%) of the Companys deposits are higher yielding time deposits
because many of its customers are individuals who seek higher yields than those
offered on savings and demand accounts.



23





---





The following table is a summary of average deposits and average
rates paid:



|                              |                        |        | For the Year Ended December 31,
|----------------------------- | ---------------------- | ------ | -------------------------------
|                              |                        |        | 2004                           
|                              |                        |        | Average                        
|                              |                        |        | Balance                        
|                              | (Dollars in Thousands)
|Non-interest
      bearing    |                        |        |                                
|demand
      deposits         | $38,567                | $ -    | - %                            
|Interest
      bearing demand |                        |        |                                
|deposits                      |                        | 51,821 | 409                            
|Savings
      deposits        |                        | 51,328 | 641                            
|Time
      deposits           |                        |        | 159,057                        
|Total                         |                        |        | $300,773                       



The company does not solicit nor does it have any brokered
deposits. The following table is a summary of time deposits of $100,000 or more
by remaining maturities at December 31, 2004:



|Time Deposits > $100,000
|------------------------
|(Dollars in Thousands)  
|Three months or less    
|Three to six months     
|Six to twelve months    
|Over twelve months      
|                        



The
Company had no short-term borrowings with an average balance outstanding of more
than 30% of stockholders equity for the years ended December 31, 2004, 2003 and
2002.



Capital Resources



The assessment of capital adequacy depends on a number of factors
such as asset quality, liquidity, earnings performance and changing competitive
conditions and economic forces. The Company seeks to maintain a strong capital
base to support its growth and expansion activities, to provide stability to
current operations and to promote public confidence.



The Banks capital position continues to exceed regulatory
requirements. The primary indicators relied on by the Federal Reserve Board and
other bank regulators in measuring strength of capital position are the Tier 1
Capital, Total Capital, and Leverage ratios.  Tier 1 Capital consists of
common and qualifying preferred stockholders equity and minority interests in
common equity accounts of consolidated subsidiaries, less goodwill. Total
Capital consists of Tier 1 Capital, qualifying subordinated debt, some hybrid
capital instruments and other qualifying preferred stock and a limited amount of
the allowance for loan losses and pre-tax net unrealized holding gains on
certain equity securities. Risk-based capital ratios are calculated with
reference to risk-weighted assets, which consist of both on and off-balance
sheet risks. The Banks Tier 1 Capital ratio was 12.5% at December 31,
2004, compared to 12.8% at December 31, 2003 and 10.6% at December 31, 2002. The
Total Capital ratio was 13.6% at December 31, 2004, compared to 13.9% and 11.6%
at December 31, 2003 and 2002, respectively. These ratios are in excess of the
mandated minimum requirements of 4% and 8%, respectively. The Leverage ratio
consists of Tier 1 capital divided by quarterly average assets. At December 31,
2004, the Banks Leverage ratio was 8.7% compared to 8.3% at December 31, 2003
and 7.6% at December 31, 2002. Each of these exceeds the required minimum
leverage ratio of 3%.  The Company, in view of the significant

24





---





growth experienced over the past several years and the resulting
impact on various capital ratios, recognized the eventual need for additional
capital to support further expansion or acquisitions and used the proceeds from
the issuance of the $5 million capital trust preferred securities in December
2003 to increase the capital position of the Bank.



The following tables show risk based capital ratios and
stockholders equity to total assets for the Company and the Bank:



|                            |                                            | December 31,       |      
|--------------------------- | ------------------------------------------ | ------------------ | -----
|                            |                                            | Regulatory
Minimum | 2004 
|                            |                                            |                    |      
|Consolidated                |                                            |                    |      
|                            | Tier
      1 risk-based capital            | 4.0%               | 13.0%
|                            | Total
      risk-based capital             | 8.0%               | 14.1%
|                            | Leverage
      ratio                       | 3.0%               | 9.0% 
|                            | Stockholders
      equity to total assets | N/A                | 8.3% 
|                            |                                            |                    |      
|Central
      Virginia Bank |                                            |                    |      
|                            | Tier
      1 risk-based capital            | 4.0%               | 12.5%
|                            | Total
      risk-based capital             | 8.0%               | 13.6%
|                            | Leverage
      ratio                       | 3.0%               | 8.7% 



The capital management function is an ongoing process. Central to
this process is internal equity generation accomplished by earnings retention.
Total stockholders equity increased by $3.0 million in 2004 primarily due to
earnings retention, and by $3.8 million during 2003 primarily as the result of
earnings retention and improvement in accumulated other comprehensive income.
 The return on average equity was 14.8% in 2004, compared to 14.7% in 2003
and 13.5% in 2002. Total cash dividends were paid representing 29% of net income
for 2004, while dividends represented 27% of net income for 2003 and 31% for
2002. Book value per share was $13.87 at December 31, 2004, compared to $12.77
at December 31, 2003 and $11.33 at December 31, 2002.



The Companys principal source of cash income is dividend payments
from the Bank. Certain limitations exist under applicable law and regulation by
regulatory agencies regarding dividend payments to a parent by its subsidiaries.
As of December 31, 2004, the Bank had $9.6 million of retained earnings
available for distribution to the Company as dividends without prior regulatory
approval.



Liquidity and Interest Rate Sensitivity



Liquidity.  Liquidity is the ability to meet present
and future financial obligations through either the sale or maturity of existing
assets or the acquisition of additional funds through liability management.
Liquid assets include cash, interest-bearing deposits with banks, federal funds
sold, investments and loans maturing within one year. The Companys ability to
obtain deposits and purchase funds at favorable rates determines its liability
liquidity.  As a result of the Companys management of liquid assets and
its ability to generate liquidity through liability funding, management believes
that the Company maintains overall liquidity sufficient to satisfy its
depositors requirements and meet its customers credit needs.



Additional sources of liquidity available to the Company include,
but are not limited to, loan repayments, the ability to obtain deposits through
the adjustment of interest rates, borrowing from the Federal Home Loan Bank,
purchasing of federal funds, and selling securities under repurchase agreements.
To further meet its liquidity needs, the company also has access to the Federal
Reserve System. In the past, growth in deposits and proceeds from the maturity
of investment securities has been

25





---





sufficient to fund the net increase in loans. The Bank, over the
past three years, has experienced 63% growth in deposits.  During the same
period, notwithstanding the $5 million long-term Capital Trust Preferred issue
in December 2003, the Bank has increased its borrowings from $19.8 million at
the beginning of 2002 to $31.4 million at the end of 2004.  In view of the
historically low interest rate environment, coupled with the opportunity to
lengthen maturities, the Bank has been able to lock-in low rate cost of funds
for up to five years.  These funds have been deployed at favorable yields
in the investment portfolio, and more recently as funding for loan growth.



Interest Rate Sensitivity.  In conjunction with
maintaining a satisfactory level of liquidity, management must also control the
degree of interest rate risk assumed on the balance sheet. Managing this risk
involves regular monitoring of the interest sensitive assets relative to
interest sensitive liabilities over specific time intervals.



At December 31, 2004, the Company had a negative 12-month gap
position. Since the largest amount of interest sensitive assets and liabilities
reprice within 12 months, the Company monitors this area closely. The Company
does not emphasize interest sensitivity analysis beyond this time frame because
it believes various unpredictable factors could result in erroneous
interpretations. Early withdrawal of deposits, prepayments of loans and loan
delinquencies are some of the factors that could have such an effect. In
addition, changes in rates on interest sensitive assets and liabilities may not
be equal, which could result in a change in net interest margin. While the
Company does not match each of its interest sensitive assets against specific
interest sensitive liabilities, it does seek to enhance the net interest margin
while minimizing exposure to interest rate fluctuations.



Effects of Inflation



Inflation significantly affects industries having high proportions
 of fixed assets or high levels of inventories. Although the Company is not
significantly affected in these areas, inflation does have an impact on the
growth of assets. As assets grow rapidly, it becomes necessary to increase
equity capital at proportionate levels to maintain the appropriate equity to
asset ratios. Traditionally, the Companys earnings and high capital retention
levels have enabled the Company to meet these needs.



The Companys reported earnings results have been affected by
 inflation, but isolating the effect is difficult. The different types of income
and expense are affected in various ways. Interest rates are affected by
inflation, but the timing and magnitude of the changes may not coincide with
changes in the consumer price index. Management actively monitors interest rate
sensitivity, as illustrated by the Gap Analysis, in order to minimize the
effects of inflationary trends on interest rates. Other areas of non-interest
expenses may be more directly affected by inflation.



The following table summarizes the Companys interest earning
assets and interest bearing liabilities with respect to the earlier of their
contractual repayment date or nearest repricing date at December 31, 2004:



|                              |                        |  |         |  |          |  | Over         |  |         
|----------------------------- | ---------------------- |  | ------- |  | -------- |  | ------------ |  | --------
|                              | Within                 |  | 4-12    |  | 1-5      |  | 5 Years or   |  |         
|                              | 3 Months               |  | Months  |  | Years    |  | Nonsensitive |  | Total   
|                              | (Dollars in thousands)
|EARNING ASSETS:               |                        |  |         |  |          |  |              |  |         
|Securities available for sale | $38,445                |  | $15,234 |  | $57,494  |  | $49,046      |  | $160,219
|Securities held to maturity   | 630                    |  | 204     |  | 5,958    |  | 2,018        |  | 8,820   
|Loans(1)                      | 85,413                 |  | 6,801   |  | 56,831   |  | 30,887       |  | 179,932 
|Total interest-earning assets | $124,488               |  | $22,239 |  | $120,293 |  | $81,951      |  | $348,971

26





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|FUNDING SOURCES                              |            |  |           |  |         |  |         |  |         
|-------------------------------------------- | ---------- |  | --------- |  | ------- |  | ------- |  | --------
|Deposits:                                    |            |  |           |  |         |  |         |  |         
|Interest
      bearing demand                | $
       - |  | $5,464    |  | $5,464  |  | $43,707 |  | $54,635 
|Savings                                      | -          |  | 42,553    |  | 5,319   |  | 5,319   |  | 53,191  
|Time
      deposits, $100,000 and over       | 4,627      |  | 17,428    |  | 17,149  |  | -       |  | 39,204  
|Other
      time deposits                    | 16,665     |  | 54,993    |  | 50,213  |  | -       |  | 121,871 
|Federal
      funds purchased and securities |            |  |           |  |         |  |         |  |         
|sold
      under repurchase agreements       | 997        |  | -         |  | -       |  | -       |  | 997     
|FHLB
      advances                          |            |  |           |  |         |  |         |  |         
|Term                                         | 15,000     |  | 1,000     |  | 10,000  |  | -       |  | 26,000  
|Overnight                                    | 4,500      |  | -         |  | -       |  | -       |  | 4,500   
|Trust
      preferred securities             | -          |  | -         |  | 5,000   |  | -       |  | 5,000   
|Total
      interest-bearing                 |            |  |           |  |         |  |         |  |         
|liabilities                                  | $41,789    |  | $121,438  |  | $93,145 |  | $49,026 |  | $305,398
|                                             |            |  |           |  |         |  |         |  |         
|Period gap                                   | $82,699    |  | $(99,199) |  | $27,148 |  | $32,925 |  | $43,573 
|Cumulative gap                               | $82,699    |  | $(16,500) |  | $10,648 |  | $43,573 |  |         
|Ratio of cumulative
      gap to total       |            |  |           |  |         |  |         |  |         
|earning
      assets                         | 23.70%     |  | -4.73%    |  | 3.05%   |  | 12.49%  |  |         

_____________

(1) Of the
amount of loans due after 12 months, $60.0 million had floating or
adjustable rates of interest and $27.7 million had fixed rates of
interest.



Off-Balance Sheet Arrangements



The Company enters into certain off-balance sheet arrangements in
the normal course of business to meet the financing needs of its customers.
 These off-balance sheet arrangements include commitments to extend credit
and standby letters of credit which would impact the Companys liquidity and
capital resources to the extent customers accept and or use these commitments.
 These instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheet.
 See Note 13 to the Consolidated Financial Statements for further
discussion of the nature, business purpose and elements of risk involved with
these off-balance sheet arrangements.  In addition to these off-balance
sheet arrangements, the Company has entered into an interest rate swap contract
in connection with its capital trust preferred securities.  The Company has
no other off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on the Companys financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures, or capital resources, that is material to investors.
 For further information see Notes 8, 9 and 13 to the Consolidated
Financial Statements.

27

---





Contractual Obligations



The following table presents the Companys contractual obligations
at December 31, 2004 and the scheduled payment amounts due at various intervals over the next five years and beyond.



|                                 | Payment due by period 
|-------------------------------- | ----------------------
|                                 | Total                 
|                                 | (Dollars in Thousands)
|Long-term
      debt obligations | $5,000                
|Other
      obligations          | 1,813                 
|Total                            | $6,813                



Forward-Looking Statements



Certain information contained in this discussion and elsewhere in
this filing may include forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  These forward-looking
statements are generally identified by phrases such as the Company expects,
the Company believes or words of similar import.  Such forward-looking
statements involve known and unknown risks including, but not limited to,
changes in general economic and business conditions, interest rate fluctuations,
competition within and from outside the banking industry, new products and
services in the banking industry, risk inherent in making loans such as
repayment risks and fluctuating collateral values, problems with technology
utilized by the Company, changing trends in custom er profiles and changes in
laws and regulations applicable to the Company. Although the Company believes
that its expectations with respect to the forward-looking statements are based
upon reliable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results, performance or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements.



Critical Accounting Policies



The Companys financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America (GAAP). The financial information contained within our statements is,
to a significant extent, financial information that is based on measures of the
financial effects of transactions and events that have already occurred. A
variety of factors could affect the ultimate value that is obtained either when
earning income, recognizing an expense, recovering an asset or relieving a
liability. For example, we use historical loss factors as one factor in
determining the inherent loss that may be present in our loan portfolio. Actual
losses could differ substantially from the historical factors that we use. In
addition, GAAP itself may change from one previously acceptable method to
another method. Although the economics of our transactions would be the same,
the timing of events that would impact our transactions could change.  A
summary of the significant accounting policies of the Company is set forth in
Note 1 to the Companys consolidated financial statements.



ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



General



An important element of both earnings performance and liquidity is
the management of our interest-sensitive assets and our interest-sensitive
liabilities maturing or repricing within specific time intervals and the risks
involved with them. Market risk is the risk of loss arising from adverse changes
in the fair value of financial instruments due to changes in interest rates,
exchange rates and equity prices. Our market risk is composed primarily of
interest rate risk. The asset and liability management committee at the Bank is
responsible for reviewing the interest rate sensitivity position and
establishing policies to monitor and limit exposure to this risk. Our board of
directors reviews the guidelines established by the committee.  Interest
rate risk is monitored through the use of three complimentary modeling tools:
static gap analysis, earnings simulation modeling and economic value simulation
(net present value estimation). Each of these models measures changes in a
variety of interest rate scenarios. While each of the interest rate risk
measures has limitations, taken together they represent a reasonably
comprehensive view of the magnitude of our interest rate risk, the distribution
of risk along the yield curve, the level of risk through time, and the amount of
exposure to changes in certain interest rate relationships. Static gap, which
measures aggregate repricing values, is less utilized since it does not

28





---





effectively measure the earnings impact on us. Earnings simulation
and economic value models, however, which more effectively reflect the earnings
impact, are utilized by management on a regular basis.



Earnings Simulation Analysis



We use simulation analysis to measure the sensitivity of net
income to changes in interest rates. The model utilized calculates an earnings
estimate based on current and projected balances and rates. This method is
subject to the accuracy of the assumptions that underlie the process, but it
provides a more realistic analysis of the sensitivity of earnings to changes in
interest rates than other analysis such as the static gap analysis.



Assumptions used in the model, including loan and deposit growth
rates, are derived from seasonal trends and managements outlook, as are the
assumptions used to project the yields and rates for new loans and deposits. All
maturities, calls and prepayments in the securities portfolio are assumed to be
reinvested in like instruments. Mortgage loans and mortgage backed securities
prepayment assumptions are based on industry estimates of prepayment speeds for
portfolios with similar coupon ranges and seasoning. Different interest rate
scenarios and yield curves are used to measure the sensitivity of earnings to
changing interest rates. Interest rates on different asset and liability
accounts move differently when the prime rate changes and are accounted for in
the different rate scenarios.



The following table represents the interest rate sensitivity of
our net income on a 12-month horizon using different rate scenarios as of
December 31, 2004. There have been no material changes in quantitative and
qualitative disclosures about market risk since this information was developed
using December 31, 2004 data.



|Change in Yield Curve   |  | % Change inNet
      Income |  | $ Change inNet
      Income
|----------------------- |  | --------------------------- |  | ---------------------------
|                        |  | (Dollars in Thousands)     
|+200 basis points       |  | 9.2%                        |  | $430                       
|+100 basis points       |  | 5.1%                        |  | $239                       
|Base                    |  | 0.0%                        |  | $  -                       
|-100
      basis points |  | -6.9%                       |  | -$324                      
|-200
      basis points |  | -17.9%                      |  | -$840                      



Economic
Value Simulation



We use economic value simulation to calculate the estimated fair
value of assets and liabilities under different interest rate environments.
Economic values are calculated based on discounted cash flow analysis. The
economic value of equity is the economic value of all assets minus the economic
value of all liabilities. The change in economic value of equity over different
rate environments is an indication of the longer term repricing risk in the
balance sheet. The same assumptions are used in the economic value simulation as
in the earnings simulation.



The following chart reflects the change in net market value of
equity by using December 31, 2004 data, over different rate environments with a
one-year horizon.



29





---







|Change
      in Yield Curve |  | Change in Economic Value of Equity |  | $
      Change in Economic Value of Equity
|--------------------------- |  | ---------------------------------- |  | ------------------------------------------
|                            |  | (Dollars in Thousands)            
|+200
      basis points     |  | -22.5%                             |  | -$8,873                                   
|+100
      basis points     |  | -9.5%                              |  | -$3,729                                   
|Base                        |  | 0.0%                               |  | $   -                                     
|-100
      basis points     |  | 5.2%                               |  | $2,042                                    
|-200
      basis points     |  | 9.4%                               |  | $3,701                                    



Management
of the Interest Sensitivity Gap



The interest sensitivity gap is the difference between
interest-sensitive assets and interest-sensitive liabilities maturing or
repricing within a specific time interval. The gap can be managed by repricing
assets or liabilities, by selling investments, by replacing an asset or
liability prior to maturity, or by adjusting the interest rate during the life
of an asset or liability. Matching the amounts of assets and liabilities
repricing in the same time interval helps to hedge the risk and minimize the
impact on net income due to changes in market interest rates. We evaluate
interest rate risk and then formulate guidelines regarding asset generation and
pricing, funding sources and pricing, and off-balance sheet commitments in order
to decrease sensitivity risk. These guidelines are based upon managements
outlook regarding future interest rate movements, the state of the regional and
nat ional economy, and other financial and business risk factors.



Our asset and liability committee reviews deposit pricing, changes
in borrowed money, investment and trading activity, loan sale activities,
liquidity levels and the overall interest sensitivity. The actions of the
committee are reported to the board of directors regularly. The periodic
monitoring of interest rate risk, investment and trading activity, along with
any other significant transactions are managed by the chief executive officer of
the Bank with input from other committee members.



ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



The following consolidated financial statements and
independent auditors report thereon are filed as a part of this report
following Item 15:



Independent Auditors Report

Consolidated Balance Sheets as of December 31, 2004 and 2003

Consolidated Statements of Income for the Years Ended December 31,
2004, 2003 and 2002

Consolidated Statements of Stockholders Equity for the Years
Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows for the Years Ended December
31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements



ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE



None.



ITEM
9A.

CONTROLS
AND PROCEDURES



As of the end of the period covered by this report, the Company
evaluated the effectiveness of the design and operations of its disclosure
controls and procedures that are designed to insure that the  Company
records, processes, summarizes and reports in a timely and effective manner the
information

30





---





required to be disclosed in reports filed with or submitted to the
Securities and Exchange Commission.  In designing and evaluating the
disclosure controls and procedures, management recognizes any controls and
procedures, no matter how well designed and operated, can provide on reasonable
assurance of achieving the desired control objectives, and management believes
it has applied prudent judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

The Company carried out its evaluation under the supervision
and with the participation of the Companys Chief Executive Officer and Chief
Financial Officer.  Based upon this evaluation, they concluded that, as of
the date of this evaluation, the Companys disclosure controls are effective and
adequate to ensure the clarity and material completeness of the Companys
disclosure in its periodic reports filed with or submitted to the Securities and
Exchange Commission.  Since the date of this evaluation, there have been no
significant changes in the Companys internal controls or in other factors that
could significantly affect those controls.





ITEM 9B.

OTHER INFORMATION



None.





PART III



ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Information set forth under the heading ELECTION OF DIRECTORS; Committees; Code of Ethics; and Section 16(a) Beneficial Ownership Reporting Compliance of the definitive 2005 Proxy Statement of the registrant
furnished to shareholders in connection with its Annual Meeting to be held on
April 26, 2005  (the 2005 Proxy Statement) is hereby incorporated by reference.



ITEM 11.

EXECUTIVE COMPENSATION



Information set forth under the heading REMUNERATION (except for the information set forth under the heading Compensation Committee Report on Executive Compensation) of the 2005
Proxy Statement is hereby incorporated by reference.



ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS



Information set forth under the heading SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS and Equity Compensation Plan Information of the 2005 Proxy Statement are hereby incorporated by reference.



ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Information set forth under the heading Certain Transactions of
the 2005 Proxy Statement is hereby incorporated by reference.



ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES



Information set forth under the heading Fees of Independent Public Accountants and Pre-Approval Services of the 2005 Proxy Statement is hereby incorporated by reference.



31





---





PART IV

ITEM
15.

EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES



(a)(1)

The
response to this portion of Item 15 is included in Item 8 above.



(a)(2)

The
response to this portion of Item 15 is included in Item 8 above.



(a)(3)

Exhibits



The following documents are filed herewith or incorporated herein
by reference as Exhibits:



3.1

Articles of Incorporation, including amendments thereto
(incorporated herein by reference to Exhibit 2 to the Registrants Form 8-A
filed with the SEC on May 2, 1994).

3.2

Bylaws (incorporated herein by reference to Exhibit 3 to the
Registrants Form 8-A filed with the SEC on May 2, 1994).

4.1

Specimen of Registrants Common Stock Certificate (incorporated
herein by reference to Exhibit 1 to the Registrants Form 8-A filed with
the SEC on May 2, 1994).

21.1

Subsidiaries of the Registrant (filed herewith).

23.1

Consent of Mitchell, Wiggins & Company, LLP (filed
herewith).

31.1

Rule 13a-14(a) Certification of Chief Executive Officer (filed
herewith).

31.2

Rule 13a-14(a) Certification of Chief Financial Officer (filed
herewith).

32.1

Statement of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 (filed herewith).



(b)

See Item 15(a)(3) above.



(c)

See Item 15(a)(2) above.







32





---

























CENTRAL VIRGINIA BANKSHARES, INC.



CONSOLIDATED FINANCIAL REPORT



DECEMBER 31, 2004





---











INDEPENDENT AUDITORS' REPORT





To
the Board of Directors and Stockholders

Central
Virginia Bankshares, Inc.

Powhatan,
Virginia



We have audited the consolidated balance sheets of Central
Virginia Bankshares, Inc., and subsidiary as of December 31, 2004 and 2003, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2004. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.



We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Central Virginia Bankshares, Inc., and subsidiary as of December 31, 2004 and
2003, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2004, in conformity with accounting
principles generally accepted in the United States of America.









/s/ Mitchell, Wiggins & Company LLP



Richmond, Virginia

February 2, 2005



















F-1





---

|CENTRAL
      VIRGINIA BANKSHARES, INC.               |                                             |                        |            
|----------------------------------------------------- | ------------------------------------------- | ---------------------- | -----------
|                                                      |                                             |                        |            
|CONSOLIDATED
      BALANCE SHEETS                     |                                             |                        |            
|December
      31, 2004 and 2003                      |                                             |                        |            
|                                                      |                                             |                        |            
|ASSETS                                                | 2004                                        | 2003                   |            
|Cash
      and due from banks                         | $9,663,181                                  | $8,029,151             |            
|                                                      |                                             |                        |            
|Federal
      funds sold                              | -                                           | 5,000,000              |            
|                                                      |                                             |                        |            
|                                                      |                                             |                        |            
|                                                      |                                             |                        |            
|Securities
      available for sale (Note 2)          | 160,219,203                                 | 165,832,951            |            
|                                                      |                                             |                        |            
|Securities held to maturity (approximate market value |                                             |                        |            
|                                                      | 2004 $9,134,149; 2003 $11,635,661) (Note 2) | 8,820,035              | 11,152,337 
|                                                      |                                             |                        |            
|                                                      |                                             |                        |            
|Mortgage loans held for sale                          | 1,264,175                                   | 762,400                |            
|                                                      |                                             |                        |            
|Loans (Notes 3, 13, and 14)                           |                                             |                        |            
|                                                      | Commercial                                  | 33,250,643             | 29,807,926 
|                                                      | Real estate:                                |                        |            
|                                                      |                                             | Mortgage               | 77,152,832 
|                                                      |                                             | Home equity            | 7,952,365  
|                                                      |                                             | Construction           | 49,787,759 
|                                                      | Bank
      cards                            | 880,815                | 891,207    
|                                                      | Installment                                 | 11,007,904             | 10,292,040 
|                                                      |                                             | Less unearned discount | (100,141)  
|                                                      |                                             |                        |            
|                                                      | Allowance for loan losses                   | (2,698,622)            | (2,454,443)
|                                                      |                                             |                        |            
|                                                      |                                             |                        |            
|Bank premises and equipment, net (Note 4)             | 8,134,145                                   | 5,050,090              |            
|Accrued interest receivable                           | 2,297,411                                   | 2,443,082              |            
|Other assets                                          | 11,644,488                                  | 11,514,768             |            
|                                                      |                                             |                        |            
|                                                      |                                             |                        |            
|See Notes to Consolidated Financial Statements.       |                                             |                        |            



F-2





---







|                                              |                                                                   |                                               |                         |              |             
|--------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------------- | ----------------------- | ------------ | ------------
|LIABILITIES
      AND STOCKHOLDERS' EQUITY    | 2004                                                              | 2003                                         
|Liabilities                                   |                                                                   |                                              
|                                              | Deposits:                                                         |                                               |                        
|                                              |                                                                   | Demand
      deposits                         | $41,046,290             | $36,150,140 
|                                              |                                                                   | Interest
      bearing demand deposits, MMDA  |                         |             
|                                              |                                                                   |                                               | and
      NOW accounts  | 54,634,469   | 49,930,596  
|                                              |                                                                   | Savings
      deposits                        | 53,190,797              | 57,593,668  
|                                              |                                                                   | Time
      deposits:  (Note 6)                |                         |             
|                                              |                                                                   |                                               | $100,000
      and over | 39,204,176   | 39,102,855  
|                                              |                                                                   |                                               | Other                   | 121,871,237  | 117,943,255 
|                                              |                                                                   |                                               |                         |              |             
|                                              |                                                                   |                                               |                         | 309,946,969  | 300,720,514 
|                                              |                                                                   |                                               |                         |              |             
|                                              | Federal
      funds purchased and securities                      |                                               |                        
|                                              |                                                                   | sold
      under repurchase agreements        | 997,000                 | 4,214,000   
|                                              | FHLB
      borrowings (Note 7)                                    | 30,500,000                                    | 26,000,000             
|                                              | Long-term
      debt, capital trust preferred securities (Note 8) | 5,000,000                                     | 5,000,000              
|                                              | Accrued
      interest payable                                    | 416,469                                       | 404,909                
|                                              | Other
      liabilities                                           | 1,034,809                                     | 1,152,541              
|                                              |                                                                   |                                               |                         | 347,895,247  | 337,491,964 
|                                              |                                                                   |                                               |                         |              |             
|Commitments
      and Contingencies (Note 13) |                                                                   |                                              
|                                              |                                                                   |                                               |                         |              |             
|Stockholders'
      Equity                    |                                                                   |                                              
|                                              | Common
      stock, $1.25 par value;                              |                                               |                        
|                                              |                                                                   | 6,000,000
      shares authorized; 2,261,716  |                         |             
|                                              |                                                                   | and
      2,113,274 shares issued and out-    |                         |             
|                                              |                                                                   | standing
      in 2004 and 2003, respectively | 2,827,145               | 2,641,593   
|                                              | Surplus                                                           | 10,417,162                                    | 6,886,930              
|                                              | Retained
      earnings                                           | 17,558,418                                    | 17,393,695             
|                                              | Accumulated
      other comprehensive                             |                                               |                        
|                                              |                                                                   | income                                        | 578,221                 | 1,420,520   
|                                              |                                                                   |                                               |                         | 31,380,946   | 28,342,738  
|                                              |                                                                   |                                               |                         |              |             
|                                              |                                                                   |                                               |                         | $379,276,193 | $365,834,702
|                                              |                                                                   |                                               |                         |              |             
|                                              |                                                                   |                                               |                         |              |             



F-3





---



|CENTRAL VIRGINIA BANKSHARES, INC.             |                                                    |                                            |                                 
|--------------------------------------------- | -------------------------------------------------- | ------------------------------------------ | --------------------------------
|                                              |                                                    |                                            |                                 
|CONSOLIDATED STATEMENTS OF INCOME             |                                                    |                                            |                                 
|Years Ended December 31, 2004, 2003, and 2002 |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|Interest income:                              |                                                    |                                            |                                 
|                                              | Interest and fees on loans                         | $11,122,815                                | $10,360,271                     
|                                              |                                                    |                                            |                                 
|                                              | Interest on securities and federal funds sold:     |                                            |                                 
|                                              |                                                    | U. S. government agencies and corporations | 3,918,091                       
|                                              |                                                    | U. S. Treasury securities                  | 37,286                          
|                                              |                                                    | States and political subdivisions          | 1,576,759                       
|                                              |                                                    | Corporate and other                        | 3,624,233                       
|                                              |                                                    | Federal funds sold                         | 38,260                          
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|Interest expense:                             |                                                    |                                            |                                 
|                                              | Interest on deposits                               | 5,982,163                                  | 5,928,852                       
|                                              |                                                    |                                            |                                 
|                                              | Interest on borrowings:                            |                                            |                                 
|                                              |                                                    | Federal funds purchased and securities     |                                 
|                                              |                                                    |                                            | sold under repurchase agreements
|                                              |                                                    | FHLB borrowings                            | 996,369                         
|                                              |                                                    | Capital trust preferred securities         | 324,603                         
|                                              |                                                    | Note payable                               | -                               
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            | Net interest income             
|                                              |                                                    |                                            |                                 
|Provision for loan losses (Note 3)            | 414,500                                            | 410,000                                    | 440,000                         
|                                              |                                                    |                                            | Net interest income after       
|                                              |                                                    |                                            |                                 
|                                              |                                                    |                                            |                                 
|Noninterest income:                           |                                                    |                                            |                                 
|                                              | Deposit fees and charges                           | 1,083,151                                  | 1,166,198                       
|                                              | Bank card fees                                     | 302,519                                    | 258,754                         
|                                              | Increase in cash surrender value of life insurance | 264,454                                    | 275,297                         
|                                              | Secondary mortgage market loan fees                | 238,199                                    | 353,317                         
|                                              | Investment and insurance commissions               | 410,206                                    | 458,715                         





---



|                      | Realized gain on sales of securities |           |           |          
|--------------------- | ------------------------------------ | --------- | --------- | ---------
|                      | available for sale                   | 310,391   | 287,688   | 114,359  
|                      | Other                                |           | 229,464   | 203,822  
|                      | 2,838,384                            | 3,003,791 | 2,547,480
|Noninterest expenses: |                                      |           |          
|                      | Salaries and wages                   | 4,244,234 | 4,018,674 | 3,239,570
|                      | Pensions and other employee benefits | 1,460,283 | 1,311,799 | 1,088,910
|                      | Occupancy expense                    | 457,624   | 364,074   | 361,295  
|                      | Equipment depreciation               | 640,268   | 632,500   | 591,389  
|(Continued)          



F-4





---



|CENTRAL VIRGINIA BANKSHARES, INC.               |            |            |           
|----------------------------------------------- | ---------- | ---------- | ----------
|                                                |            |            |           
|CONSOLIDATED STATEMENTS OF INCOME (Continued)   |            |           
|Years Ended December 31, 2004, 2003, and 2002   |            |            |           
|                                                |            |            |           
|                                                |            |            |           
|Noninterest expenses (Continued):               |            |            |           
|Equipment repairs and maintenance               | 284,868    | 289,956    | 281,889   
|Advertising and public relations                | 232,657    | 170,533    | 159,529   
|Federal insurance premiums                      | 43,871     | 38,678     | 35,862    
|Office supplies, telephone, and postage         | 569,529    | 561,134    | 474,088   
|Taxes and licenses                              | 231,233    | 165,491    | 150,591   
|Legal and professional fees                     | 174,092    | 146,992    | 160,867   
|Other operating expenses                        | 1,636,546  | 1,434,628  | 1,287,821 
|                                                |            |            |           
|Income before income taxes                      | 5,420,675  | 5,350,688  | 4,136,477 
|                                                |            |            |           
|Income taxes (Note 10)                          | 1,056,351  | 1,436,923  | 1,131,313 
|                                                |            |            |           
|Net income                                      | $4,364,324 | $3,913,765 | $3,005,164
|                                                |            |            |           
|Basic earnings per share                        | $1.95      | $1.79      | $1.39     
|                                                |            |            |           
|Diluted earnings per share                      | $1.91      | $1.72      | $1.33     
|                                                |            |            |           
|                                                |            |            |           
|                                                |            |            |           
|See Notes to Consolidated Financial Statements. |            |            |           











F-5





---



|CENTRAL VIRGINIA BANKSHARES, INC.               |                                                   |                                                     |                                                        |                                                     |            
|----------------------------------------------- | ------------------------------------------------- | --------------------------------------------------- | ------------------------------------------------------ | --------------------------------------------------- | -----------
|                                                |                                                   |                                                     |                                                        |                                                     |            
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |                                                   |                                                     |                                                        |                                                    
|Years Ended December 31, 2004, 2003, and 2002   |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     | Common     
|                                                |                                                   |                                                     |                                                        |                                                     | Stock      
|Balance, January 1, 2002                        | $2,436,537                                        | $4,573,213                                          | $13,938,489                                            | $(120,715)                                          | $20,827,524
|                                                | Comprehensive income:                             |                                                     |                                                        |                                                     |            
|                                                |                                                   | Net income                                          | -                                                      | -                                                   | 3,005,164  
|                                                |                                                   | Other comprehensive income, net of tax:             |                                                        |                                                     |            
|                                                |                                                   |                                                     | Unrealized holding gains arising during the period,    |                                                     |            
|                                                |                                                   |                                                     |                                                        | net of deferred income taxes of $771,278            | -          
|                                                |                                                   |                                                     | Less reclassification adjustment for gains included in |                                                     |            
|                                                |                                                   |                                                     |                                                        | net income, net of deferred income taxes of $38,882 | -          
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     | Total comprehensive income                             |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                | Issuance of common stock:                         |                                                     |                                                        |                                                     |            
|                                                |                                                   | 97,732 shares pursuant to 5% stock dividend         | 122,165                                                | 1,346,747                                           | (1,468,912)
|                                                |                                                   | 12,236 shares pursuant to dividend                  |                                                        |                                                     |            
|                                                |                                                   |                                                     | reinvestment plan                                      | 15,295                                              | 162,411    
|                                                | Payment for 191 fractional shares of common stock | -                                                   | -                                                      | (2,875)                                             | -          
|                                                | Cash dividends declared, $.47 per share           | -                                                   | -                                                      | (930,017)                                           | -          
|Balance, December 31, 2002                      | 2,573,997                                         | 6,082,371                                           | 14,541,849                                             | 1,300,994                                           | 24,499,211 
|                                                | Comprehensive income:                             |                                                     |                                                        |                                                     |            
|                                                |                                                   | Net income                                          | -                                                      | -                                                   | 3,913,765  
|                                                |                                                   | Other comprehensive income, net of tax:             |                                                        |                                                     |            
|                                                |                                                   |                                                     | Unrealized holding gains arising during the period,    |                                                     |            
|                                                |                                                   |                                                     |                                                        | net of deferred income taxes of $159,388            | -          
|                                                |                                                   |                                                     | Less reclassification adjustment for gains included in |                                                     |            
|                                                |                                                   |                                                     |                                                        | net income, net of deferred income taxes of $97,814 | -          
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                |                                                   |                                                     | Total comprehensive income                             |                                                     |            
|                                                |                                                   |                                                     |                                                        |                                                     |            
|                                                | Issuance of common stock:                         |                                                     |                                                        |                                                     |            
|                                                |                                                   | 43,330 shares pursuant to exercise of stock options | 55,412                                                 | 515,394                                             | -          
|                                                |                                                   | Income tax benefit of deduction for tax purposes    |                                                        |                                                     |            
|                                                |                                                   |                                                     | attributable to exercise of stock options              | -                                                   | 105,312    
|                                                |                                                   | 9,747 shares pursuant to dividend                   |                                                        |                                                     |            
|                                                |                                                   |                                                     | reinvestment plan                                      | 12,184                                              | 183,853    





---



|                                                | Cash dividends declared, $.51 per share           | -                                                   | -                                                  | (1,061,919)                                          | -           | (1,061,919)
|----------------------------------------------- | ------------------------------------------------- | --------------------------------------------------- | -------------------------------------------------- | ---------------------------------------------------- | ----------- | -----------
|Balance, December 31, 2003                      | 2,641,593                                         | 6,886,930                                           | 17,393,695                                         | 1,420,520                                            | 28,342,738 
|                                                | Comprehensive income:                             |                                                     |                                                    |                                                      |             |            
|                                                |                                                   | Net income                                          | -                                                  | -                                                    | 4,364,324   | -          
|                                                |                                                   | Other comprehensive income, net of tax:             |                                                    |                                                      |             |            
|                                                |                                                   |                                                     | Unrealized holding losses on securities available  |                                                      |             |            
|                                                |                                                   |                                                     |                                                    | for sale arising during the period,                  |             |            
|                                                |                                                   |                                                     |                                                    | net of deferred income taxes of $346,257             | -           | -          
|                                                |                                                   |                                                     | Less reclassification adjustment for gains on      |                                                      |             |            
|                                                |                                                   |                                                     |                                                    | securities available for sale included in            |             |            
|                                                |                                                   |                                                     |                                                    | net income, net of deferred income taxes of $109,361 | -           | -          
|                                                |                                                   |                                                     | Unrealized holding gain on interest swap agreement |                                                      |             |            
|                                                |                                                   |                                                     |                                                    | arising during the period, net of deferred income    |             |            
|                                                |                                                   |                                                     |                                                    | taxes of $15,036                                     | -           | -          
|                                                |                                                   |                                                     | Total comprehensive income                         |                                                      |             |            
|                                                |                                                   |                                                     |                                                    |                                                      |             |            
|                                                | Issuance of common stock:                         |                                                     |                                                    |                                                      |             |            
|                                                |                                                   | 33,149 shares pursuant to exercise of stock options | 41,435                                             | 370,808                                              | -           | -          
|                                                |                                                   | Income tax benefit of deduction for tax purposes    |                                                    |                                                      |             |            
|                                                |                                                   |                                                     | attributable to exercise of stock options          | -                                                    | 165,376     | -          
|                                                |                                                   | 106,431 shares pursuant to a 5% stock dividend      | 133,039                                            | 2,769,334                                            | (2,902,373) | -          
|                                                |                                                   | 8,862 shares pursuant to dividend                   |                                                    |                                                      |             |            
|                                                |                                                   |                                                     | reinvestment plan                                  | 11,078                                               | 224,714     | -          
|                                                | Payment for 386 fractional shares of common stock | -                                                   | -                                                  | (10,540)                                             | -           | (10,540)   
|                                                | Cash dividends declared, $.58 per share           | -                                                   | -                                                  | (1,286,688)                                          | -           | (1,286,688)
|Balance, December 31, 2004                      | $2,827,145                                        | $10,417,162                                         | $17,558,418                                        | $578,221                                             | $31,380,946
|                                                |                                                   |                                                     |                                                    |                                                      |             |            
|See Notes to Consolidated Financial Statements. |                                                   |                                                     |                                                    |                                                      |            



F-6







---

CENTRAL VIRGINIA BANKSHARES, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2004, 2003, and 2002

|                                     | 2004                                                 | 2003                                              | 2002                                   
|------------------------------------ | ---------------------------------------------------- | ------------------------------------------------- | ---------------------------------------
|Cash Flows From Operating Activities |                                                      |                                                   |                                        
|                                     | Net income                                           | $4,364,324                                        | $3,913,765                             
|                                     | Adjustments to reconcile net income                  |                                                   |                                        
|                                     |                                                      | to net cash provided by operating activities:     |                                        
|                                     |                                                      | Depreciation                                      | 753,596                                
|                                     |                                                      | Amortization                                      | 37,177                                 
|                                     |                                                      | Deferred income taxes                             | (70,200)                               
|                                     |                                                      | Provision for loan losses                         | 414,500                                
|                                     |                                                      | Amortization and accretion on securities          | 223,748                                
|                                     |                                                      | Realized gain on sales of securities              |                                        
|                                     |                                                      |                                                   | available for sale                     
|                                     |                                                      | (Gain) loss on disposal of premises and equipment | 215                                    
|                                     |                                                      | Loss on sale of foreclosed real estate            | 1,380                                  
|                                     |                                                      | Increase in cash value, life insurance            | (265,934)                              
|                                     |                                                      | Change in operating assets and liabilities:       |                                        
|                                     |                                                      |                                                   | (Increase) decrease in assets:         
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   | Increase (decrease) in liabilities:    
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   |                                        
|                                     |                                                      |                                                   |                                        
|Cash Flows From Investing Activities |                                                      |                                                   |                                        
|                                     | Proceeds from calls and maturities of                |                                                   |                                        
|                                     |                                                      | securities held to maturity                       | 2,327,420                              
|                                     | Purchase of securities held to maturity              | -                                                 | (1,033,641)                            
|                                     | Proceeds from calls and maturities of                |                                                   |                                        
|                                     |                                                      | securities available for sale                     | 32,777,425                             
|                                     | Proceeds from sales of securities available for sale | 22,569,079                                        | 10,421,113                             
|                                     | Purchase of securities available for sale            | (50,960,198)                                      | (122,279,218)                          
|                                     | Net increase in loans made to customers              | (21,598,132)                                      | (17,067,949)                           
|                                     | Proceeds from sale of premises and equipment         | -                                                 | 22,255                                 
|                                     | Net purchases of premises and equipment              | (2,189,349)                                       | (768,783)                              
|                                     | Proceeds from sale of foreclosed real estate         | 95,620                                            | -                                      
|                                     | Acquisition of other assets                          | (1,210,020)                                       | (3,072,529)                            
|                                     |                                                      |                                                   | Net cash (used in) investing activities



(Continued)

F-7



---







|CENTRAL
      VIRGINIA BANKSHARES, INC.                 |                                                                    |                                                               |                                      
|------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------------- | -------------------------------------
|                                                        |                                                                    |                                                               |                                      
|CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Continued) |                                                                    |                                                              
|Years
      Ended December 31, 2004, 2003, and 2002     |                                                                    |                                                               |                                      
|                                                        |                                                                    |                                                               |                                      
|                                                        |                                                                    |                                                               |                                      
|Cash
      Flows From Financing Activities              |                                                                    |                                                               |                                      
|                                                        | Net
      increase in demand deposits, MMDA, NOW                   |                                                               |                                      
|                                                        |                                                                    | and
      savings accounts                                    | 5,197,152                            
|                                                        | Net
      increase in time deposits                                | 4,029,303                                                     | 34,824,607                           
|                                                        | Net
      increase (decrease) in federal funds                     |                                                               |                                      
|                                                        |                                                                    | purchased
      and securities sold                           |                                      
|                                                        |                                                                    | under
      repurchase agreements                             | (3,217,000)                          
|                                                        | Net
      proceeds on FHLB borrowings                              | 4,500,000                                                     | 5,000,000                            
|                                                        | Proceeds
      from issuance of capital trust preferred securities | -                                                             | 5,000,000                            
|                                                        | Repayment
      of note payable                                    | -                                                             | -                                    
|                                                        | Net
      proceeds from issuance                                   |                                                               |                                      
|                                                        |                                                                    | of
      common stock                                         | 648,035                              
|                                                        | Payment
      for purchase of fractional                           |                                                               |                                      
|                                                        |                                                                    | shares
      of common stock                                  | (10,540)                             
|                                                        | Dividends
      paid                                               | (1,286,688)                                                   | (1,061,919)                          
|                                                        |                                                                    |                                                               | Net
      cash provided by financing 
|                                                        |                                                                    |                                                               |                                      
|                                                        |                                                                    |                                                               |                                      
|                                                        |                                                                    |                                                               | Increase
      (decrease) in cash and
|                                                        |                                                                    |                                                               |                                      
|                                                        |                                                                    |                                                               |                                      
|Cash
      and cash equivalents, beginning              | 13,029,151                                                         | 16,846,664                                                    | 8,103,189                            
|                                                        |                                                                    |                                                               |                                      
|Cash
      and cash equivalents, ending                 | $9,663,181                                                         | $13,029,151                                                   | $16,846,664                          
|                                                        |                                                                    |                                                               |                                      
|Supplemental
      Disclosures of  Cash Flow            |                                                                    |                                                               |                                      
|                                                        | Information                                                        |                                                               |                                      
|                                                        |                                                                    | Interest
      paid                                           | $7,333,888                           
|                                                        |                                                                    | Income
      taxes paid                                       | 1,202,187                            
|                                                        |                                                                    |                                                               |                                      
|Supplemental
      Disclosure of Noncash Investing      |                                                                    |                                                               |                                      
|                                                        | and
      Financing Activities                                     |                                                               |                                      
|                                                        |                                                                    | Unrealized
      gain (loss) on securities available for sale | (1,322,493)                          
|                                                        |                                                                    | Unrealized
      gain on interest rate Swap Agreement         | 39,612                               

|See Notes to Consolidated Financial Statements. |  |  | 
|----------------------------------------------- |  |  | 



F-8



---



CENTRAL VIRGINIA BANKSHARES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1. Significant Accounting Policies



Principles of consolidation: The accompanying consolidated
financial statements include the accounts of Central Virginia Bankshares, Inc.,
and its subsidiary, Central Virginia Bank, including its subsidiary, CVB Title
Services, Inc. All significant intercompany transactions and balances have been
eliminated in consolidation.



The consolidated financial statements have been prepared in conformity with generally accepted accounting principles.



Nature of operations: Central Virginia Bankshares, Inc., is
a one bank holding company headquartered in Powhatan County, Virginia. The
Corporations subsidiary, Central Virginia Bank, provides a variety of financial
services to individuals and corporate customers through its eight branches
located in the Virginia counties of Powhatan, Chesterfield, Henrico, and
Cumberland. The Banks primary deposit products are checking accounts, savings
accounts, and certificates of deposit. Its primary lending products are
residential mortgage, construction, installment, and commercial business
loans.



Central Virginia Banks subsidiary, CVB Title Services, Inc., is a
corporation organized under the laws of the Commonwealth of Virginia. The
Corporations primary purpose is to own membership interests in two
insurance-related limited liability companies.



Use of estimates: The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.



Material estimates that are particularly susceptible to
significant change relate to the determination of the allowance for losses on
loans and the valuation of real estate acquired in connection with foreclosures
or in satisfaction of loans. In connection with the determination of the
allowances for losses on loans and foreclosed real estate, management obtains
independent appraisals for significant properties.



A majority of the Banks loan portfolio consists of single-family
residential loans in the Virginia counties of Powhatan, Chesterfield, Henrico,
and Cumberland. There is also a significant concentration of loans to builders
and developers in the region. Accordingly, the ultimate collectibility of a
substantial portion of the Banks loan portfolio and the recovery of a
substantial portion of the carrying amount of foreclosed real estate are
susceptible to changes in local market conditions.







F-9





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1. Significant Accounting Policies (Continued)



While management uses available information to recognize losses on
loans and foreclosed real estate, future additions to the allowances may be
necessary based on changes in local economic conditions. In addition, regulatory
agencies, as an integral part of their examination process, periodically review
the Banks allowances for losses on loans and foreclosed real estate. Such
agencies may require the Bank to recognize additions to the allowances based on
their judgments about information available to them at the time of their
examination. Because of these factors, it is reasonably possible that the
allowances for losses on loans and foreclosed real estate may change materially
in the near term.



Cash and cash equivalents: For purposes of reporting the
consolidated statements of cash flows, the Corporation includes cash on hand,
amounts due from banks, federal funds sold and all highly liquid debt
instruments purchased with a maturity of three months or less as cash and cash
equivalents on the accompanying consolidated balance sheets. Cash flows from
deposits and loans are reported net.



The Bank maintains amounts due from banks which, at times, may
exceed federally insured limits. The Bank has not experienced any losses in such
accounts.



The Bank is required to maintain average reserve and clearing
balances in cash or on deposit with the Federal Reserve Bank. The total of these
balances was approximately $3,346,000 and $2,997,000 at December 31, 2004 and
2003, respectively.



Securities: Securities are classified as held to maturity
when management has the intent and the Bank has the ability at the time of
purchase to hold them until maturity or on a long-term basis. These securities
are carried at cost adjusted for amortization of premium and accretion of
discount, computed by the interest method over their contractual lives. Gains
and losses on the sale of such securities are determined by the specific
identification method.



Securities to be held for indefinite periods of time and not
intended to be held to maturity or on a long-term basis are classified as
available for sale and accounted for at market value on an aggregate basis.
These include securities used as part of the Bank's asset/liability management
strategy and may be sold in response to changes in interest rates, prepayment
risk, the need or desire to increase capital, to satisfy regulatory requirements
and other similar factors. Unrealized gains or losses are reported as increases
or decreases in accumlated other comprehensive income, a component of stockholders' equity, net of the related deferred tax effect.
Realized gains and losses of securities available for sale are included in net
securities gains (losses) based on the specific identification method.



Trading securities, which are generally held for the short term in
anticipation of market gains, are carried at fair value. Realized and unrealized
gains and losses on trading account assets are included in interest income on
trading account securities. The Corporation held no trading securities during
the years ended December 31, 2004, 2003, and 2002.







F-10





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1. Significant Accounting Policies (Continued)



Declines in the fair value of individual securities classified as
either held to maturity or available for sale below their amortized cost that
are determined to be other than temporary result in write-downs of the
individual securities to their fair value with the resulting write-downs
included in current earnings as realized losses.



Mortgage loans held for sale: Mortgage loans originated and
held for sale in the secondary market are reported at cost determined on an aggregate basis. Substantially
all mortgage loans held for sale are pre-sold to the Banks mortgage correspondents. All sales are
made without recourse.



Loans: Loans are stated at the amount of unpaid principal, reduced by unearned discount and fees and an allowance for possible loan
losses.



Unearned interest on discounted loans is amortized to income over
the life of the loans, using the interest method. For all other loans, interest
is accrued daily on the outstanding balances.



Loan origination and commitment fees and certain direct loan
origination costs are being deferred and the net amount amortized as an
adjustment of the related loan's yield. The Bank is generally amortizing these
amounts over the average contractual life.



For impaired loans, accrual of interest is discontinued on a loan
when management believes, after considering collection efforts and other
factors, that the borrower's financial condition is such that collection of
interest is doubtful. Cash collections on impaired loans are credited to the
loan receivable balance, and no interest income is recognized on those loans
until the principal balance has been collected.



A loan is considered to be delinquent when payments have not been
made according to contractual terms, typically evidenced by nonpayment of a
monthly installment by the due date. Loans, including impaired loans, are
generally classified as nonaccrual if they are past due as to maturity or
payment of principal or interest for a period of more than 90 days, unless such
loans are well secured and in the process of collection. Loans that are on a
current payment status or past due less than 90 days may also be classified as
nonaccrual if repayment in full of principal and/or interest is in doubt.



All interest accrued in the current calendar year but not
collected for loans that are placed on nonaccrual status or charged off is
reversed against interest income. Uncollected interest accrued in prior years is
charged off to the allowance for loan losses. The interest on these loans is
accounted for on the cash basis until qualifying for return to accrual. Loans
are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably
assured. On charged-off loans, cash receipts in excess of the amount charged to
the allowance for loan losses are recognized as income on a cash basis.





F-11





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1. Significant Accounting Policies (Continued)



Allowance for loan losses: The allowance for loan losses is
established through a provision for loan losses charged to expense. Loans are
charged against the allowance for loan losses when management believes that
collectibility of the principal is unlikely. Subsequent recoveries, if any, are
credited to the allowance.



The allowance is an amount that management believes will be
adequate to absorb estimated losses relating to specifically identified loans,
as well as probable credit losses inherent in the balance of the loan portfolio,
based on an evaluation of the collectibility of existing loans and prior loss
experience. This evaluation also takes into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, credit concentrations, trends in historical loss experience, review of
specific problem loans, and current economic conditions.



The allowance consists of specific, general, and unallocated
components. The specific component relates to loans that are classified as
doubtful, substandard or special mention. The general component covers
non-classified loans and is based on historical loss experience adjusted for
qualitative factors. An unallocated component is maintained to cover
uncertainties that could affect managements estimate of probable losses. The
unallocated component of the allowance reflects the margin of imprecision
inherent in the underlying assumptions used in the methodologies for estimating
specific and general losses in the portfolio.



A loan is impaired when it is probable the creditor will be unable
to collect all contractual principal and interest payments due in accordance
with the terms of the loan agreement. Impaired loans are measured based on the
present value of payments expected to be received, using the historical
effective loan rate as the discount rate. Alternatively, measurement also may be
based on observable market prices or, for loans that are solely dependent on the
collateral for repayment, measurement may be based on the fair value of the
collateral. The Bank does not aggregate loans for risk classification. Loans
that are to be foreclosed are measured based on the fair value of the
collateral. If the recorded investment in the impaired loan exceeds the measure
of fair value, a valuation allowance is established as a component of the
allowance for loan losses. Changes in the allowance for loan losses relating to
impaired loans are charged or credited to the provision for loan losses.



Bank premises and equipment: Bank premises and equipment
are stated at cost less accumulated depreciation. Expenditures for betterments
and major renewals are capitalized and ordinary maintenance and repairs are
charged to operations as incurred.  Depreciation is not recognized on Branches or banking
facilities purchased or constructed until the facility is
occupied and open for business.  Depreciation is computed using the
straight-line method over the following estimated useful lives.



|                                 | Years 
|-------------------------------- | ------
|Buildings
      and improvements | 5 - 39
|Furniture
      and equipment    | 3 - 10









F-12





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1. Significant Accounting Policies (Continued)



Foreclosed real estate: Foreclosed real estate represents
properties acquired through foreclosure or other proceedings. Foreclosed real
estate is held for sale and is recorded at the lower of the recorded amount of
the loan or fair value of the properties less estimated costs of disposal. Any
write-down to fair value at the time of transfer to foreclosed real estate is
charged to the allowance for loan losses. Property is evaluated regularly to
ensure the recorded amount is supported by its current fair value and valuation
allowances to reduce the carrying amount to fair value less estimated costs to
dispose are recorded as necessary. At December 31, 2004 and 2003, foreclosed
real estate totaling $0 and $97,000, respectively, is included with other assets
on the accompanying consolidated balance sheets.



Advertising costs: Advertising costs are expensed as
incurred.



Intangible assets: Intangible assets, which for the Bank
are the cost of acquired customer accounts, are amortized on a straight-line
basis over the expected periods of benefit.



Income taxes: The provision for income taxes relates to
items of revenue and expenses recognized for financial accounting purposes
during each of the years. The actual current liability may be more or less than
the charge against earnings due to the effect of deferred income taxes.



Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.

































F-13





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 1. Significant Accounting Policies (Continued)



Earnings per share: The following data show the amounts
used in computing earnings per share and the effect on income and the weighted
average number of shares of dilutive potential common stock.



|                                              |                                                    |           |           |            | 2004       | 2003       | 2002
|--------------------------------------------- | -------------------------------------------------- | --------- | --------- | ---------- | ---------- | ---------- | ----
|Income
      available to common stockholders |                                                    |           |          
|                                              | used
      in basic EPS                            |           |           | $4,364,324 | $3,913,765 | $3,005,164
|                                              |                                                    |           |           |            |            |            |     
|Weighted
      average number of common       |                                                    |           |          
|                                              | shares
      used in basic EPS                     |           | 2,243,527 | 2,186,028  | 2,157,131 
|                                              |                                                    |           |           |            |            |            |     
|Effect
      of dilutive securities:          |                                                    |           |           |           
|                                              | Stock
      options                                |           |           | 46,522     | 83,891     | 101,329   
|                                              |                                                    |           |           |            |            |            |     
|Weighted
      number of common shares and    |                                                    |           |          
|                                              | dilutive
      potential stock used in diluted EPS | 2,290,049 | 2,269,919 | 2,258,460 



Derivative financial instruments: All derivatives are
recognized on the balance sheet at their fair value as an asset or liability. On
the date the derivative contract is entered into, the Corporation designates the
derivative as a hedge of a forecasted transaction or of the variability of cash
flows to be received or paid related to a recognized asset or liability "cash
flow" hedge. Changes in the fair value of a derivative that is highly effective
as, and that is designated and qualifies as, a cash-flow hedge are recorded in
other comprehensive income, until earnings are affected by the variability of
cash flows (e.g., when periodic settlements on a variable-rate asset or
liability are recorded in earnings).



At December 31, 2004 and 2003, the Corporations only derivative
financial instrument consisted of an interest-rate swap agreement used to
lock-in the interest cash outflows on certain floating-rate debt incurred in 2003.





























F-14





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 2. Securities



Carrying amounts and approximate market values of securities
available for sale are as follows:



|                                        |                        | December 31, 2004
|--------------------------------------- | ---------------------- | -----------------
|                                        |                        |                  
|                                        |                        | Amortized        
|                                        |                        | Cost             
|U.
      S. government agencies         |                        |                  
|                                        | and
      corporations | $74,479,154      
|Bank
      eligible preferred and       |                        |                  
|                                        | equities               | 20,545,680       
|Mortgage-backed
      securities        | 8,334,907              | 41,395           
|Corporate
      and other debt          | 34,657,978             | 2,285,417        
|States
      and political subdivisions | 21,354,535             | 313,854          
|                                        |                        | $159,372,254     
|                                        |                        |                  
|                                        |                        | December 31, 2003
|                                        |                        |                  
|                                        |                        | Amortized        
|                                        |                        | Cost             
|U.
      S. treasuries                  | $8,006,252             | $ -              
|U.
      S. government agencies         |                        |                  
|                                        | and
      corporations | 70,732,187       
|Bank
      eligible preferred and       |                        |                  
|                                        | equities               | 21,465,271       
|Mortgage-backed
      securities        | 8,287,179              | 74,031           
|Corporate
      and other debt          | 34,723,263             | 2,644,171        
|States
      and political subdivisions | 20,452,881             | 289,246          
|                                        |                        | $163,667,033     





















F-15





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 2. Securities (Continued)



The amortized cost and approximate market value of securities
available for sale at December 31, 2004, by contractual maturity, are shown
below. Maturities may differ from contractual maturities in mortgage-backed
securities because the mortgages underlying the securities may be called or
repaid without any penalties. Therefore, these securities are not included in
the maturity categories in the following maturity summary. Additionally, many of
the U. S. Government agency securities held have one-time, semiannual, quarterly or continuous call
provisions that allow the agency to redeem the debt substantially in advance of
the contractual maturity.



|                                       |              | Approximate 
|-------------------------------------- | ------------ | ------------
|                                       | Amortized    | Market      
|                                       | Cost         | Value       
|Due in one year or less                | $169,679     | $174,363    
|Due after one year through five years  | 15,312,951   | 16,181,791  
|Due after five years through ten years | 47,939,074   | 48,930,553  
|Due after ten years                    | 67,069,963   | 67,214,296  
|Bank eligible preferred and equities   | 20,545,680   | 19,430,795  
|Mortgage-backed securities             | 8,334,907    | 8,287,405   
|                                       | $159,372,254 | $160,219,203



Gross gains of $337,474 and $445,202 were realized on sales and
redemptions of securities available for sale in 2004 and 2003, respectively.
Gross losses of $27,083 and $157,514 were realized on the sale of securities
available for sale in 2004 and 2003, respectively.



Securities available for sale with unrealized losses at December
31, 2004, were as follows:



|                                  |                        | December 31, 2004      
|--------------------------------- | ---------------------- | -----------------------
|                                  |                        | Less than Twelve Months
|                                  |                        | Approximate            
|                                  |                        | Market                 
|                                  |                        | Value                  
|U.
      S. government agencies   |                        |                        
|                                  | and
      corporations | $21,681,260            
|Bank
      eligible preferred and |                        |                        
|                                  | equities               | 6,240,410              
|Mortgage-backed
      securities  | 5,273,399              | (62,613)               
|Corporate
      and other debt    | 7,674,737              | (56,629)               
|States
      and political        |                        |                        
|                                  | subdivisions           | 4,552,955              
|                                  |                        | $45,422,761            



F-16

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 2. Securities (Continued)



Market changes in interest rates and market changes in credit
spreads will result in temporary unrealized losses as a normal fluctuation in
the market price of securities. The majority of the gross unrealized losses,
$1,550,698 out of total unrealized losses of $2,454,599, have been in an
unrealized loss position for more than 12 months. These are temporary losses due
primarily to increases in interest rates on securities purchased in 2002 and
2003. The $1,550,698 in unrealized losses which have been in a loss position for
more than twelve months are primarily fixed rate bonds and bank eligible
preferred equities. The reason for the temporary loss is that the dividend rates on
these securities are lower than the current rates. The Corporation has determined that there were no other than
temporary impairments associated with the above securities at December 31,
2004.



Carrying amounts and approximate market values of securities being
held to maturity are as follows:



|                                        |             | December 31, 2004
|--------------------------------------- | ----------- | -----------------
|                                        |             |                  
|                                        |             | Amortized        
|                                        |             | Cost             
|States
      and political subdivisions | $8,820,035  | $322,299         
|                                        |             |                  
|                                        |             | December 31, 2003
|                                        |             |                  
|                                        |             | Amortized        
|                                        |             | Cost             
|States
      and political subdivisions | $11,152,337 | $483,324         



The amortized cost and approximate market value of securities
being held to maturity at December 31, 2004, by contractual maturity, are shown
below.



|                                             |            | Approximate
|-------------------------------------------- | ---------- | -----------
|                                             | Amortized  | Market     
|                                             | Cost       | Value      
|Due
      in one year or less                | $333,550   | $336,026   
|Due
      after one year through five years  | 2,506,426  | 2,610,642  
|Due
      after five years through ten years | 2,061,345  | 2,152,872  
|Due
      after ten years                    | 3,918,714  | 4,034,609  
|                                             | $8,820,035 | $9,134,149 



Securities with an amortized cost of $13,132,795 and $2,416,511
and a market value of $13,149,791 and $2,523,169 at December 31, 2004 and 2003,
respectively, were pledged as collateral on public deposits and for other
purposes as required or permitted by law.

F-17





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 3. Loans



Major classifications of loans are summarized as follows:



|                                |                   |              | December 31,
|------------------------------- | ----------------- | ------------ | ------------
|                                |                   |              | 2004        
|Commercial                      | $33,250,643       | $29,807,926 
|Real
      estate:              |                   |             
|                                | Mortgage          | 77,152,832   | 67,216,322  
|                                | Home
      equity | 7,952,365    | 5,227,258   
|                                | Construction      | 49,787,759   | 45,096,386  
|Bank
      cards                | 880,815           | 891,207     
|Installment                     | 11,007,904        | 10,292,040  
|                                |                   |              | 180,032,318 
|Less
      unearned discount    | (100,141)         | (26,773)    
|                                |                   |              | 179,932,177 
|Allowance
      for loan losses | (2,698,622)       | (2,454,443) 
|Loans,
      net                | $177,233,555      | $156,049,923



Changes in the allowance for loan losses were as follows:



|                         |                                       | Years Ended December 31,
|------------------------ | ------------------------------------- | ------------------------
|                         |                                       | 2004                    
|Balance,
      beginning | $2,454,443                            | $2,101,698              
|                         | Provision
      charged to operations | 414,500                 
|                         | Loans
      charged off               | (213,796)               
|                         | Recoveries                            | 43,475                  
|Balance,
      ending    | $2,698,622                            | $2,454,443              



At December 31, 2004, the Bank had loans amounting to $270,546 that were
specifically classified as impaired. The average balance of impaired loans
amounted to approximately $144,461 for the year ended December 31, 2004. The
allowance for loan losses related to impaired loans amounted to $40,302 at
December 31, 2004.



The following is a summary of cash receipts on these loans and how
they were applied in 2004:



|Cash
      receipts applied to reduce |                        
|------------------------------------- | -----------------------
|                                      | principal
      balance
|Cash
      receipts recognized as     |                        
|                                      | interest
      income  
|Total
      cash receipts             | $   
        16,154    

F-18





---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 3. Loans (Continued)



Nonaccruing loans (principally installment, commercial, and
mortgage loans) totaled $270,546, $0, and $258,281 at December 31, 2004, 2003,
and 2002, respectively, which had the effect of reducing net income $12,189
($.01 per common share), $0, and $22,263 ($.01 per common share) for the years
then ended, respectively. Loans past due ninety days or more and still accruing
interest amounted to $604,783, $1,723,421, and $971,328 at December 31, 2004,
2003, and 2002, respectively.



Note 4. Bank Premises and Equipment



Major classifications of bank premises and equipment and the total
accumulated depreciation are summarized as follows:



|                                 |            | December 31,
|-------------------------------- | ---------- | ------------
|                                 |            | 2004        
|Land                             | $1,362,039 | $900,270    
|Buildings
      and improvements | 4,168,996  | 3,669,191   
|Furniture and equipment          | 6,885,207  | 6,310,104   
|Branch in progress               | 2,294,084  | -           
|                                 |            | 14,710,326  
|Less accumulated depreciation    | 6,576,181  | 5,829,475   
|                                 |            | $8,134,145  



During the year ended December 31, 2004, the Bank began
construction of a new main office building in Powhatan, Virginia. Costs incurred
through December 31, 2004, totaled $2,294,084 and include land cost,
construction cost, and deposits for equipment and furnishings.



Note 5. Investment in Bank Owned Life Insurance



The Bank is owner and designated beneficiary on life insurance
policies in the face amount of approximately $15,975,810 maintained on certain
of its officers and directors. The earnings from these policies will be used to
offset increases in employee benefit costs. The cash surrender value of these
policies of $5,564,020 and $5,303,762 at December 31, 2004 and 2003,
respectively, is included in other assets on the accompanying consolidated
balance sheets.





















F-19





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 6. Maturities of Time Deposits



The scheduled maturities of time deposits at December 31, 2004,
are as follows:



|Year
      Ending |            
|----------------- | -----------
|December
      31 |            
|2005              | $93,770,528
|2006              | 20,954,904 
|2007              | 15,966,895 
|2008              | 19,101,276 
|2009              | 11,281,810 
|                  |            



































































F-20





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 7. FHLB Borrowings



The
borrowings from the Federal Home Loan Bank of Atlanta, Georgia, are secured by
qualifying first mortgage loans. The borrowings at December 31, 2004 and 2003,
consist of the following:



|                                                 |                                               |            | 2004        | 2003       
|------------------------------------------------ | --------------------------------------------- | ---------- | ----------- | -----------
|Interest
      payable quarterly at a fixed rate |                                               |           
|                                                 | of
      4.45%, principal due and payable     |            |            
|                                                 | on
      January 5, 2011, callable quarterly  |            |            
|                                                 | beginning
      January 7, 2002               | $5,000,000 | $5,000,000 
|Interest
      payable quarterly at a fixed rate |                                               |           
|                                                 | of
      4.03%, principal due and payable     |            |            
|                                                 | on
      March 8, 2011, callable quarterly    |            |            
|                                                 | beginning
      September 10, 2001            | 5,000,000  | 5,000,000  
|Interest
      payable quarterly at a fixed rate |                                               |           
|                                                 | of
      3.14%, principal due and payable     |            |            
|                                                 | on
      December 5, 2011, callable quarterly |            |            
|                                                 | beginning
      December 5, 2003              | 5,000,000  | 5,000,000  
|Interest
      payable quarterly at a fixed rate |                                               |           
|                                                 | of
      2.99%, principal due and payable     |            |            
|                                                 | on
      March 17, 2014, callable quarterly   |            |            
|                                                 | beginning
      March 17, 2009                | 5,000,000  | -          
|Interest
      payable quarterly at a fixed rate |                                               |           
|                                                 | of
      3.71%, principal due and payable     |            |            
|                                                 | on
      November 14, 2013, callable on       |            |            
|                                                 | November
      14, 2008                       | 5,000,000  | 5,000,000  
|Interest
      payable and adjusts quarterly     |                                               |           
|                                                 | to
      LIBOR, currently 1.26%, principal    |            |            
|                                                 | due
      and payable on December 6, 2004     | -          | 1,000,000  
|Interest
      payable and adjusts quarterly     |                                               |           
|                                                 | to
      LIBOR, currently 2.48%, principal    |            |            
|                                                 | due
      and payable on December 8, 2006     | 1,000,000  | -          
|Short-term
      borrowing, due and payable      |                                               |           
|                                                 | on
      January 22, 2004, interest adjusted  |            |            
|                                                 | daily,
      currently 1.15%                  | -          | 5,000,000  
|Short-term
      borrowing, due and payable      |                                               |           
|                                                 | on
      January 24, 2005, interest adjusted  |            |            
|                                                 | daily,
      currently 2.51%                  | 4,500,000  | -          
|                                                 |                                               |            | $30,500,000 | $26,000,000

F-21



---



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 8. Long-Term Debt, Capital Trust Preferred
Securities



Capital trust preferred securities represent preferred beneficial
interests in the assets of Central Virginia Bankshares, Inc. Statutory Trust I
(Trust). The Trust holds certain floating rate junior subordinated debentures
due December 17, 2033, issued by the Corporation on December 17, 2003.
Distributions on the Preferred Securities is payable quarterly at an annual rate
of three-month LIBOR plus 2.85% (5.4% at December 31, 2004). However, the Corporation has
the option to defer distributions for up to five years. Cash distributions on
the Preferred Securities are made to the extent interest on the debentures is
received by the Trust. In the event of certain changes or amendments to
regulatory requirements or federal tax rules, the Preferred Securities are
redeemable in whole. Otherwise, the Preferred Securities are generally
redeemable by the Corporation in whole or in part on or after December 17, 2008,
at 100% of the liquidation amount. The Trusts obligations under the Preferred
Securities are fully and unconditionally guaranteed by the Corporation. For
regulatory purposes, the Preferred Securities are considered a component of Tier
I capital.



Note 9. Interest Rate Swap Agreement



The Corporation has entered into an interest rate swap agreement
related to the issuance of the trust preferred securities. The swap is utilized
to manage interest rate exposure and is designated as a highly effective cash
flow hedge. The differential to be paid or received on all swap agreements is
accrued as interest rates change and is recognized over the life of the
agreement in interest expense. The swap agreement expires December 17, 2008, and
has an interest rate of 6.405%. The notional amount is $5,000,000. The effect of
these agreements is to make the Corporation less susceptible to changes in
interest rates by effectively converting certain variable rate debt to fixed
rate debt. As of December 31, 2004, the estimated fair value of the interest
rate swap agreement was $39,612.



Note 10. Income Tax Matters



The Corporation and Subsidiary file a consolidated federal income
tax return. The consolidated provision for income taxes for the years ended
December 31, 2004, 2003, and 2002, are as follows:



|                        |            | 2004       | 2003       | 2002      
|----------------------- | ---------- | ---------- | ---------- | ----------
|Currently
      payable | $1,126,551 | $1,445,357 | $1,161,386
|Deferred                | (70,200)   | (8,434)    | (30,073)  
|                        |            | $1,056,351 | $1,436,923 | $1,131,313

















F-22





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 10. Income Tax Matters (Continued)



A reconciliation of the expected income tax expense computed at
34% to the income tax expense included in the consolidated statements of income
is as follows:



|                                               |                                              | Years Ended  December 31,
|---------------------------------------------- | -------------------------------------------- | -------------------------
|                                               |                                              | 2004                     
|Computed
      "expected" tax expense          | $1,843,030                                   | $1,819,234               
|Tax-exempt
      interest                      | (325,969)                                    | (236,794)                
|Tax-exempt
      loan interest                 | -                                            | (222)                    
|Disallowance
      of interest expense         |                                              |                          
|                                               | deduction
      for the portion attributable |                          
|                                               | to
      carrying tax-exempt obligations     | 25,504                   
|Dividends
      received deduction             | (265,132)                                    | (167,530)                
|Increase
      in cash value of life insurance | (50,246)                                     | (52,307)                 
|Tax
      credits from limited partnership     |                                              |                          
|                                               | investment                                   | (159,355)                
|Other                                          | (11,481)                                     | 51,701                   
|                                               |                                              | $1,056,351               















































F-23





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 10. Income Tax Matters (Continued)



The deferred income tax provision consists of the following
items:



|                                                                 |                                                           | Years Ended December 31,
|---------------------------------------------------------------- | --------------------------------------------------------- | ------------------------
|                                                                 |                                                           | 2004                    
|Difference
      between loan loss provision charged             |                                                           |                         
|                                                                 | to
      operating expense and the bad debt               |                         
|                                                                 | deduction
      taken for income tax purposes             | $(62,140)               
|Difference
      between the loss from partnership               |                                                           |                         
|                                                                 | investment
      recognized for financial statements,     |                         
|                                                                 | and
      for income tax purposes                         | 19,054                  
|Interest
      income on nonaccrual loans recognized             |                                                           |                         
|                                                                 | for
      federal income tax purposes, but not            |                         
|                                                                 | recognized
      for financial statements until received  | (5,882)                 
|Increase
      (decrease) in value of foreclosed real estate and |                                                           |                         
|                                                                 | other
      assets recognized for financial statements,   |                         
|                                                                 | but
      not recognized for income tax purposes until    |                         
|                                                                 | realized                                                  | 5,100                   
|Deduction
      for uncollectible late charges recognized        |                                                           |                         
|                                                                 | for
      financial statements, but not recognized for    |                         
|                                                                 | income
      tax purposes until realized                  | (276)                   
|Difference
      between loan fees recognized for                |                                                           |                         
|                                                                 | financial
      statements, and for income tax purposes   | (65,126)                
|Deduction
      for accrued supplemental retirement expense      |                                                           |                         
|                                                                 | recognized
      for financial statements, but not        |                         
|                                                                 | recognized
      for income tax purposes until paid       | (57,036)                
|Deduction
      for accrued professional fees recognized         |                                                           |                         
|                                                                 | for
      financial statements, but not recognized for    |                         
|                                                                 | income
      tax purposes until paid                      | 4,890                   
|Increase
      in cash surrender value of Bank owned life        |                                                           |                         
|                                                                 | insurance
      recognized for financial statements, but  |                         
|                                                                 | not
      recognized for alternative minimum tax purposes |                         
|                                                                 | until
      realized                                      | 39,668                  
|Accretion
      of discount recognized for financial             |                                                           |                         
|                                                                 | statements,
      but not recognized for income           |                         
|                                                                 | tax
      purposes until realized                         | 17,033                  
|Difference
      between the depreciation methods                |                                                           |                         
|                                                                 | used
      for financial statements and for income        |                         
|                                                                 | tax purposes                                              | 34,515                  
|                                                                 |                                                           | $(70,200)               

F-24





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 10. Income Tax Matters (Continued)



The components of the net deferred tax asset (liability) included in other assets (liabilities) are as follows at December 31:



|                                         |                                                   |                          |            | 2004      | 2003     
|---------------------------------------- | ------------------------------------------------- | ------------------------ | ---------- | --------- | ---------
|Deferred tax assets:                     |                                                   |                          |           
|                                         | Allowance for loan losses                         |                          | $860,127   | $777,273 
|                                         | Less valuation allowance                          |                          | (215,032)  | (194,318)
|                                         |                                                   |                          |            | 645,095   | 582,955  
|                                         | Devaluation
      reserve on foreclosed property  |                          |            |          
|                                         |                                                   | and
      other assets   |            | 26,020    | 31,120   
|                                         | Net
      deferred loan fees                      |                          | 65,126     | -        
|                                         | Accrued
      professional fees                   |                          | 17,272     | 22,162   
|                                         | Accrued
      supplemental retirement expense     |                          | 151,311    | 94,275   
|                                         | Reserve
      for uncollectible late charges      |                          | 8,560      | 8,284    
|                                         | Interest
      income on nonaccrual loans         |                          | 5,882      | -        
|                                         |                                                   |                          |            | 919,266   | 738,796  
|                                         |                                                   |                          |            |           |          
|Deferred
      tax liabilities:          |                                                   |                          |           
|                                         | Property
      and equipment                      |                          | 271,300    | 236,785  
|                                         | Unrealized
      gain on securities               |                          |            |          
|                                         |                                                   | available
      for sale |            | 293,303   | 745,396  
|                                         | Unrealized
      gain on interest rate            |                          |            |          
|                                         |                                                   | swap
      agreement     |            | 15,036    | -        
|                                         | Cumulative
      increase in cash surrender value |                          | 127,125    | 87,457   
|                                         | Limited
      partnership investment              |                          | 19,054     | -        
|                                         | Securities                                        |                          | 50,631     | 33,598   
|                                         |                                                   |                          |            | 776,449   | 1,103,236
|                                         |                                                   |                          |            |           |          
|Net
      deferred tax asset (liability) |                                                   | $142,817                 | $(364,440)



Note 11. Profit-Sharing and Retirement and 401K Plan



Profit-Sharing and Retirement Plan: The Bank provides a
qualified defined contribution profit-sharing and retirement plan covering
substantially all active full-time and part-time employees of the Bank.
Contributions to this plan, administered through the Virginia Bankers
Association Benefits Corporation, are made annually to the credit of the
participants individual accounts, at the discretion of the Board of Directors.
The plan may be amended or terminated by the Board of Directors at any time.
Participants vest over a five-year period. Contributions for 2004 and 2003
represented 8.25 percent of each participants eligible salary.



F-25

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 11. Profit-Sharing and Retirement and 401K Plan
(Continued)



401K Plan: The Bank also provides a qualified 401K plan in
conjunction with the defined contribution plan discussed above. Employees are eligible to participate after six months of employment.  Eligible
employees may, subject to statutory limitations, contribute a portion of their
salary on a pre and post-tax basis. The Bank provides a matching contribution of
$1.00 for every $1.00 the participant contributes up to the first 3 percent of their
salary, and $.50 for every $1.00 of the next two percent of their salary.  Participants are 100 percent vested
in all contributions.



The
total contributions to both the above plans for the years ended December 31,
2004, 2003, and 2002, were $390,736, $351,036, and $264,802, respectively.



Note 12. Supplemental Executive Retirement Plan



During the year ended December 31, 2002, the Bank established a
Supplemental Executive Retirement Plan, (the SERP), a nonqualified, unfunded,
defined benefit plan for certain executive and senior officers of the Bank as
designated by the Board of Directors. The current participants covered by the
SERP include three executive officers as well as five other senior officers. The
costs associated with this plan, as well as several other general employee
benefit plans are partially offset by earnings attributable to the Banks
purchase of single premium Bank Owned Life Insurance (BOLI). The SERP provides
an annual benefit equal to 25 percent of the participants final compensation
payable monthly over a 15-year period, following normal retirement at age 65,
provided the participant has been employed by the Bank for a minimum of 8 years.
A further provision exists for early retiremen t beginning at age 60, subject to
the same 8-year service requirement, but with reduced benefits depending on the
number of years preceding age 65 the participant elects to retire. Should the
participants employment terminate due to disability or death, and he has
otherwise met the requirements necessary to receive a supplemental benefit under
the SERP, the benefit shall be paid to the participant or his spouse. No
benefits are payable should the participants employment terminate for any
reason other than retirement, disability, death, or a change in control.

































F-26





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 12. Supplemental Executive Retirement Plan
(Continued)



The following table sets forth the plan's funded status and
amounts recognized in the consolidated balance sheets at December 31, 2004 and
2003:



|                                                          |                            | 2004       | 2003    
|--------------------------------------------------------- | -------------------------- | ---------- | --------
|Projected
      benefit obligation:                       |                            |           
|                                                          | Beginning
      obligation | $277,278   | $129,569
|                                                          | Service
      cost         | 138,639    | 129,569 
|                                                          | Interest
      cost        | 29,114     | 18,140  
|                                                          | Ending
      obligation    | $445,031   | $277,278
|                                                          |                            |            |         
|Funded
      status of the plan                           | $(445,031)                 | $(277,278)
|                                                          |                            |            |         
|Net
      consolidated balance sheet liability            | $(445,031)                 | $(277,278)
|                                                          |                            |            |         
|Net
      pension cost includes the following components: |                            |           
|                                                          | Service
      cost         | $138,639   | $129,569
|                                                          | Interest
      cost        | 29,114     | 18,140  
|                                                          |                            | $167,753   | $147,709



Assumptions used in the determination of the supplemental
executive retirement plan information consist of the following:



|                                              |      | 2004 | 2003
|--------------------------------------------- | ---- | ---- | ----
|Discount
      rate                           | 7.0% | 7.0%
|Rate
      of increase in compensation levels | 5.0% | 5.0%



Note 13. Commitments and Contingencies



Financial instruments with off-balance-sheet risk: The Bank
is party to financial instruments with off-balance sheet risk in the normal
course of business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit and standby letters of credit.
These instruments involve, to varying degrees, elements of credit risk in excess
of the amount recognized in the consolidated balance sheets.













F-27





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 13. Commitments and Contingencies (Continued)



The Bank's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as they do for on-balance-sheet instruments. A summary
of the Bank's commitments at December 31, 2004 and 2003, is as follows:



|                                   | 2004        | 2003       
|---------------------------------- | ----------- | -----------
|Commitments
      to extend credit | $59,147,621 | $38,841,693
|Standby
      letters of credit    | 3,016,759   | 4,037,883  
|                                   | $62,164,380 | $42,879,576



Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the contract.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's credit-worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by
the Bank upon extension of credit, is based on management's credit evaluation of
the party. Collateral held varies, but may include accounts receivable, crops,
livestock, inventory, property and equipment, residential real estate, and
income-producing commercial properties.



Standby letters of credit are conditional commitments issued by
the Bank to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
Collateral held varies as specified above and is required in instances which the
Bank deems necessary.



Borrowing facilities: The Bank has entered into various
borrowing arrangements with other financial institutions for Fed Funds, and
other borrowings. The total amount of borrowing facilities available at December
31, 2004, was approximately $63,368,000.



Concentrations of credit risk: All of the Bank's loans,
commitments to extend credit, and standby letters of credit have been granted to
customers within the state and, more specifically, the area surrounding
Richmond, Virginia. The concentrations of credit by type of loan are set forth
in Note 3. Although the Bank has a diversified loan portfolio, a substantial
portion of its debtors' ability to honor their contracts is dependent upon the
agribusiness and construction sectors of the economy.















F-28





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 14. Related Party Transactions



The Corporation's subsidiary, Central Virginia Bank, has had, and
may be expected to have in the future, banking transactions in the ordinary
course of business with directors, principal officers, their immediate families,
and affiliated companies in which they are principal stockholders (commonly
referred to as related parties), all of which have been, in the opinion of
management, on the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with others.



Aggregate loan transactions with related parties were as
follows:



|                   | Years Ended December 31,
|------------------ | ------------------------
|                   | 2004                    
|Balance, beginning | $1,773,046              
|New
      loans    | 3,302,541               
|Repayments         | (1,301,483)             
|Balance, ending    | $3,774,104              



Note 15. Stock Dividend



On June 15, 2004, the Corporation issued 106,431 shares of common
stock pursuant to a 5% stock dividend for stockholders of record as of May 21,
2004. As a result of the stock dividend, common stock was increased by $133,039,
surplus was increased by $2,769,334, and retained earnings was decreased by
$2,902,373. All references in the accompanying consolidated financial statements
to the number of common shares and per-share amounts for 2002 and 2003 have been
restated to reflect this stock dividend.



On December 13, 2002, the Corporation issued 97,732 shares of
common stock pursuant to a 5% stock dividend for stockholders of record as of
November 15, 2002. As a result of the stock dividend, common stock was increased
by $122,165, surplus was increased by $1,346,747, and retained earnings was
decreased by $1,468,912.



Note 16. Incentive Stock Option Plan



The Corporation has a Stock Plan that provides for the grant of
Incentive Stock Options up to a maximum of 209,475 shares of common stock. This
Plan was adopted to foster and promote the long-term growth and financial
success of the Corporation by assisting in recruiting and retaining directors
and key employees by enabling individuals who contribute significantly to the
Corporation to participate in its future success and to associate their
interests with those of the Corporation. The options were granted at the market
value on the date of each grant. The maximum term of the options is ten
years.









F-29





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note 16. Incentive Stock Option Plan (Continued)



The
following table presents a summary of options under the Plan at December 31:



|                                      |               | Shares Under Options
|------------------------------------- | ------------- | --------------------
|                                      | Option Price  | 2004                
|Outstanding, beginning                | $8.67-$17.61  | 109,182             
|Increase
      due to stock dividends | $8.28-$16.77  | 4,402               
|Options
      granted                 | $16.77-$27.34 | 10,050              
|Options
      exercised               | $8.28-$16.77  | (33,149)            
|Options
      forfeited               | $16.77        | (200)               
|Outstanding, ending                   | $8.28-$27.34  | 90,285              



Options exercisable at December 31, 2004, 2003, and 2002, were
90,285, 109,182, and 142,862, respectively.



The Corporation applies APB Opinion 25 and related interpretations
in accounting for its plan. Accordingly, no compensation cost has been
recognized. Had compensation cost for the Corporations stock option plan been
determined based on the fair value at the grant date consistent with the methods
of FASB Statement 123, the Corporations net income and net income per share
would have been reduced to the pro forma amounts indicated below. In accordance
with the transition provisions of FASB Statement 123, the pro forma amounts
reflect options with grant dates subsequent to January 1, 1995. There were
10,050, 10,650, and 8,343 options granted during the years ended December 31,
2004, 2003, and 2002, respectively.



|                                 |                   |  | 2004       | 2003       | 2002      
|-------------------------------- | ----------------- |  | ---------- | ---------- | ----------
|Net
      income                 |                   |  |            |           
|                                 | As
      reported |  | $4,364,324 | $3,913,765 | $3,005,164
|                                 |                   |  |            |            |           
|                                 | Pro
      forma   |  | $4,304,728 | $3,889,057 | $3,001,096
|                                 |                   |  |            |            |           
|Basic
      earnings per share   |                   |  |            |           
|                                 | As
      reported |  | $1.95      | $1.79      | $1.39     
|                                 |                   |  |            |            |           
|                                 | Pro
      forma   |  | $1.92      | $1.78      | $1.39     
|                                 |                   |  |            |            |           
|Diluted
      earnings per share |                   |  |            |           
|                                 | As
      reported |  | $1.91      | $1.72      | $1.33     
|                                 |                   |  |            |            |           
|                                 | Pro
      forma   |  | $1.88      | $1.71      | $1.33     







F-30





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 16. Incentive Stock Option Plan (Continued)



For purposes of computing the pro forma amounts indicated above,
the fair value of each option on the date of grant is estimated using the
Black-Scholes option-pricing model with the following assumptions for the grants
in 2004, 2003, and 2002: dividend yield of 2.18%, 2.45%, and 3.43%,
respectively, expected volatility of 20%, risk-free interest rate of 3.6%, 3.0%,
and 3.0%, and an expected option life of 9.5, 5, and 5 years, respectively. The
fair value of each option granted in 2004 was $5.93. The fair value of each
option granted in 2003 and 2002 was $2.32 and $1.15, respectively.



Note 17. Regulatory Matters



The Corporation is subject to various regulatory capital
requirements administered by its primary federal regulator, the Federal Reserve
Bank. Failure to meet minimum capital requirements can initiate certain
mandatory, and possibly, additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Corporations financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Corporation must meet specific capital guidelines
that involve quantitative measures of the Corporations assets, liabilities, and
certain off-balance sheet items as calculated under regulatory accounting
practices. The Corporations capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk weightings,
and other factors. Prompt corrective action provisions are not appl icable to
bank holding companies.



Quantitative measures established by regulation to ensure capital
adequacy require the Corporation to maintain minimum amounts and ratios as set
forth in the table below of total and Tier I capital as defined in the
regulations to risk-weighted assets as defined, and of Tier I capital as defined
to average assets as defined. Management believes, as of December 31, 2004, that
the Corporation meets all capital adequacy requirements to which it is
subject.



As of December 31, 2004, the most recent notification from the
Federal Reserve Bank categorized the Corporation as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Corporation must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institutions category.

























F-31





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 17. Regulatory Matters (Continued)



The Corporations and Banks actual capital amounts and ratios are
also presented in the table.



|                         |                                          |                       |        |                        |                   |                              |              | To Be Well Capitalized
|------------------------ | ---------------------------------------- | --------------------- | ------ | ---------------------- | ----------------- | ---------------------------- | ------------ | ----------------------
|                         |                                          |                       |        |                        |                   | For Capital                  | Under Prompt
|                         |                                          |                       |        | Actual                 | Adequacy Purposes | Corrective Action Provisions
|                         |                                          |                       |        | Amount                 | Ratio             | Amount                       | Ratio        | Amount                
|                         |                                          |                       |        | (Dollars in Thousands)
|As of December 31, 2004: |                                          |                       |        |                        |                   |                             
|                         | Total Capital (to Risk Weighted Assets)  |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | $36,681                | 14.05%            | $20,886                      | 8.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 34,816 | 13.56%                 | 20,540            | 8.00%                        | $25,676      | 10.00%                
|                         |                                          |                       |        |                        |                   |                              |              |                       
|                         | Tier I Capital (to Risk Weighted Assets) |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | 33,983                 | 13.01%            | 10,448                       | 4.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 32,526 | 12.52%                 | 10,392            | 4.00%                        | 15,588       | 6.00%                 
|                         |                                          |                       |        |                        |                   |                              |              |                       
|                         | Tier I Capital (to Average Assets)       |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | 33,983                 | 9.03%             | 15,053                       | 4.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 32,526 | 8.68%                  | 14,989            | 4.00%                        | 18,736       | 5.00%                 
|                         |                                          |                       |        |                        |                   |                              |              |                       
|As of December 31, 2003: |                                          |                       |        |                        |                   |                             
|                         | Total Capital (to Risk Weighted Assets)  |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | $34,093                | 14.93%            | $18,268                      | 8.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 31,580 | 13.92%                 | 18,149            | 8.00%                        | $22,687      | 10.00%                
|                         |                                          |                       |        |                        |                   |                              |              |                       
|                         | Tier I Capital (to Risk Weighted Assets) |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | 26,537                 | 11.62%            | 9,135                        | 4.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 29,126 | 12.84%                 | 9,074             | 4.00%                        | 13,610       | 6.00%                 
|                         |                                          |                       |        |                        |                   |                              |              |                       
|                         | Tier I Capital (to Average Assets)       |                       |        |                        |                   |                              |             
|                         |                                          | Consolidated          |        | 26,537                 | 7.48%             | 14,191                       | 4.00%        | N/A                   
|                         |                                          | Central Virginia Bank | 29,126 | 8.27%                  | 14,088            | 4.00%                        | 17,609       | 5.00%                 



Banking laws and regulations limit the amount of dividends that
may be paid without prior approval of the Bank's regulatory agency. Under that
limitation, the Bank could have declared additional dividends of approximately
$9,616,975 in 2004 without regulatory approval.



Note 18. Fair Value of Financial Instruments



FASB Statement No. 107, Disclosures about Fair Value of Financial
Instruments, requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. Statement 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Corporation and subsidiary.

F-32

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 18. Fair Value of Financial Instruments
(Continued)



The following methods and assumptions were used by the Corporation
and subsidiary in estimating the fair value of financial instruments:



Cash and cash equivalents: The carrying amounts reported in
the balance sheet for cash and short-term instruments approximate their fair
values.



Investment securities (including mortgage-backed
securities): Fair values for investment securities are based on quoted
market prices, where available. If quoted market prices are not available, fair
values are based on quoted market prices of comparable instruments.



Mortgage loans held for sale: The carrying amount of
mortgage loans held for sale approximate their fair values.



Loans receivable: For variable-rate loans that reprice
frequently and with no significant change in credit risk, fair values are based
on carrying values. The fair values for other loans are determined using
estimated future cash flows, discounted at the interest rates currently being
offered for loans with similar terms to borrowers with similar credit
quality.



Accrued interest receivable and accrued interest payable:
The carrying amounts of accrued interest receivable and accrued interest payable
approximate their fair values.



Deposit liabilities: The fair values of demand deposits
equal their carrying amounts which represents the amount payable on demand. The
carrying amounts for variable-rate fixed-term money market accounts and
certificates of deposit approximate their fair values at the reporting date.
Fair values for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected maturities on time
deposits.



Federal funds purchased and securities sold under repurchase
agreements: The carrying amounts for federal funds purchased and securities
sold under repurchase agreements approximate their fair values.



FHLB borrowings: The carrying amount of FHLB borrowings
approximate their fair values.



Capital trust preferred securities: The carrying amount of
the capital trust preferred securities approximates their fair values.

















F-33





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 18. Fair Value of Financial Instruments (Continued)



The following is a summary of the carrying amounts and estimated fair values of the Corporation and subsidiarys financial assets and liabilities at December 31, 2004 and 2003:



|                             |                                           | 2004        | 2003       
|---------------------------- | ----------------------------------------- | ----------- | -----------
|                             |                                           | Carrying    | Estimated  
|                             |                                           | Amount      | Fair Value 
|Financial
      assets:      |                                           |             |            
|                             | Cash
      and cash equivalents           | $9,663,181  | $9,663,181 
|                             | Securities
      available for sale       | 160,219,203 | 160,219,203
|                             | Securities
      held to maturity         | 8,820,035   | 9,134,149  
|                             | Mortgage
      loans held for sale        | 1,264,175   | 1,264,175  
|                             | Loans,
      net                          | 177,233,555 | 181,074,555
|                             | Accrued
      interest receivable         | 2,297,411   | 2,297,411  
|                             |                                           |             |            
|Financial
      liabilities: |                                           |             |            
|                             | Demand
      and variable rate deposits   | 148,871,556 | 148,871,556
|                             | Fixed-rate
      certificates of deposits | 161,075,413 | 162,474,413
|                             | Federal
      funds purchased and         |             |            
|                             | securities
      sold under repurchase    |             |            
|                             | agreements                                | 997,000     | 997,000    
|                             | FHLB
      borrowings                     | 30,500,000  | 30,500,000 
|                             | Capital
      trust preferred securities  | 5,000,000   | 5,000,000  
|                             | Accrued
      interest payable            | 416,469     | 416,469    



At December 31, 2004 and 2003, the Corporation had outstanding
standby letters of credit and commitments to extend credit. These off-balance
sheet financial instruments are generally exercisable at the market rate
prevailing at the date the underlying transaction will be completed, and,
therefore, they were deemed to have no current fair market value.























F-34





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 19. Condensed Parent-Only Financial Statements



Financial statements for Central Virginia Bankshares, Inc., (not consolidated) are presented below.



|BALANCE SHEETS            
|--------------------------
|                          
|Assets                    
|                          
|                          
|                          
|                          
|                          
|                          
|Liabilities               
|                          
|                          
|                          
|                          
|                          
|Stockholders'
      Equity
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          
|                          





















F-35





---





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS



Note 19. Condensed Parent-Only Financial Statements
(Continued)



|STATEMENTS OF INCOME
|--------------------
|                    
|                    
|                    
|Income:             
|                    
|                    
|                    
|                    
|                    
|                    
|Expenses:           
|                    
|                    
|                    
|                    
|                    
|Income
      taxes  
|                    







































F-36





---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 19. Condensed Parent-Only Financial Statements (Continued)



|STATEMENTS OF CASH FLOWS                                 
|---------------------------------------------------------
|                                                         
|                                                         
|                                                         
|Cash
      Flows From Operating Activities               
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net
      cash provided by (used in) operating activities
|                                                         
|Cash
      Flows From Investing Activities               
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net
      cash (used in) investing activities            
|                                                         
|Cash
      Flows From Financing Activities               
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|Net
      cash provided by (used in) financing activities
|                                                         
|Increase
      (decrease) in cash                        
|Cash,
      beginning                                    
|Cash,
      ending                                       

F-37





---





SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





CENTRAL VIRGINIA BANKSHARES, INC.





Date: March 31, 2005

By:/s/ Ralph Larry Lyons

Ralph Larry Lyons

President and Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





|March 31, 2005 | /s/ Ralph Larry Lyons
Ralph Larry Lyons
President and Chief Executive Officer; Director
(Principal Executive Officer)          
|-------------- | -------------------------------------------------------------------------------------------------------------------------------
|March 31, 2005 | Charles F. Catlett, III
Charles F. Catlett, III
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|March 31, 2005 | /s/ Thomas R. Thornton, Jr.
Thomas R. Thornton, Jr.
Assistant Vice President
(Principal Accounting Officer)                    
|March 31, 2005 | /s/ John B. Larus
John B. Larus
Chairman of the Board of Directors                                                             
|March __, 2005 | Fleming V. Austin
Director                                                                                                     
|March 31, 2005 | /s/ Charles W. Binford
Charles W. Binford
Director                                                                             





---







|March 31, 2005 | /s/ Garland L. Blanton, Jr.
Garland L. Blanton, Jr.
Director
|-------------- | ------------------------------------------------------------
|March 31, 2005 | /s/ Charles B. Goodman
Charles B. Goodman
Director          
|March 31, 2005 | /s/ Elwood C. May
Elwood C. May
Director                    
|March 31, 2005 | /s/ James T. Napier
James T. Napier
Director                

---











EXHIBITS INDEX





Item No.

Description



3.1

Articles of Incorporation, including amendments thereto (incorporated herein by reference to Exhibit 2 to the Registrants Form 8-A filed with the SEC on May 2, 1994).

3.2

Bylaws (incorporated herein by reference to Exhibit 3 to the Registrants Form 8-A filed with the SEC on May 2, 1994).

4.1

Specimen of Registrants Common Stock Certificate (incorporated herein by reference to Exhibit 1 to the Registrants Form 8-A filed with the SEC on May 2, 1994).

21.1

Subsidiaries of the Registrant (filed herewith).

23.1

Consent of Mitchell, Wiggins & Company, LLP (filed
herewith).

31.1

Rule 13a-14(a) Certification of Chief Executive Officer (filed
herewith).

31.2

Rule 13a-14(a) Certification of Chief Financial Officer (filed
herewith).

32.1

Statement of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 (filed herewith).