SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB

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


For the fiscal year ended December 31, 1999    Commission file number: 000-24002


                        CENTRAL VIRGINIA BANKSHARES, INC.
                 (Name of small business issuer in its charter)

           Virginia                                              54-1467806
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


     2036 New Dorset Road, Post Office Box 39, Powhatan, Virginia 23139-0039
               (Address of principal executive offices) (Zip Code)

          Issuer's telephone number including area code: (804) 598-4216

         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

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

Yes X   No
   ---    ---

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

         State issuer's revenues for its most recent fiscal year: $15.6 million.

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Registrant  was  approximately  $16,486,293  computed by reference to the
last sales  price of $9.125 per share as of March 3, 2000,  on The Nasdaq  Stock
Market SM, as reported in published financial sources.

         At March 3,  2000,  there  were  1,923,156  shares of the  Registrant's
Common Stock outstanding.

         Transitional Small Business Disclosure Format (check one)
         Yes    No X
            ---   ---


<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE


Document of the Registrant                   Form 10-KSB Reference Location
--------------------------                   ------------------------------

2000 Proxy Statement                         Part III


<PAGE>

                                     PART I

ITEM 1.      DESCRIPTION OF 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") capital stock.  The Bank was incorporated on June 1, 1972 under the
laws of Virginia 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 located off
Route 60 near the main office.

         Principal  Market  Area.  The Bank's  primary  service area is Powhatan
County  and  extends  into  Chesterfield  and  Cumberland   counties  which  had
populations of 15,328,  209,274 and 7,825,  respectively,  according to the 1990
census.  Both Powhatan and Chesterfield  counties'  populations are projected by
the Virginia  Department  of Planning and Budget to grow faster than the State's
average  through the year 2000. 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.  The Bank's  branch  offices are located in the Village
Marketplace  Shopping  Center in the Village of Midlothian and the Market Square
Shopping Center in Brandermill,  both in Chesterfield  County, and on U.S. Route
60 near the  courthouse  and in  Cartersville,  both in Cumberland  County.  The
Bank's  present  intention is to continue  concentrating  its  activities in its
current service area,  which the Bank believes is an attractive 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 telephone  banking and debit cards.  The Bank
also 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 travelers' checks, safe deposit boxes,  deposit transfer,  customer note
payment,  annuities,  collections,  notary public, escrow, drive-in facility 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 provides 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 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 real estate market prevailing 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. At the present
time, the Bank does not anticipate  extending operations beyond Powhatan County,
the western portion of Chesterfield County and Cumberland County.

<PAGE>

Lending Activities

         Loan  Portfolio.  The  Company is an active  residential  mortgage  and
residential  construction  lender and also extends consumer loans 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 and western  Chesterfield  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. 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.  In
an effort to manage this risk,  the Bank's  policy  gives loan  amount  approval
limits to  individual  loan  officers  based on their level of  experience.  All
unsecured loans in excess of $30,000 and all secured loans in excess of $150,000
are approved by the Bank's Senior Loan Committee.  All unsecured loans in excess
of $100,000 and all secured  loans in excess of $500,000 must be approved by the
Board of Directors.  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
Bank's real estate construction loans are for pre-sold or contract homes.

         Residential  Mortgage  Loans.  Residential  mortgage  loans are made in
amounts up to 80.0% of the appraised value of the security property. Residential
mortgage loans are underwritten  using specific  qualification  guidelines which
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  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  mortgage  loans  that are sold in the
secondary  market.  These loans are generally  either  one-year  adjustable rate
mortgages ("ARMs") or fifteen to thirty year fixed rate mortgages. Substantially
all permanent  residential  mortgages made for the Bank's own portfolio are made
as three-year ARMs.

         The  Bank's  ARMs are  subject  to  limitations  of 2.0% per three year
period on interest rate  increases and  decreases.  In addition,  ARMs currently
originated  by the Bank  provide  for a  lifetime  cap of 6.0% or less  from the
borrower's initial interest rate. All changes in the interest rate must be based
on the movement of an external index agreed to by the Bank and the borrower.

         There are risks  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 pose additional
risks,  primarily because as interest rates rise, the underlying payments by the
borrowers  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 1.0% to 3.0% of the loan principal


                                      -2-
<PAGE>

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. Such requests from Bank customers
and concerning properties in the Bank's established trade area are considered.

         Real  Estate  Construction  Lending.  In  general,  the  Bank  does not
actively  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  purposes.  The large
majority of the Bank's  construction  loans are to  experienced  builders.  Such
loans  normally  carry an  interest  rate of 1.0% to 3.0%  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 limits loan amounts to 75.0% of appraised value
on unsold homes and 80.0% of appraised  value on pre-sold  homes, 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, 1999,  commercial  business loans were $20.1 million or 15.5% of
the  Bank's  total loan  portfolio,  a  majority  of which were  secured by real
estate.  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 carefully 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 his employment and
other  income and are  secured by real  property  whose value tends to be easily
ascertainable.  In contrast, commercial 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,
1999, the majority of the Bank's non-performing loans were commercial loans.



                                      -3-
<PAGE>

Competition

         The Bank encounters strong  competition for its banking services within
its primary  service  area from other  community  banks and larger  banks in the
Richmond  metropolitan area.  Financial  companies,  mortgage companies,  credit
unions and savings and loan  associations  also  compete with the Bank for loans
and deposits. In addition,  the Bank must 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. Additionally, new community banks
have  recently  opened in both  Powhatan  and  Midlothian.  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 80 full-time and 17 part-time employees at
December 31, 1999. Employee relations have been good. The Bank sponsors a Profit
Sharing/Retirement  Plan for its employees.  In addition,  the Company  recently
implemented a 401(k) plan effective in 2000.

Regulation and Supervision

         Bank holding  companies and banks are extensively  regulated under both
federal and state law. The  following  is a summary of certain  federal laws and
regulations  that govern the Company and the Bank.  However,  to the extent that
the following  information describes statutory or regulatory  provisions,  it is
qualified  in  its  entirety  by  reference  to  the  particular  statutory  and
regulatory  provisions.  Any change in applicable  law or regulation  may have a
material effect on the business and prospects of the Company and the Bank.

         Bank Holding  Companies.  The Company is  registered  as a bank holding
company  under the Bank Holding  Company Act of 1956 (the "BHCA") and as such is
subject to  regulation by the Board of Governors of the Federal  Reserve  System
(the  "Federal  Reserve  Board").  As a bank  holding  company,  the  Company is
required  to file  with the  Federal  Reserve  Board an annual  report  and such
additional  information as the Federal Reserve Board may require pursuant to the
BHCA. The Federal Reserve Board may also make examinations of the Company.

         The BHCA  requires the prior  approval of the Federal  Reserve Board in
any case where a bank  holding  company  proposes to acquire  direct or indirect
ownership or control of more than 5% of the voting shares of any bank (unless it
owns a majority of such bank's voting  shares) or otherwise to control a bank or
to merge or  consolidate  with any other bank  holding  company.  The BHCA would
prohibit  the Federal  Reserve  Board from  approving  an  application  from the
Company to acquire shares of a bank located outside of Virginia,  unless such an
acquisition is specifically authorized by statute of the state in which the bank
whose  shares are to be acquired is located.  However,  under  recently  enacted
federal  legislation,   the  restriction  on  interstate  acquisitions  will  be
abolished effective September 1995, and thereafter,  bank holding companies from
any state will be able to acquire  banks and bank holding  companies  located in
any other state,  subject to certain conditions,  including nationwide and state
imposed  concentration  limits.  Banks also will be able to branch  across state
lines by  acquisition,  merger or de novo,  effective June 1, 1997 (unless state
law would  permit  such  interstate  branching  at an earlier  date),  providing
certain  conditions are met,  including the applicable  state law must expressly
permit such interstate branching.


                                      -4-
<PAGE>

         The  BHCA  also  prohibits  a  bank  holding   company,   with  certain
exceptions, from acquiring more than 5% of the voting shares of any company that
is not a bank and from  engaging in any business  other than banking or managing
or controlling banks. Under the BHCA, the Federal Reserve Board is authorized to
approve the  ownership  of shares by a bank  holding  company in any company the
activities of which the Federal  Reserve  Board has  determined to be so closely
related  to  banking  or to  managing  or  controlling  banks  as to be a proper
incident  thereto.  The Federal Reserve Board has by regulation  determined that
certain  activities  are  closely  related to banking  within the meaning of the
BHCA.

         Banks.  The Bank is supervised  and  regularly  examined by the Federal
Reserve  Board and the Bureau of  Financial  Institutions  of  Virginia's  State
Corporation  Commission.  The various laws and  regulations  administered by the
regulatory  agencies affect corporate  practices,  such as payment of dividends,
incurring debt and acquisition of financial  institutions  and other  companies,
and affect  business  practices,  such as payment of interest on  deposits,  the
charging of  interest on loans,  types of  business  conducted  and  location of
offices.

         FDIC  Insurance  Assessments.  The  Bank is  subject  to  FDIC  deposit
insurance assessments.  It is possible that insurance assessments could increase
in  future  years,  and it is  possible  that  there may be  special  additional
assessments.  Additional  assessments  could  have  an  adverse  impact  on  the
Company's results of operations.

         Governmental  Policies.  The operations of the Company and the Bank are
affected not only by general  economic  conditions,  but also by the policies of
various  regulatory  authorities.  In  particular,  the  Federal  Reserve  Board
regulates  money and credit and  interest  rates in order to  influence  general
economic  conditions.  These  policies have a  significant  influence on overall
growth and  distribution of loans,  investments and deposits and affect interest
rates charged on loans or paid for time and savings  deposits.  Federal  Reserve
Board monetary  policies have had a significant  effect on the operating results
of  commercial  banks in the past and are  expected  to continue to do so in the
future.

         Limits on Dividends and Other  Payments.  The Company is a legal entity
separate and distinct from the Bank. Most of the Company's  revenues result from
dividends  paid to the  Company  by the  Bank.  The  right of the  Company,  and
consequently  the  right  of  creditors  and  shareholders  of the  Company,  to
participate  in any  distribution  of the assets or earnings of the Bank through
the payment of such dividends or otherwise is  necessarily  subject to the prior
claims of creditors of the Bank, except to the extent that claims of the Company
in its capacity as a creditor may be recognized.

         The amount of dividends payable by the Bank to the Company depends upon
the Bank's  earnings and capital  position,  and is limited by federal and state
law, regulations and policies.

         As a state  member  bank  subject  to the  regulations  of the  Federal
Reserve  Board,  the Bank must obtain the approval of the Federal  Reserve Board
for any dividend if the total of all  dividends  declared in any  calendar  year
would  exceed the total of its net  profits,  as defined by the Federal  Reserve
Board,  for that year,  combined with its retained net profits for the preceding
two years.  In  addition,  the Bank may not pay a dividend in an amount  greater
than its  undivided  profits  then on hand  after  deducting  its losses and bad
debts.  For this  purpose,  bad debts  are  generally  defined  to  include  the
principal  amount of loans which are in arrears  with respect to interest by six
months or more  unless  such  loans  are fully  secured  and in the  process  of
collection. Moreover, for purposes of this limitation, the Bank is not permitted
to add the balance in its  allowance  for loan losses  account to its  undivided
profits then on hand; however, it may net the sum of its bad debts as so defined
against the  balance in its  allowance  for loan losses  account and


                                      -5-
<PAGE>

deduct  from  undivided  profits  only bad debts as so defined in excess of that
account.  At December 31, 1999,  the Bank had $2.9 million of retained  earnings
legally available for the payment of dividends.

         In addition, the Federal Reserve Board is authorized to determine under
certain circumstances  relating to the financial condition of a national bank, a
state member bank or a bank holding  company that the payment of dividends would
be an unsafe or unsound practice and to prohibit payment thereof. The payment of
dividends that deplete a bank's capital base could be deemed to constitute  such
an unsafe or unsound  practice.  The Federal  Reserve Board has  indicated  that
banking  organizations  should  generally  pay  dividends  only  out of  current
operating earnings.

         Borrowings by the Company.  There are various legal restrictions on the
extent to which the Company can borrow or otherwise obtain credit from the Bank.
In general,  these restrictions  require that any such extensions of credit must
be secured by designated amounts of specified  collateral and are limited, as to
the  Company,  to 10% of the Bank's  capital  stock and  surplus,  and as to the
Company and any nonbanking  subsidiaries in the aggregate,  to 20% of the Bank's
capital stock and surplus.  Federal law also requires that transactions  between
the Bank and the Company or any nonbanking subsidiaries, including extensions of
credit,  sales of  securities  or  assets  and the  provision  of  services,  be
conducted  on terms at least as  favorable  to the Bank as those  that  apply or
would apply to comparable transactions with unaffiliated parties.

         Capital   Requirements.   The  Federal   Reserve  Board  has  published
risk-based  capital  guidelines which are applicable to bank holding  companies.
The  Federal  Reserve  Board  guidelines  redefine  the  components  of capital,
categorize  assets into different risk classes and include  certain  off-balance
sheet items in the  calculation of  risk-weighted  assets.  The minimum ratio of
qualified total capital to risk-weighted  assets (including  certain off balance
sheet items,  such as standby  letters of credit) is 8.00%. At least half of the
total  capital  must be  comprised  of common  equity,  retained  earnings and a
limited amount of permanent  preferred stock,  less goodwill ("Tier 1 capital").
The remainder ("Tier 2 capital") may consist of a limited amount of subordinated
debt, other preferred stock,  certain other  instruments and a limited amount of
loan and lease losses reserves. The Company's Tier 1 and Total Capital ratios as
of December 31, 1999 were 11.8% and 12.8%, respectively.

         In addition, the Federal Reserve Board has established minimum Leverage
ratio (Tier 1 capital to quarterly average assets less goodwill)  guidelines for
bank holding  companies.  These guidelines  provide for a minimum ratio of 3.00%
for bank holding companies that meet certain specified criteria,  including that
they have the highest  regulatory  rating.  All other bank holding companies are
required to maintain a Leverage ratio of 3.00% plus an additional  cushion of at
least 100 to 200 basis points.  The Company's  Leverage ratio as of December 31,
1999  was  9.5%.  The  guidelines   also  provide  that  banking   organizations
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions  substantially  above the minimum  supervisory  levels,
without significant reliance on intangible assets.

         The Bank is  subject  to capital  requirements  adopted by the  Federal
Reserve Board that are the same as those that apply to the Company.  At December
31,  1999 the Bank's  total  capital,  Tier 1 capital and  leverage  ratios were
13.3%, 12.3% and 9.1%, respectively.

         Each  federal  regulatory  agency is required to revise its  risk-based
capital  standards  to ensure  that those  standards  take  adequate  account of
interest rate risk, concentration of credit risk and the risk of non-traditional
activities,  as well as to reflect the actual  performance  and expected risk of
loss on  multi-family  mortgages.  The Federal  Reserve  Board and the FDIC have
jointly solicited comments on a proposed framework for implementing the interest
rate risk component of the risk-based capital guidelines. Under


<PAGE>

the proposal,  an  institution's  assets,  liabilities,  and  off-balance  sheet
positions would be weighted by risk factors that  approximate  the  instruments'
price  sensitivity  to a one  hundred  basis  point  change in  interest  rates.
Institutions  with interest rate risk exposure in excess of the threshold  level
would be required to hold additional capital proportional to that risk. In 1994,
the Federal Reserve Board,  FDIC, and related agencies  solicited  comments on a
proposed  revision  to the  risk-based  capital  guidelines  to take  account of
concentration  of credit risk and the risk of  non-traditional  activities.  The
revision  proposed  to amend  each  agency's  risk-based  capital  standards  by
explicitly  identifying  concentration  of credit risk and the risk arising from
non-traditional  activities, as well as an institution's ability to manage those
risks, as important  factors to be taken into account by the agency in assessing
an institution's  overall capital adequacy.  The proposal was adopted as a final
rule by the Federal Reserve Board and the FDIC and subsequently became effective
on January  17,  1995.  The Company and the Bank do not expect the final rule to
have a material impact on their respective capital requirements.

         Under Federal Reserve Board policy,  a bank holding company is required
to serve as a source of  financial  and  managerial  strength to its  subsidiary
banks and may not  conduct its  operations  in an unsafe or unsound  manner.  In
addition,  it is the Federal Reserve Board's policy that, in serving as a source
of strength to its subsidiary  banks, a bank holding  company should stand ready
to use available  resources to provide  adequate capital funds to its subsidiary
banks.  This  support  may be required  during  periods of  financial  stress or
adversity,  in  circumstances  where the  Company  might  not do so absent  such
policy. A bank holding company is expected to maintain the financial flexibility
and  capital-raising  capacity to obtain additional  resources for assisting its
subsidiary  banks. The failure of a bank holding company to serve as a source of
strength to its  subsidiary  banks would  generally be considered by the Federal
Reserve  Board to be an unsafe and unsound  banking  practice,  a  violation  of
Federal Reserve Board regulations, or both.

ITEM 2.      DESCRIPTION OF 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.  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.  The Bank's other branches are
located in the Village of Midlothian in Chesterfield County and on U.S. Route 60
near  the  courthouse  and in  Cartersville,  both  in  Cumberland  County.  The
Midlothian branch is a one and one-half story building with approximately  3,000
square feet. The Cartersville location, which was originally opened in 1985, was
replaced in mid-1994 with a one-story  brick building with  approximately  1,600
square feet. In June 1998 the Bank opened a 4,800 square foot branch  located on
U. S. Route 60 (Anderson  Highway) near the  courthouse  in  Cumberland  County,
Virginia.

         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 computer
operations,  loan  administration and bookkeeping  departments all of which were
formerly located in the main office.



                                      -7-
<PAGE>

ITEM 3.      LEGAL PROCEEDINGS

         In May 1999, Old Republic National Title Insurance Company,  in its own
name  and  on  behalf  of  twelve  mortgage  lenders  insured  by  Old  Republic
(collectively "Old Republic"),  commenced an action against the Bank that is now
pending in the  Circuit  Court for the  County of  Chesterfield,  Virginia.  Old
Republic alleges that after a title agency and real estate settlement  business,
Alliance  Title and Escrow,  Ltd.,  failed,  Old  Republic  discovered  that the
president  of Alliance  Title had  misappropriated  approximately  $1.6  million
entrusted to Alliance Title by various  lenders in connection  with  residential
real estate  closings in which Old  Republic had issued or agreed to issue title
insurance policies. Old Republic alleges that the Bank knew or should have known
of the  misappropriation  of funds from the Alliance Title  accounts  maintained
with  the  Bank and that  the  Bank  and the  co-defendant  were  involved  in a
conspiracy.  Old  Republic  claims  compensatory  damages of $1.6  million,  and
further  claims  that these  damages can be trebled  and that Old  Republic  can
recover  its  attorney's  fees.  Old  Republic  has also made a claim to recover
punitive damages in the amount of $350,000.  In March 2000, Old Republic amended
its lawsuit to add one former and two current Bank employees as defendants,  but
made no other  substantial  changes to its allegations.  The Bank has denied all
liability  and is vigorously  defending the case.  The Bank has made a motion to
dismiss  the entire  case which is  pending at this time.  Although  the Bank is
vigorously defending the case, the outcome of the litigation is uncertain.

         Additionally,  in March 2000,  the trustee in  bankruptcy  for Alliance
Title filed an adversary  proceeding  against  Alliance Title's former president
and the Bank in the United States  Bankruptcy  Court for the Eastern District of
Virginia. The complaint seeks judgment against the Bank and the former president
of Alliance Title on a number of different theories of recovery,  including that
payments  made by  Alliance  Title to the  Bank in the  90-day  period  prior to
bankruptcy constitute preferential payments under federal bankruptcy law and are
therefore  recoverable by the trustee.  Although the Bank denies the allegations
of the  trustee  and is  vigorously  defending  the case,  the  outcome  of this
litigation is uncertain at this time.

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-
<PAGE>

                                     PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Common Stock

         Central  Virginia  Bankshares,  Inc common  stock  trades on the Nasdaq
Stock  Market  under the symbol  "CVBK".  As of March 3, 2000,  the  Company had
approximately 858 shareholders of record.

         The  following  table shows  dividends  paid and the high and low trade
prices by quarter for the past two years  according to Nasdaq  (figures  reflect
2-for-1 stock split issued in August 1998):
<TABLE>
<CAPTION>
                                            1999                                             1998
                         --------------------------------------------    ---------------------------------------------
                                                         Dividends                                        Dividends
                          High Trade      Low Trade        Paid            High Trade      Low Trade        Paid
                          ----------      ---------        ----            ----------      ---------        ----
<S>                          <C>           <C>              <C>              <C>            <C>              <C>
First Quarter                $14.375       $12.000          $.10             $22.813        $14.00           $.095
Second Quarter                13.00         12.00            .10              20.25          16.50            .095
Third Quarter                 12.75         11.00            .10              17.313         12.25            .095
Fourth Quarter                12.00          9.8125          .10              15.50          12.75            .10
</TABLE>

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

Results of Operations

         The  Company's  net  income for the year ended  December  31,  1999 was
$1,960,090,  a slight increase of 1.2% from 1998. This increase reflects a 17.1%
increase in net interest income,  which was primarily due to a 18.6% increase in
average  interest  earning  assets for the year. In addition,  other income rose
15.7%  primarily  due to a 43.0%  increase  in  deposit  fees and other  service
charges on deposit  accounts.  The increase in these fees is  primarily  due the
increased number of deposit accounts outstanding, which began increasing in 1998
and continued to grow during 1999. Net income per common share was $1.02 in 1999
compared to $1.01 in 1998. All per share data reflect a 2-for-1 stock split paid
in August 1998.

         The  Company's  net income  totaled  $1,936,367 in 1998, an increase of
5.6% from 1997.  These  results  also  reflect an increase  in the net  interest
income. Average  interest-earning assets increased 17.9% in 1998, which included
a 50.7%  increase in average  investment  securities  outstanding.  In addition,
other income rose 51.2% primarily due to an 18.2% increase in service charges on
deposit accounts as well as 128% increase in other income. Net income per common
share was $1.01 in 1998 compared to $.96 in 1997.

         The Company's  return on average equity was 11.3% in 1999,  compared to
12.2%  and  12.6% in 1998 and  1997,  respectively.  Return  on  average  assets
amounted to 1.05%, 1.23% and 1.38% for these same years.



                                      -9-
<PAGE>
         Net Interest  Income.  The Company's net interest income was $7,570,848
in 1999, compared to $6,466,420 and $6,090,879 for 1998 and 1997, respectively.

         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.
<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                           -------------------------------------------------------------------------------------------
                                      1999                            1998                            1997
                           ----------------------------    ----------------------------    ---------------------------
                            Average             Yield/      Average             Yield/      Average            Yield/
                            Balance   Interest   Rate       Balance   Interest   Rate       Balance   Interest  Rate
                            -------   --------   ----       -------   --------   ----       -------   --------  ----
                                                             (dollars in thousands)
<S>                         <C>        <C>       <C>        <C>        <C>       <C>        <C>       <C>       <C>
Interest earning assets:
Federal funds sold               $56        $3   5.36%        $3,747      $210   5.60%        $5,510     $315   5.72%
                                 ---        --   -----        ------      ----   -----        ------     ----   -----

Securities: (5)
  U.S. Treasury and other
    U.S. government
    agencies and
    corporations             $22,028    $1,415   6.42%       $25,546    $1,678   6.57%       $17,278   $1,170   6.77%
  States and political
    subdivisions (3)          25,029     1,833   7.32%        19,101     1,491   7.81%        12,544    1,008   8.03%
  Other securities             5,231       391   7.47%         1,821       141   7.74%         1,012       72   7.11%
                               -----       ---   -----         -----       ---   -----         -----       --   -----

    Total securities (3)      52,288     3,639   6.96%        46,468     3,310   7.12%        30,834    2,250   7.29%
                              ------     -----   -----        ------     -----   -----        ------    -----   -----

Loans (1)(2)(4)              121,783    10,871   8.93%        96,560     9,131   9.46%        88,180    8,657   9.82%
                             -------    ------   -----        ------     -----   -----        ------    -----   -----

  Total interest-earning
    assets (3)              $174,127   $14,513   8.33%      $146,775   $12,651   8.62%      $124,524  $11,222   9.01%
                            ========   =======   =====      ========   =======   =====      ========  =======   =====

Interest bearing
liabilities:
Deposits:
  Interest bearing demand    $33,789      $974   2.88%       $26,219      $754   2.88%       $21,668     $637   2.94%
  Savings                     18,949       613   3.24%        15,361       497   3.24%        13,602      441   3.24%
  Other time                  80,986     4,334   5.35%        75,083     4,266   5.68%        62,634    3,568   5.70%
                              ------     -----   -----        ------     -----   -----        ------    -----   -----

    Total deposits           133,724     5,921   4.43%       116,663     5,517   4.73%        97,904    4,646   4.75%

Federal funds purchased
  and securities sold
  under
  repurchase agreements        6,094       325   5.33%           754        44   5.84%         1,101       55   5.00%
FHLB borrowings                7,338       427   5.82%         5,000       297   5.94%         2,480      145
Long-term debt                    29         2   6.90%            38         3   7.89%            47        4   8.51%
                                  --         -   -----            --         -   -----            --        -   -----
  Total interest-bearing
    liabilities             $147,185    $6,675   4.54%      $122,455    $5,861   4.79%      $101,532   $4,850   4.78%
                            ========    ======   =====      ========    ======   =====      ========   ======   =====

Net interest spread                     $7,838   3.79%                  $6,790   3.83%                 $6,372   4.23%
                                        ======   =====                  ======   =====                 ======   =====

Net interest margin                              4.50%                           4.63%                          5.12%
                                                 =====                           =====                          =====
</TABLE>
--------------
(1)   Installment loans are stated net of unearned income.
(2)   Average loan balances include non-accrual 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 $727,800 in 1999,  $514,033
      in 1998, and $429,851 in 1997.
(5)   Includes securities available for sale and securities held to maturity.

                                      -10-
<PAGE>

         The  net  interest   margin  is  a  measure  of  net  interest   income
performance. It represents the difference between interest income, including net
loan fees earned,  and interest  expense,  reflected as a percentage  of average
interest  earning  assets.  The Company's net interest margin was 4.50% in 1999,
compared  to 4.63%  during  1998 and  5.12% in  1997.  The net  interest  margin
decreased in 1999 primarily due to lower than historical loan rates in the first
part of the  year  and the  gradual  rate  increases  seen at  year's  end.  The
tax-equivalent  yield on interest  earning assets declined to 8.33% in 1999 from
8.62% in 1998.  In 1998,  the net  interest  margin  decreased  as the  yield on
earning assets  decreased as interest rates fell while the rates paid on deposit
accounts did not fall as quickly.

         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.
<TABLE>
<CAPTION>
                                                  1999 Compared to 1998                  1998 Compared to 1997
                                            -----------------------------------   ------------------------------------
                                             Volume        Rate         Net         Volume       Rate         Net
                                            ----------  -----------  ----------   -----------  ----------  -----------
<S>                                            <C>           <C>        <C>             <C>        <C>           <C>
Interest income
Federal funds sold                              ($198)         ($9)      ($207)        ($101)        ($4)       ($105)
                                               ------         ----      ------        ------        ----       ------
Securities:  (1)
  U.S. Treasury and other U. S.
    government agencies and corporations         (227)         (36)       (263)          556         (47)         509
  States and political subdivisions (2)           427          (85)        342           527         (44)         483
  Other securities                                255           (5)        250            57          11           68
                                                  ---          ---        ----           ---         ---          ---
    Total  securities                             455         (126)        329         1,140         (80)       1,060
                                                  ---        -----        ----        ------        ----        -----

Loans                                           2,216         (476)      1,740           823        (349)         474
                                                -----        -----      ------          ----       -----          ---
    Total interest income                      $2,473        ($611)     $1,862        $1,862       ($433)      $1,429
                                              =======       ======     =======       =======      ======       ======

Interest expense:
Deposits:
  Interest bearing demand                        $218           $2        $220          $134        ($17)        $117
  Savings                                         116            0         116            56           0           56
  Other time                                      262         (194)         68           711         (13)         698
                                                  ---        -----         ---          ----        ----         ----
    Total deposits                                596         (192)        404           901         (30)         871
Federal funds purchased and securities
   sold under repurchase agreements               285           (4)        281           (17)          6          (11)
FHLB advances                                     136           (6)        130           148           4          152
Long-term debt                                     (1)          (0)         (1)           (1)         (0)          (1)
                                                  ---          ---         ---           ---         ---          ---
    Total interest expense                     $1,016        ($202)       $814        $1,031        ($20)      $1,011
                                              =======       ======       =====       =======       =====       ======
Increase (decrease) in net
   interest income                             $1,457        ($409)     $1,048          $831       ($412)        $418
                                               ======        ======     ======         =====      ======         ====
</TABLE>
---------------
(1)   Includes securities available for sale and securities held to maturity



                                      -11-
<PAGE>

         Non-Interest  Income.  In  1999,  the  Company's   non-interest  income
increased to  $1,339,124  from  $1,157,677  in 1998,  a 15.7% gain.  This is the
result of a $295,092  (42.9%)  increase in service charges on deposit  accounts,
and a $31,091 (8.9%) decrease in other income. Included in the other income is a
$57,632  decrease  in fees  received  on loans  sold in the  secondary  mortgage
market.  Gains  realized  on the sale of  securities  available  for  sale  also
decreased to $5,788 in 1999 from $88,342 in 1998.

         In 1998 the Company's total non-interest  income increased 51.2% due to
a increase  in the amount of fees  collected  on deposit  accounts  as well as a
128.1%increase  in the fees  received  on loans sold in the  secondary  mortgage
market.  The Company was not an active  participant  in the  secondary  mortgage
market during much of 1997.

         Non-Interest   Expenses.  The  Company's  total  non-interest  expenses
increased  22.3% in 1999 to  $5,927,837.  The increase in equipment  expenses of
31.3% is primarily attributable to new equipment purchased and placed in service
during the year.  Some of this new  equipment was in response to Y2K, but mostly
was the  replacement  of outdated and  inefficient  equipment.  Advertising  and
public relations expense decreased $78,120,  or 30.9% as the Company cut back on
the amount of targeted marketing efforts that it had employed in 1998. Legal and
professional  fees increased 141.8% to $285,551  primarily due to funds expended
to defend the Bank in a lawsuit  filed in May 1999.  Discussion  of this  matter
appears in Item 3. Included in the 37.7% increase in other operating expenses is
approximately $68,000 in direct Y2K related expenses.  The Company's preparation
for this event rendered it a non-event except for the expense involved.

         The Company's total  non-interest  expenses  increased 16.4% in 1998 to
$4,846,376.  Increases in salaries and benefits of 21.8%,  occupancy expenses of
4.5%,  equipment expenses of 9.5%, and office supplies,  telephone,  and postage
expense of 19.1%,  primarily  reflect the opening of the new branch  location in
Cumberland  Courthouse in June 1998. A 44.3% increase in advertising  and public
relations is partially  attributable  to the new branch but is primarily  due to
increased  advertising  efforts  directed  towards  former  customers  of larger
institutions that had recently been acquired by out of state banks.

         Income Taxes.  The Company  reported  income taxes of $714,045 in 1999,
compared  to  $643,355  in 1998 and  $659,239  in 1997.  These  amounts  yielded
effective tax rates of 26.7%, 24.9%, and 26.4%, respectively.

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  and  western  Chesterfield  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.

         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



                                      -12-
<PAGE>

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  $19.0 million or 17.3% from year-end
1998 to year-end  1999 compared to an increase of $20.7  million,  or 23.3% from
year-end 1997 to year-end  1998. The loan to deposit ratio was 84.5% at December
31, 1999, compared to 70.8% at December 31, 1998 and 72.4% at December 31, 1997.

         The following  table  summarizes the Company's loan  portfolio,  net of
unearned income:
<TABLE>
<CAPTION>
                                                                        At December 31
                                                      ------------------------------------------------------
                                                            1999              1998              1997
                                                            ----              ----              ----
                                                                     (dollars in thousands)
<S>                                                       <C>               <C>                <C>
           Real Estate:
              Mortgage                                     $58,058           $51,603           $42,158
              Home equity                                    4,632             4,793             5,769
              Construction                                  19,029            14,330             8,472
                                                           -------           -------            ------
                 Total real estate                         $81,719           $70,726           $56,399
           Commercial                                       20,109            17,674            17,816
           Bank cards                                          795               704               508
           Installment                                      27,723            22,029            15,626
                                                           -------           -------           -------
                                                          $130,346          $111,133           $90,349
           Less unearned income                               (291)             (300)             (341)
                                                             -----             -----             -----
                                                           130,055           110,833            90,008
           Allowance for loan losses                        (1,487)           (1,267)           (1,176)
                                                           -------           -------           -------
           Loans, net                                     $128,568          $109,566           $88,832
                                                          ========          ========           =======
</TABLE>

         As shown in the above  table,  the total  amount of real  estate  loans
outstanding  increased  by $11.0  million in 1999 and by $14.3  million in 1998.
During 1999,  the amount of installment  loans to individuals  increased by $5.7
million,  compared  to an  increase  of $6.4  million in 1998  compared to 1997.
Commercial,  financial and agricultural  loans increased by $2.4 million in 1999
compared to a decrease of $142,000 in 1998.

         At December 31, 1999, no  concentrations  of loans  exceeding  10.0% of
total loans existed which were not disclosed as a separate category of loans.



                                      -13-
<PAGE>

         The  following  table  shows the  maturity of loans  outstanding  as of
December 31, 1999. Also provided are the amounts due classified according to the
sensitivity to changes in interest rates.
<TABLE>
<CAPTION>
                                                                       Maturing
                                                 ------------------------------------------------------
                                                                After One
                                                  Within One    but Within     After Five
                                                     Year       Five Years        Years           Total
                                                     ----       ----------        -----           -----
                                                                   (dollars in thousands)
<S>                                               <C>            <C>             <C>           <C>
              Real estate mortgage                   $311        $44,831         $12,916        $58,058
              Installment                             860         24,509           2,354         27,723
              Other (1)                            42,085          2,305             175         44,565
                                                   ------          -----             ---         ------
                                                  $43,256        $71,645         $15,445       $130,346
                                                  =======        =======         =======       ========
              Loans maturing with:
                Fixed interest rates                                                            $45,210
                Variable interest rates                                                          85,136
                                                                                                 ------
                                                                                               $130,346
                                                                                               ========
</TABLE>
---------------
(1)   Includes home equity, real estate construction,  bank card, and commercial
      loans.

         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 $1,789,000 at December 31, 1999, compared
to $595,000 at December 31, 1998 and $734,000 at December 31, 1997. The increase
in non-performing  loans in 1999 reflects a decrease in loans accounted for on a
non-accrual  basis and an  increase in loans  contractually  past due 90 days or
more. The increase in loans  contractually past due 90 days or more includes one
large loan of $649,000,  three loans to the same borrower totaling $194,000, and
one  additional  large loan of $255,000.  All of these loans are well secured by
real estate and no significant losses are expected regardless of the resolution.

         Management  forecloses on  delinquent  real estate loans when all other
repayment  possibilities  have been  exhausted.  Real  estate  acquired  through
foreclosure  (OREO) was $369,274 at December 31, 1999,  compared to $479,725 and
$313,000 at December 31, 1998 and 1997,  respectively.  All foreclosed  property
held at  December  31,  1999  was in the  Company's  primary  service  area  and
consisted of two single-family dwellings, ten building lots, and a 5-acre parcel
of improved  land.  The Bank has incurred  current  period  expenses  related to
carrying  OREO on its books of $11,000  in 1999 and  $8,000 in 1998.  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.  The Bank is actively marketing
all foreclosed real estate and does not anticipate material write-downs in value
before disposition.

         Management does not believe that the level of  non-performing  loans in
1999 reflects any systemic problem in the Company's loan portfolio.  At December
31, 1999,  non-accrual  loans totaled $109,000  compared to $237,000 at December
31, 1998 and $38,000 at December  31,  1997.  Management  does not



                                      -14-
<PAGE>

anticipate a material increase in non-performing assets, although it may move to
foreclose on borrowers whose loans were on a non-accrual  status at December 31,
1999.

         The following table summarizes non-performing loans:
<TABLE>
<CAPTION>
                                                                                            At December 31
                                                                                 --------------------------------------
                                                                                     1999         1998         1997
                                                                                     ----         ----         ----
                                                                                       (dollars in thousands)
<S>                                                                                 <C>            <C>          <C>
Loans accounted for on a non-accrual basis                                            $109         $237          $38
Loans contractually past due 90 days or more as to interest or
   principal payments (not included in non-accrual loans above)                      1,680          358          696
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                                                                         $1,789         $595         $734
                                                                                    ======         ====         ====
</TABLE>

         Loans 90 days or more past due are placed on non-accrual  status unless
well  secured and in the  process of  collection.  In 1999,  $12,103 of interest
income  was  reversed  when  loans  were  placed on  non-accrual  status or upon
foreclosure.  In 1998 and 1997,  $8,602  and  $10,895  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 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:
<TABLE>
<CAPTION>
                                                                                   For the Year Ended December 31
                                                                               ----------------------------------------
                                                                                   1999          1998         1997
                                                                                   ----          ----         ----
                                                                                       (dollars in thousands)
<S>                                                                                 <C>          <C>           <C>
Gross interest income that would have been recorded if the loans
  had been current and in accordance with their original terms                      $6           $19           $4
Interest income included in income on the loans                                      -             -            -
</TABLE>

         Management is not aware of any other loans at December 31, 1999,  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 on the  Company's
loan  portfolio,  given  the  loan  balances  and the  value  of the  underlying
collateral,  and has recognized losses where appropriate.  Non-performing  loans
are closely  monitored on an ongoing basis as part of the Company's  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  classification  system,
which classifies problem credits as substandard,  doubtful,  or loss, additional
provisions  for losses  are made  monthly.  Furthermore,  past  experiences  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 1.14% at December 31, 1999, compared to 1.14% at



                                      -15-
<PAGE>

December  31, 1998 and 1.31% at December  31,  1997.  The decrease in the ratios
reflects the growth of the  portfolio.  Management  feels that the growth of the
allowance for loans losses,  while not at the same rate as the portfolio growth,
is adequate to provide for future losses.  At December 31, 1999 the ratio of the
allowance for loan losses to non-performing loans was 83.1%,  compared to 212.9%
and 160.2% at December  31, 1998 and 1997,  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.

         The  following  table  summarizes  changes  in the  allowance  for loan
losses:
<TABLE>
<CAPTION>
                                                                                 1999           1998            1997
                                                                                 ----           ----            ----
                                                                                      (dollars in thousands)
<S>                                                                            <C>             <C>             <C>
Balance at beginning of period                                                  $1,267          $1,176         $1,212

Charge-offs:
   Commercial, financial and agricultural                                           61              24             74
   Real estate mortgage                                                              -              61             60
   Installment loans to individuals                                                 65              70            134
                                                                                    --              --            ---
      Total                                                                        126             155            268
Recoveries on previous loan losses:
   Commercial, financial and agricultural                                           $2              $8             $-
   Installment loans to individuals                                                 36              40             32
                                                                                    --              --             --
      Total                                                                         38              48             32
                                                                                    --              --             --
Net charge-offs                                                                    (88)           (107)          (236)
Provision charged to operations                                                    308             198            200
                                                                                   ---             ---            ---
Balance at end of period                                                        $1,487          $1,267         $1,176
                                                                                ======          ======         ======
Ratio of net loan losses to average net loans outstanding:
   Net charge-offs                                                                 $88            $107           $236
   Average net loans                                                           128,411          97,066         86,616
                                                                               -------          ------         ------
                                                                                 0.07%           0.11%          0.27%
                                                                                 -----           -----          -----
Ratio of allowance for loan losses to total loans, net of unearned income:
   Allowance for loan losses                                                    $1,487          $1,267         $1,176
   Total loans at period end                                                   130,055         110,833         90,008
                                                                               -------         -------         ------
                                                                                 1.14%           1.14%          1.31%
                                                                                 -----           -----          -----
Ratio of allowance for loan losses to non-performing loans:
   Allowance for loan losses                                                    $1,487          $1,267         $1,176
   Non-performing loans                                                          1,789             595            734
                                                                                 -----             ---            ---
                                                                                83.12%         212.94%        160.22%
                                                                                ------         -------        -------
</TABLE>

         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 economic conditions, changes
in the nature and value of the portfolio,  industry standards and other relevant
factors.  Specific  factors  considered



                                      -16-
<PAGE>

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.

         The  provision  for loan  losses  totaled  $308,000  for the year ended
December 31, 1999,  $198,000 and $200,000 for the years ended  December 31, 1998
and 1997, 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.

         The following  table shows the balance and  percentage of the Company's
allowance for loan losses allocated to each category of loans:
<TABLE>
<CAPTION>
                                                                    At December 31
                         ------------------------------------------------------------------------------------------------------
                                      1999                               1998                               1997
                         --------------------------------   --------------------------------   --------------------------------
                                               Percentage                         Percentage                         Percentage
                                   Percentage   of Loans              Percentage   of Loans              Percentage   of Loans
                         Reserve   of Reserve   Category    Reserve   of Reserve   Category    Reserve   of Reserve   Category
                         for Loan   for Loan    to Total    for Loan   for Loan    to Total    for Loan   for Loan     to Total
                          Losses     Losses       Loans      Losses     Losses       Loans      Losses     Losses       Loans
                          ------     ------       -----      ------     ------       -----      ------     ------       -----
                                                                (dollars in thousands)
<S>                      <C>          <C>        <C>        <C>           <C>        <C>       <C>           <C>        <C>
Commercial                 $205        14%        16%         $211        14%         16%        $197         17%        20%
Real estate
construction                196        13%        15%          131         9%         13%          94          8%         9%
Real estate mortgage (1)    786        53%        48%          693        47%         51%         721         61%        53%
Installment (2)             300        20%        21%          232        16%         20%         164         14%        18%
                            ---        ---        ---          ---        ---         ---         ---         ---        ---
                         $1,487       100%       100%       $1,267        85%        100%      $1,176        100%       100%
                         ======       ====       ====       ======        ===        ====      ======        ====       ====
</TABLE>
---------------
(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 securities portfolio serves several purposes. Portions of
the portfolio secure certain public and trust deposits.  The remaining  portions
are held as  investments  or used to assist the Company in  liquidity  and asset
liability management.  During 1999, total securities decreased to $45.4 million,
or 24.0% of total  assets at December 31, 1999.  During 1998,  total  securities
increased to $56.5 million, or 30.9% of assets at December 31, 1998.

         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  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 the lower of cost or market value.



                                      -17-
<PAGE>

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 high credit quality with short to medium term maturities.

         The  following  table  summarizes  the  book  value  of  the  Company's
securities held to maturity at the date indicated:
<TABLE>
<CAPTION>
                                                                      Book Value at December 31
                                                              ------------------------------------------
                                                                  1999           1998          1997
                                                                  ----           ----          ----
                                                                       (dollars in thousands)
<S>                                                             <C>             <C>          <C>
          U. S. Treasury and other U. S. government
            agencies and corporations                            $2,006          $2,023       $2,040
          States and political subdivisions                      23,019          24,794       15,817
          Corporate and other debt                                1,678             828            -
                                                                  -----             ---            -
                                                                $26,703         $27,645      $10,208
                                                                =======         =======      =======
</TABLE>

         The  following  table  summarizes  the  book  value  of  the  Company's
securities available for sale at the dates indicated.
<TABLE>
<CAPTION>
                                                                      Book Value at December 31
                                                              ----------------------------------------
                                                                  1999           1998          1997
                                                                  ----           ----          ----
                                                                       (dollars in thousands)
<S>                                                             <C>             <C>          <C>
          U. S. government agencies and corporations            $12,413         $17,912      $15,230
          Equities                                                4,622           3,983          712
          Mortgage-backed securities                              3,444           6,727        6,450
                                                                  -----           -----        -----
                                                                $20,479         $28,622      $22,392
                                                                =======         =======      =======
</TABLE>

         The book value and average yield of the Company's securities, including
securities  available for sale, at December 31, 1999, by  contractual  maturity,
are  reflected  in the  following  table.  Actual  maturities  will  differ from
contractual  maturities  because certain borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                                                       U. S. Treasury and
                                           States and                                     other U. S.
                                            political            Mortgage-backed          agencies and
                                          Subdivisions             Securities             corporations            Corporate Debt
                                       --------------------    --------------------    --------------------    --------------------

                                                 Weighted                Weighted                Weighted               Weighted
                                                  Average                 Average                 Average                Average
                                        Amount     Yield        Amount     Yield        Amount     Yield        Amount    Yield
                                        ------     -----        ------     -----        ------     -----        ------    -----

                                                                         (dollars in thousands)
<S>                                     <C>          <C>         <C>         <C>        <C>         <C>          <C>        <C>
Due in one year or less                    $195      8.00%         $  -      -             $  -     -              $  -     -
Due after one year through five years     4,412      5.73%          195      6.99%        1,299     5.92%             -     -
Due after five years through ten years    6,592      5.72%        1,427      6.57%        6,134     6.33%           948     8.47%
Due after ten years                      11,820      6.56%        1,822      6.51%        6,986     6.16%           730     8.13%
                                         ------      -----        -----      -----        -----     -----           ---     -----
                                        $23,019      6.17%       $3,444      6.57%      $14,419     6.21%        $1,678     8.32%
                                        =======      =====       ======      =====      =======     =====        ======     =====
</TABLE>


                                      -18-
<PAGE>

         As shown in the  table  above,  approximately  $195,000  or .41% of the
total  portfolio  will mature in one year or less while  $5.91  million or 12.5%
will mature after one year but within five years.  The fully taxable  equivalent
average yield on the entire portfolio was 6.96% for 1999,  compared to 7.12% for
1998 and 7.29% for 1997.  The book value of the  portfolio  exceeded  the market
value by $2.7 million at December 31, 1999.

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 located within the communities served.

         As shown in the following  table,  average total deposits grew by 13.9%
in 1999 and 18.2% in 1998. The average aggregate  interest rate paid on deposits
was 3.82% in 1999, compared to 4.05% for 1998 and 4.03% in 1997. The majority of
the Company's  deposits are higher  yielding  time deposits  because most of its
customers are  individuals  who seek higher yields than those offered on savings
and demand accounts.

         The following table is a summary of average  deposits and average rates
paid:
<TABLE>
<CAPTION>
                                                              For the Year Ended December 31
                            ---------------------------------------------------------------------------------------------------
                                        1999                               1998                              1997
                            ------------------------------    -------------------------------    ------------------------------
                             Average   Interest  Average       Average   Interest   Average       Average   Interest   Average
                             Balance     Paid      Rate        Balance     Paid      Rate         Balance     Paid      Rate
                             -------     ----      ----        -------     ----      ----         -------     ----      ----

                                                                 (dollars in thousands)

<S>                         <C>        <C>        <C>        <C>         <C>         <C>        <C>         <C>         <C>
Non-interest bearing
  demand deposits            $21,469      $ -        -%       $19,645       $ -         -%       $17,434       $ -         -%
Interest bearing demand
  deposits                    33,789      974     2.88%        26,219       754      2.88%        21,668       637      2.94%
Savings deposits              18,949      613     3.24%        15,361       497      3.24%        13,602       441      3.24%
Time deposits                 80,986    4,334     5.35%        75,083     4,266      5.68%        62,634     3,568      5.70%
                              ------    -----     -----        ------     -----      -----        ------     -----      -----
    Total                   $155,193   $5,921     3.82%      $136,308    $5,517      4.05%      $115,338    $4,646      4.03%
                            ========   ======     =====      ========    ======      =====      ========    ======      =====
</TABLE>

         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, 1999:

                            Time Deposits > $100,000
                            ------------------------
                                 (in Thousands)

                     Three months or less              $1,943
                     Three to six months                8,005
                     Six to twelve months               3,482
                     Over twelve months                 1,552
                                                     --------
                                                      $14,982

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



                                      -19-
<PAGE>

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 less  goodwill.  Total Capital
consists of Tier 1 Capital,  qualifying  subordinated  debt and a portion of the
allowance  for loan  losses.  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 12.3% at December  31, 1999,
compared to 13.3% at December 31, 1998 and 16.4% at December 31, 1997. The Total
Capital  ratio was 13.3% at December  31,  1999,  compared to 14.4% and 17.7% at
December  31,  1998 and 1997,  respectively.  These  ratios are in excess of the
mandated  minimum  requirements of 4.00% and 8.00%,  respectively.  The Leverage
ratio  consists  of Tier 1 capital  divided  by  quarterly  average  assets.  At
December  31,  1999,  the Bank's  Leverage  ratio was 9.1%  compared to 10.1% at
December  31, 1998 and 11.3% at December  31,  1997.  Each of these  exceeds the
required minimum leverage ratio of 3.00%.

         The following  table shows risk based capital  ratios and  stockholders
equity to total assets:
<TABLE>
<CAPTION>
                                                                          December 31
                                               ----------------------------------------------------------------
                                                  Regulatory
                                                   Minimum           1999             1998            1997
                                                   -------           ----             ----            ----
<S>                                                   <C>            <C>              <C>             <C>
     Tier 1 risk-based capital                        4.0%           12.3%            13.3%           16.4%
     Total risk-based capital                         8.0%           13.3%            14.4%           17.7%
     Leverage ratio                                   3.0%            9.1%            10.1%           11.3%
     Stockholders' equity to total assets             N/A             9.0%             9.4%           11.4%
</TABLE>

         The capital management function is an ongoing process.  Central to this
process is internal equity generation accomplished by earnings retention. During
1999, total stockholders' equity decreased by $30,330,  primarily as a result of
the decline in market  value of the  securities  available  for sale  portfolio.
Total  stockholders'  equity  increased  by  $1,277,338  in 1998 due to earnings
retention.  The return on average equity was 11.3% in 1999, compared to 12.2% in
1998 and 12.6% in 1997.  Total cash dividends were paid  representing 39% of net
income for 1999, while dividends represented 38% of net income for both 1998 and
1997. Book value per share was $8.88 at December 31, 1999,  compared to $8.94 at
December 31, 1998 and $8.30 at December 31, 1997.

         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,  1998,  the Bank  had $2.9  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 the
ability



                                      -20-
<PAGE>

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 sufficient to fund the net increase in loans.
However,  in 1999, the Company had to make use of its borrowing  availability as
the flow of deposits slowed.

         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 interval.

         At December 31, 1999, 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.





                                      -21-
<PAGE>

         The following  table  summarizes  the  contractual  repayment  terms or
nearest  repricing dates of the Company's  interest  earning assets and interest
bearing liabilities at December 31, 1999:
<TABLE>
<CAPTION>
                                                  Within           4-12            1-5            Over
                                                 3 Months         Months          Years          5 Years          Total
                                               --------------  -------------   -------------  --------------  --------------
                                                                  (dollars in thousands)
<S>                                               <C>           <C>              <C>            <C>
INTEREST EARNING ASSETS:
  Federal funds sold                                  $77             $-              $-              $-             $77
  Securities available for sale                    10,288          2,040           3,837           2,551          18,716
  Securities held to maturity                       1,006          1,600           9,490          14,607          26,703
  Loans                                            39,600          1,717          71,817          15,434         128,568
                                                  -------         ------         -------         -------         -------
    Total interest-earning assets                 $50,971         $5,357         $85,144         $32,592        $174,064
                                                  =======         ======         =======         =======        ========

INTEREST BEARING LIABILITIES:
  Deposits:
    Interest bearing demand                            $0        $32,478              $-              $-         $32,478
    Savings                                             -         19,336               -               -          19,336
    Time deposits, $100,000 and over                1,943          8,005           5,034               -          14,982
    Other time deposits                            12,247         36,206          16,687               -          65,140
  Federal funds purchased and securities
     sold under repurchase agreements                 273              -               -               -             273
  FHLB advances                                    14,000          5,000               -               -          19,000
  Long-term debt                                        -              9              18               -              27
                                                        -             --              --              --              --

    Total interest-bearing liabilities            $28,463       $101,034         $21,739              $0        $151,236
                                                  =======       ========         =======              ==        ========

Period gap                                        $22,508       ($95,677)        $63,405         $32,592         $22,828
                                                  =======       ========         =======         =======         =======

Cumulative gap                                    $22,508       ($73,169)        ($9,764)       $22,828
                                                  =======       ========         =======        =======

Ratio of cumulative gap to total
  earning assets                                   12.93%        -42.04%          -5.61%         13.11%
                                                   ======        =======          ======         ======
</TABLE>

         Of the amount of loans due after 12 months, $43.1 million  had floating
or adjustable rates of interest and $44.1 million had fixed rates of interest.

Forward-Looking Statements

         Certain   information   contained  in  this   discussion   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
customer 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



                                      -22-
<PAGE>

materially  from any future results,  performance or  achievements  expressed or
implied by such forward-looking statements.

ITEM 7.      FINANCIAL STATEMENTS

         The  following   consolidated   financial  statements  and  independent
auditors' report thereon are filed as a part of this report following Item 13:

         Independent Auditors' Report
         Consolidated Balance Sheets as of December 31, 1999 and 1998
         Consolidated  Statements  of Income for the Years  Ended  December  31,
         1999, 1998 and 1997
         Consolidated  Statements  of  Stockholders'  Equity for the Years Ended
         December 31, 1999, 1998 and 1997
         Consolidated  Statements of Cash Flows for the Years Ended December 31,
         1999, 1998 and 1997
         Notes to Consolidated Financial Statements

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

         There  were  no  changes  in  or  disagreements   with  accountants  on
accounting and financial disclosure as defined by Item 304 of Regulation S-B.


                                    PART III
                                    --------

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

         Information  set  forth  under  the  caption  "ELECTION  OF  DIRECTORS;
SECURITY  OWNERSHIP  OF  MANAGEMENT  AND CERTAIN  BENEFICIAL  OWNERS" on pages 2
through 6 of the definitive 2000 Proxy Statement of the Registrant  furnished to
shareholders  in connection with its Annual Meeting to be held on April 25, 2000
(the "2000 Proxy Statement") is hereby incorporated by reference.

ITEM 10.     EXECUTIVE COMPENSATION

         Information  set forth  under  the  heading  "REMUNERATION"  on pages 6
through 7 of the 2000 Proxy Statement is hereby incorporated by reference.

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT

         Information  set  forth  under  the  heading  "Security   Ownership  of
Management" and "Security  Ownership of Certain Beneficial Owners" on page 4, of
the 2000 Proxy Statement, is hereby incorporated by reference.



                                      -23-
<PAGE>

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information set forth under the heading "Certain  Transactions" on page
8 of the 2000 Proxy Statement is hereby incorporated by reference.

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         The following  documents are attached hereto 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).
         27     Financial Data Schedule (filed electronically only).

(b)      Reports on Form 8-K

         No reports on Form 8-K were filed during the quarter ended December 31,
         1999.


         With the exception of the information herein expressly  incorporated by
reference,  the 2000 Proxy Statement of the Registrant is not to be deemed filed
as part of this Annual Report on Form 10-KSB.






                                      -24-
<PAGE>




                        CENTRAL VIRGINIA BANKSHARES, INC.

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 1999


<PAGE>

--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT                                                  1
--------------------------------------------------------------------------------

CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated balance sheets                                          2 - 3

     Consolidated statements of income                                    4 - 5

     Consolidated statements of stockholders' equity                          6

     Consolidated statements of cash flows                                7 - 8

     Notes to consolidated financial statements                          9 - 30
--------------------------------------------------------------------------------


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Central Virginia Bankshares, Inc.
Powhatan, Virginia

We have audited the accompanying consolidated balance sheets of Central Virginia
Bankshares,  Inc.,  and  subsidiary  as of December  31, 1999 and 1998,  and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the  three  years in the  period  ended  December  31,  1999.  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  generally   accepted  auditing
standards.  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, 1999 and 1998,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1999,  in  conformity  with  generally  accepted
accounting principles.


                                            /s/ Mitchell, Wiggins & Company, LLP



Richmond, Virginia
January 20, 2000





                                       -1-


<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS                                                            1999               1998
----------------------------------------------------------------------------------------------
<S>                                                          <C>                <C>
Cash and due from banks                                      $   5,587,252      $   7,812,804

Federal funds sold                                                  77,000                  -
                                                        --------------------------------------

           Total cash and cash equivalents                       5,664,252          7,812,804



Securities available for sale (Note 3)                          18,715,596         28,888,350



Securities held to maturity (Note 3)                            26,703,152         27,645,062



Mortgage loans held for sale                                       360,772            759,466



Loans: (Notes 4, 11, and 12)
     Commercial                                                 20,109,229         17,674,195
     Real estate:
        Mortgage                                                58,057,618         51,602,843
        Home equity                                              4,632,330          4,792,595
        Construction                                            19,028,495         14,329,842
     Bank cards                                                    795,395            704,370
     Installment                                                27,723,212         22,029,060
        Less unearned discount                                    (291,178)          (299,602)
     Allowance for loan losses                                  (1,486,900)        (1,267,192)
                                                        --------------------------------------
           Loans, net                                          128,568,201        109,566,111
                                                        --------------------------------------


Bank premises and equipment, net (Note 5)                        4,602,207          4,281,687
Accrued interest receivable                                      1,406,052          1,467,595
Other assets                                                     3,312,008          2,208,419
                                                        --------------------------------------
                                                             $ 189,332,240      $ 182,629,494
                                                        ======================================
</TABLE>

See Notes to Consolidated Financial Statements.


                                      -2-
<PAGE>
<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                    1999               1998
----------------------------------------------------------------------------------------------------
<S>                                                                <C>                <C>
Liabilities
     Deposits:
        Demand deposits                                            $  20,276,263      $  23,566,911
        Interest bearing demand deposits, money
           market accounts, and NOW accounts                          32,477,640         31,769,395
        Savings deposits                                              19,335,962         17,305,350
        Time deposits, $100,000 and over:  (Note 6)
           Retail certificates of deposit                             11,986,378         12,530,199
           Retirement accounts                                         2,995,158          2,772,715
        Other time deposits:  (Note 6)
           Retail certificates of deposit                             54,675,801         56,438,262
           Retirement accounts                                        10,463,799         10,343,969
                                                              --------------------------------------

                                                                     152,211,001        154,726,801

     Federal funds purchased and securities
        sold under repurchase agreements                                 273,042          5,080,192
     FHLB borrowings (Note 7)                                         19,000,000          5,000,000
     Note payable (Note 8)                                                27,000             36,000
     Accrued interest payable                                            394,724            375,777
     Other liabilities                                                   339,672            293,593
                                                              --------------------------------------
                                                                     172,245,439        165,512,363
                                                              --------------------------------------

Commitments and Contingencies (Note 11)

Stockholders' Equity
     Common stock, $1.25 par value;
        6,000,000 shares authorized; 1,923,156
        and 1,914,147 shares issued and out-
        standing in 1999 and 1998, respectively                        2,403,945          2,392,684
     Surplus                                                           4,337,689          4,238,689
     Retained earnings                                                11,503,480         10,310,831
     Accumulated other comprehensive
        income                                                        (1,158,313)           174,927
                                                              --------------------------------------
                                                                      17,086,801         17,117,131
                                                              --------------------------------------

                                                                   $ 189,332,240      $ 182,629,494
                                                              ======================================
</TABLE>



                                      -3-
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                                          1999             1998            1997
-------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>             <C>
Interest income:
     Interest and fees on loans                                       $ 10,871,174     $ 9,131,040     $ 8,656,580
     Interest on securities:
        U. S. government agencies and corporations                       1,289,021       1,555,869       1,115,884
        U. S. Treasury securities                                          126,067         121,716          54,349
        States and political subdivisions                                1,565,620       1,168,126         726,564
        Other                                                              390,833         140,588          72,207
     Interest on federal funds sold                                          2,694         210,513         314,940
                                                                 --------------------------------------------------
                                                                        14,245,409      12,327,852      10,940,524
                                                                 --------------------------------------------------

Interest expense:
     Interest on deposits                                                5,921,585       5,517,379       4,646,081
     Interest on federal funds purchased and
        securities sold under repurchase agreements                        323,991          44,431          55,159
     Interest on FHLB borrowings                                           426,645         296,562         144,625
     Interest on note payable                                                2,340           3,060           3,780
                                                                 --------------------------------------------------
                                                                         6,674,561       5,861,432       4,849,645
                                                                 --------------------------------------------------
           Net interest income                                           7,570,848       6,466,420       6,090,879

Provision for loan losses (Note 4)                                         308,000         197,999         200,000
                                                                 --------------------------------------------------
           Net interest income after
               provision for loan losses                                 7,262,848       6,268,421       5,890,879
                                                                 --------------------------------------------------

Other income:
     Deposit fees and charges                                              982,788         687,696         581,896
     Realized gain on sales of securities
        available for sale                                                   5,788          88,342          16,353
     Other                                                                 350,548         381,639         167,334
                                                                 --------------------------------------------------
                                                                         1,339,124       1,157,677         765,583
                                                                 --------------------------------------------------

Other expenses:
     Salaries and wages                                                  2,330,686       1,935,153       1,572,054
     Pensions and other employee benefits                                  600,662         500,156         427,134
     Occupancy expense                                                     267,921         260,884         249,622
     Equipment depreciation                                                482,864         354,477         319,210
     Equipment repairs and maintenance                                     220,749         181,304         170,000
</TABLE>


                                   (Continued)


                                      -4-
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME (Continued)
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                                          1999            1998             1997
-------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>              <C>
     Advertising and public relations                                     174,857         252,977          175,359
     Federal insurance premiums                                            22,410          18,872           12,375
     Office supplies, telephone, and postage                              437,606         403,106          338,354
     Taxes and licenses                                                   134,325         116,718          130,186
     Legal and professional fees                                          285,551         118,084          138,048
     Other operating expenses                                             970,206         704,645          630,791
                                                                  -------------------------------------------------
                                                                        5,927,837       4,846,376        4,163,133
                                                                  -------------------------------------------------
           Income before income taxes                                   2,674,135       2,579,722        2,493,329

Income taxes (Note 9)                                                     714,045         643,355          659,239
                                                                  -------------------------------------------------

           Net income                                                 $ 1,960,090     $ 1,936,367      $ 1,834,090
                                                                  =================================================

Basic earnings per share                                                   $ 1.02          $ 1.01           $ 0.96
                                                                  =================================================

Diluted earnings per share                                                 $ 1.02          $ 1.01           $ 0.96
                                                                  =================================================
</TABLE>

See Notes to Consolidated Financial Statements.




                                      -5-
<PAGE>
CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                                                                            Other
                                                                    Common                 Retained     Comprehensive
                                                                    Stock       Surplus    Earnings         Income         Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>        <C>             <C>            <C>
Balance, January 1, 1997                                        $2,372,850    $4,091,019 $ 7,975,381     $   4,357      $14,443,607
                                                                                                                       -------------
  Comprehensive income:
    Net income                                                           -             -   1,834,090             -        1,834,090
    Other comprehensive income, net of tax:
       Unrealized holding gains arising during the period
         net of deferred income taxes of $111,038                        -             -           -       215,545          215,545
       Less reclassification adjustment for gains included in
         net income, net of deferred income taxes of $5,560              -             -           -       (10,793)         (10,793)
                                                                                                                       -------------

       Total comprehensive income                                                                                         2,038,842
                                                                                                                       -------------
  Issuance of common stock:
    6,222 shares pursuant to exercise
       of stock options                                              7,778        20,221           -               -         27,999
    10 shares in employee bonuses                                       12            92           -               -            104
    2,764 shares pursuant to dividend
       reinvestment plan                                             3,455        25,396           -               -         28,851
  Cash dividends declared, $.368 per share                               -             -    (699,610)              -       (699,610)
                                                               ---------------------------------------------------------------------
Balance, December 31, 1997                                       2,384,095     4,136,728   9,109,861         209,109     15,839,793
                                                                                                                       -------------
  Comprehensive income:
    Net income                                                           -             -   1,936,367               -      1,936,367
    Other comprehensive income, net of tax:
       Unrealized holding gains arising during the period,
         net of deferred income taxes of $12,428                         -             -           -          24,124         24,124
       Less reclassification adjustment for gains included in
         net income, net of deferred income taxes of $30,036             -             -           -         (58,306)       (58,306)
                                                                                                                       -------------

       Total comprehensive income                                                                                         1,902,185
                                                                                                                       -------------
  Issuance of common stock:
    36 shares in employee bonuses                                       45           445           -               -            490
    6,835 shares pursuant to dividend
       reinvestment plan                                             8,544       101,516           -               -        110,060
  Cash dividends declared, $.385 per share                               -             -    (735,397)              -       (735,397)
                                                               ---------------------------------------------------------------------
Balance, December 31, 1998                                       2,392,684     4,238,689  10,310,831         174,927     17,117,131
                                                                                                                       -------------
  Comprehensive income:
    Net income                                                           -             -   1,960,090               -      1,960,090
    Other comprehensive income, net of tax:
       Unrealized holding losses arising during the period,
         net of deferred income taxes of $694,932                        -             -           -      (1,329,420)    (1,329,420)
       Less reclassification adjustment for gains included in
         net income, net of deferred income taxes of $1,968              -             -           -          (3,820)        (3,820)
                                                                                                                       -------------

       Total comprehensive income                                                                                           626,850
                                                                                                                       -------------
  Issuance of common stock:
    14 shares in employee bonuses                                       18           154           -               -            172
    8,995 shares pursuant to dividend
       reinvestment plan                                            11,243        98,846           -               -        110,089
  Cash dividends declared, $.40 per share                                -             -    (767,441)              -       (767,441)
                                                               ---------------------------------------------------------------------
Balance, December 31, 1999                                      $2,403,945    $4,337,689 $11,503,480     $(1,158,313)   $17,086,801
                                                               =====================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

                                      -6-
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                                             1999              1998              1997
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>               <C>
Cash Flows From Operating Activities
     Net income                                                           $1,960,090        $1,936,367        $1,834,090
     Adjustments to reconcile net income
        to net cash provided by operating activities:
        Depreciation                                                         574,155           441,044           400,281
        Amortization                                                               -                 -             2,766
        Deferred income taxes                                                (63,822)          (10,611)           50,496
        Provision for loan losses                                            308,000           197,999           200,000
        Amortization and accretion on securities                              87,306            51,131            71,930
        Realized gain on sales of securities
            available for sale                                                (5,788)          (88,342)          (16,353)
        Gain on sale of equipment                                                  -                 -            (7,430)
        Loss on sale of foreclosed real estate                                32,775                 -             9,362
        Change in operating assets and liabilities:
            (Increase) decrease in assets:
               Mortgage loans held for sale                                  398,694          (428,116)         (129,552)
               Accrued interest receivable                                    61,543          (148,715)         (515,689)
               Other assets                                                 (679,071)         (407,381)          (33,737)
            Increase (decrease) in liabilities:
               Accrued interest payable                                       18,947            48,014            94,817
               Other liabilities                                              46,079           154,753           (30,704)
                                                                   ------------------------------------------------------
               Net cash provided by operating
                   activities                                              2,738,908         1,746,143         1,930,277
                                                                   ------------------------------------------------------

Cash Flows From Investing Activities
     Proceeds from maturities of
        securities held to maturity                                        2,189,100         1,785,000           440,000
     Purchase of securities held to maturity                              (1,304,877)      (11,588,886)       (8,087,324)
     Proceeds from sales and maturities of
        securities available for sale                                      8,757,685        13,578,242         7,180,442
     Purchase of securities available for sale                              (638,900)      (19,754,346)      (21,951,343)
     Net increase in loans made to customers                             (19,310,090)      (21,099,882)       (5,007,369)
     Proceeds from sale of equipment                                               -                 -             7,600
     Net purchases of premises and equipment                                (649,593)       (1,171,349)         (336,866)
     Proceeds from sale of foreclosed real estate                            163,950                 -           360,109
     Net expenditures on foreclosed real estate                              (86,274)                -                 -
     Increase in cash value, life insurance                                  (19,331)          (12,251)          (17,385)
                                                                   ------------------------------------------------------
            Net cash (used in) investing activities                      (10,898,330)      (38,263,472)      (27,412,136)
                                                                   ------------------------------------------------------
</TABLE>

                                   (Continued)


                                      -7-
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                                           1999            1998            1997
-------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>             <C>
Cash Flows From Financing Activities
     Net increase (decrease) in deposits                                (2,515,800)     32,053,260      12,792,601
     Net increase (decrease) in federal funds
        purchased and securities sold
        under repurchase agreements                                     (4,807,150)      3,886,305        (340,592)
     Net proceeds from FHLB borrowings                                  14,000,000               -       5,000,000
     Repayment of note payable                                              (9,000)         (9,000)         (9,000)
     Net proceeds from issuance
        of common stock                                                    110,261         110,550          56,954
     Dividends paid                                                       (767,441)       (735,397)       (699,610)
                                                                   ------------------------------------------------
           Net cash provided by financing
               activities                                                6,010,870      35,305,718      16,800,353
                                                                   ------------------------------------------------

           (Decrease) in cash and
               cash equivalents                                         (2,148,552)     (1,211,611)     (8,681,506)

Cash and cash equivalents, beginning                                     7,812,804       9,024,415      17,705,921
                                                                   ------------------------------------------------

Cash and cash equivalents, ending                                      $ 5,664,252     $ 7,812,804     $ 9,024,415
                                                                   ================================================

Supplemental Disclosures Of
     Cash Flow Information
        Interest paid                                                  $ 6,655,614     $ 5,813,418     $ 4,754,828
        Income taxes paid                                                  777,546         635,927         664,064

Supplemental Schedule Of Noncash
     Investing Activities
        Other real estate, equipment
           and investments acquired
           in settlement of loans                                                -         168,000         313,000
</TABLE>

See Notes to Consolidated Financial Statements.



                                      -8-
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies

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 six branches  located in the
Virginia counties of Powhatan,  Chesterfield, 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 a partnership interest in a title insurance company.

Basis 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.

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
with the Federal  Reserve Bank.  The total of these  balances,  after  receiving
credit for vault cash on hand,  was  approximately  $50,000 at December 31, 1999
and 1998.

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.


                                       -9-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies (Continued)

A majority of the Bank's loan  portfolio  consist of  single-family  residential
loans in the Virginia counties of Powhatan,  Chesterfield, 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.

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.

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
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, 1999, 1998, and 1997.

Mortgage loans held for sale: Mortgage loans originated and held for sale in the
secondary market are reported at the lower of cost or market value determined on
an aggregate basis.



                                      -10-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies (Continued)

Loans and  allowance  for loan losses:  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.

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.  The
allowance  is an amount  that  management  believes  will be  adequate to absorb
estimated  losses on  existing  loans  that may become  uncollectible,  based on
management's  evaluation of the collectibility of the loan portfolio,  including
the nature of the portfolio,  credit  concentrations,  trends in historical loss
experience,  specific impaired loans, and economic conditions.  The allowance is
increased  by a provision  for loan  losses,  which is charged to  expense,  and
reduced by charge-offs, net of recoveries.

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.

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.

The basic policy of the Bank is to charge off loans when the loss can be readily
determined.  Changes in the allowance for loan losses relating to impaired loans
are charged or credited to the provision for loan losses.

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.  Loans may be returned to accrual  status when all
principal  and interest  amounts  contractually  due are  reasonably  assured of
repayment.



                                      -11-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies (Continued)

When a loan  is  classified  as  nonaccrual,  all  interest  receivable  on that
particular  loan is  charged  back to  income  at that  time.  When  the  future
collectibility of the recorded loan balance is expected,  interest income may be
recognized on a cash basis. On charged-off loans, cash receipts in excess of the
amount  charged to the allowance for loan losses are recognized as income on the
cash basis.

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  computed  using the  straight-line  method over the
following estimated useful lives.

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

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.  Foreclosed  real estate is included with other assets on
the accompanying consolidated balance sheets.

Advertising costs:  Advertising costs are expensed as incurred.

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.



                                      -12-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 1.  Significant Accounting Policies (Continued)

Earnings per share: In 1997, the Financial Accounting Standards Board issued its
Statement of Financial  Accounting  Standards  No. 128 (SFAS 128)  "Earnings per
Share." This Statement  specifies the  computation,  presentation and disclosure
requirements for earnings per share for entities with publicly held common stock
or potential common stock. Statement 128 replaced the calculation of primary and
fully  diluted  earnings  per share with basic and diluted  earnings  per share.
Basic earnings per share excludes any dilutive effects of options,  warrants and
convertible  securities.  Diluted  earnings  per  share is very  similar  to the
previously  reported  fully diluted  earnings per share.  All earnings per share
amounts for all periods have been presented and, where appropriate,  restated to
conform to the Statement 128 requirements.

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.  Options on 122,175  shares of common  stock were not included in
computing diluted EPS because their effect was antidilutive.
<TABLE>
<CAPTION>
                                                                  1999            1998            1997
                                                         -------------------------------------------------
<S>                                                           <C>             <C>             <C>
Income available to common stockholders
     used in basic EPS                                        $ 1,960,090     $ 1,936,367     $ 1,834,090
                                                         =================================================

Weighted average number of common
     shares used in basic EPS                                   1,919,132       1,910,484       1,903,672

Effect of dilutive securities:
     Stock options                                                      -               -               -
                                                         -------------------------------------------------

Weighted number of common shares and
     dilutive potential stock used in diluted
     EPS                                                        1,919,132       1,910,484       1,903,672
                                                         =================================================
</TABLE>

Note 2.  Stock Split

On July 14, 1998,  the Board of Directors  authorized a 2-for-1 stock split.  In
connection  with the stock split,  the number of issued and  outstanding  shares
increased by 955,847 shares,  and the par value of each share decreased to $1.25
per share. All references in the accompanying financial statements to the number
of common  shares and per share  amounts for prior  years have been  restated to
reflect the stock split.



                                      -13-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 3.  Securities

Carrying amounts and approximate market values of securities  available for sale
are as follows:
<TABLE>
<CAPTION>
                                                             December 31, 1999
                                     -------------------------------------------------------------------
                                                            Gross          Gross         Approximate
                                           Amortized     Unrealized      Unrealized         Market
                                              Cost          Gains          Losses           Value
                                     -------------------------------------------------------------------
<S>                                       <C>             <C>           <C>             <C>
U.S. government agencies
  and corporations                        $ 12,412,684    $        -    $ 1,026,590     $ 11,386,094
Equities                                     4,622,130           813        639,700        3,983,243
Mortgage-backed securities                   3,444,205         4,728        102,674        3,346,259
                                     -------------------------------------------------------------------
                                          $ 20,479,019    $    5,541    $ 1,768,964     $ 18,715,596
                                     ===================================================================

                                                             December 31, 1998
                                     -------------------------------------------------------------------
                                                             Gross          Gross         Approximate
                                           Amortized      Unrealized      Unrealized         Market
                                              Cost           Gains          Losses           Value
                                     -------------------------------------------------------------------
U.S. government agencies
   and corporations                       $ 17,911,720    $   218,920   $   112,769     $ 18,017,871
Equities                                     3,983,230        100,889        11,880        4,072,239
Mortgage-backed securities                   6,726,685         85,359        13,804        6,798,240
                                     -------------------------------------------------------------------
                                          $ 28,621,635    $   405,168   $   138,453     $ 28,888,350
                                     ===================================================================
</TABLE>

The amortized cost and approximate market value of securities available for sale
at December 31, 1999, 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.

                                                                Approximate
                                                  Amortized        Market
                                                     Cost          Value
                                             ------------------------------
Due in one year or less                                 $ -            $ -
Due after one year through five years               300,000        283,875
Due after five years through ten years            5,126,744      4,783,317
Due after ten years                               6,985,940      6,318,902
Equities                                          4,622,130      3,983,243
Mortgage-backed securities                        3,444,205      3,346,259
                                             ------------------------------
                                               $ 20,479,019    $18,715,596
                                             ==============================



                                      -14-

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 3.  Securities (Continued)

Carrying  amounts and  approximate  market  values of  securities  being held to
maturity are as follows:
<TABLE>
<CAPTION>
                                                                    December 31, 1999
                                            ------------------------------------------------------------------
                                                                  Gross           Gross         Approximate
                                                Amortized       Unrealized     Unrealized         Market
                                                  Cost            Gains          Losses            Value
                                            ------------------------------------------------------------------
<S>                                            <C>              <C>            <C>             <C>
U.S. Treasury and other
   U.S. government agencies
   and corporations                            $ 2,005,775      $   4,341      $   26,696      $ 1,983,420
Corporate and other debt                         1,678,114         80,767          17,207        1,741,674
States and political subdivisions               23,019,263        104,970       1,045,471       22,078,762
                                            ------------------------------------------------------------------
                                               $26,703,152      $ 190,078      $1,089,374      $25,803,856
                                            ==================================================================

                                                                   December 31, 1998
                                            ------------------------------------------------------------------
                                                                  Gross           Gross         Approximate
                                                Amortized       Unrealized     Unrealized         Market
                                                  Cost            Gains          Losses            Value
                                            ------------------------------------------------------------------
U.S. Treasury and other
   U. S. government agencies
   and corporations                           $ 2,023,399       $  40,401      $        -     $ 2,063,800
Corporate and other debt                          827,442               -               -         827,442
States and political subdivisions              24,794,221         924,260         112,130      25,606,351
                                            ------------------------------------------------------------------
                                              $27,645,062       $ 964,661      $  112,130     $28,497,593
                                            ==================================================================
</TABLE>

The amortized  cost and  approximate  market value of  securities  being held to
maturity at December 31, 1999, by contractual maturity, are shown below.

                                                               Approximate
                                                Amortized        Market
                                                  Cost            Value
                                            -------------------------------
Due in one year or less                       $    195,000    $    195,777
Due after one year through five years            5,410,425       5,403,199
Due after five years through ten years           8,547,029       8,313,777
Due after ten years                             12,550,698      11,891,103
                                            -------------------------------
                                              $ 26,703,152    $ 25,803,856
                                            ===============================


Securities  with an amortized  cost of $3,092,557  and  $4,153,610  and a market
value of $3,041,969 and $4,257,709 at December 31, 1999 and 1998,  respectively,
were pledged as collateral on public deposits and for other purposes as required
or permitted by law.



                                      -15-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 4.  Loans

Major classifications of loans are summarized as follows:

                                                   December 31,
                                      -------------------------------------
                                              1999               1998
                                      -------------------------------------
Commercial                                $  20,109,229      $  17,674,195
Real estate:
     Mortgage                                58,057,618         51,602,843
     Home equity                              4,632,330          4,792,595
     Construction                            19,028,495         14,329,842
Bank cards                                      795,395            704,370
Installment                                  27,723,212         22,029,060
                                      -------------------------------------
                                            130,346,279        111,132,905
Less unearned discount                         (291,178)          (299,602)
                                      -------------------------------------
                                            130,055,101        110,833,303
Allowance for loan losses                    (1,486,900)        (1,267,192)
                                      -------------------------------------
Loans, net                                $ 128,568,201      $ 109,566,111
                                      =====================================

Changes in the allowance for loan losses were as follows:

                                                Years Ended December 31,
                                       -----------------------------------------
                                            1999          1998          1997
                                       -----------------------------------------
Balance, beginning of year              $ 1,267,192   $ 1,175,842   $ 1,211,675
  Provision charged to operations           308,000       197,999       200,000
  Loans charged off                        (126,639)     (155,563)     (267,145)
  Recoveries                                 38,347        48,914        31,312
                                       -----------------------------------------
Balance, end of year                    $ 1,486,900   $ 1,267,192   $ 1,175,842
                                       =========================================

At  December  31,  1999,  the Bank had loans  amounting  to  $108,932  that were
specifically  classified  as  impaired.  The average  balance of impaired  loans
amounted to  approximately  $244,820 for the year ended  December 31, 1999.  The
allowance  for loan  losses  related to  impaired  loans  amounted to $20,570 at
December 31, 1999.  The  following is a summary of cash  receipts on these loans
and how they were applied in 1999:

Cash receipts applied to reduce
   principal balance                          $ 329,775
Cash receipts recognized as
   interest income                               16,666
                                          --------------
Total cash receipts                           $ 346,441
                                          ==============

Nonaccruing  loans  (principally   installment  and  commercial  loans)  totaled
$108,932,   $241,962,  and  $37,989  at  December  31,  1999,  1998,  and  1997,
respectively,  which had the effect of  reducing  net income  $5,975  ($.003 per
common  share),  $18,887 ($.01 per common  share),  and $4,403 ($.002 per common
share) for the years then ended, respectively.


                                      -16-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 5.  Bank Premises and Equipment

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

                                                     December 31,
                                            -----------------------------
                                                 1999            1998
                                            -----------------------------
Land                                         $   544,802     $   544,802
Buildings and improvements                     3,106,010       3,103,115
Furniture and equipment                        4,696,799       3,805,020
                                            -----------------------------
                                               8,347,611       7,452,937
Less accumulated depreciation                  3,745,404       3,171,250
                                            -----------------------------
                                             $ 4,602,207     $ 4,281,687
                                            =============================

Note 6.  Maturities of Certificates of Deposits

The scheduled  maturities of  certificates of deposits at December 31, 1999, are
as follows:

Year Ending
December 31
-----------------------------------------------------
2000                                    $ 58,565,865
2001                                       7,439,760
2002                                       7,357,714
2003                                       4,539,809
2004 and later                             2,217,988
                                   ------------------
                                        $ 80,121,136
                                   ==================

Note 7.  FHLB Borrowings

The borrowings from the Federal Home Loan Bank of Atlanta,  Georgia, are secured
by the mortgage  loan  portfolio of Central  Virginia  Bank.  The  borrowings at
December 31, 1999 and 1998, consist of the following:

                                                        1999            1998
                                                  ------------------------------
Interest payable quarterly at a fixed rate
  of 5.85%, principal due and payable
  on July 8, 2002                                  $  5,000,000    $  5,000,000
Interest payable quarterly at a fixed rate
  of 6.03%, principal due and payable
  on January 18, 2000                                10,000,000               -
Interest payable daily at a variable rate
  (currently 4.55%), principal due and
  payable on January 1, 2000                          4,000,000               -
                                                  ------------------------------
                                                   $ 19,000,000    $  5,000,000
                                                  ==============================


                                      -17-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 8.  Note Payable

The Corporation's subsidiary, Central Virginia Bank, has a note payable which is
secured by a first deed of trust on the bank  building in Powhatan and is due in
annual  principal  installments  of $9,000  plus  interest at the rate of 8% per
annum through the year 2002.  At December 31, 1999 and 1998,  the balance of the
note was $27,000 and $36,000, respectively.

Note 9.  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,
1999, 1998, and 1997, are as follows:

                                       1999           1998          1997
                                 -------------------------------------------
Currently payable                    $ 777,867      $ 653,966     $ 608,743
Deferred                               (63,822)       (10,611)       50,496
                                 -------------------------------------------
                                     $ 714,045      $ 643,355     $ 659,239
                                 ===========================================

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:
<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                                   -----------------------------------
                                                       1999        1998        1997
                                                   -----------------------------------
<S>                                                 <C>         <C>         <C>
Computed "expected" tax expense                     $ 909,250   $ 877,105   $ 847,732
Tax-exempt interest                                  (175,510)   (206,624)   (177,519)
Tax-exempt loan interest                              (31,446)    (22,844)     (5,717)
Disallowance of interest expense
     deduction for the portion attributable
     to carrying tax-exempt obligations                23,275      25,575      23,132
Other                                                 (11,524)    (29,857)    (28,389)
                                                   -----------------------------------
                                                    $ 714,045   $ 643,355   $ 659,239
                                                   ===================================
</TABLE>



                                      -18-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 9.  Income Tax Matters (Continued)

The deferred income tax provision consists of the following items:
<TABLE>
<CAPTION>
                                                                       Years Ended December 31,
                                                               --------------------------------------
                                                                   1999          1998          1997
                                                               --------------------------------------
<S>                                                              <C>           <C>           <C>
Difference between loan loss provision charged
     to operating expense and the bad debt
     deduction taken for income tax purposes                     $(49,803)     $(20,707)     $ 8,123
Interest income on nonaccrual loans
     recognized for federal income tax pur-
     poses, but not recognized for financial
     statements until received                                      5,648        (6,522)      25,635
Decrease in value of foreclosed real estate
     recognized for financial statements, but not
     recognized for income tax purposes until realized            (12,580)            -            -
Deduction for uncollectible late charges
     recognized for financial statements, but not
     recognized for income tax purposes until realized            (15,150)            -            -
Accretion of discount recognized for
     financial statements, but not recognized
     for income tax purposes until realized                       (11,219)        5,845        6,717
Difference between the depreciation methods
     used for financial statements and for income
     tax purposes                                                  19,282        10,773       10,021
                                                               --------------------------------------
                                                                 $(63,822)     $(10,611)     $50,496
                                                               ======================================
</TABLE>



                                      -19-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 9.  Income Tax Matters (Continued)

The  components  of the net  deferred  tax asset  included in other assets is as
follows at December 31:

                                                           1999          1998
                                                       -------------------------
Deferred tax assets:
     Allowance for loan losses                          $ 448,308     $ 373,607
     Less valuation allowance                            (149,421)     (124,523)
                                                       -------------------------
                                                          298,887       249,084
     Devaluation reserve on foreclosed property            12,580             -
     Unrealized loss on securities
         available for sale                               605,112             -
     Reserve for uncollectible late charges                15,150             -
     Interest income on nonaccrual loans                    4,183         9,831
                                                       -------------------------
                                                          935,912       258,915
                                                       -------------------------

Deferred tax liabilities:
     Property and equipment                               113,058        93,776
     Securities                                             8,843        20,062
     Unrealized gain on securities
         available for sale                                     -        91,788
                                                       -------------------------
                                                          121,901       205,626
                                                       -------------------------

Net deferred tax asset                                  $ 814,011     $  53,289
                                                       =========================

Note 10.  Profit-Sharing Plan

The Bank has a profit-sharing  plan for those employees who meet the eligibility
requirements set forth in the Plan.  Substantially  all the full-time  employees
are covered.  Contributions  to the Trust fund are  determined  each year by the
Board of  Directors.  The plan may be  amended  or  terminated  by the  Board of
Directors at any time. The  contributions for the years ended December 31, 1999,
1998, and 1997, were $184,372, $142,526, and $133,341, respectively.

Note 11.  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.



                                      -20
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 11.  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, 1999 and 1998, is as follows:

                                               1999              1998
                                         -----------------------------------
Commitments to extend credit                  $ 26,337,377     $ 32,132,566
Standby letters of credit                        1,425,202        1,901,084
                                         -----------------------------------
                                              $ 27,762,579     $ 34,033,650
                                         ===================================

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, 1999, was approximately
$19,800,000.

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 4.  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.



                                      -21-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 11.  Commitments and Contingencies (Continued)

Legal  proceedings:  In May 1999, Old Republic National Title Insurance Company,
in its own name and on behalf of twelve mortgage lenders insured by Old Republic
(collectively "Old Republic"),  commenced an action against the Bank that is now
pending in the  Circuit  Court for the  County of  Chesterfield,  Virginia.  Old
Republic alleges that after a title agency and real estate settlement  business,
Alliance Title Escrow,  Ltd., failed, Old Republic discovered that the president
of Alliance Title had  misappropriated  approximately  $1.6 million entrusted to
Alliance Title by various  lenders in connection  with  residential  real estate
closings in which Old  Republic  had issued or agreed to issue  title  insurance
policies.  Old  Republic  alleges that the Bank knew or should have known of the
misappropriation  of funds from the Alliance Title accounts  maintained with the
Bank and that the Bank and the co-defendant  were involved in a conspiracy.  Old
Republic claims  compensatory  damages of $1.6 million,  and further claims that
these  damages can be trebled and that Old Republic  can recover its  attorney's
fees.  Old  Republic  has also made a claim to recover  punitive  damages in the
amount  of  $350,000.  The Bank  has  denied  all  liability  and is  vigorously
defending the case.  The Bank has made a motion to dismiss the entire case which
is pending at this time. Although the Bank is vigorously defending the case, the
outcome of the litigation is uncertain.

Note 12. 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,
                             -----------------------------
                                  1999            1998
                             -----------------------------
Balance, beginning            $ 2,260,291     $ 1,797,346
  New loans                     1,302,348       2,067,488
  Repayments                   (1,207,134)     (1,604,543)
                             -----------------------------
Balance, ending               $ 2,355,505     $ 2,260,291
                             =============================




                                      -22-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 13.  Incentive Stock Option Plan

The  Corporation has a Stock Plan that provides for the grant of Incentive Stock
Options.  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.  Options may be  exercised  from date of grant
through  January  9,  2009.  Options  were  granted  in 1999  to all  directors,
officers, full and part-time employees with a minimum of two years experience at
the date of grant.

The following table presents a summary of options under the Plan at December 31:
<TABLE>
<CAPTION>
                                                                Shares Under Options
                                                       ---------------------------------------
                                      Option Price        1999         1998         1997
                                     ---------------------------------------------------------
<S>                                    <C>              <C>            <C>          <C>
Outstanding, beginning of year         $      -               -            -            -
  Options granted                         13.50         127,325            -            -
  Options exercised                           -               -            -            -
  Options forfeited                       13.50          (5,150)           -            -
                                     ---------------------------------------------------------
Outstanding, end of year               $  13.50         122,175            -            -
                                     =========================================================
</TABLE>

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 no options
granted during the years ended December 31, 1998, or December 31, 1997.

                                      1999            1998            1997
                                 ---------------------------------------------
Net income
  As reported                     $ 1,960,090     $ 1,936,367     $ 1,834,090
                                 =============================================

  Pro forma                       $ 1,891,012     $ 1,936,367     $ 1,834,090
                                 =============================================

Basic earnings per share
  As reported                     $      1.02     $      1.01     $      0.96
                                 =============================================

  Pro forma                       $      0.99     $      1.01     $      0.96
                                 =============================================

Diluted earnings per share
  As reported                     $      1.02     $      1.01     $      0.96
                                 =============================================

  Pro forma                       $      0.99     $      1.01     $      0.96
                                 =============================================


                                      -23-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 13.  Incentive Stock Option Plan (Continued)

Prior to 1998,  the  Corporation  had a stock option plan which  authorized  the
grant of 15,000  shares of common stock on July 14, 1987.  During the year ended
December 31, 1997,  options were  exercised  for the purchase of 6,222 shares of
common stock at $4.50 per share.  No options were  exercised for the purchase of
common  stock during the year ended  December  31,  1996.  At December 31, 1997,
there were no remaining unexercised options.

Note 14.  Regulatory Matters

The Bank 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 Bank's  financial  statements.  Under  capital  adequacy
guidelines and the regulatory  framework for prompt corrective  action, the Bank
must meet specific capital guidelines that involve quantitative  measures of the
Bank's assets,  liabilities,  and certain  off-balance sheet items as calculated
under  regulatory   accounting   practices.   The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  the Bank 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, 1999, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 1999, the most recent  notification  from the Federal Reserve
Bank categorized the Bank as well capitalized under the regulatory framework for
prompt corrective  action. To be categorized as well capitalized,  the Bank 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.







                                      -24-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 14.  Regulatory Matters (Continued)

The Bank's actual capital amounts and ratios are also presented in the table.
<TABLE>
<CAPTION>
                                                                                  To Be Well Capitalized
                                                                For Capital       Under Prompt Corrective
                                              Actual         Adequacy Purposes      Action Provisions
                                      -------------------------------------------------------------------
                                        Amount     Ratio      Amount     Ratio      Amount     Ratio
                                      -------------------------------------------------------------------
                                                            (Dollars in Thousands)
<S>                                    <C>         <C>      <C>           <C>     <C>          <C>
As of December 31, 1999:
     Total Capital                     $ 18,442    13.31%   $ 11,085      8.00%   $ 13,856     10.00%
        (to Risk Weighted Assets)
     Tier I Capital                      16,955    12.26%      5,532      4.00%      8,298      6.00%
        (to Risk Weighted Assets)
     Tier I Capital                      16,955     9.11%      7,445      4.00%      9,306      5.00%
        (to Average Assets)

As of December 31, 1998:
     Total Capital                     $ 17,390    14.35%   $  9,695      8.00%   $ 12,118     10.00%
        (to Risk Weighted Assets)
     Tier I Capital                      16,123    13.30%      4,847      4.00%      7,271      6.00%
        (to Risk Weighted Assets)
     Tier I Capital                      16,123    10.07%      6,405      4.00%      8,006      5.00%
        (to Average Assets)
</TABLE>

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 $2,941,108 in
1999 without regulatory approval.

Note 15.  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.

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.



                                      -25-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 15.  Fair Value of Financial Instruments (Continued)

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.

Note payable: The carrying amount of note payable approximates its fair value.






                                      -26-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 15.  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, 1999 and 1998:
<TABLE>
<CAPTION>
                                                                1999                               1998
                                               -----------------------------------------------------------------------
                                                     Carrying          Estimated         Carrying          Estimated
                                                      Amount          Fair Value          Amount          Fair Value
                                               -----------------------------------------------------------------------
<S>                                                <C>               <C>               <C>               <C>
Financial assets:
     Cash and cash equivalents                     $  5,664,252      $  5,664,252      $  7,812,804      $  7,812,804
     Securities available for sale                   18,715,596        18,715,596        28,888,350        28,888,350
     Securities held to maturity                     26,703,152        25,803,856        27,645,062        28,497,593
     Mortgage loans held for sale                       360,772           360,772           759,466           759,466
     Loans, net                                     128,568,201       128,473,000       109,566,111       113,699,000
     Accrued interest receivable                      1,406,052         1,406,052         1,467,595         1,467,595

Financial liabilities:
     Demand and variable rate deposits               72,089,865        72,089,865        72,641,656        72,641,656
     Fixed-rate certificates of deposits             80,121,136        79,942,000        82,085,145        83,893,000
     Federal funds purchased and
         securities sold under repurchase
         agreements                                     273,042           273,042         5,080,192         5,080,192
     FHLB borrowings                                 19,000,000        19,000,000         5,000,000         5,000,000
     Note payable                                        27,000            27,000            36,000            36,000
     Accrued interest payable                           394,724           394,724           375,777           375,777
</TABLE>

At December 31, 1999 and 1998, 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.





                                      -27-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 16.  Condensed Parent-Only Financial Statements

Financial statements for Central Virginia  Bankshares,  Inc., (not consolidated)
are presented below.
<TABLE>
<CAPTION>
                                 BALANCE SHEETS
                                                                             December 31
                                                                -----------------------------------
                                                                        1999              1998
<S>                                                                  <C>              <C>
Assets                                                          -----------------------------------
     Cash                                                            $    114,828     $     55,481
     Investment in subsidiary                                          16,048,529       16,122,640
     Securities available for sale                                        826,755          903,614
     Other assets                                                         113,405           49,458
                                                                -----------------------------------
                                                                     $ 17,103,517     $ 17,131,193
                                                                ===================================

Liabilities
     Other liabilities                                               $     16,716     $     14,062
                                                                -----------------------------------

Stockholders' Equity
     Common stock, $1.25 par value;
        6,000,000 shares authorized;
        1,923,156 and 1,914,147 shares
        issued and outstanding in 1999
        and 1998, respectively                                          2,403,945        2,392,684
     Surplus                                                            4,337,689        4,238,689
     Retained earnings                                                 11,503,480       10,310,831
     Accumulated other comprehensive income                            (1,158,313)         174,927
                                                                -----------------------------------
                                                                       17,086,801       17,117,131
                                                                -----------------------------------
                                                                     $ 17,103,517     $ 17,131,193
                                                                ===================================
</TABLE>





                                      -28-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 16.  Condensed Parent-Only Financial Statements (Continued)

                                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                                -------------------------------------------------
                                                                        1999             1998            1997
                                                                -------------------------------------------------
<S>                                                                 <C>               <C>             <C>
Income:
     Management fees                                                $    36,000       $   36,000      $   38,368
     Dividends received from subsidiary                                 767,441          935,397         999,611
     Equity in undistributed earnings of subsidiary                   1,154,895          951,733         834,475
     Dividend income                                                     73,540           38,428          19,520
     Gain on sale of securities available for sale                            -           64,114               -
                                                                -------------------------------------------------
                                                                      2,031,876        2,025,672       1,891,974
Expenses:
     Operating expenses                                                  66,909           75,243          57,884
                                                                -------------------------------------------------
           Income before income taxes                                 1,964,967        1,950,429       1,834,090

Income taxes                                                              4,877           14,062               -
                                                                -------------------------------------------------
           Net income                                               $ 1,960,090      $ 1,936,367     $ 1,834,090
                                                                =================================================
</TABLE>





                                      -29-
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Note 16.  Condensed Parent-Only Financial Statements (Continued)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                 Years Ended December 31,
                                                                  -------------------------------------------------
                                                                           1999            1998            1997
                                                                  -------------------------------------------------
<S>                                                                   <C>             <C>             <C>
Cash Flows From Operating Activities
     Net income                                                       $  1,960,090    $  1,936,367    $  1,834,090
     Adjustments to reconcile net income to net
        cash provided by operating activities:
        Undistributed earnings of subsidiary                            (1,154,895)       (951,733)       (834,475)
        Realized gain on sales of securities available
           for sale                                                              -         (64,114)              -
        Change in operating assets and liabilities:
           (Increase) decrease in other assets                                (172)            (88)         27,486
           Increase in other liabilities                                     2,654          14,062               -
                                                                  -------------------------------------------------
Net cash provided by operating activities                                  807,677         934,494       1,027,101
                                                                  -------------------------------------------------

Cash Flows From Investing Activities
     Proceeds from sales of securities available
        for sale                                                                 -         319,489               -
     Purchase of securities available for sale                             (91,150)       (668,980)       (462,125)
                                                                  -------------------------------------------------
Net cash (used in) investing activities                                    (91,150)       (349,491)       (462,125)
                                                                  -------------------------------------------------

Cash Flows From Financing Activities
     Net proceeds from issuance of common stock                            110,261         110,550          56,954
     Dividends paid                                                       (767,441)       (735,397)       (699,610)
                                                                  -------------------------------------------------
Net cash (used in) financing activities                                   (657,180)       (624,847)       (642,656)
                                                                  -------------------------------------------------

Increase (decrease) in cash                                                 59,347         (39,844)        (77,680)
Cash, beginning                                                             55,481          95,325         173,005
                                                                  -------------------------------------------------

Cash, ending                                                          $    114,828    $     55,481    $     95,325
                                                                  =================================================
</TABLE>



                                      -30-
<PAGE>

                                   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 30, 2000                 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 30, 2000                   /s/ Ralph Larry Lyons
                                 -----------------------------------------------
                                 Ralph Larry Lyons
                                 President and Chief Executive Officer; Director
                                 (Principal Executive Officer)

March 30, 2000                   /s/ Charles F. Catlett, III
                                 -----------------------------------------------
                                 Charles F. Catlett, III
                                 Vice President and Chief Financial Officer
                                 (Principal Financial Officer)

March 30, 2000                   /s/ Thomas R. Thornton, Jr.
                                 -----------------------------------------------
                                 Thomas R. Thornton, Jr.
                                 Assistant Vice President
                                 (Principal Accounting Officer)

March 30, 2000                   /s/ John B. Larus
                                 -----------------------------------------------
                                 John B. Larus
                                 Chairman of the Board of Directors

March 30, 2000                   /s/ Fleming V. Austin
                                 -----------------------------------------------
                                 Fleming V. Austin
                                 Director

March __, 2000
                                 -----------------------------------------------
                                 Charles W. Binford
                                 Director




                                      -25-
<PAGE>



March 30, 2000                   /s/ Garland L. Blanton, Jr.
                                 -----------------------------------------------
                                 Garland L. Blanton, Jr.
                                 Director

March 30, 2000                   /s/ Charles B. Goodman
                                 -----------------------------------------------
                                 Charles B. Goodman
                                 Director

March 30, 2000                   /s/ Elwood C. May
                                 -----------------------------------------------
                                 Elwood C. May
                                 Director

March __, 2000
                                 -----------------------------------------------
                                 James T. Napier
                                 Director




                                      -26-
<PAGE>

                                 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)
27            Financial Data Schedule (filed electronically only)