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, 1997     Commission file number:  33-9686


                        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) 794-6266


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

         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $2.50 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: $11.0 million

         The aggregate  market value of the Common Stock held by  non-affiliates
of the Registrant  was  approximately  $30,032,549  computed by reference to the
last sales price of $33.50 per share as of March 16,  1998,  on The Nasdaq Stock
MarketSM, as reported in published financial sources.

         At March 16, 1998, there were 953,638 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
--------------------------                        ------------------------------

1998 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  in the
Cartersville  community 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
offers a wide  range of  services,  including  checking  and  savings  accounts,
certificates  of  deposits,   as  well  as  credit  cards,   installment  loans,
construction and permanent residential mortgage loans and other consumer lending
services.  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.  The Bank is
planning  to  establish  an  additional  branch  in  Cumberland  County  and may
establish additional branches in locations if attractive sites become available.


<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  $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.  Most 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 are eligible for sale into the  secondary
mortgage  market.  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. 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 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 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  would  be
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


                                      -2-
<PAGE>

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 and home equity lines of credit.

         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, 1997,  commercial  business loans were $17.8 million or 19.7% 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,
1997, the majority of the Bank's nonperforming loans were commercial loans.

Competition

         The Bank encounters strong  competition for its banking services within
its primary service area. In Powhatan and Cumberland Counties, the bank competes
with Jefferson  National Bank,  which is the only bank that has branches  within
these two markets other than the Bank.  The Bank is the only  community  bank in
the two counties.  In Chesterfield County there are several community banks that
compete with the Bank.  The Bank also  competes  with many large banks in nearby
Richmond to where many  residents in the Bank's  primary  service area  commute.
Financial  companies,  mortgage  companies,  credit  unions and savings and loan
associations also compete with the Bank for loans and deposits.  In addition, in
some  instances,  the Bank must  compete for deposits  with money market  mutual
funds  that  are  marketed  nationally.  Most  of the  Bank's  competitors  have
substantially greater resources than the Bank.

Employees

         The Bank had 65  officers  and  full-time  employees  and 13  part-time
employees at December  31, 1997.  Employee  relations  have been good.  The Bank
sponsors a Profit Sharing/Retirement Plan for its employees.

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



                                      -3-
<PAGE>

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.

         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 deduct from
undivided  profits  only bad debts as so defined in excess of that  account.  At
December  31,  1997,  the Bank had $3.18  million of retained  earnings  legally
available for the payment of dividends.


                                      -4-
<PAGE>

         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, 1997 were 16.1% and 17.4%, 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,
1997  was  10.6%.  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,  1997 the Bank's  total  capital,  Tier 1 capital and  leverage  ratios were
16.1%, 17.4% and 10.6%, 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 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




                                      -5-
<PAGE>

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   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 two other  branches are
located in the Village of Midlothian in Chesterfield County and in Cartersville,
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 May 1998 the Bank expects to
open a 4,800  square foot branch  located on U. S. Route 60  (Anderson  Highway)
near the courthouse in Cumberland County,  Virginia. This will be a full-service
branch location including a drive-up ATM.

         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.

ITEM 3.     LEGAL PROCEEDINGS

         There are no material legal proceedings  pending at this time involving
either  the  Company or the Bank as a party or  affecting  any  property  of the
Company of the Bank.

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.




                                      -6-
<PAGE>

                                     PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS

Common Stock

         The Company's common stock is listed on The Nasdaq Stock MarketSM under
the symbol  "CVBK".  As of March 6, 1998,  the Company had  approximately  1,544
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 the Nasdaq:
<TABLE>
<CAPTION>

                                           1997                                              1996
                       ----------------------------------------------     -------------------------------------------
                                                        Dividends                                        Dividends
                         High Trade     Low Trade         Paid             High Trade     Low Trade        Paid
<S>                        <C>            <C>             <C>                 <C>           <C>             <C>
First Quarter              $21.75         $19.50          $.18                $21.25        $18.00          $.165
Second Quarter              24.50          21.25           .18                 20.75         18.25           .165
Third Quarter               28.25          22.25           .185                20.75         18.75           .18
Fourth Quarter              33.00          25.00           .19                 20.75         19.00           .18
</TABLE>

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

Results of Operations

         The  Company's  net income  totaled  $1,834,090 in 1997, an increase of
7.2% from 1996.  These results  reflect an increase in the net interest  income.
Average  interest-earning  assets  increased 7.4% in 1997 which included a 65.3%
decrease in lower-yielding  federal funds sold.  Average  investment  securities
increased 83.7% in 1997 and average loans outstanding increased 5.8% in the same
time period.  Net income per common share was $1.93 in 1997 compared to $1.81 in
1996. The computation of earnings per share is based on weighted-average  shares
outstanding of 951,836 in 1997 and 946,077 in 1996.

         In 1996,  the Company  earned  $1,710,797,  a decrease of 9% over 1995.
This decrease was primarily attributable to a decrease in the net interest yield
for the year and an  increase  in other  operating  expenses  as a result of the
opening of our Corporate  Center in May 1996.  Earnings per share decreased $.19
from 1995 to $1.81 per share.  Weighted-average  shares outstanding in 1995 were
940,071.

         The Company's  return on average equity was 12.6% in 1997,  compared to
12.5%  and  15.1% in 1996 and  1995,  respectively.  Return  on  average  assets
amounted to 1.38%, 1.37% and 1.65% for these same years.

         Net Interest  Income.  The Company's net interest income was $6,090,879
in 1997, compared to $5,498,547 and $5,443,510, for 1996 and 1995, 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.



                                      -7-
<PAGE>
<TABLE>
<CAPTION>

                                                                Years Ended December 31,
                               ----------------------------------------------------------------------------------------
                                           1997                        1996                           1995
                               ---------------------------  ----------------------------   ----------------------------
                                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                 $5,510    $315    5.72%     $15,862     $848    5.35%       $6,171     $354    5.74%
                                   ------    ----              -------     ----                ------     ----
Securities: (5)
  U.S. Treasury securities            863      54    6.26            -        -       -             -        -       -
  Obligations of other U.S.
    governmental agencies and
    corporations                   16,415   1,116    6.80        6,812      473    6.94         9,280      640    6.90
  Obligations of states and
    political subdivisions(3)      12,544     727    8.78        9,747      553    8.60         8,777      514    8.87

  Other securities                  1,012      72    7.11          227       11    4.85           227       11    4.85
                                    -----   -----                -----    -----                ------    -----
    Total securities (3)           30,834   1,969    7.42       16,786    1,037    7.88        18,284    1,165    7.82
                                   ------   -----               ------    -----                ------    -----
Loans (1)(2)(4)                    88,180   8,657    9.82       83,323    8,207    9.85        82,855    8,278    9.99
                                   ------   -----               ------    -----                ------    -----
  Total interest-earning assets  $124,524 $10,941    8.79%    $115,971  $10,092    8.70%     $107,310   $9,797    9.13%
                                 ======== =======             ========  =======              ========   ======

Interest bearing liabilities:
Deposits:
  Interest bearing demand         $21,668    $637    2.94%     $20,630     $611    2.96%      $20,600     $649    3.15%
  Savings                          13,602     441    3.24       12,189      394    3.23        11,001      355    3.23
  Other time                       62,634   3,568    5.70       61,985    3,544    5.72        57,085    3,306    5.79
                                   ------   -----               ------    -----                ------    -----
    Total deposits                 97,904   4,646    4.75       94,804    4,549    4.80        88,686    4,310    4.86
Securities sold under
  repurchase agreements             1,101      55    5.00          815       39    4.79           571       30    5.25
FHLB advance                        2,480     145    5.85            -        -    -                -        -    -
Short-term borrowings                   -       -    -               -        -    -              135        8    5.93
Long-term debt                         47       4    8.51           56        5    8.93            65        5    7.69
                                    -----   -----               ------    -----                ------   ------
  Total interest-bearing
    liabilities                  $101,532  $4,850    4.78%     $95,675   $4,593    4.80%      $89,457   $4,353    4.87%
                                 ========  ======              =======   ======               =======   ======
Net interest margin                        $6,091    4.01%               $5,499    3.90%                $5,444    4.26%
                                           ======                        ======                         ======
Net interest yield                                   5.19%                         4.99%                          5.32%
</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 $429,851 in 1997, $425,320
       in 1996 and $406,251 in 1995.
(5)    Includes investment securities and securities available for sale.

         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 4.01% in 1997,
compared  to 3.90%  during  1996 and  4.26% in  1995.  The net  interest  margin
increased  in 1997  primarily  due to the  decrease  in the  average  balance of
lower-yielding federal funds sold and the reinvestment of these funds into loans
and investment  securities.  In 1996, the net interest  margin  decreased as the
yield on average  interest-earning  assets decreased from 9.13% in 1995 to 8.70%
in 1996 despite an 8.1% increase in the volume of interest-earning assets.

         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.



                                      -8-
<PAGE>

<TABLE>
<CAPTION>

                                                        1997 Compared to 1996              1996 Compared to 1995
                                                   ---------------------------------    -----------------------------
                                                     Volume       Rate       Net         Volume     Rate      Net
                                                                        (Dollars in Thousands)
<S>                                                  <C>          <C>      <C>           <C>      <C>        <C>
Interest Income:
Federal funds sold                                   $(553)         $20    $(533)         $556     $(62)      $494
Securities: (1)
U. S. Treasury securities                                54           0        54            -         -         -
Obligations of other U.S. government agencies
  and corporations                                      666        (23)       643        (170)         3     (167)
Obligations of states and political subdivisions        159          15       174           57      (18)        39
Other                                                    38          23        61            -         -        -
                                                         --          --        --         ----       ---      ---
  Total securities                                      917          15       932        (113)      (15)     (128)
                                                        ---          --       ---        -----      ----     -----
Loans                                                   477        (27)       450           47     (118)      (71)
                                                        ---        ----       ---           --     -----      ----
  Total interest income                                $841          $8      $849         $490    $(195)      $295
                                                       ====          ==      ====         ====    ======      ====
Interest Bearing Liabilities:
Deposits:
  Interest bearing demand                               $31        $(5)       $26           $1     $(39)     $(38)
  Savings                                                46           1        47           39         0        39
  Other time                                             36        (12)        24          283      (45)       238
                                                         --        ----        --          ---      ----       ---
  Total deposits                                        113        (16)        97          323      (84)       239
Securities sold under repurchase agreements              14           2        16           13       (4)         9
FHLB advances                                           145           0       145            -         -         -
Short-term borrowing                                      -           -         -          (8)         0       (8)
Long-term debt                                          (1)           0       (1)          (1)         1         0
                                                        ---         ---       ---          ---       ---       ---
  Total interest expense                               $271       $(14)      $257         $327     $(87)      $240
                                                       ====       =====      ====         ====     =====      ====
Increase(decrease) in net interest income              $570         $22      $592         $163    $(108)       $55
                                                       ====         ===      ====         ====    ======       ===
</TABLE>
--------------------

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

         Non-Interest  Income. In 1997 the Company's total  non-interest  income
decreased  11.3% due to a decrease in the amount of fees  collected  on checking
accounts  for  overdrafts  as well as a decrease  in the gains on sales of loans
originated for others. In 1996  non-interest  income increased 12.6% without the
effect  of a $25,000  gain on sale of a  security  available  for sale and 16.2%
given the effect of the security gain.  Fees collected on checking  accounts for
overdrafts was the primary cause of this increase.

         Non-Interest   Expenses.  In  1997  the  Company's  total  non-interest
expenses increased $361,892 or 9.5%, compared to 1996. Included in this increase
is a 9.8%  increase in salaries  and  benefits,  as well as a 13.7%  increase in
occupancy  expenses  and a 12.7%  increase  in  equipment  and  office  supplies
expenses, both attributable to the first full year of operation of the Corporate
Center office.

         In 1996 the Company's total non-interest expenses increased $456,048 or
13.6%,  compared to 1995.  Expenses  related to employee  salaries and increased
9.9%  reflecting  normal  salary  increases  as well as a small  increase in the
number of personnel.  Occupancy and equipment  expenses  increased 31.2% in 1996
primarily due to the opening of the $1.05 million Corporate Center in May 1996.

         Income Taxes.  The Company  reported income taxes of $659,239 for 1997,
compared to $684,917  in 1996,  and  $796,166  in 1995.  These  amounts  yielded
effective tax rates of 26.4%, 28.6% and 29.7%, 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 does not attempt to
diversify its loan portfolio  geographically  by making  significant  amounts of
loans to borrowers outside of its primary service area.


                                      -9-
<PAGE>

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

         Loans  increased  $4.5 million or 5.3% from  year-end  1996 to year-end
1997,  compared  to an increase of $1.3  million or 1.5% from  year-end  1995 to
year-end  1996.  The loan to  deposit  ratio was  72.6% at  December  31,  1997,
compared to 76.8% at December 31, 1996 and 77.1% at December 31, 1995.

         The following  table  summarizes the Company's loan  portfolio,  net of
unearned income:
<TABLE>
<CAPTION>
                                                                At December 31
                                                -----------------------------------------------
                                                     1997           1996            1995
                                                            (Dollars in Thousands)
<S>                                                 <C>            <C>              <C>
        Real Estate:
          Mortgage                                  $42,158        $37,884          $35,979
          Home equity                                 5,769          6,315            6,477
          Construction                                8,472         10,078            9,768
                                                      -----         ------            -----
        Total Real Estate                           $56,399        $54,237          $52,224
        Commercial                                   17,816         15,314           15,914
        Installment                                  16,134         16,400           16,592
                                                     ------         ------           ------
                                                    $90,349        $85,951          $84,730
        Less unearned discount                        (341)          (401)            (528)
                                                      -----          -----            -----
                                                     90,008         85,550           84,202
        Allowance for loan losses                   (1,176)        (1,212)          (1,127)
                                                    -------        -------          -------
        Loans, net                                  $88,832        $84,338          $83,075
                                                    =======        =======          =======
</TABLE>

         As shown in the above  table,  the total  amount  of  outstanding  real
estate loans  increased by $2.2 million in 1997 and increased by $2.0 million in
1996.  During 1997, the amount of outstanding  installment  loans to individuals
decreased  by $266,000,  compared to a decrease of $192,000 in 1996  compared to
1995. Commercial,  financial and agricultural loans increased by $2.5 million in
1997 and decreased by $600,000 in 1996.

         At December 31, 1997, no  concentrations  of loans  exceeding  10.0% of
total loans existed which were not disclosed as a separate category of loans.

         The  following  table  shows the  maturity of loans  outstanding  as of
December 31, 1997. 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                  $11,181       $29,448        $1,529        $42,158
            Installment                             5,263         9,965           906         16,134
            Other (1)                              30,724         1,301            32         32,057
                                                   ------         -----          ----         ------
                                                  $47,168       $40,714        $2,467        $90,349
                                                  =======       =======        ======        =======
            Loans maturing with:
              Fixed interest rates                                                           $22,298
              Variable interest rates                                                         68,051
                                                                                             $90,349
                                                                                             =======
</TABLE>
---------------------

(1)    Includes home equity, real estate construction and commercial loans.


                                      -10-
<PAGE>

       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 $734,000 at December 31, 1997, compared to
$1,643,000  at  December  31, 1996 and  $1,126,000  at December  31,  1995.  The
decrease in non-performing loans reflects a decrease in loans accounted for on a
non-accrual basis.

         Management  forecloses on  delinquent  real estate loans when all other
repayment  possibilities  have been  exhausted.  Real  estate  acquired  through
foreclosure  (OREO) was $313,000 at December 31, 1997,  compared to $372,546 and
$284,466 at December 31, 1996 and 1995,  respectively.  All foreclosed  property
held at  December  31,  1997  was in the  Company's  primary  service  area  and
consisted of former day care center, ten building lots and a five-acre parcel of
improved land.  The Bank has not incurred  significant  current period  expenses
related to  carrying  OREO on its books.  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
1997  reflects  any  systematic  problem in the  Company's  loan  portfolio.  At
December 31, 1997,  non-accrual  loans totaled  $38,000  compared to $708,000 at
December  31, 1996 and  $648,000  at  December  31,  1995.  Management  does not
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,
1997.

         The following table summarizes non-performing loans:
<TABLE>
<CAPTION>

                                                                                          At December 31
                                                                              ---------------------------------------
                                                                                 1997          1996         1995
                                                                                 ----          ----         ----
                                                                                      (Dollars in Thousands)
<S>                                                                             <C>         <C>          <C>
Loans accounted for on a non-accrual basis                                       $38          $708         $648
Loans contractually past due 90 days or more as to interest or principal
  payments (not included in non-accrual loans above)                             696           935          478
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                                                                       $734        $1,643       $1,126
                                                                                ====        ======       ======
</TABLE>

         Since 1992,  loans 90 days or more past due were placed on  non-accrual
status unless well secured and in the process of collection. In 1997, $10,895 of
interest  income was reversed  when loans were placed on  non-accrual  status or
upon  foreclosure.  In 1996 and 1995,  $3,502  and $269 of  interest  income was
reversed under the same circumstances,  respectively. Since the Company operates
in a rural to suburban area, it is generally well  acquainted with its principal
borrowers  and has 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
exceeds net charge-offs.  However, with the continued growth of the Company, the
decision  was made in 1992 that a loan not well  secured  and in the  process of
collection  should be placed on a non-accrual  status when it is 90 days or more
delinquent, rather than after 180 days, as had been the practice before 1992.


                                      -11-
<PAGE>

         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
                                                                                  -----------------------------------
                                                                                     1997        1996        1995
                                                                                     ----        ----        ----
                                                                                        (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                                  $4         $56         $63
Interest income included in income on the loans                                         -           -           -
</TABLE>

         Management  is not aware of any other loans at December  31, 1997 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 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 higher level
of  reserves  than the  Company  has  maintained  in the past.  The ratio of the
allowance  for loan  losses  to total  loans  was 1.31% at  December  31,  1997,
compared  to 1.42% at  December  31, 1996 and 1.34% at  December  31,  1995.  At
December 31, 1997 the ratio of the allowance  for loan losses to  non-performing
loans was 160.2%,  compared to 73.8% and 100.08% at December  31, 1996 and 1995,
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.  Management believes,  based on its review, that the
Company  has  adequate  reserves  to cover  any  future  write-down  that may be
required on these loans.



                                      -12-
<PAGE>

         The  following  table  summarizes  changes  in the  allowance  for loan
losses:
<TABLE>
<CAPTION>

                                                                                        Year Ended December 31
                                                                               -----------------------------------------
                                                                                   1997          1996          1995
                                                                                   ----          ----          ----
                                                                                     (Dollars in Thousands)
<S>                                                                              <C>            <C>          <C>
Balance at beginning of period                                                    $1,212        $1,127        $1,066
                                                                                  ------        ------        ------
Charge-offs:
  Commercial, financial and agricultural                                              74             8             -
  Real estate mortgage                                                                60            30            53
  Installment loans to individuals                                                   134            64           100
                                                                                     ---            --           ---
    Total                                                                           $268          $102          $153
                                                                                    ----          ----          ----
Recoveries on previous loan losses:
  Commercial, financial and agricultural                                         $     -       $     -           $21
  Installment loans to individuals                                                    32            22            28
                                                                                      --            --            --
Total                                                                              $  32           $22           $49
                                                                                   -----           ---           ---
Net charge-offs                                                                   $(236)         $(80)        $(104)
Provision charged to operations                                                      200           165           165
                                                                                     ---           ---           ---
Balance at end of period                                                          $1,176        $1,212        $1,127
                                                                                  ======        ======        ======
Ratio of net loan losses to average net loans outstanding:
  Net charge-offs                                                                   $236           $80          $104
  Average net loans                                                               86,616        81,701        81,725
                                                                                  ------        ------        ------
                                                                                   0.27%         0.09%         0.13%
Ratio of allowance for loan losses to total loans, net of unearned income:
  Allowance for loan losses                                                       $1,176        $1,212        $1,127
  Total loans at period end                                                       90,008        85,550        84,202
                                                                                  ------        ------        ------
                                                                                   1.31%         1.42%         1.34%
Ratio of allowance for loan losses to non-performing loans:
  Allowance for loan losses                                                       $1,176        $1,212        $1,127
  Non-performing loans                                                               734         1,643         1,126
                                                                                     ---         -----         -----
                                                                                 160.22%        73.77%       100.08%
</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  collectibility  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 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  $200,000  for the years ended
December 31, 1997,  $200,000 for the years ended  December 31, 1996 and 1995. 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
increase the allowance for future loan losses.



                                      -13-
<PAGE>

         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
                           -------------------------------------------------------------------------------------------------
                                       1997                              1996                              1995
                           -----------------------------     -----------------------------     -----------------------------
                                               Percent                           Percent                           Percent
                                              of Loans                          of Loans                          of Loans
                                                 in                                in                                in
                                     Percent  category                 Percent  category                 Percent  category
                                       of        to                      of        to                      of        to
                                     Allow-     Total                  Allow-     Total                  Allow-     Total
                            Amount    ance      Loans         Amount    ance      Loans         Amount    ance      Loans
                                                               (Dollars in Thousands)
<S>                         <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>       <C>
Commercial                    $197      17%        20%          $212      18%        19%          $219      20%       19%
Real estate construction        94       8          9            125      10         12             99       9        12
Real estate mortgage (1)       721      61         53            660      54         47            623      55        50
Installment                    164      14         18            215      18         22            186      16        19
                               ---                               ---                               ---
                            $1,176     100%       100%        $1,212     100%       100%        $1,127     100%      100%
                            ======                            ======                            ======
--------------
</TABLE>

(1)      Includes home-equity loans.

         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 1997, total securities increased to $17.9 million,
or 14.2% of total  assets at December 31, 1997.  During 1996,  total  securities
increased to $17.9 million, or 14.2% of assets at December 31, 1996.

         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.
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
                                                             -----------------------------------------
                                                                 1997          1996          1995
                                                                 ----          ----          ----
                                                                      (Dollars in Thousands)
<S>                                                             <C>            <C>          <C>
         U. S. government agencies and corporations             $ 1,042        $     -      $     -
         Obligations of states and political subdivisions        15,817         10,208       10,009
         U. S. treasury notes                                       998              -            -
                                                                 ------         ------       ------
                                                                $17,857        $10,208      $10,009
                                                                =======        =======      =======
</TABLE>


                                      -14-
<PAGE>

         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
                                                             -----------------------------------------
                                                                 1997          1996          1995
                                                                 ----          ----          ----
                                                                      (Dollars in Thousands)
<S>                                                            <C>             <C>          <C>
         U. S. government agencies and corporations            $15,230         $6,717       $1,999
         Equities                                                  712              -            -
         Mortgage-backed securities                              6,450            962        2,902
                                                                ------          -----        -----
                                                               $22,392         $7,679       $4,901
                                                               =======         ======       ======
</TABLE>

         The book value and average yield of the Company's securities, including
securities  available for sale, at December 31, 1997, 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>

                                          Obligations of state                                    U. S. government
                                             and political              U. S. Treasury              agencies and
                                              subdivisions                securities                corporations
                                         -----------------------     ----------------------    ------------------------
                                                     Weighted                   Weighted                    Weighted
                                                      Average                    Average                     Average
                                          Amount       Yield          Amount      Yield          Amount       Yield
                                                                    (Dollars in Thousands)
<S>                                        <C>          <C>          <C>                       <C>
Due in one year or less                     $1,767      5.21%        $      -      -           $        -     -
Due after one year through five years        3,553      6.03%               -      -                1,474     6.57%
Due after five years through ten years       5,070      5.34%           1,042      6.28%           12,660     7.03%
Due after ten years                          6,425      6.45%               -      -                7,546     7.05%
                                            ------                     ------                      ------
                                           $16,815      5.90%          $1,042      6.28%          $21,680     7.00%
                                           =======                     ======                     =======
</TABLE>

         As shown in the table above,  approximately  $1,767,000  or 4.5% of the
total  portfolio  will mature in one year or less while  $5.03  million or 12.7%
will mature after one year but within five years.  The fully taxable  equivalent
average yield on the entire portfolio was 7.42% for 1997,  compared to 7.88% for
1996 and 7.82% for 1995.  The market  value of the  portfolio  exceeded the book
value by $610,068 at December 31, 1997.

Deposits and Short-Term Borrowings

         The Company's  predominate source of funds is depository 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 4.7% in
1997 and 8.9% in 1996. The average aggregate  interest rate paid on deposits was
4.03% in 1997, compared to 4.13% for 1996 and 4.26% in 1995. 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
                          ----------------------------------------------------------------------------------------------------
                                      1997                               1996                               1995
                          ------------------------------     ------------------------------    -------------------------------
                           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            $17,434  $     -        -%        $15,371  $      -        -%        $12,462  $     -         -%
Interest bearing demand
  deposits                    21,668      637     2.94%         20,630       611     2.96%         20,600      649      3.15%
Savings deposits              13,602      441     3.24%         12,189       394     3.23%         11,001      355      3.23%
Time deposits                 62,634    3,568     5.70%         61,985     3,544     5.72%         57,085    3,306      5.79%
                              ------    -----                  -------     -----                   ------    -----
    Total                   $115,338   $4,646     4.03%       $110,175    $4,549     4.13%       $101,148   $4,310      4.26%
                            ========   ======                 ========    ======                 ========   ======
</TABLE>


                                      -15-
<PAGE>

         The  following  table is a summary of time deposits of $100,000 or more
by remaining maturities at December 31, 1997:

                       Time Deposits > $100,000
                            (in Thousands)

              Three months or less                  $1,843
              Three to six months                    3,758
              Six to twelve months                   4,536
              Over twelve months                     1,861
                                                  --------
                                                   $11,998

Capital Resources

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

         The   Bank's   capital   position   continues   to  exceed   regulatory
requirements.  The primary indicators relied on by the Federal Reserve Board and
other bank regulators in measuring  strength of capital  position are the Tier 1
Capital,  Total Capital,  and Leverage ratios. Tier 1 Capital consists of common
and  qualifying  preferred  stockholders'  equity 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  Company's  Tier 1 Capital  ratio was 16.1% at  December  31,  1997,
compared to 16.4% at December  31, 1996,  and 14.4% at December  31,  1995.  The
Total Capital ratio was 17.4% at December 31, 1997,  compared to 17.7% and 15.6%
at December 31, 1996 and 1995,  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, 1997,  the Bank's  Leverage  ratio was 10.6%  compared to 11.2% at
December  31,  1996 and 10.7% at December  31,  1995.  Each of these  exceed 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          1997             1996           1995
                                                     -------          ----             ----           ----
<S>                                                    <C>            <C>              <C>            <C>
       Tier 1 risk-based capital                       4.0%           16.1%            16.4%          14.4%
       Total risk-based capital                        8.0%           17.4%            17.7%          15.6%
       Leverage ratio                                  3.0%           10.6%            11.2%          10.7%
       Stockholders' equity to total assets            N/A            10.9%            11.4%          10.8%
</TABLE>

         The capital management function is an ongoing process.  Central to this
process is internal equity generation accomplished by earnings retention. During
1997, total stockholders' equity increased by $1,396,186,  primarily as a result
of earnings  retention.  Total  stockholders'  equity increased by $1,130,113 in
1996 also due to earnings  retention.  The return on average equity was 12.6% in
1997,  compared 12.5% in 1996 and 15.1% in 1995.  Total cash dividends were paid
representing 38% of net income for 1997,  compared to 38% of net income for 1996
and 31% for 1995. Book value per share was $16.61 at December 31, 1997, compared
to $15.22 at December 31, 1996, and $14.11 at December 31, 1995.

         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,  1997,  the Bank had $3.18  million  of  retained  earnings
available for distribution to the Company as dividends  without prior regulatory
approval.


                                      -16-
<PAGE>


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 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 and the
purchasing of federal funds.  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 have been sufficient to
fund the net increase in loans.

         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, 1997,  the Company had a positive 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 and  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.


                                      -17-
<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, 1997:
<TABLE>
<CAPTION>

                                                                   Maturing or Repricing In:
                                            -------------------------------------------------------------------------
                                               Within          4-12           1-5           Over
                                              3 Months        Months         Years         5 Years         Total
                                              --------        ------         -----         -------         -----
                                                                     (Dollars in Thousands)
<S>                                           <C>           <C>             <C>            <C>           <C>
Interest Earning Assets
  Federal funds sold                            $3,785      $       -       $     -        $     -         $3,785
  Securities available for sale                  4,622          5,716        10,738          1,637         22,713
  Securities held to maturity                    1,010            758         7,780          8,309         17,857
  Loans                                         31,146          1,911        49,690          7,261         90,008
                                                ------          -----        ------          -----         ------
    Total interest-earning assets              $40,563         $8,385       $68,208        $17,207       $134,363
                                               =======         ======       =======        =======       ========

Interest Bearing Liabilities
  Deposits:
    Interest bearing demand                    $20,991      $       -       $     -        $     -        $20,991
    Savings                                     13,974              -             -              -         13,974
    Time deposits, $100,000 and over             1,843          3,758         6,397              -         11,998
    Other time deposits                         10,544         26,126        19,426              -         56,096
  Securities sold under repurchase
    agreements                                   1,569              -             -              -          1,569
  FHLB advance                                       -              -         5,000              -          5,000
  Long-term debt                                     -              9            36              -             45
                                                ------         ------        ------         ------        -------
    Total interest-bearing liabilities         $48,921        $29,893       $30,859        $     -       $109,673
                                               =======        =======       =======        =======       ========
Period gap                                    $(8,358)      $(21,508)       $37,349        $17,207        $24,690
                                              ========      =========       =======        =======        =======
Cumulative gap                                $(8,358)      $(29,866)        $7,483        $24,690
                                              ========      =========        ======        =======
Ratio of cumulative gap to total earning
  assets                                      (6.22%)       (22.23%)         5.57%        18.38%
</TABLE>

         Of the amount of loans due after 12 months,  $35.3 million had floating
or adjustable rates of interest and $21.7 million had fixed rates of interest.

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, 1997 and 1996
         Consolidated  Statements  of Income for the Years  Ended  December  31,
           1997, 1996 and 1995
         Consolidated  Statements  of  Stockholders'  Equity for the Years Ended
           December 31, 1997, 1996 and 1995
         Consolidated  Statements of Cash Flows for the Years Ended December 31,
           1997, 1996 and 1995
         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.




                                      -18-
<PAGE>


                                    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 1998 Proxy Statement of the Registrant  furnished to
shareholders  in connection with its Annual Meeting to be held on April 30, 1997
(the "1998 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 1998 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 pages 4 and
5,  respectively,  of the  1998  Proxy  Statement,  is  hereby  incorporated  by
reference.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information set forth under the heading "Certain  Transactions" on page
7 of the 1998 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)

(b)      Reports on Form 8-K

         No reports on Form 8-K were filed during the quarter ended December 31,
1997.

         With the exception of the information herein expressly  incorporated by
reference,  the 1998 Proxy Statement of the Registrant is not to be deemed filed
as part of this Annual Report on Form 10-KSB.




                                      -19-
<PAGE>









                        CENTRAL VIRGINIA BANKSHARES, INC.

                          CONSOLIDATED FINANCIAL REPORT

                                DECEMBER 31, 1997


<PAGE>

                                 C O N T E N T S



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

CONSOLIDATED FINANCIAL STATEMENTS

    Consolidated balance sheets                                        F-2 - F-3

    Consolidated statements of income                                  F-4 - F-5

    Consolidated statements of stockholders' equity                          F-6

    Consolidated statements of cash flows                              F-7 - F-8

    Notes to consolidated financial statements                        F-9 - F-25
--------------------------------------------------------------------------------



<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, 1997 and 1996,  and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the  three  years in the  period  ended  December  31,  1997.  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, 1997 and 1996,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1997,  in  conformity  with  generally  accepted
accounting principles.




/s/ Mitchell, Wiggins & Company, LLP

Richmond, Virginia
January 16, 1998





                                       F-1

<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>

ASSETS                                                1997               1996
-------------------------------------------------------------------------------------
<S>                                                   <C>                <C>
Cash and due from banks                               $ 5,239,415        $ 5,418,921






Federal funds sold                                      3,785,000         12,287,000
                                                  -----------------------------------
           Total cash and cash equivalents              9,024,415         17,705,921

Securities available for sale                          22,713,173          7,685,684


Securities held to maturity                            17,857,400         10,207,765


Mortgage loans held for sale                              331,350            201,798


Loans, net                                             88,832,228         84,337,859


Bank premises and equipment, net                        3,540,305          3,560,609


Accrued interest receivable                             1,318,880            803,191


Other assets                                            1,601,073          1,812,689
                                                  -----------------------------------
                                                    $ 145,218,824      $ 126,315,516
                                                  -----------------------------------
</TABLE>


See Notes to Consolidated Financial Statements.




                                       F-2

<PAGE>

<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                      1997               1996
-----------------------------------------------------------------------------------------
<S>                                                      <C>                <C>
Liabilities
    Deposits:
        Demand deposits                                  $ 19,614,855       $ 15,703,040
        Interest bearing demand deposits
           and NOW accounts                                20,991,218         20,936,589
        Savings deposits                                   13,973,955         13,065,401
        Time deposits, $100,000 and over                   11,997,704         10,210,956
        Other time deposits                                56,095,809         49,964,954
                                                       ----------------------------------
                                                          122,673,541        109,880,940
    Securities sold under repurchase agreements             1,193,887          1,534,479
    FHLB advance                                            5,000,000                  -
    Note payable                                               45,000             54,000
    Accrued interest payable                                  327,763            232,946
    Other liabilities                                         138,840            169,544
                                                       ----------------------------------
                                                          129,379,031        111,871,909
                                                       ----------------------------------

Commitments and Contingencies (Note 11)

Stockholders' Equity
    Common stock, $2.50 par value;
        3,000,000 shares authorized; 953,638
        and 949,140 shares issued and out-
        standing in 1997 and 1996, respectively             2,384,095          2,372,850
    Surplus                                                 4,136,728          4,091,019
    Retained earnings                                       9,109,861          7,975,381
    Net unrealized  gain on securities
        available for sale, net of tax                        209,109              4,357
                                                       ----------------------------------
                                                           15,839,793         14,443,607
                                                       ----------------------------------

                                                        $ 145,218,824      $ 126,315,516
                                                       ----------------------------------

</TABLE>



                                       F-3
<PAGE>

<TABLE>
<CAPTION>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1997, 1996, and 1995

                                                                     1997             1996             1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>               <C>
Interest income:
    Interest and fees on loans                                      $ 8,656,580      $ 8,206,531       $ 8,277,868
    Interest on securities:
        U. S. government agencies and corporations                    1,115,884          473,056           639,748
        U. S. Treasury notes                                             54,349                -                 -
        States and political subdivisions                               726,564          553,370           514,364
        Other                                                            72,207           10,916            10,888
    Interest on federal funds sold                                      314,940          847,727           353,977
                                                               ----------------------------------------------------
                                                                     10,940,524       10,091,600         9,796,845
                                                               ----------------------------------------------------

Interest expense:
    Interest on deposits                                              4,646,081        4,549,567         4,309,812
    Interest on securities sold under
        repurchase agreements                                            55,159           38,986            30,207
    Interest, FHLB advance                                              144,625                -                 -
    Interest, other                                                           -                -             8,096
    Interest on note payable                                              3,780            4,500             5,220
                                                               ----------------------------------------------------
                                                                      4,849,645        4,593,053         4,353,335
                                                               ----------------------------------------------------
           Net interest income                                        6,090,879        5,498,547         5,443,510

Provision for loan losses                                               200,000          165,000           165,000
                                                               ----------------------------------------------------
           Net interest income after
              provision for loan losses                               5,890,879        5,333,547         5,278,510
                                                               ----------------------------------------------------

Other income:
    Service charges                                                     581,896          598,981           552,278
    Realized gain on sales of securities
        available for sale                                               16,353           25,000                 -
    Other                                                               167,334          239,427           190,731
                                                               ----------------------------------------------------
                                                                        765,583          863,408           743,009
                                                               ----------------------------------------------------
Other expenses:
    Salaries and wages                                                1,572,054        1,434,644         1,309,833
    Pensions and other employee benefits                                427,134          386,712           347,066
    Occupancy expense                                                   249,622          219,579           158,455
    Equipment depreciation                                              319,210          258,635           190,707
    Equipment repairs and maintenance                                   170,000          165,222           141,002

</TABLE>


                                   (Continued)



                                      F-4
<PAGE>

<TABLE>
<CAPTION>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED  STATEMENTS OF INCOME  (Continued)
Years Ended  December 31, 1997, 1996, and 1995


                                                                         1997           1996            1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>             <C>
    Advertising and public relations                                       175,359         140,841         127,305
    Federal insurance premiums                                              12,375          69,869         118,177
    Office supplies, telephone, and postage                                338,354         310,174         252,244
    Taxes and licenses                                                     130,186         119,408         103,652
    Other operating expenses                                               768,839         696,157         596,752
                                                                    -----------------------------------------------
                                                                         4,163,133       3,801,241       3,345,193
                                                                    -----------------------------------------------
          Income before income taxes                                     2,493,329       2,395,714       2,676,326

Income taxes                                                               659,239         684,917         796,166
                                                                    -----------------------------------------------

          Net income                                                   $ 1,834,090     $ 1,710,797     $ 1,880,160
                                                                    -----------------------------------------------

Net income per share of common stock                                        $ 1.93          $ 1.81          $ 2.00
                                                                    -----------------------------------------------

Average shares outstanding                                                 951,836         946,077         940,071
                                                                    -----------------------------------------------

</TABLE>

See Notes to Consolidated Financial Statements.



                                       F-5
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
                                                                                                   Net Unrealized
                                                                                                   Gain (Loss) On
                                                                                                     Securities
                                                          Common                      Retained      Available for
                                                           Stock        Surplus       Earnings    Sale, Net of Tax       Total
------------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                                     <C>           <C>           <C>                 <C>           <C>
Balance, January 1, 1995                                 $ 2,344,725   $ 3,930,215   $ 5,629,290         $ (190,459)   $ 11,713,771
    Issuance of common stock:
       2,699 shares pursuant to exercise
          of stock options                                     6,747        17,543             -                  -          24,290
       60 shares in employee bonuses                             150           870             -                  -           1,020
       3,084 shares pursuant to dividend
          reinvestment plan                                    7,710        48,175             -                  -          55,885
    Net income                                                     -             -     1,880,160                  -       1,880,160
    Cash dividends declared, $.63 per share                        -             -      (592,239)                 -        (592,239)
    Unrealized gain on securities available
       for sale, net of tax                                        -             -             -            230,607         230,607
                                                        ----------------------------------------------------------------------------
Balance, December 31, 1995                                 2,359,332     3,996,803     6,917,211             40,148      13,313,494
    Issuance of common stock:
       9 shares in employee bonuses                               23           153             -                  -             176
       5,398 shares pursuant to dividend
          reinvestment plan                                   13,495        94,063             -                  -         107,558
    Net income                                                     -             -     1,710,797                  -       1,710,797
    Cash dividends declared, $.69 per share                        -             -      (652,627)                 -        (652,627)
    Unrealized loss on securities available
       for sale, net of tax                                        -             -             -            (35,791)        (35,791)
                                                        ----------------------------------------------------------------------------
Balance, December 31, 1996                                 2,372,850     4,091,019     7,975,381              4,357      14,443,607
    Issuance of common stock:
       3,111 shares pursuant to exercise
          of stock options                                     7,778        20,221             -                  -          27,999
       5 shares in employee bonuses                               12            92             -                  -             104
       1,382 shares pursuant to dividend
          reinvestment plan                                    3,455        25,396             -                  -          28,851
    Net income                                                     -             -     1,834,090                  -       1,834,090
    Cash dividends declared, $.735 per share                       -             -      (699,610)                 -        (699,610)
    Unrealized gain on securities available
       for sale, net of tax                                        -             -             -            204,752         204,752
                                                        ----------------------------------------------------------------------------
 Balance, December 31, 1997                              $ 2,384,095   $ 4,136,728   $ 9,109,861          $ 209,109    $ 15,839,793
                                                        ----------------------------------------------------------------------------
</TABLE>

See Notes to Consolidated Financial Statements.




                                       F-6
<PAGE>


CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>

                                                                        1997           1996             1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>              <C>
Cash Flows From Operating Activities
    Net income                                                        $ 1,834,090     $ 1,710,797      $ 1,880,160
    Adjustments to reconcile net income
       to net cash provided by operating activities:
       Depreciation                                                       400,281         330,092          242,581
       Amortization                                                         2,766          16,600           16,600
       Deferred income taxes                                               50,496         (28,623)           3,437
       Provision for loan losses                                          200,000         165,000          165,000
       Amortization and accretion on securities                            71,930          (2,093)         (31,645)
       Realized gain on sales of securities
          available for sale                                              (16,353)        (25,000)               -
       Gain on sale of equipment                                           (7,430)              -                -
       Loss on sale of foreclosed  real estate                              9,362          16,211            9,041
       Changes in operating assets and liabilities:
          (Increase) decrease in:
            Mortgage loans held for sale                                 (129,552)        666,796         (769,000)
            Accrued interest receivable                                  (515,689)        (15,647)         (14,860)
            Other assets                                                  (33,737)       (592,763)          22,540
          Increase (decrease) in:
            Accrued interest payable                                       94,817         (30,474)          84,941
            Other liabilities                                             (30,704)         56,419         (107,836)
                                                                   ------------------------------------------------
          Net cash provided by
            operating activities                                        1,930,277       2,267,315        1,500,959
                                                                   ------------------------------------------------

Cash Flows From Investing Activities
    Proceeds from maturities of
       securities held to maturity                                        440,000         910,000          475,000
    Purchase of securities held to maturity                            (8,087,324)     (1,104,736)      (2,240,000)
    Proceeds from sales and maturities of
       securities available for sale                                    7,180,442       3,031,996        6,708,356
    Purchase of securities available for sale                         (21,951,343)     (5,787,595)        (965,859)
    Net increase in loans made to customers                            (5,007,369)     (1,796,896)      (3,921,415)
    Proceeds from sale of equipment                                         7,600               -                -
    Net purchases of premises and equipment                              (336,866)     (1,771,900)        (201,553)
    Proceeds from sale of foreclosed real estate                          360,109         291,233          324,212
    Net expenditures on foreclosed real estate                                  -         (22,978)          (8,438)
    Proceeds received from cancellation
       of life insurance policies                                               -          19,564           29,120
    Increase in cash value, life insurance                                (17,385)        (12,651)         (10,729)
                                                                   ------------------------------------------------
          Net cash provided by (used in)
            investing activities                                      (27,412,136)     (6,243,963)         188,694
                                                                   ------------------------------------------------

</TABLE>



                                   (Continued)


                                      F-7
<PAGE>

CENTRAL VIRGINIA BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>

                                                                      1997              1996               1995
-------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>                <C>
Cash Flows From Financing Activities
    Net increase in deposits                                       12,792,601         2,074,735         13,791,379
    Net increase (decrease) in securities sold
        under repurchase agreements                                  (340,592)           99,172            587,631
    Net proceeds from FHLB advance                                  5,000,000                 -                  -
    Repayment of note payable                                          (9,000)           (9,000)            (9,000)
    Net proceeds from issuance
        of common stock                                                56,954           107,734             81,195
    Dividends paid                                                   (699,610)         (652,627)          (592,239)
                                                             ------------------------------------------------------
           Net cash provided by financing
              activities                                           16,800,353         1,620,014         13,858,966
                                                             ------------------------------------------------------

           Increase (decrease) in cash
              and cash equivalents                                 (8,681,506)       (2,356,634)        15,548,619

Cash and cash equivalents, beginning                               17,705,921        20,062,555          4,513,936
                                                             ------------------------------------------------------

Cash and cash equivalents, ending                                 $ 9,024,415      $ 17,705,921       $ 20,062,555
                                                             ------------------------------------------------------

Supplemental Disclosures Of
    Cash Flow Information
        Interest paid                                             $ 4,754,828       $ 4,623,527        $ 4,268,394

        Income taxes paid                                             664,064           692,356            813,748

Supplemental Schedule Of Noncash
    Investing Activities
        Other real estate, equipment
           and investments acquired
           in settlement of loans                                     313,000           369,189            247,810


</TABLE>

See Notes to Consolidated Financial Statements.




                                      F-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 five 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.

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.






                                       F-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, 1997, 1996, and 1995.

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.





                                      F-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. Accrual of interest is discontinued on a loan
when payments of interest and/or principal have remained delinquent for a period
of 90 days or more and are not well secured and in the process of collection.

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.  Allowances for
impaired  loans  are  generally  determined  based on  collateral  values or the
present value of estimated cash flows. 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.

Effective  January 1, 1995,  the  Corporation  adopted FASB  Statement  No. 114,
"Accounting by Creditors for Impairment of a Loan." This statement as amended by
FASB  Statement No. 118,  establishes  accounting  and  reporting  standards for
impaired  loans.  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.

Individually  identified  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.




                                      F-11

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Significant Accounting Policies (Continued)

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.

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.  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.

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.

Earnings per share:  Earnings per share are based on the weighted average number
of shares  outstanding.  The stock  options  mentioned  in Note 13 have not been
included in the  computation  because they would not have a materially  dilutive
effect.



                                      F-12

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2.  Restrictions on Cash and Cash Equivalents

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, 1997
and 1996.

Note 3.  Securities

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

<TABLE>
<CAPTION>

                                                            December 31, 1997
                                     -----------------------------------------------------------------
                                                           Gross          Gross        Approximate
                                         Amortized       Unrealized    Unrealized         Market
                                            Cost           Gains         Losses           Value
                                     -----------------------------------------------------------------
<S>                                       <C>              <C>             <C>           <C>
U. S. government agencies
    and corporations                      $ 15,229,999     $ 171,918       $  7,644      $ 15,394,273
Equities                                       712,125        80,750              -           792,875
Mortgage-backed securities                   6,449,972        92,419         16,366         6,526,025
                                     -----------------------------------------------------------------
                                          $ 22,392,096     $ 345,087       $ 24,010      $ 22,713,173
                                     -----------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                                            December 31, 1996
                                     -----------------------------------------------------------------
                                                           Gross          Gross        Approximate
                                         Amortized       Unrealized    Unrealized         Market
                                            Cost           Gains         Losses           Value
                                     -----------------------------------------------------------------
<S>                                        <C>              <C>            <C>            <C>
U. S. government agencies
    and corporations                       $ 6,717,452      $ 70,579       $ 43,574       $ 6,744,457
Mortgage-backed securities                     961,630             -         20,403           941,227
                                     -----------------------------------------------------------------
                                           $ 7,679,082      $ 70,579       $ 63,977       $ 7,685,684
                                     -----------------------------------------------------------------
</TABLE>


The amortized cost and approximate market value of securities available for sale
at December 31, 1997, 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                250,000            250,235
Due after five years through ten years             8,025,413          8,120,967
Due after ten years                                6,954,586          7,023,071
Equities                                             712,125            792,875
Mortgage-backed securities                         6,449,972          6,526,025
                                           -------------------------------------
                                                $ 22,392,096       $ 22,713,173
                                           -------------------------------------




                                      F-13


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3.  Securities (Continued)

Securities  available for sale with a carrying amount of $1,831,982 and $941,227
at December  31, 1997 and 1996,  respectively,  were  pledged as  collateral  on
public deposits and for other purposes as required or permitted by law.

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

<TABLE>
<CAPTION>
                                                                   December 31, 1997
                                            -----------------------------------------------------------------
                                                                  Gross          Gross        Approximate
                                                Amortized      Unrealized     Unrealized         Market
                                                  Cost            Gains         Losses           Value
                                            -----------------------------------------------------------------
<S>                                             <C>              <C>             <C>           <C>
U. S. government agencies
    and corporations                            $  1,042,663     $  10,467       $      -      $ 1,053,130
U. S. Treasury notes                                 997,666         1,224              -          998,890
States and political subdivisions                 15,817,071       305,404         28,104       16,094,371
                                            -----------------------------------------------------------------
                                                $ 17,857,400     $ 317,095       $ 28,104      $ 18,146,391
                                            -----------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

                                                                   December 31, 1996
                                            -----------------------------------------------------------------
                                                                  Gross          Gross        Approximate
                                                Amortized      Unrealized     Unrealized         Market
                                                  Cost            Gains         Losses           Value
                                            -----------------------------------------------------------------
<S>                                             <C>              <C>             <C>           <C>
States and political subdivisions               $ 10,207,765     $ 211,044       $ 43,016      $ 10,375,793
                                            -----------------------------------------------------------------
</TABLE>

The amortized  cost and  approximate  market value of  securities  being held to
maturity at December 31, 1997, by contractual maturity, are shown below.

                                                                  Approximate
                                                 Amortized           Market
                                                    Cost             Value
                                             -----------------------------------
Due in one year or less                            $ 1,767,538       $ 1,775,207
Due after one year through five years                3,552,552         3,660,336
Due after five years through ten years               6,303,002         6,416,696
Due after ten years                                  6,234,308         6,294,152
                                             -----------------------------------
                                                  $ 17,857,400      $ 18,146,391
                                             -----------------------------------

Securities  being held to  maturity  with a carrying  amount of  $2,045,038  and
$1,480,000  at  December  31,  1997 and  1996,  respectively,  were  pledged  as
collateral on public deposits and for other purposes as required or permitted by
law.




                                      F-14

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4.  Loans

Major classifications of loans are summarized as follows:

                                                     December 31,
                                         ------------------------------------
                                               1997              1996
                                         ------------------------------------
Commercial                                    $ 17,815,987      $ 15,314,303
Real estate:
    Mortgage                                    47,927,212        44,157,608
    Construction                                 8,472,139        10,078,318
Installment                                     16,134,096        16,399,849
                                         ------------------------------------
                                                90,349,434        85,950,078
Less unearned discount                            (341,364)         (400,544)
                                         ------------------------------------
                                                90,008,070        85,549,534
Allowance for loan losses                       (1,175,842)       (1,211,675)
                                         ------------------------------------
Loans, net                                    $ 88,832,228      $ 84,337,859
                                         ------------------------------------

Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>

                                                       Years Ended December 31,
                                           -------------------------------------------------
                                                1997             1996            1995
                                           -------------------------------------------------
<S>                                            <C>              <C>             <C>
Balance, beginning of year                     $ 1,211,675      $ 1,126,872     $ 1,065,754
    Provision charged to operations                200,000          165,000         165,000
    Loans charged off                             (267,145)        (101,558)       (152,655)
    Recoveries                                      31,312           21,361          48,773
                                           -------------------------------------------------
Balance, end of year                           $ 1,175,842      $ 1,211,675     $ 1,126,872
                                           -------------------------------------------------
</TABLE>

At  December  31,  1997,  the Bank had  loans  amounting  to  $37,989  that were
specifically  classified  as  impaired.  The average  balance of impaired  loans
amounted to  approximately  $415,471 for the year ended  December 31, 1997.  The
allowance  for loan  losses  related to  impaired  loans  amounted to $20,067 at
December 31, 1997.  The  following is a summary of cash  receipts on these loans
and how they were applied in 1997:

Cash receipts applied to reduce
    principal balance                         $ 243,026
Cash receipts recognized as
    interest income                              14,158
                                          --------------
Total cash receipts                           $ 257,184
                                          --------------

Nonaccruing loans  (principally  commercial and mortgage loans) totaled $37,989,
$708,476, and $647,732 at December 31, 1997, 1996, and 1995, respectively, which
had the effect of reducing net income $4,403 ($.005 per common  share),  $55,518
($.06 per common share),  and $62,711 ($.07 per common share) for the years then
ended, respectively.


                                      F-15
<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,
                                              ---------------------------------
                                                      1997             1996
                                              ---------------------------------
Land                                                $ 543,802        $ 502,859
Buildings and improvements                          2,611,016        2,577,809
Furniture and equipment                             3,115,693        2,870,470
                                              ---------------------------------
                                                    6,270,511        5,951,138
Less accumulated depreciation                       2,730,206        2,390,529
                                              ---------------------------------
                                                  $ 3,540,305      $ 3,560,609
                                              ---------------------------------

Note 6.  Maturities of Certificates of Deposits

The scheduled  maturities of  certificates of deposits at December 31, 1997, are
as follows:

Year Ending
December 31
----------------------------------------------------
1998                                   $ 37,350,422
1999                                     11,986,573
2000                                     13,261,162
2001                                      1,726,116
2002 and later                            3,769,240
                                   -----------------
                                       $ 68,093,513
                                   -----------------

Note 7.  FHLB Advance

The advance of $5,000,000  from the Federal Home Loan Bank of Atlanta,  Georgia,
is secured by the mortgage loan portfolio of Central Virginia Bank.  Interest is
payable  quarterly at a fixed rate of 5.85% per annum. The principal  balance is
due and payable on July 8, 2002.

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, 1997 and 1996,  the balance of the
note was $45,000 and $54,000, respectively.




                                      F-16
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,
1997, 1996, and 1995, are as follows:

                                     1997          1996          1995
                                 ------------------------------------------
Currently payable                    $ 608,743     $ 713,540     $ 792,729
Deferred                                50,496       (28,623)        3,437
                                 ------------------------------------------
                                     $ 659,239     $ 684,917     $ 796,166
                                 ------------------------------------------

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,
                                                       -------------------------------------------
                                                           1997          1996           1995
                                                       -------------------------------------------
<S>                                                        <C>           <C>            <C>
Computed "expected" tax expense                            $ 847,732     $ 814,543      $ 909,951
Tax-exempt interest                                         (177,519)     (148,044)      (136,610)
Tax-exempt loan interest                                      (5,717)            -              -
Disallowance of interest expense
    deduction for the portion attributable
    to carrying tax-exempt obligations                        23,132        20,001         19,130
Other                                                        (28,389)       (1,583)         3,695
                                                       -------------------------------------------
                                                           $ 659,239     $ 684,917      $ 796,166
                                                       -------------------------------------------
</TABLE>

The deferred income tax provision consists of the following items:
<TABLE>
<CAPTION>

                                                                      Years Ended December 31,
                                                               -----------------------------------------
                                                                    1997           1996          1995
                                                               -----------------------------------------
<S>                                                                <C>          <C>           <C>
Difference between loan loss provision charged
    to operating expense and the bad debt
    deduction taken for income tax purposes                        $ 8,123      $ (19,223)    $ (24,844)
Interest income on nonaccrual loans
    recognized for federal income tax pur-
    poses, but not recognized for financial
    statements until received                                       25,635        (10,458)        7,802
Accretion of discount recognized for
    financial statements, but not recognized
    for income tax purposes until realized                           6,717           (689)        1,060
Difference between the depreciation methods
    used for financial statements and for income
    tax purposes                                                    10,021          1,747        19,419
                                                               -----------------------------------------
                                                                  $ 50,496      $ (28,623)     $  3,437
                                                               -----------------------------------------

</TABLE>


                                      F-17


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.  Income Tax Matters (Continued)

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

                                                      1997           1996
                                                  -----------------------------
Deferred tax assets:
    Allowance for loan losses                         $ 342,548      $ 354,732
    Less valuation allowance                           (114,171)      (118,232)
                                                  -----------------------------
                                                        228,377        236,500
    Interest income on nonaccrual loans                   3,309         28,944
                                                  -----------------------------
                                                        231,686        265,444
                                                  -----------------------------

Deferred tax liabilities:
    Property and equipment                               83,003         72,982
    Securities                                           14,217          2,245
    Unrealized gain on securities
        available for sale                              111,968          7,500
                                                  -----------------------------
                                                        209,188         82,727
                                                  -----------------------------

Net deferred tax asset                                 $ 22,498      $ 182,717
                                                  -----------------------------

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, 1997,
1996, and 1995, were $133,341, $118,824, and $103,626, 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.




                                      F-18
<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, 1997 and 1996, is as follows:

                                               1997             1996
                                         -----------------------------------
Commitments to extend credit                 $ 25,720,298      $ 22,664,435
Standby letters of credit                       2,725,439         3,077,256
                                         -----------------------------------
                                             $ 28,445,737      $ 25,741,691
                                         -----------------------------------

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.

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.







                                      F-19
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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,
                             ------------------------------
                                 1997             1996
                             ------------------------------
Balance, beginning            $ 1,485,811      $ 1,361,547
    New loans                   1,844,749        2,006,810
    Repayments                 (1,533,214)      (1,882,546)
                             ------------------------------
Balance, ending               $ 1,797,346      $ 1,485,811
                             ------------------------------

Note 13. Stock Option Plan

The Corporation  has a stock option plan which  authorizes the granting of stock
options to key employees and directors up to a maximum of 7,500 shares of common
stock.  The  options are  exercisable  at the date of grant and expire ten years
thereafter.  On July 14, 1987,  7,500 options were granted at an option price of
$9 per share.

During the year ended December 31, 1997, options were exercised for the purchase
of 3,111 shares of common stock at $9 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.

The  Corporation  did not grant any options  during the years ended December 31,
1997 and 1996. Therefore,  the transition provisions of FASB Statement 123 would
not be applicable.




                                      F-20

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 1997, that the Bank
meets all capital adequacy requirements to which it is subject.

As of December 31, 1997, 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.

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, 1997:
    Total Capital
        (to Risk Weighted Assets)      $ 16,172   17.45%      $ 7,413    8.00%      $ 9,266   10.00%
    Tier I Capital
        (to Risk Weighted Assets)        15,013   16.20%        3,706    4.00%        5,560    6.00%
    Tier I Capital
        (to Average Assets)              15,013   11.29%        5,320    4.00%        6,650    5.00%

As of December 31, 1996:
    Total Capital
        (to Risk Weighted Assets)      $ 15,247   17.68%      $ 6,842    8.00%      $ 8,553   10.00%
    Tier I Capital
        (to Risk Weighted Assets)        14,176   16.43%        3,421    4.00%        5,132    6.00%
    Tier I Capital
        (to Average Assets)              14,176   11.33%        5,005    4.00%        6,256    5.00%

</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 $3,180,000 in
1997 without regulatory approval.



                                      F-21
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 Bank.

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

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

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

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.  The carrying amount of accrued
interest receivable approximates it fair value.

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. The carrying amount
of accrued interest payable approximates its fair value.

FHLB  advance:  The carrying  amount of the FHLB advance  approximates  its fair
value.

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




                                      F-22
<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 Bank's financial assets and liabilities at December 31, 1997 and 1996:

<TABLE>
<CAPTION>

                                                                           December 31,
                                              -----------------------------------------------------------------------
                                                    1997                                1996
                                              -----------------------------------------------------------------------
                                                  Carrying          Estimated         Carrying         Estimated
                                                   Amount          Fair Value          Amount          Fair Value
                                              -----------------------------------------------------------------------
<S>                                              <C>               <C>             <C>               <C>
Financial assets:
    Cash and cash equivalents                    $  9,024,415      $  9,024,415    $ 17,705,921      $ 17,705,921
    Securities available for sale                  22,713,173        22,713,173       7,685,684         7,685,684
    Securities held to maturity                    17,857,400        18,146,391      10,207,765        10,375,793
    Mortgage loans held for sale                      331,350           331,350         201,798           201,798
    Loans, net                                     88,832,228        91,350,000      84,337,859        86,182,000
    Accrued interest receivable                     1,318,880         1,318,880         803,191           803,191

Financial liabilities:
    Demand and variable rate deposits            $ 54,580,028      $ 54,580,028    $ 49,705,030      $ 49,705,030
    Fixed-rate certificates of deposits            68,093,513        68,636,000      60,175,910        60,408,000
    Securities sold under repurchase
       agreements                                   1,193,887         1,193,887       1,534,479         1,534,479
    FHLB advance                                    5,000,000         5,000,000               -                 -
    Note payable                                       45,000            45,000          54,000            54,000
    Accrued interest payable                          327,763           327,763         232,946           232,946

</TABLE>

At December 31, 1997 and 1996, the Corporation  had outstanding  standby letters
of credit and commitments to extend credit.  These  off-balance  sheet financial
instruments are generally  exercisable at the market rate prevailing at the date
the underlying transaction will be completed,  and, therefore,  they were deemed
to have no current fair market value.




                                      F-23

<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.

                                 BALANCE SHEETS

                                                         December 31
                                              ----------------------------------
Assets                                             1997              1996
                                              ----------------------------------
    Cash                                              $ 95,325         $ 173,005
    Investment in subsidiary                        15,178,495        14,183,162
    Securities available for sale                      532,875                 -
    Other assets                                        33,098            87,440
                                              ----------------------------------
                                                  $ 15,839,793      $ 14,443,607
                                              ----------------------------------

Stockholders' Equity
    Common stock, $2.50 par value;
        3,000,000 shares authorized;
        953,638 and 949,140 shares
        issued and outstanding in 1997
        and 1996, respectively                     $ 2,384,095       $ 2,372,850
    Surplus                                          4,136,728         4,091,019
    Retained earnings                                9,109,861         7,975,381
    Net unrealized gain on
        securities available for sale,
        net of tax                                      43,893                 -
    Net unrealized gain on
        securities available for sale
        held by subsidiary, net of tax                 165,216             4,357
                                              ----------------------------------
                                                  $ 15,839,793      $ 14,443,607
                                              ----------------------------------




                                      F-24
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16.  Condensed Parent-Only Financial Statements (Continued)
<TABLE>
<CAPTION>

                                              STATEMENTS OF INCOME
                                                                            Years Ended December 31,
                                                                -------------------------------------------------
                                                                     1997            1996             1995
                                                                -------------------------------------------------
<S>                                                                 <C>             <C>              <C>
Income:
    Management fees                                                 $   38,368      $    46,456      $    66,260
    Dividends received from subsidiary                                  999,611         652,627          592,239
    Equity in undistributed earnings of subsidiary                      834,475       1,058,170        1,287,921
    Dividend income                                                      19,520               -                -
                                                                -------------------------------------------------
                                                                      1,891,974       1,757,253        1,946,420

Expenses:
    Operating expenses                                                   57,884          46,456           66,260
                                                                -------------------------------------------------
Income before income taxes                                            1,834,090       1,710,797        1,880,160

Income taxes (benefit)                                                        -               -                -
                                                                -------------------------------------------------
Net income                                                          $ 1,834,090     $ 1,710,797      $ 1,880,160
                                                                -------------------------------------------------

</TABLE>

                                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                                 -------------------------------------------------
                                                                       1997            1996            1995
                                                                 -------------------------------------------------
<S>                                                                   <C>             <C>             <C>
Cash Flows From Operating Activities
    Net income                                                        $ 1,834,090     $ 1,710,797     $ 1,880,160
    Adjustments to reconcile net income to net
        cash provided by operating activities:
        Undistributed earnings of subsidiary                             (834,475)     (1,058,170)     (1,287,921)
        Changes in operating assets and liabilities:
           (Increase) decrease in other assets                             27,486         (36,420)          3,798
                                                                 -------------------------------------------------
Net cash provided by operating activities                               1,027,101         616,207         596,037
                                                                 -------------------------------------------------

Cash Flows From Investing Activities
    Purchase of securities available for sale                            (462,125)              -               -
                                                                 -------------------------------------------------
Net cash (used in) investing activities                                  (462,125)              -               -
                                                                 -------------------------------------------------

Cash Flows From Financing Activities
    Net proceeds from issuance of common stock                             56,954         107,733          81,195
    Dividends paid                                                       (699,610)       (652,627)       (592,239)
                                                                 -------------------------------------------------
Net cash (used in) financing activities                                  (642,656)       (544,894)       (511,044)
                                                                 -------------------------------------------------

Increase (decrease) in cash                                               (77,680)         71,313          84,993
Cash, beginning                                                           173,005         101,692          16,699
                                                                 -------------------------------------------------

Cash, ending                                                             $ 95,325       $ 173,005       $ 101,692
                                                                 -------------------------------------------------

</TABLE>



                                      F-25

<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 31, 1998                  By: /s/ Ralph Larry Lyons
                                           ----------------------
                                           Ralph Larry Lyons
                                           President and Chief Executive Officer

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

March 31, 1998                  /s/ Ralph Larry Lyons
                                -----------------------------------------
                                Ralph Larry Lyons
                                President and Chief Executive Officer; Director
                                (Chief Financial Officer)

March 31, 1998                  /s/ Thomas R. Thornton, Jr.
                                -----------------------------------------
                                Thomas R. Thornton, Jr.
                                Assistant Vice President
                                (Chief Accounting Officer)

March 31, 1998                  /s/ John B. Larus
                                -----------------------------------------
                                John B. Larus
                                Chairman of the Board of Directors

March __, 1998
                                -----------------------------------------
                                Fleming V. Austin
                                Director

March __, 1998
                                -----------------------------------------
                                Charles W. Binford
                                Director

March 31, 1998                  /s/ Garland L. Blanton, Jr.
                                -----------------------------------------
                                Garland L. Blanton, Jr.
                                Director

March 31, 1998                  /s/ Charles B. Goodman
                                -----------------------------------------
                                Charles B. Goodman
                                Director

March 31, 1998                  /s/ Elwood C. May
                                -----------------------------------------
                                Elwood C. May
                                Director

March 31, 1998                  /s/ James T. Napier
                                -----------------------------------------
                                James T. Napier
                                Director


<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)