UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from ____________ to _____________
Commission file number: 0-30535
GRAYSON BANKSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
Virginia 54-1647596
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
113 West Main Street
Independence, Virginia 24348
(Address of Principal Executive Offices) (Zip Code)
(276) 773-2811
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes _____ No __X__
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
1,718,968 shares of Common Stock, par value
$1.25 per share, outstanding as of September 30, 2003.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets--September 30, 2003
and December 31, 2002................................................3
Consolidated Statements of Income--Nine Months Ended
September 30, 2003 and September 30, 2002............................4
Consolidated Statements of Income--Three Months Ended
September 30, 2003 and September 30, 2002........................... 5
Consolidated Statements of Stockholders' Equity--Nine Months
Ended September 30, 2003 and Year Ended December 31, 2002............6
Consolidated Statements of Cash Flows--Nine Months
Ended September 30, 2003 and September 30, 2002......................7
Notes to Consolidated Financial Statements............................8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................10
Item 3. Quantitative and Qualitative Disclosures about Market Risk...........12
Item 4. Controls and Procedures..............................................13
PART II OTHER INFORMATION
Item 1. Legal Proceedings....................................................14
Item 2. Changes in Securities and Use of Proceeds............................14
Item 3. Defaults Upon Senior Securities......................................14
Item 4. Submission of Matters to a Vote of Security Holders..................14
Item 5. Other Information....................................................14
Item 6. Exhibits and Reports on Form 8-K.....................................14
Signatures
2
Part I: Financial Information
Item 1: Financial Statements
Grayson Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 2003 and December 31, 2002
- --------------------------------------------------------------------------------
September 30, December 31,
Assets 2003 2002
--------------- -------------
(Unaudited) (Audited)
Cash and due from banks $ 7,883,540 $ 11,265,444
Interest-bearing deposits with banks - -
Federal funds sold 15,133,523 19,740,228
Investment securities available for sale 43,538,905 40,120,124
Investment securities held to maturity 3,654,496 3,906,401
Restricted equity securities 1,081,750 845,450
Loans, net of allowance for loan losses of $2,285,891
at September 30, 2003 and $2,189,028 at December 31, 2002 170,838,251 154,190,005
Property and equipment, net 5,741,235 4,126,234
Accrued income 2,136,513 1,798,906
Other assets 5,710,323 5,289,797
--------------- ----------------
$ 255,718,536 $ 241,282,589
=============== ================
Liabilities and Stockholders' Equity
Liabilities
Demand deposits $ 25,756,970 $ 22,950,583
Interest-bearing demand deposits 19,224,939 18,079,169
Savings deposits 44,243,200 37,822,606
Large denomination time deposits 35,798,324 35,232,988
Other time deposits 94,015,367 92,823,178
--------------- ----------------
Total deposits 219,038,800 206,908,524
FHLB Advances 10,000,000 10,000,000
Accrued interest payable 722,775 328,975
Other liabilities 972,750 815,573
--------------- ----------------
230,734,325 218,053,072
--------------- ----------------
Commitments and contingencies
Stockholders' equity
Preferred stock, $25 par value; 500,000
shares authorized; none issued - -
Common stock, $1.25 par value; 5,000,000 shares
authorized; 1,718,968 shares issued and
outstanding in 2003 and 2002 2,148,710 2,148,710
Surplus 521,625 521,625
Retained earnings 22,007,401 19,967,611
Accumulated other comprehensive income 306,475 591,571
--------------- ----------------
24,984,211 23,229,517
--------------- ----------------
$ 255,718,536 $ 241,282,589
=============== ================
See Notes to Consolidated Financial Statements
3
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Income
For the Nine Months ended September 30, 2003 and 2002
- --------------------------------------------------------------------------------
Nine Months Ended
September 30,
2003 2002
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 8,709,969 $ 8,925,294
Federal funds sold 209,948 175,994
Investment securities:
Taxable 1,190,450 1,349,497
Exempt from federal income tax 335,368 321,355
Deposits with banks - -
------------- --------------
10,445,735 10,772,140
------------- --------------
Interest expense:
Deposits 4,003,272 4,686,115
Interest on borrowings 392,824 326,568
------------- --------------
4,396,096 5,012,683
------------- --------------
Net interest income 6,049,639 5,759,457
Provision for loan losses 290,000 315,000
------------- --------------
Net interest income after
provision for loan losses 5,759,639 5,444,457
------------- --------------
Noninterest income:
Service charges on deposit accounts 313,171 253,107
Other income 1,895,785 310,477
------------- --------------
2,208,956 563,584
------------- --------------
Noninterest expense:
Salaries and employee benefits 2,725,329 2,207,522
Occupancy expense 111,880 90,912
Equipment expense 352,911 321,456
Other expense 1,072,857 897,981
------------- --------------
4,262,977 3,517,871
------------- --------------
Income before income taxes 3,705,618 2,490,170
Income tax expense 1,047,000 666,000
------------- --------------
Net income $ 2,658,618 $ 1,824,170
============= ==============
Basic earnings per share $ 1.55 $ 1.06
============= ==============
Weighted average shares outstanding 1,718,968 1,718,968
============= ==============
See Notes to Consolidated Financial Statements
4
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Income
For the Three Months ended September 30, 2003 and 2002
- --------------------------------------------------------------------------------
Three Months Ended
September 30,
2003 2002
------------- --------------
Interest income: (Unaudited) (Unaudited)
Loans and fees on loans $ 2,979,226 $ 3,058,723
Federal funds sold 69,266 59,390
Investment securities:
Taxable 328,186 507,887
Exempt from federal income tax 114,459 72,044
Deposits with banks - -
------------- --------------
3,491,137 3,698,044
------------- --------------
Interest expense:
Deposits 1,232,479 1,542,586
Interest on borrowings 148,973 116,534
------------- --------------
1,381,452 1,659,120
------------- --------------
Net interest income 2,109,685 2,038,924
Provision for loan losses 110,000 105,000
------------- --------------
Net interest income after
provision for loan losses 1,999,685 1,933,924
------------- --------------
Noninterest income:
Service charges on deposit accounts 111,879 92,121
Other income 699,374 126,401
------------- --------------
811,253 218,522
------------- --------------
Noninterest expense:
Salaries and employee benefits 962,172 760,286
Occupancy expense 41,077 31,928
Equipment expense 142,606 114,296
Other expense 408,098 318,084
------------- --------------
1,553,953 1,224,594
------------- --------------
Income before income taxes 1,256,985 927,852
Income tax expense 357,000 249,000
------------- --------------
Net income $ 899,985 $ 678,852
============= ==============
Basic earnings per share $ .52 $ .39
============= ==============
Weighted average shares outstanding 1,718,968 1,718,968
============= ==============
See Notes to Consolidated Financial Statements
5
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
For the Nine Months ended September 30, 2003 (unaudited)
and the Year ended December 31, 2002 (audited)
- --------------------------------------------------------------------------------
Accumulated
Common Stock Other
------------ Retained Comprehensive
Shares Amount Surplus Earnings Income (Loss) Total
------ ------ ------- -------- ------------- -----
Balance, December 31, 2001 1,718,968 $ 2,148,710 $ 521,625 $ 18,221,877 $ 193,561 $ 21,085,773
Comprehensive income
Net income - - - 2,536,459 - 2,536,459
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $202,495 - - - - 398,010 398,010
--------------
Total comprehensive income 2,934,469
Dividends paid
($.46 per share) - - - (790,725) - (790,725)
--------- ---------- --------- ------------- ------------- --------------
Balance, December 31, 2002 1,718,968 2,148,710 521,625 19,967,611 591,571 23,229,517
Comprehensive income
Net income - - - 2,658,618 - 2,658,618
Net change in unrealized
appreciation on investment
securities available for
sale, net of taxes of $(146,868) - - - - (285,096) (285,096)
--------------
Total comprehensive income 2,373,522
Dividends paid
($.36 per share) - - - (618,828) - (618,828)
--------- ---------- --------- ------------- ------------- --------------
Balance, September 30, 2003 1,718,968 $2,148,710 $ 521,625 $ 22,007,401 $ 306,475 $ 24,984,211
========== ========== ========== ============= ============= ==============
See Notes to Consolidated Financial Statements
6
Grayson Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows
For the Nine Months ended September 30, 2003 and 2002
- --------------------------------------------------------------------------------
Nine Months Ended
September 30,
2003 2002
------------- --------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 2,658,618 $ 1,824,170
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 285,000 277,500
Provision for loan losses 290,000 315,000
Deferred income taxes (4,000) (52,000)
Net realized gains on securities (905,810) (1,750)
Accretion of discount on securities, net of
amortization of premiums 181,545 84,946
Deferred compensation 7,891 4,318
Changes in assets and liabilities:
Accrued income (337,607) (232,558)
Other assets (269,658) (156,638)
Accrued interest payable 393,800 484,382
Other liabilities 149,286 (174,747)
------------- --------------
Net cash provided by operating activities 2,449,065 2,372,623
------------- --------------
Cash flows from investing activities:
(Increase) decrease in interest-bearing deposits with banks - -
Net (increase) decrease in federal funds sold 4,606,705 (513,354)
Purchases of investment securities (22,817,973) (16,561,165)
Sales of investment securities 11,449,464 -
Maturities of investment securities 8,493,934 5,682,453
Purchases of restricted equity securities (236,300) (19,700)
Net increase in loans (16,938,246) (12,560,104)
Purchases of bank-owned life insurance - (4,000,000)
Purchases of property and equipment, net of sales (1,900,001) (979,353)
------------- --------------
Net cash used in investing activities (17,342,417) (28,951,223)
------------- --------------
Cash flows from financing activities:
Net increase (decrease) in demand,
savings and NOW deposits 10,372,751 9,204,290
Net increase in time deposits 1,757,525 10,047,716
Dividends paid (618,828) (378,173)
Net increase (decrease) in other borrowings - 10,000,000
------------- --------------
Net cash provided by financing activities 11,511,448 28,873,833
------------- --------------
Net increase (decrease) in cash and cash equivalents (3,381,904) 2,295,233
Cash and cash equivalents, beginning 11,265,444 8,715,457
------------- --------------
Cash and cash equivalents, ending $ 7,883,540 $ 11,010,690
============= ==============
Supplemental disclosure of cash flow information:
Interest paid $ 4,002,296 $ 4,528,301
============= ==============
Taxes paid $ 1,129,001 $ 731,219
============= ==============
See Notes to Consolidated Financial Statements
7
Grayson Bankshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1. Organization and Summary of Significant Accounting Policies
Organization
Grayson Bankshares, Inc. (the "Company") was incorporated as a Virginia
corporation on February 3, 1992 to acquire the stock of The Grayson National
Bank (the "Bank"). The Bank was acquired by the Company on July 1, 1992.
The Bank was organized under the laws of the United States in 1900 and currently
serves Grayson County, Virginia and surrounding areas through seven banking
offices. As an FDIC insured, National Banking Association, the Bank is subject
to regulation by the Comptroller of the Currency. The Company is regulated by
the Federal Reserve.
The consolidated financial statements as of September 30, 2003 and for the
periods ended September 30, 2003 and 2002 included herein, have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished in the interim consolidated financial statements reflects
all adjustments necessary to present fairly the Company's consolidated financial
position, results of operations, changes in stockholders' equity and cash flows
for such interim periods. Management believes that all interim period
adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the Company's audited financial
statements and the notes thereto as of December 31, 2002, included in the
Company's Form 10-K for the fiscal year ended December 31, 2002.
The accounting and reporting policies of the Company and the Bank follow
generally accepted accounting principles and general practices within the
financial services industry.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
the Bank, which is wholly owned. All significant, intercompany transactions and
balances have been eliminated in consolidation.
Note 2. Allowance for Loan Losses
The following is an analysis of the allowance for loan losses for the nine
months ended September 30, 2003 and 2002.
2003 2002
------------- --------------
Balance, beginning $ 2,189,028 $ 1,821,966
Provision charged to expense 290,000 315,000
Recoveries of amounts charged off 38,300 175,610
Amounts charged off (231,437) (228,370)
------------- --------------
Balance, ending $ 2,285,891 $ 2,084,206
============= ==============
Note 3. Income Taxes
A reconciliation of income tax expense computed at the statutory federal income
tax rate to income tax expense included in the statements of income for the nine
months ended September 30, 2003 and 2002 follows:
2003 2002
------------- --------------
Tax at statutory federal rate $ 1,259,910 $ 846,658
Tax exempt interest income (139,328) (109,261)
Other tax exempt income (96,900) (54,400)
Other 23,318 (16,997)
------------- --------------
$ 1,047,000 $ 666,000
============= ==============
8
Grayson Bankshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 4. 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, credit risk in excess
of the amount recognized in the consolidated balance sheets.
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 for on-balance-sheet instruments. A summary of the Bank's
commitments at September 30, 2003 and 2002 is as follows:
2003 2002
------------- --------------
Commitments to extend credit $ 9,209,224 $ 6,222,286
Standby letters of credit - -
------------- --------------
$ 9,209,224 $ 6,222,286
============= ==============
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. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. 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
creditworthiness 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, 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 that the Bank deems necessary.
9
Part I: Financial Information
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
General
The following discussion provides information about the major components of the
results of operations and financial condition of the Company. This discussion
and analysis should be read in conjunction with the Consolidated Financial
Statements and Notes to Consolidated Financial Statements included in this
report.
Results of Operations
Total interest income decreased by $206,907 for the quarter ended September 30,
2003 compared to the quarter ended September 30, 2002, and interest expense on
deposits and other borrowings decreased by $277,668 over the same period. This
resulted in an increase in net interest income of $70,761 or 3.47%. The
decreases in both interest income and expense came as a result of the general
decreases in interest rates which have occurred over the past year. Interest
income on investment securities also decreased as a result of management's
strategy to shorten the overall duration of the investment portfolio during the
current low-rate environment.
Other income was up $572,973 in the third quarter of 2003 compared to the third
quarter of 2002. This is a result of increases in mortgage origination fees
generated by the recent refinancing volume, alone with a one-time gain of
approximately $500,000 on the termination of a pay-fixed, receive-floating,
interest rate swap agreement.
The provision for credit losses was $110,000 for the quarter ended September 30,
2003 and $105,000 for the quarter ended September 30, 2002. Management believes
the provision and the resulting allowance for loan losses are adequate.
Total other expenses increased by $329,359, or 26.90% for the quarter ended
September 30, 2003 compared to the quarter ended September 30, 2002. This is due
primarily to increases in personnel costs, as well as other expenses associated
with the opening of a new branch banking facility during the quarter.
The increases in net interest income and other income combined with the increase
in other expense, resulted in an increase in net income before taxes of
$329,133, or 35.47% for the quarter ended September 30, 2003, compared to the
same quarter in 2002. Income tax expense increased to $357,000, resulting in an
increase in net income of $221,133, or 32.57% to $899,985 for the third quarter
of 2003 compared to $678,852 for the third quarter of 2002.
For the nine months ended September 30, 2003, total interest income decreased by
$326,405 compared to the nine-month period ended September 30, 2002, while
interest expense decreased by $616,587 over the same period. This resulted in an
increase in net interest income of $290,182, or 5.04%. As stated above, the
decreases in both interest income and expense came as a result of general
decreases in interest rates.
Other income was up $1,585,308 for the nine-month period ended September 30,
2003 compared to the same period in 2002. The majority of this increase came in
the form of securities gains resulting from the restructuring of a leveraging
strategy that was implemented in the first quarter of 2002. Securities gains
from this transaction totaled approximately $870,000. Other income was also
impacted by a one-time gain of approximately $500,000 on the termination of an
interest rate swap agreement, as discussed above in the quarterly comparisons.
The remaining increase came as a result of increases in the cash value of
bank-owned life insurance policies, which were purchased in 2002, as well as
increases in mortgage-origination fees.
Normal cost increases, combined with the aforementioned costs of salaries,
benefits, and branching activities, resulted in an overall increase in other
expenses of $745,106 for the first nine months of 2003 compared to the first
nine months of 2002. Net income for the nine-month period ended September 30,
2003 increased by $834,448, or 45.74% compared to the nine-month period ended
September 30, 2002. The significant increase in net income was due primarily to
the securities gains and other items noted above in the discussion of other
income.
10
Financial Condition
Total assets increased by $14,435,947, or 5.98% from December 31, 2002 to
September 30, 2003. Net loans increased by $16,648,246 and investment securities
increased by $3,166,876.
Total deposits increased by $12,130,276, or 5.86% from December 31, 2002 to
September 30, 2003. Federal Home Loan Bank advances were unchanged at September
30, 2003, compared to December 31, 2002 as new advances taken in the second
quarter of 2003 were repaid in the third quarter in conjunction with the
termination of an underlying interest rate swap agreement.
Shareholders' equity totaled $24,984,211 at September 30, 2003 compared to
$23,229,517 at December 31, 2002. The $1,754,694 increase was the result of
earnings for the nine months less decreases in the market value of securities
that are classified as available for sale and the payment of dividends of
$618,828.
Regulatory guidelines relating to capital adequacy provide minimum risk-based
ratios at the Bank level which assess capital adequacy while encompassing all
credit risks, including those related to off-balance sheet activities. The Bank
exceeds all regulatory capital guidelines and is considered to be well
capitalized.
Forward-Looking Statements
Certain information contained in this discussion may include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are generally identified by phrases such as
"the Company expects," "the Company believes" or words of similar import. Such
forward-looking statements involve known and unknown risks including, but not
limited to, changes in general economic and business conditions, interest rate
fluctuations, competition within and from outside the banking industry, new
products and services in the banking industry, risk inherent in making loans
such as repayment risks and fluctuating collateral values, problems with
technology utilized by the Company, changing trends in customer profiles and
changes in laws and regulations applicable to the Company. Although the Company
believes that its expectations with respect to the forward-looking statements
are based upon reliable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
11
Part I: Financial Information
Item 3: Quantitative and Qualitative Disclosures about Market Risk
- --------------------------------------------------------------------------------
The principal goals of the Bank's asset and liability management strategy are
the maintenance of adequate liquidity and the management of interest rate risk.
Liquidity is the ability to convert assets to cash to fund depositors'
withdrawals or borrowers' loans without significant loss. Interest rate risk
management balances the effects of interest rate changes on assets that earn
interest or liabilities on which interest is paid, to protect the Bank from wide
fluctuations in its net interest income which could result from interest rate
changes.
Management must ensure that adequate funds are available at all times to meet
the needs of its customers. On the asset side of the balance sheet, maturing
investments, loan payments, maturing loans, federal funds sold, and unpledged
investment securities are principal sources of liquidity. On the liability side
of the balance sheet, liquidity sources include core deposits, the ability to
increase large denomination certificates, federal fund lines from correspondent
banks, borrowings from the Federal Home Loan Bank and the Federal Reserve Bank,
as well as the ability to generate funds through the issuance of long-term debt
and equity.
Interest rate risk is the effect that changes in interest rates would have on
interest income and interest expense as interest-sensitive assets and
interest-sensitive liabilities either reprice or mature. Management attempts to
maintain the portfolios of interest-earning assets and interest-bearing
liabilities with maturities or repricing opportunities at levels that will
afford protection from erosion of net interest margin, to the extent practical,
from changes in interest rates.
The Bank uses a number of tools to manage its interest rate risk, including
simulating net interest income under various scenarios, monitoring the present
value change in equity under the same scenarios, and monitoring the difference
or gap between rate sensitive assets and rate sensitive liabilities over various
time periods.
The earnings simulation model forecasts annual net income under a variety of
scenarios that incorporate changes in the absolute level of interest rates,
changes in the shape of the yield curve and changes in interest rate
relationships. Management evaluates the effect on net interest income from
gradual changes in the Prime Rate of up to 300 basis points up or down over a
12-month period. The current model indicates that an increase in rates of 300
basis points over the next twelve months would result in a decrease in net
interest income of $601,747, or 6.65%, while a similar decrease in rates would
result in an increase in net interest income of $510,165, or 5.64%. The model
also incorporates Management's forecasts for balance sheet growth, noninterest
income and noninterest expense. The interest rate scenarios are used for
analytical purposes and do not represent Management's view of future market
movements. Rather, these are intended to provide a measure of the degree of
volatility interest rate movements may apply to the earnings of the Company.
Modeling the sensitivity of earnings to interest rate risk is highly dependent
on numerous assumptions embedded in the simulation model. While the earnings
sensitivity analysis incorporates Management's best estimate of interest rate
and balance sheet dynamics under various market rate movements, the actual
behavior and resulting earnings impact likely will differ from that projected.
12
Part I: Financial Information
Item 4: Controls and Procedures
- --------------------------------------------------------------------------------
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with the Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15. Based upon that evaluation, the Company's President
and Chief Executive Officer along with the Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in its periodic SEC filings.
The Company's management is also responsible for establishing and maintaining
adequate internal control over financial reporting. There were no changes in the
Company's internal control over financial reporting identified in connection
with the evaluation of it that occurred during the Company's last fiscal quarter
that materially affected, or are reasonably likely to materially affect,
internal control over financial reporting.
13
Part II: Other Information
Grayson Bankshares, Inc. and Subsidiary
- --------------------------------------------------------------------------------
Item 1. Legal Proceedings
There are no matters pending legal proceedings to which the Company or its
subsidiary is a party or of which any of their property is subject.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Rule 13a-14(a) Certification of President and Chief
Executive Officer.
31.2 Rule 13a-14(a) Certification of Chief Financial
Officer.
32.1 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350.
(b) Reports on 8-K
None
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GRAYSON BANKSHARES, INC.
Date: November 14, 2003 By: /s/ Jacky K. Anderson
----------------------------------------
Jacky K. Anderson
President and Chief Executive Officer
By: /s/ Blake M. Edwards
----------------------------------------
Blake M. Edwards
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
31.1 Rule 13a-14(a) Certification of President and Chief Executive
Officer.
31.2 Rule 13a-14(a) Certification of Chief Financial Officer.
32.1 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350.