Exhibit 99.1

GRAYSON

BANKSHARES, INC.

Financial Report

December 31, 2007

113 West Main Street  Post Office Box 186

Independence, Virginia 24348

(276) 773-2811

East Independence		(276) 773-2811
Elk Creek	(276) 655-4011
Galax	(276) 238-2411
Troutdale	(276) 677-3722
Sparta	(336) 372-2811
Carroll	(276) 238-8112
Hillsville	(276) 728-2810
Whitetop	(276) 388-3811

Message to Shareholders

Dear Fellow Shareholders,

It is our pleasure to present our 4^th Quarter 2007 Financial Report to you.

Our total assets are $361,486,399, up $27,882,124, or 8.36% for the year. Net loans have increased by $18,211,913, or 7.42%, while deposits increased by $26,927,663, or 9.54% during the last twelve months.

Stockholders’ equity increased by $1,986,704 for the year. Total stockholders’ equity at December 31, 2007 was $30,290,873, which represents a book value of $17.62 per share. Dividends of 26 cents per share were declared and paid in December, for a total of 86 cents per share for 2007.

Our net income was $739,669 for the quarter ended December 31, 2007, compared to $632,449 for the same period last year. The increase was due primarily to an increase in the Bank’s net interest income of $268,267. Net income for the year totaled $3,167,503, compared to $3,147,221 for 2006.

As always, we appreciate your support, welcome your comments and the opportunity to serve you.

Sincerely,

Jacky K. Anderson

President and CEO

Consolidated Balance Sheets

December 31,			December 31,
	2007	2006

Assets

Cash and due from banks					$			10,746,139				$				10,120,984
Federal funds sold								24,637,131								17,785,525
Investment securities								42,573,226								40,848,274
Loans							266,486,861								248,419,200
	Less allowance for loan losses			2,757,745							2,901,997
		Net loans				263,729,116							245,517,203
Properties and equipment									8,485,058								8,165,147
Accrued interest receivable									2,996,261								2,930,705
Other assets					8,319,468							8,236,437
		Total assets	$			361,486,399				$				333,604,275

Liabilities

Demand deposits		$		44,630,854	$		40,971,045
Interest-bearing demand deposits				20,422,189			17,704,016
Savings deposits				35,822,800			37,356,154
Large denomination time deposits				74,466,245			63,294,716
Other time deposits		133,831,606			122,920,100
	Total deposits		309,173,694			282,246,031

FHLB Advances				10,000,000				10,000,000
Other Borrowings				10,000,000				10,000,000
Accrued interest payable					536,393				553,446
Other liabilities			1,485,439				2,500,629
	Total liabilities	331,195,526				305,300,106

Commitments and contingencies

Stockholders’ equity

Preferred stock, $25 par value; 500,000
	shares authorized; none outstanding								-							-
Common stock, $1.25 par value; 2,000,000
	shares authorized; 1,718,968 shares
	issued and outstanding					2,148,710							2,148,710
Surplus								521,625							521,625
Retained earnings					29,026,036							27,336,848
Accumulated other comprehensive income (loss)							(1,405,498)							(1,703,014)
		Total stockholders’ equity	30,290,873							28,304,169
		Total liabilities and stockholders’ equity	$	361,486,399						$	333,604,275

Consolidated Statements of Operations

	Three Months Ended December 31,			Year ended December 31,
2007		2006	2007		2006

Interest income

Loans and fees on loans		$		5,213,174		$		4,854,069		$		20,332,780		$		18,194,285
Interest on securities					483,426				457,082				1,779,661				1,815,094
Federal funds sold		240,074				167,174				771,860				613,499
	Total interest income		5,936,674				5,478,325				22,884,301				20,622,878

Interest expense

Deposits				2,632,341				2,305,160				10,311,008				7,692,010
FHLB Advances					72,871				120,334				93,138				462,334
Other Borrowings		91,111				180,747				429,628				481,747
	Total interest expense		2,796,323				2,606,241				10,833,774				8,636,091

Net interest income 3,140,351  2,872,084  12,050,527   11,986,787

Provision for loan losses			191,555		120,000		465,143		520,000
	Net interest income after provision
		for loan losses		2,948,796		2,752,084		11,585,384		11,466,787

Other income

Service charges on deposit accounts				245,778			144,163			828,111			581,136
Other income			225,177			231,680			1,206,216			1,102,690
	Total other income	470,955			375,843			2,034,327			1,683,826

Other expenses

Salaries and employee benefits					1,358,831				1,275,868							5,569,084					5,168,830
Occupancy expense						102,913						89,739					358,068					315,012
Equipment expense						222,981					194,353						839,195					811,427
Other expense			702,326					671,075						2,389,830					2,385,680
	Total other expense	2,387,051					2,231,035						9,156,177					8,680,949
	Net income before income taxes			1,032,700						896,892					4,463,534					4,469,664

Income taxes		293,031				264,443				1,296,031				1,322,443
	Net income	$		250,821		$		448,063		$		981,204		$	1,140,507
	Net income	$		739,669		$		632,449		$	3,167,503			$	3,147,221
Net income per share		$			.43	$			.37	$			1.84	$		1.83
Weighted average shares outstanding			1,718,968				1,718,968				1,718,968				1,718,968

Officers

Julian L. Givens

Chairman of the Board

Jacky K. Anderson

President & CEO

Dennis B. Gambill

Vice President

Brenda C. Smith

Secretary

Blake M. Edwards

Chief Financial Officer

Board of Directors

Julian L. Givens

Retired Physician

Carl J. Richardson

Retired

Jacky K. Anderson

Grayson BankShares, Inc. and The Grayson National Bank

Jean W. Lindsey

Walters’ Drug, Inc.

Dennis B. Gambill

Grayson BankShares, Inc. and The Grayson National Bank

Jack E. Guynn, Jr.

Guynn Enterprises, Inc.

Charles T. Sturgill

Grayson County Clerk of Court

J. David Vaughan

Vaughan Furniture

Thomas M. Jackson, Jr.

Attorney

Bryan L. Edwards

Sparta Town Manager

Member Federal Deposit Insurance Corporation