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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-209052

MERGER PROPOSED – YOUR VOTE IS VERY IMPORTANT

April 20, 2016

To the Shareholders of Grayson Bankshares, Inc. and Cardinal Bankshares Corporation:

On November 6, 2015, Grayson Bankshares, Inc. (“Grayson”), Cardinal Bankshares Corporation (“Cardinal”) and Parkway Acquisition Corp. (“Parkway”), entered into an Agreement and Plan of Merger (the “merger agreement”), that provides for the combination of the three companies. Under the merger agreement, Grayson and Cardinal will merge with and into Parkway, with Parkway as the surviving corporation (the “merger”). Following the merger, the Bank of Floyd will merge with and into Grayson National Bank, with Grayson National Bank as the surviving bank (the “bank merger” and collectively, with the merger, the “mergers”).

In the merger, each share of Grayson common stock will be converted into the right to receive 1.76 shares of Parkway common stock, and each share of Cardinal common stock will be converted into the right to receive 1.30 shares of Parkway common stock. Based on the current number of shares of Grayson common stock and Cardinal common stock outstanding, Parkway expects to issue 5,021,837 shares of common stock in the aggregate upon completion of the merger. Based on these numbers, current Grayson shareholders would own approximately 60.2% of the shares of Parkway and current shareholders of Cardinal would own approximately 39.8% of the shares of Parkway immediately following the merger. In lieu of fractional shares, Parkway will issue cash to holders of Grayson common stock and Cardinal common stock, on the basis of $10.45 per share of Parkway common stock.

The value of any stock consideration you receive will depend on the value of Parkway common stock. Parkway was recently incorporated under Virginia law and has only one share of stock issued and outstanding, which is held by a nominee shareholder solely to facilitate the merger. Parkway has no material assets or liabilities, has not conducted any business and will not conduct any business prior to consummation of the merger except to perform its obligations under the merger agreement. Accordingly, there is currently no trading market and no market price for Parkway common stock.

Grayson and Cardinal each will hold a special meeting of their respective shareholders in connection with the merger. Grayson and Cardinal shareholders will be asked to vote to approve the merger agreement and to approve a proposal to adjourn their respective special meetings, if necessary to solicit additional proxies in favor of the approval of the merger agreement as described in this joint proxy statement/prospectus.

The special meeting of Grayson shareholders will be held on May 24, 2016, at the Independence Volunteer Fire Department, 529 Davis Street, Independence, Virginia at 1:00 p.m. local time. The special meeting of Cardinal shareholders will be held on May 26, 2016, at the Bank of Floyd Conference Center, 101 Jacksonville Circle, Floyd, Virginia at 10:00 a.m. local time.

The Grayson Board has determined that the merger agreement is in the best interests of Grayson and its shareholders, has approved the merger agreement and recommends that Grayson shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the Grayson special meeting, if necessary to solicit additional proxies in favor of the proposal to approve the merger agreement.

The Cardinal Board has determined that the merger agreement is in the best interests of Cardinal and its shareholders, has approved the merger agreement and recommends that Cardinal shareholders vote “FOR” the proposal to approve the merger agreement and “FOR” the proposal to adjourn the Cardinal special meeting, if necessary to solicit additional proxies in favor of the proposal to approve the merger agreement.

This document, which serves as a joint proxy statement for the special meetings of Grayson and Cardinal shareholders and as a prospectus for the shares of Parkway common stock to be issued to Grayson and Cardinal shareholders in the merger, describes the Grayson special meeting, the Cardinal special meeting, the merger, the documents related to the merger and other related matters. Please carefully read this entire joint proxy statement/prospectus, including the section entitled, “Risk Factors,” beginning on page 23, for a discussion of the risks relating to the proposed merger.

If you have any questions concerning the merger, Grayson shareholders should contact Blake M. Edwards, Jr., Chief Financial Officer, 113 W. Main Street, Independence, Virginia 24348 at (276) 773-2811, and Cardinal shareholders should contact J. Alan Dickerson, Interim President and Chief Executive Officer and Chief Financial Officer, 101 Jacksonville Circle, Floyd, Virginia 24091, at (540) 745-4191. We look forward to seeing you at the meetings.

J. Allan Funk		J. Alan Dickerson
President and Chief Executive Officer		Interim President and Chief Executive Officer and Chief Financial Officer
Grayson Bankshares, Inc.		Cardinal Bankshares Corporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares of Parkway common stock are not savings or deposit accounts or other obligations of any bank or savings association, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this joint proxy statement/prospectus is April 20, 2016, and it is first being mailed or otherwise delivered to the shareholders of Grayson and Cardinal on or about April 22, 2016.

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GRAYSON BANKSHARES, INC.

113 W. MAIN STREET

INDEPENDENCE, VIRGINIA 24348

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 24, 2016

A special meeting of shareholders of Grayson Bankshares, Inc., a Virginia corporation (“Grayson”) will be held on Tuesday, May 24, 2016 at 1:00 p.m. local time, at the Independence Volunteer Fire Department, 529 Davis Street, Independence, Virginia, for the purpose of considering and voting upon the following:

Grayson’s board of directors (the “Grayson Board”) unanimously recommends that Grayson shareholders vote “FOR” the Grayson merger proposal and “FOR” the Grayson adjournment proposal.

You have the right to assert appraisal rights with respect to the merger and demand in writing that Parkway pay the fair value of your shares of Grayson common stock under applicable provisions of Virginia law. In order to exercise and perfect appraisal rights, you must give written notice of your intent to demand payment for your shares to Grayson before the vote is taken on the merger at the special meeting and must not vote in favor of the merger. A copy of the applicable Virginia statutory provisions is included in the joint proxy statement/prospectus as Appendix D, and a description of the procedures to demand and perfect appraisal rights is included in the section entitled, “The Merger – Appraisal Rights,” beginning on page 71.

You are cordially invited to attend the meeting in person. However, even if you expect to attend the meeting, you are requested to complete, sign, and date the enclosed appointment of proxy and return it in the envelope provided for that purpose to ensure that a quorum is present at the meeting. You may also vote via the Internet or telephone by following the instructions on the proxy card. The giving of an appointment of proxy will not affect your right to revoke it or to attend the meeting and vote in person.

If your shares are held in the name of a broker, bank or other fiduciary, please follow the instructions on the voting instruction card provided by such person.

You may revoke your proxy at any time prior to or at the meeting by providing written notice to Grayson, by executing a proxy bearing a later date, or by attending the meeting and voting in person.

If you have any questions or need assistance voting your shares, please contact Blake M. Edwards, Jr., Chief Financial Officer, 113 W. Main Street, Independence, Virginia 24348, at (276) 773-2811.

By Order of the Board of Directors,

J. Allan Funk

President and Chief Executive Officer

Independence, Virginia

April 20, 2016

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CARDINAL BANKSHARES CORPORATION

101 JACKSONVILLE CIRCLE

FLOYD, VIRGINIA 24091

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 26, 2016

A special meeting of shareholders of Cardinal Bankshares Corporation, a Virginia corporation (“Cardinal”) will be held on Thursday, May 26, 2016 at 10:00 a.m. local time, at the Bank of Floyd Conference Center, 101 Jacksonville Circle, Floyd, Virginia, for the purpose of considering and voting upon the following:

Cardinal’s board of directors (the “Cardinal Board”) unanimously recommends that Cardinal shareholders vote “FOR” the Cardinal merger proposal and “FOR” the Cardinal adjournment proposal.

You have the right to assert appraisal rights with respect to the merger and demand in writing that Parkway pay the fair value of your shares of Cardinal common stock under applicable provisions of Virginia law. In order to exercise and perfect appraisal rights, you must give written notice of your intent to demand payment for your shares to Cardinal before the vote is taken on the merger at the special meeting and must not vote in favor of the merger. A copy of the applicable Virginia statutory provisions is included in the joint proxy statement/prospectus as Appendix D, and a description of the procedures to demand and perfect appraisal rights is included in the section entitled, “The Merger – Appraisal Rights,” beginning on page 71.

You are cordially invited to attend the meeting in person. However, even if you expect to attend the meeting, you are requested to complete, sign, and date the enclosed appointment of proxy and return it in the envelope provided for that purpose to ensure that a quorum is present at the meeting. You may also vote via the Internet or telephone by following the instructions on the proxy card. The giving of an appointment of proxy will not affect your right to revoke it or to attend the meeting and vote in person.

If your shares are held in the name of a broker, bank or other fiduciary, please follow the instructions on the voting instruction card provided by such person.

You may revoke your proxy at any time prior to or at the meeting by providing written notice to Cardinal, by executing a proxy bearing a later date, or by attending the meeting and voting in person.

If you have any questions or need assistance voting your shares, please contact J. Alan Dickerson, Interim President and Chief Executive Officer and Chief Financial Officer, 101 Jacksonville Circle, Floyd, Virginia 24091, at (540) 745-4191.

By Order of the Board of Directors,

J. Alan Dickerson

Interim President and Chief Executive Officer Chief Financial Officer

Floyd, Virginia

April 20, 2016

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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

You should read carefully the detailed information set forth in this joint proxy statement/prospectus, including the “Risk Factors” section, beginning on page 23, before deciding how to vote your shares. Unless otherwise specified in this joint proxy statement/prospectus or the context otherwise requires:

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL SHAREHOLDER

MEETINGS

The following are answers to certain questions that you may have regarding the merger and the special meetings of the shareholders of Grayson and Cardinal. You should carefully read this entire joint proxy statement/prospectus because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to this joint proxy statement/prospectus.

You are receiving this document because Grayson and Cardinal are each holding a special meeting of shareholders to vote on the proposals necessary to complete the merger. The merger cannot be completed unless, among other things:

Each of the Grayson Board and the Cardinal Board has unanimously determined that the merger is in the best interest of its shareholders, approved the merger and recommends that its shareholders vote “FOR” the merger proposal. If either Grayson or Cardinal does not receive shareholder approval, the merger would not be completed, and Grayson and Cardinal would not be able to realize the expected benefits of the transaction, including those described under “—Why do Grayson and Cardinal want to merge?” below. In addition, Grayson and Cardinal would have incurred substantial merger-related expenses and experienced potential disruptions in their relationships with customers, employees or vendors and the diversion of management attention, without realizing the expected benefits of the merger. Further, if the merger agreement is terminated because Grayson’s or Cardinal’s shareholders fail to approve the merger, then the applicable party would be required to reimburse the other party for up to $250,000 of out of pocket expenses.

In addition, both Grayson and Cardinal are soliciting proxies from their shareholders with respect to proposals to adjourn the Grayson and Cardinal special meetings, as applicable, if necessary or appropriate, to solicit additional proxies in favor of their respective proposals to approve the merger agreement, if there are insufficient votes at the time of such adjournment to approve such proposal.

Grayson and Cardinal will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the special meetings and you should read it carefully. It is a joint proxy statement because both the Grayson Board and the Cardinal Board are soliciting proxies from their respective shareholders. It is a prospectus because Parkway will issue shares of Parkway common stock to holders of Grayson and Cardinal common stock in connection with the merger. The enclosed materials allow you to have your shares voted by proxy without attending your respective special meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

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After the merger, Parkway will be significantly larger than either Cardinal or Grayson and will be better able to compete in the New River Valley of Virginia and contiguous markets. Larger banks with greater geographical reach can serve larger customers, and such customers may have larger credit needs. Banking organizations with more than $500 million of total assets, as Parkway would be following the merger, tend to be more efficient and, therefore, more profitable than smaller institutions like Grayson and Cardinal. Additionally, banking organizations with more than $500 million of total assets tend to trade at higher multiples of tangible book value and earnings per share than institutions the size of Grayson and Cardinal.

Grayson and Cardinal expect that the increase in asset size and a larger shareholder base of Parkway following the merger should result in more liquidity in the market for shares of Parkway common stock than in the markets for Grayson and Cardinal common stock.

Further, Parkway and the Surviving Bank would have a strong team of employees and directors. The Grayson Board and the Cardinal Board are compatible and share a commitment to the creation of shareholder value through a locally owned and managed community bank.

Each of the Grayson Board and the Cardinal Board has unanimously determined that the merger is fair and in the best interest of its respective shareholders and recommends that its shareholders vote for their respective proposals. You should review the reasons for the merger described in greater detail under the sections entitled, “The Merger – Grayson’s Reasons for the Merger; Recommendation of the Grayson Board” and “The Merger – Cardinal’s Reasons for the Merger; Recommendation of the Cardinal Board,” beginning on pages 48 and 58, respectively.

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Cardinal : The Cardinal special meeting is scheduled to take place on Thursday, May 26, 2016 at 10:00 a.m., local time, at the Bank of Floyd Conference Center, 101 Jacksonville Circle, Floyd, Virginia.

Cardinal: Holders of record of Cardinal common stock at the close of business on April 12, 2016, which is the date that the Cardinal Board has fixed as the record date for the Cardinal special meeting, are entitled to vote at the Cardinal special meeting.

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Cardinal: The presence at the Cardinal special meeting, in person or by proxy, of holders of a majority of the outstanding shares of Cardinal common stock entitled to vote at the Cardinal special meeting will constitute a quorum for the transaction of business. Abstentions, if any, will be included in determining the number of shares present at the Cardinal special meeting for the purpose of determining the presence of a quorum.

Cardinal: Approval of the Cardinal merger proposal requires the affirmative vote of more than two-thirds of all of the outstanding shares of Cardinal common stock entitled to vote on the merger as of the close of business on April 12, 2016, the record date for the Cardinal special meeting. If you (1) fail to submit a proxy or vote in person at the Cardinal special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote with respect to the proposal to approve the merger agreement, it will have the same effect as a vote “AGAINST” the proposal. Assuming a quorum is present, approval of the Cardinal adjournment proposal requires the affirmative vote of a majority of the shares represented at the Cardinal special meeting.

Under the rules of applicable securities exchanges, brokers who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that the securities exchanges determine to be

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“non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Grayson special meeting and the Cardinal special meeting are such “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

Grayson: If you are a Grayson shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

Cardinal: If you are a Cardinal shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares:

Cardinal: With respect to the Cardinal merger proposal, if you (1) fail to submit a proxy or vote in person at the Cardinal special meeting, (2) mark “ABSTAIN” on your proxy or (3) fail to instruct your bank or broker how to vote, it will have the same effect as a vote “AGAINST” the proposal. With respect to the Cardinal adjournment proposal, if you (1) fail to submit a proxy or vote in person at the Cardinal special meeting or (2) fail to instruct your bank or broker how to vote, it will have no effect on the outcome of the vote on such proposal. If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the proposal.

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Cardinal: Yes. If you are a holder of record of Cardinal common stock, you may revoke any proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) voting by telephone or the Internet at a later time, (3) delivering a written revocation letter to Cardinal’s corporate secretary or (4) attending the Cardinal special meeting in person, notifying the corporate secretary and voting by ballot at the Cardinal special meeting. Attendance at the Cardinal special meeting will not automatically revoke your proxy. A revocation or later-dated proxy received by Cardinal after the Cardinal special meeting will be ineffective. Cardinal’s corporate secretary’s mailing address is: 101 Jacksonville Circle, Floyd, Virginia 24091, Attention: Corporate Secretary. If you hold your shares in “street name” through a bank or broker, you should contact your bank or broker if you want to revoke your proxy.

Furthermore, the holders of Grayson or Cardinal common stock will have basis in Parkway common stock received equal to the net of: (1) the basis of Grayson or Cardinal common shares for which it was exchanged, minus (2) the amount of any cash received in the exchange, plus (3) the amount of any gain recognized on the exchange. The holding period of Parkway common stock received in exchange for shares of Grayson or Cardinal common stock will include the holding period of the Grayson or Cardinal common stock for which it is exchanged.

For further information, see the section entitled, “The Merger—Material United States Federal Income Tax Consequences,” beginning on page 74.

The U.S. federal income tax consequences described above may not apply to all holders of Grayson or Cardinal common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your own tax advisor to determine the particular tax consequences of the merger to you.

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Cardinal : If you are unable to locate your original Cardinal stock certificate(s), you should contact Cardinal’s transfer agent, Broadridge Corporate Issuer Solutions, Inc., at P.O. Box 1342, Brentwood, New York 11717, or at (877) 830-4936.

Following the merger, Computershare will act as Parkway’s transfer agent, and any inquiries should be directed to Computershare, at 250 Royall Street, Canton, MA 02021, or at (800) 368-5948.

Cardinal: In addition to solicitation of proxies by Cardinal by mail, proxies may also be solicited by Cardinal’s directors and employees personally, and by telephone, facsimile or other means. Cardinal has also retained Regan & Associates to assist in soliciting proxies for a fee of approximately $8,000.00. For more information on solicitation of proxies in connection with the Cardinal special meeting, see the section entitled, “Cardinal Special Meeting of Shareholders—Solicitation of Proxies,” beginning on page 42.

Cardinal : If you have any questions concerning the merger or this joint proxy statement/prospectus, would like additional copies of this joint proxy statement/prospectus or need help voting your shares of Cardinal common stock, please contact: J. Alan Dickerson, Interim President and Chief Executive Officer and Chief Financial Officer, 101 Jacksonville Circle, Floyd, Virginia 24091, at (540) 745-4191.

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RISK FACTORS

The merger, including the issuance of Parkway common stock and the other transactions contemplated by the merger agreement, involves significant risks. Grayson shareholders and Cardinal shareholders should carefully read and consider the following factors in deciding whether to vote for the merger proposal.

Risks Related to the Merger

Because there is no trading market for Parkway’s common stock and the exchange ratios are fixed, you cannot be sure of the value of the merger consideration that you may receive.

Upon completion of the merger, each share of Grayson common stock will be converted into the right to receive merger consideration consisting of 1.76 shares of Parkway common stock, and each share of Cardinal common stock will be converted into the right to receive merger consideration consisting of 1.30 shares of Parkway common stock. Parkway was recently incorporated under Virginia law and has only one share of stock issued and outstanding, which is held by a nominee shareholder solely to facilitate the merger. Parkway has no material assets or liabilities, has not conducted any business and will not conduct any business prior to consummation of the merger except to perform its obligations under the merger agreement. Accordingly, there is currently no trading market and no market price for Parkway common stock. This lack of a public market makes it difficult to determine the value of Parkway common stock.

In addition, the value of the Parkway common stock to be received upon completion of the merger will depend in part upon the underlying valuation of the business operations and prospects of the combined company. Such valuation may be impacted by a variety of factors, including general market and economic conditions, changes in the companies’ respective businesses, operations and prospects during the pendency of the merger and regulatory considerations. Many of these factors are beyond the companies’ control. Despite any such variations, the Grayson Exchange Ratio and the Cardinal Exchange Ratio will not change.

For accounting purposes, the merger will be accounted for as an acquisition of Cardinal by Grayson using the acquisition method of accounting. As such, the preliminary pro forma purchase price is estimated using the recent trading price of Grayson of $11.70 per share, adjusted for the Grayson exchange ratio. Grayson’s common stock is thinly traded and does not have an active trading market; therefore, the current trading price may not necessarily be indicative of its fair market value. An increase or decrease in the value of Grayson’s common stock would result in an increase or decrease in the pro forma purchase price and resulting gain, as discussed under “Unaudited Pro Forma Combined Condensed Consolidated Financial Information” beginning on page 88 of this joint proxy statement/prospectus. The equity of Parkway reflected in the unaudited pro forma financial information is not necessarily an indication of the fair value of Parkway’s equity or the price at which Parkway common stock will trade upon completion of the merger, and the resulting purchase gain or goodwill recognized may differ materially from the amount reflected in the unaudited pro forma financial information. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in the unaudited pro forma financial information.

Due to the difficulty in determining the value of Parkway common stock and the fixed exchange ratios, Grayson and Cardinal shareholders will not know or be able to calculate the value of any Parkway common stock they will receive in the merger at the time they submit their proxy or at the time of the respective special shareholders’ meetings.

The companies may fail to realize the cost savings the companies estimate for the merger.

The success of the merger will depend in part on the companies’ ability to realize the estimated cost savings from combining the businesses of Grayson and Cardinal. Grayson’s and Cardinal’s management originally estimated that annual cost savings of approximately $2.5 million would be realized from the merger. While the companies believe, as of the date of this joint proxy statement/prospectus, that these cost savings estimates are

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achievable, it is possible that the potential cost savings may be more difficult to achieve than the companies anticipate. The companies’ cost savings estimates also depend on their ability to combine the businesses of Grayson and Cardinal in a manner that permits those cost savings to be realized. The anticipated cost savings may not be realized fully or at all, or may take longer to realize than expected.

Combining the two banks may be more difficult, costly or time-consuming than expected, or could result in the loss of customers.

The companies have operated, and, until the completion of the merger, will continue to operate, independently. The success of the merger will depend on a number of factors, including, but not limited to the combined company’s ability to:

It is possible that the integration process could result in the loss of key employees, the disruption of ongoing business or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.

Before the transactions contemplated by the merger agreement may be completed, various approvals or waivers must be obtained from bank regulatory authorities, including the Board of Governors of the Federal Reserve System, the OCC and the Virginia Bureau of Financial Institutions. These regulators may impose conditions on the granting of such approvals or changes to the terms of the merger. Such conditions or changes and the process of obtaining regulatory approvals or waivers could have the effect of delaying completion of the merger or of imposing additional costs or limitations on Parkway following the merger. The regulatory approvals or waivers may not be received at all, may not be received in a timely fashion or may contain conditions on the completion of the merger that are burdensome, not anticipated or cannot be met. If the necessary governmental approvals or waivers contain such conditions, the business, financial condition and results of operations of Parkway may be materially adversely affected.

A significant delay in the completion of the merger could negatively impact Grayson and Cardinal as a combined company.

The merger agreement is subject to a number of conditions that must be fulfilled in order to complete the merger. Those conditions include, among others: (1) approval of the merger agreement by Grayson shareholders and Cardinal shareholders, (2) receipt of all required approvals from bank regulatory authorities and expiration of all applicable waiting periods, (3) absence of any statute, rule, regulation, judgment, decree, injunction or other order prohibiting the completion of the merger and (4) effectiveness of the registration statement of which this joint proxy statement/prospectus is a part.

If these conditions to the completion of the merger are not fulfilled when expected and, accordingly, the completion of the merger is delayed, the diversion of management attention from pursuing other opportunities, the constraints in the merger agreement on the ability to make significant changes to each company’s ongoing business during the pendency of the merger, the incurrence of additional merger-related expenses, and other market and economic factors could have a material adverse effect on the combined company’s business, financial condition and results of operations.

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The fairness opinions of Grayson’s and Cardinal’s financial advisors have not been, and are not expected to be, updated to reflect changes in circumstances between the dates of the opinion and the respective shareholder meetings or the completion of the merger.

The fairness opinions obtained by Grayson and Cardinal were dated November 6, 2015, which is the date the merger agreement was signed, and speak only as of that date. Because neither Grayson nor Cardinal anticipates asking its financial advisor to update its opinion, the opinions will not address the fairness of the Grayson Exchange Ratio or the Cardinal Exchange Ratio from a financial point of view at the time the merger is completed or as of any other date other than the date of such opinions. Accordingly, the fairness opinions will not reflect subsequent changes in the operations and prospects of Grayson or Cardinal, general market and economic conditions and other factors that may be beyond the control of Grayson or Cardinal, and upon which the financial advisors’ opinions were based, and that may significantly alter the value of Cardinal or Grayson, the prices of the shares of Grayson common stock or Cardinal common stock, or the value of Parkway, as the combined company, by the time the merger is completed.

If the merger is completed, Grayson shareholders and Cardinal shareholders will have less influence on the management and policies of the combined company than they had on Grayson or Cardinal independently before the merger.

After the merger is complete, it is anticipated that approximately 60.2% of the shares of Parkway will be held by former shareholders of Grayson and approximately 39.8% of the shares of Parkway will be held by former shareholders of Cardinal. Consequently, shareholders of Grayson and Cardinal will have significantly less influence on the management and policies of Parkway after the merger than they now have on the management and policies of Grayson or Cardinal, respectively. In addition, the Parkway Board consists of eight members of the Grayson Board and four members of the Cardinal Board. Pursuant to the merger agreement and Parkway’s bylaws, Cardinal may, before the consummation of the merger, appoint a thirteenth director on the Parkway Board. Additionally, the members of the Parkway Board who were formerly members of the Cardinal Board, after consultation with the entire Parkway Board, may appoint an additional (fourteenth) director to the Parkway Board following completion of the merger.

Risks Related to the Business of the Combined Company

An investment in Parkway’s common stock involves certain risks, including those described below. The risks discussed below are substantially similar to those which Grayson and Cardinal currently face as independent companies in the banking industry. Unless otherwise indicated or as the context requires, all references in this section to “we,” “us” and “our” refer to Parkway or the Surviving Bank, as appropriate.

We may be adversely affected by economic conditions in our market area.

We are located in southwestern Virginia, and our local economy is heavily influenced by the furniture and textile industries, both of which have been in decline in recent years. Further changes in the economy may influence the growth rate of our loans and deposits, the quality of the loan portfolio and loan and deposit pricing. Higher unemployment rates may lead to future increases in past-due and nonperforming loans thus having a negative impact on the earnings of the Surviving Bank. An additional, significant decline in general economic conditions caused by inflation, recession, unemployment or other factors beyond our control, would impact these local economic conditions and the demand for banking products and services generally, which could negatively affect our financial condition and performance.

Our concentration in loans secured by real estate may increase our credit losses, which would negatively affect our financial results.

We offer a variety of secured loans, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans. Many of our loans are secured by real estate (both

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residential and commercial) in our market area. At December 31, 2015, Grayson had $223.5 million of such loans outstanding, or 92.64% of its total loans, and Cardinal had $121 million of such loans outstanding, or 72.1% of its total loans. A major change in the real estate market, such as deterioration in the value of this collateral, or in the local or national economy, could adversely affect our customers’ ability to pay these loans, which in turn could impact us. Risk of loan defaults and foreclosures are unavoidable in the banking industry, and we try to limit our exposure to this risk by monitoring our extensions of credit carefully. We cannot fully eliminate credit risk, and as a result credit losses may occur in the future.

Should our loan quality deteriorate, and our allowance for loan losses becomes inadequate, our results of operations may be adversely affected.

Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. In addition, we maintain an allowance for loan losses that we believe is a reasonable estimate of known and inherent losses within our loan portfolio. We could sustain losses if we incorrectly assess the creditworthiness of our borrowers or fail to detect or respond to deterioration in asset quality in a timely manner. Through a periodic review and consideration of the loan portfolio, management determines the amount of the allowance for loan losses by considering general market conditions, credit quality of the loan portfolio, the collateral supporting the loans and performance of customers relative to their financial obligations.

The amount of future loan losses will be influenced by changes in economic, operating and other conditions, including changes in interest rates, which may be beyond our control, and these losses may exceed current estimates. Although we believe the allowance for loan losses is a reasonable estimate of known and inherent losses in the loan portfolio, we cannot precisely predict such losses or be certain that the loan loss allowance will be adequate in the future. While the risk of nonpayment is inherent in banking, we could experience greater nonpayment levels than we anticipate. Further deterioration in the quality of our loan portfolio could cause our interest income and net interest margin to decrease and our provisions for loan losses to increase further, which could adversely affect our results of operations and financial condition.

Federal and state regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs, based on judgments different than those of management. Any increase in the amount of the provision or loans charged-off as required by these regulatory agencies could have a negative effect on our operating results and financial condition.

An inability to maintain our regulatory capital position could adversely affect our operations.

As of December 31, 2015, Grayson National Bank and the Bank of Floyd were classified as well capitalized for regulatory capital purposes, and we expect that the Surviving Bank will be well capitalized following completion of the merger. If we do not maintain the expected levels of regulatory capital in the future, it could increase the regulatory scrutiny on Parkway and the Surviving Bank, and the OCC could establish individual minimum capital ratios or take other regulatory actions against us. Further, if the Surviving Bank were no longer “well capitalized” for regulatory capital purposes, it would not be able to offer interest rates on deposit accounts that are significantly higher than the average rates in its market area. As a result, it may be more difficult for us to increase deposits. If we are not able to attract new deposits, our ability to fund our loan portfolio may be adversely affected. In addition, we would pay higher insurance premiums to the FDIC, which would reduce our earnings.

Our ability to maintain adequate sources of liquidity may be negatively impacted by the economic environment which could adversely affect our financial condition and results of operations.

In managing our consolidated balance sheet, we depend on cash and due from banks, federal funds sold, loan and investment security payments, core deposits, lines of credit with correspondent banks and lines of credit with the Federal Home Loan Bank to provide sufficient liquidity to meet our commitments and business needs,

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and to accommodate the transaction and cash management needs of clients. The availability of these funding sources is highly dependent upon the perception of the liquidity and creditworthiness of the financial institution, and such perception can change quickly in response to market conditions or circumstances unique to a particular company. Any event that limits our access to these sources, such as a decline in the confidence of debt purchasers, or our depositors or counterparties, may adversely affect our liquidity, financial position, and results of operations.

We may incur losses if we are unable to successfully manage interest rate risk.

Our profitability will depend in substantial part upon the spread between the interest rates earned on investments and loans and interest rates paid on deposits and other interest-bearing liabilities. Changes in interest rates will affect our operating performance and financial condition in diverse ways including the pricing of securities, loans and deposits and the volume of loan originations in our mortgage-origination office. We attempt to minimize our exposure to interest rate risk, but we will be unable to eliminate it. Our net interest spread will depend on many factors that are partly or entirely outside our control, including competition, federal economic, monetary and fiscal policies, and economic conditions generally.

We may be adversely impacted by changes in market conditions.

We are directly and indirectly affected by changes in market conditions. Market risk generally represents the risk that values of assets and liabilities or revenues will be adversely affected by changes in market conditions. As a financial institution, market risk is inherent in the financial instruments associated with our operations and activities, including loans, deposits, securities, short-term borrowings, long-term debt and trading account assets and liabilities. A few of the market conditions that may shift from time to time, thereby exposing us to market risk, include fluctuations in interest rates, equity and futures prices, and price deterioration or changes in value due to changes in market perception or actual credit quality of issuers. Our investment securities portfolio, in particular, may be impacted by market conditions beyond our control, including rating agency downgrades of the securities, defaults of the issuers of the securities, lack of market pricing of the securities, and inactivity or instability in the credit markets. Any changes in these conditions, in current accounting principles or interpretations of these principles could impact our assessment of fair value and thus the determination of other-than-temporary impairment of the securities in the investment securities portfolio.

Our small-to-medium sized business target market may have fewer financial resources to weather a downturn in the economy.

We target our business development and marketing strategy primarily to serve the banking and financial services needs of small and medium sized businesses. These businesses generally have less capital or borrowing capacity than larger entities. If general economic conditions adversely affect this major economic sector in our markets, our results of operations and financial condition may be adversely affected.

Our future success is dependent on our ability to compete effectively in the highly competitive banking industry.

We face vigorous competition from other banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions for deposits, loans and other financial services in our market area. A number of these banks and other financial institutions are significantly larger than we are and have substantially greater access to capital and other resources, as well as larger lending limits and branch systems, and offer a wider array of banking services. To a limited extent, we also compete with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies, insurance companies and governmental organizations which may offer more favorable financing than we can. Many of our non-bank competitors are not subject to the same extensive regulations that govern us. As a result,

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these non-bank competitors have advantages over us in providing certain services. This competition may reduce or limit our margins and our market share and may adversely affect our results of operations and financial condition.

Our ability to operate profitably may be dependent on our ability to implement various technologies into our operations.

The market for financial services, including banking and consumer finance services, is increasingly affected by advances in technology, including developments in telecommunications, data processing, computers, automation, online banking and tele-banking. Our ability to compete successfully in our market may depend on the extent to which we are able to exploit such technological changes. If we are not able to afford such technologies, properly or timely anticipate or implement such technologies, or effectively train our staff to use such technologies, our business, financial condition or operating results could be adversely affected.

Our operations depend upon third party vendors that perform services for us.

We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations, including data processing and interchange and transmission services for the ATM network. Accordingly, our success depends on the services provided by these vendors, and our operations are exposed to risk that these vendors will not perform in accordance with the contracted service agreements. Although we maintain a system of policies and procedures designed to monitor and mitigate vendor risks, the failure of an external vendor to perform in accordance with the contracted arrangements under service agreements could disrupt our operations, which could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Our operations may be adversely affected by cybersecurity risks.

In the ordinary course of business, we collect and store sensitive data, including proprietary business information and personally identifiable information of our customers and employees, in systems and on networks. The secure processing, maintenance and use of this information is critical to our operations and business strategy. We have invested in accepted technologies and review processes and practices that are designed to protect our networks, computers and data from damage or unauthorized access. Despite these security measures, our computer systems and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. A breach of any kind could compromise systems and the information stored there could be accessed, damaged or disclosed. A breach in security could result in legal claims, regulatory penalties, disruption in operations and damage to our reputation, which could adversely affect our business.

Our inability to successfully manage growth or implement our growth strategy may adversely affect our results of operations and financial condition.

A key aspect of our long-term business strategy is our continued growth and expansion. We may not be able to successfully implement this strategy if we are unable to identify attractive expansion locations or opportunities in the future. In addition, our successful implementation and management of growth will be contingent upon whether we can maintain appropriate levels of capital to support our growth, maintain control over expenses, maintain adequate asset quality, attract talented bankers and successfully integrate into the organization, any branches or businesses acquired. As we continue to implement our growth strategy, we expect to incur increased personnel, occupancy and other operating expenses. In many cases, our expenses will increase prior to the income we expect to generate from the growth. For instance, in the case of new branches, we must absorb these expenses prior to or as we begin to generate new deposits, and there is a further time lag involved in redeploying the new deposits into attractively priced loans and other higher yielding earning assets. Thus, our plans to branch or expand loan or mortgage operations could depress earnings in the short run, even if we are able to efficiently execute our strategy.

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Our profitability may suffer because of rapid and unpredictable changes in the highly regulated environment in which we operate.

We are subject to extensive supervision by several governmental regulatory agencies at the federal and state levels. Recently enacted, proposed and future banking legislation and regulations have had, and will continue to have, a significant impact on the financial services industry. These regulations, which are intended to protect depositors and not our shareholders, and the interpretation and application of them by federal and state regulators, are beyond our control, may change rapidly and unpredictably and can be expected to influence our earnings and growth. Our success depends on our continued ability to comply with these regulations.

We may be subject to more stringent capital requirements, which could adversely affect our results of operations and future growth.

In 2013, the Federal Reserve, the FDIC and the OCC approved a new rule that substantially amends the regulatory risk-based capital rules applicable to us. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule included new minimum risk-based capital and leverage ratios that became effective for us on January 1, 2015, and refined the definition of what constitutes “capital” for purposes of calculating these ratios. The new minimum capital requirements are: (i) a new common equity Tier 1 (“CET1”) capital ratio of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6%, which is increased from 4%; (iii) a total capital ratio of 8%, which is unchanged from the current rules; and (iv) a Tier 1 leverage ratio of 4%. The final rule also establishes a “capital conservation buffer” of 2.5% above the new regulatory minimum capital ratios, and when fully effective in 2019, will result in the following minimum ratios: (a) a common equity Tier 1 capital ratio of 7.0%; (b) a Tier 1 to risk-based assets capital ratio of 8.5%; and (c) a total capital ratio of 10.5%. The new capital conservation buffer requirement will be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such activities. In addition, the final rule provides for a number of new deductions from and adjustments to capital and prescribes a revised approach for risk weightings that could result in higher risk weights for a variety of asset categories. In February 2015, the agencies increased the filing threshold to exempt holding companies under $1 billion concerning computing and reporting consolidated capital ratios. Therefore, currently, the new BASEL III ratios will be applicable only to the Surviving Bank.

The application of these more stringent capital requirements for us could, among other things, result in lower returns on equity, require the raising of additional capital, adversely affect our future growth opportunities, and result in regulatory actions such as a prohibition on the payment of dividends or on the repurchase shares if we were unable to comply with such requirements.

Government measures to regulate the financial industry could materially affect our businesses, financial condition or results of operations.

As a financial institution, we are heavily regulated at the state and federal levels. Banking regulations generally are intended to protect depositors, not investors, and regulators have broad interpretive and enforcement powers beyond our control that may change rapidly and unpredictably and could influence our earnings and growth. Future changes in the laws or regulations or their interpretations or enforcement could be materially adverse to us and our shareholders.

Further, as a result of the financial crisis and related global economic downturn that began in 2008, we have faced, and expect to continue to face, increased public and legislative scrutiny as well as stricter and more comprehensive regulation of our financial services practices. In July 2010, the Dodd-Frank Act was signed into law. Many of the provisions of the Dodd-Frank Act have begun to be or will be phased in over the next several

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months or years and will be subject both to further rulemaking and the discretion of applicable regulatory bodies. Although we cannot predict the full effect of the Dodd-Frank Act on our operations, it, as well as the future rules implementing its reforms, could impose significant additional costs on us, limit the products we offer, limit our ability to pursue business opportunities in an efficient manner, require us to increase our regulatory capital, impact the values of assets that we hold, significantly reduce our revenues or otherwise materially and adversely affect our businesses, financial condition, or results of operations. The ultimate impact of the final rules on our businesses and results of operations, however, will depend on regulatory interpretation and rulemaking, as well as the success of our actions to mitigate the negative earnings impact of certain provisions.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a public company, Parkway will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

As a result of disclosure of information in this registration statement and in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

Risks Related to Parkway’s Common Stock

Parkway’s common stock does not currently have an established trading market, and a liquid market for its common stock may not develop after the merger.

Parkway was recently incorporated under Virginia law and has only one share of stock issued and outstanding, which is held by a nominee shareholder solely to facilitate the merger. Parkway has no material

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assets or liabilities, has not conducted any business and will not conduct any business prior to consummation of the merger except to perform its obligations under the merger agreement. Accordingly, there is currently no trading market and no current market price for Parkway common stock.

Parkway plans to cause its common stock to be quoted on the OTC Market Group’s OTCQX marketplace or other quotation system at or following closing of the merger, but there can be no guarantee that a liquid trading market for the stock will develop after the merger. Shares of Grayson’s and Cardinal’s common stock are each quoted on OTC Pink marketplace; however, the volume of trading activity in each stock is relatively limited. The lack of liquidity of the investment in the common shares should be carefully considered when making an investment decision. Even if a more active market develops, there can be no assurance that such market will continue, and it may be difficult for you to sell your shares of Parkway common stock at the times or prices that you desire.

Parkway’s ability to pay dividends is limited, and Parkway may be unable to pay future dividends.

Parkway’s ability to pay dividends will be limited by regulatory restrictions and the need to maintain sufficient capital in Parkway and the Surviving Bank following the merger. The ability of the Surviving Bank to pay dividends to Parkway also will be limited by the bank’s obligations to maintain sufficient capital, earnings and liquidity and by other general restrictions on its dividends under federal and state bank regulatory requirements. See the section entitled, “Comparative Per Share Market Price and Dividend Information,” beginning on page 21. Any future financing arrangements that Parkway enters into may also limit its ability to pay dividends to its shareholders. If we do not satisfy these regulatory requirements or arrangements, Parkway will be unable to pay dividends on its common stock. Further, even if Parkway has earnings and available cash in an amount sufficient to pay dividends to its shareholders of common stock, the Parkway Board, in its sole discretion, may decide to retain them and therefore not pay dividends in the future.

If Parkway issues additional shares of common stock or other equity securities after the merger, your beneficial ownership percentage will be diluted.

Following the completion of the merger, the Parkway Board, without the approval of shareholders, could from time to time decide to issue additional shares of common stock or shares of preferred stock, which may dilute your holdings. Any sale of additional shares of Parkway common stock may be at prices lower than the market value of the shares you receive in the merger or on terms better than those of the shares you receive in the merger.

Certain provisions under Parkway’s articles of incorporation and Virginia corporate law may make it difficult for others to obtain control of Parkway even if such a change in control may be favored by some shareholders.

Certain provisions in Parkway’s articles of incorporation and applicable Virginia corporate law may have the effect of discouraging a change of control of Parkway even if such a transaction is favored by some of its shareholders and could result in shareholders receiving a substantial premium over the then-current market price of Parkway’s common stock. The primary purpose of these provisions is to encourage negotiations with Parkway’s management by persons interested in acquiring control of Parkway. These provisions may also tend to perpetuate present management and make it difficult for shareholders owning less than a majority of the shares to be able to elect even a single director. See the section entitled, “Description of Parkway’s Capital Stock – Antitakeover Provisions of Parkway’s Articles of Incorporation, Bylaws and Virginia Law,” beginning on page 146.

An investment in Parkway’s common stock is not an insured deposit.

Parkway’s common stock is not a bank deposit and, therefore, it is not insured against loss by the Federal Deposit Insurance Corporation or by any other public or private entity. Investment in Parkway’s common stock is

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inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this joint proxy statement/prospectus and is subject to the same market forces that affect the price of common stock in any company and, as a result, you may lose some or all of your investment.

Parkway’s bylaws designate a circuit court or federal court with jurisdiction over the County of Grayson, Virginia as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Parkway’s shareholders, which could limit the ability of Parkway’s shareholders to select a judicial forum viewed by the shareholders as more favorable for disputes with Parkway and Parkway’s directors, officers or employees.

Section 5.6 of Parkway’s bylaws provides that a circuit court or a federal district court with jurisdiction over the County of Grayson, Virginia shall be the sole and exclusive forum for (i) any derivative action brought on behalf of Parkway; (ii) any action for breach of duty to Parkway or Parkway’s shareholders by any current or former officer or director of Parkway; or (iii) any action against Parkway or any current or former officer or director of Parkway arising pursuant to the Virginia Stock Corporation Act or Parkway’s articles of incorporation or bylaws. Any person or entity purchasing or otherwise acquiring any interest in shares of Parkway’s capital stock shall be deemed to have notice of and to have consented to the provisions of Parkway’s bylaws related to choice of forum. These provisions would prevent a shareholder from selecting a different judicial forum for disputes with Parkway, which may discourage such lawsuits against Parkway and Parkway’s directors, officers and employees. Alternatively, if a court were to find the choice of forum provision contained in Parkway’s bylaws to be inapplicable or unenforceable in an action, Parkway may incur additional costs associated with resolving such action in other jurisdictions, which could harm Parkway’s business, operating results and financial condition.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which Congress passed in an effort to encourage companies to provide information about their anticipated future financial performance. This act protects a company from unwarranted litigation if actual results are different from management expectations. This joint proxy statement/prospectus reflects the current views and estimates of future economic circumstances, industry conditions, company performance, and financial results of the management of Grayson, Cardinal and Parkway. These forward-looking statements are subject to a number of factors and uncertainties which could cause Grayson’s, Cardinal’s or Parkway’s actual results and experience to differ from the anticipated results and expectations expressed in such forward-looking statements, and such differences may be material. Forward-looking statements speak only as of the date they are made and Grayson, Cardinal and Parkway do not assume any duty to update forward-looking statements. These forward-looking statements include, but are not limited to, statements about (i) the expected benefits of the transaction between Grayson, Cardinal and Parkway, including future financial and operating results, cost savings, enhanced revenues and the expected market position of the combined company that may be realized from the transaction, and (ii) Grayson’s, Cardinal’s and Parkway’s plans, objectives, expectations and intentions and other statements contained in this joint proxy statement/prospectus that are not historical facts. Other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “projects,” “predicts,” “potential,” “possible,” “should,” “would,” “will,” “goal,” “target” or words of similar meaning generally are intended to identify forward-looking statements. These statements are based upon the current beliefs and expectations of Grayson’s, Cardinal’s and Parkway’s management and are inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond their respective control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements and such differences may be material.

The following risks, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

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GRAYSON SPECIAL MEETING OF SHAREHOLDERS

General

This section contains information about the Grayson special meeting that has been called to vote upon the matters described below.

Grayson is mailing this joint proxy statement/prospectus on or about April 22, 2016, to holders of shares of Grayson common stock at the close of business on April 7, 2016, which is the record date for the Grayson special meeting. Together with this joint proxy statement/prospectus, Grayson is also sending a notice of the Grayson special meeting and a form of proxy that is solicited by the Grayson Board for use at the Grayson special meeting to be held on May 24, 2016 at 1:00 p.m., local time, at the Independence Volunteer Fire Department, 529 Davis Street, Independence, Virginia, and at any adjournment or postponement of that meeting.

Matters to be Considered

At the special meeting, Grayson shareholders will be asked to:

Recommendations of the Grayson Board

The Grayson Board unanimously (1) determined that the merger agreement is in the best interests of Grayson and its shareholders, (2) approved and adopted the merger agreement and (3) recommends that Grayson shareholders vote “FOR” the Grayson merger proposal. The Grayson Board also unanimously recommends that Grayson shareholders vote “FOR” the Grayson adjournment proposal.

Record Date and Voting Rights

The Grayson Board has fixed the close of business on April 7, 2016 as the record date for determining the shareholders entitled to notice of and to vote at the Grayson special meeting or any postponement or adjournment thereof. Accordingly, Grayson shareholders are only entitled to notice of and to vote at the Grayson special meeting if they were a record holder of Grayson common stock at the close of business on the record date. On the record date, there were 1,718,968 shares of Grayson common stock outstanding, held by approximately 1,100 holders of record.

To have a quorum that permits Grayson to conduct business at the Grayson special meeting, it needs the presence, whether in person or by proxy, of the holders of Grayson common stock representing a majority of the shares outstanding on the record date and entitled to vote. Each Grayson shareholder is entitled to one vote for each outstanding share of Grayson common stock held by such shareholder as of the close of business on the record date.

Holders of shares of Grayson common stock present in person at the Grayson special meeting but not voting, and shares of Grayson common stock for which Grayson has received proxies indicating that its holders have abstained, will be counted as present at the Grayson special meeting for purposes of determining whether there is a quorum for transacting business. Shares held in “street name” that have been designated by brokers on proxies as not voted will not be counted as votes cast for or against any proposal. Broker shares that are voted on

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any matter at the Grayson special meeting will be counted as present at the Grayson special meeting for purposes of determining whether there is a quorum for transacting business.

Votes Required

Vote Required for the Merger Proposal (Proposal No. 1)

Approval of the merger proposal requires the affirmative vote of more than two-thirds of the shares of Grayson common stock outstanding on the record date and entitled to vote.

Abstentions and broker non-votes will not count as votes cast. Because, however, approval of the merger proposal requires the affirmative vote of more than two-thirds of the shares of Grayson common stock outstanding on the record date, abstentions and broker non-votes will have the same effect as votes against the merger proposal. In addition, a failure to vote Grayson shares by proxy or in person will have the same effect as a vote against the merger proposal.

Vote Required for the Adjournment Proposal (Proposal No. 2)

The approval of the adjournment proposal requires that the votes cast for the proposal exceed the votes cast against the proposal, whether or not a quorum is present.

Abstentions and broker non-votes will not count as votes cast for the adjournment proposal and will have no effect for purposes of determining whether the adjournment proposal has been approved.

Stock Ownership of Grayson Directors and Executive Officers

As of the record date, directors and executive officers of Grayson and their affiliates beneficially owned 61,098 shares of Grayson common stock. All of Grayson’s directors have entered into support agreements pursuant to which, subject to certain exceptions, they have agreed to vote the shares of Grayson common stock that they own in favor of the merger proposal. As of the record date, 50,761 shares, representing approximately 2.95% of the aggregate voting power of Grayson shares entitled to vote at the Grayson special meeting, were subject to a support agreement.

Voting of Proxies

By Mail

A proxy card is enclosed for the use of Grayson shareholders. To submit a proxy by mail, complete, sign, and date the enclosed proxy card and, if the Grayson shareholder is a shareholder of record, return it as soon as possible in the enclosed postage-paid envelope. Street name shareholders should refer to the information card provided by his or her bank, broker, or other nominee. When the enclosed proxy card is returned properly executed, the shares of Grayson common stock represented by it will be voted at the Grayson special meeting in accordance with the instructions contained therein.

If the accompanying proxy card is returned properly executed without indication as to how to vote, the Grayson common stock represented by each such proxy will be voted in favor of all matters for consideration at the Grayson special meeting as follows: (1) “FOR” the Grayson merger proposal (Proposal No. 1) and (2) “FOR” the Grayson adjournment proposal (Proposal No. 2).

If the Grayson special meeting is postponed or adjourned, all proxies will be voted at the postponed or adjourned Grayson special meeting in the same manner as they would have been voted at the originally scheduled Grayson special meeting except for any proxies that have been properly withdrawn or revoked.

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Your vote is important! Please complete, sign, date, and return promptly the proxy card in the enclosed postage-paid envelope whether or not you plan to attend the Grayson special meeting in person.

By Internet or Telephone

You may vote your shares via the Internet, by accessing the site listed on the enclosed proxy card and following the instructions, or by telephone, by calling the toll-free number listed on the enclosed proxy card on a touch-tone phone and following the recorded instructions.

Street name shareholders may also be eligible to vote their shares over the Internet or by telephone, by following the voting instructions provided by the bank, broker or other nominee that holds the shares, using the Internet address or telephone number provided on the voting instruction card (if the bank, broker or other nominee provides this voting method).

Voting in Person

If a Grayson shareholder wishes to vote in person at the Grayson special meeting, a ballot will be provided at the meeting. However, street name shareholders must obtain a legal proxy, executed in such shareholder’s favor, from the holder of record to be able to vote those shares at the meeting.

Revocation of Proxies

Any Grayson shareholder giving a proxy may change or revoke it at any time before the polls are closed for voting at the Grayson special meeting. If a Grayson shareholder grants a proxy with respect to the shareholder’s Grayson shares and then attends the Grayson special meeting in person, such attendance at the Grayson special meeting or at any adjournment or postponement of the Grayson special meeting will not automatically revoke the proxy. A Grayson shareholder of record may change or revoke a proxy by:

If a Grayson shareholder chooses the first method, he or she must submit the new proxy or notice of revocation to Linda B. Eller, Corporate Secretary, at Grayson National Bank, P.O. Box 186, Independence, Virginia, 24348, no later than the beginning of the Grayson special meeting or, if the Grayson special meeting is adjourned or postponed, before the adjourned or postponed meeting is actually held.

If a Grayson shareholder is a street name shareholder, he or she must follow the instructions found on the voting instruction card provided by his or her bank, broker, or other nominee, or contact his or her bank, broker, or other nominee, in order to change or revoke a previously given voting instructions.

If assistance is needed in changing or revoking a proxy, please contact Linda B. Eller, Corporate Secretary, at Grayson National Bank, P.O. Box 186, Independence, Virginia, 24348, or at (276) 773-2811.

Solicitation of Proxies

This solicitation is made on behalf of the Grayson Board, and Grayson will pay the costs of soliciting and obtaining proxies, including the cost of reimbursing brokers and other custodians, nominees, and fiduciaries for their expenses incurred in forwarding these proxy materials to Grayson shareholders. Proxies may be solicited, without extra compensation, by Grayson’s directors, officers, and employees in person or by mail, telephone or

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other electronic means. Grayson has also engaged Regan & Associates, a proxy soliciting firm, to assist in the solicitation of proxies for a fee of approximately $8,000.00.

Appraisal Rights

Each Grayson shareholder has the right to assert appraisal rights with respect to the merger and demand in writing that he or she be paid the fair value of the shares of his or her Grayson common stock under applicable provisions of Virginia law following consummation of the merger. In order to exercise and perfect appraisal rights, a Grayson shareholder generally must:

A copy of the applicable Virginia statutory provisions is included in this joint proxy statement/prospectus as Appendix D. For more information on the assertion of appraisal rights by a Grayson shareholder, see the section entitled, “The Merger – Appraisal Rights,” beginning on page 71.

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GRAYSON PROPOSALS

Proposal No. 1 – Approval of the Merger

At the Grayson special meeting, Grayson shareholders will be asked to approve the merger agreement proposal providing for the merger of Grayson and Cardinal with and into Parkway. Grayson shareholders should read this joint proxy statement/prospectus carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Appendix A.

After careful consideration, the Grayson Board, by a unanimous vote of all directors, approved the merger agreement and the merger, to be advisable and in the best interests of Grayson and its shareholders. See the section entitled, “The Merger – Grayson’s Reasons for the Merger; Recommendation of the Grayson Board” for a more detailed discussion of the recommendation of the Grayson Board.

THE GRAYSON BOARD UNANIMOUSLY RECOMMENDS THAT GRAYSON SHAREHOLDERS

VOTE “FOR” THE MERGER.

Proposal No. 2 – Adjournment of the Special Meeting

If Grayson does not receive a sufficient number of votes to constitute a quorum of the common stock or approve the merger agreement, it may propose to adjourn the special meeting for the purpose of soliciting additional proxies to establish such quorum or approve the merger agreement. Grayson does not currently intend to propose adjournment of the special meeting if there are sufficient votes to approve the merger agreement. If approval of the proposal to adjourn the special meeting for the purpose of soliciting additional proxies is submitted to the Grayson shareholders for approval, the approval requires that the votes cast for the proposal exceed the votes cast against the proposal, whether or not a quorum is present.

THE GRAYSON BOARD UNANIMOUSLY RECOMMENDS THAT GRAYSON SHAREHOLDERS

VOTE “FOR” THE ADJOURNMENT PROPOSAL.

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CARDINAL SPECIAL MEETING OF SHAREHOLDERS

General

This section contains information about the Cardinal special meeting that has been called to vote upon the matters described below.

Cardinal is mailing this joint proxy statement/prospectus on or about April 22, 2016, to holders of shares of Cardinal common stock at the close of business on April 12, 2016, which is the record date for the Cardinal special meeting. Together with this joint proxy statement/prospectus, Cardinal is also sending a notice of the Cardinal special meeting and a form of proxy that is solicited by the Cardinal Board for use at the Cardinal special meeting to be held on May 26, 2016 at 10:00 a.m., local time, at the Bank of Floyd Conference Center, 101 Jacksonville Circle, Floyd, Virginia 24091, and at any adjournment or postponement of that meeting.

Matters to be Considered

At the special meeting, Cardinal shareholders will be asked to:

Recommendations of the Cardinal Board

The Cardinal Board unanimously (1) determined that the merger agreement is in the best interests of Cardinal and its shareholders, (2) approved and adopted the merger agreement and (3) recommends that Cardinal shareholders vote “FOR” the Cardinal merger proposal. The Cardinal Board also unanimously recommends that Cardinal shareholders vote “FOR” the Cardinal adjournment proposal.

Record Date and Voting Rights

The Cardinal Board has fixed the close of business on April 12, 2016 as the record date for determining the shareholders entitled to notice of and to vote at the Cardinal special meeting or any postponement or adjournment thereof. Accordingly, Cardinal shareholders are only entitled to notice of and to vote at the Cardinal special meeting if they were a record holder of Cardinal common stock at the close of business on the record date. On the record date, there were 1,535,733 shares of Cardinal common stock outstanding, held by approximately 735 holders of record.

To have a quorum that permits Cardinal to conduct business at the Cardinal special meeting, it needs the presence, whether in person or by proxy, of the holders of Cardinal common stock representing a majority of the shares outstanding on the record date and entitled to vote. A Cardinal shareholder is entitled to one vote for each outstanding share of Cardinal common stock held as of the close of business on the record date.

Holders of shares of Cardinal common stock present in person at the Cardinal special meeting but not voting, and shares of Cardinal common stock for which Cardinal has received proxies indicating that its holders have abstained, will be counted as present at the Cardinal special meeting for purposes of determining whether there is a quorum for transacting business. Shares held in “street name” that have been designated by brokers on proxies as not voted will not be counted as votes cast for or against any proposal. Broker shares that are voted on any matter at the Cardinal special meeting will be counted as present at the Cardinal special meeting for purposes of determining whether there is a quorum for transacting business.

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Votes Required

Vote Required for the Merger Proposal (Proposal No. 1)

Approval of the merger proposal requires the affirmative vote of more than two-thirds of the shares of Cardinal common stock outstanding on the record date and entitled to vote.

Abstentions and broker non-votes will not count as votes cast. Because, however, approval of the merger proposal requires the affirmative vote of more than two-thirds of the shares of Cardinal common stock outstanding on the record date, abstentions and broker non-votes will have the same effect as votes against the merger proposal. In addition, a failure to vote Cardinal shares by proxy or in person will have the same effect as a vote against the merger proposal.

Vote Required for the Adjournment Proposal (Proposal No. 2)

The approval of the adjournment proposal requires the affirmative vote of a majority of shares represented at the Cardinal special meeting.

Broker non-votes will not count as votes cast for the adjournment proposal and will have no effect for purposes of determining whether the adjournment proposal has been approved.

Stock Ownership of Cardinal Directors and Executive Officers

As of the record date, directors and executive officers of Cardinal and their affiliates beneficially owned 136,798 shares of Cardinal common stock. All of Cardinal’s directors have entered into support agreements pursuant to which, subject to certain exceptions, they have agreed to vote the shares of Cardinal common stock that they own in favor of the merger proposal. As of the record date, 117,963 shares, representing approximately 7.68% of the aggregate voting power of Cardinal shares entitled to vote at the Cardinal special meeting, were subject to a support agreement.

Voting of Proxies

By Mail

A proxy card is enclosed for the use of Cardinal shareholders. To submit a proxy by mail, complete, sign, and date the enclosed proxy card and, if the Cardinal shareholder is a shareholder of record, return it as soon as possible in the enclosed postage-paid envelope. Street name shareholders should refer to the information card provided by his or her bank, broker, or other nominee. When the enclosed proxy card is returned properly executed, the shares of Cardinal common stock represented by it will be voted at the Cardinal special meeting in accordance with the instructions contained therein.

If the accompanying proxy card is returned properly executed without indication as to how to vote, the Cardinal common stock represented by each such proxy will be voted in favor of all matters for consideration at the Cardinal special meeting as follows: (1) “FOR” the Cardinal merger proposal (Proposal No. 1) and (2) “FOR” the Cardinal adjournment proposal (Proposal No. 2).

If the Cardinal special meeting is postponed or adjourned, all proxies will be voted at the postponed or adjourned Cardinal special meeting in the same manner as they would have been voted at the originally scheduled Cardinal special meeting except for any proxies that have been properly withdrawn or revoked.

Your vote is important! Please complete, sign, date, and return promptly the proxy card in the enclosed postage-paid envelope whether or not you plan to attend the Cardinal special meeting in person.

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By Internet or Telephone

You may vote your shares via the Internet, by accessing the site listed on the enclosed proxy card and following the instructions, or by telephone, by calling the toll-free number listed on the enclosed proxy card on a touch-tone phone and following the recorded instructions.

Street name shareholders may also be eligible to vote their shares over the Internet or by telephone, by following the voting instructions provided by the bank, broker or other nominee that holds the shares, using the Internet address or telephone number provided on the voting instruction card (if the bank, broker or other nominee provides this voting method.

Voting in Person

If a Cardinal shareholder wishes to vote in person at the Cardinal special meeting, a ballot will be provided at the meeting. However, street name shareholders must obtain a legal proxy, executed in such shareholder’s favor, from the holder of record to be able to vote those shares at the meeting.

Revocation of Proxies

Any Cardinal shareholder giving a proxy may change or revoke it at any time before the polls are closed for voting at the Cardinal special meeting. If a Cardinal shareholder grants a proxy with respect to the shareholder’s Cardinal shares and then attends the Cardinal special meeting in person, such attendance at the Cardinal special meeting or at any adjournment or postponement of the Cardinal special meeting will not automatically revoke the proxy. A Cardinal shareholder of record may change or revoke a proxy by:

If a Cardinal shareholder chooses the first method, he or she must submit the new proxy or notice of revocation to Cardinal’s Secretary at 101 Jacksonville Circle, Floyd, Virginia 24091, no later than the beginning of the Cardinal special meeting or, if the Cardinal special meeting is adjourned or postponed, before the adjourned or postponed meeting is actually held.

If a Cardinal shareholder is a street name shareholder, he or she must follow the instructions found on the voting instruction card provided by his or her bank, broker, or other nominee, or contact his or her bank, broker, or other nominee, in order to change or revoke a previously given voting instructions.

If assistance is needed in changing or revoking a proxy, please contact Suzanne S. Yearout, Corporate Secretary, by calling (540)  745-4191 or by writing to the Bank of Floyd at 101 Jacksonville Circle, Floyd, Virginia 24091, Attn: Corporate Secretary.

Solicitation of Proxies

This solicitation is made on behalf of the Cardinal Board, and Cardinal will pay the costs of soliciting and obtaining proxies, including the cost of reimbursing brokers and other custodians, nominees, and fiduciaries for their expenses incurred in forwarding these proxy materials to Cardinal shareholders. Proxies may be solicited, without extra compensation, by Cardinal’s directors, officers, and employees in person or by mail, telephone or other electronic means. Cardinal has also engaged Regan & Associates, a proxy soliciting firm, to assist in the solicitation of proxies for a fee of approximately $8,000.00.

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Appraisal Rights

Each Cardinal shareholder has the right to assert appraisal rights with respect to the merger and demand in writing that he or she be paid the fair value of the shares of his or her Cardinal common stock under applicable provisions of Virginia law following consummation of the merger. In order to exercise and perfect appraisal rights, a Cardinal shareholder generally must:

A copy of the applicable Virginia statutory provisions is included in this joint proxy statement/prospectus as Appendix D. For more information on the assertion of appraisal rights by a Cardinal shareholder, see the section entitled, “The Merger – Appraisal Rights,” beginning on page 71.

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CARDINAL PROPOSALS

Proposal No. 1 – Approval of the Merger

At the Cardinal special meeting, Cardinal shareholders will be asked to approve the merger agreement proposal providing for the merger of Cardinal and Grayson with and into Parkway. Cardinal shareholders should read this joint proxy statement/prospectus carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Appendix A.

After careful consideration, the Cardinal Board, by a unanimous vote of all directors, approved the merger agreement and the merger, to be advisable and in the best interests of Cardinal and its shareholders. See the section entitled, “The Merger – Cardinal’s Reasons for the Merger; Recommendation of the Cardinal Board” for a more detailed discussion of the recommendation of the Cardinal Board.

THE CARDINAL BOARD UNANIMOUSLY RECOMMENDS THAT CARDINAL SHAREHOLDERS

VOTE “FOR” THE MERGER.

Proposal No. 2 – Adjournment of the Special Meeting

If Cardinal does not receive a sufficient number of votes to constitute a quorum of the common stock or approve the merger agreement, it may propose to adjourn the special meeting for the purpose of soliciting additional proxies to establish such quorum or approve the merger agreement. Cardinal does not currently intend to propose adjournment of the special meeting if there are sufficient votes to approve the merger agreement. If approval of the proposal to adjourn the special meeting for the purpose of soliciting additional proxies is submitted to the Cardinal shareholders for approval, the approval requires the affirmative vote of a majority of shares represented at the Cardinal special meeting.

THE CARDINAL BOARD UNANIMOUSLY RECOMMENDS THAT CARDINAL SHAREHOLDERS

VOTE “FOR” THE ADJOURNMENT PROPOSAL.

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THE MERGER

The following is a discussion of the merger. This summary may not contain all of the information about the merger that is important to you. Holders of Grayson common stock and Cardinal common stock should read carefully this joint proxy statement/prospectus in its entirety, including the appendices, for more detailed information concerning the merger and the merger agreement. In particular, you are directed to the merger agreement, including the related plan of merger and the bank merger agreement, copies of which are attached as Appendix A and are incorporated in this joint proxy statement/prospectus by reference.

Background of the Merger

Each of the Grayson Board and the Cardinal Board and their respective senior management have from time to time separately engaged in long-term strategic reviews and have considered ways to enhance shareholder value and their respective companies’ performance and prospects in light of industry changes, competitive challenges, compliance costs and other relevant developments. For each company, these reviews have included periodic discussions concerning potential mergers that could further its strategic objectives and the potential benefits and risks of any such transactions.

In both 2012 and 2013, the Grayson Board engaged in a routine strategic review process in which it considered various ways to enhance shareholder value. As part of this process, the Grayson Board emphasized its desire to remain a locally focused and locally managed community bank which is largely reflective of its shareholder base. The Grayson Board expressed its ongoing commitment to making a broad range of banking services available to smaller communities, which would otherwise be underserved by larger financial institutions, as well as their continued belief that these services can be offered in a manner that will create value for the company’s shareholders. In October 2014, the Grayson Board and its financial advisor, Raymond James, modeled a select number of potential business combinations, including a strategic merger with Cardinal.

In 2012, at the 2012 annual meeting of shareholders, Cardinal’s shareholders elected three new directors to the Cardinal Board causing a 50% shift in the composition of the Cardinal Board. The newly elected Cardinal Board then appointed Michael Larrowe as the Chief Executive Officer. Following these events, the Cardinal Board and Cardinal’s management engaged in various strategic initiatives in 2013 and 2014 to rebuild the Bank of Floyd’s infrastructure, attract new customers and grow the Bank of Floyd. Following Mr. Larrowe’s departure in November 2014, the Cardinal Board reviewed various strategic priorities, including the need for capital. In December 2014, and in the face of regulatory pressure to develop a capital plan, the Cardinal Board discussed various capital raising alternatives with Banks Street Partners, but ultimately determined that an equity capital raise would not be in the best interests of its shareholders at that time due to a number of factors, including the dilution that shareholders likely would experience as a result of such a capital raise.

In November 2014, following the announcement of the resignation of Cardinal’s and the Bank of Floyd’s former Chief Executive Officer, Michael Larrowe, J. Allan Funk, President and Chief Executive Officer of Grayson, contacted John Paul Houston, the former Chairman of the Cardinal Board, to introduce himself. At Mr. Funk’s suggestion, Mr. Houston and Thomas M. Jackson, Jr., Chairman of the Grayson Board, also met to introduce themselves and discuss their respective banks and the community banking industry. The discussions were introductory in nature and were not specifically related to consideration of any future transaction.

In April 2015, the Cardinal Board engaged CCG Catalyst Consulting Group (“CCG”) to assist the Cardinal Board and Cardinal’s management with strategic planning. In May 2015, the Cardinal Board met with Mr. Van Dyke and representatives from Gentry Locke and engaged in a strategic planning session. During this meeting, the Cardinal Board considered the strategic direction of Cardinal and the Bank of Floyd and discussed a number of options, including a merger or combination with a bank of similar size, for Cardinal and the Bank of Floyd with an objective of increasing long term value for shareholders. At the conclusion of the planning process, the

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Cardinal Board concluded that the best course of action, and the highest priority for Cardinal, was to engage in a strategic merger transaction (i.e., a “merger of equals” or a combination with a similarly sized bank).

In June 2015, Mr. Funk contacted Mr. Houston by telephone to discuss their respective banks and request an in-person meeting. On July 3, 2015, Mr. Funk and Blake M. Edwards, Jr., Chief Financial Officer of Grayson, met with Mr. Houston, Dr. J. Howard Conduff, Jr., a member of the Cardinal Board, and Mr. Van Dyke, and presented information about Grayson, the community banking industry, the competitive landscape, and they outlined the merits and possibilities of a potential combination of Grayson and Cardinal.

Prior to the June, 2015 telephone call to Mr. Houston and the July 3, 2015 meeting, Mr. Funk and Mr. Edwards discussed the potential for a combination with Cardinal with members of Grayson’s Board and representatives of Williams Mullen, Grayson’s legal advisor, Elliott Davis Decosimo, PLLC, Grayson’s independent registered public accounting firm, and Raymond James.

In July 2015, the Cardinal Board expanded CCG’s role by contracting with CCG to provide the services of a special advisor and consultant, Mr. Litz Van Dyke, to take an active role in the ongoing strategic planning process and the evaluation of strategic options. Further planning confirmed Cardinal’s direction, to seek a strategic merger transaction.

In addition to providing an attractive long term outcome for Cardinal shareholders, the Cardinal Board believed that preserving the community banking model in the communities served by the Bank of Floyd was a high priority because of, among other things, the opinions expressed during the 2012 proxy process for the high value placed on local community banking by the shareholders and the possible strategic advantages of maintaining for customers the option to use a relationship based, locally-owned bank in the face of the influx of “super-regional” banks into the Roanoke Valley and surrounding areas.

On July 7, 2015, a special meeting of the Grayson Board was held to review preliminary information about a proposed merger between Cardinal and Grayson, and the process and timeline for next steps. On July 10, 2015, the Cardinal Board held a meeting to discuss the proposed merger and similarly discussed the process, timeline and next steps. Following these meetings, Grayson and Cardinal entered into a mutual confidentiality agreement and formal due diligence between the parties began, including a simultaneous credit review.

At various times during July after the board meetings, Mr. Funk, Mr. Houston and Mr. Van Dyke discussed approaches to valuing the proposed business combination, including the relevance of book values of the respective organizations and the listed market values of the common stock, which are thinly traded. Based upon guidance from both management teams, Raymond James prepared an economic contribution analysis that took into account balance sheet items (loans, core deposits, equity, etc.) and earnings (pre tax, pre provision income, recent year’s income and projected income) which became a starting point for defining the company’s respective economic contributions to the business combination. The economic contribution analysis became the framework for defining ownership in the new company and ultimately determining an exchange ratio for common stockholders.

On July 30, 2015, a special meeting of the Grayson Board was held with representatives of its financial advisor, Raymond James, to review financial models and a preliminary economic contribution analysis. On July 31, 2015, a special meeting of the Cardinal Board was held at the law offices of Gentry Locke where Raymond James reviewed the same preliminary financial models and economic contribution analysis related to the prospective business combination. Mr. Van Dyke of CCG, Cardinal’s special advisor, attended the meeting in furtherance of his responsibilities to assist Cardinal in the execution of its strategic plan. Additionally, Cardinal’s executive management and Cardinal’s legal counsel were present at the meeting. Grayson’s Board Chairman, Tom Jackson, and Grayson’s CEO and CFO, Allan Funk and Blake Edwards, respectively, attended a question and answer session for a portion of this meeting.

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On August 18, 2015, a meeting was held between Cardinal’s executive management, Grayson’s executive management, and Mr. Van Dyke to review and discuss background information, business models and potential synergies. In late August 2015, Grayson prepared and circulated a draft letter of intent with Cardinal that proposed the transaction structure of a merger of Grayson and Cardinal into a new holding company (to be re-branded later) formed for the express purpose of combining the companies. The formation of a new holding company, rather than a merger of Grayson into Cardinal or Cardinal into Grayson, reflected the goal of the Boards to combine the resources of each bank to form a newly re-branded bank, rather than maintaining the legacy name of either Bank of Floyd or Grayson National Bank.

On September 3, 2015, a joint meeting of the Grayson Board and the Cardinal Board was held at Selu Conference Center at Radford University to discuss the combination, the draft letter of intent and the process and timetable for the combination. During September, discussions regarding the terms of letter of intent, including the contribution analysis, continued to be held between Mr. Funk, Mr. Houston and Mr. Van Dyke.

In late September 2015, after each party had completed its credit due diligence and the earnings of each had been updated through June 30, 2015, Raymond James updated a contribution analysis, which implied a range of ratios for exchanging shares of Grayson common stock and Cardinal common stock for Parkway common stock. Grayson and Cardinal’s agreement on exchange ratio terms was influenced by the final contribution analysis which showed that Grayson and Cardinal would contribute approximately 60% and 40%, respectively, of the economic value of newly formed company. On October 2, 2015 Grayson submitted a revised letter of intent to Cardinal that included the final exchange ratios of Parkway common stock for Grayson common stock and Cardinal common stock.

On October 6, 2015, the parties executed a non-binding letter of intent providing for the merger of Grayson and Cardinal with and into Parkway with an exchange ratio of 1.76 shares of Parkway common stock for each share of Grayson common stock and 1.30 shares of Parkway common stock for each share of Cardinal common stock and other terms set forth in the letter of intent.

On October 13, 2015, representatives of Raymond James reviewed its financial analysis of the proposed merger with members of the Grayson Board. Representatives of Williams Mullen also reviewed the structure and terms of the merger during that same meeting.

On October 26 and 27, 2015, Grayson and Cardinal, with the assistance of their respective financial and legal advisors and representatives, gathered and reviewed business, financial and other information regarding the other company and attended meetings at Grayson’s offices in Independence, Virginia and Cardinal’s offices in Floyd, Virginia. During these meetings, members of management of each of the companies, with the assistance of their advisors and representatives, engaged in a series of discussions about each company’s respective businesses.

On October 29, 2015, the Cardinal Board held a special meeting to meet with its legal advisors, Gentry Locke, to discuss the structure of the potential business combination. Gentry Locke discussed the drafts of the merger documents, including a draft merger agreement, at length with the Cardinal Board.

On November 6, 2015, the Cardinal Board held a special meeting to consider the proposed merger and the merger agreement. At the meeting, the Cardinal Board received an update from Cardinal’s management on the status of the negotiations with Grayson. Also at the meeting, representatives of Banks Street Partners reviewed its financial analysis of the terms of the merger, including the Cardinal Exchange Ratio, and delivered to the Cardinal Board an oral opinion (which was subsequently confirmed in writing) to the effect that, as of November 6, 2015, and based on and subject to various assumptions and limitations described in the opinion, the exchange ratio in the merger was fair, from a financial point of view, to Cardinal shareholders. Representatives of Gentry Locke reviewed with the Cardinal Board the legal standards applicable to its decisions and actions with respect to the proposed transaction and reviewed in detail the definitive merger agreement and all related

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documents, copies of which were delivered to each director before the date of the meeting. Following these discussions, the Cardinal Board unanimously voted to approve the merger, the merger agreement and the related plan of merger.

Also on November 6, 2015, the Grayson Board held a special meeting to consider the proposed merger and the merger agreement. At the meeting, the Grayson Board received an update from Grayson’s management on the status of the negotiations with Cardinal. Also at the meeting, representatives of Raymond James reviewed its financial analysis of the terms of the merger, including the Grayson Exchange Ratio in the merger agreement, and delivered to the Grayson Board its written opinion to the effect that, as of November 6, 2015, and based on and subject to various assumptions and limitations described in the opinion, the Grayson Exchange Ratio in the merger was fair, from a financial point of view, to Grayson shareholders. Representatives of Williams Mullen discussed with the Grayson Board the legal standards applicable to its decisions and actions with respect to the proposed transaction and reviewed in detail the proposed merger agreement and related agreements, copies of which were delivered to each director before the date of the meeting. Following these discussions, the Grayson Board unanimously voted to approve the merger, the merger agreement and the related plan of merger.

Grayson and Cardinal executed the merger agreement after the financial markets closed on November 6, 2015, and, on the afternoon of Sunday, November  8, 2015, issued a joint press release announcing the execution of the merger agreement and the terms of the merger.

Grayson’s Reasons for the Merger; Recommendation of the Grayson Board

In reaching its determination to approve and adopt the merger agreement, and to recommend the merger agreement to Grayson shareholders, the Grayson Board consulted with Grayson’s management and its financial and legal advisors, and considered a number of factors, including the following:

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The Grayson Board also considered a number of potential risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:

In the judgment of the Grayson Board, the potential benefits of the merger outweigh these considerations.

The preceding discussion of the information and factors considered by the Grayson Board is not intended to be exhaustive, but, rather, includes all of the material factors considered by it in connection with its evaluation of the merger. In reaching its determination to approve and adopt the merger agreement and recommend that Grayson shareholders approve the merger agreement, the Grayson Board did not quantify, rank or otherwise assign any relative or specific weights to the factors considered in reaching that determination. In addition, the Grayson Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. Moreover, in considering the information and factors described above, individual directors may have given differing weights to different factors. The Grayson Board based its determination on the totality of the information presented.

The Grayson Board unanimously determined that the merger agreement is in the best interests of Grayson and its shareholders. Accordingly, the Grayson Board unanimously approved and adopted the merger agreement and unanimously recommends that shareholders vote “FOR” the merger proposal.

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Grayson’s Directors and Officers Have Financial Interests in the Merger

In considering the recommendation of the Grayson Board that you approve the merger, you should be aware that Grayson’s directors and executive officers have arrangements that are different from, or are in addition to, those of Grayson shareholders generally. The Grayson Board was aware of these interests and considered them, among other matters, in reaching its decision to approve the merger agreement and to recommend that you vote in favor of approving the merger agreement.

Appointment of Individuals to the Boards of Directors of Parkway and the Surviving Bank

Currently, all eight members of the Grayson Board are members of the Parkway Board. These directors will continue as Parkway directors following the completion of the merger. The eight individuals who are currently members of both the Grayson Board and the Parkway Board and who will continue as directors of Parkway following completion of the merger are: Thomas M. Jackson, Jr., Jack E. Guynn, Jr., Jacky K. Anderson, Bryan L. Edwards, J. David Vaughan, Theresa S. Lazo, Carl J. Richardson, and J. Allan Funk. For more information, including biographical information for the directors and executive officers of Parkway, see the section entitled “Management of Parkway Following the Merger,” beginning on page 96.

Employment with Parkway Following the Merger

The following Grayson executives are expected to continue their employment as executives of Parkway following the completion of the merger in the capacities identified below: Thomas M. Jackson, Jr. (Chairman of the Board of Parkway), J. Allan Funk (President and Chief Executive Officer of Parkway), Blake M. Edwards, Jr. (Executive Vice President and Chief Financial Officer of Parkway), Rebecca M. Melton (Chief Risk Officer of Parkway), Rodney H. Halsey (Chief Operations Officer of Parkway) and Linda B. Eller (Secretary of Parkway). These individuals may enter into employment agreements with Parkway following completion of the merger. For more information, including biographical information for the directors and executive officers of Parkway, see the section entitled, “Management of Parkway Following the Merger,” beginning on page 96.

Merger Consideration to Be Received by Grayson Directors and Executive Officers in Exchange for Their Shares of Grayson Common Stock

As noted in the section entitled, “Security Ownership of Certain Beneficial Owners and Management of Grayson,” beginning on page 156, the directors and officers of Grayson beneficially own shares of Grayson common stock. As a result, like all other Grayson shareholders, these directors and officers will be entitled to receive merger consideration upon the consummation of the merger. As a result of the merger, each share of Grayson common stock will be converted into the right to receive 1.76 shares of Parkway common stock.

Opinion of Grayson’s Financial Advisor

Grayson retained Raymond James as financial advisor on October 13, 2015. Pursuant to that engagement, the Grayson Board requested that Raymond James opine as to the fairness of the Grayson Exchange Ratio, from a financial point of view, to holders of Grayson’s common stock.

Grayson had a longstanding relationship with Raymond James dating back approximately a decade. Grayson selected Raymond James as its financial advisor based upon its knowledge of Grayson and Cardinal as well as its experience as a nationally recognized investment banking firm with significant experience in mergers and acquisitions, including bank mergers and acquisitions.

At the November 6, 2015 meeting of the Grayson Board, representatives of Raymond James rendered its opinion as to the fairness of the Grayson Exchange Ratio, from a financial point of view, to the holders of Grayson’s common stock, based upon and subject to the qualifications, assumptions and other matters considered in connection with the preparation of its opinion.

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The full text of the written opinion of Raymond James is attached as Appendix B to this joint proxy statement/prospectus. The summary of the opinion of Raymond James set forth in this document is qualified in its entirety by reference to the full text of such written opinion. Holders of Grayson’s common stock are urged to read the opinion in its entirety.

Raymond James provided its opinion for the information of the Grayson Board (solely in each director’s capacity as such) in connection with, and for purposes of, its consideration of the merger and its opinion only addresses whether the Grayson Exchange Ratio in the merger was fair, from a financial point of view, to the holders of Grayson’s common stock. The opinion of Raymond James does not address any other term or aspect of the merger agreement or the merger contemplated thereby. The Raymond James opinion does not constitute a recommendation to the Grayson Board or to any holder of Grayson’s common stock as to how the Grayson Board, such stockholder or any other person should vote or otherwise act with respect to the merger or any other matter. Raymond James does not express any opinion as to the likely trading range of Parkway common stock following the merger, which may vary depending on numerous factors that generally impact the price of securities or on the financial condition of Parkway at that time.

In connection with its review of the proposed merger and the preparation of its opinion, Raymond James, among other things:

With Grayson’s consent, Raymond James assumed and relied upon the accuracy and completeness of all information supplied by or on behalf of Grayson or otherwise reviewed by or discussed with Raymond James, and Raymond James has undertaken no duty or responsibility to, nor did it, independently verify any of such information. Raymond James has not made or obtained an independent appraisal of the assets or liabilities (contingent or otherwise) of Grayson or Cardinal. Raymond James is not an expert in the evaluation of loan and lease portfolios for purposes of assessing the adequacy of the allowances for losses with respect thereto and,

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accordingly, Raymond James has assumed that such allowances for losses are in the aggregate adequate to cover such losses. With respect to the Projections and any other information and data provided to or otherwise reviewed by or discussed with Raymond James, Raymond James has, with Grayson’s consent, assumed that the Projections and such other information and data have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of Grayson’s management, and Raymond James has relied upon Grayson to advise it promptly if any information previously provided became inaccurate or was required to be updated during the period of Raymond James’ review. Raymond James expresses no opinion with respect to the Projections or the assumptions on which they are based. Raymond James has assumed that the final form of the merger agreement was substantially similar to the draft reviewed by it, and that the merger will be consummated in accordance with the terms of the merger agreement without waiver or amendment of any conditions thereto, including that the exchange ratio for each share of Cardinal common stock remains 1.30 shares of Parkway common stock. Furthermore, Raymond James has assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the merger agreement are true and correct and that each such party will perform all of the covenants and agreements required to be performed by it under the merger agreement without being waived. Raymond James has relied upon and assumed, without independent verification, that (i) the merger will be consummated in a manner that complies in all respects with all applicable international, federal and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the merger will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would have an effect on the merger or Grayson that would be material to Raymond James’ analyses or the opinion.

Raymond James relied upon, without independent verification, the assessment by Grayson’s management and Cardinal’s management and Grayson’s legal, tax, accounting and regulatory advisors with respect to all legal, tax, accounting and regulatory matters, including without limitation that the merger will qualify as a “reorganization” within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended.

Raymond James’ opinion is based upon market, economic, financial and other circumstances and conditions existing and disclosed to it as of November 5, 2015, and any material change in such circumstances and conditions would require a reevaluation of the opinion, which Raymond James is under no obligation to undertake. Raymond James relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of Grayson since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Raymond James that would be material to Raymond James’ analyses or the opinion, and that there is no information or any facts that would make any of the information reviewed by Raymond James incomplete or misleading in any material respect.

Raymond James expresses no opinion as to the underlying business decision to effect the merger, the structure or tax consequences of the merger or the availability or advisability of any alternatives to the merger. Raymond James did not solicit indications of interest with respect to a transaction involving Grayson nor did Raymond James advise Grayson with respect to its strategic alternatives. This letter does not express any opinion as to the likely trading range of Parkway stock following the merger, which may vary depending on numerous factors that generally impact the price of securities or on the financial condition of Parkway at that time. Raymond James’ opinion is limited to the fairness, from a financial point of view of the Grayson Exchange Ratio, to the holders of Grayson’s common stock.

Raymond James expresses no opinion with respect to any other reasons, legal, business, or otherwise, that may support the decision of the Grayson Board to approve or consummate the merger. Furthermore, no opinion, counsel or interpretation is intended by Raymond James on matters that require legal, accounting or tax advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Raymond James relied, with the consent of the Grayson Board, on the fact that Grayson has been assisted by legal, accounting and tax advisors and Raymond James has, with the consent

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of the Grayson Board, relied upon and assumed the accuracy and completeness of the assessments by Grayson and its advisors as to all legal, accounting and tax matters with respect to Grayson and the merger.

In formulating the opinion, Raymond James considered only the Grayson Exchange Ratio as is previously described and Raymond James did not consider and it expresses no opinion on the fairness of the amount or nature of any compensation to be paid or payable to any of the Grayson’s or Grayson National Bank’s officers, directors or employees, or class of such persons. Raymond James has not been requested to opine as to, and the opinion does not express an opinion as to or otherwise address, among other things: (1) the fairness of the merger to the holders of any class of securities, creditors, or other constituencies of Grayson, or to any other party, except and only to the extent expressly set forth in the last sentence of the opinion or (2) the fairness of the merger to any one class or group of Grayson’s or any other party’s security holders or other constituencies vis-à-vis any other class or group of Grayson’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration to be received in the merger amongst or within such classes or groups of security holders or other constituents). Raymond James is not expressing any opinion as to the impact of the merger on the solvency or viability of Grayson, Cardinal or Parkway or the ability of Grayson, Cardinal or Parkway to pay its respective obligations when they come due.

Material Financial Analyses

The following summarizes the material financial analyses reviewed by Raymond James with the Grayson Board at its meeting on November 6, 2015, which material was considered by Raymond James in rendering its opinion. No company or transaction used in the analyses described below is identical or directly comparable to Grayson, Cardinal or the contemplated merger.

Contribution Analysis

Raymond James analyzed the relative contribution of Grayson and Cardinal to the combined company’s results using financial data as of and for the twelve months ending September 30, 2015 and by using data for the fiscal years ending December 31, 2015 and December 31, 2016, respectively, based on the Projections. Such information included, for each of Grayson and Cardinal, a) market capitalization, b) total assets, c) gross loans held for investment, d) deposits, e) tangible common equity, f) last twelve months net interest income plus noninterest income, g) last twelve months core net income (Cardinal’s negative LTM core net income contribution and the implied exchange ratio are considered not meaningful), h) fiscal year ending 2015 estimated net income, and i) fiscal year ending 2016 estimated net income. The relative contribution analysis did not give effect to the impact of any synergies as a result of the proposed merger. The implied exchange ratio values assume a fixed 1.30x exchange ratio for Cardinal. The results of this analysis are summarized below:

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Discounted Cash Flow Analyses

Raymond James performed two discounted cash flow analyses of Grayson and Cardinal by calculating the estimated present value of the estimated free cash flows that Grayson and Cardinal were forecasted to generate through December 31, 2020 based upon the Projections. Raymond James applied a range of terminal value multiples of 12.0x to 16.0x estimated 2020 earnings for each of Grayson and Cardinal. Raymond James also applied a range of terminal value multiples of 110% to 150% of estimated 2020 tangible book value for each of Grayson and Cardinal. The present values of such estimated free cash flows and terminal values were then calculated using discount rates ranging from 16.1% to 18.1%. In performing these analyses, Raymond James used the Projections. Raymond James assumed Cardinal had 1,996,453 shares of Parkway common stock to reflect a fixed exchange ratio of 1.30x. Raymond James reviewed the ranges of implied per share prices indicated by the discounted cash flow analyses for each of Grayson and Cardinal and calculated a range of implied exchange ratios by dividing the maximum implied per share price of Grayson common stock by the minimum implied per share price of Cardinal common stock to calculate the maximum implied exchange ratio, and by dividing the minimum implied per share price of Grayson by the maximum implied per share price of Cardinal to calculate the minimum implied exchange ratio. The results of the discounted cash flow analyses are summarized in the table below:

Selected Companies Analysis

Raymond James analyzed the relative valuation multiples of ten publicly-traded banks and thrifts that it deemed relevant. Raymond James selected certain companies a) based in North Carolina or Virginia, b) with total assets between $200 million and $500 million, c) with nonperforming assets and loans 90 days or more past due divided by total assets less than 5.00%, and d) core return on average assets less than 0.75%. Raymond James excluded targets of announced mergers, grey market-traded companies, and mutual holding companies. Raymond James reviewed, among other financial metrics, the price to tangible book values associated with the selected companies. The selected companies and resulting data are below:

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Taking into account the above results of the selected companies analysis, Raymond James applied the 25^th and 75^th price to tangible book value percentiles to both Grayson’s and Cardinal’s tangible book values per share to derive implied per share equity values. Raymond James assumed Cardinal will receive 1.30 shares of Parkway common stock for each of Cardinal’s outstanding shares, per the merger agreement. Raymond James used the implied equity values per share to establish a range of implied exchange ratios for Grayson.

Additional Considerations

The preparation of a fairness opinion is a complex process and is not susceptible to a partial analysis or summary description. Raymond James believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, Raymond James considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to significance and relevance of each analysis and factor, so the ranges of exchange ratios resulting from any particular analysis described above should not be taken to be the view of Raymond James as to the actual range of exchange ratios for Grayson.

In performing its analyses, Raymond James made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of Grayson. The analyses performed by Raymond James are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. Such analyses were provided to the Grayson Board (solely in each director’s capacity as such) and were prepared solely as part of the analysis of Raymond James of the fairness of the Grayson Exchange Ratio, from a financial point of view, to the holders of Grayson’s common stock. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty. The opinion of Raymond James was one of many factors taken into account by the Grayson Board in making its determination to approve the merger. Neither Raymond James’ opinion nor the analyses described above should be viewed as determinative of the Grayson Board’s or Grayson’s management’s views with respect to Grayson, Cardinal or the merger. Raymond James provided advice to Grayson with respect to the proposed merger. Raymond James did not, however, recommend any specific amount of consideration to the Grayson Board or that any specific exchange ratio constituted the only appropriate consideration for the merger. Grayson placed no limits on the scope of the analysis performed, or opinion expressed, by Raymond James.

The Raymond James opinion was necessarily based upon market, economic, financial and other circumstances and conditions existing and disclosed to it on November 5, 2015, and any material change in such circumstances and conditions may affect the opinion of Raymond James, but Raymond James does not have any obligation to update, revise or reaffirm that opinion. Raymond James relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition,

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results of operations, cash flows or prospects of Grayson since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Raymond James that would be material to its analyses or its opinion, and that there was no information or any facts that would make any of the information reviewed by Raymond James incomplete or misleading in any material respect.

During the two years preceding the date of Raymond James’ written opinion, Raymond James has not been engaged by, performed services for or received any compensation from Grayson (other than any amounts that were paid to Raymond James under the engagement letter described in this joint proxy statement/prospectus pursuant to which Raymond James was retained as a financial advisor to Grayson to assist in reviewing strategic alternatives).

For services rendered in connection with the delivery of its opinion, Grayson paid Raymond James a customary investment banking fee of $150,000 upon delivery of its opinion. Grayson will also pay Raymond James a customary fee for advisory services in connection with the merger of $225,000, which is contingent upon the closing of the merger. Grayson has also paid Raymond James a retainer of $25,000 and has agreed to reimburse Raymond James for its expenses incurred in connection with its services, including the fees and expenses of its counsel, and will indemnify Raymond James against certain liabilities arising out of its engagement.

Raymond James is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. In the ordinary course of business, Raymond James may trade in the securities of Grayson and Cardinal for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. Raymond James may provide investment banking, financial advisory and other financial services to Grayson, Parkway, and/or Cardinal or other participants in the merger in the future, for which Raymond James may receive compensation.

Certain Grayson Unaudited Prospective Financial Information

Grayson does not as a matter of course make public projections as to future performance, revenues, earnings or other financial results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, Grayson is including in this joint proxy statement/prospectus certain unaudited prospective financial information that was made available to Raymond James, Grayson’s financial advisor in connection with the merger. The inclusion of this information should not be regarded as an indication that any of Grayson, Raymond James, their respective representatives or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such.

Grayson’s management approved the use of the following unaudited prospective financial information. This information was prepared solely for internal use and is subjective in many respects. While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to Grayson’s business, all of which are difficult to predict and many of which are beyond Grayson’s control. The unaudited prospective financial information reflects both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. Grayson can give no assurance that the unaudited prospective financial information and the underlying estimates and assumptions will be realized. In addition, since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year. Actual results may differ materially from those set forth below, and important factors that may affect actual results and cause the unaudited prospective financial information to be inaccurate include, but are not limited to, risks and uncertainties relating to Grayson’s business, industry performance, general business and economic conditions, competition and adverse

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changes in applicable laws, regulations or rules, and the certain other market and operations risks similar to those set forth in the section entitled, “Risk Factors,” beginning on page 23.

The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. In addition, the unaudited prospective financial information requires significant estimates and assumptions that make it inherently less comparable to the similarly titled GAAP measures in Grayson’s historical GAAP financial statements. Neither Grayson’s independent public accountants, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared. Grayson can give no assurance that, had the unaudited prospective financial information been prepared either as of the date of the merger agreement or as of the date of this joint proxy statement/prospectus, similar estimates and assumptions would be used. Grayson does not intend to, and disclaims any obligation to, make publicly available any update or other revision to the unaudited prospective financial information to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions. The unaudited prospective financial information does not take into account the possible financial and other effects on either Grayson or Cardinal, as applicable, of the merger and does not attempt to predict or suggest future results of Parkway. The unaudited prospective financial information does not give effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with completing the merger, the potential synergies that may be achieved by Parkway as a result of the merger, the effect on either Grayson or Cardinal, as applicable, of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Further, the unaudited prospective financial information does not take into account the effect on either Grayson or Cardinal, as applicable, of any possible failure of the merger to occur. None of Grayson, Cardinal, Raymond James or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in the future to make any representation to any Grayson shareholder or other person regarding Grayson’s ultimate performance compared to the information contained in the unaudited prospective financial information or that the projected results will be achieved. The inclusion of the unaudited prospective financial information in this joint proxy statement/prospectus should not be deemed an admission or representation by Grayson or Cardinal that it is viewed as material information of Grayson, particularly in light of the inherent risks and uncertainties associated with such forecasts. The summary of the unaudited prospective financial information included below is not being included to influence your decision whether to vote for the merger proposal, but is being provided solely because it was made available to Grayson’s financial advisor in connection with the merger.

In light of the foregoing, and considering that the Grayson special meeting will be held many months after the unaudited prospective financial information was prepared, as well as the uncertainties inherent in any forecasted information, Grayson shareholders are cautioned not to place unwarranted reliance on such information, and Grayson urges all Grayson shareholders to review Grayson’s financial statements and other information contained elsewhere in this joint proxy statement/prospectus for a description of Grayson’s business and financial results.

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The following table presents a summary of selected Grayson unaudited prospective financial data for the years 2016 through 2020 (dollars in millions, except per share data):

Cardinal’s Reasons for the Merger; Recommendation of the Cardinal Board

In reaching its determination to approve and adopt the merger agreement and to recommend the merger agreement to Cardinal shareholders, the Cardinal Board consulted with Cardinal and the Bank of Floyd’s management and its financial and legal advisors, and considered a number of factors. The following material factors were considered, without limitation by the Cardinal Board:

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The Cardinal Board also considered a number of risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:

In the judgment of the Cardinal Board, the potential benefits outweigh the risks and uncertainties associated with the merger.

The preceding discussion of the information and factors considered by the Cardinal Board is not intended to be exhaustive, but, rather includes all of the material factors considered by it in connection with its evaluation of the merger. In reaching its determination to approve and adopt the merger agreement and recommend that Cardinal shareholders approve the merger agreement, the Cardinal Board did not quantify, rank or otherwise assign and relative or specific weights to the factors considered in reaching that determination. In addition, the Cardinal Board did not undertake to make any specific determination as to whether any factor, or any particular aspect of any factors described above, individual directors may have given differing weights to different factors. The Cardinal Board based its determination on the totality of the information presented.

The Cardinal Board unanimously determined that the merger agreement is in the best interests of Cardinal and its shareholders. Accordingly, the Cardinal Board unanimously approved and adopted the merger agreement and unanimously recommends that shareholders vote “FOR” the merger.

Cardinal’s Directors and Officers Have Financial Interests in the Merger

In considering the recommendation of the Cardinal Board that you approve the merger, you should be aware that Cardinal’s directors and executive officers have arrangements that are different from, or are in addition to, those of Cardinal shareholders generally. The Cardinal Board was aware of these interests and considered them, among other matters, in reaching its decisions to approve the merger agreement and to recommend that you vote in favor of approving the merger agreement.

Appointment of Individuals to the Boards of Directors of Parkway and the Surviving Bank

Currently, four members of the Cardinal Board are members of the Parkway Board. These directors will continue as Parkway directors following the completion of the merger. The four individuals who are currently members of both the Cardinal Board and the Parkway Board and who will continue as directors of Parkway

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following completion of the merger are: James W. Shortt, Dr. J. Howard Conduff, Jr., T. Mauyer Gallimore and R. Devereux Jarratt. For more information, including biographical information for the directors and executive officers of Parkway, see the section entitled, “Management of Parkway Following the Merger,” beginning on page 96.

Additionally, the merger agreement and Parkway’s bylaws provide that (i) before the Effective Time, the Cardinal Board may appoint a thirteenth director to the Parkway Board and (ii) after the Effective Time but before the annual shareholder meeting of Parkway that next follows the Effective Time, the four members of the Parkway Board who were formerly directors of Cardinal as of October 31, 2015, may designate one additional qualified person to become a member of the Parkway Board in accordance with Parkway’s bylaws. It is the intention of the parties that the additional director will have a meaningful connection to a part of the Bank of Floyd’s present market area that is not presently represented by the board of directors of the Bank of Floyd. Any such designation will be made after consultation with the entire Parkway Board.

Payment under Current Cardinal Change in Control Agreements

Cardinal’s Interim President and Chief Executive Officer and Chief Financial Officer, Alan Dickerson, entered into a change in control agreement, dated August 25, 2015, with Cardinal. The change in control agreement contains provisions which entitle Mr. Dickerson to certain benefits in the event his employment is terminated within a year of a change in control of Cardinal. Upon consummation of the merger, Mr. Dickerson is not expected to continue his employment as an executive of Parkway. It is therefore expected that the conditions to Mr. Dickerson’s payment under his change in control agreement will be met and Parkway will pay $137,700 in 26 equal installments over the period of a year to Mr. Dickerson.

Cardinal’s former Interim President and Chief Executive Officer, Mark A. Smith, entered into a change in control agreement, dated August 25, 2015, with Cardinal. The change in control agreement contains provisions which entitle Mr. Smith to certain benefits in the event his employment is terminated within a year of a change in control of Cardinal. Mr. Smith resigned from Cardinal and the Bank of Floyd effective April 8, 2016, and, consequently, will not receive payments under his change in control agreement.

Additionally, the following employees of the Bank of Floyd have entered into change in control agreements with Cardinal: Wanda M. Gardner, Lynn Murray, Ronnie L. Stump, Mary D. Tabor, Betty A. Whitlock, and Sharon N. Zeman. Pursuant to these agreements, such officers are entitled to certain severance payments in the event of termination of employment or resignation for “good reason” at the effective time of or within a certain time period following a change in control.

The change in control agreements with Ms. Murray, Mr. Smith and Ms. Tabor (each an “employee”) each provide, in relevant part, that if, within one year following a change in control, the employee is terminated without cause or resigns for “good reason,” and such employee signs a waiver and release of all claims, the employee is entitled to (i) an amount equal to the greater of the employee’s base salary for the calendar year preceding the termination or for the calendar year in which the termination occurs, payable in 26 equal installments on Cardinal’s regular paydays and (ii) if the employee elects COBRA continuation coverage, premiums on the employee’s behalf for employee-only COBRA coverage for up to 12 months. For purposes of these change in control agreements, “good reason” means the existence of one or more of the following conditions arising with or within 12 months after a change in control, without the employee’s express consent:

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For purposes of the above, the change in control agreements provide that the employee will have no right to claim good reason if employee is retained after a change in control event but is given a lower-level officer position, so long as the base salary remains at or above the specified level.

The change in control agreements with Ms. Gardner, Mr. Stump, Ms. Whitlock and Ms. Zeman each provide, in relevant part, that if, within three years following a change in control, the employee is terminated without “cause” or resigns for “good reason” (provided such resignation occurs within one year following the initial existence of the condition constituting good reason), the employee is entitled to a lump sum cash payment in an amount equal to the lesser of (i) the base salary for the calendar year preceding the termination or for the calendar year in which the termination occurs, whichever is higher and (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Internal Revenue Code Section 401(a)(17) for the year in which the termination occurs. For purposes of these change in control agreements, “good reason” means the existence of one or more of the following conditions arising with or after a change in control, without the employee’s express consent:

These officers are expected to continue their employment with Parkway and the Surviving Bank following completion of the merger. As a result, Parkway does not expect any payment obligations to arise under these agreements. In the event that one of these employees is terminated or resigns for “good reason” within the specified time after completion of the merger, however, Parkway could incur post-closing obligations pursuant to these agreements.

Employment with Parkway Following the Merger

The following Cardinal executives are expected to continue their employment as executives of Parkway following the completion of the merger in the capacities identified below: Mary D. Tabor (Chief Credit Officer of Parkway) and Lynn Murray (Chief Retail Banking Officer of Parkway). These individuals may enter into employment agreements with Parkway following completion of the merger. For more information, including biographical information for the directors and executive officers of Parkway, see the section entitled, “Management of Parkway Following the Merger,” beginning on page 96.

Mark A. Smith resigned from Cardinal and the Bank of Floyd effective April 8, 2016, and therefore, is not expected to continue employment with Parkway.

Merger Consideration to Be Received by Cardinal Directors and Executive Officers in Exchange for Their Shares of Cardinal Common Stock

As noted in “Security Ownership of Certain Beneficial Owners and Management of Cardinal,” the directors and officers of Cardinal beneficially own shares of Cardinal common stock. As a result, like all other Cardinal

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shareholders, these directors and officers will be entitled to receive merger consideration upon the consummation of the merger. As a result of the merger, each share of Cardinal common stock will be converted into the right to receive 1.30 shares of Parkway common stock. Additionally, Cardinal shareholders will receive cash in lieu of fractional shares.

Opinion of Cardinal’s Financial Advisor

Cardinal engaged Banks Street Partners to render a written opinion to the Cardinal Board as to the fairness, from a financial point of view, of the merger consideration to be paid by Parkway to Cardinal shareholders as set forth in the merger agreement. Banks Street Partners is an investment banking firm that specializes in providing investment banking services to financial institutions. Banks Street Partners has been involved in numerous bank-related business combinations. No limitations were imposed by Cardinal upon Banks Street Partners with respect to rendering its opinion.

Cardinal spoke with Sander O’Neill and Banks Street Partners to discuss strategic planning in January and February of 2015. The Cardinal Board did not engage Sander O’Neill or Banks Street Partners to render any services at that time. On October 2, 2015, Cardinal and Grayson entered into a non-binding letter of intent for the merger, which set forth the consideration to be paid in the merger. After the execution of the letter of intent, the Cardinal Board again evaluated multiple investment banking firms to assess the fairness of the merger. Cardinal received proposals from Scott & Stringfellow and Banks Street Partners to provide fairness assessments. The Cardinal Board decided to hire Banks Street Partners due to the favorable exposure Cardinal had with Banks Street Partners in early 2015, Banks Street Partners’ stellar reputation in the banking community and the lower cost to provide the requested services.

For providing a fairness assessment, Cardinal paid Banks Street Partners a $100,000 fee for services provided and was reimbursed for $2,967.58 for its related expenses. Other than as discussed above, Cardinal had no material relationship with Banks Street Partners.

The full text of Banks Street Partners’ opinion is attached as Appendix C to this document. The opinion outlines the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Banks Street Partners in rendering its opinion. The description of the opinion set forth below is qualified in its entirety by reference to the opinion. We urge you to read the entire opinion carefully in connection with your consideration of the proposed merger.

The opinion speaks only as of the date of the opinion. The opinion was directed to the Cardinal Board and is directed only to the fairness, from a financial point of view, of the merger consideration to Cardinal shareholders. It does not address Cardinal’s underlying business decision to engage in the merger or any other aspect of the merger and is not a recommendation to any shareholder as to how such shareholder should vote with respect to the merger or any other matter.

For purposes of the opinion and in connection with its review of the proposed transactions, Banks Street Partners, among other things, did the following:

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Banks Street Partners assumed and relied, without independent verification, upon the accuracy and completeness of all of the financial and other information that has been provided to it by Cardinal, Grayson, and their respective representatives, and of the publicly available information that was reviewed by Banks Street Partners. Banks Street Partners is not an expert in the evaluation of allowances for loan losses and has not independently verified such allowances, and has relied on and assumed that such allowances of Cardinal and Grayson were adequate to cover such losses and complied fully with applicable law, regulatory policy and sound banking practice as of the date of such financial statements. Banks Street Partners was not retained to and did not conduct a physical inspection of any of the properties or facilities of Cardinal or Grayson, did not make any independent evaluation or appraisal of the assets, liabilities or prospects of Cardinal or Grayson, was not furnished with any such evaluation or appraisal, and did not review any individual credit files. Banks Street Partners’ opinion was necessarily based on economic, market, and other conditions in effect on, and the information made available to it, as of November 6, 2015.

Banks Street Partners, as part of its investment banking business, is regularly engaged in the valuation of banks and bank holding companies, thrifts and thrift holding companies, and various other financial services companies, in connection with mergers and acquisitions, private placements of securities, and valuations for other purposes. In rendering its fairness opinion, Banks Street Partners acted on behalf of the Cardinal Board.

Banks Street Partners’ opinion is limited to the fairness, from a financial point of view, of the merger consideration to be paid to holders of Cardinal common stock in the merger and does not address the ability of the merger to be consummated, the satisfaction of the conditions precedent contained in the merger agreement, or the likelihood of the merger receiving regulatory approval. Although Banks Street Partners was retained on behalf of the Cardinal Board, its fairness opinion does not constitute a recommendation to any director of Cardinal as to how such director or any shareholder should vote with respect to the merger agreement.

Based upon and subject to the foregoing and based on Banks Street Partners’ experience as investment bankers, Banks Street Partners’ activities as described above, and other factors Banks Street Partners deemed relevant, Banks Street Partners rendered its opinion that, as of November 6, 2015, the merger consideration to be paid to the holders of Cardinal’s common stock in the merger is fair, from a financial point of view.

The following is a summary of material analyses performed by Banks Street Partners in connection with its opinion to the Cardinal Board on November 6, 2015. The summary does not purport to be a complete description of the analyses performed by Banks Street Partners but summarizes the material analyses performed and presented in connection with such opinion.

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Summary of the Proposed Merger

Banks Street Partners reviewed the financial terms of the proposed transaction. In accordance with the terms of the merger agreement, each share of Cardinal common stock issued and outstanding shall be converted into and exchanged for the right to receive 1.30 shares of Parkway common stock (the “Cardinal Exchange Ratio”). At the same time, each share of Grayson common stock issued and outstanding shall be converted into and exchanged for the right to receive 1.76 shares of Parkway common stock (the “Grayson Exchange Ratio”). Because there is no current market for Parkway common stock, it is not possible to directly assign a dollar value to the Cardinal Exchange Ratio.

Relative Contribution Analysis

Banks Street Partners reviewed the relative contributions of Cardinal and Grayson to the pro forma combined company with respect to certain financial and operating measurements. This analysis was based on September 30, 2015 financials for both parties, except for dates indicated otherwise. Banks Street Partners then compared these contributions to the pro forma implied stock ownership interests in Parkway of Cardinal and Grayson shareholders based on their respective exchange ratio.

The following table indicates what Cardinal’s and Grayson’s percentage contributions would have been on a pro forma basis to the combined company, excluding merger synergies and merger accounting adjustments, in the categories listed:

In thousands of dollars, as of September 30, 2015

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Selected Peer Mergers-of-Equals Analysis

Banks Street Partners used publicly available information to compare selected financial information for Cardinal to a peer group of publicly announced mergers-of-equals transactions that Banks Street Partners deemed relevant for purposes of its analysis. Banks Street Partners compared selected operating results of Cardinal to the nominal “sellers” in 8 mergers-of-equals announced since January 1, 2011 for which stock exchange ratios and tangible book values per share for both parties in each transaction were publicly available (“MOE Peer Group”). Detailed composition of the MOE Peer Group appears in the table below. Banks Street Partners calculated the book-for-book exchange ratio in each transaction, with the book-for-book exchange ratio defined as the number of dollars of the nominal buyer’s tangible book value the nominal seller received for each dollar of its own tangible book value based on the exchange ratio in each transaction. Banks Street Partners then calculated the book-for-book exchange ratio in the merger based on both the Cardinal Exchange Ratio and the Grayson Exchange Ratio. The median book-for-book exchange ratio in the MOE Peer Group was calculated to be 1.0559 and the book-for-book exchange ratio in the merger was calculated to be 0.9650. Because Cardinal is not directly receiving shares of Grayson in the merger, the common exchange ratio for the merger was calculated based on the number of shares of Parkway common stock to be received for one share of each company’s common stock.