UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

(Mark One)

[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended September 30, 2002
                                         ------------------

                                       or

[    ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from                   to
                                        --------------------------------------


                        Commission File Number: 33-14252

                      FIRST NATIONAL BANKSHARES CORPORATION
             (Exact name of registrant as specified in its charter)

                  West Virginia                          62-1306172
                  -------------                          ----------
         (State or other jurisdiction                 (I.R.S. Employer
               of incorporation)                      Identification No.)

           One Cedar Street, Ronceverte, West Virginia       24970
          ---------------------------------------------   -----------
              (Address of principal executive offices)     (Zip Code)

                                 (304) 647-4500
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes      X         No
    -----------       ----------

The number of shares  outstanding of the issuer's  classes of common stock as of
November 1, 2002:

                  Common Stock, $1 par value -- 981,780 shares











                          THIS REPORT CONTAINS 24 PAGES


<PAGE>




                      FIRST NATIONAL BANKSHARES CORPORATION

                                    FORM 10-Q
                    For the Quarter Ended September 30, 2002

                                      INDEX



                                                                            Page
PART I.   FINANCIAL INFORMATION

  Item 1.  Financial Statements

           Condensed Consolidated Balance Sheets -
             September 30, 2002 and December 31, 2001                          3

           Condensed Consolidated Statements of Income -
             Three Months Ended September 30, 2002 and 2001 and
             Nine Months Ended September 30, 2002 and 2001                     4

           Condensed Consolidated Statements of Shareholders' Equity -
             Three Months Ended September 30, 2002 and 2001 and
             Nine Months Ended September 30, 2002 and 2001                     5

           Condensed Consolidated Statements of Cash Flows -
             Nine Months Ended September 30, 2002 and 2001                     6

           Notes to Condensed Consolidated Financial Statements             7-10

  Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                     11-17

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk         18

  Item 4.  Controls and Procedures                                            18

PART II.  OTHER INFORMATION

  Item 1. Legal Proceedings                                                   18

  Item 2. Changes in Securities                                               18

  Item 3. Defaults upon Senior Securities                                     18

  Item 4. Submission of Matters to a Vote of Security Holders                 18

  Item 5. Other Information                                                   18

  Item 6. Exhibits and Reports on Form 8-K                                    18

  SIGNATURES                                                                  19


<PAGE>



                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                      FIRST NATIONAL BANKSHARES CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                (in thousands of dollars, except per share data)

<TABLE>
<CAPTION>
<S>                        <C>                                                                    <C>               <C>

                                                                                               Sept. 30,         Dec. 31,
                                                                                                  2002             2001
                                                                                            ---------------  ---------------
                                           ASSETS

Cash and due from banks                                                                      $       3,533    $       3,570
Interest-bearing deposits with other banks                                                             209            2,139
Federal funds sold                                                                                   3,783               13
Securities available for sale                                                                       24,106           11,161
Securities held to maturity (estimated fair value
   of $5,213 and $7,291, respectively)                                                               5,016            7,166
Loans, less allowance for loan losses of $1,012 and
   $837, respectively                                                                              106,065          102,801
Premises and equipment, net                                                                          2,801            2,456
Accrued interest receivable                                                                            822              711
Other real estate owned                                                                                  -              796
Other assets                                                                                           508              506
                                                                                            ---------------  ---------------
      Total assets                                                                           $     146,843    $     131,319
                                                                                            ===============  ===============

                            LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
   Non-interest-bearing                                                                      $      15,742    $      15,536
   Interest-bearing                                                                                114,712           99,084
                                                                                            ---------------  ---------------
      Total deposits                                                                               130,454          114,620
Short-term borrowings                                                                                3,143            3,401
Other liabilities                                                                                      898            1,034
Long-term borrowings                                                                                     -              442
                                                                                            ---------------  ---------------
      Total liabilities                                                                            134,495          119,497
                                                                                            ---------------  ---------------

Shareholders' equity
Common stock, $1.00 par value, authorized
   10,000,000 shares, issued 981,780 shares, respectively                                              982              982
Capital surplus                                                                                      1,188            1,188
Retained earnings                                                                                   10,054            9,640
Accumulated other comprehensive income                                                                 124               12
                                                                                            ---------------  ---------------
      Total shareholders' equity                                                                    12,348           11,822
                                                                                            ---------------  ---------------
      Total liabilities and shareholders' equity                                             $     146,843    $     131,319
                                                                                           ===============  ===============



(1) Extracted from December 31, 2001 audited financial statements.

</TABLE>


            See Notes to Condensed Consolidated Financial Statements


<PAGE>


                      FIRST NATIONAL BANKSHARES CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
         THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                (In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
<S>                    <C>                                                 <C>          <C>            <C>           <C>


                                                                         Three Months Ended           Nine Months Ended
                                                                            September 30,               September 30,
                                                                           2002         2001           2002         2001
                                                                      ------------  -----------    -----------  -----------
Interest income

   Interest and fees on loans                                         $      1,929  $     2,014    $     5,775  $     5,984
   Interest and dividends on securities:
      Taxable                                                                  218          201            573          711
      Tax-exempt                                                                30           41            118          119
   Interest on Federal funds sold and interest-bearing deposits                 23           66             68          192
                                                                      ------------  -----------    -----------  -----------
         Total interest income                                               2,200        2,322          6,534        7,006
                                                                      ------------  -----------    -----------  -----------
Interest expense
   Deposits                                                                    706          956          2,186        3,012
   Short-term borrowings                                                        12           47             43          233
   Long-term borrowings                                                         10            6             23           20
                                                                      ------------  -----------   ------------  -----------
         Total interest expense                                              1,009          728          2,252        3,265
                                                                      ------------  -----------   ------------  -----------
         Net interest income                                                 1,472        1,313          4,282        3,741

Provision for loan losses                                                       30           81            239          151

         Net interest income after provision for loan losses                 1,442        1,232          4,043        3,590
                                                                      ------------  -----------   ------------  -----------
Non-interest income
   Service fees                                                                114          115            339          318
   Secondary loan market fees                                                   66           27            220           73
   Security gains                                                                3            -              3            -
   Other income                                                                 34           29             89           76
                                                                      ------------  -----------   ------------  -----------
         Total non-interest income
                                                                               217          171            651          467
                                                                      ------------  -----------   ------------  -----------
Non-interest expense
   Salaries and employee benefits                                              549          462          1,668        1,339
   Net occupancy expense                                                        81           68            248          214
   Equipment rental, depreciation and maintenance                               99           85            309          240
   Data processing                                                             101           81            286          250
   Advertising                                                                  36           26             99           72
   Professional and legal                                                       31           30             96           99
   Mailing and postage                                                          35           22             92           65
   Directors' fees and shareholder expenses                                     25           26             93           84
   Stationary and supplies                                                      30           27            105           83
   Loss on foreclosed real estate                                                4            -            266            -
   Other operating expenses                                                    118          120            359          327
                                                                      ------------  -----------   ------------  -----------
         Total non-interest expense                                          1,109          947          3,621        2,773
                                                                      ------------  -----------   ------------  -----------
Income before income taxes
                                                                               550          456          1,073        1,284

Income tax expense                                                             191          147            345          412
                                                                      ------------  -----------   ------------  -----------
Net income                                                            $        359  $       309   $        728  $       872
                                                                      ============  ===========   ============  ===========
Basic earnings per common share                                       $       0.37  $      0.32   $       0.74  $      0.90
                                                                      ============  ===========   ============  ===========
Diluted earnings per common share                                     $       0.36  $      0.31   $       0.74  $      0.89
                                                                      ============  ===========   ============  ===========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements


<PAGE>


                      FIRST NATIONAL BANKSHARES CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
         THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
                (In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
<S>                            <C>                                          <C>          <C>            <C>         <C>


                                                                         Three Months Ended           Nine Months Ended
                                                                            September 30,               September 30,
                                                                         2002          2001           2002         2001
                                                                      ----------   -----------    -----------  -----------
Balance, beginning of period                                          $   12,012   $    11,397    $    11,822  $    10,986
Comprehensive income
   Net income                                                                359           309            728          872
   Other comprehensive income, net of deferred
   income taxes of $29 and $24 for the three month
   periods; $72 and $57 for the nine month periods:
         Unrealized gains on securities                                       45            37            112           88
                                                                      ----------   -----------    -----------  -----------
         Total comprehensive income                                          404           346            840          960
                                                                      ----------   -----------    -----------  -----------
Cash dividends declared ($0.07 and $0.14 per
   share for the three month periods; $0.32
   and $0.39 per share for the nine month periods)                           (68)         (136)          (314)        (379)

Issuance of common stock pursuant to stock option exercises                    -            43              -           83
                                                                      ----------   -----------    -----------  -----------
Balance, end of period                                                $   12,348   $    11,650    $    12,348  $    11,650
                                                                      ==========   ===========    ===========  ===========

</TABLE>



































            See Notes to Condensed Consolidated Financial Statements


<PAGE>


                      FIRST NATIONAL BANKSHARES CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         NINE MONTHS ENDED SEPTEMBER 30,
                            (In thousands of dollars)
<TABLE>
<CAPTION>
<S>                          <C>                                                           <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES                                                       2002            2001
                                                                                      -------------   --------------
Net income                                                                            $               $
                                                                                               728              872
Adjustments to reconcile net income to net cash provided by (used in)
  operating activities:
     Depreciation and amortization                                                             242              179
     Loss on disposal of premises and equipment                                                  3                1
     Loss (Gain) on sale of other real estate owned                                            266               (4)
     Gains on premium calls of securities held to maturity                                      (3)               -
     Provision for loan losses                                                                 239              151
     Deferred income tax benefit                                                               (16)             (46)
     Net amortization (accretion) of security premiums and discounts                            46              (96)
     (Increase) decrease in accrued interest receivable                                       (111)             157
     (Increase) decrease in other assets                                                       (59)              15
     (Decrease) increase in other liabilities                                                  (58)             124
                                                                                      -------------   --------------
          Net cash provided by operating activities                                          1,277            1,353
                                                                                      -------------   --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and calls of securities held to maturity                            3,043          108,965
Proceeds from maturities and calls of securities available for sale                         14,783           19,125
Purchases of securities held to maturity                                                      (881)        (105,254)
Purchases of securities available for sale                                                 (27,599)         (19,186)
Net increase in loans                                                                       (3,503)         (10,759)
Purchases of premises and equipment                                                           (589)            (529)
Proceeds from sale of bank premises and equipment                                                -                5
Proceeds from sale of other real estate owned                                                  530              204
Lease payments collected on other real estate owned                                              -               17
                                                                                      -------------    -------------
          Net cash used in investing activities                                            (14,216)          (7,412)
                                                                                      -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits savings accounts                                            15,457           16,048
Net increase in certificates of deposit                                                        377              197
Proceeds from stock option exercises                                                             -               83
Net decrease increase in short-term borrowings                                                (258)          (2,211)
Principal payments on long-term borrowings                                                    (442)             (12)
Dividends paid                                                                                (392)            (408)
                                                                                      -------------    -------------
          Net cash provided by financing activities                                         14,742           13,697
                                                                                      -------------    -------------

Increase in cash and cash equivalents                                                        1,803            7,638

Cash and cash equivalents:
Beginning                                                                                    5,722            2,053
                                                                                      -------------    -------------
Ending                                                                                $      7,525     $      9,691
                                                                                      =============    =============

</TABLE>

            See Notes to Condensed Consolidated Financial Statements


<PAGE>


              FIRST NATIONAL BANKSHARES CORPORATION AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Basis of Presentation
The accounting and reporting policies of First National Bankshares  Corporation,
(the "Company" or "First National"),  and its wholly owned  subsidiaries,  First
National Bank and FNB Insurance, LLC, conform to accounting principles generally
accepted  in the  United  States and to general  policies  within the  financial
services  industry.  The  preparation  of  such  financial  statements  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the  reporting  period.  Actual  results  may differ from those
estimates.

The condensed  consolidated  statements  include the accounts of the Company and
its wholly owned subsidiaries,  First National Bank and FNB Insurance,  LLC. All
significant  intercompany  balances and transactions  have been eliminated.  The
information  contained in the  condensed  consolidated  financial  statements is
unaudited. In the opinion of management, all adjustments for a fair presentation
of the results of the interim periods have been made. All such  adjustments were
of a normal,  recurring  nature.  The results of operations  for the nine months
ended  September  30, 2002 are not  necessarily  indicative of the results to be
expected for the full year. The condensed  consolidated financial statements and
notes  included  herein should be read in  conjunction  with the Company's  2001
audited financial statements and Form 10-K.

Certain amounts in the condensed consolidated financial statements for the prior
year, as previously presented, have been reclassified to conform to current year
classifications.

Note 2.   Securities
The amortized  cost,  unrealized  gains,  unrealized  losses and estimated  fair
values of securities at September 30, 2002 and December 31, 2001 are  summarized
as follows (in thousands):
<TABLE>
<CAPTION>
<S>                    <C>                                   <C>              <C>                <C>             <C>

                                                                               September 30, 2002
                                                                                                               Estimated
                                                         Amortized         Unrealized        Unrealized           Fair
                                                            Cost             Gains             Losses            Value
                                                     ----------------- ----------------- ----------------- -----------------
Available for Sale
   Taxable:
   U.S. Government agencies and corporations          $        23,377   $           206   $             2   $        23,581
   Federal Reserve Bank stock                                      57                 -                 -                57
   Federal Home Loan Bank stock                                   444                 -                 -               444
   Other equities                                                  22                 -                 -                22
                                                     ----------------- ----------------- ----------------- -----------------
      Total taxable                                            23,900               206                 2            24,104
   Tax-exempt:
   Federal Reserve Bank stock                                       2                 -                 -                 2
                                                     ----------------- ----------------- ----------------- -----------------
      Total Securities Available for Sale             $        23,902   $           206   $             2   $        24,106
                                                     ================= ================= ================= =================

Held to maturity:
   Taxable:
   U.S. Government agencies and corporations          $         1,000   $            43   $             -             1,043
   State and political subdivisions                               455                 -                 -               455
                                                     ----------------- ----------------- ----------------- -----------------
      Total taxable                                             1,455                43                 -             1,498
   Tax-exempt:
   State and political subdivisions                             3,561               154                 -             3,715
                                                     ----------------- ----------------- ----------------- -----------------
      Total securities held to maturity               $         5,016   $           197   $             -   $         5,213
                                                     ================= ================= ================= =================
</TABLE>
<PAGE>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                           <C>                            <C>               <C>              <C>                 <C>

                                                                               December 31, 2001
                                                                                                                Estimated
                                                         Amortized         Unrealized        Unrealized           Fair
                                                            Cost             Gains             Losses             Value
                                                     ----------------- ----------------- -----------------  ----------------
Available for Sale
  Taxable:
   U.S. Government agencies and corporations          $        10,414   $            62    $           42    $       10,434
   Federal Reserve Bank stock                                      57                 -                 -                57
   Federal Home Loan Bank stock                                   646                 -                 -               646
   Other equities                                                  22                 -                 -                22
                                                     ----------------- ----------------- -----------------  ----------------
      Total taxable                                            11,139                62                42            11,159
   Tax-exempt:
   Federal Reserve Bank stock                                       2                 -                 -                 2
                                                     ----------------- ----------------- -----------------  ----------------
      Total Securities Available for Sale             $        11,141   $            62    $           42    $       11,161
                                                     ================= ================= =================  ================

Held to maturity:
  Taxable:
   U.S. Government agencies and corporations          $         2,985   $            42    $            -    $        3,027
   State and political subdivisions                               470                14                 -               484
                                                     ----------------- ----------------- -----------------  ----------------
      Total taxable                                             3,455                56                 -             3,511
   Tax-exempt:
   State and political subdivisions                             3,711                70                 1             3,780
                                                     ----------------- ----------------- -----------------  ----------------
      Total securities held to maturity               $         7,166   $           126    $            1    $        7,291
                                                     ================= ================= =================  ================
</TABLE>

The  maturities,  amortized  cost and  estimated  fair  values of the  Company's
securities at September 30, 2002 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S>                     <C>                                <C>                <C>                <C>              <C>

                                                               Held to Maturity                   Available for Sale
                                                     ----------------------------------- -----------------------------------
                                                                            Estimated                           Estimated
                                                          Amortized            Fair             Amortized           Fair
                                                            Cost               Value               Cost            Value
                                                     ----------------- ----------------- ------------------ ----------------
Due within 1 year                                     $           370   $           374   $        4,906     $        4,942
Due after 1 but within 5 years                                  3,074             3,206           18,471             18,639
Due after 5 but within 10 years                                   487               515                -                  -
Due after 10 years                                              1,085             1,118                -                  -
Equity securities                                                   -                 -              525                525
                                                     ----------------- ----------------- -----------------  ----------------
                                                      $         5,016   $         5,213   $        23,902    $       24,106
                                                     ================= ================= =================  ================
</TABLE>

The  Company's  Federal  Reserve Bank stock and Federal Home Loan Bank stock are
equity  securities  that are included in  securities  available  for sale in the
accompanying condensed consolidated financial statements. Such securities do not
have a stated  maturity  date,  and are carried at cost,  since they may only be
sold back to the respective issuer or another member at par value.
<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3.   Loans
Total loans are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                                              <C>                <C>
                                                                                           Sept. 30,           Dec. 31,
                                                                                             2002                2001
                                                                                     -------------------  ------------------
Commercial, financial and agricultural                                                 $        45,287     $        42,541
Real estate - construction                                                                       1,101               1,163
Real estate - mortgage                                                                          44,024              44,399
Installment loans to individuals                                                                14,422              13,236
Other                                                                                            2,250               2,299
                                                                                     -------------------  ------------------
   Total loans                                                                                 107,084             103,638
Net deferred loan origination costs                                                                 (7)                  -
                                                                                     -------------------  ------------------
   Total loans net of deferred origination costs                                               107,077             103,638
Less allowance for loan losses                                                                   1,012                 837
                                                                                     -------------------  ------------------
   Loans, net                                                                          $       106,065     $       102,801
                                                                                     ===================  ==================
</TABLE>

Note 4. Allowance for Credit Losses An analysis of the allowance for loan losses
is presented below (in thousands) for the nine month periods ended September 30,
2002 and 2001 and for the year ended December 31, 2001:
<TABLE>
<CAPTION>
<S>                        <C>                                          <C>                  <C>                  <C>

                                                                                                               Dec. 31,
                                                                        2002                 2001                2001
                                                                 ------------------  -------------------  ------------------
Balance, beginning of period                                      $            837     $            619    $            619
   Loans charged off                                                            78                   37                  56
   Recoveries                                                                   14                   15                  17
                                                                 ------------------  -------------------  ------------------
      Net losses                                                                64                   22                  39
                                                                 ------------------  -------------------  ------------------
   Provision for loan losses                                                   239                  151                 257
                                                                 ------------------  -------------------  ------------------
Balance, end of period                                            $          1,012     $            748    $            837
                                                                 ==================  ===================  ==================
</TABLE>

The Company's total recorded  investment in impaired loans at September 30, 2002
approximated  $149,000,  for which  the  related  allowance  for  credit  losses
determined in accordance with accounting  principles  generally  accepted in the
United  States  approximated  $0. All impaired  loans at September 30, 2002 were
collateral dependent,  and accordingly,  the fair value of the loan's collateral
was used to measure the impairment of each loan.

Note 5. Commitments and  Contingencies  In the ordinary course of business,  the
Company's  subsidiary bank is party to financial  instruments  with  off-balance
sheet risk.  These financial  instruments  include standby letters of credit and
commitments to extend credit. The unused portions of existing lines of credit at
September  30,  2001 and  December  31,  2001,  and the  contractual  amount  of
commitments to lend are as follows, in thousands of dollars:

                                              Sept. 30,       Dec. 31,
                                                 2002           2001
                                             -------------  -------------
Total loan commitments                        $    15,726    $    15,372
                                             =============  =============

Management is not aware of any commitments or contingencies  that may reasonably
be expected to have a material impact on operating results, liquidity or capital
resources.  The Company  continues to be involved in various  legal  actions and
contractual matters arising in the normal course of business.

Note 6.  Earnings  per share  Diluted  earnings  per share  amounts  assume  the
conversion,  exercise or  issuance of all  potential  common  stock  instruments
unless the effect is to reduce the loss or increase  the income per common share
from continuing operations.  For purposes of computing basic earnings per share,
weighted  average shares  outstanding  were 981,780 and 975,354 for the quarters
ended  September  30,  2002 and 2001 and 981,780 and 973,868 for the nine months
ended  September  30,  2002 and  2001.  The  dilutive  effect  of stock  options
approximated  2,824 shares and 5,705 shares for the quarters ended September 30,
2002 and 2001 and  3,121  shares  and 6,329  shares  for the nine  months  ended
September 30, 2002 and 2001.
<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Other Real Estate Owned During the third quarter,  the Company completed
the sale of  commercial  property it held as other real estate owned at June 30,
2002. A charge to earnings of $262,000 was  recognized in the second  quarter of
2002 in order to reduce the carrying value of the property to its net realizable
value.  Additional closing and selling expenses of $4,000 were recognized during
the third quarter.



<PAGE>


                                     ITEM 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis focused on significant changes in the
financial  condition  and results of  operations  of First  National  Bankshares
Corporation (the "Company" or "Bankshares"),  and its wholly owned subsidiaries,
First  National Bank and FNB  Insurance,  LLC, for the periods  indicated.  This
discussion and analysis  should be read in  conjunction  with the Company's 2001
consolidated  financial  statements  and notes  included in its Annual Report to
Shareholders and Form 10-K.

The Private  Securities  Litigation Act of 1995 indicates that the disclosure of
forward-looking  information  is desirable  for investors  and  encourages  such
disclosure  by  providing  a  safe  harbor  for  forward-looking  statements  by
corporate   management.   This   Quarterly   Report   on  Form   10-Q   contains
forward-looking statements that involve risk and uncertainty. In order to comply
with the terms of the safe  harbor,  the  corporation  notes  that a variety  of
factors  could  cause the  Company's  actual  results and  experience  to differ
materially from the anticipated results or other expectations expressed in those
forward-looking statements.

EARNINGS  SUMMARY
Nine  Months  Ended  September  30, 2002 vs. 2001
The Company reported  consolidated net income of $728,000,  or $0.74 per diluted
share for the nine months ended September 30, 2002, compared to consolidated net
income of $872,000, or $0.89 per diluted share, for the same period of 2001. The
Company's  annualized return on average assets (ROA) was 0.69% and 0.92% for the
nine-month  periods ended September 30, 2002 and 2001,  respectively,  while the
annualized return on average  shareholders'  equity (ROE) was 8.1% and 10.3% for
the nine months ended September 30, 2002 and 2001, respectively.

Improvements in net interest income and non-interest  income were mitigated by a
greater provision for loan losses and higher non-interest expenses following the
Company's  opening of a de novo branch in Covington,  Virginia in February 2002.
In addition,  a $266,000  pre-tax loss was  recognized on the sale of other real
estate owned.

An analysis of the major  components of the statement of income and expense on a
basic earnings per share basis is presented  below for the  three-month  and for
the nine-month periods ended September 30, 2002 and 2001.
<TABLE>
<CAPTION>
<S>           <C>                             <C>           <C>             <C>           <C>          <C>           <C>

                                                   Three Months Ended                        Nine Months Ended
                                                     September 30,                             September 30,
                                       ----------------------------------------- -------------------------------------------
                                                                      Increase                                   Increase
                                            2002          2001       (Decrease)        2002         2001        (Decrease)
                                       -------------- ------------- ------------ -------------- ------------- --------------
Interest income                        $        2.24  $       2.38  $    (0.14)  $       6.65   $     7.19    $    (0.54)
Interest expense                                0.74          1.04       (0.30)          2.29         3.35         (1.06)
                                       -------------- ------------  ------------ -------------- ------------- --------------
   Net interest income                          1.50          1.34        0.16           4.36         3.84          0.52
Provision for loan losses                       0.03          0.08       (0.05)          0.24         0.16          0.08
                                       -------------- ------------- ------------ -------------- ------------- --------------
   Net interest income after
      provision for loan losses                 1.47          1.26        0.21           4.12         3.68          0.44
                                       -------------- ------------- ------------ -------------- ------------- --------------
Non-interest income                             0.22          0.18        0.04           0.66         0.48          0.18
Non-interest expense                            1.13          0.97        0.16           3.69         2.84          0.85
                                       -------------- ------------- ------------ -------------- ------------- --------------
   Income before income taxes                   0.56          0.47        0.09           1.09         1.32         (0.23)
Income tax expense                              0.19          0.15        0.04           0.35         0.42         (0.07)
                                       -------------- ------------- ------------ -------------- ------------- --------------
   Net income                          $        0.37  $       0.32  $     0.05   $        0.74  $      0.90   $    (0.16)
                                       ============== ============= ============ ============== ============= ==============
</TABLE>

Three Months Ended September 30, 2002 vs. 2001
The Company reported  consolidated net income of $359,000,  or $0.36 per diluted
share for the three months ended  September 30, 2002,  compared to  consolidated
net income of $309,000, or $0.31 per diluted share, for the same period of 2001.
The Company's  annualized return on average assets (ROA) was 0.98% and 0.96% for
the three-month periods ended September 30, 2002 and 2001,  respectively,  while
the annualized return on average  shareholders' equity (ROE) was 11.8% and 10.9%
for the same periods, respectively.

On a  quarter-to-quarter  basis, the Company experienced a favorable variance in
net interest income and non-interest  income. As more fully discussed in the NET
INTEREST  INCOME  section  below,  the growth in the Company's  interest-bearing
assets  relative  to its  growth in  interest-bearing  liabilities  equated to a
positive impact on the Company's net interest income.  Likewise,  an increase in
the volume of fee-related services has aided in enhancing non-interest income by
26.9%.  Earnings  also  improved  due to a decline  in the loan loss  provision.
Slower loan demand  coupled with a decline in the  outstanding  loans during the
current  quarter  curbed  the need for a  comparative  loan loss  provision.  As
discussed above in the year to date summary,  non-interest expense has increased
dramatically due to the new branch in Covington.  As expected,  the expenses are
currently  exceeding  the  revenues  generated  by  the  office,  however,  each
succeeding  monthly result is steadily  improving as the office tracks towards a
breakeven asset base.

NET INTEREST INCOME
The most  significant  component of the  Company's  net earnings is net interest
income,  which represents the excess of interest income earned on earning assets
over the  interest  expense paid for sources of funds.  Net  interest  income is
affected  by changes in volume  resulting  from  growth  and  alteration  of the
balance sheet's composition, as well as by fluctuations in market interest rates
and  maturities of sources and uses of funds.  For purposes of this  discussion,
net interest income is presented on a fully  tax-equivalent basis to enhance the
comparability  of the performance of tax-exempt to fully taxable earning assets.
For the nine-month periods ended September 30, 2002 and 2001, the tax-equivalent
adjustment was $61,000.

Over the first  nine  months of 2002,  the  Company's  net  interest  income has
improved  $548,000  or  14.4%.  As  shown  in  Table  II,  the  majority  of the
improvement is volume related. Average interest-bearing assets were $134,000,000
in 2002 compared to  $120,000,000  in 2001, an increase of 11.1%.  The increased
volume  equated to an  incremental  increase  in  interest  income of  $830,000.
Likewise, the growth in interest-bearing liabilities ($11,000,000) equated to an
incremental increase in interest expense of $158,000. Overall, the net impact of
the volume variance was an increase in net interest income of $672,000.

Interest  rates have steadily  declined  over the past several  months with many
indices  and  benchmarks  at or near  historical  lows.  As a result of variable
interest rate provisions,  maturities and prepayments,  a significant portion of
the  Company's  interest-earning  assets have repriced at lower  interest  rates
during 2002. As a result, the net yield on interest-earning  assets has declined
from  7.82%  to  6.57%,  or  125  basis  points.   Similarly,   interest-bearing
liabilities repriced during 2002, resulting in a 161 basis point decrease in the
average interest rate paid on the liabilities. Overall, the net impact of change
in interest rates resulted in a net decrease in net interest income of $124,000.

An important component to any financial  institution's  financial success is its
ability  to  effectively  manage  its net  yield on  interest-earning  assets or
"margin." Despite the falling rate environment,  the Company was able to improve
its margin by 13 basis  points from the prior year  (4.33%  versus  4.20%).  The
improvement  in the  margin  is a result of the loan  growth  over the past year
(loans are the Company's  highest  yielding asset) and the  incremental  benefit
derived  from  funding a portion of the growth in  interest-earning  assets with
non-interest bearing deposits and internal capital  (approximately  $3,000,000).
Going  forward,  the Company  will  continue to face a  multitude  of  obstacles
lowering its margin - fluctuations  in interest  rates,  competition  for loans,
prepayments and others.  Unfortunately,  the current trend of slower loan demand
will  likely  have a  negative  impact on the  Company's  margin  in the  fourth
quarter.  To combat the potential  impact of the lower yield on its assets,  the
Company will be less aggressive with its funding prices, thereby better managing
the asset growth of the Company.

Further  analysis  of  the  Company's  yields  on  interest-earning  assets  and
interest-bearing  liabilities  and changes in net interest income as a result of
changes in average volume and interest rates are presented in Tables I and II.

NON-INTEREST INCOME
Non-interest  income  includes  revenues  from all sources  other than  interest
income and yield related loan fees from loans held in the  Company's  portfolio.
On a quarter-to-quarter  basis,  non-interest income improved $46,000, or 26.9%,
while for the nine month period ended September 30, 2002, it improved  $184,000,
or 39.4%. As a percentage of average assets,  annualized non-interest income was
0.61% and 0.49% for the  nine-month  periods ended  September 31, 2002 and 2001,
respectively.

The  improvement in the quarter and year to date  non-interest  income totals is
attributed to the Company's  secondary market loan program. A favorable interest
rate  environment  coupled with the  allocation of  additional  resources to the
program  relative  to  the  prior  year,  has  led  to a  $39,000  and  $147,000
improvement in the quarter and  year-to-date  totals,  respectively.  Management
expects to further  capitalize  on its  secondary  market loan  activity for the
balance of the year.

NON-INTEREST EXPENSE
Non-interest  expense  includes  overhead costs that are not related to interest
expense or to losses from loans or  securities.  As of September  30, 2002,  the
Company's  non-interest expense totaled $3,621,000,  an increase of $848,000, or
30.5%,  over total  non-interest  expense  incurred  for the nine  months  ended
September 30, 2001. On a  quarter-to-quarter  basis, other non-interest  expense
increased to $162,000,  or 17.1%, for the third quarter of 2002.  Expressed as a
percentage of average assets,  annualized non-interest expense was 3.4% and 2.9%
for the nine months ended September 30, 2002 and 2001, respectively.

<TABLE>
<CAPTION>
<S>          <C>                                               <C>            <C>    <C>        <C>        <C>        <C>

====================================================================================================================================

                                     TABLE I
                            AVERAGE BALANCE SHEET AND
                          NET INTEREST INCOME ANALYSIS
                            (In thousands of dollars)

                                                                  Nine Months Ended               Nine Months Ended
                                                                  September 30, 2002              September 30, 2001
                                                              Average     Interest  Yield/     Average     Interest Yield/
                                                              Balance        (1)     Rate      Balance       (1)     Rate
                                                           ------------- ---------- ------- ------------ ---------- ---------
INTEREST-EARNING ASSETS

    Loans, net of deferred origination costs               $    106,360   $ 5,775   7.24%   $   92,818    $  5,984    8.60%
    Securities:
        Taxable                                                  19,124       573   3.99%       17,844         704    5.26%
        Tax-exempt  (1)                                           3,683       179   6.47%        3,339         180    7.19%
                                                           ------------- --------- -------- -----------   ---------  -------
              Total securities                                   22,807       752   4.40%       21,183         884    5.56%
                                                           ------------- --------- -------- -----------   ---------  -------
    Federal funds sold and interest-bearing deposits              4,622        68   1.96%        6,358         192    4.03%
        with other banks                                   ------------- --------- -------- -----------   ---------  -------
              Total interest-earning assets                     133,789     6,595   6.57%      120,359       7,060    7.82%
                                                           ------------- --------- -------- -----------   --------- --------
NON-INTEREST-EARNING ASSETS
    Cash and due from banks                                       3,648                          2,812
    Bank premises and equipment                                   2,793                          1,611
    Other assets                                                  2,057                          2,333
    Allowance for loan losses                                      (951)                          (668)
                                                           -------------                    ------------
             Total assets                                  $    141,336                     $  126,447
                                                           =============                    ============
INTEREST-BEARING LIABILITIES
    Demand deposits                                        $     18,556        99   0.71%   $   15,257         185    1.62%
    Savings deposits                                             55,500     1,079   2.59%       41,365       1,212    3.91%
    Time deposits                                                34,658     1,008   3.88%       38,136       1,615    5.65%
                                                           ------------- --------- -------  -----------   ---------  -------
            Total interest-bearing deposits                     108,714     2,186   2.68%       94,758       3,012    4.24%
                                                           ------------- --------- -------  -----------   ---------  -------
    Short-term borrowings                                         3,532        43   1.62%        6,539         233    4.75%
    Long-term borrowings                                            356        23   8.61%          452          20    5.90%
                                                           ------------- --------- -------  -----------   ---------  -------
            Total other interest-bearing liabilities              3,888        66   2.26%        6,991         253    4.83%
                                                           ------------- --------- -------  -----------   ---------  -------
            Total interest-bearing liabilities                  112,602     2,252   2.67%      101,749       3,265    4.28%
                                                           ------------- --------- -------  -----------   ---------  -------
NON-INTEREST-BEARING LIABILITIES
    AND SHAREHOLDERS' EQUITY
    Demand deposits                                              15,579                         12,219
    Other liabilities                                             1,128                          1,149
    Shareholders' equity                                         12,027                         11,330
                                                           -------------                    -----------
           Total liabilities and shareholders' equity      $    141,336                     $  126,447
                                                           =============                    ===========
NET INTEREST-EARNINGS                                                    $  4,343                         $  3,795
                                                                         =========                        =========
NET YIELD ON INTEREST-EARNING ASSETS                                                4.33%                             4.20%
                                                                                   =======                           =======


(1) - Calculated on a fully  tax-equivalent basis using the rate of 34% for 2002
and 2001.
(2) - For purposes of these computations,  non-accrual loans are included in the
amounts of average  loans  outstanding.  Included in  interest  are loan fees of
$93,000 and $97,000 for 2002 and 2001, respectively.



====================================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
<S>             <C>                                                            <C>                 <C>               <C>

====================================================================================================================================

                                    TABLE II

                     CHANGES IN INTEREST INCOME AND EXPENSE
               DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES
                            (In thousands of dollars)

                                                                                         Nine Months Ended
                                                                                Sept. 30, 2002 versus Sept. 30, 2001
                                                                                        Increase (Decrease)
                                                                                         Due to Changes In:
                                                                             Volume (1)         Rate (1)           Total
                                                                         ---------------------------------------------------
INTEREST-EARNING ASSETS
    Loans                                                                 $          807     $     (1,016)     $      (209)
    Securities:
        Taxable                                                                       48             (179)            (131)
        Tax-exempt (2)                                                                18              (19)              (1)
                                                                         -----------------  ---------------  ---------------
           Total securities                                                           66             (198)            (132)
                                                                         -----------------  ---------------  ---------------
    Federal funds sold and interest-bearing deposits                                 (43)             (81)            (124)
       with other banks
                   Total interest-earning assets                                     830           (1,295)            (465)
                                                                         -----------------  ---------------  ---------------
INTEREST-BEARING LIABILITIES
    Demand deposits                                                                   34             (120)             (86)
    Savings deposits                                                                 344             (477)            (133)
    Time deposits                                                                   (137)            (470)            (607)
    Short-term borrowings                                                            (78)            (112)            (190)
    Long-term borrowings                                                              (5)               8                3
                                                                         -----------------  ---------------  ---------------
                   Total interest-bearing liabilities                                158           (1,171)          (1,013)
                                                                         -----------------  ---------------  ---------------
NET INTEREST-EARNINGS                                                     $          672     $       (124)     $       548
                                                                         =================  ===============  ===============

(1) - The change in  interest  due to both rate and  volume  has been  allocated
between the factors in proportion  to the  relationship  of the absolute  dollar
amounts of the change in each. (2) - Calculated on a fully  tax-equivalent basis
using the rate of 34%.

====================================================================================================================================
</TABLE>

The increase in both the quarter and year to date  expenses  from the prior year
is due in part to the  incremental  operating  expenses  associated with the new
Covington   branch.   Nearly  all-major  expense  line  items  reported  in  the
Consolidated  Statements  of Income in Item 1 are up from the prior  year due to
the de novo branch.  Direct  operating  expenses  attributed to the new location
totaled  $112,000  and  $356,000,  respectively  for the quarter and nine months
ended  September  30,  2002.  Salaries  and  employee  benefits  account for the
majority of the incremental  expenses,  which are derived from the six full-time
staff  employed by the branch.  A portion of the  expenses  incurred  during the
first nine months are  nonrecurring  and  therefore  are not  indicative  of the
future  ongoing  expense of the branch.  Subsequent to September  30, 2002,  the
Company hired a new executive,  who will be largely responsible for spearheading
the  business  development  of the  Covington  branch.  Therefore,  non-interest
expense is expected to increase in the fourth quarter.

Included  in  non-interest  expense is a $266,000  loss  recorded  on other real
estate owned.

INCOME TAXES
The  Company's  provisions  for state and federal  income taxes during the third
quarters of 2002 and 2001 were  $191,000  and  $147,000,  respectively.  For the
year-to-date  period,  income tax expense was  $345,000 in 2002 and  $412,000 in
2001 representing effective tax rates of 32.2% and 32.1%, respectively.

CHANGES IN FINANCIAL CONDITION
The Company's total assets were $146,843,000 at September 30, 2002,  compared to
$131,319,000 at December 31, 2001, an increase of $15,524,000 or 11.8%.  Average
total assets were $141,336,000  during the nine month period ended September 30,
2002.  Details concerning changes in the Company's major balance sheet items and
changes in financial condition follow.

Securities and Federal Funds Sold
At September 30, 2002, the Company's securities position totaled $29,122,000, an
increase of $10,795,000  or 58.9% from December 31, 2001.  During the first nine
months of 2002, the deposit growth has outpaced loan growth by nearly 5 to 1. As
a  result,  additional  funds  were  available  for  investing  in the  security
portfolio.  The ratio of  securities  designated  as Available  for Sale ("AFS")
versus  Held to Maturity  ("HTM")  continues  to shift  towards  AFS.  With this
designation,  the Company can more adequately meet its liquidity demands, should
the need  arise.  Future  designations  of HTM will  likely  be  limited  to the
purchase of small blocks of municipal securities.  A more detailed discussion of
the  securities  portfolio may be found in Note 2 of the condensed  consolidated
financial statements found in Item I.

It is the Bank's  philosophy to minimize its  involvement in the overnight funds
market, however due to liquidity reasons (i.e.  fluctuations in loan and deposit
balances), the bank may buy or sell funds on an overnight basis. On average, its
position  in the  overnight  market  in 2002 has been  $4,622,000  (this  figure
includes  interest-bearing  deposits with other banks) compared to $6,358,000 in
the prior year.

Loan Portfolio
At September  30, 2002,  gross loans totaled  $107,084,000,  an increase of 3.3%
from  December  31, 2001,  while on average,  gross loans  totaled  $106,360,000
during the first nine months of 2002.  Loan demand has been  markedly  slower in
2002 in comparison  to the prior year. A portion of the slow down is a result of
the current economic conditions.  Uncertainty has prompted many small businesses
to delay expansion or in some cases, employ a retraction strategy.  In addition,
competition  for high quality loans remains keen,  particularly in the Company's
primary market area (Greenbrier  County,  WV). The low interest rate environment
has put  tremendous  pressure  on the  Company  to remain  competitive  with its
pricing and service.  Prepayment risk in a falling rate environment continues to
play a  significant  role in the volume of loans the  Company  must  generate in
order to  maintain  a flat  growth  trend.  In the  third  quarter,  total  loan
outstandings  declined $928,000 due to these same competitive  factors. In order
to combat the current trend,  the Company has and will continue to make interest
rate  concessions  to  loan  customers  so  long as the  decisions  support  the
Company's   long-term  financial  goals  and  are  supported  by  the  Company's
asset/liability  policies and interest rate risk guidelines.  Additionally,  the
Company will focus  efforts on its newest market - Covington,  Virginia.  Of the
Company's  $3,446,000  growth in loans  during  the first  nine  months of 2002,
Covington  contributed  approximately  $2,000,000 of the growth. As mentioned in
the NON-INTEREST  EXPENSE section, the Company has hired an additional executive
who will be  largely  responsible  for  business  development  in the  Covington
market. As a result,  management  expects the majority of the future loan growth
to come from the  Covington  location,  while loan growth at will be moderate to
flat in the other markets.  See Note 3 of the condensed  consolidated  financial
statements for further information on the loan portfolio.

Allowance and Provision for Loan Losses
The allowance for loan losses is  maintained at a level  considered  adequate to
provide  for losses that can be  reasonably  estimated.  On a  quarterly  basis,
management performs a comprehensive  evaluation of the adequacy of the allowance
that encompasses evaluating problem credits and their potential loss, if any. In
addition, management considers historical loan loss experience, new loan volume,
portfolio  composition,  levels of non-performing and past due loans and current
and anticipated  economic conditions in evaluating the adequacy of the allowance
for loan  losses.  When  determined  necessary,  a provision  for loan losses is
charged to earnings in order to maintain an adequate allowance for probable loan
losses.  During the third quarter of 2002, the Company made a $30,000  provision
for loan losses  compared to $81,000  during the third quarter of 2001.  For the
nine months ended September 30, 2002 and 2001,  respectively,  the provision for
loan losses was $239,000 and $151,000.  At September 30, 2002, the allowance for
loan losses was $1,012,000 compared to $837,000 at December 31, 2001.  Expressed
as a percentage  of loans,  the allowance for loan losses was 0.95% and 0.81% at
September 30, 2002 and December 31, 2001, respectively. In management's opinion,
the allowance for loan losses is adequate to absorb the current  estimated  risk
of loss in the  existing  portfolio.  See Note 4 of the  condensed  consolidated
financial  statements for an analysis of the activity in the Company's allowance
for loan losses for the  nine-month  periods ended  September 30, 2002 and 2001,
and for the year ended December 31, 2001.

Asset quality trends represent an important factor in evaluating the adequacy of
the  allowance for loan losses.  A summary of the  Company's  past due loans and
non-performing assets is provided in the following table:



               SUMMARY OF PAST DUE LOANS AND NON-PERFORMING ASSETS
                            (in thousands of dollars)
<TABLE>
<CAPTION>
<S>                     <C>                                                  <C>              <C>                <C>

                                                                          Sept. 30,         Sept. 30,         Dec. 31,
                                                                            2002              2001              2001
                                                                    ------------------ ------------------ ------------------
   Loans past due 90 or more days still accruing                     $              -   $              -   $              -
   Non-accrual loans                                                              328                239                294
                                                                    ------------------ ------------------ ------------------
      Total non-performing loans                                                  328                239                294
   Other real estate owned and repossessed assets                                   2                796                796
                                                                    ------------------ ------------------ ------------------
      Total non-performing assets                                    $            330   $          1,035   $          1,090
                                                                    ================== ================== ==================
      Non-performing assets as a % of total assets                               0.2%               0.8%               0.8%
                                                                    ================== ================== ==================
      Allowance for loan losses as a % of non-performing loans                 308.5%             313.0%             284.7%
                                                                    ================== ================== ==================
</TABLE>

Total  non-performing  assets at  September  30, 2002  decreased  $760,000  from
December  31,  2001.  As more  fully  discussed  in  Note 7 of the  Consolidated
Financial Statements included in Item 1, the Company completed the sale of other
real estate owned in the third quarter,  which had a carrying amount of $796,000
at December 31, 2001.

Deposits and Other Funding Sources
Total  deposits  at  September  30,  2002  increased  $15,834,000  or 13.8% from
December 31, 2001. On average,  deposits  totaled  $124,293,000  during the nine
months  ended  September  30,  2002,  which  is an 8.4%  increase  over the 2001
year-end  deposit  balance.  The following table  summarizes the quarter-end and
average year to date deposit mix for  September 30, 2002 as compared to December
31, 2001:
<TABLE>
<CAPTION>
<S>    <C>                                                         <C>           <C>          <C>               <C>
                                                                             Avg. YTD      % Increase/(Decrease) Since
                                                                             Balance      Dec. 31, 2001 as Compared To:
                                                                                         -----------------------------------
                                                              Sept. 30,      Sept. 30,      Sept. 30,         Avg. YTD
                                                                 2002          2002           2002              2002
                                                           --------------  ------------- -----------------------------------
Demand deposits                                            $      35,692  $      34,135        14.0%            9.0%
Savings                                                           60,407         55,500        22.5%           12.5%
Certificates of deposit                                           34,355         34,658         1.1%            2.0%
                                                           -------------- --------------
   Total deposits                                          $     130,454  $     124,293        13.8%            8.4%
                                                           ============== ==============
</TABLE>

The  opening  of the  Covington  branch  has  had a  significant  impact  on the
Company's  deposit  growth.  This location was  responsible  for  $11,073,000 or
nearly 70.0% of the total growth  experienced  in the first nine months of 2002.
The deposit mix at the new location is similar to the  consolidated mix shown in
the above table.  Deposit growth from the Company's  other  locations has slowed
following a rapid increase over an 18-month  period.  Because of the slower loan
demand,  management has opted to be less aggressive with its deposit pricing. As
a result,  deposit  growth has been flat in all markets  with the  exception  of
Covington. The Company will remain highly competitive in this market in order to
build its book of business.

Over the past year and  coinciding  with the fall in interest  rates,  there has
been a distinct trend for depositor  preference in short-term,  liquid deposits,
which yield a competitive  return. This preference has led to significant growth
in the  Company's  savings  balance  relative  to  other  deposit  products.  As
illustrated  above,  savings  deposits have grown 22.5% since December 31, 2001.
This  trend is likely to  continue  should  interest  rates  remain at their low
levels and should equity markets continue to be highly volatile.

The  Company's  use  of  short-term  borrowings  during  the  nine-months  ended
September 30, 2002 consisted entirely of repurchase agreements entered into with
various customers and on average did not materially differ from the December 31,
2001 balance.

LIQUIDITY
Liquidity is a measure of the Company's  ability to ensure the  availability  of
adequate funds to meet loan commitments and deposit  withdrawals,  as well as to
provide for other  Company  transactional  requirements.  Liquidity  is provided
primarily by funds  invested in cash and due from banks,  Federal funds sold and
interest-bearing   deposits  with  other  banks,  which  totaled  $7,525,000  at
September  30, 2002  versus  $5,722,000  at December  31,  2001.  The  Company's
liquidity is further enhanced by the availability of $5,276,000 (amortized cost)
in debt securities  maturing  within the succeeding one year.  Also, the Company
has  classified  additional  debt  securities  with an  estimated  fair value at
September  30,  2002 of  $18,639,000  as  available  for  sale in the  event  of
unforeseen  need for  liquidity.  Additionally,  the Company  has  approximately
$49,000,000 in available lines of credit with various correspondent banks should
the need arise.

Management's Asset/Liability Committee (ALCO) meets on a regular basis to review
the Company's  sources and uses of funds for the succeeding  (30), (60) and (90)
day time frames.  In addition,  projected balance sheets for the succeeding (12)
month time frame are prepared and reviewed in order to ensure that  liquidity is
within  policy  guidelines,   and  if  not,  that  appropriate   strategies  are
formulated,  implemented  and  measured  for  effectiveness  in  order  to bring
liquidity risk within policy guidelines.  Management is not aware of any trends,
commitments,  events or  uncertainties  that have resulted in or are  reasonably
likely to result in a material change in the Company's liquidity.

CAPITAL RESOURCES
Maintenance  of a strong capital  position is a continuing  goal of the Company.
Through  management  of its capital  resources,  the Company seeks to provide an
attractive  financial  return to its  shareholders  while  retaining  sufficient
capital to support future growth.  Total  shareholders'  equity at September 30,
2002 was  $12,348,000  compared to $11,822,000 at December 31, 2001, an increase
of  $526,000.  A  reconciliation  of the  increase is reported in the  Condensed
Consolidated Statement of Shareholders' Equity included in Item I. Average total
shareholders'  equity  expressed  as a  percentage  of average  total assets was
approximately  8.5% at September  30, 2002 compared to December 31, 2001's level
of 9.0%.

Cash dividends  totaling  $314,000,  or $0.32 per share were declared during the
first nine months of 2002  compared  to $379,000 or $0.39 per share  declared in
comparable period of 2001. These payout levels represented  approximately  43.1%
and 43.5% of the  Company's  year-to-date  earnings for the  nine-month  periods
ended  September  30,  2002 and 2001,  respectively.  The Company has a dividend
policy  whereby the dividend  payout  level may not exceed 40% of the  Company's
annual  net  income.  Accordingly,  future  declarations  may be  limited to the
amounts that would be available under the policy directive.

The  Company  has  experienced  rapid  growth  over  the  past  two  years,  and
accordingly,  the Company's  leverage  ratio  (equity to assets) has  decreased.
Although  the Company  continues  to report  capital  ratios well above  minimum
guidelines as discussed in the following section,  it has become prudent for the
Company to manage the  dividend  growth  rate in order to  preserve  capital for
future internal asset growth and to build a capital position that will allow the
Company to react in a timely manner to external growth opportunities should they
present themselves. As a result, the board and management have opted to maintain
a flat dividend rate with 2001's regular  dividends as the "base year," provided
year-to-date earnings support the divided policy mandate described above.

REGULATORY RESTRICTIONS ON CAPITAL AND DIVIDENDS
The primary source of funds for the dividends paid by First National  Bankshares
Corporation is dividends  received from its subsidiary  bank.  Dividends paid by
the subsidiary bank are subject to restrictions by banking regulations. The most
restrictive  provision  requires  approval by the regulatory agency if dividends
declared  in any year exceed the year's net  income,  as  defined,  plus the net
retained profits of the two preceding years.  Management does not anticipate any
such restriction on its dividends in 2002.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the subsidiary bank to maintain minimum amounts and ratios (set forth in
the table below) of total and Tier I capital (as defined in the  regulations) to
risk-weighted  assets (as defined),  and of Tier capital (as defined) to average
assets (as defined).  Management  believes,  as of September 30, 2002,  that the
subsidiary bank meets all capital adequacy  requirements to which it is subject,
as evidenced by the following table:

                            RISK-BASED CAPITAL RATIOS
                               September 30, 2002

                                        Actual      Minimum
                                                  Requirement
                                      --------- -------------
Tier 1 risk-based capital ratio         11.16%       4.00%
Total risk-based capital ratio          12.17%       8.00%
Leverage ratio                           7.67%       3.00%

Improved  operating results and a consistent  dividend program,  coupled with an
effective  management  of credit and interest rate risk will be the key elements
towards the Company  continuing to maintain its present strong capital  position
in the future.




                                     ITEM 3.
                          QUANTITATIVE AND QUALITATIVE
                          DISCLOSURES ABOUT MARKET RISK

The following table represents the results of the Company's interest sensitivity
simulation  analysis  as of  September  30,  2002 and  December  31,  2001.  Key
assumptions in the preparation of the table include changes in market conditions
including  interest  rates,  loan  volumes,  and pricing;  deposit  sensitivity;
customer  preferences;  and capital plans.  To attempt to quantify the potential
change  in net  interest  income,  given a change  in  interest  rates,  various
interest  rate  scenarios  are applied to  projected  balances,  maturities  and
repricing  opportunities.  The resulting  change in net interest income reflects
the level of  sensitivity  that net interest  income has in relation to changing
interest.

                                          Annualized Hypothetical %
                                       Change in Net Interest Income
                                         Sept. 30,          Dec. 31,
Interest rate scenario                      2002              2001
                                     ------------------ ----------------
Up 100 basis points                         -2.3             -4.8
Down 100 basis points                        1.8              4.8

As reported  above,  a sharp increase or decrease in interest rates would have a
significant  impact on the Company's  earnings.  Modest  changes in the interest
rate environment would not have as dramatic an impact.

                                     ITEM 4
                             CONTROLS AND PROCEDURES

The  Company's  management,  including  the Chief  Executive  Officer  and Chief
Financial  Officer,  have  conducted  an  evaluation  of  the  effectiveness  of
disclosure controls and procedures  pursuant to Exchange Act Rule 13a-14.  Based
on that  evaluation,  the Chief Executive  Officer and Chief  Financial  Officer
concluded that the disclosure  controls and procedures are effective in ensuring
that all material  information required to be filed in this quarterly report has
been made  known to them in a timely  fashion.  There  have been no  significant
changes in internal  controls,  or in factors  that could  significantly  affect
internal controls,  subsequent to the date the Chief Executive Officer and Chief
Financial Officer completed their evaluation.


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings
          Various legal proceedings are presently pending in which the Bank is a
          named party. These proceedings involve routine litigation incidental
          to the Bank's business. In Management's opinion, based upon advice of
          counsel, the resolution of such proceedings will not have a material
          impact on the Bank's financial position.

Item 2. Changes in Securities
          None

Item 3. Defaults upon Senior Securities
          None

Item 4. Submission of Matters to a Vote of Security Holders
          None

Item 5. Other Information
          None

Item 6. Exhibits and Reports on Form 8-K
             a)  All exhibits included with this filing follow the signature
                 page. 1. Exhibit 11, Computation of Per Share Earnings, is
                 included on page 22.
                 2.       Exhibit 99.1, Certification of Chief Executive Officer
                          pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
                 3.       Exhibit 99.2, Certification of Chief Financial Officer
                          pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
             b). The Company did not file any Form 8-K, Current Reports during
                 the quarter ended September 30, 2002.


<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                      FIRST NATIONAL BANKSHARES CORPORATION


                                    By /s/ L. Thomas Bulla

                                    L. Thomas Bulla
                                    President and Chief Executive Officer



                                    By /s/ Matthew L. Burns

                                    Matthew L. Burns, CPA
                                    Chief Financial Officer, First National Bank
                                    (Principal Financial and Accounting Officer)




Date: November 14, 2002



                                  CERTIFICATION



I, L. Thomas Bulla, President and CEO, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of First National
         Bankshares Corporation;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:
         a) designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;
         b) evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and
         c) presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):
         a) all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
         b) any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



                                           By /s/ L. Thomas Bulla

                                           L. Thomas Bulla
                                           President and Chief Executive Officer


Date: November 14, 2002


<PAGE>


                                  CERTIFICATION



I, Matthew L. Burns, Chief Financial Officer, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of First National
         Bankshares Corporation;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:
         a) designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;
         b) evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and
         c) presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):
         a) all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
         b) any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.



                                    By /s/ Matthew L. Burns

                                    Matthew L. Burns, CPA
                                    Chief Financial Officer, First National Bank
                                    (Principal Financial and Accounting Officer)


Date: November 14, 2002



                                   EXHIBIT 11
                        COMPUTATION OF PER SHARE EARNINGS



Earnings Per Share

     Basic Earnings per Share is calculated based upon the Company's net income
     after income taxes, divided by the weighted average number of shares
     outstanding during the fiscal period.

     Diluted Earnings Per Share is calculated based upon the Company's net
     income after income taxes, divided by the weighted average number of shares
     outstanding during the period plus the conversion, exercise or issuance of
     all potential common stock instruments unless the effect is to increase the
     income per common share from continuing operations.




                                  EXHIBIT 99.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of First National Bankshares Corporation
("First  National")  on Form 10-Q for the period  ending  September 30, 2002, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  I, L. Thomas Bulla,  President and Chief Executive  Officer of First
National,  certify,  pursuant to 18 U.S.C.  section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the  requirements of Section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and results of operations of First National.



                                          By /s/ L. Thomas Bulla

                                          L. Thomas Bulla
                                          President and Chief Executive Officer



Date: November 14, 2002







                                  EXHIBIT 99.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of First National Bankshares Corporation
("First  National")  on Form 10-Q for the period  ending  September 30, 2002, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  I,  Matthew L. Burns,  Chief  Financial  Officer of First  National,
certify,  pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906
of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the  requirements of Section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and results of operations of First National.



                                    By /s/ Matthew L. Burns

                                    Matthew L. Burns, CPA
                                    Chief Financial Officer, First National Bank




Date: November 14, 2002