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, 2001
                                         ------------------------------------

                                       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, 2001:

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











                          THIS REPORT CONTAINS 20 PAGES


<PAGE>



                 FIRST NATIONAL BANKSHARES CORPORATION

                                    FORM 10-Q
                    For the Quarter Ended September 30, 2001

                                      INDEX



                                                                           Page
PART I.   FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets -
   September 30, 2001 and December 31, 2000                                    3

Condensed Consolidated Statements of Income -
   Three Months Ended September 30, 2001 and 2000 and
   Nine Months Ended September 30, 2001 and 2000                               4

Condensed Consolidated Statements of Shareholders' Equity -
   Three Months Ended September 30, 2001 and 2000 and
   Nine Months Ended September 30, 2001 and 2000                               5

Condensed Consolidated Statements of Cash Flows -
   Nine Months Ended September 30, 2001 and 2000                               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            17


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                                      19

SIGNATURES                                                                    20


<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>
                                                                                         September 30,     December 31,
                                                                                             2001              2000
                                                                                     ------------------------------------
                                       ASSETS

Cash and due from banks                                                               $           3,368 $          2,035
Federal funds sold                                                                                4,756                1
Interest-bearing deposits with other banks                                                        1,567               17
Securities available for sale                                                                     9,837            9,645
Securities held to maturity (estimated fair value
   of $7,902 and $11,348, respectively)                                                           7,750           11,351
Loans, less allowance for loan losses of $748 and
   $619, respectively                                                                            98,367           87,759
Premises and equipment, net                                                                       1,881            1,537
Accrued interest receivable                                                                         780              937
Other real estate owned acquired in settlement of loans                                             796            1,013
Other assets                                                                                        554              580
                                                                                     ------------------------------------
      Total assets                                                                    $         129,656 $        114,875
                                                                                     ====================================

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
   Noninterest-bearing                                                                           13,120           11,147
   Interest-bearing                                                                              99,650           85,378
                                                                                     ------------------------------------
      Total deposits                                                                            112,770           96,525

Short-term borrowings                                                                             3,698            5,909
Other liabilities                                                                                 1,092              997
Long-term borrowings                                                                                446              458
                                                                                     ------------------------------------
      Total liabilities                                                                         118,006          103,889
                                                                                     ------------------------------------
Shareholders' equity
Common stock, $1.00 par value, authorized
   10,000,000 shares, issued 979,265 and 971,265 shares, respectively                               979              971
Capital surplus                                                                                   1,165            1,089
Retained earnings                                                                                 9,459            8,967
Accumulated other comprehensive income (loss)                                                        47              (41)
                                                                                     ------------------------------------
      Total shareholders' equity                                                                 11,650           10,986
                                                                                     ------------------------------------
      Total liabilities and shareholders' equity                                      $         129,656 $        114,875
                                                                                     ====================================


</TABLE>


(1) Extracted from December 31, 2000 audited financial statements.


            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, 2001 AND 2000
                (In thousands of dollars, except per share data)

<TABLE>
<CAPTION>
<S>                                                                         <C>        <C>             <C>         <C>
                                                                       Three Months Ended          Nine Months Ended
                                                                         September 30,               September 30,
                                                                         2001        2000           2001         2000
                                                                    -------------------------   -------------------------
Interest income
   Interest and fees on loans                                       $      2,014 $     1,987    $     5,984 $      5,427
   Interest and dividends on securities:
      Taxable                                                                197         276            704          865
      Tax-exempt                                                              41          36            119          108
   Interest on Federal funds sold and interest-bearing deposits               66           1            192           26
                                                                    -------------------------   -------------------------
         Total interest income                                             2,318       2,300          6,999        6,426
                                                                    -------------------------   -------------------------

Interest expense
   Deposits                                                                  956         936          3,012        2,619
   Short-term borrowings                                                      47         153            233          308
   Long-term borrowings                                                        6           7             20           21
                                                                    -------------------------   -------------------------
         Total interest expense                                            1,009       1,096          3,265        2,948
                                                                    -------------------------   -------------------------
         Net interest income                                               1,309       1,204          3,734        3,478

Provision for loan losses                                                     81          35            151           50

         Net interest income after provision for loan losses               1,228       1,169          3,583        3,428
                                                                    -------------------------   -------------------------

Noninterest income
   Service fees                                                              115          79            318          222
   Securities (losses)                                                         -          (3)             -           (3)
   Loan origination fees - secondary market loans                             27           1             73            4
   Other income                                                               27          25             73           87
                                                                    -------------------------   -------------------------

         Total noninterest income                                            169         102            464          310
                                                                    -------------------------   -------------------------

Noninterest expense
   Salaries and employee benefits                                            462         415          1,339        1,252
   Net occupancy expense                                                      68          67            214          205
   Equipment rental, depreciation and maintenance                             85          71            240          208
   Data processing                                                            69          56            213          171
   Advertising and promotions                                                 26          23             72           64
   Professional and legal                                                     30          34             99           88
   Directors' fees and shareholder expenses                                   26          24             84           87
   Stationery and supplies                                                    27          23             83           66
   Other operating expenses                                                  148         116            419          395
                                                                    -------------------------   -------------------------
         Total noninterest expense                                           941         829          2,763        2,536
                                                                    -------------------------   -------------------------
Income before income taxes                                                   456         442          1,284        1,202
Income tax expense                                                           147         146            412          398
                                                                    -------------------------   -------------------------
Net income                                                          $        309 $       296    $       872 $        804
                                                                    =========================   =========================
Basic earnings per common share                                     $       0.32 $      0.31    $      0.90  $      0.83
                                                                    =========================   =========================
Diluted earnings per common share                                   $       0.31 $      0.30    $      0.89  $      0.83
                                                                    =========================   =========================
</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, 2001 AND 2000
                (In thousands of dollars, except per share data)


<TABLE>
<CAPTION>
<S>                                                                       <C>         <C>            <C>            <C>
                                                                       Three Months Ended          Nine Months Ended
                                                                         September 30,               September 30,
                                                                        2001         2000           2001         2000
                                                                    ------------ ------------  ------------- ------------
Balance, beginning of period                                        $     11,397 $    10,434   $     10,986  $    10,151

Comprehensive income

   Net income                                                                309         296            872          804
   Other comprehensive income, net of deferred income taxes
      of $24 and $61 for the three month periods;
      $57 and $37 for the nine month periods:

         Unrealized gains on securities                                       37          95             88           58
                                                                    -------------------------  --------------------------

      Total comprehensive income                                             346         391            960          862
                                                                    -------------------------  --------------------------
Cash dividends declared ($0.14 and $0.13 for the three month
   periods; $0.39 and $0.35 for the nine month periods)                     (136)       (125)          (379)        (338)

Issuance of common stock pursuant to stock option exercises                   43           -             83           25
                                                                    -------------------------  --------------------------
Balance, end of period
                                                                    $     11,650 $    10,700   $     11,650 $     10,700
                                                                    =========================  ==========================

</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>
CASH FLOWS FROM OPERATING ACTIVITIES                                                           2001             2000
                                                                                         ---------------  ---------------
Net income                                                                               $          872   $          804
Adjustments to reconcile net income to net cash provided by (used in) operating
  activities:
   Depreciation and amortization                                                                    179              164
   Loss on disposal of premises and equipment                                                         1                -
   Gain on sale of other real estate owned                                                           (4)
   Provision for loan losses                                                                        151               50
   Deferred income tax benefit                                                                      (46)             (50)
   Accretion of security discounts, net                                                             (96)             (18)
   Securities losses, net                                                                             -                3
   Decrease (increase) in accrued interest receivable                                               157             (196)
   Decrease (increase) in other assets                                                               15              (20)
   Increase (decrease) in other liabilities                                                         124              (78)
                                                                                         ---------------  ---------------
      Net cash provided by operating activities                                                   1,353              659
                                                                                         ---------------  ---------------

CASH FLOWS FROM INVESTING ACTIVITIES

Net (increase) decrease in interest-bearing deposits with other banks                            (1,550)              12
Proceeds from maturities and calls of securities held to maturity                               108,965            1,012
Proceeds from maturities and calls of securities available for sale                              19,125            2,500
Purchases of securities held to maturity                                                       (105,254)            (600)
Purchases of securities available for sale                                                      (19,186)            (501)
Net increase in loans                                                                           (10,759)         (13,808)
Purchases of premises and equipment                                                                (529)             (56)
Proceeds from sale of bank premises and equipment                                                     5                -
Proceeds from sale of other real estate owned                                                       204                -
Lease payments collected on other real estate owned                                                  17               32
                                                                                         ---------------  ---------------
      Net cash used in investing activities                                                     (8,962)         (11,409)
                                                                                         ---------------  ---------------

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase (decrease) in demand deposits, NOW and savings accounts                             16,048           (2,799)
Net increase in time deposits                                                                       197            5,618
Proceeds from sale of common stock pursuant to stock  option exercise                                83               25
Net (decrease) increase in short-term borrowings                                                 (2,211)           6,518
Principal payments on long-term borrowings                                                          (12)             (11)
Dividends paid                                                                                     (408)            (299)
                                                                                         ---------------  ---------------
      Net cash provided by financing activities                                                  13,697            9,052
                                                                                         ---------------  ---------------

Increase (decrease) in cash and cash equivalents                                                  6,088           (1,698)

Cash and cash equivalents:

Beginning                                                                                         2,036            3,747
                                                                                         ---------------  ---------------
Ending
                                                                                         $        8,124   $        2,049
                                                                                         ===============  ===============
</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 could 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, 2001 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  2000
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.

Accounting Pronouncements
In September 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities," (FAS 133) which requires all derivatives to
be  recorded  on the  balance  sheet at fair  value  and  establishes  "special"
accounting for fair value,  cash flow, and foreign currency  hedges.  FAS 133 is
effective,  as amended,  for years  beginning  after June 15, 2000.  The Company
adopted the accounting pronouncement on January 1, 2001. Because the Company did
not hold any financial  instruments that qualified as derivatives,  the adoption
had no impact on the Company's balance sheet or its income statement.

Note 2.   Securities
The amortized  cost,  unrealized  gains,  unrealized  losses and estimated  fair
values of securities at September 30, 2001 and December 31, 2000 are  summarized
as follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                       <C>                <C>              <C>               <C>

                                                                             September 30, 2001
                                                                                                             Estimated
                                                        Amortized        Unrealized        Unrealized          Fair
                                                           Cost            Gains             Losses            Value
                                                    ---------------------------------------------------------------------
Available for Sale
  Taxable:

   U.S. Government agencies and corporations         $         9,042 $              78 $               -  $        9,120
   Federal reserve bank stock                                     57                 -                 -              57
   Federal home loan bank stock                                  646                 -                 -             646
   Other equities                                                 13                 -                 1              12
                                                    ---------------------------------------------------------------------
      Total taxable                                            9,758                78                 1           9,835

Tax-exempt
   Federal reserve bank stock                                      2                 -                 -               2
                                                    ---------------------------------------------------------------------
      Total Securities Available for Sale            $         9,760 $              78 $               1  $        9,837
                                                    =====================================================================

</TABLE>


<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S>                                                         <C>               <C>              <C>              <C>

                                                                             September 30, 2001
                                                                                                            Estimated
                                                        Amortized        Unrealized        Unrealized          Fair
                                                           Cost            Gains             Losses           Value
                                                    ---------------------------------------------------------------------
Held to maturity:
  Taxable:

   U.S. Government agencies and corporations         $         3,803  $            50  $               - $         3,853
   State and political subdivisions                              470               20                  -             490
                                                    ---------------------------------------------------------------------
      Total taxable                                            4,273               70                  -           4,343

Tax-exempt
   State and political subdivisions                            3,477               82                  -           3,559
                                                    ---------------------------------------------------------------------
      Total securities held to maturity              $         7,750  $           152  $               - $         7,902
                                                    =====================================================================

                                                                             December 31, 2000
                                                                                                             Estimated
                                                        Amortized        Unrealized        Unrealized          Fair
                                                          Cost             Gains             Losses            Value
                                                    ---------------- ----------------- ----------------- ----------------
Available for Sale
Taxable:
   U.S. Government agencies and corporations         $        8,999   $             -   $            67   $        8,932
   Federal Reserve Bank stock                                    57                 -                 -               57
   Federal Home Loan Bank stock                                 646                 -                 -              646
   Other equities                                                 9                 -                 1                8
                                                    ---------------- ----------------- ----------------- ----------------
      Total taxable                                           9,711                 -                68            9,643
Tax-exempt:
   Federal Reserve Bank stock                                     2                 -                 -                2
                                                    ---------------- ----------------- ----------------- ----------------
      Total Securities Available for Sale            $        9,713   $             -   $            68   $        9,645
                                                    ================ ================= ================= ================

                                                                             December 31, 2000
                                                                                                             Estimated
                                                        Amortized        Unrealized        Unrealized          Fair
                                                          Cost             Gains             Losses            Value
                                                    ---------------- ----------------- ----------------- ----------------
Held to maturity:
Taxable:
   U.S. Government agencies and corporations         $        7,600   $             5   $            33   $        7,572
   State and political subdivisions                             485                 -                 7              478
                                                    ---------------- ----------------- ----------------- ----------------
      Total taxable                                           8,085                 5                40            8,050
Tax-exempt:
   State and political subdivisions                           3,266                32                 -            3,298
                                                    ---------------- ----------------- ----------------- ----------------
      Total securities held to maturity              $       11,351   $            37   $            40   $       11,348
                                                    ================ ================= ================= ================

</TABLE>


<PAGE>



              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The  maturities,  amortized  cost and  estimated  fair  values of the  Company's
securities at September 30, 2001 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                        <C>                <C>               <C>           <C>

                                                             Held to Maturity                  Available for Sale
                                                                         Estimated                           Estimated
                                                        Amortized           Fair           Amortized           Fair
                                                          Cost             Value             Cost              Value
                                                    ---------------- ----------------- ----------------  ----------------

Due within 1 year                                   $         2,703  $          2,718  $         1,516   $         1,533
Due after 1 but within 5 years                                4,441             4,552            7,026             7,087
Due after 5 but within 10 years                                 136               142              500               500
Due after 10 years                                              470               490                -                 -
Equity securities                                                 -                 -              718               717
                                                    ---------------- ----------------- ----------------  ----------------
                                                    $         7,750  $          7,902  $         9,760   $         9,837
                                                    ================ ================= ================  ================
</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.

Note 3.   Loans
Total loans as of September  30, 2001 and December  31, 2000 are  summarized  as
follows (in thousands):
<TABLE>
<CAPTION>
<S>                                                                                        <C>               <C>

                                                                                           2001                2000
                                                                                   ------------------  ------------------

Commercial, financial and agricultural                                               $        39,612     $        32,687
Real estate - construction                                                                     1,142                 502
Real estate - mortgage                                                                        42,160              38,312
Installment loans to individuals                                                              14,119              14,083
Other                                                                                          2,082               2,794
                                                                                   ------------------  ------------------
   Total loans                                                                                99,115              88,378
Less allowance for loan losses                                                                   748                 619
                                                                                   ------------------  ------------------
   Loans, net                                                                        $        98,367     $        87,759
                                                                                   ==================  ==================
</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, 2001 and 2000:
<TABLE>
<CAPTION>
<S>                                                                     <C>                 <C>              <C>

                                                                                                             Dec. 31,
                                                                       2001                2000                2000
                                                               ------------------  ------------------  ------------------

Balance, beginning of period                                     $           619     $           764     $           764

   Loans charged off                                                          37                  55                 253
   Recoveries                                                                 15                  26                  35
                                                               ------------------  ------------------  ------------------
      Net losses                                                              22                  29                 218
                                                               ------------------  ------------------  ------------------

   Provision for loan losses                                                 151                  50                  73
                                                               ------------------  ------------------  ------------------

Balance, end of period                                           $           748     $           785     $           619
                                                               ==================  ==================  ==================
</TABLE>
<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company's total recorded  investment in impaired loans at September 30, 2001
approximated  $239,000,  for which  the  related  allowance  for  credit  losses
determined in accordance with accounting  principles  generally  accepted in the
United States  approximated  $16,000.  All impaired  loans at September 30, 2001
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,
2000,  and the  contractual  amount of  commitments  to lend are as follows,  in
thousands of dollars:
<TABLE>
<CAPTION>
<S>                                                  <C>           <C>
                                                  Sept. 30,      Dec. 31,
                                                     2001          2000
                                               ------------- --------------

  Commitments to extend credit                 $     15,701  $       13,475
                                               ============= ==============
</TABLE>

On August 7, 2001,  the company  received  approval from the  Comptroller of the
Currency to open a  full-service  branch bank in Covington,  VA. The Company has
purchased  land in the City of Covington for  approximately  $250,000  where the
facility  will be  constructed.  The total cost of the  facility is estimated at
$1,000,000, including the cost of the land and site preparation, and is expected
to open on February 1, 2002.  As of September 30, 2001,  total  capital  outlays
were $265,000.

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 975,354 and 967,015 for the quarters ended  September 30, 2001
and 2000 and 973,868 and 966,340 for the nine months  ended  September  30, 2001
and 2000.  The dilutive  effect of stock options  approximated  5,705 shares and
6,000 shares for the quarters ended September 30, 2001 and 2000 and 6,329 shares
and 6,000 shares for the nine months ended September 30, 2001 and 2000.

<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 2000
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
The Company reported net income of $309,000 for the three months ended September
30, 2001 compared to net income of $296,000 for the quarter ended  September 30,
2000, an increase of 4.4%.  For the nine month period ended  September 30, 2001,
the  Company's  net  income of  $872,000  increased  $68,000  from the  $804,000
reported  for the same period of 2000,  an increase of 8.5%.  The  increases  in
quarterly and year-to-date  earnings were primarily  attributable to an increase
in the  Company's  net  interest  income  and were a result of the asset  growth
during 2001.

Basic  earnings per common share was $0.32 for the quarter  ended  September 30,
2001  compared to $0.31  reported  for the third  quarter of 2000.  For the nine
month period ended  September 30, 2001,  basic earnings per common share totaled
$0.90  compared with $0.83 for the same period of 2000. An analysis of the major
components  of the  statement  of income  and  expense  on a per share  basis is
presented  below  for the  three  month  and for the nine  month  periods  ended
September 30, 2001 and 2000.
<TABLE>
<CAPTION>
<S>                                   <C>            <C>            <C>              <C>          <C>           <C>

                                            Three Months Ended                             Nine Months Ended
                                               September 30,                                 September 30,
                                                                 Increase                                     Increase
                                      2001          2000        (Decrease)          2001          2000       (Decrease)
                                 -------------- ------------- --------------   ------------------------------------------

Interest income                  $        2.38         $2.38         $   -      $       7.19 $        6.65 $        0.54
Interest expense                          1.04          1.13         (0.09)             3.35          3.05          0.30
                                 -------------- ------------- --------------   ------------------------------------------
   Net interest income                    1.34          1.25           0.09             3.84          3.60          0.24
Provision for loan losses                 0.08          0.04           0.04             0.16          0.05          0.11
                                 -------------- ------------- --------------   ------------------------------------------
   Net interest income after
      provision for loan losses           1.26          1.21           0.05             3.68          3.55          0.13
                                 -------------- ------------- --------------   ------------------------------------------
Non-interest income                       0.17          0.11           0.06             0.48          0.32          0.16
Non-interest expense                      0.96          0.86           0.10             2.84          2.63          0.21
                                 -------------- ------------- --------------   ------------------------------------------
   Income before income taxes             0.47          0.46           0.01             1.32          1.24          0.08
Income tax expense                        0.15          0.15           0.00             0.42          0.41          0.01
                                 -------------- ------------- --------------   ------------------------------------------
   Net income                    $        0.32  $       0.31  $        0.01    $        0.90  $       0.83 $        0.07
                                 ============== ============= ==============   ==========================================
</TABLE>

The Company's annualized return on average assets (ROA) for the third quarter of
2001 was 0.98%  compared to 1.08% for the third  quarter of 2000.  This compares
with an ROA of 0.92% and 0.98% for the nine month  periods  ended  September 30,
2001 and 2000,  respectively.  Annualized return on average shareholders' equity
(ROE) was 10.91% for the third  quarter of 2001  compared to 10.97% in the third
quarter of 2000, while year to date ROE was 10.26% and 9.93% as of September 30,
2001 and 2000, respectively.

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,  2001 and 2000,  the  tax-equivalent  adjustment  was $61,000 and
$56,000, respectively.

The Company's net interest  income totaled  $3,795,000 for the nine month period
ended  September 30, 2001, an increase of $260,000 or 7.4% compared to September
30, 2000. The growth in the Company's  interest-earning assets,  principally its
loan growth,  has translated to an overall  positive impact on the Company's net
interest income.  As noted in Table II, the impact of the volume increase in its
interest-earning   assets,  net  of  the  volume  increase  in  interest-bearing
liabilities,  equated to an  additional  $358,000 in net interest  income.  This
increase,  however,  was mitigated by a $98,000 reduction in net interest income
as a result of the lower  interest rate  environment  in 2001.  Since January 1,
2001, the Federal Reserve Board's policy has been to lower  short-term  interest
rates in an attempt to steer the economy from a recession.  Interest  rates have
been cut 400 basis points since the beginning of the year.  Lower interest rates
coupled  with  increased  competition  for  deposits  have led to a  decline  in
interest  rate margins  throughout  the  industry.  The  Company's  yield on its
interest-earning  assets  declined  55  basis  points,  while  its cost of funds
decreased 25 basis points.  This contraction of the interest rate spread has led
to a 36 basis point decline in the Company's  margin in 2001. The Company's cost
of funds has been buoyed by its  longer-term  time deposits,  and in particular,
its (18) month product.  A large portion of these  certificates  were written in
the  fourth  quarter of 2000 when  interest  rates  were at their  highest.  The
majority of these higher-rate deposits will mature by June 2002, therefore,  the
cost of funds is expected to decline over the next three quarters.

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.

PROVISION FOR LOAN LOSSES
The  provision  for loan  losses  represents  charges to earnings  necessary  to
maintain  an  adequate   allowance  for  probable   loan  losses.   Management's
determination of the appropriate level of the allowance is based upon an ongoing
analysis of credit quality and loss potential in the loan portfolio, actual loan
loss experience  relative to the size and characteristics of the loan portfolio,
change in the composition and risk characteristics of the loan portfolio and the
anticipated influence of national and local economic conditions. The adequacy of
the allowance for loan losses is reviewed  quarterly and adjustments are made as
considered necessary.

During the third  quarter of 2001,  the Bank made an $81,000  provision for loan
losses compared to $35,000 during the third quarter of 2000. For the nine months
ended September 30, 2001 and 2000,  respectively,  the provision for loan losses
was $151,000 and $50,000.  For  additional  discussion  of these factors and the
related  allowance for loan losses  account,  refer to the Loan and Related Risk
Elements section of this discussion.

NON-INTEREST INCOME
Non-interest  income  includes  revenues  from all sources  other than  interest
income and yield  related loan fees from loan held in the  Company's  portfolio.
For the nine month period ended September 30, 2001,  non-interest income totaled
$464,000, an increase of $154,000 or 49.7% from the $310,000 recorded during the
same period of 2000. As a percentage of average assets,  annualized non-interest
income was 0.49% and 0.38% for the nine month periods  ended  September 31, 2001
and 2000, respectively.

For the quarter  ended  September  30,  2001,  service  fees  increased  $36,000
compared to the same quarter of 2000,  and for the nine months  ended  September
30, 2001,  they have  increased  $96,000 or 43.2% compared to the same period in
2000. The increase is due to a new service fee schedule  implemented on April 1,
2001. Secondary market loan origination fees totaled $27,000 for the quarter and
for the year total $73,000. A favorable  interest rate environment  coupled with
the opening of the loan  production  office in  Covington,  Virginia in February
2001,  which  specializes in this type of loan, has  contributed  greatly to the
quarter and year to date increases.

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, 2001,  the
Company's  non-interest expense totaled $2,763,000,  an increase of $227,000, or
9.0%,  over  total  non-interest  expense  incurred  for the nine  months  ended
September 30, 2000. On a  quarter-to-quarter  basis, other non-interest  expense
increased  $112,000,  or 13.5%.  Expressed  as a percentage  of average  assets,
annualized  non-interest  expense  was 2.9% and 3.1% for the nine  months  ended
September  30, 2001 and 2000,  respectively.  The  significant  items  affecting
non-interest expense are discussed below.


<TABLE>
<CAPTION>
<S>                                                         <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, 2001              September 30, 2000
                                                         ----------------------------------------------------------------
                                                            Average     Interest Yield/     Average     Interest Yield/
                                                            Balance       (1)     Rate      Balance       (1)     Rate
                                                         ----------------------------------------------------------------
INTEREST EARNING ASSETS

    Loans, net of unearned income                        $  92,818     $ 5,984   8.60%     $ 80,553      $5,427  8.98%
    Securities:
        Taxable                                             17,844         704   5.26%       19,075         865  6.05%
        Tax-exempt  (1)                                      3,339         180   7.20%        3,019         164  7.24%
                                                         ----------------------------------------------------------------
              Total securities                              21,183         884   5.57%       22,094       1,029  6.21%
                                                         ----------------------------------------------------------------
   Federal funds sold and interest-bearing deposits          6,358         192   4.03%          652          27  5.52%
                                                         ----------------------------------------------------------------
              Total interest earning assets                120,359       7,060   7.82%      103,299       6,483  8.37%
                                                         ----------------------------------------------------------------
NONINTEREST EARNING ASSETS
    Cash and due from banks                                  2,812                            2,792
    Bank premises and equipment                              1,611                            1,649
    Other assets                                             2,333                            2,207
    Allowance for loan losses                                 (668)                            (757)
                                                         ----------                      ----------
             Total assets                                $ 126,447                        $ 109,190
                                                         ==========                      ==========

INTEREST-BEARING LIABILITIES

    Demand deposits                                     $   15,257         185   1.62%    $  14,895         272  2.43%
    Savings deposits                                        41,365       1,212   3.91%       36,919       1,289  4.66%
    Time deposits                                           38,136       1,615   5.65%       27,202       1,058  5.19%
                                                        ---------- ------------------  ----------- ------------------
            Total interest-bearing deposits                 94,758       3,012   4.24%       79,016       2,619  4.42%
                                                        ---------- ----------------------------------------------------
   Short-term borrowings                                     6,539         233   4.75%        7,214         308  5.69%
   Long-term borrowings                                        452          20   5.90%          479          21  5.85%
                                                          -------- ------------------  ----------- ------------------
          Total other interest-bearing liabilities           6,991         253   4.83%        7,693         329  5.70%
                                                         ---------   ----------------- --------------------------------
          Total interest-bearing liabilities               101,749       3,265   4.28%       86,709       2,948  4.53%
                                                         ---------   --------------------- ----------------------------
NONINTEREST-BEARING LIABILITIES
    AND SHAREHOLDERS' EQUITY
    Demand deposits                                         12,219                           10,916
    Other liabilities                                        1,149                              769
    Shareholders' equity                                    11,330                           10,796
                                                         ---------                       ----------
           Total liabilities and shareholders' equity    $ 126,447                        $ 109,190
                                                         =========                       ==========


NET INTEREST EARNINGS                                                $   3,795                        $   3,535
                                                                     ===========                      ==========

NET YIELD ON INTEREST EARNING ASSETS                                             4.20%                           4.56%
                                                                                =======                         =======

</TABLE>

(1) - Calculated on a fully tax-equivalent basis using the rate of 34% for 2001
and 2000.
(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
$97,000 and $74,000 for 2001 and 2000, respectively.

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

<PAGE>

                                    TABLE II

                     CHANGES IN INTEREST INCOME AND EXPENSE
               DUE TO CHANGES IN AVERAGE VOLUME AND INTEREST RATES
                            (In thousands of dollars)
<TABLE>
<CAPTION>
<S>                                                                             <C>               <C>             <C>


                                                                                        Nine Months Ended
                                                                                Sept. 30, 2001 vs. Sept. 30, 2000
                                                                                       Increase (Decrease)
                                                                                       Due to Changes in:
                                                                             Volume (1)        Rate (1)        Total
                                                                         ----------------- ---------------- -------------
INTEREST EARNING ASSETS
    Loans                                                                $            799   $        (242)  $        557
    Securities:
        Taxable                                                                       (53)           (108)          (161)
        Tax-exempt (2)                                                                 17              (1)            16
                                                                         ----------------- ---------------- -------------
              Total securities                                                        (36)           (109)          (145)
                                                                         ----------------- ---------------- -------------
    Federal funds sold and interest-bearing deposits                                  174              (9)           165
Total interest earning assets                                                         937            (360)           577
                                                                         ----------------- ---------------- -------------

INTEREST-BEARING LIABILITIES
    Demand deposits                                                                     6             (93)           (87)
    Savings deposits                                                                  145            (222)           (77)
    Time deposits                                                                     456             101            557
    Short-term borrowings                                                             (27)            (48)           (75)
    Long-term borrowings                                                               (1)              -             (1)
                                                                         ----------------- ---------------- -------------
            Total interest-bearing liabilities                                        579            (262)           317
                                                                         ----------------- ---------------- -------------

NET INTEREST EARNINGS                                                    $            358   $         (98)  $        260
                                                                         ================= ================ =============


(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>

Salaries  and  employee  benefits,  the  Company's  largest  non-interest  cost,
increased  $47,000  (11.3%)  during the third  quarter,  and for the year,  have
increased  $87,000  (6.9%).  The increases  are due to the Company  adding three
full-time  employees to the staff and  escalating  employee  benefit plan costs,
primarily  health  insurance.  The additional  staff is a result of the new loan
production office in Covington,  Virginia and the additional  workload generated
from the loan and deposit growth.  Data processing has increased for the quarter
and year to date due to the introduction of the Company's online banking product
in July 2000 and the  addition  of various  data  processing  enhancements.  The
remaining line items are consistent with the prior year quarter and year to date
totals.

INCOME TAXES
The Company's  income tax expense,  which includes both federal and state income
taxes,  totaled  $412,000  for the nine month period  ended  September  30, 2001
compared  to  $398,000  for  same  period  of  2000.   The  effective  tax  rate
approximated  32.2% and 33.0% for the three months ended  September 30, 2001 and
2000 and 32.1% and 33.1% for the nine months ended September 30, 2001 and 2000.

CHANGES IN FINANCIAL CONDITION
The Company's total assets were $129,656,000 at September 30, 2001,  compared to
$114,875,000 at December 31, 2000, an increase of $14,781,000 or 12.9%.  Average
total assets were $126,447,000  during the nine month period ended September 30,
2001.  Details concerning changes in the Company's major balance sheet items and
changes in financial condition follow.

Securities and Federal Funds Sold
The Bank's total securities portfolio has decreased $3,409,000 or 16.2% from the
December 31, 2000 balance, with the portfolio decreasing $6,464,000 in the third
quarter alone.  The declining  interest rate  environment  has  accelerated  the
maturity  of several  bonds due to the issuers  invoking  call  provisions.  The
Company has opted to invest the  proceeds  in  short-term  investments,  such as
Federal funds sold and  interest-bearing  deposits with other banks, in order to
meet current and future liquidity needs. As a result, the short-term  investment
position has increased $6,305,000 compared to the December 31, 2000 balance, and
on average, has been $6,358,000 during 2001.

Loan Portfolio and Asset Quality
At September  30, 2001,  gross loans totaled  $99,115,000,  an increase of 12.1%
from December 31, 2000. On average,  gross loans totaled  $92,818,000 during the
first nine months of 2001,  an increase  of  $12,265,000  or 15.2% from the same
period in 2000.  Most of the loan  growth  has come from the  Company's  primary
market area,  which  includes  Greenbrier  County,  West Virginia and contiguous
counties located in West Virginia and Virginia.  This market, which accounts for
approximately 75% of the total loan portfolio,  has experienced new ownership of
various competitors by both in-state and out-of-state institutions over the past
few  years.   The  Company  has  capitalized  on  the  operational  and  pricing
differences that have transpired, and as a result, has experienced growth due to
the  migration of  customers  from its  competitors.  Loan demand is expected to
remain steady over the next quarter due to key personnel additions in the outset
of the fourth quarter coupled with the continuing marketing and sales campaigns.
See  Note 3 of the  condensed  consolidated  financial  statements  for  further
information on the loan portfolio.

The  allowance  for loan losses was $748,000 at September  30, 2001  compared to
$619,000 at December 31, 2000. Expressed as a percentage of loans, the allowance
for loan losses was 0.75% and 0.70% at September 30, 2001 and December 31, 2000,
respectively.  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 nonperforming and past due loans
and current and  anticipated  economic  conditions in evaluating the adequacy of
the allowance for loan losses. 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, 2001 and 2000, and for the year ended December
31, 2000. A summary of the Company's past due loans and nonperforming  assets is
provided in the following table:

               SUMMARY OF PAST DUE LOANS AND NONPERFORMING ASSETS
                            (in thousands of dollars)

<TABLE>
<CAPTION>
<S>                                                                             <C>              <C>             <C>
                                                                          Sept. 30,         Dec. 31,       Sept. 30,
                                                                            2001              2000            2000
                                                                      ----------------  --------------- ---------------
Loans past due 90 or more days still accruing                         $             -   $            -  $            -
                                                                      ================  =============== ===============
Nonperforming assets:
   Nonaccrual loans                                                   $           239   $          123  $          390
   Other real estate owned                                                        796            1,013             852
                                                                      ----------------  --------------- ---------------
      Total nonperforming assets                                      $         1,035   $        1,136  $        1,242
                                                                                        =============== ===============
                                                                      ================
Nonperforming assets as a % of total assets                                     0.80%            0.99%           1.08%
                                                                      ================  =============== ===============
</TABLE>

Total  nonperforming  assets at  September  30,  2001  decreased  $101,000  from
December 31, 2000.  Other real estate owned ("OREO")  decreased  $200,000 due to
the sale of a personal  residence  that had been in  foreclosure  since December
2000. At September 30, 2001, OREO consists of a parcel of commercial real estate
that is leased under a three (3) year  agreement  expiring in February 2002. See
further  discussion of the Company's  nonaccrual  loans,  all of which have been
deemed "impaired",  at Note 4 of the Consolidated  Financial Statements included
in Item 1.

Deposits and Other Funding Sources
Total  deposits at September  30, 2001  increased  $16,245,000,  or 16.8%,  from
December  31,  2000.  The  following  table  compares  the year to date  average
balances by deposit  product for September 30, 2001 and 2000 and the increase in
average  deposits  by product as  compared to the  December  31,  2000  year-end
balances:

<PAGE>


<TABLE>
<CAPTION>
<S>                                                          <C>              <C>             <C>               <C>
                                                                                          % Increase        % Increase
                                                           Sept. 30,      Sept. 30,          From              From
                                                             2001            2000       Sept. 30, 2000    Dec. 31, 2000
                                                       --------------- ---------------  ----------------  ---------------
Demand deposits                                          $     27,476   $      25,811              6.5%            12.0%
Savings                                                        41,365          36,919             12.0%            12.2%
Certificates of deposits                                       38,136          27,202             40.2%             8.6%
                                                       --------------- ---------------
   Total average deposits                                $    106,977   $      89,932             19.0%            10.8%
                                                       =============== ===============
</TABLE>

As illustrated in the above table, the Company's certificates of deposits ("CD")
have increased  significantly  over the previous year and based upon the average
balance in 2001,  they have  increased  8.6% from the December 31, 2000 year-end
balance.  In  order  to  fund  its  loan  growth,  the  Company  began  offering
competitive  interest  rates on various CD  products in the latter part of 2000.
The efforts were  successful and the Company has been less  aggressive  with its
pricing strategy. The loan to deposit ratio has gone from 96.6% at September 30,
2000 (91.6% at December 31, 2000) to its current  position of 87.9%.  As the CDs
mature in the coming  months,  management  is  confident  that it can retain the
majority of the growth with its current pricing strategy;  however,  in light of
the current  interest rate declines and the  uncertainty of future interest rate
policy by the Federal  Reserve  Board,  the trend has been for customers to move
maturing certificates to a competitive savings product offered by the bank.

The Company continues to attract demand and savings deposit products, which when
managed,  provide an inexpensive  core-funding  source for its  interest-earning
assets.  Over the past three  quarters,  the Company has opened 1,424 new demand
and savings  accounts.  As with loans,  many  customers have migrated from local
competitors.

Short-term  borrowings consist of securities sold under agreements to repurchase
("repurchase agreements"),  Federal funds purchased and short-term advances from
the FHLB.  At  September  30, 2001,  short-term  borrowings  totaled  $3,698,000
compared to $5,909,000 at December 31, 2000 balance, a decrease of $2,211,000 or
37.4%. The current balance decreased due to the maturity of a short-term advance
from the  FHLB  ($3,000,000)  in  August  2001.  On  average,  the  balance  was
$6,539,000  for the first nine months of 2001.  During the year, the Company has
entered into various term  repurchase  agreements  under a single  relationship,
which has increased the average 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, which totaled $9,691,000 at September 30, 2001 versus
$2,053,000 at December 31, 2000. The Company's  liquidity is further enhanced by
the  availability of $10,801,000  (amortized  cost) in debt securities  maturing
within  one year of  September  30,  2001.  Also,  the  Company  has  classified
additional debt securities with an estimated fair value at September 30, 2001 of
$6,051,000  as  available  for  sale  in  response  to an  unforeseen  need  for
liquidity.  Additionally, the Company has approximately $41,717,000 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's
management.  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, 2001 was  $11,650,000  compared to
$10,986,000 at December 31, 2000, an increase of $664,000.  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  9.0% at
September 30, 2001 compared to December 31, 2000's level of 9.8%.  The Company's
"leverage"  position  has  decreased  due to the asset growth over the past nine
months.  Cash dividends  totaling  $379,000,  or $0.39 per share,  were declared
during the first nine months of 2001,  which is 12.1%  higher than the  dividend
level paid  during the same  period of 2000.  These  payout  levels  represented
approximately  43.5% and 42.0% of the  Company's  year-to-date  earnings for the
nine month periods ended September 30, 2001 and 2000, respectively.  The Company
is not aware of any trends or uncertainties, nor do any material commitments for
capital expenditures exist, which may materially impair its capital position.

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 restrictions on its dividends in 2001.

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, 2001,  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, 2001
<TABLE>
<CAPTION>
<S>                                       <C>         <C>

                                        Actual      Minimum
                                                  Requirement
                                      --------------------------
Tier 1 risk-based capital ratio         11.73%       4.00%
Total risk-based capital ratio          12.56%       8.00%
Leverage ratio                           8.28%       3.00%
</TABLE>

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 QUALITATTIVE
                          DISCLOSURES ABOUT MARKET RISK

The following table represents the results of the Company's interest sensitivity
simulation  analysis  as of  September  30,  2001 and  December  31,  2000.  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.
<TABLE>
<CAPTION>
<S>                                                                         <C>               <C>
                                                                         Annualized Hypothetical %
                                                                     Change in Net Interest Income
                                                                       Sept. 30,          Dec. 31,
               Interest rate scenario                                     2001              2000
                                                                    ----------------- -----------------
               Up 300 basis points                                       -12.6             -15.4
               Up 100 basis points                                       - 5.3             - 5.1
               Down 100 basis points                                       5.2               5.1
               Down 300 basis points                                      10.6              13.0
</TABLE>

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.


<PAGE>





                           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 20.
b) The Company  did not file any Form 8-K,  Current  Reports  during the quarter
   ended September 30, 2001.

























<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/ Charles A. Henthorn
                                   Charles A. Henthorn
                                   Secretary to the Board of Directors




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



Date: November 14, 2001




<PAGE>


                                   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.