UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 No. 2-25805


                            FAUQUIER BANKSHARES, INC.
             (Exact name of registrant as specified in its charter)



           VIRGINIA                                            54-1288193
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)


     10 COURTHOUSE SQUARE
       WARRENTON, VIRGINIA                                         20186
(Address of principal executive offices)                         (Zip Code)


                                 (540) 347-2700
              (Registrant's telephone number, including area code)


                                 NOT APPLICABLE
              (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 ____

         As of November 7, 2002, the latest practicable date for determination,
3,283,029 shares of common stock, par value $3.13 per share, of the registrant
were outstanding.


<PAGE>


                            FAUQUIER BANKSHARES, INC.

                                      INDEX

Part I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>

                                                                                                                        Page
                                                                                                                        ----
   <S>      <C>                                                                                                         <C>
   Item 1.  Financial Statements
            Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001                        2

            Consolidated Statements of Income (unaudited) for the Three Months Ended September 30, 2002 and 2001          3

            Consolidated Statements of Income (unaudited) for the Nine Months Ended September 30, 2002 and 2001           4

            Consolidated Statements of Changes in Shareholders' Equity
            (unaudited) for the Nine Months Ended September 30, 2002 and 2001                                             5

            Consolidated Statements of Cash Flows (unaudited) for the Nine
            Months Ended September 30, 2002 and 2001                                                                      6

            Notes to Consolidated Financial Statements                                                                  7-10

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

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                                   19

   Item 4.  Controls and Procedures                                                                                      20

Part II. OTHER INFORMATION

   Item 1.  Legal Proceedings                                                                                            20

   Item 6.  Exhibits and Reports on Form 8-K                                                                             20


SIGNATURES                                                                                                               22

CERTIFICATIONS                                                                                                           23

</TABLE>

<PAGE>

PART I.           FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS










                                       1

<PAGE>
                     FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                   SEPTEMBER 30, 2002          DECEMBER 31, 2001
                                                                                       (UNAUDITED)                  (AUDITED)
                                                                                  ---------------------       ---------------------
<S>                                                                                    <C>                        <C>
ASSETS
Cash and due from banks                                                                $ 17,857,882               $ 14,408,495
Interest-bearing deposits in other banks                                                    253,423                    352,536
Federal funds sold                                                                        8,714,000                 15,421,000
Securities, at fair value                                                                56,937,870                 36,907,864
Loans, net of allowance for loan losses of $3,004,837
  in 2002 and $2,856,743 in 2001                                                        213,816,523                207,452,738
Bank premises and equipment, net                                                          6,566,118                  6,335,708
Accrued interest receivable                                                               1,735,767                  1,590,282
Other assets                                                                              2,686,929                  2,733,384
                                                                                       ------------               ------------
              Total assets                                                             $308,568,512               $285,202,007
                                                                                       ============               ============

LIABILITIES
Deposits:
  Noninterest-bearing                                                                  $ 50,683,297               $ 50,659,242
  Interest-bearing                                                                      210,636,553                193,087,800
                                                                                       ------------               ------------
     Total deposits                                                                    $261,319,850               $243,747,042
Federal Home Loan Bank advances                                                          15,000,000                 15,000,000
Company-obligated mandatorily redeemable capital securities                               4,000,000                         --
Dividends payable                                                                           330,599                    318,356
Other liabilities                                                                         2,241,443                  1,979,210
Commitments and contingent liabilities                                                           --                         --
                                                                                       ------------               ------------
              Total liabilities                                                        $282,891,892               $261,044,608
                                                                                       ------------               ------------
SHAREHOLDERS' EQUITY
Common stock, par value, $3.13; authorized 8,000,000 shares;
  issued and outstanding, 2002, 3,297,748 shares; 2001, 1,675,559 shares                 10,321,951                  5,244,500
Retained earnings                                                                        14,779,444                 18,685,761
Accumulated other comprehensive income                                                      575,225                    227,138
                                                                                       ------------               ------------
              Total shareholders' equity                                               $ 25,676,620               $ 24,157,399
                                                                                       ------------               ------------
              Total liabilities and shareholders' equity                               $308,568,512               $285,202,007
                                                                                       ============               ============
</TABLE>



See Accompanying Notes to Consolidated Financial Statements.


                                       2
<PAGE>

                      FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                                     (UNAUDITED)
                FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


<TABLE>
<CAPTION>

                                                                               2002                      2001
                                                                            -----------               -----------
<S>                                                                        <C>                       <C>
INTEREST INCOME
     Interest and fees on loans                                             $ 4,205,327               $ 4,449,604
     Interest and dividends on securities available for sale:
        Taxable interest income                                                 540,511                   292,027
        Interest income exempt from federal income taxes                         24,566                    37,539
        Dividends                                                                62,445                    29,567
     Interest on federal funds sold                                              55,278                   209,413
     Interest on deposits in other banks                                            248                       657
                                                                            -----------               -----------
        Total interest income                                                 4,888,375                 5,018,807
                                                                            -----------               -----------
INTEREST EXPENSE
     Interest on deposits                                                     1,030,030                 1,593,067
     Interest on Federal Home Loan Bank advances                                177,739                   293,695
     Distribution on capital securities of subsidiary trust                      55,882                        --
                                                                            -----------               -----------
        Total capital interest expense                                        1,263,651                 1,886,762
                                                                            -----------               -----------
        Net interest income                                                   3,624,724                 3,132,045

Provision for loan losses                                                        65,000                    75,000
                                                                            -----------               -----------
        Net interest income after
          provision for loan losses                                           3,559,724                 3,057,045
                                                                            -----------               -----------
OTHER INCOME
     Wealth management income                                                   181,995                   197,356
     Service charges on deposit accounts                                        522,348                   436,830
     Other service charges, commissions and fees                                250,698                   221,613
     Gains on securities available for sale                                      33,914                        --
     Other operating income                                                       9,863                    17,603
                                                                            -----------               -----------
        Total other income                                                      998,818                   873,402
                                                                            -----------               -----------
OTHER EXPENSES
     Salaries and employees' benefits                                         1,444,599                 1,212,041
     Net occupancy expense of premises                                          191,871                   156,057
     Furniture and equipment                                                    252,709                   212,317
     Marketing and business development                                          81,123                    82,480
     Bank card                                                                  122,333                   114,346
     Professional and consulting fees                                           200,910                   146,661
     Data processing                                                            213,076                   205,193
     Non-loan chargeoffs                                                         48,725                   (32,392)
     Postage                                                                     32,330                    41,123
     Supplies                                                                    62,452                    66,854
     Taxes, other than income                                                    70,358                    60,247
     Telephone                                                                   69,881                    57,877
     Other operating expenses                                                   263,524                   206,894
                                                                            -----------               -----------
        Total other expenses                                                  3,053,891                 2,529,698
                                                                            -----------               -----------
        Income before income taxes                                            1,504,651                 1,400,749

Income tax expense                                                              473,485                   443,498
                                                                            -----------               -----------
        Net income                                                          $ 1,031,166               $   957,251
                                                                            ===========               ===========
*EARNINGS PER SHARE, basic                                                  $      0.31               $      0.28
                                                                            ===========               ===========
*EARNINGS PER SHARE, assuming dilution                                      $      0.30               $      0.27
                                                                            ===========               ===========
*DIVIDENDS PER SHARE                                                        $      0.10               $     0.095
                                                                            ===========               ===========
</TABLE>


*Amounts have been restated to reflect a 100% stock dividend during May 2002.

See Accompanying Notes to Consolidated Financial Statements.


                                       3
<PAGE>


                   FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001



<TABLE>
<CAPTION>
                                                                                2002                2001
                                                                             -----------         -----------
<S>                                                                          <C>                 <C>
INTEREST INCOME
      Interest and fees on loans                                             $12,776,346         $13,228,893
      Interest and dividends on securities available for sale:
           Taxable interest income                                             1,398,785             804,366
           Interest income exempt from federal income taxes                       87,031             118,025
           Dividends                                                             125,512             106,642
      Interest on federal funds sold                                             156,384             562,312
      Interest on deposits in other banks                                          1,834               2,444
                                                                             -----------         -----------
           Total interest income                                              14,545,892          14,822,682
                                                                             -----------         -----------

INTEREST EXPENSE
      Interest on deposits                                                     3,311,937           4,899,211
      Interest on Federal Home Loan Bank advances                                527,421             700,086
      Distribution on capital securities of subsidiary trust                     115,455                  --
                                                                             -----------         -----------
           Total capital interest expense                                      3,954,813           5,599,297
                                                                             -----------         -----------
           Net interest income                                                10,591,079           9,223,385

Provision for loan losses                                                        252,500             275,000
                                                                             -----------         -----------
           Net interest income after
             provision for loan losses                                        10,338,579           8,948,385
                                                                             -----------         -----------
OTHER INCOME
      Wealth management income                                                   513,597             490,667
      Service charges on deposit accounts                                      1,477,399           1,211,283
      Other service charges, commissions and fees                                727,052             604,551
      Gains on securities available for sale                                      33,914                  --
      Non-loan chargeoff recovery                                                     --             542,320
      Other operating income                                                      52,422              41,666
                                                                             -----------         -----------
           Total other income                                                  2,804,384           2,890,487
                                                                             -----------         -----------
OTHER EXPENSES
      Salaries and employees' benefits                                         4,215,204           3,538,760
      Net occupancy expense of premises                                          537,943             439,532
      Furniture and equipment                                                    742,780             623,223
      Advertising and business development                                       334,581             234,459
      Bank card                                                                  348,031             315,091
      Consulting and professional fees                                           530,757             559,916
      Data processing                                                            609,780             540,328
      Non-loan chargeoffs                                                        113,774              86,884
      Postage                                                                    125,013             117,179
      Supplies                                                                   168,288             171,970
      Taxes, other than income                                                   177,522             166,551
      Telephone                                                                  193,785             150,494
      Other operating expenses                                                   814,131             671,769
                                                                             -----------         -----------
           Total other expenses                                                8,911,589           7,616,156
                                                                             -----------         -----------
           Income before income taxes                                          4,231,374           4,222,716
Income tax expense                                                             1,316,422           1,327,584
                                                                             -----------         -----------
           Net income                                                        $ 2,914,952         $ 2,895,132
                                                                             ===========         ===========
*EARNINGS PER SHARE, basic                                                   $      0.88         $      0.85
                                                                             ===========         ===========
*EARNINGS PER SHARE, assuming dilution                                       $      0.84         $      0.83
                                                                             ===========         ===========
*DIVIDENDS PER SHARE                                                         $      0.30         $     0.265
                                                                             ===========         ===========
</TABLE>



*Amounts have been restated to reflect a 100% stock dividend during May 2002.

See Accompanying Notes to Consolidated Financial Statements.



                                       4
<PAGE>

             FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                            (UNAUDITED)
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

<TABLE>
<CAPTION>

                                                                                                           ACCUMULATED
                                                                                                              OTHER
                                                               COMMON        CAPITAL          RETAINED     COMPREHENSIVE
                                                               STOCK         SURPLUS          EARNINGS        INCOME
                                                           ----------------------------------------------------------------
<S>                                                        <C>             <C>             <C>             <C>
BALANCE, DECEMBER 31, 2000                                 $  5,359,158    $         --    $ 17,145,324    $    (85,543)
Comprehensive income:
  Net income                                                         --              --       2,895,132              --
  Other comprehensive income (loss) net of tax:
    Unrealized holding gains on securities available
      for sale, net of deferred income taxes of $200,275             --              --              --         388,770

  Total comprehensive income                                         --              --              --              --

Cash dividends                                                       --              --        (903,667)             --
Acquisition of 16,718 shares of common stock                    (52,327)             --        (303,189)             --
Exercise of stock options                                         7,280              --          21,028              --
                                                           ------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2001                                $  5,314,111    $         --    $ 18,854,628    $    303,227
                                                           ============================================================

BALANCE, DECEMBER 31, 2001                                 $  5,244,500    $         --    $ 18,685,761    $    227,138
Comprehensive income:
  Net income                                                         --              --       2,914,952              --
  Other comprehensive income (loss) net of tax:
    Unrealized holding gains on securities available
      for sale, net of deferred income taxes of $179,318             --              --              --         348,087

  Total comprehensive income                                         --              --              --              --

100% Stock Dividend                                           5,185,020                      (5,185,020)
Cash dividends                                                       --              --        (993,417)             --
Acquisition of 38,499 shares of common stock                   (120,503)             --        (697,719)             --
Issuance of common stock                                          5,547              --          37,424              --
Exercise of stock options                                         7,387              --          17,463              --
                                                           ------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2002                                $ 10,321,951    $         --    $ 14,779,444    $    575,225
                                                           ============================================================


<CAPTION>


                                                            COMPREHENSIVE
                                                               INCOME          TOTAL
                                                           ------------------------------
<S>                                                         <C>             <C>
BALANCE, DECEMBER 31, 2000                                                  $ 22,418,939
Comprehensive income:
  Net income                                                $  2,895,132       2,895,132
  Other comprehensive income (loss) net of tax:
    Unrealized holding gains on securities available
      for sale, net of deferred income taxes of $200,275         388,770         388,770
                                                            ------------
  Total comprehensive income                                $  3,283,902              --
                                                            ============
Cash dividends                                                                  (903,667)
Acquisition of 16,718 shares of common stock                                    (355,516)
Exercise of stock options                                                         28,308
                                                                            ------------
BALANCE, SEPTEMBER 30, 2001                                                 $ 24,471,966
                                                                            ============

BALANCE, DECEMBER 31, 2001                                                  $ 24,157,399
Comprehensive income:
  Net income                                                $  2,914,952       2,914,952
  Other comprehensive income (loss) net of tax:
    Unrealized holding gains on securities available
      for sale, net of deferred income taxes of $179,318         575,225         348,087
                                                            ------------
  Total comprehensive income                                $  3,490,177              --
                                                            ============
100% Stock Dividend
Cash dividends                                                                 (993,417)
Acquisition of 38,499 shares of common stock                                   (818,222)
Issuance of common stock                                                         42,971
Exercise of stock options                                                        24,850
                                                                           ------------
BALANCE, SEPTEMBER 30, 2002                                                $ 25,676,620
                                                                           ============

</TABLE>



See Accompanying Notes to Consolidated Financial Statements.



                                       5
<PAGE>

                   FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

<TABLE>
<CAPTION>

                                                                         -----------      ------------
                                                                            2002              2001
                                                                        ------------      ------------
<S>                                                                     <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net income                                                       $  2,914,952      $  2,895,132
       Adjustments to reconcile net income to net
         cash provided by operating activities:
            Depreciation                                                     696,395           548,865
            Provision for loan losses                                        252,500           275,000
            Net premium amortization on investment securities                262,630            37,512
            Gain on sale of fixed assets                                      (7,006)               --
            Gain on sale of securities available for sale                    (33,914)               --
            Changes in assets and liabilities:
                (Increase) in accrued interest receivable                   (145,485)         (180,447)
                (Increase) in other assets                                  (132,863)         (124,858)
                Increase in other liabilities                                262,233           144,832
                                                                        ------------      ------------
                   Net cash provided by operating activities               4,069,442         3,596,036
                                                                        ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Proceeds from maturities, calls and principal
            payments of securities available for sale                     11,876,633         8,491,643
       Purchase of securities available for sale                         (32,641,600)      (22,389,942)
       Proceeds from sale of securities available for sale                 1,033,650                --
       Proceeds from sale of premises and equipment                            7,006                --
       Purchase of premises and equipment                                   (926,805)       (1,369,177)
       Net (increase) in loans                                            (6,616,285)      (12,552,550)
                                                                        ------------      ------------
                   Net cash (used in) investing activities               (27,267,401)      (27,820,026)
                                                                        ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES
       Net increase in demand deposits, NOW accounts
            and savings accounts                                          15,090,518        20,820,457
       Net increase in certificates of deposit                             2,482,290         4,665,756
       Proceeds from issuance of capital securities                        4,000,000                --
       Proceeds from Federal Home Loan Bank advances                              --        10,000,000
       Cash dividends paid                                                  (981,174)         (872,157)
       Issuance of common stock                                               67,821            28,308
       Acquisition of common stock                                          (818,222)         (355,516)
                                                                        ------------      ------------
                   Net cash provided by financing activities              19,841,233        34,286,848
                                                                        ------------      ------------
                   Increase (decrease) in cash and cash equivalents       (3,356,726)       10,062,858

CASH AND CASH EQUIVALENTS
       Beginning                                                          30,182,031        25,578,884
                                                                        ------------      ------------
       Ending                                                           $ 26,825,305      $ 35,641,742
                                                                        ============      ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
       Cash payments for:
            Interest                                                    $  4,029,932      $  5,571,748
                                                                        ============      ============
            Income taxes                                                $  1,165,000      $  1,378,500
                                                                        ============      ============
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES
       Unrealized gain on securities available for sale, net            $    527,405      $    589,046
                                                                        ============      ============
</TABLE>

See Accompanying Notes to Consolidated Financial Statements.


                                       6


<PAGE>
FAUQUIER BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       GENERAL

         The consolidated statements include the accounts of Fauquier
         Bankshares, Inc. ("Bankshares") and its subsidiary, The Fauquier Bank.
         All significant intercompany balances and transactions have been
         eliminated. In the opinion of management, the accompanying unaudited
         consolidated financial statements contain all adjustments (consisting
         of only normal recurring accruals) necessary to present fairly the
         financial positions as of September 30, 2002 and December 31, 2001, and
         the results of operations and cash flows for the nine months ended
         September 30, 2002 and 2001.

         The results of operations for the three and nine months ended September
         30, 2002 and 2001 are not necessarily indicative of the results
         expected for the full year.

2.       SECURITIES

         The amortized cost of securities available for sale, with unrealized
         gains and losses follows:


<TABLE>
<CAPTION>
                                                                      GROSS           GROSS
                                                  AMORTIZED        UNREALIZED       UNREALIZED        FAIR
                                                    COST             GAINS           (LOSSES)         VALUE
                                                 ------------     ------------      ----------     ------------
                                                                      September 30, 2002
                                                 --------------------------------------------------------------
         <S>                                     <C>              <C>               <C>            <C>
         Obligations of U.S.
           Government corporations
           and agencies                          $ 43,077,220     $    666,050      $         --   $ 43,743,270
         Obligations of states and political
           subdivisions                             2,149,829           91,732                --      2,241,561
         Corporate Bonds                            4,061,200          122,763                --      4,183,963
         Mutual Funds                               5,018,568            1,008                --      5,019,576
         Restricted investments:
           Federal Home Loan
             Bank stock                             1,150,000               --                --      1,150,000
         Federal Reserve Bank
           stock                                       72,000               --                --         72,000
         Community Bankers'
           Bank stock                                  50,000               --                --         50,000
         FHLMC Preferred
           Bank stock                                 487,500               --           (10,000)       477,500
                                                 ------------     ------------      ------------   ------------
                                                 $ 56,066,317     $    881,553      $    (10,000)  $ 56,937,870
                                                 ============     ============      ============   ============
</TABLE>


                                       7
<PAGE>


<TABLE>
<CAPTION>
                                                                     GROSS            GROSS
                                                  AMORTIZED        UNREALIZED       UNREALIZED        FAIR
                                                    COST             GAINS           (LOSSES)         VALUE
                                                 ------------     ------------      ----------     ------------
                                                                      December 31, 2001
                                                 --------------------------------------------------------------
         <S>                                     <C>              <C>               <C>            <C>

         Obligations of U.S.
           Government corporations
           and agencies                          $  26,680,369    $    202,404      $    (38,948)  $26,843,825
         Obligations of states and political
           subdivisions                              3,043,644          59,399                --     3,103,043
         Corporate Bonds                             5,080,203         148,793                --     5,228,996
         Restricted investments:
           Federal Home Loan
             Bank stock                              1,150,000              --                --       1,150,000
         Federal Reserve Bank
           stock                                        72,000              --                --          72,000
         Community Bankers'
           Bank stock                                   50,000                                          50,000
         FHLMC Preferred
           Bank stock                                  487,500              --           (27,500)      460,000
                                                 -------------    ------------       ------------  -----------
                                                 $  36,563,716    $    410,596       $   (66,448)  $36,907,864
                                                 =============    ============       ============  ===========
</TABLE>


3.       LOANS

         A summary of the balances of loans follows:
<TABLE>
<CAPTION>
                                                                                  SEPTEMBER 30,      DECEMBER 31,
                                                                                      2002               2001
                                                                                  -------------      ------------
                                                                                            (Thousands)
         <S>                                                                        <C>                <C>
         Real estate loans:
           Construction and land development                                        $ 11,732           $ 16,851
           Secured by farmland                                                         2,266              2,220
           Secured by 1-4 family residential                                          75,906             72,692
           Other real estate loans                                                    62,366             62,845
         Commercial and industrial loans (except those secured by real estate)        18,060             15,154
         Loans to individuals for personal expenditures                               35,930             34,640
         All other loans                                                              10,628              5,962
                                                                                    --------           --------
                      Total loans                                                   $216,888           $210,364
         Less:  Unearned income                                                           67                 54
                   Allowance for loan losses                                           3,005              2,857
                                                                                    --------           --------
                      Net loans                                                     $213,817           $207,453
                                                                                    ========           ========
</TABLE>


                                       8
<PAGE>

         Analysis of the allowance for loan losses follows:
<TABLE>
<CAPTION>
                                                       NINE MONTHS       NINE MONTHS
                                                         ENDING            ENDING
                                                      SEPTEMBER 30,     SEPTEMBER 30,      DECEMBER 31,
                                                           2002              2001              2001
                                                      -------------      ------------      ------------
                                                                         (Thousands)
         <S>                                             <C>               <C>               <C>
         Balance at beginning of period                  $ 2,857           $ 2,554           $ 2,554
         Provision charged to operating expense              253               275               350
         Recoveries added to the allowance                    29               215               230
         Loan losses charged to the allowance               (134)             (173)             (277)
                                                         -------           -------           -------
         Balance at end of period                        $ 3,005           $ 2,871           $ 2,857
                                                         =======           =======           =======
</TABLE>

         Nonperforming assets consist of the following:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,    DECEMBER 31,
                                                          2002            2001
                                                      -------------    ------------
                                                              (Thousands)
         <S>                                             <C>             <C>
         Nonaccrual loans                                $1,095          $  913
         Restructured loans                                  --              --
                                                         ------          ------
                    Total non-performing loans            1,095             913
         Foreclosed real estate                              --              --
                                                         ------          ------
                    Total non-performing assets          $1,095          $  913
                                                         ======          ======
</TABLE>

         Total loans past due 90 days or more and still accruing were $330,000
         on September 30, 2002 and $541,000 on December 31, 2001.

4.       COMPANY-OBLIGATED MANDITORILY REDEEMABLE CAPITAL SECURITIES OF
         SUBSIDIARY TRUST

         On March 26, 2002, Bankshares' wholly-owned Connecticut statutory
         business trust privately issued $4 million face amount of the trust's
         Floating Rate Capital Securities ("Capital Securities") in a pooled
         capital securities offering. Simultaneously, the trust used the
         proceeds of that sale to purchase $4 million principal amount of
         Bankshares's Floating Rate Junior Subordinated Deferrable Interest
         Debentures due 2032 ("Subordinated Debentures"). Both the Capital
         Securities and the Subordinated Debentures are callable at any time
         after five years from the issue date. The Subordinated Debentures are
         an unsecured obligation of Bankshares and are junior in right of
         payment to all present and future senior indebtedness of Bankshares.
         The Capital Securities are guaranteed by Bankshares on a subordinated
         basis.

         The Capital Securities are presented in the consolidated balance sheets
         of Bankshares under the caption "Company-Obligated Mandatorily
         Redeemable Capital Securities." Bankshares records distributions
         payable on the Capital Securities as an Interest Expense in its
         consolidated statements of income. The cost of issuance of the Capital
         Securities was approximately $128,000. This cost is being amortized
         over a five year period from the issue date.


                                       9
<PAGE>


5.       EARNINGS PER SHARE

         The following table shows the weighted average number of shares used in
         computing earnings per share and the effect on weighted average number
         of shares of diluted potential common stock. Weighted average number of
         shares for all periods reported have been restated to give effect to
         the 100% stock dividend in May 2002.
<TABLE>
<CAPTION>
                                                              THREE MONTHS              NINE MONTHS               NINE MONTHS
                                                                 ENDING                   ENDING                    ENDING
                                                           SEPTEMBER 30, 2002        SEPTEMBER 30, 2002        SEPTEMBER 30, 2001
                                                                      PER SHARE                 PER SHARE                 PER SHARE
                                                          SHARES        AMOUNT       SHARES       AMOUNT      SHARES        AMOUNT
                                                         ---------    ---------    ---------    ---------    ---------    ---------
         <S>                                             <C>          <C>          <C>          <C>          <C>          <C>
         Basic earnings per share                        3,305,145    $    0.31    3,319,043    $    0.88    3,418,094    $    0.85
                                                                      =========                 =========                 =========

         Effect of dilutive securities, stock options      151,169                   145,643                    52,898
                                                         ---------                 ---------                 ---------

         Diluted earnings per share                      3,456,314    $    0.30    3,464,686    $    0.84    3,470,992    $    0.83
                                                         =========    =========    =========    =========    =========    =========
</TABLE>


                                       10
<PAGE>


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

         CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         The following discussion is qualified in its entirety by the more
         detailed information and the financial statements and accompanying
         notes appearing elsewhere in this Form 10-Q. In addition to the
         historical information contained herein, this report on Form 10-Q
         contains forward-looking statements within the meaning of the Private
         Securities Litigation Reform Act of 1995. Forward-looking statements,
         which are based on certain assumptions and describe future plans,
         strategies, and expectations of management, are generally identifiable
         by use of the words "believe," "expect," "intend," "anticipate,"
         "estimate," "project," "may," "will" or similar expressions. Although
         we believe our plans, intentions and expectations reflected in these
         forward-looking statements are reasonable, we can give no assurance
         that these plans, intentions, or expectations will be achieved. Our
         ability to predict results or the actual effect of future plans or
         strategies is inherently uncertain, and actual results, performance or
         achievements could differ materially from those contemplated. Factors
         that could have a material adverse effect on our operations and future
         prospects include, but are not limited to, changes in: interest rates,
         general economic conditions, legislative/regulatory climate, monetary
         and fiscal policies of the U.S. Government, including policies of the
         U.S. Treasury and the Board of Governors of the Federal Reserve System,
         the quality or composition of the loan or investment portfolios, demand
         for loan products, deposit flows, competition, demand for financial
         services in our market area, and accounting principles, policies and
         guidelines. These risks and uncertainties should be considered in
         evaluating forward-looking statements contained herein, and you should
         not place undue reliance on such statements, which reflect our position
         as of the date of this report.

         GENERAL

         Fauquier Bankshares, Inc. ("Bankshares") was incorporated under the
         laws of the Commonwealth of Virginia on January 13, 1984. Bankshares is
         a registered bank holding company and owns all of the voting shares of
         The Fauquier Bank ("TFB"). Bankshares engages in its business through
         TFB, a Virginia state-chartered bank that commenced operations in 1902.
         Bankshares has no significant operations other than owning the stock of
         TFB. Bankshares had issued and outstanding 3,297,748 shares of common
         stock, par value $3.13 per share, held by approximately 390
         shareholders of record on September 30, 2002.

         TFB has seven full service branch offices located in the Virginia
         communities of Warrenton, Catlett, The Plains, Manassas and New
         Baltimore. The executive offices of Bankshares and the main branch
         office of TFB are located at 10 Courthouse Square, Warrenton, Virginia
         20186. TFB has entered into a contract to buy a property in Bealeton,
         Virginia, and subject to satisfaction of certain conditions, including
         receipt of required governmental and regulatory approvals, plans to
         open its eighth full service branch office in Bealeton during 2003.

         TFB provides a range of consumer and commercial banking services to
         individuals, businesses, and industries. The deposits of TFB are
         insured up to applicable limits by the Bank Insurance Fund of the
         Federal Deposit Insurance Corporation (the "FDIC"). The basic services
         offered by TFB include: demand interest bearing and non-interest
         bearing accounts, money market deposit accounts, NOW accounts, time
         deposits, safe deposit services, credit cards, cash management, direct
         deposits, notary services, money orders, night depository, traveler's
         checks, cashier's checks, domestic collections, savings bonds, bank
         drafts, automated teller services, drive-in tellers, internet banking,
         and banking by mail and telephone. In addition, TFB makes secured and
         unsecured commercial and real estate loans, issues stand-by letters of
         credit and grants available credit for installment, unsecured and
         secured personal loans, residential mortgages and home equity loans, as
         well as automobile and other types of consumer financing. TFB provides
         automated teller machine (ATM) cards, as a part of the Star and Plus
         ATM networks, thereby permitting customers to utilize the convenience
         of larger ATM networks. TFB operates a Wealth Management Services
         division that began with the granting of trust powers to TFB in 1919.
         The Wealth Management Services division provides personalized services
         that include investment management, trust, estate settlement,
         retirement, insurance, and brokerage services.


                                       11
<PAGE>


         The revenues of TFB are primarily derived from interest on, and fees
         received in connection with, real estate and other loans, and from
         interest and dividends from investment and mortgage-backed securities,
         and short-term investments. The principal sources of funds for TFB's
         lending activities are its deposits, repayment of loans, and the sale
         and maturity of investment securities, and advance borrowings from the
         Federal Home Loan Bank ("FHLB") of Atlanta. The principal expenses of
         TFB are the interest paid on deposits and borrowings, and operating and
         general administrative expenses.

         TFB's general market area principally includes Fauquier and western
         Prince William counties, and is located approximately sixty (60) miles
         southwest of Washington, D.C.

         CRITICAL ACCOUNTING POLICIES

         GENERAL. Bankshares' financial statements are prepared in accordance
         with accounting principles generally accepted in the United States
         (GAAP). The financial information contained within our statements is,
         to a significant extent, based on measures of the financial effects of
         transactions and events that have already occurred. A variety of
         factors could affect the ultimate value that is obtained either when
         earning income, recognizing an expense, recovering an asset or
         relieving a liability. We use historical loss factors as one factor in
         determining the inherent loss that may be present in our loan
         portfolio. Actual losses could differ significantly from the historical
         factors that we use in our estimates. In addition, GAAP itself may
         change from one previously acceptable method to another method.
         Although the economics of our transactions would be the same, the
         timing of events that would impact our transactions could change.

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is an estimate
         of the losses that may be sustained in our loan portfolio. The
         allowance is based on two basic principles of accounting: (i) Statement
         of Financial Accounting Standards (SFAS) No. 5 "Accounting for
         Contingencies," which requires that losses be accrued when they are
         probable of occurring and estimable and (ii) SFAS No. 114, "Accounting
         by Creditors for Impairment of a Loan," which requires that losses be
         accrued based on the differences between the value of collateral,
         present value of future cash flows or values that are observable in the
         secondary market and the loan balance.

         Our allowance for loan losses has three basic components: the specific
         allowance, the formula allowance and the unallocated allowance. Each of
         these components is determined based upon estimates that can and do
         change when the actual events occur.

         The specific allowance is used to individually allocate an allowance
         for larger balance, non-homogeneous loans. The specific allowance uses
         various techniques to arrive at an estimate of loss. First, analysis of
         the borrower's overall financial condition, resources and payment
         record; the prospects for support from financial guarantors; and the
         fair market value of collateral are used to estimate the probability
         and severity of inherent losses. Additionally, the migration of
         historical default rates and loss severities, internal risk ratings,
         industry and market conditions and trends, and other environmental
         factors are considered. The use of these values is inherently
         subjective and our actual losses could be greater or less than the
         estimates.

         The formula allowance is used for estimating the loss on pools of
         smaller-balance, homogeneous loans; including one-to-four family
         mortgage loans, installment loans, other consumer loans, as well as
         outstanding loan commitments. Also, a formula allowance is used for the
         remaining pool of larger balance, non-homogeneous loans which were not
         allocated a specific allowance upon their review. The formula allowance
         begins with estimates of probable losses inherent in the homogeneous
         portfolio based upon various statistical analyses. These include
         analysis of historical and peer group delinquency and credit loss
         experience, together with analyses that reflect current trends and
         conditions. We also consider trends and changes in the volume and term
         of loans, changes in the credit process and/or lending policies and
         procedures, and an evaluation of overall credit quality. The formula
         allowance uses a historical loss view as an indicator of future losses
         and, as a result, could differ from the loss incurred in the future.
         However, since this history is regularly updated with the most recent
         loss information, the errors that might otherwise occur are mitigated.


                                       12
<PAGE>


         The unallocated allowance captures losses that are attributable to
         various economic events, industry or geographic sectors whose impact on
         the portfolio have occurred but have yet to be recognized in either the
         formula or specific allowances. In addition, an unallocated reserve is
         maintained to recognize the imprecision in estimating and measuring
         inherent losses on individual loans or pools of loans.

         COMPARISION OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER
         30, 2002 AND SEPTEMBER 30, 2001

         NET INCOME. Net income for the three months ended September 30, 2002
         was $1.03 million or $0.30 per diluted share compared with $957,000 or
         $0.27 per diluted share for the three months ended September 30, 2001.
         The 7.7% increase in net income for the three-month period was
         primarily due to the increase in net interest income.

         NET INTEREST INCOME. Net interest income increased $493,000 or 15.7% to
         $3.6 million for the three months ended September 30, 2002 compared
         with $3.1 million for the three months ended September 30, 2001. The
         net interest margin, computed on a tax equivalent basis, for the
         September 2002 quarter was 5.03% compared with 4.74% for the same
         quarter one year earlier. The increase in the net interest margin can
         be primarily attributed to the declining interest rate environment over
         the last twelve months, and the corresponding reduction in the average
         cost on total deposits to 1.54% for the quarter ended September 30,
         2002, from 2.72% for the quarter ended September 30, 2001.

         Average interest-earning assets grew 9.2% to $286.5 million for the
         third quarter of 2002 compared with $262.4 million for the third
         quarter of 2001. Total interest income declined $130,000 or 2.6% to
         $4.89 million for the three months ended September 30, 2002 compared to
         $5.02 million for the three months ended September 30, 2001, primarily
         as a result of the declining interest rate environment and its effect
         on the yield on interest-earning assets. The tax equivalent yield on
         interest-earning assets declined to 6.78% for the quarter ended
         September 30, 2002, from 7.58% for the quarter ended September 30,
         2001. Interest and fees on loans declined $244,000, or 5.5% to $4.21
         million for the September 2002 quarter. Average loans outstanding
         totaled $214.3 million and earned 7.31% on a tax-equivalent basis for
         the quarter ended September 30, 2002, compared with $211.2 million and
         7.81%, respectively, for the quarter ended September 30, 2001.
         Investment securities income increased $268,000 or 74.7%, while
         interest on federal funds sold decreased $154,000 or 73.6%. Investment
         securities and federal funds sold averaged $58.7 million and $13.5
         million, respectively, for the third quarter of 2002 compared with
         $26.5 million and $24.7 million for the same quarter one year earlier.
         The yield on investment securities and federal funds was 3.84% on a
         tax-equivalent basis for the third quarter of 2002, compared with 4.56%
         for the third quarter of 2001.

         Total interest expense decreased $623,000 or 33.0% to $1.26 million for
         the three months ended September 30, 2002 from $1.89 million for the
         three months ended September 30, 2001. Average interest-bearing
         liabilities grew 10.4% to $233.1 million for the third quarter of 2002
         compared with $211.1 million for the third quarter of 2001, while the
         average cost on interest-bearing liabilities decreased to 2.15% from
         3.54% for the same respective time periods. The decrease in total
         interest expense and the average cost of interest-bearing liabilities
         was due to the declining interest rate environment. Average
         certificates of deposit balances for the third quarter of 2002 were
         $71.1 million at an average cost of 3.66%, compared with $77.4 million
         at an average cost of 5.53% for the same quarter one year earlier.
         Average FHLB of Atlanta advances were $15.0 million at an average cost
         of 4.64% for the third quarter of 2002, compared with $23.0 million at
         an average cost of 5.00% during the third quarter of 2001.

         Future trends regarding net interest income are dependent on the
         absolute level of market interest rates, the shape of the yield curve,
         the amount of lost income from non-performing assets, the amount of
         prepaying loans and mortgage-backed securities, the reinvestment
         strategy for loan and mortgage-backed security prepayments, the overall
         volume of interest-earning assets and interest-bearing liabilities, and
         other factors. One trend that resulted from the decrease in market
         interest rates that began in early 2001 and has continued through 2002
         is the increase in the magnitude of loan and mortgage-backed security
         prepayments and the reduced yield on the reinvestment of the prepayment
         proceeds. The continuation of this trend may cause downward pressure on
         the net interest margin in future periods. The monitoring and
         management of net interest income is the responsibility of TFB's Asset


                                       13
<PAGE>


         and Liability Management Committee ("ALCO"). ALCO meets no less than
         monthly, and is comprised of TFB's senior management.

         PROVISION FOR LOAN LOSSES. The provision for loan losses was $65,000
         and $75,000 for the three months ended September 30, 2002 and 2001,
         respectively. The respective amounts of the provision for loan losses
         were determined based upon management's continual evaluation of the
         adequacy of the allowance for loan losses, which encompasses the
         overall risk characteristics of the loan portfolio, trends in TFB's
         delinquent and non-performing loans, estimated values of collateral,
         and the impact of economic conditions on borrowers. There can be no
         assurances, however, that future losses will not exceed estimated
         amounts, or that additional provisions for loan losses will not be
         required in future periods.

         TOTAL OTHER INCOME. Total other income increased by $125,000 or 14.4%
         from $873,000 for the three months ended September 30, 2001 to $999,000
         for the three months ended September 30, 2002, primarily due to the
         increase in service charge income on deposit accounts. Service charges
         on deposit accounts increased $86,000, or 19.6% to $522,000 for the
         quarter ended September 30, 2002 compared with $437,000 for the same
         quarter one year earlier. Major factors in the increase in service
         charges on deposit accounts were management's focus on meeting the
         needs of its customers with new value-added, fee-based products such as
         "Courtesy Pay," and the impact of TFB's deposit base increasing 10.0%
         from $237.6 million at September 30, 2001 to $261.3 million at
         September 30, 2002.

         TOTAL OTHER EXPENSES. Total other expenses increased 20.7% or $524,000
         to $3.05 million for the three months ended September 30, 2002 compared
         with $2.53 million for the three months ended September 30, 2001.
         Approximately $233,000 of the increase was due to the increase in
         salary and benefit expenses. The primary factors causing the increase
         in salary and benefit expense were increases in the defined-benefit
         pension plan and medical insurance expense, and the customary annual
         salary increases. Occupancy and furniture and equipment expenses also
         increased over the same time period by $36,000 and $40,000,
         respectively, due to the addition of the Old Town-Manassas branch
         office. Marketing and business development expenses increased by
         $44,000, primarily due to the marketing of TFB's new check imaging
         program. Beginning in September 2002, TFB began processing checking
         accounts using state-of-the-art check imaging. By providing customers a
         high quality photo journal of checks issued, the ease and efficiency of
         their financial recordkeeping was greatly enhanced. Data processing and
         telephone expenses increased $54,000 and $11,000, respectively,
         primarily due to the improvement in TFB's customer relationship
         management and business continuity capabilities, as well as the
         additional expenses related to the Old Town-Manassas branch in August
         2001. Other operating expenses increased $57,000 primarily in employee
         training/education expenses, and miscellaneous lending-related
         expenses. Non-loan chargeoffs increased $81,000 to $49,000 for the
         third quarter of 2002 from a net recovery of $32,000 for the third
         quarter of 2001. During 2001, reserves of approximately $69,000, which
         were previously established for a potential loss on the
         misappropriation of ATM cash by a subcontracted ATM servicer, were
         reversed as a result of various subsequent events, including the "make
         whole" guarantee from the vendor who had subcontracted with the ATM
         servicer.

         COMPARISION OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER
         30, 2002 AND SEPTEMBER 30, 2001

         NET INCOME. Net income for the nine months ended September 30, 2002 was
         $2.91 million or $0.84 per diluted share compared with $2.90 million or
         $0.84 per diluted share for the nine months ended September 30, 2001.
         The absence of growth in net income when comparing the nine-month
         periods was entirely due to a $358,000 non-loan chargeoff recovery, net
         of tax, during the first quarter of 2001. Excluding this one-time
         recovery and associated income tax, net income from operations
         increased 14.9% from $2.54 million for the first nine months of 2001 to
         $2.91 million.


                                       14
<PAGE>


         NET INTEREST INCOME. Net interest income increased $1.37 million or
         14.8% to $10.59 million for the nine months ended September 30, 2002
         compared with $9.22 million for the nine months ended September 30,
         2001. The net interest margin, computed on a tax equivalent basis, for
         the nine months ending September 30, 2002 was 5.14% compared with 4.93%
         for the same period one year earlier. The increase in the net interest
         margin is primarily attributable to the declining interest rate
         environment over the last twelve months, and the corresponding
         reduction in the average cost on total deposits to 1.74% for the nine
         months ended September 30, 2002, from 2.92% for the same period in
         2001.

         Average interest-earning assets grew 10.2% to $275.7 million for the
         first nine months of 2002 compared with $250.3 million for the first
         nine months of 2001. Total interest income declined $277,000 or 1.9% to
         $14.55 million for the nine months ended September 30, 2002 compared to
         $14.82 million for the nine months ended September 30, 2001, as a
         result of the declining interest rate environment and its effect on the
         yield on interest-earning assets. The tax equivalent yield on
         interest-earning assets declined to 7.05% for the nine months ended
         September 30, 2002, from 7.91% for the nine months ended September 30,
         2001. Interest and fees on loans declined $453,000, or 3.4% to $12.78
         million for the first nine months of 2002 compared with $13.23 million
         for the same period one year earlier. Average loans outstanding totaled
         $214.3 million and earned 7.45% on a tax-equivalent basis for the nine
         months ended September 30, 2002, compared with $208.1 million and
         7.93%, respectively, for the nine months ended September 30, 2001.
         Investment securities income increased $582,000 or 56.6%, while
         interest on federal funds sold decreased $406,000 or 72.2%. Investment
         securities and federal funds sold averaged $48.7 million and $12.8
         million, respectively, for the first nine months of 2002 compared with
         $24.1 million and $18.2 million for the same period one year earlier.
         The yield on investment securities and federal funds was 3.93% on a
         tax-equivalent basis for the first nine months of 2002, compared with
         5.20% for the first nine months of 2001.

         Total interest expense decreased $1.64 million or 29.4% to $3.95
         million for the nine months ended September 30, 2002 from $5.60 million
         for the nine months ended September 30, 2001. Average interest-bearing
         liabilities grew 11.3% to $223.5 million for the first nine months of
         2002 compared with $200.8 million for the first nine months of 2001,
         while the average cost on interest-bearing liabilities decreased to
         2.36% from 3.72% for the same respective time periods. The decrease in
         total interest expense and the average cost of interest-bearing
         liabilities was due to the declining interest rate environment. Average
         certificates of deposit balances for the first nine months of 2002 were
         $69.7 million at an average cost of 3.98%, compared with $77.0 million
         at an average cost of 5.74% for the same period one year earlier.
         Average FHLB of Atlanta advances were $15.0 million with an average
         cost of 4.64% for the first nine months of 2002 compared with $18.3
         million and an average cost of 5.05% during the first nine months of
         2001.

         PROVISION FOR LOAN LOSSES. The provision for loan losses was $253,000
         and $275,000 for the nine months ended September 30, 2002 and 2001,
         respectively. The respective amounts of the provision for loan losses
         were determined based upon management's continual evaluation of the
         adequacy of the allowance for loan losses, which encompasses the
         overall risk characteristics of the loan portfolio, trends in TFB's
         delinquent and non-performing loans, estimated values of collateral,
         and the impact of economic conditions on borrowers. There can be no
         assurances, however, that future losses will not exceed estimated
         amounts, or that additional provisions for loan losses will not be
         required in future periods.

         TOTAL OTHER INCOME. Total other income decreased by $86,000 or 3.0%
         from $2.89 million for the nine months ended September 30, 2001 to
         $2.80 million for the nine months ended September 30, 2002. This
         decrease stemmed from the non-loan chargeoff recovery of $542,000
         during the first quarter of 2001. Excluding this one-time recovery,
         total other income increased $456,000 or 19.4%. Service charges on
         deposit accounts increased $266,000, or 22.0%, from the first nine
         months of 2001 to the first nine months of 2002. Major factors in the
         increase in service charges on deposit accounts were primarily those
         discussed in the quarterly comparison above. Other service charges,
         commissions and fees increased $123,000, or 20.3%, from the first nine
         months of 2001 to the first nine months of 2002 primarily due to
         increased VISA check card income and increased bankcard merchant
         discount fees.


                                       15
<PAGE>


         TOTAL OTHER EXPENSES. Total other expenses increased 17.0% or $1.30
         million to $8.91 million for the nine months ended September 30, 2002
         compared with $7.62 million for the nine months ended September 30,
         2001. Approximately $676,000 of the increase was due to the increase in
         salary and benefit expenses. Major factors in the increase in salary
         and benefit expenses were primarily those discussed in the quarterly
         comparison above. Advertising and business development expenses
         increased 42.7%, or $100,000, from the nine months ended September 30,
         2001, to the nine months ended September 30, 2002, primarily due to
         TFB's 100-year anniversary celebration, as well as the marketing of
         TFB's new check imaging program. Occupancy, furniture and equipment,
         and telephone expenses also increased over the same time period due to
         the addition of the Old Town-Manassas branch office. Other operating
         expenses increased $142,000 primarily in employee training/education
         expenses, and miscellaneous lending-related expenses.

         COMPARISON OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 FINANCIAL
         CONDITION

         Assets totaled $308.6 million at September 30, 2002, an increase of
         8.2% or $23.4 million from $285.2 million at December 31, 2001. Balance
         sheet categories reflecting significant changes include loans, federal
         funds sold, securities, deposits, and company-obligated mandatory
         redeemable capital securities of subsidiary trust. Each of these
         categories is discussed below.

         LOANS. Net loans were $213.8 million at September 30, 2002, which is an
         increase of $6.4 million or 3.1% from $207.5 million at December 31,
         2001. The growth in total loans is attributable to the increases in
         one-to-four family residential loans of $3.2 million, commercial and
         industrial loans of $2.9 million, and miscellaneous other loans of $4.7
         million, partially offset by the decrease in construction and land
         development loans of $5.1 million.

         FEDERAL FUNDS SOLD. Federal funds sold were $8.7 million at September
         30, 2002, compared with $15.4 million at December 31, 2001,
         representing a decrease of $6.7 million. The decrease was due to
         investment of excess liquidity in securities rather than federal funds
         sold as discussed in the next paragraph.

         SECURITIES. Investment securities increased $20.0 million from December
         31, 2001 to September 30, 2002. This increase was funded by the
         increase in deposits discussed below, as well as a decrease in the
         amount of federal funds sold, and investment of the proceeds in
         securities. Virtually all securities purchased during the quarter ended
         September 30, 2002 were relatively short-term with projected durations
         of three years or less.

         DEPOSITS. On September 30, 2002, total deposits were $261.3 million,
         reflecting an increase of $17.6 million or 7.2% from $243.7 million at
         December 31, 2001. The growth was in interest-bearing deposits, which
         increased $17.5 million, while non-interest-bearing deposits were
         substantially unchanged.Many factors may have contributed to the
         increase in interest-bearing deposits, including the outflow of funds
         from the equity investment markets into bank deposits.

         COMPANY-OBLIGATED MANDATORILY REDEEMABLE CAPITAL SECURITIES OF
         SUBSIDIARY TRUST ("Capital Securities"). During March 2002, Bankshares
         established a subsidiary trust that issued $4.0 million of capital
         securities as part of a pooled trust preferred security offering with
         other financial institutions. Bankshares is using the offering proceeds
         for the purposes of expansion and the repurchase of additional shares
         of its common stock. Under applicable regulatory guidelines, the
         capital securities are treated as Tier 1 capital for purposes of the
         Federal Reserve's capital guidelines for bank holding companies, as
         long as the capital securities and all other cumulative preferred
         securities of Bankshares together do not exceed 25% of Tier 1 capital.

         SHAREHOLDERS' EQUITY

         Total shareholders' equity was $25.7 million at September 30, 2002
         compared to $24.2 million at December 31, 2001, an increase of $1.5
         million, or 6.3%. During the nine months ended September 30, 2002,


                                       16
<PAGE>


         shareholders' equity was reduced by $818,000 due to the repurchase of
         38,499 shares of Bankshares' common stock.

         ASSET QUALITY

         Non-performing loans, in most cases, consist of loans that are 90 days
         or more past due and for which the accrual of interest has been
         discontinued. Management evaluates all loans that are 90 days or more
         past due, as well as loans that have suffered financial distress, to
         determine if they should be placed on non-accrual status. Factors
         considered by management include the estimated value of collateral, if
         any, and other resources of the borrower that may be available to
         satisfy the delinquency.

         Non-performing loans totaled approximately $1.09 million, or .50% of
         total loans at September 30, 2002, as compared with $1.32 million, or
         .61% of total loans at June 30, 2002, and $913,000, or .43% of total
         loans at December 31, 2001. The increase in non-performing loans since
         December 2001 is entirely due to approximately $356,000 of loans to one
         borrower that changed to non-performing status. The allowance for loan
         losses allocated for these loans was increased to reflect the change in
         their status. Non-performing loans as a percentage of the allowance for
         loan losses were 36.4% and 32.0% at September 30, 2002 and December 31,
         2001, respectively.

         Loans that are 90 days past due and accruing interest totaled $331,000
         and $541,000 at September 30, 2002 and December 31, 2001, respectively.
         No loss is anticipated on these loans.

         There are no loans, other than those disclosed above as either
         non-performing or impaired, where known information about the borrower
         has caused management to have serious doubts about the borrower's
         ability to comply with the contractual repayment obligations. There are
         also no other interest-bearing assets that would be subject to
         disclosure as either non-performing or impaired if such
         interest-bearing assets were loans. To management's knowledge, no
         concentration of loans to borrowers engaged in similar activities
         exceeds 10% of total loans.

         CAPITAL RESOURCES AND LIQUIDITY

         The primary sources of funds are deposits, repayment of loans,
         maturities of investments, funds provided from operations, and advances
         from the FHLB of Atlanta. While scheduled repayments of loans and
         maturities of investment securities are predictable sources of funds,
         deposit flows and loan repayments are greatly influenced by the general
         level of interest rates, economic conditions and competition. TFB uses
         its funds for existing and future loan commitments, maturing
         certificates of deposit and demand deposit withdrawals, to invest in
         other interest-earning assets, to maintain liquidity, and to meet
         operating expenses. Management regularly monitors projected liquidity
         needs and determines the desirable funding level based in part on TFB's
         commitments to make loans and management's assessment of TFB's ability
         to generate funds.

         Cash and amounts due from depository institutions, interest-bearing
         deposits in other banks and federal funds sold totaled $26.8 million at
         September 30, 2002. These assets provide the primary source of
         liquidity for TFB. In addition, management has designated the
         investment securities portfolio, totaling $56.9 million, as available
         for sale, and TFB has a line of credit with the FHLB of Atlanta to
         provide additional sources of liquidity. The FHLB of Atlanta line of
         credit had a borrowing limit of approximately $47.2 million at
         September 30, 2002, of which $15.0 million was in use.

         CAPITAL REQUIREMENTS

         The federal bank regulatory authorities have adopted risk-based capital
         guidelines for banks and bank holding companies that are designed to
         make regulatory capital requirements more sensitive to differences in
         risk profile among banks and bank holding companies. The resulting
         capital ratios represent qualifying capital as a percentage of total


                                       17
<PAGE>


         risk-weighted assets and off-balance sheet items. The guidelines
         establish minimums, and the federal regulators have noted that banks
         and bank holding companies contemplating significant expansion programs
         should maintain all ratios well in excess of the minimums and should
         not allow expansion to diminish their capital ratios. The current
         guidelines require all bank holding companies and federally regulated
         banks to maintain a minimum risk-based total capital ratio equal to 8%,
         of which at least 4% must be Tier 1 capital. Tier 1 capital includes
         common stockholder's equity, qualifying perpetual preferred stock, and
         minority interests in equity accounts of consolidated subsidiaries, but
         excludes goodwill and most other intangibles and excludes the allowance
         for loan losses. Tier 2 capital includes the excess of any preferred
         stock not included in Tier 1 capital, mandatory convertible securities,
         hybrid capital instruments, subordinated debt and intermediate
         term-preferred stock, and general reserves for loan losses up to 1.25%
         of risk-weighted assets.


         The FDIC Improvement Act of 1991 ("FDICIA") contains "prompt corrective
         action" provisions pursuant to which banks are to be classified into
         one of five categories based upon capital adequacy, ranging from "well
         capitalized" to "critically undercapitalized" and which require
         (subject to certain exceptions) the appropriate federal banking agency
         to take prompt corrective action with respect to an institution which
         becomes "significantly undercapitalized" or "critically
         undercapitalized."

         As of September 30, 2002, (i) Bankshares' Tier 1, total risk-based
         capital and leverage ratios were 14.23%, 15.48% and 9.35%,
         respectively, and (ii) TFB's Tier 1 and total risk-based capital and
         leverage ratios were 14.03%, 15.28%, and 9.33%, respectively. TFB was
         notified by the Federal Reserve Bank of Richmond that, at September 30,
         2002, both Bankshares and TFB were considered "well capitalized."

         FDICIA also (i) provides that only a "well capitalized" depository
         institution may accept brokered deposits without prior regulatory
         approval and (ii) requires the appropriate federal banking agency
         annually examine all insured depository institutions, with some
         exceptions for small, "well capitalized" institutions and
         state-chartered institutions examined by state regulators. FDICIA also
         contains a number of consumer banking provisions, including disclosure
         requirements and substantive contractual limitations with respect to
         deposit accounts.

         RECENT ACCOUNTING PRONOUCEMENTS

         In April 2002, the Financial Accounting Standards Board issued
         Statement No. 145, Rescissions of FASB No. 4, 44, and 64, Amendment of
         FASB Statement No. 13, and Technical Corrections. This Statement
         rescinds FASB Statement No. 4, Reporting Gains and Losses from
         Extinguishment of Debt, and an amendment of that Statement, FASB
         Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
         Requirements. This Statement also rescinds FASB Statement No. 44,
         Accounting for Intangible Assets of Motor Carriers. This Statement
         amends FASB Statement No. 13, Accounting for Leases, to eliminate an
         inconsistency between the required accounting for sale-leaseback
         transactions and the required accounting for certain lease
         modifications that have economic effects that are similar to
         sale-leaseback transactions. This Statement also amends other existing
         authoritative pronouncements to make various technical corrections,
         clarify meanings, or describe their applicability under changed
         conditions. The provisions of this Statement related to the rescission
         of Statement No. 4 shall be applied in fiscal years beginning after May
         15, 2002. The provisions of this Statement related to Statement 13 are
         effective for transactions occurring after May 15, 2002, with early
         application encouraged.

         In June 2002, the Financial Accounting Standards Board issued Statement
         146, Accounting for Costs Associated with Exit or Disposal Activities.
         This Statement addresses financial accounting and reporting for costs
         associated with exit or disposal activities and nullifies Emerging
         Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
         Certain Employee Termination Benefits and Other Costs to Exit an
         Activity (including Certain Costs Incurred in a Restructuring)." The
         standard requires companies to recognize costs associated with exit or
         disposal activities when they are incurred rather than at the date of a
         commitment to an exit or disposal plan. The provisions of this
         Statement are effective for exit or disposal activities that are
         initiated after December 31 2002, with early application encouraged.


                                       18
<PAGE>


         The Financial Accounting Standards Board issued Statement No. 147,
         Acquisitions of Certain Financial Institutions, an Amendment of FASB
         Statements No. 72 and 144 and FASB Interpretation No. 9 in October
         2002. FASB Statement No. 72, Accounting for Certain Acquisitions of
         Banking or Thrift Institutions, and FASB Interpretation No. 9, Applying
         APB Opinions No. 16 and 17 When a Savings and Loan Association or a
         Similar Institution Is Acquired in a Business Combination Accounted for
         by the Purchase Method, provided interpretive guidance on the
         application of the purchase method to acquisitions of financial
         institutions. Except for transactions between two or more mutual
         enterprises, Statement No. 147 removes acquisitions of financial
         institutions from the scope of both Statement No. 72 and Interpretation
         No. 9 and requires that those transactions be accounted for in
         accordance with FASB Statements No. 141, Business Combinations, and No.
         142, Goodwill and Other Intangible Assets. Thus, the requirement in
         paragraph 5 of Statement No. 72 to recognize (and subsequently
         amortize) any excess of the fair value of liabilities assumed over the
         fair value of tangible and identifiable intangible assets acquired as
         an unidentifiable intangible asset no longer applies to acquisitions
         with the scope of Statement No. 147. In addition, this Statement amends
         FASB Statement No. 144, Accounting for the Impairment or Disposal of
         Long-Lived Assets, to include in its scope long-term
         customer-relationship intangible assets of financial institutions such
         as depositor- and borrower-relationship assets and credit cardholder
         intangible assets. Consequently, those intangible assets are subject to
         the same undiscounted cash flow recoverability test and impairment loss
         recognition and measurement provisions that Statement No. 144 requires
         for other long-lived assets that are held and used.

         Paragraph 5 of Statement No. 147, which relates to the application of
         the purchase method of accounting, is effective for acquisitions for
         which the date of acquisition is on or after October 1, 2002. The
         provisions in paragraph 6 related to accounting for the impairment or
         disposal of certain long-term customer-relationship intangible assets
         are effective on October 1, 2002. Transition provisions for previously
         recognized unidentifiable intangible assets in paragraphs 8-14 are
         effective on October 1, 2002, with earlier application permitted.

         Statement No. 147 clarifies that a branch acquisition that meets the
         definition of a business should be accounted for as a business
         combination, whereas a branch acquistion that does not should be
         accounted for as an acquisition of net assets that does not result in
         the recognition of goodwill.

         The transition provisions state that if the transaction that gave rise
         to the unidentifiable intangible asset was a business combination, the
         carrying amount of that asset shall be reclassified to goodwill as of
         the later of the date of acquisition or the date Statement No. 142 was
         first applied (fiscal years beginning after December 15, 2001). Any
         previously issued interim statements that reflect amortization of the
         unidentifiable intangible asset subsequent to the Statement No. 142
         application date shall be restated to remove that amortization expense.
         The carrying amounts of any recognized intangible assets that meet the
         recognition criteria of Statement No. 141 that have been included in
         the amount reported as an unidentifiable intangible asset and for which
         separate accounting records have been maintained shall be reclassified
         and accounted for as assets apart from the unidentifiable intangible
         asset and shall not be reclassified to goodwill.

         ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         An important component of both earnings performance and liquidity is
         management of interest rate sensitivity. Interest rate sensitivity
         reflects the potential effect on net interest income of a movement in
         market interest rates. TFB is subject to interest rate sensitivity to
         the degree that its interest-earning assets mature or reprice at
         different time intervals than its interest-bearing liabilities.
         However, TFB is not subject to the other major categories of market
         risk such as foreign currency exchange rate risk or commodity price
         risk.

         TFB uses a number of tools to manage its interest rate risk, including
         simulating net interest income under various scenarios, monitoring the
         present value change in equity under the same scenarios, and monitoring
         the difference or gap between rate sensitive assets and rate sensitive
         liabilities over various time periods. Management believes that
         interest rate risk is best measured by simulation modeling. The
         earnings simulation model forecasts annual net income under a variety
         of scenarios that incorporate changes in the absolute level of interest
         rates, changes in the shape of the yield curve and changes in interest


                                       19
<PAGE>


         rate relationships. Management evaluates the effect on net interest
         income and present value equity under varying market rate assumptions.

         TFB monitors exposure to instantaneous change in market rates of up to
         200 basis points up or down. TFB's policy limit for the maximum
         negative impact on net interest income and change in the economic value
         of equity resulting from instantaneous change in market interest rates
         of 200 basis points is 15% and 35%, respectively. Management has
         maintained a risk position well within these guideline levels during
         the third quarter of 2002.There have been no material changes in market
         risk since 2001 year end.

         ITEM 4. CONTROLS AND PROCEDURES

         Evaluation of Disclosure Controls and Procedures
         ------------------------------------------------

         As a result of the enactment of the Sarbanes-Oxley Act of 2002, issuers
         such as Bankshares that file periodic reports under the Securities
         Exchange Act of 1934 (the "Act") are now required to include in those
         reports certain information concerning the issuer's controls and
         procedures for complying with the disclosure requirements of the
         federal securities laws. Under rules adopted by the Securities and
         Exchange Commission effective August 29, 2002, these disclosure
         controls and procedures include, without limitation, controls and
         procedures designed to ensure that information required to be disclosed
         by an issuer in the reports it files or submits under the Act, is
         communicated to the issuer's management, including its principal
         executive officer or officers and principal financial officer or
         officers, or persons performing similar functions, as appropriate to
         allow timely decisions regarding required disclosure.

         Bankshares has established disclosure controls and procedures to ensure
         that material information related to Bankshares is made known to its
         principal executive officer and principal financial officer on a
         regular basis, in particular during the periods in which its quarterly
         and annual reports are being prepared. These disclosure controls and
         procedures consist principally of communications between and among the
         chief executive officer and the chief financial officer, and the other
         executive officers of Bankshares and its subsidiaries to identify any
         new transactions, events, trends, contingencies or other matters that
         may be material to Bankshares' operations. As required, management,
         including the chief executive officer and chief financial officer, will
         evaluate the effectiveness of these disclosure controls and procedures
         on a quarterly basis, and most recently did so as of October 7, 2002, a
         date within 90 days prior to the filing of this quarterly report. Based
         on this evaluation, Bankshares' management, including the chief
         executive officer and the chief financial officer, concluded that such
         disclosure controls and procedures were operating effectively as
         designed as of the date of such evaluation.

         Changes in Internal Controls
         ----------------------------

         There were no significant changes in Bankshares' internal controls or
         in other factors that could significantly affect these controls
         subsequent to the date of their evaluations.

         PART II. OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS

         There are no pending or threatened legal proceedings to which
         Bankshares or TFB is a party or to which the property of either
         Bankshares or TFB is subject that, in the opinion of management, may
         materially impact the financial condition of either company.

         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


                                       20
<PAGE>


         (a) Exhibits:

         (3)(i)     Articles of Incorporation of Fauquier Bankshares, Inc., as
                    amended*

         (3)(ii)    Bylaws of Fauquier Bankshares, Inc.*

         Certain instruments relating to capital securities not being registered
         have been omitted in accordance with Item 601(b)(4)(iii) of Regulation
         S-K. The registrant will furnish a copy of any such instrument to the
         Securities and Exchange Commission upon its request.

         (11)       Refer to Part I, Item 1, Footnote 5 to the Consolidated
                    Financial Statements.

         * Incorporated by reference to Bankshares' Registration Statement on
         Form 10, filed with the Securities and Exchange Commission on April 16,
         1999.

         (b) Reports on Form 8-K:

         Current Report on Form 8-K, filed on August 14, 2002, stating that the
         chief executive officer and chief financial officer of Fauquier
         Bankshares, Inc. filed certifications in accordance with ss. 906 of the
         Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350) on August 14, 2002.


                                       21
<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.

                                           FAUQUIER BANKSHARES, INC.

         Dated: November 14,  2002         /s/ C. Hunton Tiffany
                                           -------------------------------------
                                           C. Hunton Tiffany
                                           President and Chief Executive Officer

         Dated: November 14, 2002          /s/ Eric P. Graap
                                           -------------------------------------
                                           Eric P. Graap
                                           Senior Vice President and Chief
                                           Financial Officer


             (Certification of CEO and CFO under Section 906 of the
               Sarbanes-Oxley Act of 2002 are enclosed separately
                 separately as correspondence with this filing.)



                                       22
<PAGE>


                                 CERTIFICATIONS

I, C. Hunton Tiffany, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Fauquier
Bankshares, Inc.;

         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.

Dated: November 14,  2002                  /s/ C. Hunton Tiffany
                                           -------------------------------------
                                           C. Hunton Tiffany
                                           President and Chief Executive Officer


                                       23
<PAGE>


I, Eric P. Graap, certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Fauquier
Bankshares, Inc.;

         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.

         Dated: November 14, 2002      /s/ Eric P. Graap
                                       -----------------------------------------
                                       Eric P. Graap
                                       Senior Vice President and Chief Financial
                                       Officer


                                       24