FORM 10-QSB

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, DC   20549


                  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 1996
                               -----------------


                                      OR


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

for the transition period from ___________________ to _____________________



      Commission File Number                     0-24674
                                            ----------------

                             SWVA BANCSHARES, INC
                             --------------------

        VIRGINIA                                               54-1721629
-------------------------------                            -------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)

302 Second Street, SW, Roanoke Virginia                          24011-1597
----------------------------------------                         ----------
(Address of Principal executive offices)                         (Zip Code )

Registrant's telephone number, including area code  (540) 343-0135
                                                    --------------


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

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


The  number of shares  outstanding  of each of the  issuer's  classes  of common
stock, as of February 10, 1997: $0.10 par value - 520,434 common shares.

Transitional Small Business Disclosure Format (check one):

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


<PAGE>



                     SWVA BANCSHARES, INC. & SUBSIDIARIES


                                     INDEX

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

PART I.     FINANCIAL INFORMATION                                       PAGE
            =====================                                       =====


Item 1.     Financial Statements

            Consolidated Statements of Financial Condition
            at December 31, 1996 and June 30, 1996 (unaudited)            1

            Consolidated Statements of Income for the
            Three and Six Months Ended December 31, 1996 and
            December 31, 1995 (unaudited)                                 2

            Consolidated Statements of Cash Flows for the
            Six Months Ended December 31, 1996 and
            December 31, 1995 (unaudited)                                 3

            Notes to Unaudited Interim Consolidated
            Financial Statements                                          4


Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                           5


PART II.    OTHER INFORMATION                                             II-1
            =================



<PAGE>



                        SWVA BANCSHARES, INC & SUBSIDIARY
                 Consolidated Statements of Financial Condition
                                 (In thousands)
<TABLE>
<CAPTION>

                                            Assets                     Dec 31    June 30
                                                                        1996       1996
                                                                      -------------------
                                                                          (Unaudited)

<S>                                                                   <C>         <C>    
Cash and cash equivalents                                             $ 3,259     $ 5,262
Interest-bearing deposits                                               4,828       3,841
Investment & Mortgage Backed Securities:
  Held to Maturity, at amortized cost                                     412         443
  Available for Sale, at fair value                                     7,422       7,496
Loans held for sale                                                       230         985
Loans receivable, net                                                  51,247      46,757
Property and equipment, net                                             1,647       1,662
Accrued interest receivable                                               359         343
Prepaid expenses and other assets                                         247         198
                                                                      -------     -------

    Total assets                                                      $69,651     $66,987
                                                                      =======     =======

                      Liabilities and Stockholders' Equity
Deposits                                                              $57,274     $57,643
Advances Federal Home Loan Bank                                         3,500           0
Accounts payable                                                           34          42
Accrued interest payable                                                   23          43
Advances from borrowers
  for taxes and insurance                                                 144         146
Income taxes payable                                                        0          28
Other accrued expenses                                                    122         133
Other payables and deferred income                                        202         277
                                                                      -------     -------

    Total liabilities                                                  61,299      58,312
                                                                      --------    -------

Stockholders' Equity
Preferred Stock, 275,000 shares
   authorized, no shares issued or
   outstanding
Common stock, $.10 par value,  2,225,000 
   shares authorized,  520,434 outstanding
   as of December 31, 1996 and 543,190
   outstanding as of June 30, 1996                                         52          54
Additional paid-in capital                                              4,423       4,750
Dividends declared and paid                                               (70)       (154)
Less unearned ESOP shares (36,517 shares)                                (365)       (365)
Less unearned MSBP shares (20,177 shares)                                (349)       (388)
Retained earnings
 (substantially restricted)                                             4,666       4,790
Valuation allowance
  marketable equity securities                                             (5)        (12)
                                                                      -------     -------

  Total Stockholders' Equity                                            8,352       8,675
                                                                      -------     -------

  Total Liabilities
        and Stockholders' Equity                                      $69,651     $66,987
                                                                      =======     =======
</TABLE>

                                               1

<PAGE>



                     SWVA BANCSHARES, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                                 (In thousands)
<TABLE>
<CAPTION>

                                                      Three Months         Six Months
                                                                    Ended
                                                                 December 31
                                                       ---------------------------------
                                                       1996     1995       1996     1995
                                                       ----     ----       ----     ----
                                                                      (Unaudited)
Interest income
<S>                                                   <C>       <C>       <C>      <C>   
  Loans                                               $1,101    $1,030    $2,109   $2,065
  Mortgage-backed and related securities                 123        92       243      187
  U. S. Government obligations
       including agencies                                 18        18        36       35
  Other investments, including
       overnight deposits                                104        94       213      175
                                                      ------    ------    ------   ------

Total interest income                                  1,346     1,234     2,601    2,462
                                                      ------    ------    ------   ------

Interest expense
  Deposits                                               634       647     1,269    1,286
  Borrowed funds                                          50        18        59       46
                                                      ------    ------    ------   ------

      Total interest expense                             684       665     1,328    1,332
                                                      ------    ------    ------   ------

      Net interest income                                662       569     1,273    1,130

Provision for credit losses                                0         0         0        0
                                                      ------    ------    ------   ------

      Net interest income after
        provision for credit losses                      662       569     1,273    1,130
                                                      ------    ------    ------   ------

Noninterest income
  Loan and other customer service fees                    36        37        73       75
  Gain on sale of mortgage loans                          31        45        57       98
  Gross rental income                                     24        23        48       46
  Net gain on sale of investments,
       available for    sale                              39         0        39        0
                                                      ------    ------    ------   ------

      Total noninterest income                           130       105       217      219
                                                      ------    ------    ------   ------

Noninterest expenses
  Personnel                                              308       324       613      624
  Office occupancy and equipment                          72        80       140      158
  Data processing                                         34        31        66       65
  Federal insurance of accounts                           23        31       412       62
  Other                                                  101       114       199      230
                                                      ------    ------    ------   ------

      Total noninterest expenses                         538       580     1,430    1,139
                                                      ------    ------    ------   ------

      Income before income taxes                         254        94        60      210
      Provision for income taxes                          30        32        30       82
                                                      ------    ------    ------   ------


      Net income                                      $  224    $   62    $   30   $  128
                                                      ======    ======    ======   ======

Per common share:
Primary and fully diluted earnings                       .47       .12       .06      .25
</TABLE>

                                            2

<PAGE>



                      SWVA BANCSHARES, INC. & SUBSIDIARIES
                      Consolidated Statements of Cash Flow
                                 (In Thousands)

<TABLE>
<CAPTION>

                                                                          Six Months Ended
                                                                            December 31
                                                                         ------------------
                                                                          1996      1995
Operating Activities                                                        (Unaudited)
<S>                                                                      <C>      <C>    
   Net Income                                                            $   30   $   128
   Adjustments to Reconcile Net Income to Net Cash
     Provided by (used in) operating activities
     Provision for credit losses                                              0         0
     Provision for depreciation and amortization                             42        52
     Provision for Deferred Income Tax                                        2        82
     Federal Home Loan Bank Stock Dividend                                    0         0
     Loans Originated for Sale                                           (3,516)  (11,271)
     Proceeds from sales of loans originated for sale                     4,329    10,647
     Gain on Sale of Loans, from fees                                       (57)      (98)
     Gain on Sale of Real Estate                                              0         0
     Gain on Disposal of Property and Equipment                               0         0
     Net gain on sale of investments, available for sale                     39         0
     Net (increase) decrease in Other Assets                                (44)       36
     Net increase (decrease) in Other Liabilities                          (130)       32
                                                                        -------   -------
      Net cash provided by (used in) operating activities                   695      (392)

Investing activities
   Proceeds from sale of property and equipment                               0         0
   Proceeds from maturity of investments
     and interest-bearing deposits                                        1,572     1,580
  Proceeds from sale of available for sale investments                    2,062         0
   Purchase of investments and interest-bearing deposits                 (2,558)   (2,073)
  Purchase of available for sale investments                             (1,992)        0
   Proceeds from sale of foreclosed real estate                               0         0
   Purchase of foreclosed real estate                                         0         0
   Purchase of property and equipment                                       (28)      (27)
   Net (increase) decrease in loans                                      (4,468)    1,513)
   Purchase of loans                                                        (22)        0
   Principal repayments on Mortgage Backed Securities                        46        41
                                                                        -------   -------
     Net cash provided by (used in) investing activities                 (5,388)    1,034
                                                                        -------   -------
Financing activities
   Curtailment of advances and other borrowings                               0      (800)
   Proceeds from advances and other borrowings                            3,500       200
   Net increase (decrease) in savings deposits                             (399)    1,547
  Proceeds from sale of stock                                                 0         0
  Purchase of stock by ESOP                                                   0         0
  Repurchase of stock                                                      (341)     (466)
   Dividends paid                                                           (70)      (79)
                                                                        -------   -------
   Net cash used in financing activities                                  2,690       402
                                                                        -------   -------

Increase (decrease) in cash and cash equivalents                          2,003     1,044

Cash and cash equivalents at beginning of period                          5,262       830
                                                                        -------   -------

Cash and cash equivalents at end of period                              $ 3,259   $ 1,874
                                                                        =======   =======

</TABLE>

                                            3

<PAGE>



                      SWVA BANCSHARES, INC. & SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

The accompanying  consolidated financial statements include the accounts of SWVA
Bancshares, Inc. ("Company") and its wholly-owned subsidiary, Southwest Virginia
Savings Bank, FSB ("Bank") and its wholly-owned  subsidiary,  Southwest Virginia
Service Corporation. All significant intercompany balances and transactions have
been eliminated in consolidation.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for  fair  presentation  have  been  included.
Operating  results for the three and six months ended December 31, 1996, are not
necessarily  indicative  of the results that may be expected for the year ending
June 30, 1997.

NOTE 2 - STOCK REPURCHASE

On July 26, 1996, the Company received the necessary approval from the Office of
Thrift  Supervision  ("OTS") to  repurchase  up to 5% (or 27,160  shares) of the
Company's Common Stock prior to October 5, 1996.

On the date of the request for permission to repurchase the stock, the Company's
stock was trading at a price significantly below book value. Based upon the then
current  market price of the Company's  stock,  the likelihood of increasing the
book  value per share and net  income  per share on the  remaining  shares,  the
general economic  conditions  affecting the Company and the Bank, and the use of
repurchased shares to mitigate the potentially  dilutive effect of the Company's
stock option plan and any other stock based  compensation  plan or program,  the
Board determined that the repurchase program would enhance shareholder value and
be in the best interests of the Company and shareholders.

The company repurchased 22,756 shares of its Common Stock in the open market,
at an aggregate purchase price of approximately $341,000.  The amount
repurchased represented approximately 4.2% of the Company's total shares
outstanding prior to the repurchase.

NOTE 3 -- EARNINGS PER SHARE

Earnings per share have been  determined  by dividing net income by the weighted
number of shares of common stock and common stock equivalents outstanding during
the period net of unallocated ESOP shares.

                                            4

<PAGE>




                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Comparison of Financial Condition at December 31, 1996 and June 30, 1996
------------------------------------------------------------------------


Total assets increased $2.7 million or 3.98% from $67.0 million at June 30, 1996
to $69.7  million at December  31, 1996.  Net loans  receivable  increased  $4.4
million or 9.61% to $51.2  million at December  31,  1996 from $46.8  million at
June 30, 1996 due primarily to an increase in mortgage loans added to the Bank's
portfolio.


Interest-bearing  deposits  increased  $1.0 million or 25.70% to $4.8 million at
December  31, 1996 from $3.8  million at June 30, 1996 due mainly to an increase
in cash  available  to  invest  in  interest-bearing  deposits.  Cash  and  cash
equivalents  decreased $2.0 million or 38.07% from $5.3 million at June 30, 1996
to $3.3 million at December 31, 1996 due mainly to  increased  cash  required to
fund mortgage loans.  Loans held for sale decreased  $755,000 or 76.65% due to a
decrease in loans originated to be sold.


There were no  non-performing  assets at December  31,  1996 and June 30,  1996.
Classified  assets  totaled $1.0 million.  All except $1,000 were  classified as
substandard,  with the $1,000  classified as loss.  $325,000 was in Construction
and Development  loans,  $202,000 was in an apartment building and the remaining
substandard  loans were on single  family loans.  The $1,000 loan  classified as
loss was a small unsecured consumer loan.


Deposits  decreased  $369,000,  or .65% from $57.6  million at June 30,  1996 to
$57.3 million at December 31, 1996 due mainly to a decrease in funds in checking
accounts. Core deposits were $16.9 million or 29.38% of total savings.


At December 31, 1996,  there were $3.5 million  outstanding in advances from the
Federal home Loan Bank of Atlanta.  There were no advances  outstanding  on June
30, 1996. The advances were used to fund mortgage loan  originations  during the
period.


Other payables and deferred income decreased $75,000, or 27.08% from $277,000 at
June 30,  1996 to $202,000  at  December  31, 1996 due mainly to a reduction  in
outstanding cashier's checks and certified checks.

                                            5

<PAGE>



Results of Operations  for the three months ended December 31, 1996 and December
-------------------------------------------------------------------------------
31, 1995
--------

      Net Income Net income increased $162,000 or 261.30%,  from $62,000 for the
three  months  ended  December  31, 1995 to $224,000  for the three months ended
December  31, 1996.  The  increase in net income was due to  increased  interest
income and a reduction in tax  provision  due to the loss  recorded in the prior
quarter for the one time SAIF Special Assessment.

      Interest Income Interest income increased  $100,000,  or 9.08%,  from $1.2
million for the three  months  ended  December  31, 1995 to $1.3 million for the
three  months  ended  December  31,  1996.  The  increase was mainly a result of
additional  mortgage loans put in the Bank's  portfolio and an increase in funds
invested.

      Interest Expense Interest expense increased $19,000 or 2.86% from $665,000
for the three  months  ended  December 31, 1995 to $684,000 for the three months
ended  December 31, 1996. The increase was due mainly to an increase in interest
paid on borrowed funds offset by a decrease in interest paid on deposits.

      Net Interest Income Net interest income increased by $93,000 from $569,000
for the three  months  ended  December 31, 1995 to $662,000 for the three months
ended  December 31, 1996 due mainly to  additional  interest  earned on mortgage
loans.

      Provision  for Credit  Losses The Bank made no provision for credit losses
for the three  months ended  December  31, 1996 and there was no  provision  for
credit  losses for the three months ended  December 31, 1995.  The allowance for
credit  losses is $194,000.  Management  reviews the Bank's loan  portfolio  and
future additions may become necessary based upon changing  economic  conditions,
increased  loan  portfolio or changes in the  underlying  collateral of the loan
portfolio.

      Non-interest  Income  Non-interest  income increased by $25,000, or 23.81%
from  $105,000 for the three months ended  December 31, 1995 to $130,000 for the
three  months ended  December 31, 1996.  This was mainly the result of a $39,000
net gain on the sale of  investments,  offset  partially by a reduction on loans
sold in the secondary market for the three months ended December 31, 1996.

      Non-interest  Expense  Non-interest expense decreased by $42,000, or 7.24%
from  $580,000 for the three months ended  December 31, 1995 to $538,000 for the
three months ended December 31, 1996, mainly due to the accounting  treatment of
personnel expenses and loan origination income pursuant to SFAS 91 which reduced
personnel  expenses,  a reduction in office occupancy and equipment  expense,  a
refund in Federal Deposit Insurance Premiums and a reduction in legal expenses.

      Provision  for income taxes The  provision  for income taxes for the three
months ended  December 31, 1996 was $30,000 as compared to $32,000 for the three
months ended December 31, 1995. Tax calculations for the 3 months ended December
31, 1996 were affected by the loss recorded during the first quarter for the one
time SAIF Special Assessment.

                                            6

<PAGE>



Results of  Operations  for the six months ended  December 31, 1996 and December
-------------------------------------------------------------------------------
31, 1995
--------

      Net Income Net income decreased  $98,000 or 76.57%,  from $128,000 for the
six months ended  December 31, 1995 to $30,000 for the six months ended December
31, 1996.  The  decrease was mainly due to the one time SAIF Special  ASSESSMent
offset partially by increased interest earned on mortgage loans and investments.

      Interest Income Interest income increased $139,000,  or 5.65%, for the six
months ended  December 31, 1996.  The increase was mainly a result of additional
mortgage loans put in the Bank's  portfolio during the period and an increase in
funds invested in mortgage-backed and related securities.

      Interest  Expense  Interest  expense  decreased $4,000 or .31% for the six
months ended December 31, 1996. The decrease was mainly due to a decrease in the
cost of deposits offset by an increase in funds borrowed.

      Net Interest Income Net interest income  increased by $143,000 for the six
months ended  December 31, 1996.  This  resulted  mainly from an increase in the
interest  earned on mortgage loans,  Mortgage Backed and related  securities and
other investments.

      Provision  for Credit  Losses The Bank made no provision for credit losses
for the six months ended December 31, 1996 and there was no provision for credit
losses for the six months ended December 31, 1995. Management reviews the Bank's
loan  portfolio and future  additions may become  necessary  based upon changing
economic  conditions,  increased  loan  portfolio  or changes in the  underlying
collateral of the loan portfolio.

      Non-interest  Income  Non-interest income decreased by $2,000 or .92% from
$219,000  for the six months  ended  December  31, 1995 to $217,000  for the six
months ended December 31, 1996.  This resulted from a net gain of $39,000 on the
sale of investments and a reduction of $41,000 in the gains on loans sold in the
secondary market.

      Non-interest Expense Non-interest expense increased by $300,000, or 25.55%
from $1.1 million for the six months ended December 31, 1995 to $1.4 million for
the six months  ended  December  31,  1996,  due mainly to a reduction  in legal
expenses and office  occupancy  and  equipment  expense,  offset  partially by a
reduction in  accounting  treatment of personnel  expenses and loan  origination
income pursuant to SFAS 91.

      Provision  for income  taxes The  provision  for income  taxes for the six
months  ended  December  31, 1996 was $30,000 as compared to $82,000 for the six
months  ended  December 31,  1995.  The  decrease  was due to decreased  pre-tax
income.

                                            7

<PAGE>



Regulatory Capital Requirements

OTS capital  regulations  require  savings  institutions  to meet three  capital
standards:  (1) tangible capital equal to 1.5% of total adjusted  assets,  (2) a
leverage ratio (core  capital)  equal to at least 3.0% of total adjusted  assets
and (3) a risk-based  capital  requirement equal to 8.0% of total risk- weighted
assets.

As shown below, the Bank's tangible,  core and risk-based capital  significantly
exceed all applicable regulatory capital requirements of the OTS at December 31,
1996:


                                                                    Percent of
                                                      Amount          Assets
                                                      ------        ----------

            GAAP Capital....................          $7,529            10.72%
                                                       =====           ======

            Tangible Capital................          $7,529            10.72%
            Tangible Capital Requirement....           1,053             1.50%
                                                       -----            -----
            Excess..........................          $6,476             9.22%
                                                       =====            =====

            Core Capital....................          $7,529            10.72%
            Core Capital Requirement........           2,107             3.00%
                                                       -----            -----
            Excess..........................          $5,422             7.72%
                                                       =====            =====

            Total Risk-Based Capital........          $7,724            20.62%
            Risk-Based Capital Requirement..           2,997             8.00%
                                                       -----            -----
            Excess..........................          $4,727            12.62%
                                                       =====            =====


Management  believes that under current  regulations,  the Bank will continue to
meet its minimum capital  requirements in the foreseeable future.  Events beyond
the control of the Bank,  such as  increased  interest  rates or downturn in the
economy  in areas in which  the Bank  operates  could  adversely  affect  future
earnings  and as a result,  the  ability of the Bank to meet its future  minimum
capital requirements.


Liquidity

The Bank's  liquidity is a measure of its ability to fund loans,  withdrawals of
deposits and other cash outflows in a cost effective manner.  The Bank's primary
sources of funds are deposits and proceeds from principal and interest  payments
on loan and mortgage backed  securities.  The Bank also obtains funds from sales
and maturities of investment securities,  short-term investments and borrowings,
namely advances from the FHLB of Atlanta.  The Bank uses such funds primarily to
meet commitments on existing and continuing loan  commitments,  to fund maturing
time  deposits and savings  withdrawals  and to maintain  liquidity.  While loan
payments,  maturing investments and mortgage-backed  securities are a relatively
predictable  source of funds,  deposit  flows and loan  prepayments  are greatly
influenced by general interest rates,  economic conditions and competition.  The
Bank's  liquidity  is also  influenced  by the level of demand for funding  loan
originations.

                                            8

<PAGE>



Liquidity, cont.

The Bank is required  under federal  regulations to maintain  certain  specified
levels of "liquid  investments,"  which include certain United States government
obligations and other approved  investments.  Current  regulations  required the
Bank to  maintain  liquid  assets  of not less  than 5% of its net  withdrawable
accounts  plus short term  borrowings.  Short term liquid assets must consist of
not less than 1% of such accounts and borrowings,  which amount is also included
within the 5% requirements. Those levels may be changed from time to time by the
regulators  to  reflect  current  economic  conditions.  The  Bank's  regulatory
liquidity was 8.67% at December 31, 1996 and 12.29% as of June 30, 1996.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements  of  the  Company  and  notes  thereto,
presented  elsewhere  herein,  have been prepared in accordance with GAAP, which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering  the change in the relative  purchasing
power of money over time due to inflation.  The impact of inflation is reflected
in the  increased  cost of the  Company's  operations.  Unlike  most  industrial
companies,  nearly all the assets and  liabilities of the Company are financial.
As a result,  interest rates have a greater impact on the Company's  performance
than do the  effects  of  general  levels of  inflation.  Interest  rates do not
necessarily  move in the same  direction  or to the same extent as the prices of
goods and services.

SAIF Special Assessment

Deposits of the  Savings  Bank are  insured by the SAIF as  administered  by the
FDIC. As a member of the SAIF, the Savings Bank paid an insurance premium to the
FDIC equal to a minimum of 0.23% of its total deposits.  The FDIC also maintains
another insurance fund, The Bank Insurance Fund ("BIF"), which primarily insures
commercial  bank  deposits.  Effective  September 30, 1995, the FDIC lowered the
insurance  premium on BIF insured deposits to a range of between 0.04% and 0.31%
of deposits with the result that most commercial banks would pay the lowest rate
of 0.04%.  Effective  January 1, 1996, the annual insurance premium for most BIF
members was lowered to $2,000.  These  reductions in insurance  premiums for BIF
members placed SAIF members at a competitive disadvantage to BIF members.

Effective  September  30,  1996,  federal  law was revised to mandate a one-time
special  assessment  on SAIF members  such as the Savings Bank of  approximately
 .657% of deposits  held on March 31, 1995.  The Savings Bank recorded a $355,000
pre-tax expense for this assessment at September 30, 1996.  Beginning January 1,
1997,  deposit  insurance  assessments  for  SAIF  members  will be  reduced  to
approximately  .065% of  deposits  on an annual  basis  through the end of 1999.
During this same period,  BIF members are expected to be assessed  approximately
 .013% of deposits.  Thereafter,  assessments  for BIF and SAIF members should be
the same. It is expected that these continuing assessments for both SAIF and BIF
members  will  be  used  to  repay   outstanding   Financing   Corporation  bond
obligations.  As a result of these changes,  beginning January 1, 1997, the rate
of deposit  insurance  assessed the Savings  Bank will decline by  approximately
70%.

                                            9

<PAGE>



                      SWVA BANCSHARES, INC. & SUBSIDIARIES


                                     PART II

Item 1.     Legal Proceedings

            Not applicable.

Item 2.     Changes in Securities

            Not applicable.

Item 3.     Defaults upon Senior Securities

            Not applicable.

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

            The annual meeting of stockholders  was held on October 23, 1996. At
            that meeting the following  matters were  considered  and votes were
            recorded as shown below:

            1.    The following directors were elected:

            Nominee                 Votes For           Votes Withheld
            -------                 ---------           --------------

            James H. Brock          412,411                 15,100

            Glen C. Combs           412,411                 15,100

            Michael M. Kessler      412,411                 15,100

            2.    The appointment of Cherry Bekaert & Holland, L.L.P. as
                  independent auditors of the Company for the fiscal year ending
                  June 30, 1997 was ratified:

            Votes For               Votes Against           Abstain
            ---------               -------------           -------

            426,111                   1,400                       0

Item 5.     Other Information

            Not applicable.

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

            (a)   Not applicable.

            (b)   During the quarter  under  report,  a Form 8-K (Item 7), dated
                  October 22, 1996, was filed.  The Form 8-K was filed to report
                  first quarter earnings and the results of the annual meeting.


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<PAGE>


                      SWVA BANCSHARES, INC. & SUBSIDIARIES

                                   SIGNATURES


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

                              SWVA Bancshares, Inc.


Date: February 14, 1997       By:   /s/  B. L. Rakes
                                    --------------------------------------
                                    B. L. Rakes
                                    President, Chief Executive Officer,
                                    Chief Financial Officer, and Director


Date: February 14, 1997       By:   /s/  Mary G. Staples
                                    --------------------------------------
                                    Mary G. Staples
                                    Controller/Treasurer
                                    Principal Financial Officer



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