FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549


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

     For the quarterly period ended March 31, 2000
                                    --------------

                                       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 May 10, 2000: $0.10 par value - 423,612 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 March 31, 2000 (unaudited) and June 30, 1999            1

                  Consolidated Statements of Income for the Three
                  and Nine Months Ended March 31, 2000 and
                  March 31, 1999 (unaudited)                                 2

                  Consolidated Statements of Comprehensive Income
                  for the Three and  Nine Months Ended March 31, 2000
                  and March 31, 1999 (unaudited)                             3

                  Consolidated Statements of Cash Flows for the
                  Nine Months Ended March 31, 2000 and
                  March 31, 1999 (unaudited)                                 4

                  Notes to Unaudited Interim Consolidated
                  Financial Statements                                       5


Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                        7

PART II. OTHER INFORMATION                                                  12
         =================


<PAGE>

                        SWVA BANCSHARES, INC & SUBSIDIARY
                 Consolidated Statements of Financial Condition
                                 (In thousands)

                                     Assets
                                                         Mar 31         June 30
                                                     ------------   ------------
                                                          2000            1999
                                                     ------------   ------------
                                                      (Unaudited)
Cash and cash equivalents                            $     1,399    $     2,454
Interest-bearing deposits                                  3,040          6,278
Investment & Mortgage Backed Securities:
  Held to Maturity, at amortized cost                        261            283
  Available for Sale, at fair value                       21,767         22,934
  Restricted at cost                                         550            600
Loans held for sale                                          270            476
Loans receivable, net                                     52,684         45,576
Property and equipment, net                                1,653          1,688
Accrued interest receivable                                  615            594
Prepaid expenses and other assets                            884            831
                                                     -----------    -----------

    Total assets                                     $    83,123    $    81,714
                                                     ===========    ===========

          Liabilities and Stockholders' Equity
Deposits                                             $    65,240    $    62,094
Advances from Federal Home Loan Bank                      10,250         12,000
Advances from borrowers
  for taxes and insurance                                    378            210
Other liabilities and deferred income                        629            619
                                                     -----------    -----------

    Total liabilities                                     76,497         74,923
                                                     -----------    -----------

Stockholders' Equity
Preferred Stock, 275,000 shares
   authorized, no shares issued or
   outstanding
Common stock, $.10 par value, 2,225,000
   shares authorized,  423,612 outstanding
   as of March 31, 2000 and
   June 30, 1999                                              42             42
Additional paid-in capital                                 2,827          2,838
Less unearned ESOP shares (27,385 shares)                   (228)          (228)
Less unearned MSBP shares (14,895 shares)                   (241)          (254)
Dividends declared and paid                                 (152)          (180)
Retained earnings
 (substantially restricted)                                5,237          5,088
Valuation allowance
  marketable equity securities                              (859)          (515)
                                                     -----------    -----------

  Total Stockholders' Equity                               6,626          6,791
                                                     -----------    -----------

  Total Liabilities
        and Stockholders' Equity                     $    83,123    $    81,714
                                                     ===========    ===========

Book Value Per Share (not in thousands)              $     15.64    $     16.03
                                                     ===========    ===========

                                       1
<PAGE>
                     SWVA BANCSHARES, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                                 (In thousands)

<TABLE>
<CAPTION>
                                                     Three Months       Nine Months
                                                                 Ended
                                                                March 31
                                                    ----------------------------------
                                                      2000     1999     2000     1999
                                                      ----     ----     ----     ----
                                                               (Unaudited)
<S>                                                <C>      <C>      <C>      <C>
Interest Income
  Loans                                             $1,033   $  934   $2,967   $2,936
  Mortgage-backed and related securities               157      137      477      448
  U.S. Government obligations including agencies       206      158      620      472
  Municipal Bonds                                       30       17       89       40
  Other investments, including overnight deposits       84      162      315      482
                                                    ------   ------   ------   ------
         Total interest income                       1,510    1,408    4,468    4,378
                                                    ------   ------   ------   ------

Interest expense
  Deposits                                             696      676    2,021    2,206
  Borrowed funds                                       126      119      409      342
                                                    ------   ------   ------   ------
         Total interest expense                        822      795    2,430    2,548
                                                    ------   ------   ------   ------

Net interest income                                    688      613    2,038    1,830
Provision for credit losses                              3        3        9        9
                                                    ------   ------   ------   ------

Net interest income after
  provision for credit losses                          685      610    2,029    1,821
                                                    ------   ------   ------   ------

Noninterest income
  Loan and other customer service fees                  50       40      191      114
  Gain on sale of mortgage loans                        17       60       85      267
  Gross rental income                                   25       25       76       76
  Gain (loss) on Available for Sale Investments          0        0        0        0
  Other                                                  0        0        0        9
                                                    ------   ------   ------   ------
         Total noninterest income                       92      125      352      466
                                                    ------   ------   ------   ------

Noninterest expenses
  Personnel                                            390      372    1,113    1,072
  Office occupancy and equipment                        84       84      255      251
  Data processing                                       64       57      181      167
  Federal insurance of accounts                          4       10       22       30
  Other                                                129      108      356      345
                                                    ------   ------   ------   ------
         Total noninterest expenses                    671      631    1,927    1,865
                                                    ------   ------   ------   ------

         Income before income taxes                    106      104      454      422
         Provision for income taxes                      9       40      125      162
                                                    ------   ------   ------   ------

         Net Income                                 $   97   $   64   $  329   $  260
                                                    ======   ======   ======   ======

Basic earnings per share                            $  .24   $  .14   $  .82   $  .56
                                                    ======   ======   ======   ======
Diluted earnings per share                          $  .24   $  .14   $  .82   $  .56
                                                    ======   ======   ======   ======
Cash dividends per share                            $  .20   $  .20   $  .40   $  .40
                                                    ======   ======   ======   ======
</TABLE>

                                       2
<PAGE>

                     SWVA BANCSHARES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Comprehensive Income
                                 (In thousands)

<TABLE>
<CAPTION>
                                                   Three Months      Nine Months
                                                               Ended
                                                              March 31
                                                   ---------------------------------
                                                   2000     1999     2000     1999
                                                   ----     ----     ----     ----
                                                              (Unaudited)


<S>                                               <C>     <C>      <C>      <C>
Net Income                                         $  97   $  64    $ 329    $ 260

Other comprehensive income, net of tax
         Unrealized gains (losses) on securities      66    (143)    (345)    (158)
                                                   -----   -----    -----    -----

Comprehensive Income                               $ 163   $ (79)   $ (16)   $ 102
                                                   =====   =====    =====    =====

</TABLE>

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                     Mar 31
                                                                 2000       1999
                                                               -------  ----------
                                                                 (Unaudited)
<S>                                                          <C>        <C>

Operating Activities
    Net Income                                                  $ 329      $ 260
Adjustments to Reconcile Net Income to Net Cash
        Provided by (used in) operating activities
        MSBP Shares Allocated                                      13         45
        Provision for credit losses                                 9          9
        Provision for depreciation and amortization                86         79
        Loans Originated for Sale                              (5,899)   (24,795)
        Proceeds from sales of loans originated for sale        6,189     25,937
        Gain on Sale of Loans, from fees                          (84)      (267)
        Gain on Disposal of Property and Equipment                  -          -
        Net gain on sale of investments, available for sale         -          -
        Net (increase) decrease in Other Assets                   111        126
        Net increase (decrease) in Other Liabilities              169         41
                                                              -------    -------
      Net cash provided by (used in) operating activities         923      1,435
                                                              -------   --------

Investing activities
    Proceeds from maturity of investments
        and interest-bearing deposits                           4,725      5,136
    Proceeds from sale of FHLB Stock                              109          -
    Proceeds from sale of available for sale investments       (1,487)     7,250
    Purchase of investments and interest-bearing deposits           -     (5,014)
    Purchase of available for sale investments                      -     (9,571)
    Purchase of property and equipment                            (50)       (51)
    Purchase of FHLB Stock                                        (59)         -
    Net (increase) decrease in loans                           (5,217)     4,193
    Purchase of loans                                          (1,900)    (1,313)
    Principal repayments on Mortgage Backed Securities            657      2,639
                                                              -------    -------
        Net cash provided by (used in) investing activities    (3,222)     3,269
                                                              -------    -------

Financing activities
    Curtailment of advances and other borrowings               (6,500)    (1,000)
    Proceeds from advances and other borrowings                 4,750      3,000
    Net increase (decrease) in savings deposits                 3,146     (4,456)
    Repurchase of stock                                             -     (1,209)
    Dividends paid    (152)                                      (173)
                   --------                                    -------
    Net cash used in financing activities                       1,244     (3,838)
                                                              -------     -------

Increase (decrease) in cash and cash equivalents               (1,055)       866

Cash and cash equivalents at beginning of period                2,454      3,193
                                                               -------    ------

Cash and cash equivalents at end of period                    $ 1,399    $ 4,059
                                                               =======    ======
</TABLE>

                                       4
<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.  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 nine months ended March 31, 2000, are not necessarily
indicative  of the  results  that may be  expected  for the year ending June 30,
2000.


NOTE 2 -- EARNINGS PER SHARE

The  following  table  sets  forth  the  reconciliation  of the  numerators  and
denominators of the basic and diluted earnings per share (EPS) computations:
<TABLE>
<CAPTION>

                                                                      Three Months            Nine Months
                                                                                      Ended
                                                                                     March 31,
                                                                ---------------------------------------------------
                                                                    2000         1999        2000         1999
                                                                    ----         ----        ----         ----
                                                                                   (Unaudited)
<S>                                                             <C>          <C>          <C>          <C>

         Numerator:
(a) Net income available to shareholders                         $      97    $      64    $     329    $     260
                                                                 =========    =========    =========    =========

         Denominator:
         Weighed-average shares outstanding                        423,612      473,968      423,612      487,759
         Less: ESOP weighed-average shares outstanding             (22,819)     (27,385)     (22,819)     (27,385)
                                                                 ---------    ---------    ---------    ---------

(b) Basic EPS weighed-average shares outstanding                   400,793      446,583      400,793      460,374

         Effect of dilutive securities:
           Incremental shares attributable to the Stock Option
           Plan and Management Stock Bonus Plan                          0            0            0            0
                                                                 ---------    ---------    ---------    ---------

(c) Diluted EPS weighed-average shares outstanding                 400,793      446,583      400,793      460,374
                                                                 =========    =========    =========    ========

         Basic earnings per share (a/b)                          $     .24    $     .14    $     .82    $    .56
                                                                 =========    =========    =========    ========

         Diluted earnings per share (a/c)                        $     .24    $     .14    $     .82    $    .56
                                                                 =========    =========    =========    ========

</TABLE>


                                       5
<PAGE>

NOTE 3 -- FASB Statement on Reporting Comprehensive Income
Effective July 1, 1998, the Company  adopted FASB Statement No. 130,  "Reporting
Comprehensive Income." Statement No. 130 requires the reporting of comprehensive
income in addition to net income from operations. Comprehensive income is a more
inclusive  financial  reporting  methodology that includes certain disclosure of
certain  financial  information that has historically not been recognized in the
calculation of net income.

The company  had  unrealized  gain on  securities  held for sale,  for the three
months ended March 31, 2000 of $66,000  after tax versus an  unrealized  loss of
$143,000  after tax for the three months  ended March 31, 1999.  The Company had
unrealized  loss on securities  held as available for sale,  for the nine months
ended  March 31,  2000 of  $345,000  after tax  versus  and  unrealized  loss of
$158,000  after tax for the nine  months  ended March 31,  1999.  The before and
after tax amount, as well as the tax benefit is summarized below.


                                                                Tax
                                                      Before  (Expense)    After
                                                       Tax     Benefit      Tax
                                                       ---     -------      ---


Three months ended March 31, 2000:
         Unrealized gains (losses) on securities       $ 99      ($33)     $ 66

Three months ended March 31, 1999:
         Unrealized gains (losses) on securities      ($144)      $ 1     ($143)



Nine months ended March 31, 2000:
         Unrealized gains (losses) on securities      ($522)     $177     ($345)

Nine months ended March 31, 1999:
         Unrealized gains (losses) on securities      ($168)      $10     ($158)


                                       6
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Financial Condition at March 31, 2000 and June 30, 1999
---------------------------------------------------------------------

Total assets increased $1.4 million or 1.72% from $81.7 million at June 30, 1999
to $83.1 million at March 31, 2000. Net loans receivable  increased $7.1 million
or 15.60% to $52.7 million at March 31, 2000 from $45.6 million at June 30, 1999
due primarily to  additional  mortgage  loans added to the Bank's  portfolio and
continued growth in consumer and commercial loans during the quarter ended March
31, 2000.
                                                         .
Cash and cash  equivalents  decreased $1.1 million from $2.5 million at June 30,
1999 to $1.4  million at March 31,  2000.  The cash flow from loan  payments and
payoffs on mortgage loans and mortgage backed  securities and from  certificates
of deposits was used to fund new loans. Interest bearing deposits decreased $3.3
million or 51.58% from $6.3 million at June 30, 1999 as compared to $3.0 million
at March  31,  2000,  due to a  decrease  in jumbo  certificates  in the  Bank's
portfolio which are matched with interest bearing  deposits.  Available for Sale
Investments decreased $1.1 million to $21.8 million at March 31, 2000 due mainly
to  principal  paybacks  on  Mortgage  Backed  Securities.  Loans  held for sale
decreased  $206,000 from $476,000 at June 30, 1999 to $270,000 at March 31, 2000
due to a reduction in the local market demand for mortgage loans.

There were non-performing  loans at March 31, 2000 totaling $118,000.  The loans
are secured by single family real estate and no loss is anticipated.  There were
no non-performing  assets at June 30, 1999.  Classified assets totaled $531,000.
An unsecured consumer loan for $4,000 was classified as doubtful.  The remaining
classified loans were classified as substandard and were primarily single family
mortgage loans.

Deposits increased $3.1 million, or 5.07% from $62.1 million at June 30, 1999 to
$65.2  million at March 31, 2000 due mainly to an increase  in  certificates  of
deposits.  These funds were used to fund loan growth.  Core  deposits were $19.5
million or 29.80% of total deposits.

At March 31, 2000,  there were $10.3  million  outstanding  in advances from the
Federal Home Loan Bank of Atlanta.  The decrease in advances of $1.7 million was
due to payment of cash available from funds received on certificates of deposit.

Advances from  borrowers for taxes and insurance  increased  $168,000 due to the
accumulation  of funds to pay real estate  taxes due during the  quarter  ending
June 30, 2000.

Results of Operations for the three months ended March 31, 2000
---------------------------------------------------------------
and March 31, 1999
------------------

         Net Income Net income increased $33,000 or 51.56%, from $64,000 for the
         ----------
three  months  ended March 31, 1999 to $97,000 for the three  months ended March
31, 2000. The increase was mainly due to increased net interest income.

         Interest Income Interest income increased $102,000, or 7.24%, from $1.4
         ---------------
million for the three  months ended March 31, 1999 to $1.5 million for the three
months ended March 31, 2000. The increase was mainly a result in the increase in
earnings on a larger loan portfolio.

         Interest  Expense  Interest  expense  increased  $27,000  or 3.40% from
         -----------------
$795,000  for the three  months  ended March 31, 1999 to $822,000  for the three
months ended March 31, 2000.  The increase was due mainly to an increase in loan
production and upward adjustments on variable rate loans.

         Net Interest Income Net interest income  increased by $75,000 or 12.23%
         ------------
from  $613,000  for the three  months  ended March 31, 1999 to $688,000  for the
three months ended March 31, 2000. The increase was due mainly to an increase in
loans and an increase in borrowed funds and certificates of deposits.

         Provision  for Credit Losses The Bank made an addition of $3,000 to the
         ----------------------------
provision for credit losses for the quarter ended March 31, 2000.  The allowance
for credit  losses was $219,000 at March 31, 2000.  The Bank made an addition of
$3,000 to the  provision for credit losses for the quarter ended March 31, 1999.
The allowance for credit losses was $206,000 at March 31, 1999.
                                       7
<PAGE>

Results of Operations for the three months ended March 31, 2000
---------------------------------------------------------------
and March 31, 1999, cont.
-------------------------


         Non-interest Income Non-interest income decreased by $33,000, or 26.40%
         -------------------
from $125,000 for the three months ended March 31, 1999 to $92,000 for the three
months ended March 31, 2000.  The decrease was mainly due to a decrease in gains
on the sale of mortgage loans.

         Non-interest  Expense  Non-interest  expense  increased by $40,000,  or
         ---------------------
6.34% from  $631,000  for the three  months ended March 31, 1999 to $671,000 for
the three months  ended March 31,  2000,  mainly due to an increase in personnel
expense,  data  processing,  and  advertising  expenses  partially  offset  by a
reduction in Federal insurance of account premiums.

         Provision for income taxes The provision for income taxes for the three
         --------------------------
months  ended  March 31,  1999 was  $40,000 as  compared to $9,000 for the three
months ended March 31, 2000.  The decrease was due to adjustment  for taxes paid
in prior years on deferred compensation expenses and a review of the tax accrual
on municipal bonds.


Results of Operations for the nine months ended March 31, 2000
--------------------------------------------------------------
and March 31, 1999
------------------

         Net Income Net income  increased  $69,000 or 26.54%,  from $260,000 for
         ----------
the nine months ended March 31, 1999 to $329,000 for the nine months ended March
31, 2000. The increase was mainly due to increased net interest income.

         Interest Income Interest income increased $90,000,  or 2.06%, from $4.4
         ---------------
million  for the nine months  ended March 31, 1999 to $4.5  million for the nine
months ended March 31, 2000. The increase was mainly a result in the increase in
earnings on a larger loan  portfolio,  particularly  in consumer and  commercial
loans.

         Interest Expense Interest expense decreased $118,000 or 4.63% from $2.5
         ----------------
million  for the nine months  ended March 31, 1999 to $2.4  million for the nine
months ended March 31,  2000.  The decrease was due mainly to a decrease in cost
of funds as high cost certificates of deposits matured and were repriced.

         Net Interest Income Net interest income increased by $208,000 or 11.37%
         -------------------
from $1.8  million for the nine months  ended March 31, 1999 to $2.0 million for
the nine months ended March 31, 2000.  The increase was mainly due to a decrease
in interest paid on deposits and by increased  income on  investment  securities
and loans.

         Provision  for Credit Losses The Bank made an addition of $9,000 to the
         ----------------------------
provision  for credit  losses for the nine  months  ended  March 31,  2000.  The
allowance  for credit  losses was $219,000 at March 31, 2000.  The allowance for
credit  losses was  $206,000 at March 31, 1999.  A charge to the  provision  for
credit  losses  was made for a $9,000  loss on a consumer  loan  during the nine
months ended March 31, 1999.

         Non-interest  Income  Non-interest  income  decreased by $114,000  from
         --------------------
$466,000  for the nine months  ended  March 31,  1999 to  $352,000  for the nine
months ended March 31, 2000.  The decrease was mainly due to a decrease in gains
on the sale of mortgage  loans  although  mitigated  by an increase in other fee
income.

         Non-interest  Expense Non-interest expense increased by $62,000 to $1.9
         ---------------------
million for the nine months  ended March 31,  2000,  mainly due to  increases in
personnel expense, data processing expense and advertising expenses.



         Provision  for income taxes The provision for income taxes for the nine
         ---------------------------
months  ended March 31,  2000 was  $125,000  compared  to $162,000  for the nine
months ended March 31, 1999. The decrease was due to the tax savings  associated
with municipal  bonds and an adjustment  during the quarter ended March 31, 2000
for prior year tax adjustment on deferred compensation expense.

                                       8
<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 March 31,
2000:
                                                                Percent of
                                                                ----------
                                                 Amount           Assets
                                                 ------           ------

      GAAP Capital....................           $7,200            8.54%
                                                  =====           =====

      Tangible Capital................           $7,200            8.54%
      Tangible Capital Requirement....            1,265            1.50%
                                                  -----           -----
      Excess..........................           $5,935            7.04%
                                                  =====           =====

      Core Capital....................           $7,200            8.54%
      Core Capital Requirement........            2,530            3.00%
                                                  -----           -----
      Excess..........................           $4,670            5.54%
                                                  =====           =====

      Total Risk-Based Capital........           $7,419           15.91%
      Risk-Based Capital Requirement..            3,731            8.00%
                                                  -----           -----
      Excess..........................           $3,688            7.91%
                                                  =====           =====

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.

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 require the Bank
to maintain liquid assets of not less than 4% of its net  withdrawable  accounts
plus short term borrowings. Those levels may be changed from time to time by the
regulators  to  reflect  current  economic  conditions.  The  Bank's  regulatory
liquidity was 26.79% at March 31, 2000 and 30.11% as of June 30, 1999.

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.

                                       9
<PAGE>

                      SWVA BANCSHARES, INC. & SUBSIDIARIES

                                     PART II

Item 1.  Legal Proceedings

                  Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

                  Not applicable.

Item 3.  Defaults upon Senior Securities

                  Not applicable.

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

         None.

Item 5.  Other Information


         None.

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

         None.


                                       10
<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:    May 10, 2000      By: /s/ D. W. Shilling
                               --------------------
                               D. W. Shilling
                               President, Chief Financial Officer, and Director


Date:    May 10, 2000      By: /s/  Mary G. Staples
                               --------------------
                               Mary G. Staples
                               Controller/Treasurer
                               Principal Financial Officer