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 September 30, 1999
                                               ------------------

                                       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 November 5, 1999: $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 September 30, 1999 (unaudited) and June 30, 1999              1

             Consolidated Statements of Income for the
             Three Months Ended September 30, 1999 and
             September 30, 1998 (unaudited)                                   2

             Consolidated Statements of Comprehensive Income
             for the Three Months Ended September 30, 1999 and
             September 30, 1998 (unaudited)                                   3

             Consolidated Statements of Cash Flows for the
             Three Months Ended September 30, 1999 and
             September 30, 1998 (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                                               11
             =================

<PAGE>



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

<TABLE>
<CAPTION>
                                     Assets

                                                              Sept 30          June 30
                                                            -----------      ----------
                                                               1999             1999
                                                            -----------      ----------
                                                            (Unaudited)
<S>                                                        <C>              <C>
Cash and cash equivalents                                    $ 2,135          $ 2,454
Interest-bearing deposits                                      5,909            6,278
Investment & Mortgage Backed Securities:
  Held to Maturity, at amortized cost                            275              283
  Available for Sale, at fair value                           22,434           22,934
  Restricted at cost                                             516              600
Loans held for sale                                              812              476
Loans receivable, net                                         47,342           45,576
Property and equipment, net                                    1,683            1,688
Accrued interest receivable                                      604              594
Prepaid expenses and other assets                                864              831
                                                             --------         --------
    Total assets                                             $82,574          $81,714
                                                             ========         ========

                      Liabilities and Stockholders' Equity

Deposits                                                     $65,880          $62,094
Advances from Federal Home Loan Bank                           9,000           12,000
Advances from borrowers
  for taxes and insurance                                        388              210
Other liabilities and deferred income                            607              619
                                                             --------         --------
    Total liabilities                                         75,875           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 September 30, 1999 and as of June 30, 1999               42               42
Additional paid-in capital                                     2,838            2,838
Dividends declared and paid                                      (76)            (180)
Less unearned ESOP shares (27,385 shares)                       (228)            (228)
Less unearned MSBP shares (17,537 shares)                       (241)            (254)
Retained earnings
 (substantially restricted)                                    5,032            5,088
Valuation allowance
  marketable equity securities                                  (668)            (515)
                                                             --------         --------
  Total Stockholders' Equity                                   6,699            6,791
                                                             --------         --------

  Total Liabilities
        and Stockholders' Equity                             $82,574          $81,714
                                                             ========         ========

Book Value Per Share (not in thousands)                       $15.81           $16.03
                                                             ========         ========

</TABLE>

                                       1
<PAGE>

                     SWVA BANCSHARES, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                     Sept 30
                                                            ------------------------
                                                              1999            1998
                                                            --------       ---------
                                                                   (Unaudited)
<S>                                                         <C>           <C>
Interest income
  Loans                                                      $   930        $1,001
  Mortgage-backed and related securities                         161           153
  U. S. Government obligations including agencies                207           165
  Municipal Bonds                                                 30            12
  Other investments, including overnight deposits                123           162
                                                              -------       -------
Total interest income                                          1,451         1,493
                                                              -------       -------
Interest expense
  Deposits                                                       632           790
  Borrowed funds                                                 157            99
                                                              -------       -------
         Total interest expense                                  789           889
                                                              -------       -------
         Net interest income                                     662           604
Provision for credit losses                                        3             3
                                                              -------       -------
         Net interest income after
           provision for credit losses                           659           601
                                                              -------       -------
Noninterest income
  Loan and other customer service fees                            57            37
  Gain on sale of mortgage loans                                  49            79
  Gross rental income                                             25            25
  Loss (gain) on Available for Sale Investments                    -             -
  Other                                                            -             7
                                                              -------       -------
         Total noninterest income                                131           149
                                                              -------       -------
Noninterest expenses
  Personnel                                                      349           352
  Office occupancy and equipment                                  86            85
  Data processing                                                 58            55
  Federal insurance of accounts                                    9            10
  Other                                                          106           111
                                                              -------       -------
         Total noninterest expenses                              608           613
                                                              -------       -------
         Income before income taxes                              182           137
         Provision for income taxes                               58            52
                                                              -------       -------
         Net income                                          $   124       $    85
                                                              =======       =======
Basic earnings per share                                          .31          .18
Diluted earnings per share                                        .31          .18
Cash dividends per share                                          .20          .20

</TABLE>


                                       2
<PAGE>

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


                                                           Three Months Ended
                                                                 Sept 30
                                                         -----------------------
                                                          1999             1998
                                                         ------           ------
                                                               (Unaudited)
Net Income                                                $124             $ 85

Other comprehensive income, net of tax

         Unrealized gains on securities                   (153)              32
                                                         -----             ----

Comprehensive Income                                     ($ 29)            $117
                                                         =====             ====

                                        3

<PAGE>


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

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                           Sept 30
                                                                  --------------------------
                                                                     1999            1998
                                                                    -------         -------
                                                                          (Unaudited)

<S>                                                              <C>             <C>
Operating Activities
   Net Income                                                      $    124         $    85
Adjustments to Reconcile Net Income to Net Cash
     Provided by (used in) operating activities
     MSBP Shares Allocated                                               13
     Provision for credit losses                                          3               3
     Provision for depreciation and amortization                         29              26
     Provision for Deferred Income Tax                                    0               0
     Loans Originated for Sale                                       (3,998)         (6,710)
     Proceeds from sales of loans originated for sale                 3,710           6,766
     Gain on Sale of Loans, from fees                                   (49)            (79)
     Gain on Sale of Real Estate                                          -               -
     Gain on Disposal of Property and Equipment                           -               -
     Net gain on sale of investments, available for sale                  -               -
     Net (increase) decrease in Other Assets                             40              50
     Net increase (decrease) in Other Liabilities                       167             132
                                                                    -------         -------
   Net cash provided by (used in) operating activities                   39             273
                                                                    -------         -------
Investing activities
    Proceeds from sale of property and equipment                          -               -
    Proceeds from sale of FHLB Stock                                    109               -
    Proceeds from maturity of investments
        and interest-bearing deposits                                 1,856           1,871
    Proceeds from sale of available for sale investments                  -           3,250
    Purchase of investments and interest-bearing deposits            (1,487)         (2,370)
    Purchase of available for sale investments                            -          (3,000)
    Proceeds from sale of foreclosed real estate                          -               -
    Purchase of FHLB Stock                                              (25)              -
    Purchase of foreclosed real estate                                    -               -
    Purchase of property and equipment                                  (23)             (5)
    Net (increase) decrease in loans                                 (1,169)            819
    Purchase of loans                                                  (600)              -
    Principal repayments on Mortgage Backed Securities                  271             546
                                                                    -------         -------
        Net cash provided by (used in) investing activities          (1,068)          1,111
                                                                    -------         -------
Financing activities
    Curtailment of advances and other borrowings                     (4,000)              -
    Proceeds from advances and other borrowings                       1,000               -
    Net increase (decrease) in savings deposits                       3,786          (2,586)
   Repurchase of stock                                                    -             (68)
    Dividends paid                                                      (76)            (99)
                                                                    -------         -------
    Net cash used in financing activities                               710          (2,753)
                                                                    -------         -------
Increase (decrease) in cash and cash equivalents                       (319)         (1,369)

Cash and cash equivalents at beginning of period                      2,454           3,193
                                                                    -------         -------
Cash and cash equivalents at end of period                          $ 2,135         $ 1,824
                                                                    =======         =======

</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 three  months  ended  September  30,  1999,  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 Ended
                                                                      ------------------------
                                                                           September 30,
                                                                      ------------------------
                                                                        1999            1998
                                                                      ---------       --------
<S>                                                                 <C>            <C>
         Numerator:
(a) Net income available to shareholders                              $    124       $     85
                                                                       =======        =======
         Denominator:
         Weighed-average shares outstanding                            423,612        495,899
         Less: ESOP weighed-average shares outstanding                 (22,819)       (27,385)
                                                                       -------        -------

(b) Basic EPS weighed-average shares outstanding                       400,793        468,514

         Effect of dilutive securities:
           Incremental shares attributable to the Stock Option               -          3,627
           Plan and Management Stock Bonus Plan                              -          1,429
                                                                       -------        -------

(c) Diluted EPS weighed-average shares outstanding                     400,793        473,570
                                                                       =======        =======

         Basic earnings per share (a/b)                               $    .31       $    .18
                                                                       =======        =======

         Diluted earnings per share (a/c)                             $    .31       $    .18
                                                                       =======        =======

</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  loss on securities  held as available for sale, for
the three  months  ended  September  30,  1999 of  $153,000  after tax versus an
unrealized  gain of $32,000  after tax for the three months ended  September 30,
1998.  The  before tax and after tax  amount,  as well as the tax  (expense)  is
summarized below.


                                                  Before       Tax        After
                                                   Tax       Expense       Tax
                                                   ---       -------       ---

Three months ended September 30, 1999:
         Unrealized gains on securities           ($232)       $79        ($153)

Three months ended September 30, 1998:
         Unrealized gains on securities             $40       ($ 8)        $ 32


                                        6

<PAGE>


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

Comparison of Financial Condition at September 30, 1999 and June 30, 1999
-------------------------------------------------------------------------

Total assets increased  $860,000 or 1.04% from $81.7 million at June 30, 1999 to
$82.6 million at September 30, 1999. Net loans receivable increased $1.8 million
or 3.73% to $47.3  million at September  30, 1999 from $45.6 million at June 30,
1999 due to increased  activity in small business loans and greater retention of
mortgage production in the loan portfolio.

Interest-bearing  deposits decreased $369,000 or 5.88% from $6.3 million at June
30, 1999 to $5.9 million at September 30, 1999. The decrease was mainly due to a
decision by management to use funds on jumbo certificates to fund mortgage loans
instead  of placing  them in  certificates  of  deposits  with  other  financial
institutions.  Cash and cash equivalents  decreased $319,000 or 13.00% from $2.4
million at June 30,  1999 to $2.1  million at  September  30, 1999 due mainly to
increased cash needed for funding loans. Held to Maturity Investments  decreased
$8,000  from  $283,000  at June 30, 1999 to  $275,000  at  September  30,  1999.
Available for Sale Investments decreased $500,000 from $22.9 million at June 30,
1999 to $22.4  million  at  September  30,  1999 due to  principal  paybacks  on
Mortgage Backed Securities.

There were no  non-performing  assets at  September  30, 1999 and June 30, 1999.
Classified assets totaled $282,000.  $278,000 was classified as substandard with
$277,000  on single  family  mortgage  loans and  $1,000 on a consumer  loan.  A
consumer loan in the amount of $4,000 was classified as doubtful.

Deposits increased $3.8 million, or 6.10% from $62.1 million at June 30, 1999 to
$65.9  million at  September  30,  1999 due mainly to special  rates  offered on
certificates of deposits.  The funds received on these  certificates was used to
fund loans and to decrease  the amount of borrowed  funds.  Core  deposits  were
$18.5 million or 27.98% of total savings.

At September 30, 1999, there were $9.0 million  outstanding in advances from the
Federal Home Loan Bank of Atlanta as compared to $12.0  million  outstanding  on
June 30, 1999.

Advances from borrowers for taxes and insurance increased $178,000 or 84.76% due
to the  accumulation  of escrow  for real  estate  taxes to be paid  during  the
quarter  ending  December  31,  1999.  Other  liabilities  and  deferred  income
decreased $12,000 or 1.94%.

Results of Operations for the three months ended September 30, 1999
-------------------------------------------------------------------
and September 30, 1998
----------------------

         Net Income Net income increased $39,000 or 45.88%, from $85,000 for the
three  months  ended  September  30, 1998 to $124,000 for the three months ended
September  30,  1999.  The  increase was mainly due to a decrease in the cost of
deposits  offset by an increase in the cost of borrowed  funds and a decrease in
the gain on sale of mortgage loans.

         Interest Income Interest income decreased $42,000,  or 2.81%, from $1.5
million for the three  months ended  September  30, 1998 to $1.4 million for the
three months ended September 30, 1999. The decrease was mainly due to a decrease
in loan rates on adjustable rate mortgages.

         Interest  Expense Interest  expense  decreased  $100,000 or 11.25% from
$889,000 for the three months ended September 30, 1998 to $789,000 for the three
months ended  September 30, 1999.  The decrease was due mainly to an decrease in
interest  paid on  deposits  partially  offset by an  increase  in  interest  on
borrowed funds.

         Net Interest Income Net interest  income  increased by $58,000 or 9.60%
from $604,000 for the three months ended  September 30, 1998 to $662,000 for the
three months ended September 30, 1999.

         Provision  for Credit  Losses The Bank made  additions of $3,000 to the
provision for credit losses for the quarters ended  September  30,1998 and 1999.
The allowance for credit losses was $213,000 at September 30, 1999.

         Non-interest Income Non-interest income decreased by $18,000, or 13.74%
from $149,000 for the three months ended  September 30, 1998 to $131,000 for the
three  months  ended  September  30,  1999.  The  decrease  was mainly due to an
decrease  in  gains on the sale of  mortgage  loans  during  the  quarter  ended
September 30, 1999.


                                        7

<PAGE>


Results of Operations for the three months ended September 30, 1999
-------------------------------------------------------------------
and September 30, 1998, cont.
-----------------------------

         Non-interest  Expense Non-interest expense decreased by $5,000, or .82%
from $613,000 for the three months ended  September 30, 1998 to $608,000 for the
three months ended September 30, 1999.

         Comprehensive Income (Loss) 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.  For
the quarter ended September 30, 1999, unrealized losses on Investments Available
for Sale, net of tax effects  aggregated  $153,000.  These unrealized  losses on
securities  when  combined with net  operating  income of $124,000  results in a
comprehensive loss of $29,000,  net of the applicable tax effect. For additional
information,  please refer to  Management's  Discussion  on  Regulatory  Capital
Requirements.

         Provision for income taxes The provision for income taxes for the three
months ended  September  30, 1999 was $58,000  compared to $52,000 for the three
months ended  September 30, 1998.  The increase was due to increased  income for
the quarter ended September 30, 1999.

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 September
30, 1999:
                                                                      Percent of
                                                                      ----------
                                                          Amount        Assets
                                                          ------      ----------

     GAAP Capital....................                     $7,001         8.38%
                                                           =====        =====

     Tangible Capital................                     $7,001         8.38%
     Tangible Capital Requirement....                      1,254         1.50%
                                                           -----        -----
     Excess..........................                     $5,747         6.88%
                                                           =====        =====

     Core Capital....................                     $7,001         8.38%
     Core Capital Requirement........                      2,508         3.00%
                                                           -----        -----
     Excess..........................                     $4,493         5.38%
                                                           =====        =====

     Total Risk-Based Capital........                     $7,214        17.10%
     Risk-Based Capital Requirement..                      3,374         8.00%
                                                           -----        -----
     Excess..........................                     $3,840         9.10%
                                                           =====        =====

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.

Pursuant to FASB No. 130 the Bank is required to record  changes in the value of
its investment  portfolio as regards  unrealized gains or losses that may result
from  movements in interest  rates.  As of September 30, 1999,  the Savings Bank
shows  unrealized  losses,  net of tax effect,  totaling  $153,000 due to higher
interest  rates.  Management  does not anticipate  the  realization of the above
loss. The unrealized  loss does however  negatively  impact the Bank's capital.
The unrealized  losses  combined with net operating  income of $124,000 yields a
net reduction in the Bank's capital of $29,000,  net of applicable  taxes, and a
corresponding  reduction  in the book value of common  stock from $16.03 on June
30, 1999 to $15.81 as of September 30, 1999. Despite this reduction,  the Bank's
capital continues to exceed regulatory requirements as shown above and continues
to be adequate to support future asset growth.

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

                                        8

<PAGE>


Liquidity, cont.

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 27.92% at September 30,
1999 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.

The Year 2000 Issue

The Bank's  Board of  Directors  has adopted an action plan for  addressing  the
computer-related  concerns  raised by Year 2000. An internal  committee has been
apointed by the Board to manage this effort.  The Year 2000 committee meets on a
regular basis to review and assess the current  status of the Year 2000 project.
The committee  then prepares as status  report for  management  and the Board of
Directors.

Equipment
---------
A process to identify all equipment  that may  potentially  be impacted has been
completed.  All outside servicers and major vendors have been contacted in order
to  ascertain  their  individual  degree of  readiness  for the Year 2000.  This
includes  items such as the vault,  heating,  ventilation  and air  conditioning
controls and telephones. All of the vendors have responded to these inquires. We
have received  certifications of Year 2000 compliance for systems  controlled by
third party  providers or determined  that the systems should not be impacted by
the Year 2000.  The only  upgrade  needed was to our  telephone  system and this
upgrade has been completed.

Internal Computers
------------------
All internal computers have been tested for the Year 2000. At this time, we have
found no problems with the computers and software used on the computers. We have
completed  testing with Bisys (our data services  provider  which  processes the
Bank's major loan and deposit applications). This testing involved advancing the
date in a test environment  through various critical dates during the millennium
change.  Transactions  were run on the  test  system  to test the date  handling
portions of the upgraded  software.  No problems  were found during the testing.
With the extensive  testing and lack of problems  found, we are confident of our
ability to provide all services to our customer in the Year 2000 and beyond.

Computers used by our customers
-------------------------------
Large loan customers have been contacted in order to both instill  awareness and
to determine  their state of readiness for Year 2000.  All  customers  contacted
have  responded.  At this point,  the Bank has no reason to doubt the ability of
any of these  customers  to  continue  to  operate  effectively  in a Year  2000
environment.  We believe that most of our residential borrowers and that none of
our  commercial  borrowers are so dependent on their  computers that a Year 2000
problem  would render them unable to collect  revenue or rent and in turn hinder
their  ability to make loan payments to the Bank.  New large loan  customers and
commercial  customers (both loan and deposit) are asked to complete a form as to
their state of readiness for the Year 2000. We do not expect any material  costs
to address this risk area.

Cost
----
The  committee  has  presented  to the  Board of  Directors,  and the  Board has
approved a Year 2000 budget. The budget is approximately $35,000. To date, total
expenses paid are $33,000.  The major costs was an upgrade and testing surcharge
paid to Bisys.  (Bisys is a data services  provider  which  processes the Bank's
major loan and deposit applications.)

Contingency & Cash Plan
-----------------------
Our data services provider has sponsored six meetings on their progress and test
plans for the Year 2000. Starting in November,  1998 and continuing until April,
1999, a test facility was set up to provide for formal testing  between the Bank
and  Bisys.  At this time,  we find no reason to believe  that Bisys will not be
able to operate properly in January, 2000.


                                        9

<PAGE>


The Year 2000 Issue, cont.

The committee worked with senior management to develop, validate and implement a
Year 2000 liquidity or "Cash" Plan. This plan has been completed and approved by
the Board of Director.

A Contingency  Plan has been prepared by the committee to facilitate the ability
of the Bank to continue  providing an acceptable  level of service to the Bank's
customers in the event that Bisys encounters problems in January, 2000 or we are
unable  to  communicate  with  Bisys.   Procedures  were  already  in  place  to
accommodate interruptions of online service for periods of short duration. These
procedures have been  re-evaluated  for  effectiveness  over a longer  duration.
Appropriate  adjustments have been made and additional  procedures  required for
longer duration "down-time" have been put into place. During September, 1999, we
tested our procedures, including operating two offices without electrical power.
The test was a success and shows our ability to handle various situations should
the need arise.  At the end of December,  1999, we will generate paper backup of
all  customer  accounts  and  general  ledger  accounts.  In the plan,  customer
payments will be processed manually, and due to the size of the Bank, we believe
that we would be able to operate in this manner indefinitely, until our existing
data  servicer,  or a  replacement,  is able to again  provide  data  processing
services.  This procedure would require  changing of schedules and the hiring of
temporary  staff during this time,  which would increase our cost.  Should it be
necessary  to change data  service  providers  during the  beginning of the Year
2000, the cost could be material.

During  the  weekend of January  1,  2000,  we will  verify  with Bisys that all
systems  are  up  and  running  prior  to  opening  on  January  3,  2000.  This
verification will include telephone systems, electrical and computer operations.



                                       10

<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.

                  Not applicable.

Item 5.  Other Information

                  Not applicable.

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

                  Not applicable.



                                       11

<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:    November 12, 1999                 By: /s/ D. W. Shilling
                                               ---------------------------------
                                           D. W. Shilling
                                           President, Chief Executive Officer,
                                           Chief Financial Officer, and Director


Date:    November 12, 1999                 By: /s/  Mary G. Staples
                                               ---------------------------------
                                           Mary G. Staples
                                           Controller/Treasurer
                                           Principal Financial Officer



                                       12