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 September 30, 1997
                               ------------------


                                       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 12, 1997: $0.10 par value - 510,984 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, 1997 and June 30, 1997
                  (unaudited)                                               1

                  Consolidated Statements of Income for the
                  Three Months Ended September 30, 1997 and
                  September 30, 1996 (unaudited)                            2

                  Consolidated Statements of Cash Flows for the
                  Three Months Ended September 30, 1997 and
                  September 30, 1996 (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                                        10
                  =================




<PAGE>

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

<TABLE>
<CAPTION>
                                     Assets                    Sept 30      June 30
                                                               --------------------   
                                                                 1997         1997
                                                               --------------------
                                                                    (Unaudited)

<S>                                                            <C>         <C>     
Cash and cash equivalents                                      $  4,550    $  1,276
Interest-bearing deposits                                         6,176       5,304
Investment & Mortgage Backed Securities:
  Held to Maturity, at amortized cost                               358         365
  Available for Sale, at fair value                               8,229       8,748
  Restricted at cost                                                961         961
Loans held for sale                                                 533         727
Loans receivable, net                                            48,990      50,982
Property and equipment, net                                       1,644       1,666
Accrued interest receivable                                         487         437
Prepaid expenses and other assets                                   259         287
                                                               --------    --------

    Total assets                                               $ 72,187    $ 70,753
                                                               ========    ========


                      Liabilities and Stockholders' Equity

Deposits                                                       $ 58,650    $ 57,933
Advances Federal Home Loan Bank                                   4,500       3,500
Advances from borrowers
  for taxes and insurance                                           436         205
Other liabilities and deferred income                               418         513
                                                               --------    --------

    Total liabilities                                            64,004      62,151
                                                               --------    --------

Stockholders' Equity
Preferred Stock, 275,000 shares
   authorized, no shares issued or
   outstanding
Common stock, $.10 par value,  2,225,000 shares authorized,  
   510,984 outstanding as of September 30, 1997 and 510,984
   outstanding as of June 30, 1997                                   51          51
Additional paid-in capital                                        4,298       4,286
Dividends declared and paid                                        (588)       (143)
Less unearned ESOP shares (31,951 shares)                          (319)       (319)
Less unearned MSBP shares (20,145 shares)                          (349)       (349)
Retained earnings
 (substantially restricted)                                       5,020       5,047
Valuation allowance
  marketable equity securities                                       70          29
                                                               --------    --------

  Total Stockholders' Equity                                      8,183       8,602
                                                               --------    --------

  Total Liabilities
        and Stockholders' Equity                               $ 72,187    $ 70,753
                                                               ========    ========
</TABLE>


                                        1


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

<TABLE>
<CAPTION>
                                                            Three Months
                                                               Ended
                                                              Sept 30
                                                       --------------------
                                                        1997          1996
                                                       --------------------
                                                            (Unaudited)
<S>                                                    <C>           <C>   
Interest income
  Loans                                                $1,095        $1,008
  Mortgage-backed and related securities                   46           120
  U. S. Government obligations
          including agencies                              107            18
  Other investments, including
          overnight deposits                              145           109
                                                       ------        ------

Total interest income                                   1,393         1,255
                                                       ------        ------

Interest expense
  Deposits                                                671           635
  Borrowed funds                                           47             9
                                                       ------        ------

         Total interest expense                           718           644
                                                       ------        ------

         Net interest income                              675           611

Provision for credit losses                                24             0
                                                       ------        ------

         Net interest income after
           provision for credit losses                    651           611
                                                       ------        ------

Noninterest income
  Loan and other customer service fees                     32            37
  Gain on sale of mortgage loans                           46            26
  Gross rental income                                      25            24
  Other                                                   (17)            0
                                                       ------        ------

         Total noninterest income                          86            87
                                                       ------        ------

Noninterest expenses
  Personnel                                               318           305
  Office occupancy and equipment                           74            68
  Data processing                                          31            32
  Federal insurance of accounts                             5           389
  Other                                                   122            98
                                                       ------        ------

         Total noninterest expenses                       550           892
                                                       ------        ------

         Income before income taxes                       187          (194)
         Provision for income taxes                        71             0
                                                       ------        ------


         Net income                                    $  116         $(194)
                                                       ======         ===== 

Per common share:
Primary and fully diluted earnings                         .24        (0.39)
</TABLE>


                                        2


<PAGE>

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

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                            Sept 30
                                                                     -----------------------
                                                                      1997           1996
                                                                     -----------------------
Operating Activities                                                          (Unaudited)
<S>                                                                  <C>           <C>      
    Net Income                                                     $    116        $   (194)
    Adjustments to Reconcile Net Income to Net Cash
        Provided by (used in) operating activities
        Provision for credit losses                                      24               0
        Provision for depreciation and amortization                      22              21
        Provision for Deferred Income Tax                                 0             (24)
        Loans Originated for Sale                                    (3,695)         (1,266)
        Proceeds from sales of loans originated for sale              3,935           1,833
        Gain on Sale of Loans, from fees                                (46)            (26)
        Gain on Sale of Real Estate                                       0               0
        Gain on Disposal of Property and Equipment                        1               0
        Net gain on sale of investments, available for sale             (17)              0
        Net (increase) decrease in Other Assets                         (12)            (28)
        Net increase (decrease) in Other Liabilities                    135             522
                                                                   --------        --------
          Net cash provided by (used in) operating activities           463             838
                                                                   --------        --------

Investing activities
    Proceeds from sale of property and equipment                          0               0
    Proceeds from maturity of investments
        and interest-bearing deposits                                 1,089             887
  Proceeds from sale of available for sale investments                2,757               0
    Purchase of investments and interest-bearing deposits            (2,250)         (1,993)
  Purchase of available for sale investments                         (1,961)         (1,184)
    Proceeds from sale of foreclosed real estate                          0               0
    Purchase of foreclosed real estate                                    0               0
    Purchase of property and equipment                                   (1)             (3)
    Net (increase) decrease in loans                                  1,967          (3,015)
    Purchase of loans                                                     0             (11)
    Principal repayments on Mortgage Backed Securities                   80              19
                                                                   --------        --------
        Net cash provided by (used in) investing activities           1,681          (5,300)
                                                                   --------        --------

Financing activities
    Curtailment of advances and other borrowings                     (1,500)              0
    Proceeds from advances and other borrowings                       2,500           3,500
    Net increase (decrease) in savings deposits                         718          (1,167)
  Repurchase of stock                                                     0            (341)
    Dividends paid                                                     (588)            (70)
                                                                   --------        --------
    Net cash used in financing activities                             1,130           1,922
                                                                   --------        --------

Increase (decrease) in cash and cash equivalents                      3,274          (2,540)

Cash and cash equivalents at beginning of period                      1,276           5,262
                                                                   --------        --------

Cash and cash equivalents at end of period                         $  4,550        $  2,722
                                                                   ========        ========
</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.  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,  1997,  are not
necessarily  indicative  of the results that may be expected for the year ending
June 30, 1998.

NOTE 2 -- 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 September 30, 1997 and June 30, 1997
-------------------------------------------------------------------------


Total assets increased $1.4 million or 2.03% from $70.8 million at June 30, 1997
to $72.2  million at September 30, 1997.  Net loans  receivable  decreased  $2.0
million or 3.91% to $49.0  million at September  30, 1997 from $51.0  million at
June 30, 1997 due  primarily to an decrease in Adjustable  Rate  Mortgage  (ARM)
loans.


Interest-bearing  deposits  increased  $872,000  or  16.44% to $6.2  million  at
September  30, 1997 from $5.3 million at June 30, 1997 due mainly to an increase
in cash  available  to  invest  in  interest-bearing  deposits.  Cash  and  cash
equivalents increased $3.3 million or 256.58% from $1.3 million at June 30, 1997
to $4.6  million at September  30, 1997 due mainly to  increased  cash from loan
payoffs and funds received on savings  deposits.  Available for Sale Investments
decreased  $500,000  from  $8.7  million  at June 30,  1997 to $8.2  million  at
September 30, 1997 due to a decrease in funds  invested and $73,000 in principal
payments  on FNMA  Mortgage  Backed  Securities.  Loans held for sale  decreased
$194,000  or 26.69% due to a decrease in loans  pending  sale on  September  30,
1997.


Non-performing assets at September 30, 1997 were $112,000 as compared to $60,000
non-performing assets at June 30, 1997. The non-performing assets consisted of 2
single family  mortgage  loans.  Classified  assets totaled  $441,000.  All were
classified  as  substandard.  $6,000 was on a letter of credit and the remaining
were on single family mortgage loans.


Deposits  increased  $717,000,  or 1.24% from $57.9  million at June 30, 1997 to
$58.7  million  at  September  30,  1997 due mainly to an  increase  in funds in
certificates  of deposits.  Core  deposits were $16.3 million or 27.86% of total
savings.


At September 30, 1997, there were $4.5 million  outstanding in advances from the
Federal home Loan Bank of Atlanta as compared to $3.5 million outstanding at the
end of June 30, 1997,  an increase of $1.0 million or 28.57%.  The advances were
used to leverage investment purchases.


Advances from  borrowers for taxes and insurance  increased  $231,000 or 112.68%
due to the  accumulation  of escrow for real estate  taxes to be paid during the
quarter  ending  December  31,  1997.  Other  liabilities  and  deferred  income
decreased $95,000 or 18.52%.

                                        5


<PAGE>

Results  of  Operations  for the  three  months  ended  September  30,  1997 and
--------------------------------------------------------------------------------
September 30, 1996
------------------

         Net Income Net income  increased  $310,000 or 159.79%,  from ($194,000)
for the three months ended  September  30, 1996 to $116,000 for the three months
ended  September  30, 1997.  The increase in net income was  primarily  due to a
one-time federal deposit  insurance  assessment  during only the 1996 period and
increased net interest income.

         Interest Income Interest income  increased  $138,000,  or 11.00%,  from
$1.3million  for the three months ended  September  30, 1996 to $1.4 million for
the three  months  ended  September  30,  1997.  The  increase was mainly due to
increased interest earned on fixed rate mortgage loans and investments.

         Interest  Expense  Interest  expense  increased  $74,000 or 11.49% from
$644,000 for the three months ended September 30, 1996 to $718,000 for the three
months ended  September 30, 1997.  The increase was due mainly to an increase in
interest paid on borrowed funds and interest paid on deposits.

         Net Interest Income Net interest income  increased by $64,000 or 10.47%
from $611,000 for the three months ended  September 30, 1996 to $675,000 for the
three months ended  September 30, 1997 due mainly to additional  interest earned
on fixed rate mortgage loans and investments.

         Provision for Credit Losses The Bank made an addition of $24,000 to the
provision  for credit  losses  for the  quarter  ended  September  30,1997.  The
addition  was made due to a loss of $44,000 on a  delinquent  real estate  loan.
After the  deduction of the loss,  the allowance for credit losses was $197,000.
No provision for credit losses were made during the quarter ending September 30,
1996.

         Non-interest  Income  Non-interest income decreased by $1,000, or 1.15%
from $87,000 for the three months  ended  September  30, 1996 to $86,000 for the
three months ended  September 30, 1997. The decrease was mainly due to a loss on
the sale of  investment  securities,  offset by an increase in the fees on loans
sold in the secondary market.

         Non-interest  Expense  Non-interest  expense decreased by $342,000,  or
38.34% from  $892,000 for the three months ended  September 30, 1996 to $550,000
for the three months ended September 30, 1997,  mainly due to a $355,000 special
federal deposit insurance assessment during the three months ended September 30,
1996 that was not repeated  during the three months  ended  September  30, 1997.
This was partially offset by a $24,000 or 24.49% increase in other expenses.

         Provision for income taxes The provision for income taxes for the three
months ended  September 30, 1997 was $71,000.  There was no provision for income
taxes during the three months ended  September  30, 1997 due to the loss for the
quarter.

                                        6


<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 September
30, 1997:

<TABLE>
<CAPTION>
                                                                         Percent of
                                                                         ----------
                                                            Amount         Assets
                                                            ------         -------

<S>                                                         <C>           <C>   
                  GAAP Capital....................          $8,043        11.06%
                                                            ======        ===== 

                  Tangible Capital................          $8,043        11.06%
                  Tangible Capital Requirement....           1,091         1.50%
                                                            ------         ---- 
                  Excess..........................          $6,952         9.56%
                                                            ======         ==== 

                  Core Capital....................          $8,043        11.06%
                  Core Capital Requirement........           2,182         3.00%
                                                            ------         ---- 
                  Excess..........................          $5,861         8.06%
                                                            ======         ==== 

                  Total Risk-Based Capital........          $8,240        22.31%
                  Risk-Based Capital Requirement..           2,955         8.00%
                                                            ------         ---- 
                  Excess..........................          $5,285        13.31%
                                                            ======        ===== 
</TABLE>


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.

                                        7


<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 11.67% at September 30, 1997 and 6.74% as of June 30, 1997.

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.



                                        8


<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.

                  Not applicable.

Item 5.           Other Information

                  Not applicable.

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

                  (a)      Not applicable.



                                        9


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


Date: November 12, 1997               By:   /s/  Mary G. Staples
                                         -----------------------------------
                                      Mary G. Staples
                                      Vice President/Treasurer
                                      Principal Financial Officer



                                       11