UNITED STATES SECURITITES AND EXCHANGE COMMISSION
                             Washington, D.C. 29549

                                    FORM 10-Q
(Mark One)
  [ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES
           EXCHANGE ACT OF 1934

                  For the quarterly period ended September 30, 2000

  [   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _______________

                        Commission File Number: 000-30515


                     Weststar Financial Services Corporation
                     ---------------------------------------
             (Exact name of registrant as specified in its charter)


           North Carolina                                      56-2181423
  --------------------------------                        -------------------
  (State or other  jurisdiction of                          (IRS Employer
   incorporation or  organization)                        Identification No.)


                      79 Woodfin Place, Asheville NC 28801
                    -----------------------------------------
                    (Address of principal executive offices)

                                  828-252-1735
              (Registrant's telephone number, including area code)



------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes [ X ]  No  [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common stock,  $1.00 par value - 633,298  shares  outstanding as of November 10,
2000.


<PAGE>


INDEX                                                                 Page

Part I -  FINANCIAL INFORMATION

Financial Statements:
           Consolidated Balance Sheets
             September 30, 2000 and December 31, 1999                   3

           Consolidated Statements of Operations
             Three Months Ended September 30, 2000 and 1999             4
             and Nine Months Ended September 30, 2000 and 1999

           Consolidated Statements of Comprehensive Income (Loss)
             Three Months Ended September 30, 2000 and 1999             5
              and Nine Months Ended September 30, 2000 and 1999

           Consolidated Statement of Changes in Shareholders' Equity
             Nine Months Ended September 30, 2000                       6

           Consolidated Statements of Cash Flows
             Nine Months Ended September 30, 2000 and 1999              7

           Notes to Consolidated Financial Statements                   8

           Management's Discussion and Analysis
             Financial Condition and Results of Operations             10

Part II - OTHER INFORMATION

Exhibit Index                                                          14

Signatures                                                             15


<PAGE>


Weststar Financial Services Corporation & Subsidiary
Consolidated Balance Sheets (unaudited)

<TABLE>
<CAPTION>
                                                                           September 30,       December 31,
                                                                               2000               1999
                                                                            ------------       ------------
<S>                                                                         <C>                <C>
ASSETS:
Cash and cash equivalents:
  Cash and due from banks                                                   $  4,978,116       $  1,892,403
  Interest-bearing deposits                                                        7,973              2,784
  Federal funds sold                                                                   0          2,110,000
                                                                            ------------       ------------
      Total cash and cash equivalents                                          4,986,089          4,005,187
                                                                            ------------       ------------
Investment securities -
  Available for sale, at fair value (amortized cost of
  $2,015,807 and $2,508,339, respectively)                                     2,017,016          2,502,411
                                                                            ------------       ------------
Loans                                                                         55,989,415         34,460,724
Allowance for loan losses                                                       (824,145)          (528,808)
                                                                            ------------       ------------
Net loans                                                                     55,165,270         33,931,916
Premises and equipment, net                                                    2,354,391          2,455,507
Accrued interest receivable                                                      421,082            220,151
Federal Home Loan Bank stock, at cost                                            145,600             58,100
Deferred income taxes                                                            537,572            133,688
Other assets                                                                      95,533             61,137
                                                                            ------------       ------------
TOTAL                                                                       $ 65,722,553       $ 43,368,097
                                                                            ============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
  Demand                                                                    $ 11,128,694       $  4,780,881
  NOW accounts                                                                 7,037,113          3,154,225
  Money market accounts                                                       11,997,449         10,623,376
  Savings                                                                        785,062            583,797
  Time deposits of $100,000 or more                                            6,552,697          5,620,684
  Other time deposits                                                         20,054,136         13,158,017
                                                                            ------------       ------------
        Total deposits                                                        57,555,151         37,920,980
Federal Funds Purchased                                                        1,760,000                 09
Accrued interest payable                                                         226,411           159,1499
Other liabilities                                                                193,803            119,569
                                                                            ------------       ------------
      Total liabilities                                                       59,735,365         38,199,698
                                                                            ------------       ------------


SHAREHOLDERS' EQUITY:
Preferred stock; authorized $1,000,000; issued and outstanding - none                  0                  0
Common stock, $1 par value, authorized - 9,000,000
    shares; issued and outstanding - 633,298 and 633,298, respectively           633,298            633,298
Additional paid-in capital                                                     6,129,636          6,129,636
Accumulated deficit                                                             (776,487)        (1,590,896)
Accumulated other comprehensive income                                               741             (3,639)
                                                                            ------------       ------------
      Total shareholders' equity                                               5,987,188          5,168,399
                                                                            ------------       ------------
TOTAL                                                                       $ 65,722,553       $ 43,368,097
                                                                            ============       ============
</TABLE>

See notes to consolidated financial statements.

                                       3
<PAGE>

Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Operations (unaudited)

<TABLE>
<CAPTION>


                                                                   Three Months                         Nine Months
                                                                  Ended Sept 30,                       Ended Sept 30,
                                                             2000               1999               2000                1999
                                                         -----------        -----------        -----------         ------------
<S>                                                      <C>                <C>                <C>                 <C>
INTEREST INCOME:
Interest and fees on loans                               $ 1,386,333        $   713,500        $ 3,467,835         $ 1,652,746
Federal funds sold                                             9,967             20,907             50,749             118,974
Interest-bearing deposits with other banks                       114                  7                230               1,165
Investments:
  U.S Treasuries                                              11,969              5,408             32,643              20,908
  U.S. Government agencies                                    20,392             26,735             66,849              68,206
  Other                                                        2,806              2,173              5,153               2,698
                                                         -----------        -----------        -----------         -----------
       Total interest income                               1,431,581            768,730          3,623,459           1,864,697
                                                         -----------        -----------        -----------         -----------
INTEREST EXPENSE:
Time deposits of $100,000 or more                             96,272             48,660            263,268             125,555
Other time and savings deposits                              468,075            246,270          1,167,418             640,620
Federal funds purchased                                       16,884                  0             20,211                   0
Other interest expense                                             0                 59                 41                  59
                                                         -----------        -----------        -----------         -----------
                                                         -----------        -----------        -----------         -----------
     Total interest expense                                  581,231            294,989          1,450,938             766,234
                                                         -----------        -----------        -----------         -----------
NET INTEREST INCOME                                          850,350            473,741          2,172,521           1,098,463
PROVISION FOR LOAN LOSSES                                    160,260             61,170            317,460             265,455
                                                         -----------        -----------        -----------         -----------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                                             690,090            412,571          1,855,061             833,008
                                                         -----------        -----------        -----------         -----------
OTHER INCOME:
Service charges on deposit accounts                           89,255             73,345            258,297             187,890
Other service fees and commissions                            44,995             49,588            101,755              87,781
Other                                                          1,768              3,153              8,951               7,374
                                                         -----------        -----------        -----------         -----------
       Total other income                                    136,018            126,086            369,003             283,045
                                                         -----------        -----------        -----------         -----------
OTHER EXPENSES:
Salaries and wages                                           255,339            252,432            770,877             680,600
Employee benefits                                             37,117             27,340            115,933              65,771
Occupancy expense, net                                        35,790             21,955             98,843              58,870
Equipment rentals, depreciation and
  Maintenance                                                 53,862             54,792            167,383             147,683
Supplies                                                      36,852             29,886             97,546              82,689
Professional fees                                            143,691             86,867            416,631             242,605
Marketing                                                     44,312             32,242            113,604             102,304
Other                                                         16,379             26,109             32,465              55,126
                                                         -----------        -----------        -----------         -----------
        Total other expenses                                 623,342            531,623          1,813,282           1,435,648
                                                         -----------        -----------        -----------         -----------
INCOME (LOSS) BEFORE CUMULATIVE
  EFFECT OF A CHANGE IN ACCOUNTING
  PRINCIPLE AND INCOME TAXES                                 202,766              7,034            410,782            (319,595)
INCOME TAX PROVISION (BENEFIT)                                70,049                  0           (403,627)                  0
                                                         -----------        -----------        -----------         -----------
INCOME (LOSS) BEFORE CUMULATIVE
  EFFECT OF A CHANGE IN ACCOUNTING
  PRINCIPLE                                                  132,717              7,034            814,409            (319,595)
                                                         -----------        -----------        -----------         -----------
CUMULATIVE EFFECT OF A CHANGE IN
  ACCOUNTING PRINCIPLE, NET OF TAX
  BENEFIT OF $44,877                                               0                  0                  0             (71,326)
                                                         -----------        -----------        -----------         -----------
NET INCOME (LOSS)                                        $   132,717        $     7,034        $   814,409         $  (390,921)
                                                         ===========        ===========        ===========         ===========

PER SHARE AMOUNTS:
Basic and diluted income (loss) before cumulative
  Effect of a change in accounting principle             $      0.21        $      0.02        $      1.29         $     (0.52)
Cumulative effect of a change in accounting
  Principle                                                        0                  0                  0               (0.12)
                                                         -----------        -----------        -----------         -----------
 Basic and diluted net income (loss)                     $      0.21        $      0.02        $      1.29         $     (0.64)
                                                         ===========        ===========        ===========         ===========
</TABLE>

See notes to consolidated financial statements

                                        4


<PAGE>

WESTSTAR FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months                    Nine  Months
                                                                Ended Sept. 30,                 Ended Sept. 30,
                                                            2000             1999           2000             1999

<S>                                                       <C>             <C>             <C>              <C>
NET INCOME (LOSS)                                         $132,717        $  7,034        $814,409         $(390,921)
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized holding gains (losses) on securities
  available for sale, net of taxes                           2,908             385           4,380            (3,291)
                                                          --------       ---------        --------         ---------

COMPREHENSIVE INCOME (LOSS)                               $135,625        $  7,419        $818,789         $(394,212)

</TABLE>

See notes to consolidated financial statements.

                                       5

<PAGE>


WESTSTAR FINANCIAL SERVICES CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 and 2000 (unaudited)

<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                 Common Stock          Additional                      Other          Total
                                            ----------------------      Paid-In     Accumulated    Comprehensive  Shareholders'
                                             Shares        Amount       Capital       Deficit      Income (Loss)     Equity
<S>                                         <C>        <C>            <C>           <C>            <C>            <C>
Balance December 31, 1998                   607,557    $   607,557    $ 5,897,957   $(1,341,243)   $    (1,696)   $ 5,162,575
  Net change in unrealized
     loss on securities held for sale        (3,291)        (3,291)
  Issuance of common stock                   25,741         25,741        231,679                                     257,420
  Net loss                                                                             (390,921)                     (390,921)
                                           -----------------------------------------------------------------------------------
Balance September 30, 2000                  633,298    $   633,298    $ 6,129,636   $(1,732,164)   $    (4,987)   $ 5,025,783
                                           ===================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                 Common Stock          Additional                      Other         Total
                                            ----------------------      Paid-In     Accumulated    Comprehensive  Shareholders'
                                             Shares        Amount       Capital       Deficit      Income (Loss)     Equity
<S>                                         <C>        <C>            <C>           <C>            <C>            <C>
Balance December 31, 1999                   633,298   $   633,298     $ 6,129,636   $(1,590,896)   $    (3,639)   $ 5,168,399
  Net change in unrealized
     loss on securities held for sale         4,380         4,380
  Net income                                814,409       814,409
                                           -----------------------------------------------------------------------------------
Balance September 30, 2000                  633,298   $   633,298     $ 6,129,636   $  (776,487)   $       741    $ 5,987,188
                                           ===================================================================================
</TABLE>

See notes to consolidated financial statements

                                        6

<PAGE>

Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                                                    2000               1999

<S>                                                                            <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss)                                                               $    814,409       $   (390,921)
Adjustments to reconcile net income (loss) to net cash provided (used) by
operating activities:
  Depreciation                                                                      174,637            127,103
  Provision for loan loss                                                           317,460            265,455
  Premium amortization and discount accretion, net                                  (18,233)           (53,130)
  Cumulative effect of a change in accounting principle                                   0             71,326
  Increase in accrued interest receivable                                          (200,931)          (101,041)
  Increase in accrued interest payable                                               67,262             72,652
  Increase in other assets                                                          (34,412)           (28,379)
  Deferred income taxes                                                            (406,627)                 0
  Increase (decrease) in other liabilities                                           74,235           (101,185)
                                                                               ------------       ------------
    Net cash provided (used) by operating activities                                787,800           (138,120)
                                                                               ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Federal Home Loan Bank stock                                            (87,500)                 0
Purchases of securities available for sale                                       (2,010,234)        (2,509,711)
Maturities of securities available for sale                                       2,521,000          2,100,000
Net increase in loans                                                           (21,550,814)       (16,984,105)
Additions to premises and equipment                                                 (73,521)          (401,655)
Issuance of common stock                                                                  0            257,420
                                                                               ------------       ------------
    Net cash used in investing activities                                       (21,201,069)       (17,538,051)
                                                                               ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts, and savings accounts              11,806,039         10,836,202
Net increase in certificates of deposits                                          7,828,132          7,704,525
Net increase in federal funds purchased                                           1,760,000                  0
                                                                               ------------       ------------
    Net cash provided by financing activities                                    21,394,171         18,540,727
                                                                               ------------       ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                           980,902            864,556
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  4,005,187          3,545,714
                                                                               ------------       ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $  4,986,089       $  4,410,270
                                                                               ============       ============


SUPPLEMENTAL DISCLOSURES:
  Cash paid during the period for:
    Interest                                                                   $  1,363,424       $    693,582
    Income taxes                                                                      3,000                  0

</TABLE>

See notes to consolidated financial statements.

                                       7
<PAGE>


WESTSTAR FINANCIAL SERVICES CORPORTION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.             Weststar Financial Services Corporation (the "Company") is a bank
               holding  company with one  subsidiary,  The Bank of Asheville,  a
               state chartered commercial bank incorporated in North Carolina on
               October 29, 1997.  Common  shares of The Bank of  Asheville  were
               exchanged for common shares of the Company on April 29, 2000.

               In  the  opinion  of  management,   the  accompanying   financial
               statements  contain all  adjustments  necessary to present fairly
               the  consolidated   financial  position  of  the  Company  as  of
               September  30, 2000 and December 31, 1999,  and the  consolidated
               results  of their  operations  and their cash flows for the three
               and nine month periods ended September 30, 2000 and 1999.

               The accounting  policies  followed are set forth in Note 1 to the
               1999 Annual Report to Shareholders (Form 10-KSB) on file with the
               Federal Deposit Insurance Corporation.

2.             Loans at September 30, 2000 and December 31, 1999 classified by
               type are as follows:

<TABLE>
<CAPTION>
                                                            September 30,       December 31,
                                                                2000               1999
               Real Estate:
<S>                                                        <C>                <C>
                 Construction                              $  9,201,506       $  7,152,238
                 Mortgage                                    29,890,483         16,963,594
               Commercial, financial and agricultural        16,090,477          9,926,255
               Consumer                                       1,009,529            562,765
                                                           ------------       ------------
               Subtotal                                      56,191,995         34,604,852
               Net deferred loan origination fees              (202,580)          (144,128)
                                                           ------------       ------------
               Total                                       $ 55,989,415       $ 34,460,724
                                                           ============       ============
</TABLE>


3.             At  December  31,  1999,  the  Company  had a $543,000  valuation
               allowance  related to  deferred  tax  assets  for  which,  in the
               opinion of management,  realization  was not reasonably  assured.
               Based  upon  the  taxable  income  being  generated  in 2000  and
               management  expectations of continued  profitability,  management
               now believes that  realization of the deferred tax assets is more
               likely than not.  The  valuation  allowance  was  reversed in the
               first quarter of 2000, thereby providing a deferred tax benefit.

4.             In the normal  course of business  there are various  commitments
               and contingent  liabilities such as commitments to extend credit,
               which are not reflected on the financial  statements.  The unused
               portion of lines to extend credit were $10,618,000 and $5,537,000
               at September 30, 2000 and December 31, 1999, respectively.

5.             Basic  earnings per share have been  computed  using the weighted
               average  number of shares of common stock  outstanding of 633,298
               and 613,395 for the quarters  ended  September 30, 2000 and 1999,
               respectively  and 633,298 and 609,530 for the nine month  periods
               ended  September 30, 2000 and 1999,  respectively.  There were no
               potentially  dilutive  securities during the three and nine month
               periods ended September 30, 2000 and 1999.

                                       8

<PAGE>


6.             The Company's capital at September 30, 2000 and December 31, 1999
               to risk weighted assets totaled 12.92% and 17.13%,  respectively.
               Current federal  regulations  require that the Company maintain a
               minimum  ratio of total  capital to risk  weighted  assets of 8%,
               with at least 4% being in the form of Tier 1 capital,  as defined
               in the  regulations.  In addition,  the Company  must  maintain a
               leverage  ratio of 4%. As of September  30, 2000 and December 31,
               1999,  the  Company's   capital   exceeded  the  current  capital
               requirements.

7.             The SEC has issued Staff Accounting Bulletin No. 101 ("SAB 101"),
               as amended  on June 26,  2000,  titled  "Revenue  Recognition  in
               Financial  Statements".  SAB 101  provides  SEC  guidance  on the
               recognition, presentation and disclosure of revenue in accordance
               with generally  accepted  accounting  principles in the financial
               statements.  The Company must implement any applicable provisions
               of SAB 101 no later than the fourth quarter of the current fiscal
               year.  The  Company has  determined  that  implementation  of the
               applicable  provisions of SAB 101 will not have a material effect
               on the Company's financial statements and current disclosures.

               In June 1998, the Financial  Accounting  Standards Board ("FASB")
               issued Statement of Financial  Accounting  Standards ("SFAS") No.
               133   "Accounting   for   Derivative   Instruments   and  Hedging
               Activities."  SFAS  133  establishes   accounting  and  reporting
               standards   for   derivative   instruments,   including   certain
               derivative instruments embedded in other contracts, (collectively
               referred to as derivatives) and for hedging  activities.  The new
               standard  requires that an entity  recognize all  derivatives  as
               either  assets  or  liabilities  in the  statement  of  financial
               position and measure those  instruments  at fair value.  SFAS 133
               was  amended  by  SFAS  No.  137   "Accounting   for   Derivative
               Instruments  and Hedging  Activities - Deferral of the  Effective
               Date for FASB  Statement  No. 133",  which  delays the  Company's
               effective date until January 1, 2001. Management does not believe
               that  SFAS 133  will  have a  material  effect  on the  Company's
               financial statements and current disclosures.

               In September  2000, the FASB issued SFAS No. 140  "Accounting for
               Transfers and Servicing of Financial Assets and Extinguishment of
               Liabilities".  SFAS 140 revises the standards for  accounting for
               securitization  and  other  transfers  of  financial  assets  and
               collateral  and requires  certain  disclosures,  but carries over
               most of the provisions of SFAS 125 without  reconsideration.  The
               statement is effective  for  transfers and servicing of financial
               assets and  extinguishment  of liabilities  occurring after March
               31, 2001.  Management  does not believe that SFAS 140 will have a
               material effect on the Company's financial statements and current
               disclosures.

                                       9

<PAGE>


Weststar Financial Services Corporation & Subsidiary
Management's Discussion and Analysis

CHANGES IN FINANCIAL CONDITION
SEPTEMBER 30, 2000 COMPARED TO DECEMBER 31, 1999

During the period from  December  31, 1999 to  September  30, 2000 total  assets
increased $22,354,456 or 52%. This increase, reflected primarily in the cash and
loan portfolios, was funded primarily by deposit growth.

Securities and  interest-bearing  balances with other financial  institutions at
September  30, 2000 totaled  $2,024,989  compared to  $4,615,195 at December 31,
1999.  Securities  available for sale remained  relatively flat when compared to
December  31,  1999 and  federal  funds  sold was  reduced to none as funds were
allocated to the loan  portfolio.  During 1999, the Company gained access to the
Federal Home Loan Bank system. This access grants the Company additional sources
of funds for lending and liquidity.  An initial equity investment of $58,100 was
required to gain access to the Federal  Home Loan Bank's  resources.  During the
nine month period of 2000, an  additional  investment of $87,500 was required by
the Federal Home Loan Bank.

The  loan  portfolio  constituted  85%  of the  Company's  total  assets.  Loans
increased $21,528,691 from December 31, 1999 to September 30, 2000. The increase
in loan  demand  resulted  from  market  penetration  into the  small  business,
professional and consumer bases within the Company's market. Management places a
strong emphasis on loan quality. At September 30, 2000, there were no loans that
(i)  represented  or resulted  from  trends or  uncertainties  which  management
reasonably expects to materially impact future operating results,  liquidity, or
capital resources,  or (ii) represented  material credits about which management
was aware of any information  which caused  management to have serious doubts as
to the ability of such borrowers to comply with the loan repayment terms.

Management  considers the Company's  asset quality to be of primary  importance.
The  allowance for loan losses,  which is utilized to absorb losses  inherent in
the loan portfolio, is maintained at a level sufficient to provide for estimated
potential  charge-offs of non-collectible  loans. The loan portfolio is analyzed
periodically  in an effort to identify  potential  problems before they actually
occur.  The  allowance  for loan  losses  is  evaluated  on a  regular  basis by
management using a methodology  that segments the loan portfolio by types.  This
methodology is based upon management's  periodic review of the collectibility of
the  loans  in  light  of  the  current  status  of  the  portfolio,  historical
experience, the nature and volume of the loan portfolio, adverse situations that
may affect the borrower's  ability to repay,  estimated  value of any underlying
collateral, and prevailing economic conditions.  Because the Company has been in
existence for a relatively  short time,  and  therefore  has a limited  history,
management has also  considered in applying its analytical  methodology the loss
experience and allowance levels of other peer community banks and the historical
experiences encountered by the Company's management and senior lending officers.
Weststar's  methodology for assessing the  appropriateness  of the allowance for
loan losses  consists of two key elements,  which are the formula  allowance and
specific allowance.

The formula  allowance is  calculated  by applying  loss factors to  outstanding
loans and certain  unused  commitments,  in each case based on the internal risk
grade of such loans,  pools of loans and commitments.  Changes in risk grades of
both  performing  and  non-performing  loans  affect the  amount of the  formula
allowance.  Loss  factors  are based in part on  limited  experience  and may be
adjusted for  significant  factors that, in management's  judgement,  affect the
collectibility  of the  portfolio as of the  evaluation  date.  Loss factors are
developed in the following way.

                                       10
<PAGE>

-   Problem  graded  loan loss  factors  are  derived  from a  methodology  that
    utilizes  published  experience of peer  community  banks and the historical
    experiences encountered by Weststar's management.
-   Pass graded loan loss  factors are based on average  annual net  charge-offs
    rate over a period believed to be a business cycle.
-   Pooled  loan loss  factors  (not  individually  graded  loans)  are based on
    expected  net  charge-offs  for one year.  Pooled  loans are loans  that are
    homogeneous in nature, such as consumer installment loans.
-   Specific allowances are established in cases where management has identified
    significant  conditions or circumstances related to a credit that management
    believes indicate the probability that a loss has been incurred in excess of
    the formula allowance. This amount is determined either by a discounted cash
    flow method or the fair value of the collateral.

The Company has incurred limited charge-off  experience.  Actual charge-offs are
compared to the allowance and adjustments are made accordingly.  Also, by basing
the pass graded loan loss  factors over a period  relative of a business  cycle,
the  methodology  is designed to take our recent loss  experience  into account.
Pooled  loan loss  factors  are  adjusted  monthly  based  upon the level of net
charge-offs expected by management in the next twelve months.  Furthermore,  the
methodology  permits  adjustments to any loss factor used in the  computation of
the formula allowance in the event that, in management's judgement,  significant
factors,  which affect the  collectibility of the portfolio as of the evaluation
date, are not reflected in the loss factors. By assessing the probable estimated
losses  inherent in the loan portfolio on a monthly basis, we are able to adjust
specific and inherent loss estimates based upon the most recent information.

The provision for loan losses  represents a charge  against  income in an amount
necessary  to  maintain  the  allowance  at an  appropriate  level.  The monthly
provision for loan losses may fluctuate  based on the results of this  analysis.
The  allowance  for loan losses at September  30, 2000 and December 31, 1999 was
$824,145  and  $528,808  or  1.47%  and  1.53%,  respectively,  of  gross  loans
outstanding.

Deposits increased  $19,634,171 during the nine months ended September 30, 2000.
The growth was found in all  categories  of  deposits.  Transaction  and savings
accounts  accounted  for  $11,806,039  or 60% of  growth,  while  time  deposits
accounted  for  $7,828,132  or 40% of growth.  Approximately  $5 million in time
deposits were generated through the internet. These deposits primarily represent
deposits  from other  financial  institutions  such as credit unions and savings
banks, and account for approximately 9% of total deposits.

The  Company's  capital at September 30, 2000 to risk  weighted  assets  totaled
12.92%.  Current federal regulations require a minimum ratio of total capital to
risk  weighted  assets  of 8%,  with at  least  4%  being  in the form of Tier 1
capital, as defined in the regulations. In addition, the Company must maintain a
leverage ratio of 4%. As of September 30, 2000, the Company's  capital  exceeded
the current regulatory capital requirements.

RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2000 AND 1999

Net interest  income,  the principal  source of the Company's  earnings,  is the
amount of income  generated by earning  assets  (primarily  loans and investment
securities)  less the total  interest  cost of the funds  obtained to carry them
(primarily  deposits  and other  borrowings).  The volume,  rate and mix of both
earning assets and related funding sources determine net interest income.

COMPARATIVE THREE MONTHS

Net interest  income for the quarter ended  September 30, 2000 totaled  $850,350
compared to $473,741 in 1999.  This  increase is  attributable  to growth in net
earning  assets and improved net interest  margins.  The  Company's net interest
margin was approximately 5.7% and 5.2% for the quarters ended September 30, 2000
and 1999, respectively.


                                       11
<PAGE>


Weststar  recorded a provision  for loan losses of $160,260  and $16,170 for the
quarters ended September 30, 2000 and 1999, respectively. The provision for loan
losses is  charged  to  operations  to bring  the  allowance  to a level  deemed
appropriate by management based on the factors  discussed under "Asset Quality."
The provision for credit losses  increased due to growth in the loan  portfolio,
and an  increase  in  non-performing  loans  from  .30% to .83% of  gross  loans
outstanding at September 30, 1999 and 2000, respectively.

Non-interest  income  for the  September  30,  2000  and 1999  quarters  totaled
$136,018  and  $126,086,  respectively.  The  growth in  service  charge  income
increased  commensurate  with growth in transaction  related  deposit  accounts.
Non-interest expense totaled $623,342 compared to $531,623 in 1999. Non-interest
expense  increased  primarily  as a result of Company  wide asset growth and the
costs of  servicing  a larger  loan and deposit  base of  customers.  Additional
increased costs related  directly to insurance,  supplies,  audit, tax and legal
fees as well as a sundry of other  items.  Income  (loss)  before  income  taxes
totaled  $202,766 and $7,034 for the quarters ended September 30, 2000 and 1999,
respectively.  Income  taxes  totaled  $70,049 and none for the  quarters  ended
September  30, 2000 and 1999,  respectively.  Net income  totaled  $132,717  and
$7,034 for the quarters ended September 30, 2000 and 1999, respectively.

Other  comprehensive  income,  which  is  the  change  in  shareholders'  equity
excluding  transactions with shareholders',  totaled $2,908 and $385 in 2000 and
1999, respectively.  Comprehensive income totaled $135,625 for the quarter ended
September 30, 2000 compared to $7,419 for the quarters ended September 30, 1999.

COMPARATIVE NINE MONTHS

Net interest  income for the nine month period ended  September 30, 2000 totaled
$2,172,521   compared  to  $1,098,463  in  1999.   This  increase  is  primarily
attributable to growth in earning assets and interest-bearing  liabilities.  The
Company's  net  interest  margin  was  approximately  5.5% and 4.7% for the nine
months ended September 30, 2000 and 1999, respectively.

The provision for loan losses  charged to operations is an amount  sufficient to
bring the  allowance  for loan losses to an estimated  balance  considered to be
adequate to absorb potential losses in the portfolio. Management's determination
of the adequacy of the  allowance is based on an  evaluation  of the  portfolio,
current  economic  conditions,  historical loan loss experience and other risks.
During the nine month  period  ended  September  30,  2000 and 1999,  management
allocated $317,460 and $265,455, respectively, to the loan loss reserve.

The  recorded  investment  in  loans  that  are  considered  to be  impaired  in
accordance  with  criteria  set  forth  in  Statement  of  Financial  Accounting
Standards No. 114 of the Financial  Accounting  Standards Board was $194,528 and
$90,544 at  September  30, 2000 and 1999,  respectively.  The  average  recorded
balance of impaired loans during 2000 and 1999 was not  significantly  different
from the balance at September 30, 2000 and 1999.  Loans are considered  impaired
when based on current  information,  it is probable that the Bank will be unable
to collect  all  amounts  due  according  to the  contractual  terms of the loan
agreement,  including interest payments. Impaired loans are carried at the lower
of the recorded investment in the loan, the estimated present value of the total
expected future cash flows,  discounted at the loan's effective rate or the fair
value  of the  collateral,  if the loan is  collateral  dependent.  The  related
allowance  for loan  losses  determined  in  accordance  with  SFAS No.  114 for
impaired  loans  was  $51,779  and  $51,823  at  September  30,  2000 and  1999,
respectively.  For the nine month period ended  September 30, 2000 and 1999, the
Company recognized  interest income from impaired loans of approximately  $8,660
and $4,044, respectively.


                                       12
<PAGE>


Non-interest  income for the nine month period ended September 30, 2000 and 1999
totaled $369,003 and $283,045, respectively. The growth in service charge income
increased  commensurate  with growth in transaction  related  deposit  accounts.
Non-interest   expense  totaled  $1,813,282  compared  to  $1,435,648  in  1999.
Non-interest  expense increased primarily as a result of additional staffing and
premises and equipment purchases related to growth.  Additional  increased costs
related directly to insurance,  supplies, audit, tax and legal fees as well as a
sundry of other  items.  The net  operating  income  (loss)  before a cumulative
effect of a change in  accounting  principle and income tax benefit was $410,782
and ($319,595) for September 30, 2000 and 1999, respectively.

For the nine month period ended  September 30, 2000,  the Company  recognized an
income tax benefit of $403,627  primarily  related to the release of a valuation
allowance of $530,612  previously  recorded against deferred tax assets,  net of
income  taxes  related to  operations  for the  period.  At  December  31,  1999
management   believed  the  realization  of  the  valuation  allowance  was  not
reasonably  assured.  Based upon the taxable income being  generated in 2000 and
management's  expectations of continued  profitability,  management now believes
the realization of the deferred tax asset is more likely than not. The valuation
allowance  was  reversed  in the first  quarter  of 2000,  thereby  providing  a
deferred tax benefit. Net income totaled $814,409 compared to ($390,921) for the
nine month periods ended September 30, 2000 and 1999, respectively.

Other comprehensive  income (loss),  which is the change in shareholders' equity
excluding  transactions with shareholders',  totaled $4,380 and $(3,291) in 2000
and 1999,  respectively.  Other  comprehensive  income (loss)  totaled  $818,789
compared to $(394,212) in 2000 and 1999, respectively.



                                       13
<PAGE>





Part II - OTHER INFORMATION

ITEM 4 - OTHER INFORMATION

None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

A.)         Exhibits
                          None

B.)         Reports on Form 8-K
            No reports on Form 8-K have been filed for the quarter ended June
            30, 1999. Items 1, 2, 3, 4, 5, 6, 7, 8 and 9 are inapplicable and
            are omitted.




                                       14
<PAGE>


                                   SIGNATURE

In accordance  with the  requirement of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                        Weststar Financial Services Corporation
                                        (Registrant)

November 10, 2000                       /s/ Randall C.  Hall
                                        --------------------
                                        Randall C. Hall
                                        Executive Vice President and
                                        Chief Financial and
                                        Principal Accounting Officer