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

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

For the quarterly period ended March 31, 2003

[_]  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 - 957,539 shares outstanding as of April 30, 2003.










                                                                               1

<PAGE>


INDEX                                                                       Page

Part I - FINANCIAL INFORMATION

Financial Statements:
         Consolidated Balance Sheets
           March 31, 2003 and December 31, 2002                              3

         Consolidated Statements of Operations
           Three Months Ended March 31, 2003 and 2002                        4

         Consolidated Statements of Comprehensive Income
           Three Months Ended March 31, 2003 and 2002                        5

         Consolidated Statement of Changes in Shareholders' Equity
           Three Months Ended March 31, 2003                                 6

         Consolidated Statements of Cash Flows
           Three Months Ended March 31, 2003 and 2002                        7

         Notes to Consolidated Financial Statements                          8

Item 2 - Management's Discussion and Analysis
           Financial Condition and Results of Operations                     10

Item 3 - Controls and procedures                                             17

Part II - OTHER INFORMATION

Exhibit Index                                                                17

Signatures                                                                   18



                                                                               2

<PAGE>
<TABLE>
<CAPTION>



WESTSTAR FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS                                                      (unaudited)          (audited)
                                                                                   March 31,         December 31,
                                                                                    2003                2002*
                                                                               --------------       --------------

ASSETS:
Cash and cash equivalents:
<S>                                                                            <C>                   <C>
  Cash and due from banks                                                      $  4,566,430          $  3,796,804
  Interest-bearing deposits                                                          42,992                40,018
  Federal funds sold                                                             10,994,000            10,279,000
                                                                               ------------          ------------
      Total cash and cash equivalents                                            15,603,422            14,115,822
Investment securities -
  Available for sale, at fair value (amortized cost of
  $13,475,496 and $12,507,535, respectively)                                     13,566,421            12,557,103
                                                                               ------------          ------------
Loans                                                                            67,510,928            67,977,979
Allowance for loan losses                                                        (1,019,736)           (1,020,198)
                                                                               ------------          ------------
Net loans                                                                        66,491,192            66,957,781
Premises and equipment, net                                                       2,075,150             2,004,769
Accrued interest receivable                                                         478,074               487,949
Federal Home Loan Bank stock, at cost                                               229,800               229,800
Deferred income taxes                                                               172,413               189,486
Foreclosed properties                                                               905,779               792,190
Other assets                                                                        338,915               355,214
                                                                               ------------          ------------
TOTAL                                                                          $ 99,861,166          $ 97,690,114
                                                                               ============          ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
  Demand                                                                       $ 18,410,883          $ 16,806,011
  NOW accounts                                                                    8,701,119             9,064,594
  Money market accounts                                                          26,938,830            25,949,134
  Savings                                                                         2,132,326             1,887,138
  Time deposits of $100,000 or more                                               7,225,219             8,036,462
  Other time deposits                                                            27,186,412            26,735,930
                                                                               ------------          ------------
        Total deposits                                                           90,594,789            88,479,269
Accrued interest payable                                                            157,645              157,4609
Other liabilities                                                                   342,287               384,231
                                                                               ------------          ------------
      Total liabilities                                                          91,094,721            89,020,960
                                                                               ------------          ------------


SHAREHOLDERS' EQUITY:
Preferred stock; authorized $1,000,000; issued and outstanding - none                  --                    --
Common stock, $1 par value, authorized - 9,000,000
    shares; issued and outstanding - 957,539 and 957,539, respectively              957,539               957,539
Additional paid-in capital                                                        7,120,187             7,120,187
Retained earnings                                                                   632,909               561,003
Accumulated other comprehensive income                                               55,810                30,425
                                                                               ------------          ------------
      Total shareholders' equity                                                  8,766,445             8,669,154
                                                                               ------------          ------------
TOTAL                                                                          $ 99,861,166          $ 97,690,114
                                                                               ============          ============
</TABLE>


*Derived from audited financial statements.

See notes to consolidated financial statements.

                                                                               3

<PAGE>

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


<TABLE>
<CAPTION>


                                                                  Three Months
                                                                 Ended March 31,

                                                              2003            2002
                                                          --------------  -------------
INTEREST INCOME:
<S>                                                     <C>             <C>
Interest and fees on loans                              $     1,179,724 $    1,263,673
Federal funds sold                                               25,951          2,002
Interest-bearing deposits                                           122          6,156
Investments:
  U.S. Government and agencies                                   86,097         67,573
  Municipal bonds                                                 9,767          2,262
  Corporate dividends                                             2,896          3,620
                                                          --------------  -------------
       Total interest income                                  1,304,557      1,345,286
                                                          --------------  -------------
INTEREST EXPENSE:
Time deposits of $100,000 or more                                57,601         84,426
Other time and savings deposits                                 319,871        324,211
Federal funds purchased                                               -         14,888
Other interest expense                                            2,276          1,444
                                                          --------------  -------------
     Total interest expense                                     379,748        424,969
                                                          --------------  -------------
NET INTEREST INCOME                                             924,809        920,317
PROVISION FOR LOAN LOSSES                                       355,000        202,650
                                                          --------------  -------------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                                                569,809        717,667
                                                          --------------  -------------
OTHER INCOME:
Service charges on deposit accounts                             244,590        282,803
Other service fees and commissions                               89,384         97,200
Other                                                             4,163          7,916
                                                          --------------  -------------
       Total other income                                       338,137        387,919
                                                          --------------  -------------
OTHER EXPENSES:
Salaries and wages                                              335,098        315,726
Employee benefits                                                56,939         55,744
Occupancy expense, net                                           49,813         39,503
Equipment rentals, depreciation and
  maintenance                                                    57,916         68,409
Supplies                                                         46,735         43,408
Professional fees                                               165,493        194,844
Marketing                                                        15,601         21,751
Other                                                            68,445        101,084
                                                          --------------  -------------
        Total other expenses                                    796,040        840,469
                                                          --------------  -------------
INCOME BEFORE INCOME TAXES                                      111,906        265,117
INCOME TAX PROVISION                                             40,000        102,865
                                                          --------------  -------------
NET INCOME                                              $        71,906 $      162,252
                                                          =============   ============

EARNINGS PER SHARE:
Basic                                                   $          0.08 $         0.17
                                                          ==============  =============
Diluted                                                 $          0.07 $         0.17
                                                          ==============  =============

</TABLE>




See notes to consolidated financial statements


                                                                               4
<PAGE>


Weststar Financial Services Corporation
Consolidated Statements of Comprehensive Income (unaudited)


                                                             Three   Months
                                                             Ended March 31,
                                                           2003          2002

NET INCOME                                             $   71,906   $  162,252
OTHER COMPREHENSIVE INCOME
  Unrealized holding gains (losses)  on securities
    available for sale                                    41,357       (46,307)
  Tax effect                                             (15,972)       17,884
                                                       -----------  ------------
  Unrealized holding gains (losses) on securities
  available for sale, net of tax                           25,385      (28,423)
                                                       -----------  ------------
COMPREHENSIVE INCOME                                   $   97,291   $  133,829
                                                       ===========  ============

See notes to consolidated financial statements.


                                                                               5

<PAGE>

WESTSTAR FINANCIAL SERVICES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHARESHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002

<TABLE>
<CAPTION>

                                                                                       Accumulated
                                                             Additional                   Other           Total
                                          Common Stock        Paid-In     Retained    Comprehensive    Shareholders'
                                     ------------------------
                                        Shares     Amount     Capital     Earnings       Income           Equity
<S>                                       <C>       <C>       <C>          <C>                <C>          <C>
Balance December 31, 2001                 869,721   $869,721  $7,114,771   ($43,014)          $40,719      $7,982,197
  Net change in unrealized
     gain on securities held for sale                                                        (28,423)        (28,423)
  Net income                                                                 162,252                          162,252
                                     ---------------------------------------------------------------------------------
Balance March 31, 2002                    869,721    869,721   7,114,771     119,238           12,296       8,116,026
                                     =================================================================================


Balance December 31, 2002                 957,539   $957,539  $7,120,187    $561,003          $30,425      $8,669,154
  Net change in unrealized
     gain on securities held for sale                                                          25,385          25,385
  Net income                                                                  71,906                           71,906
                                     ---------------------------------------------------------------------------------
Balance March 31, 2003                    957,539   $957,539  $7,120,187    $632,909          $55,810      $8,766,445
                                     =================================================================================

</TABLE>



See notes to consolidated financial statements.


                                                                               6
<PAGE>

<TABLE>
<CAPTION>


Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Cash Flows
For the Three Months Ended March 31,                                               2003                   2002
                                                                                ------------          ------------


CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>                   <C>
Net income                                                                      $     71,906          $    162,252
Adjustments to reconcile net income to net cash used by operating activities:
  Depreciation                                                                        66,547                72,377
  Provision for loan losses                                                          355,000               202,650
  Premium amortization and discount accretion, net                                     4,618                 1,262
  (Increase) decrease in accrued interest receivable                                   9,875              (105,596)
  Increase (decrease) in accrued interest payable                                        185               (64,623)
  (Increase) decrease in other assets                                                (82,765)               20,608
  Decrease in other liabilities                                                      (41,944)              (19,075)
  Loss on sales of foreclosed properties                                              32,014                 1,299
  Loss on sales of premises and equipment                                               --                   1,588
  Deferred income tax provision (benefit)                                              1,101               (26,121)
  Loss on uninsured deposits                                                           5,205                67,000
                                                                                ------------          ------------
    Net cash provided by operating activities                                        421,742               313,621
                                                                                ------------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale                                        (4,508,950)                 --
Maturities of securities available for sale                                        3,536,371               100,000
Net increase in loans                                                               (100,863)           (1,502,444)
Proceeds from sales of foreclosed properties                                          66,849                 8,000
Proceeds from sales of premises and equipment                                           --                   3,005
Net expenditures on foreclosed properties                                             93,859                  --
Additions to premises and equipment                                                 (136,928)               (8,974)
                                                                                ------------          ------------
    Net cash used in investing activities                                         (1,049,662)           (1,400,413)
                                                                                ------------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts, MMDA and savings accounts           2,476,281             4,511,006
Net decrease in time deposits                                                       (360,761)              (86,817)
                                                                                ------------          ------------
    Net cash provided by financing activities                                      2,115,520             4,424,189
                                                                                ------------          ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                          1,487,600             3,337,397
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  14,115,822             5,426,705
                                                                                ------------          ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $ 15,603,422          $  8,764,102
                                                                                ============          ============

</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  consolidated  financial
     statements  contain  all  adjustments   necessary  to  present  fairly  the
     consolidated  financial  position  of the  Company as of March 31, 2003 and
     December 31, 2002,  and the  consolidated  results of their  operations and
     their cash flows for the three-month periods ended March 31, 2003 and 2002.
     Operating  results for the three-month  period ended March 31, 2003 are not
     necessarily  indicative  of the results that may be expected for the fiscal
     year ending December 31, 2003.

     The accounting policies followed are set forth in Note 1 to the 2002 Annual
     Report  to  Shareholders  (Form  10-KSB)  on file with the  Securities  and
     Exchange Commission.

2.   Loans at March 31, 2003 and  December  31, 2002  classified  by type are as
     follows:

                                                  March 31,      December 31,
                                                   2003              2002
    Real Estate:
     Construction                              $ 11,835,335      $ 12,334,543
     Mortgage                                    36,667,840        37,214,677
    Commercial, financial and agricultural       17,040,089        16,367,306
    Consumer                                      2,079,855         2,188,840
                                               ------------      ------------
    Subtotal                                     67,623,119        68,105,366
    Net deferred loan origination fees             (112,191)         (127,387)
                                               ------------      ------------
    Total                                      $ 67,510,928      $ 67,977,979
                                               ============      ============


3.   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  portions of lines to
     extend  credit  were  $11,558,055  and  $13,911,491  at March 31,  2003 and
     December 31, 2002,  respectively.  In addition,  letters of credit  totaled
     $1,085,000  and  $1,145,022  at March  31,  2003  and  December  31,  2002,
     respectively.

4.   Basic  earnings per share have been  computed  using the  weighted  average
     number of shares of common stock outstanding of 957,539 and 956,693 for the
     quarters ended March 31, 2003 and 2002, respectively.  Diluted earnings per
     share have been computed using common stock and common stock equivalents of
     994,471 and 968,297. Shares have been adjusted to reflect a 10% stock split
     paid in the form of an 11-for-10 stock dividend paid December 2002.

5.   Statement of Financial  Accounting  Standards ("SFAS") No. 123,  Accounting
     for Stock-Based Compensation, encourages all entities to adopt a fair value



                                                                               8
<PAGE>

     based method of accounting for employee stock compensation  plans,  whereby
     compensation  cost is  measured at the grant date based on the value of the
     award and is  recognized  over the  service  period,  which is usually  the
     vesting  period.  However,  it also allows an entity to continue to measure
     compensation cost for those plans using the intrinsic value based method of
     accounting  prescribed  by  Accounting  Principles  Board  Opinion  No. 25,
     Accounting for Stock Issued to Employees,  whereby compensation cost is the
     excess,  if any, of the quoted  market price of the stock at the grant date
     (or other measurement date) over the amount an employee must pay to acquire
     the  stock.  The  Company  has  elected  to  continue  with the  accounting
     methodology in Opinion No. 25 and, as a result,  has provided the below pro
     forma   disclosures  of  net  income  and  earnings  per  share  and  other
     disclosures  as if the fair  value  based  method  of  accounting  had been
     applied.

     At March 31, 2003, the Company had two stock-based  compensation plans. The
     Company  accounts for  compensation  costs related to the  Company's  stock
     option plans using the intrinsic value method.  Therefore,  no compensation
     costs has been  recognized  for stock option awards because the options are
     granted at exercise prices based on the market value of the Company's stock
     on the date of grant. Had compensation costs for the Company's stock option
     plans been determined using the fair value method,  the Company's pro forma
     net income would have been as follows:

     For the Periods Ended March 31,                      2003         2002


     Net income as reported                          $    71,906  $   162,252
     Less:  Total stock-based employee
     compensation expense determined
     under fair value method for all awards, net
     of related tax effects                               36,575       36,542
                                                     -----------  -----------
     Pro forma net income                            $    35,331  $   125,710
                                                     ===========  ===========

     Net income per share:
       As reported:

         Basic                                       $      0.08  $      0.17
                                                     ===========  ===========
         Diluted                                     $      0.07  $      0.17
                                                     ===========  ===========

       Pro forma:


         Basic                                       $      0.04  $      0.13
                                                     ===========  ===========
         Diluted                                     $      0.04  $      0.13
                                                     ===========  ===========






                                                                               9
<PAGE>



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

CHANGES IN FINANCIAL CONDITION
MARCH 31, 2003 COMPARED TO DECEMBER 31, 2002

During the  period  from  December  31,  2002 to March 31,  2003,  total  assets
increased  $2,171,052 or 2%. This increase,  reflected primarily in the cash and
cash  equivalents  and investment  securities,  was funded  primarily by deposit
growth.

Securities,   federal  funds  sold  and  interest-bearing  balances  with  other
financial  institutions  at March  31,  2003  totaled  $24,603,413  compared  to
$22,876,121 at December 31, 2002.  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.  Investments
in Federal Home Loan Bank stock to date total $229,800.

The  loan  portfolio  constituted  68%  of the  Company's  total  assets.  Loans
decreased  $467,051  from  December  31, 2002 to March 31, 2003.  Slow  economic
growth,  charge-offs of $364,363 in addition to  management's  desire to improve
liquidity  resulted in the modest decrease in loan growth.  Management  places a
strong emphasis on loan quality. At March 31, 2003, 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.

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 $2,118,882,
$518,658,  and  $2,160,936  at March 31, 2003 and 2002,  and  December 31, 2002,
respectively.  The average  recorded  balance of impaired  loans during 2003 and
2002 was not  significantly  different  from the  balance at March 31,  2003 and
2002. The average  balance for the year ended December 31, 2002 was  $1,085,215.
The related allowance for loan losses determined in accordance with SFAS No. 114
for  impaired  loans was $495,438 and $28,262 and $115,865 at March 31, 2002 and
2001,  and December 31, 2002  respectively.  For the  three-month  periods ended
March 31, 2003 and 2002, Weststar recognized interest income from impaired loans
of approximately  $29,527 and $5,736.  See "Asset Quality" for discussion for an
analysis of loan loss reserves.

Deposits increased  $2,115,520 during the three months ended March 31, 2003. The
growth was found in demand deposits,  money market and savings accounts.  Growth
stemmed from continued market penetration.  Transactions accounts such as demand
deposits,  NOW  accounts,  money market  demand and savings  accounts  reflected
$2,476,281 in growth.  Interest rate sensitive customers shifted funds from time
deposits  to  lower  interest-bearing  money  market  and  savings  accounts  in
anticipation of future increases in interest rates.

The Company's  capital at March 31, 2003 to risk weighted assets totaled 13.54%.
Current  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  regulation.  As of March 31, 2003,  the Company's  capital  exceeded the
current regulatory capital requirements.





                                                                              10


<PAGE>

RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2003 AND 2002

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 March 31,  2003  totaled  $924,809
compared to $920,317 in 2002.  This  increase is  attributable  to growth in net
earning  assets.  The Company's net interest margin was  approximately  3.9% and
4.5% for the quarters ended March 31, 2003 and 2002, respectively.

Weststar  recorded a provision  for loan losses of $355,000 and $202,650 for the
quarters  ended March 31, 2003 and 2002,  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  primarily as a result of one large
charge-off to a single borrower in the amount of $250,000.

Non-interest  income for the March 31, 2003 and 2002 quarters  totaled  $338,137
and $387,919,  respectively.  The decrease in service  charge  income  primarily
reflects a decrease  in  overdraft  charge  income of $48,076.  The  decrease in
overdraft  charges was based on activity  during the period.  Other service fees
and commission  decreased  principally due to a reduction of master card fees of
$16,398,  which was  partially  offset by an increase of $6,023 in mortgage loan
income.

Non-interest  expense  totaled  $796,040  compared  to  $840,469  in 2002.  This
decrease  was  primarily  attributable  to a  decline  in the level of losses of
uninsured  deposits in the amount of $61,975.  Increased costs within  operating
expenses  were  principally  related to a $32,000 loss on the sale of foreclosed
assets. Income before income tax provision totaled $111,906 and $265,117 for the
quarters  ended  March 31,  2003 and 2002,  respectively.  Income tax  provision
totaled  $40,000 and $102,865  for the  quarters  ended March 31, 2003 and 2002,
respectively.  Net income  totaled  $71,906 and $162,252 for the quarters  ended
March 31, 2003 and 2002, respectively.

Other comprehensive income (loss) totaled $25,385 and ($28,423) in 2003 and
2002, respectively. Comprehensive income, which is the change in shareholders'
equity excluding transactions with shareholders, totaled $97,291 and $133,829
for the quarters ended March 31, 2003 and 2002, respectively.

                           ASSET/LIABILITY MANAGEMENT

The Company's  asset/liability  management,  or interest  rate risk  management,
program is focused  primarily on evaluating and managing the  composition of its
assets and  liabilities  in view of various  interest  rate  scenarios.  Factors
beyond the Company's control, such as market interest rates and competition, may
also have an impact on the Company's interest income and interest expense.

In the  absence  of other  factors,  the  yield or  return  associated  with the
Company's  earning  assets  generally  will increase  from existing  levels when
interest rates rise over an extended  period of time and,  conversely,  interest
income will decrease when interest rates decline.  In general,  interest expense
will  increase  when  interest  rates rise over an extended  period of time and,
conversely, interest expense will decrease when interest rates decline.

Interest  Rate Gap  Analysis.  As a part of its  interest  rate risk  management
policy,  the Company  calculates  an interest  rate "gap."  Interest  rate "gap"
analysis is a common,  though  imperfect,  measure of interest rate risk,  which
measures   the  relative   dollar   amounts  of   interest-earning   assets  and
interest-bearing liabilities which reprice within a specific time period, either
through  maturity or rate  adjustment.  The "gap" is the difference  between the
amounts  of such  assets  and  liabilities  that are  subject  to  repricing.  A
"positive"  gap for a given  period  means that the  amount of  interest-earning
assets maturing or otherwise  repricing within that period exceeds the amount of
interest-bearing  liabilities  maturing or otherwise  repricing  within the same
period.  Accordingly,  in a declining interest rate environment,  an institution
with a positive gap would  generally  be  expected,  absent the effects of other
factors,  to  experience a decrease in the yield on its assets  greater than the
decrease  in the cost of its  liabilities  and its income  should be  negatively
affected.  Conversely,  the cost of funds for an institution with a positive gap
would generally be expected to increase more slowly than the yield on its assets
in a rising  interest  rate  environment,  and such  institution's  net interest
income generally would be expected to be positively  affected by rising interest
rates.  Changes in  interest  rates  generally  have the  opposite  effect on an
institution with a "negative gap."




                                                                              11
<PAGE>

The  following  table sets  forth the  amounts  of  interest-earning  assets and
interest-bearing  liabilities outstanding at March 31, 2003, which are projected
to reprice or mature in each of the future time periods shown.  Except as stated
below,  the  amounts of assets and  liabilities  shown  which  reprice or mature
within a particular  period were  determined in accordance  with the contractual
terms of the assets or  liabilities.  Loans with  adjustable  rates are shown as
being due at the end of the next upcoming  adjustment  period. In addition,  the
table reflects scheduled principal  payments,  which will be received throughout
the lives of the loans.  The interest rate  sensitivity of the Company's  assets
and liabilities  illustrated in the following table would vary  substantially if
different  assumptions  were  used or if  actual  experience  differs  from that
indicated by such assumptions.

<TABLE>
<CAPTION>


                                                                TERMS TO REPRICING AT MARCH 31, 2003
                                   1-90 Days       91-180 Days      181-365 Days    Total One Year   Non-Sensitive       Total
                                  --------------------------------------------------------------------------------------------------
Interest-earning assets:
<S>                                <C>               <C>               <C>               <C>            <C>              <C>
Interest bearing deposits          $     42,992         -                 -              $  42,992         -              $  42,992
Federal funds sold                   10,994,000         -                 -             10,994,000         -             10,994,000
Investment securities                 2,000,000        $1,600,000       $2,506,578       6,106,578      $ 7,368,918      13,475,496

Federal Home Loan Bank stock           -                -                 -               -                 229,800         229,800
Loans                                47,209,866         3,015,756        2,630,013      52,855,635       13,158,828      66,014,463
Total interest-earning assets        60,246,858         4,615,756        5,136,591      69,999,205       20,757,546      90,756,751

Interest-bearing liabilities
Time deposits                         9,888,190        14,956,143        7,898,828      32,743,161        1,668,470      34,411,631
All other deposits                   37,772,275         -                 -             37,772,275         -             37,772,275
Other                                  -                -                 -               -                 100,166         100,166
Total            interest-bearing    47,660,465        14,956,143        7,898,828      70,515,436        1,768,636      72,284,072
liabilities

Interest sensitivity gap           $ 12,586,393      ($10,340,387)     ($2,762,237)      ($516,231)     $18,988,910      18,472,679
Cumulative interest sensitivity
gap                                $ 12,586,393        $2,246,006        ($516,231)
Cumulative ratio of interest -
earning assets as a percent
of interest sensitive                    126.4%              30.9%            65.0%           99.3%
liabilities
</TABLE>


Non-accrual loans have been excluded.


                                                                              12
<PAGE>

Weststar has established an acceptable range of 80% to 120% for interest-earning
assets as a percent of interest sensitive liabilities.

                                  ASSET QUALITY

Management  considers  Weststar's asset quality to be of primary importance.  We
maintain an allowance for loan losses to absorb  probable losses inherent in the
loan portfolio.  The loan portfolio is analyzed monthly in an effort to identify
potential  problems before they actually occur. The allowance for loan losses is
established  as losses are  estimated to have  occurred  through a provision for
loan losses  charged to earnings.  The  provision  for loan losses is based upon
management's  best  estimate of the amount  needed to maintain the allowance for
loan losses at an adequate level.  Loan losses are charged against the allowance
when management  believes the  uncollectibility  of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management  and
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.  Management segments the loan portfolio by loan
type in considering each of the aforementioned factors and their impact upon the
level of the allowance for loan losses.

This  evaluation is inherently  subjective,  as it requires  estimates  that are
susceptible  to  significant  revision as more  information  becomes  available.
Therefore,  while  management  uses  the  best  information  available  to  make
evaluations,  future adjustments to the allowance may be necessary if conditions
differ  substantially  from the assumptions used in making the  evaluations.  In
addition,  regulatory  examiners may require the Company to recognize changes to
the  allowance  for  loan  losses  based on their  judgments  about  information
available to them at the time of their examination.

A loan is considered  impaired when, based on current information and events, it
is probable that the Company will be unable to collect the scheduled payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Factors  considered by management in determining  impairment include
payment status,  collateral  value, and the probability of collecting  scheduled
principal and interest  payments when due. Loans that  experience  insignificant
payment delays and payment shortfalls  generally are not classified as impaired.
Management  determines the significance of payment delays and payment shortfalls
on a case-by-case  basis,  taking into  consideration  all of the  circumstances
surrounding  the loan and the borrower,  including the length of the delay,  the
reasons for the delay,  the borrower's  prior payment record,  and the amount of
the  shortfall in relation to the  principal  and interest  owed.  Impairment is
measured on a loan by loan basis for commercial and construction loans by either
the  present  value of  expected  future  cash  flows  discounted  at the loan's
effective  interest rate, the loan's  obtainable market price, or the fair value
of the collateral if the loan is collateral  dependent.  Large groups of smaller
balance   homogeneous   loans  are   collectively   evaluated  for   impairment.
Accordingly,  the Company does not separately  identify  individual consumer and
residential loans for impairment disclosures.

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 March 31, 2003,  2002 and December 31, 2002 and
2001 was $1,019,736,  $998,399,  $1,020,198 and $978,467 or 1.51%,  1.50%, 1.50%
and  1.50%,  respectively,   of  gross  loans  outstanding.  The  ratio  of  net
charge-offs  to average loans  outstanding  was .53%,  .28%,  1.26% and .70%, at
March 31, 2003 and 2002, and December 2002 and 2001,  respectively.  A sustained
recessionary  economy  and



                                                                              13
<PAGE>

one large  charge-off  in the amount of $250,000 to a single  entity  during the
period ended March 31, 2003 resulted in a larger  provision during 2003 compared
to the same  period  in  2002.  Primarily  because  of a  recessionary  economy,
charge-offs for the years ended 2002 and 2001 totaled $889,565 and $490,600.

The  following  table  contains an analysis for the  allowance  for loan losses,
including  the  amount of  charge-offs  and  recoveries  by loan  type,  for the
three-months ended March 31, 2003 and 2002, and for the years ended December 31,
2002 and 2001.

Summary of Allowance for Loan Losses
<TABLE>
<CAPTION>

                                                   For the three months                   For the years ended
                                                      ended March 31,                         December 31,
                                                   2003              2002                2002              2001
                                                   ----              ----                ----              ----
<S>                                           <C>                 <C>      <C>                         <C>
Balance, beginning of period                  $ 1,020,198         $978,467 $            978,467        $   871,706
  Charge-offs:
  Commercial, financial and agricultural         (319,999)          (131,020)          (568,710)          (373,087)
  Real estate:
    Construction                                     --                 --             (127,810)              --
    Mortgage                                      (11,000)           (25,000)           (33,574)           (90,275)
  Consumer                                        (33,364)           (34,796)          (159,471)           (27,238)
                                              -----------        -----------        -----------        -----------
Total charge-offs                                (364,363)          (190,816)          (889,565)          (490,600)
Recoveries
  Commercial, financial and agricultural            2,407              5,976             19,753             45,270
  Real estate:
    Construction                                     --                 --                1,531               --
    Mortgage                                         --                 --               13,322               --
  Consumer                                          6,494              2,122             18,770              1,671
                                              -----------        -----------        -----------        -----------
Total recoveries                                    8,901              8,098             53,376             46,941
                                              -----------        -----------        -----------        -----------
Net (charge-offs) recoveries                     (355,462)          (182,718)          (836,189)          (443,659)
                                              -----------        -----------        -----------        -----------
Provision charged to operations                   355,000            202,650            877,920            550,420
                                              -----------        -----------        -----------        -----------
Balance, end of period                        $ 1,019,736           $998,399         $1,020,198        $   978,467
                                              ===========        ===========        ===========        ===========

Percentage of net charge-offs to
  average loans                                       .53%               .28%              1.26%               .70%
Percentage of allowance to
  period-end loans                                   1.51%              1.50%              1.50%              1.50%
</TABLE>

The following  table allocates the allowance for loan losses by loan category at
the dates  indicated.  The  allocation  of the allowance to each category is not
necessarily  indicative  of future  losses and does not  restrict the use of the
allowance to absorb losses in any category.
<TABLE>
<CAPTION>

                                     March 31, 2003                   December 31, 2002
                                Amount of      Percent of       Amount of        Percent of
                                Allowance      Total Loans      Allowance        Total Loans

TYPE OF LOAN:
<S>                            <C>                     <C>      <C>                     <C>
Real estate                    $  699,044              72%      $  690,842              73%
Commercial and industrial
  loans                           279,513              25%         287,860              24%
Consumer                           16,445               3%          19,184               3%
Unallocated                        24,734            --             22,312            --
                               ----------      ----------       ----------      ----------
Total allowance                $1,019,736             100%      $1,020,198             100%
                               ==========      ==========       ==========      ==========
</TABLE>

The  Company  does not have any  significant  loan  concentrations.  During  the
period, loan quality and terms remained relatively unchanged.


                                                                              14
<PAGE>

During 2003,  there were no changes in estimation  methods or  assumptions  that
affected our  methodology for assessing the  appropriateness  of the formula and
specific  allowance  for credit  losses.  Changes in estimates  and  assumptions
regarding the effect of economic and business conditions on borrowers affect the
assessment of the allowance.

                                CAPITAL RESOURCES

Banks and bank holding companies, as regulated institutions,  must meet required
levels of capital.  The Federal Deposit Insurance  Corporation  ("FDIC") and the
Federal Reserve,  the primary  regulators of The Bank of Asheville and Weststar,
respectively,  have adopted  minimum  capital  regulations  or  guidelines  that
categorize  components  and the level of risk  associated  with various types of
assets.  Financial  institutions  are  expected  to  maintain a level of capital
commensurate  with the risk profile  assigned to its assets in  accordance  with
these  guidelines.  As shown in the  following  table,  Weststar and The Bank of
Asheville both maintained  capital levels exceeding the minimum levels for "well
capitalized" banks and bank holding companies.

<TABLE>
<CAPTION>

                                            REGULATORY CAPITAL

                                                                                                    To Be Well
                                                                                                 Capitalized Under
                                                                           For Capital           Prompt Corrective
                                                     Actual             Adequacy Purposes        Action Provisions
                                                  Amount      Ratio       Amount        Ratio      Amount      Ratio
                                                                        (Dollars in Thousands)
As of March 31, 2003
Total Capital (to Risk Weighted Assets)
<S>                                               <C>         <C>         <C>           <C>        <C>         <C>
  Consolidated                                    $9,598      13.54%      $5,673        8.00%      $7,092      10.00%
  Bank                                            $9,514      13.42%      $5,671        8.00%      $7,089      10.00%

Tier 1 Capital (to Risk Weighted Assets)
  Consolidated                                    $8,710      12.28%      $2,837        4.00%      $4,255       6.00%
  Bank                                            $8,626      12.17%      $2,836        4.00%      $4,254       6.00%

Tier 1 Capital (to Average Assets)
  Consolidated                                    $8,710       9.20%      $3,788        4.00%      $4,735       5.00%
  Bank                                            $8,626       9.11%      $3,787        4.00%      $4,734       5.00%
</TABLE>


                                                                              15
<PAGE>


                                    LIQUIDITY

Maintaining  adequate liquidity while managing interest rate risk is the primary
goal of Weststar's  asset and liability  management  strategy.  Liquidity is the
ability  to fund the  needs  of the  Company's  borrowers  and  depositors,  pay
operating expenses, and meet regulatory liquidity requirements. Loan repayments,
deposit  growth,  federal funds  purchased and borrowings  from the Federal Home
Loan  Bank are  presently  the main  sources  of the  Company's  liquidity.  The
Company's primary uses of liquidity are to fund loans and to make investments.

As of March 31, 2003, liquid assets (cash due from banks,  interest-earning bank
deposits  and  federal  funds  sold) were  approximately  $15.6  million,  which
represents 15.6% of total assets and 17.2% of total deposits. Supplementing this
liquidity,  Weststar has available lines of credit from  correspondent  banks of
approximately  $14.4  million.  At March 31, 2003,  outstanding  commitments  to
extend  credit and  available  lines of credit  were $12.6  million.  Management
believes  that the  combined  aggregate  liquidity  position  of the  Company is
sufficient  to  meet  the  funding  requirements  of  loan  demand  and  deposit
maturities and withdrawals in the near term.

Certificates  of deposit  represented  approximately  38.0% of Weststar's  total
deposits at March 31, 2003. The Company's  growth  strategy will include efforts
focused on increasing the relative volume of transaction  deposit  accounts,  as
the branch  network  is  expanded,  making it more  convenient  for our  banking
customers.  Certificates of deposit of $100,000 or more  represented 8.0% of the
Company's  total  deposits  at March 31,  2003.  These  deposits  are  generally
considered   rate   sensitive,   but  management   believes  most  of  them  are
relationship-oriented.  While the Company will need to pay competitive  rates to
retain these deposits at maturity,  there are other subjective factors that will
determine the Company's continued retention of these deposits.

                              INVESTMENT ACTIVITIES

At March 31,  2003,  Weststar's  investments  consisted of U.S.  Government  and
agency  securities,  and North Carolina  municipal bonds. The investments,  with
aggregate amortized cost of $13.5 million,  are classified as available for sale
and are  presented  in the  consolidated  financial  statements  at their market
values of $13.6 million at March 31, 2003.  These securities have tax equivalent
yields  of 3.2% and  5.2%  respectively,  with an  aggregate  remaining  term of
approximately 47.8 months. The Company's investment in stock of the Federal Home
Loan Bank,  which is  required  of every  member and is  redeemable  only by the
Federal  Home Loan Bank,  was  $229,800  with a yield of 4.5% at March 31, 2002.
Because the  investment is redeemable  only by the Federal Home Loan Bank, it is
listed separately rather than a component of the Company's investment portfolio.

                     IMPACT OF INFLATION AND CHANGING PRICES

A financial institution has assets and liabilities that are distinctly different
from those of a company  with  substantial  investments  in plant and  inventory
because the major  portion of its assets is monetary in nature.  As a result,  a
bank's performance may be significantly influenced by changes in interest rates.
Although the banking industry is more affected by changes in interest rates than
by inflation in the prices of goods and services,  inflation is a factor,  which
may influence interest rates.  However,  the frequency and magnitude of interest
rate  fluctuations  do not  necessarily  coincide  with  changes in the  general
inflation  rate.  Inflation  does affect  operating  expenses in that  personnel
expenses,  cost of supplies and outside  services  tend to increase  more during
periods of high inflation.



                                                                              16


<PAGE>


CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report,  the Company carried out an
evaluation  under the  supervision and with the  participation  of the Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls and  procedures  pursuant to  Securities  Exchange Act Rule
13a-14.  Based  upon that  evaluation,  the Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company  required to be included in the  Company's  periodic SEC
Filings. There were no significant changes in the Company's internal controls or
in other factors that could  significantly  affect these controls  subsequent to
the date of their evaluation.

Part II - OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

A.) Exhibits
    99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


B.)  Reports on Form 8-K
     The  Company  filed a  current  report on Form 8-K  dated  March  10,  2003
     announcing the  appointment of Patricia P. Grimes to the Board of Directors
     of the  Registrant  and to  the  Board  of  Directors  of the  Registrant's
     wholly-owned subsidiary, The Bank of Asheville.

     Items 1, 2, 3, 4, 5, 7, 8 and 9 are inapplicable and are omitted.








                                                                              17
<PAGE>


                                   SIGNATURES


Under the requirements of the Securities Exchange Act of 1934, the Bank has duly
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.



                                     Weststar Financial Services Corporation


Date:   April 30, 2003               By:   /s/ Randall C. Hall
                                           -------------------------------------
                                           Randall C. Hall.
                                           President and Chief Executive Officer
                                           Executive Vice President and
                                           Chief Financial and
                                           Principal Accounting Officer







                                                                              18
<PAGE>


CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Randall C. Hall, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Weststar  Financial
     Services Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of material  fact or omit to state a material  fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act 13a-14 and 15-d-14) for the registrant and have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed,  based upon
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of the registrant's board of directors:

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:   April 30, 2003      By: /s/ Randall C. Hall
                                ------------------------------------------------
                                Randall C. Hall
                                President and Chief Executive Officer
                                Executive Vice President and
                                Chief Financial and Principal Accounting Officer




                                                                              19


<PAGE>

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


I, G. Gordon Greenwood, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Weststar  Financial
     Services Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of material  fact or omit to state a material  fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act 13a-14 and 15-d-14) for the registrant and have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed,  based upon
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of the registrant's board of directors:

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:   April 30, 2003               By:   /s/ G. Gordon Greenwood
                                           -------------------------------------
                                           G. Gordon Greenwood
                                           President and Chief Executive Officer






                                                                              20