SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 2003

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

          For the transition period from ____________ to _____________

                         Commission file number: 0-30535

                            GRAYSON BANKSHARES, INC.
             (Exact Name of Registrant as Specified in its Charter)


                  Virginia                                 54-1647596
       (State or Other Jurisdiction of                 (I.R.S. Employer
        Incorporation or Organization)                Identification No.)

           113 West Main Street
           Independence, Virginia                             24348
   (Address of Principal Executive Offices)                (Zip Code)

        Registrant's telephone number, including area code (276) 773-2811


         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 _____

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes_____    No __X__

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

             There were 1,718,968 shares of Common Stock, par value
                 $1.25 per share, outstanding as of May 12, 2003

<PAGE>
                            GRAYSON BANKSHARES, INC.

                                      INDEX


PART I     FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1.  Financial Statements
<S>                                                                                                          <C>
         Consolidated Balance Sheets--Three Months Ended March 31, 2003 and December
         31, 2003                                                                                               2

         Consolidated Statements of Income--Three Months Ended March 31, 2003 and
         March 31, 2002                                                                                         3

         Consolidated Statements of Stockholders' Equity--Three Months Ended March
         31, 2003 and Year Ended December 31, 2002                                                              4

         Consolidated Statements of Cash Flows--Three Months Ended March 31, 2003
         and March 31, 2002                                                                                     5

         Notes to Consolidated Financial Statements                                                             6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations                                                                                          8

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                            10

Item 4.  Controls and Procedures                                                                               11

PART II    OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                     12

Item 2.  Changes in Securities and Use of Proceeds                                                             12

Item 3.  Defaults Upon Senior Securities                                                                       12

Item 4.  Submission of Matters to a Vote of Security Holders                                                   12

Item 5.  Other Information                                                                                     12

Item 6.  Exhibits and Reports on Form 8-K                                                                      12

SIGNATURES                                                                                                     13
</table>

<PAGE>


Part I:  Financial Information

Item 1:  Financial Statements


                     Grayson Bankshares, Inc. and Subsidiary
                           Consolidated Balance Sheets
                      March 31, 2003 and December 31, 2002
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                    March 31,         December 31,
Assets                                                                                2003                2002
                                                                                -----------------  ------------------
<S>                                                                            <C>               <C>
                                                                                   (Unaudited)            (Audited)
Cash and due from banks                                                         $     9,675,470    $     11,265,444
Interest-bearing deposits with banks                                                          -                   -
Federal funds sold                                                                   25,754,612          19,740,228
Investment securities available for sale                                             40,771,281          40,120,124
Investment securities held to maturity                                                2,745,396           3,906,401
Restricted equity securities                                                            883,800             845,450
Loans, net of allowance for loan losses of $2,212,332
  at March 31, 2003 and $2,189,028 at December 31, 2002                             155,577,196         154,190,005
Property and equipment, net                                                           4,521,918           4,126,234
Accrued income                                                                        1,870,156           1,798,906
Other assets                                                                          5,322,461           5,289,797
                                                                                ---------------    ----------------
                                                                                $   247,122,290    $    241,282,589
                                                                                ===============    ================

Liabilities and Stockholders' Equity

Liabilities
Demand deposits                                                                 $    23,228,482    $     22,950,583
Interest-bearing demand deposits                                                     16,784,724          18,079,169
Savings deposits                                                                     40,396,877          37,822,606
Large denomination time deposits                                                     36,352,449          35,232,988
Other time deposits                                                                  94,485,717          92,823,178
                                                                                ---------------    ----------------
     Total deposits                                                                 211,248,249         206,908,524

FHLB Advances                                                                        10,000,000          10,000,000

Accrued interest payable                                                                682,129             328,975
Other liabilities                                                                     1,030,655             815,573
                                                                                ---------------    ----------------
                                                                                    222,961,033         218,053,072

Commitments and contingencies

Stockholders' equity
Preferred stock, $25 par value; 500,000
   shares authorized; none issued                                                             -                   -
Common stock, $1.25 par value; 5,000,000 shares
   authorized; 1,718,968 shares issued and
   outstanding in 2003 and 2002                                                       2,148,710           2,148,710
Surplus                                                                                 521,625             521,625
Retained earnings                                                                    20,907,751          19,967,611
Accumulated other comprehensive income (loss)                                           583,171             591,571
                                                                                ---------------    ----------------
                                                                                     24,161,257          23,229,517
                                                                                ---------------    ----------------
                                                                                $   247,122,290    $    241,282,589
                                                                                ===============    ================

</TABLE>

See Notes to Consolidated Financial Statements


                                       2
<PAGE>

                     Grayson Bankshares, Inc. and Subsidiary
                        Consolidated Statements of Income
               For the Three Months ended March 31, 2003 and 2002
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                                          Three Months Ended
                                                                                               March 31,
                                                                                        2003              2002
                                                                                    -------------    --------------
Interest income:                                                                     (Unaudited)       (Unaudited)
<S>                                                                              <C>              <C>
   Loans and fees on loans                                                          $   2,815,234    $    2,939,966
   Federal funds sold                                                                      70,079            61,871
   Investment securities:
     Taxable                                                                              469,670           392,650
     Exempt from federal income tax                                                       114,797           106,639
   Deposits with banks                                                                          -                 -
                                                                                    -------------    --------------
                                                                                        3,469,780         3,501,126

Interest expense:
   Deposits                                                                             1,416,177         1,588,003
   Interest on borrowings                                                                 114,001            94,767
                                                                                    -------------    --------------
                                                                                        1,530,178         1,682,770
         Net interest income                                                            1,939,602         1,818,356

Provision for loan losses                                                                  90,000           105,000
                                                                                    -------------    --------------
   Net interest income after
     provision for loan losses                                                          1,849,602         1,713,356
                                                                                    -------------    --------------

Noninterest income:
   Service charges on deposit accounts                                                     91,030            71,380
   Other income                                                                         1,013,305            73,757
                                                                                    -------------    --------------
                                                                                        1,104,335           145,137
                                                                                    -------------    --------------

Noninterest expense:
   Salaries and employee benefits                                                         840,442           688,807
   Occupancy expense                                                                       35,169            29,916
   Equipment expense                                                                      107,441           104,140
   Other expense                                                                          337,469           278,222
                                                                                    -------------    --------------
                                                                                        1,320,521         1,101,085
         Income before income taxes                                                     1,633,416           757,408

Income tax expense                                                                        487,000           199,000
                                                                                    -------------    --------------
         Net income                                                                 $   1,146,416    $      558,408
                                                                                    =============    ==============

Basic earnings per share                                                            $         .67    $          .32
                                                                                    =============    ==============
Weighted average shares outstanding                                                     1,718,968         1,718,968
                                                                                    =============    ==============

</TABLE>


See Notes to Consolidated Financial Statements



                                       3
<PAGE>




                     Grayson Bankshares, Inc. and Subsidiary
                 Consolidated Statements of Stockholders' Equity
             For the Three Months ended March 31, 2003, (unaudited)
                 and the Year ended December 31, 2002, (audited)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                          Accumulated
                                                                                             Other
                                  Common Stock  Retained                                 Comprehensive
                                     Shares      Amount       Surplus     Earnings        Income (Loss)    Total
                                     ------      ------       -------     --------        -------------    -----
<S>                             <C>        <C>           <C>         <C>            <C>            <C>
Balance, December 31, 2001        1,718,968  $ 2,148,710   $  521,625  $  18,221,877   $    193,561  $   21,085,773

   Comprehensive income
   Net income                             -            -            -      2,536,459              -       2,536,459
   Net change in unrealized
     appreciation on investment
     securities available for
     sale, net of taxes of $202,495       -            -            -              -        398,010         398,010
                                                                                                       ------------
     Total comprehensive income                                                                           2,934,469

   Dividends paid
     ($.46 per share)                     -            -            -       (790,725)             -        (790,725)


Balance, December 31, 2002        1,718,968    2,148,710      521,625     19,967,611        591,571      23,229,517

    Comprehensive income
   Net income                             -            -            -      1,146,416              -       1,146,416
   Net change in unrealized
     appreciation on investment
     securities available for
     sale, net of taxes of $(4,327)       -            -           -              -          (8,400)         (8,400)
                                                                                                       ------------
   Total comprehensive income                                                                             1,138,016

   Dividends paid
       ($.12 per share)                   -            -            -       (206,276)             -        (206,276)
                                 ----------   ----------   ----------  -------------  -------------  --------------
Balance, March 31, 2003           1,718,968   $2,148,710   $ 521,625   $  20,907,751  $     583,171  $   24,161,257
                                 ==========   ==========   ==========  =============  =============  ==============

</TABLE>



See Notes to Consolidated Financial Statements



                                       4
<PAGE>




                     Grayson Bankshares, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
               For the Three Months ended March 31, 2003 and 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                          Three Months Ended
                                                                                               March 31,
                                                                                        2003              2002
                                                                                    -------------    --------------
                                                                                     (Unaudited)       (Unaudited)
<S>                                                                               <C>              <C>
Cash flows from operating activities:
   Net income                                                                       $   1,146,416    $      558,408
   Adjustments to reconcile net income
     to net cash provided by operations:
       Depreciation and amortization                                                       90,000            88,500
       Provision for loan losses                                                           90,000           105,000
       Deferred income taxes                                                               43,000           (42,000)
       Net realized gains on securities                                                  (869,597)             (750)
       Accretion of discount on securities, net of
         amortization of premiums                                                          50,070            26,767
       Deferred compensation                                                                2,153               962
       Changes in assets and liabilities:
         Accrued income                                                                   (71,250)          (53,236)
         Other assets                                                                     (71,337)          (56,588)
         Accrued interest payable                                                         353,154           487,619
         Other liabilities                                                                212,929           222,828
                                                                                    -------------    --------------
           Net cash provided by operating activities                                      975,538         1,337,510
                                                                                    -------------    --------------

Cash flows from investing activities:
   (Increase) decrease in interest-bearing deposits with banks                                  -                 -
   Net (increase) decrease in federal funds sold                                       (6,014,384)         (657,819)
   Purchases of investment securities                                                 (12,531,389)      (11,645,014)
   Sales of investment securities                                                      10,998,533                 -
   Maturities of investment securities                                                  2,931,254         2,036,711
   Purchases of restricted equity securities                                             (120,100)          (19,700)
   Net increase in loans                                                               (1,477,191)       (3,710,239)
   Purchases of bank-owned life insurance                                                       -        (4,000,000)
   Purchases of property and equipment, net of sales                                     (485,684)         (205,884)
                                                                                    -------------    --------------
           Net cash used in investing activities                                       (6,698,961)      (18,201,945)
                                                                                    -------------    --------------

Cash flows from financing activities:
   Net increase (decrease) in demand,
     savings and NOW deposits                                                           1,557,725         1,694,648
   Net increase in time deposits                                                        2,782,000         4,456,270
   Dividends paid                                                                        (206,276)                -
   Net increase (decrease) in other borrowings                                                  -        10,000,000
                                                                                    -------------    --------------
           Net cash provided by financing activities                                    4,133,449        16,150,918
                                                                                    -------------    --------------
           Net increase (decrease) in cash and cash equivalents                        (1,589,974)         (713,517)

Cash and cash equivalents, beginning                                                   11,265,444         8,715,457
                                                                                    -------------    --------------
Cash and cash equivalents, ending                                                   $   9,675,470    $    8,001,940
                                                                                    =============    ==============

Supplemental disclosure of cash flow information:
   Interest paid                                                                    $   1,177,024    $    1,195,151
                                                                                    =============    ==============
   Taxes paid                                                                       $      51,147    $        7,940
                                                                                    =============    ==============
</TABLE>

See Notes to Consolidated Financial Statements



                                       5
<PAGE>




                     Grayson Bankshares, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements

-------------------------------------------------------------------------------

Note 1.  Organization and Summary of Significant Accounting Policies

Organization

Grayson Bankshares, Inc. (the Company) was incorporated as a Virginia
corporation on February 3, 1992 to acquire the stock of The Grayson National
Bank (the Bank). The Bank was acquired by the Company on July 1, 1992.

The Grayson National Bank was organized under the laws of the United States in
1900 and currently serves Grayson County, Virginia and surrounding areas through
six banking offices. As a Federal Deposit Insurance Corporation insured,
National Banking Association, the Bank is subject to regulation by the
Comptroller of the Currency. The Company is regulated by the Federal Reserve.

The consolidated financial statements as of March 31, 2003 and for the periods
ended March 31, 2003 and 2002 included herein, have been prepared by Grayson
Bankshares, Inc., without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
information furnished in the interim consolidated financial statements reflects
all adjustments necessary to present fairly the Company's consolidated financial
position, results of operations, changes in stockholders' equity and cash flows
for such interim periods. Management believes that all interim period
adjustments are of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the Company's audited financial
statements and the notes thereto as of December 31, 2002, included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2002.

The accounting and reporting policies of the Company and the Bank follow
generally accepted accounting principles and general practices within the
financial services industry.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
the Bank, which is wholly owned. All significant, intercompany transactions and
balances have been eliminated in consolidation.

Note 2.  Allowance for Loan Losses

The following is an analysis of the allowance for loan losses for the three
months ended March 31, 2003 and 2002.
<TABLE>
<CAPTION>

                                         2003              2002
                                     -------------    --------------
<S>                                  <C>              <C>
Balance, beginning                     $   2,189,028    $    1,821,966
Provision charged to expense                  90,000           105,000
Recoveries of amounts charged off              9,455            74,408
Amounts charged off                          (76,151)         (132,753)
                                       -------------    --------------
Balance, ending                        $   2,212,332    $    1,868,621
                                       =============    ==============
</TABLE>

Note 3.  Income Taxes

A reconciliation of income tax expense computed at the statutory federal income
tax rate to income tax expense included in the statements of income for the
three months ended March 31, 2003 and 2002 follows:

<TABLE>
<CAPTION>
                                       2003              2002
                                   -------------    --------------
<S>                                <C>              <C>
Tax at statutory federal rate       $     555,361    $      257,519
Tax exempt interest income                (47,359)          (43,703)
Other tax exempt income                   (27,200)          (16,320)
Other                                       6,198             1,504
                                    -------------    --------------
                                    $     487,000    $      199,000
                                    =============    ==============
</TABLE>


                                       6
<PAGE>


                     Grayson Bankshares, Inc. and Subsidiary
                   Notes to Consolidated Financial Statements

--------------------------------------------------------------------------------

Note 4.  Commitments and Contingencies

Financial Instruments with Off-Balance-Sheet Risk

The Bank is party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. These instruments involve, to varying degrees, credit risk in excess
of the amount recognized in the consolidated balance sheets.

The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those instruments.
The Bank uses the same credit policies in making commitments and conditional
obligations as for on-balance-sheet instruments. A summary of the Bank's
commitments at March 31, 2003 and 2002 is as follows:

<TABLE>
<CAPTION>
                                             2003              2002
                                         -------------    --------------
<S>                                     <C>              <C>
Commitments to extend credit             $   6,533,667    $    5,277,627
Standby letters of credit                            -                 -
                                         -------------    --------------
                                         $   6,533,667    $    5,277,627
                                         =============    ==============
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the party. Collateral held varies, but may include accounts
receivable, inventory, property and equipment, residential real estate and
income-producing commercial properties.

Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held varies
as specified above and is required in instances which the Bank deems necessary.






                                       7
<PAGE>

                          Part I: Financial Information

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

--------------------------------------------------------------------------------

General

The following  discussion provides information about the major components of the
results of operations and financial  condition of the Company.  This  discussion
and  analysis  should be read in  conjunction  with the  Consolidated  Financial
Statements  and Notes to  Consolidated  Financial  Statements  included  in this
report.

Results of Operations

Total interest income decreased by $31,346 for the quarter ended March 31, 2003
compared to the quarter ended March 31, 2002, while interest expense on deposits
and other borrowings decreased by $152,592 over the same period. The decreases
in both interest income and expense came as a result of the general decreases in
interest rates which have occurred over the past year. The result was an
increase in net interest income of $121,246 or 6.67%.

Other income was up $959,198 in the first quarter of 2003 compared to the first
quarter of 2002. This is a result of increases in the cash value of bank-owned
life insurance policies, which were purchased in 2002, as well as increases in
mortgage-origination fees and securities gains resulting from the restructuring
of a leveraging strategy that was implemented in the first quarter of 2002.
Securities gains from this transaction totaled approximately $870,000.

The provision for credit losses was $90,000 for the quarter ended March 31, 2003
and $105,000 for the quarter ended March 31, 2002. The reserve for loan losses
at March 31, 2003 was approximately 1.40% of total loans. Management believes
the provision and the resulting allowance for loan losses are adequate.

Total other expenses increased by $219,436, or 19.93% for the quarter ended
March 31, 2003 compared to the quarter ended March 31, 2002. Increases in
salaries and employee benefits came as a result of employee additions as well as
cost increases for employee medical benefits and defined-benefit retirement
plans.

The increases in net interest income and other income resulted in an increase in
net income before taxes of $876,008, for the quarter ended March 31, 2003,
compared to the same quarter in 2002. Net income increased by $588,008, or
105.30% to $1,146,416 for the first quarter of 2003 compared to net income of
$558,408 for the same period in 2002. The significant increase in net income was
due primarily to the securities gains noted above in the discussion of other
income.

Financial Condition

Total assets increased by $5,839,701, or 2.42% from December 31, 2002 to March
31, 2003. Net loans increased by $1,387,191 and federal funds sold increased by
$6,014,384, while investment securities decreased by $471,498.

Total deposits increased by $4,339,725, or 2.10% from December 31, 2002 to March
31, 2003. FHLB advances were $10,000,000 at March 31, 2003 and 2002.

Shareholders' equity totaled $24,161,257 at March 31, 2003 compared to
$23,229,517 at December 31, 2002. The $931,740 increase was the result of
earnings for the three months, less the payment of dividends of $206,276 and a
decrease in the market value of securities classified as available for sale of
$8,400.

Regulatory guidelines relating to capital adequacy provide minimum risk-based
ratios at the Bank level which assess capital adequacy while encompassing all
credit risks, including those related to off-balance sheet activities. The
Grayson National Bank (a wholly owned subsidiary of Grayson Bankshares, Inc.)
exceeds all regulatory capital guidelines and is considered to be well
capitalized.

Critical Accounting Policies

See Note 1 of the Notes to  Consolidated  Financial  Statements in the Company's
Annual  Report on Form 10-K for the year  ended  December  31,  2002 (the  "Form
10-K").

                                       8
<PAGE>


                          Part I: Financial Information

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

-------------------------------------------------------------------------------


Forward-Looking Statements

Certain information contained in this discussion may include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are generally identified by phrases such as
"the Company expects," "the Company believes" or words of similar import. Such
forward-looking statements involve known and unknown risks including, but not
limited to, changes in general economic and business conditions, interest rate
fluctuations, competition within and from outside the banking industry, new
products and services in the banking industry, risk inherent in making loans
such as repayment risks and fluctuating collateral values, problems with
technology utilized by the Company, changing trends in customer profiles and
changes in laws and regulations applicable to the Company. Although the Company
believes that its expectations with respect to the forward-looking statements
are based upon reliable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.



                                       9
<PAGE>

                          Part I: Financial Information

Item 3:  Quantitative and Qualitative Disclosures about Market Risk

--------------------------------------------------------------------------------

The principal goals of the Bank's asset and liability management strategy are
the maintenance of adequate liquidity and the management of interest rate risk.
Liquidity is the ability to convert assets to cash to fund depositors'
withdrawals or borrowers' loans without significant loss. Interest rate risk
management balances the effects of interest rate changes on assets that earn
interest or liabilities on which interest is paid, to protect the Bank from wide
fluctuations in its net interest income which could result from interest rate
changes.

Management must ensure that adequate funds are available at all times to meet
the needs of its customers. On the asset side of the balance sheet, maturing
investments, loan payments, maturing loans, federal funds sold, and unpledged
investment securities are principal sources of liquidity. On the liability side
of the balance sheet, liquidity sources include core deposits, the ability to
increase large denomination certificates, federal fund lines from correspondent
banks, borrowings from the Federal Home Loan Bank and the Federal Reserve Bank,
as well as the ability to generate funds through the issuance of long-term debt
and equity.

Interest rate risk is the effect that changes in interest rates would have on
interest income and interest expense as interest-sensitive assets and
interest-sensitive liabilities either reprice or mature. Management attempts to
maintain the portfolios of interest-earning assets and interest-bearing
liabilities with maturities or repricing opportunities at levels that will
afford protection from erosion of net interest margin, to the extent practical,
from changes in interest rates.

The Bank uses a number of tools to manage its interest rate risk, including
simulating net interest income under various scenarios, monitoring the present
value change in equity under the same scenarios, and monitoring the difference
or gap between rate sensitive assets and rate sensitive liabilities over various
time periods.

The earnings simulation model forecasts annual net income under a variety of
scenarios that incorporate changes in the absolute level of interest rates,
changes in the shape of the yield curve and changes in interest rate
relationships. Management evaluates the effect on net interest income from
gradual changes in the Prime Rate of up to 300 basis points up or down over a
12-month period. The current model indicates that an increase in rates of 300
basis points over the next twelve months would result in a decrease in net
interest income of $592,000, or 6.64%, while a similar decrease in rates would
result in an increase in net interest income of $551,000, or 6.18%. The model
also incorporates Management's forecasts for balance sheet growth, noninterest
income and noninterest expense. The interest rate scenarios are used for
analytical purposes and do not represent Management's view of future market
movements. Rather, these are intended to provide a measure of the degree of
volatility interest rate movements may apply to the earnings of the Company.
Modeling the sensitivity of earnings to interest rate risk is highly dependent
on numerous assumptions embedded in the simulation model. While the earnings
sensitivity analysis incorporates Management's best estimate of interest rate
and balance sheet dynamics under various market rate movements, the actual
behavior and resulting earnings impact likely will differ from that projected.



                                       10
<PAGE>


                          Part I: Financial Information

Item 4:  Controls and Procedures

-------------------------------------------------------------------------------


Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with the Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-14. Based upon that evaluation, the Company's President and Chief
Executive Officer along with the Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in our periodic SEC filings.

There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out this evaluation.















                                       11
<PAGE>

                           Part II: Other Information

                     Grayson Bankshares, Inc and Subsidiary

--------------------------------------------------------------------------------


Item 1.  Legal Proceedings

There are no pending legal proceedings to which the Company or its subsidiary is
a party or of which any of their property is subject.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         99       Statement  of Chief  Executive  Officer  and  Chief  Financial
                  Officer Pursuant to 18 U.S.C. Section 1350

(b)      Reports on 8-K None



                                       12
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                          GRAYSON BANKSHARES, INC.


Date:  May 12, 2003                       By: /s/ Jacky K. Anderson
                                              -------------------------
                                              Jacky K. Anderson
                                              President and CEO


Date:  May 12, 2003                       By: /s/ Blake M. Edwards
                                              -------------------------
                                              Blake M. Edwards
                                              Chief Financial Officer



                                       13
<PAGE>



                                 CERTIFICATIONS

         I, Jacky K. Anderson certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Grayson
         Bankshares, Inc.;

         2. Based on my knowledge, this quarterly report does not contain any
         untrue statement of a 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 Rules 13a-14 and 15d-14) for the registrant and
         we 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 on our most recent evaluation, to the registrant's auditors and
         the audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

                  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 or not 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:  May 12, 2003
                ------------
                                          /s/ Jacky K. Anderson
                                          --------------------------
                                          Jacky K. Anderson
                                          President and Chief Executive Officer




                                       14
<PAGE>

                                 CERTIFICATIONS

         I, Blake M. Edwards certify that:

         1. I have reviewed this quarterly report on Form 10-Q of Grayson
         Bankshares, Inc.;

         2. Based on my knowledge, this quarterly report does not contain any
         untrue statement of a 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 Rules 13a-14 and 15d-14) for the registrant and
         we 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 on our most recent evaluation, to the registrant's auditors and
         the audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

                  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 or not 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:  May 12, 2003
                ------------
                                                /s/ Blake M. Edwards
                                                ---------------------------
                                                Blake M. Edwards
                                                Chief Financial Officer


<PAGE>


                                  EXHIBIT INDEX


Exhibit No.          Description

   99             Statement  of Chief  Executive  Officer  and  Chief  Financial
                  Officer Pursuant to 18 U.S.C. Section 1350