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, 2001

              [ ] 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  (540) 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  Exchange Act 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  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of March 31, 2001.

           1,718,968 shares of common stock, par value $1.25 per share



<PAGE>

                            GRAYSON BANKSHARES, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                     Page No.

Part I.     Financial Information
<S>                                                                                    <C>
         Item 1.  Financial Statements

                  Consolidated Balance Sheets
                  March 31, 2001 and December 31, 2000...................................3

                  Consolidated Statements of Income
                  For the Three Months Ended March 31, 2001 and 2000.....................4

                  Consolidated Statements of Stockholders' Equity
                  For the Three Months Ended March 31, 2001 and
                  the Year Ended December 31, 2000.......................................5

                  Consolidated Statements of Cash Flows
                  For the Three Months Ended March 31, 2001 and 2000.....................6

                  Notes to Consolidated Financial Statements.............................7

         Item 2.  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..............................................9

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk............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

</TABLE>




                                       2
<PAGE>

                          Part I: Financial Information

Item 1:  Financial Statements

================================================================================
                     Grayson Bankshares, Inc. and Subsidiary
                           Consolidated Balance Sheets
                      March 31, 2001 and December 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              March 31,      December 31,
Assets                                                          2001             2000
                                                            ------------     ------------
                                                             (Unaudited)       (Audited)
<S>                                                         <C>              <C>
Cash and due from banks                                     $  5,560,394     $  4,993,526
Interest-bearing deposits with banks                                   -                -
Federal funds sold                                             9,094,052        7,820,438
Investment securities available for sale                      18,956,485       18,718,706
Investment securities held to maturity                         9,373,614        9,965,781
Restricted equity securities                                      81,750           81,750
Loans, net of allowance for loan losses of $1,834,102
  at March 31, 2001 and $1,760,999 at December 31, 2000      135,635,813      133,071,889
Property and equipment, net                                    2,764,026        2,792,981
Accrued income                                                 1,726,185        1,681,910
Other assets                                                   1,078,788        1,190,831
                                                            ------------     ------------
                                                            $184,271,107     $180,317,812
                                                            ============     ============

Liabilities and Stockholders' Equity

Liabilities
Demand deposits                                             $ 17,596,988     $ 18,674,556
Interest-bearing demand deposits                              14,159,465       14,059,974
Savings deposits                                              29,172,974       29,837,478
Large denomination time deposits                              27,384,855       26,580,744
Other time deposits                                           74,111,811       70,437,348
                                                            ------------     ------------
     Total deposits                                          162,426,093      159,590,100

Accrued interest payable                                         733,288          294,583
Other liabilities                                                796,021          795,468
                                                            ------------     ------------
                                                             163,955,402      160,680,151

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 2001 and 2000                                2,148,710        2,148,710
Surplus                                                          521,625          521,625
Retained earnings                                             17,480,487       16,986,754
Accumulated other comprehensive income (loss)                    164,883          (19,428)
                                                            ------------     ------------
                                                              20,315,705       19,637,661
                                                            ------------     ------------
                                                            $184,271,107     $180,317,812
                                                            ============     ============
</TABLE>


See Notes to Consolidated Financial Statements


                                       3
<PAGE>

================================================================================
                     Grayson Bankshares, Inc. and Subsidiary
                        Consolidated Statements of Income
               For the Three Months ended March 31, 2001 and 2000
--------------------------------------------------------------------------------

                                                         Three Months Ended
                                                              March 31,
                                                       2001              2000
                                                   ------------     ------------
Interest income:                                    (Unaudited)      (Unaudited)
   Loans and fees on loans                         $  2,978,360     $  2,588,740
   Federal funds sold                                   103,843          114,547
   Investment securities:
     Taxable                                            274,167          245,624
     Exempt from federal income tax                     121,547          174,210
   Deposits with banks                                        -                -
                                                   ------------     ------------
                                                      3,477,917        3,123,121

Interest expense:
   Deposits                                           1,842,807        1,577,015
   Interest on borrowings                                     -                -
                                                   ------------     ------------
                                                      1,842,807        1,577,015
         Net interest income                          1,635,110        1,546,106

Provision for loan losses                                75,000           60,000
                                                   ------------     ------------
   Net interest income after
     provision for loan losses                        1,560,110        1,486,106
                                                   ------------     ------------

Noninterest income:
   Service charges on deposit accounts                   78,391           33,824
   Other income                                          28,529           23,452
                                                   ------------     ------------
                                                        106,920           57,276
                                                   ------------     ------------

Noninterest expense:
   Salaries and employee benefits                       625,679          589,594
   Occupancy expense                                     33,006           25,236
   Equipment expense                                     84,936           67,036
   Other expense                                        232,676          187,038
                                                   ------------     ------------
                                                        976,297          868,904
                                                   ------------     ------------
         Income before income taxes                     690,733          674,478

Income tax expense                                      197,000          110,000
                                                   ------------     ------------
         Net income                                $    493,733     $    564,478
                                                   ============     ============

Basic earnings per share                           $        .29     $        .33
                                                   ============     ============
Weighted average shares outstanding                   1,718,968        1,718,968
                                                   ============     ============






See Notes to Consolidated Financial Statements



                                       4
<PAGE>

================================================================================
                     Grayson Bankshares, Inc. and Subsidiary
                 Consolidated Statements of Stockholders' Equity
              For the Three Months ended March 31, 2001 (unaudited)
                 and the Year ended December 31, 2000 (audited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                              Common Stock                                            Other
                                      ---------------------------                    Retained     Comprehensive
                                         Shares         Amount         Surplus       Earnings      Income (Loss)        Total
                                      ------------  -------------   ------------   ------------     -----------    ------------
<S>                                      <C>         <C>            <C>            <C>               <C>           <C>
Balance, December 31, 1999               1,718,968   $  2,148,710   $    521,625   $ 15,559,063      $ (339,326)   $ 17,890,072

   Comprehensive income
   Net income                                    -              -              -      2,063,709               -       2,063,709
   Net change in unrealized
     depreciation on investment
     securities available for
     sale, net of taxes of $164,796              -              -              -              -         319,898         319,898
                                                                                                                   ------------
     Total comprehensive income                                                                                       2,383,607

   Dividends paid
     ($.37 per share)                            -              -              -       (636,018)              -        (636,018)

                                      ------------  -------------   ------------   ------------     -----------    ------------
Balance, December 31, 2000               1,718,968      2,148,710        521,625     16,986,754         (19,428)     19,637,661

   Comprehensive income
   Net income                                    -              -              -        493,733               -         493,733
   Net change in unrealized
     depreciation on investment
     securities available for
     sale, net of taxes of $94,922               -              -              -              -         184,311         184,311
                                                                                                                   ------------
   Total comprehensive income                                                                                           678,044

   Dividends paid                                -              -              -              -               -               -
                                      ------------   ------------   ------------    ------------    ------------   ------------
Balance, March 31, 2001                  1,718,968   $  2,148,710   $    521,625   $ 17,480,487     $    164,883   $ 20,315,705
                                      ============   ============   ============    ============    ============   ============

</TABLE>











See Notes to Consolidated Financial Statements


                                       5
<PAGE>

================================================================================
                     Grayson Bankshares, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
               For the Three Months ended March 31, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                 March 31,
                                                                          2001              2000
                                                                      ------------      ------------
                                                                       (Unaudited)       (Unaudited)
<S>                                                                   <C>               <C>
Cash flows from operating activities:
   Net income                                                         $    493,733      $    564,478
   Adjustments to reconcile net income
     to net cash provided by operations:
       Depreciation and amortization                                        74,400            55,800
       Provision for loan losses                                            75,000            60,000
       Deferred income taxes                                               101,948           (48,000)
       Net realized gains on securities                                       (538)           (2,738)
       Accretion of discount on securities, net of
         amortization of premiums                                            4,316             3,047
       Deferred compensation                                                 3,469            14,567
       Changes in assets and liabilities:
         Accrued income                                                    (44,275)          (82,519)
         Other assets                                                      (84,853)          (25,968)
         Accrued interest payable                                          438,705           406,269
         Other liabilities                                                  (2,916)          144,455
                                                                      ------------      ------------
           Net cash provided by operating activities                     1,058,989         1,089,391
                                                                      ------------      ------------

Cash flows from investing activities:
   (Increase) decrease in interest-bearing deposits with banks                   -                 -
   Net (increase) decrease in federal funds sold                        (1,273,614)       (1,170,893)
   Purchases of investment securities                                   (4,512,206)       (1,231,155)
   Sales of investment securities                                        2,401,407           278,500
   Maturities of investment securities                                   2,740,668           561,230
   Net increase in loans                                                (2,638,924)       (3,060,689)
   Purchases of property and equipment, net of sales                       (45,445)         (128,026)
                                                                      ------------      ------------
           Net cash used in investing activities                        (3,328,114)       (4,751,033)
                                                                      ------------      ------------

Cash flows from financing activities:
   Net increase (decrease) in demand,
     savings and NOW deposits                                           (1,642,581)           98,130
   Net increase in time deposits                                         4,478,574         1,065,132
   Dividends paid                                                                -                 -
   Net increase (decrease) in short-term debt                                    -                 -
                                                                      ------------      ------------
           Net cash provided by financing activities                     2,835,993         1,163,262
                                                                      ------------      ------------
           Net increase (decrease) in cash and cash equivalents            566,868        (2,498,380)

Cash and cash equivalents, beginning                                     4,993,526         7,773,049
                                                                      ------------      ------------
Cash and cash equivalents, ending                                     $  5,560,394      $  5,274,669
                                                                      ============      ============

Supplemental disclosure of cash flow information:
   Interest paid                                                      $  1,404,102      $  1,170,746
                                                                      ============      ============
   Taxes paid                                                         $          -      $          -
                                                                      ============      ============

</TABLE>


See Notes to Consolidated Financial Statements



                                       6
<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 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 an FDIC 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, 2001 and for the periods
ended  March  31,  2001 and 2000  included  herein,  have been  prepared  by the
Company,  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, 2000,  included in the Company's  Annual Report
on Form 10-K for the fiscal year ended December 31, 2000.

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.

                                                    2001                2000
                                                 -----------        -----------

Balance, beginning                               $ 1,760,999        $ 1,731,096
Provision charged to expense                          75,000             60,000
Recoveries of amounts charged off                     32,618             29,774
Amounts charged off                                  (34,515)            (8,269)
                                                 -----------        -----------
Balance, ending                                  $ 1,834,102        $ 1,812,601
                                                 ===========        ===========







                                       7
<PAGE>

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

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

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, 2001 and 2000 follows:

                                                        2001            2000
                                                    ------------   ------------

Tax at statutory federal rate                       $    234,849   $    229,323
Tax exempt interest income                               (41,326)       (59,232)
Alternative minimum tax credit                                 -        (66,135)
Other                                                      3,477          6,044
                                                    ------------   ------------
                                                    $    197,000   $    110,000
                                                    ============   ============

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, 2001 and 2000 is as follows:

                                                        2001            2000
                                                    ------------   ------------

Commitments to extend credit                        $  4,197,623   $  4,937,687
Standby letters of credit                                      -              -
                                                    ------------   ------------
                                                    $  4,197,623   $  4,937,687
                                                    ============   ============

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.






                                       8
<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

For the  quarter  ended  March 31,  2001,  net income was  $493,733  compared to
$564,478  for the quarter  ended  March 31,  2000,  representing  an decrease of
$70,745 or 12.53%.  However, net income before income taxes increased by $16,255
or 2.41% for the same  period.  The  increase  in  income  taxes was a result of
alternative  minimum tax credits,  which were  available  for the quarter  ended
March 31, 2000, but were exhausted prior to the quarter ended March 31, 2001.

Net interest  income  increased by $89,004 to  $1,635,110  for the quarter ended
March 31, 2001  compared to  $1,546,106  for the quarter  ended March 31,  2000.
Interest income for the quarter ended March 31, 2001 was $3,477,917, up $354,796
from $3,123,121 for the quarter ended March 31, 2000. Interest expense increased
by $265,792 for the same period.

The provision for credit losses was $75,000 for the quarter ended March 31, 2001
and $60,000  for the  quarter  ended March 31,  2000.  Management  believes  the
provision and the resulting allowance for loan losses are adequate.

Other  expenses  increased  by  $107,393,  or  12.36%  due  primarily  to  costs
associated with the opening of a new branch in the 4th quarter of 2000.

Financial Condition

Total assets  increased by $3,953,295  for the quarter ended March 31, 2001. Net
loans increased by $2,563,924 while deposits increased by $2,835,993.

Shareholders'   equity  totaled  $20,315,705  at  March  31,  2001  compared  to
$19,637,661  at December  31,  2000.  The  $678,044  increase  was the result of
earnings for the three months  combined  with an increase in the market value of
securities that are classified as available for sale.

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 Bank
(a wholly  owned  subsidiary  of the  Company)  exceeds all  regulatory  capital
guidelines and is considered to be well capitalized.

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



                                       9
<PAGE>

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.


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 insure 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  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.















                                       10
<PAGE>

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  and
present value equity from gradual  changes in rates of up to 400 basis points up
or down  over a  12-month  period.  The  following  table  presents  the  Bank's
forecasts  for changes in net income and market  value of equity as of March 31,
2001.


Table:  Interest Rate Risk (dollars in thousands)
<TABLE>
<CAPTION>
                                    Rate Shocked Interest Margin and Market Value of Equity
------------------------------------------------------------------------------------------------------------------------------

         Rate Change           -400bp     -300bp     -200bp     -100bp       0bp      +100bp     +200bp     +300bp     +400bp
                               ------     ------     ------     ------       ---      ------     ------     ------     ------
<S>                           <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest Income:
Federal funds sold            $    289   $    338   $    387   $    437   $    486   $    535   $    584   $    634   $    683
Investments                      1,719      1,735      1,750      1,766      1,780      1,791      1,803      1,814      1,825
Loans                           10,854     11,155     11,452     11,751     12,035     12,306     12,575     12,842     13,107
                              ------------------------------------------------------------------------------------------------
  Total interest income         12,862     13,228     13,589     13,954     14,301     14,632     14,962     15,290     15,615

Interest Expense:
Deposits                         6,737      6,926      7,115      7,304      7,494      7,684      7,874      8,064      8,255
Federal funds purchased              -          -          -          -          -          -          -          -          -
Other borrowings                     -          -          -          -          -          -          -          -          -
                              ------------------------------------------------------------------------------------------------
  Total interest expense         6,737      6,926      7,115      7,304      7,494      7,684      7,874      8,064      8,255

Interest Margin               $  6,125   $  6,302   $  6,474   $  6,650   $  6,807   $  6,948   $  7,088   $  7,226   $  7,360
Actual Dollars at Risk        $    682   $    505   $    333   $    157        $ -        $ -        $ -        $ -        $ -

Market value of assets        $189,316   $187,657   $185,992   $184,344   $182,578   $180,721   $178,889   $177,068   $175,258
Market value of liabilities    174,237    172,620    171,004    169,387    167,771    166,155    164,538    162,922    161,305
                              ------------------------------------------------------------------------------------------------

Market Value of Equity        $ 15,079   $ 15,037   $ 14,988   $ 14,957   $ 14,807   $ 14,566   $ 14,351   $ 14,146   $ 13,953

</TABLE>





                                       11
<PAGE>

                           Part II: Other Information
================================================================================
                     Grayson Bankshares, Inc. and Subsidiary

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


Item 1.  Legal Proceedings

         Not applicable

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits
               None
         (b)   Reports on 8-K
               None











                                       12

<PAGE>
                                   SIGNATURES

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

                                       GRAYSON BANKSHARES, INC.



Date:  May 15, 2001                    By: /s/ Jacky K. Anderson
                                           -------------------------------------
                                           Jacky K. Anderson
                                           President and Chief Executive Officer



Date:  May 15, 2001                    By: /s/ Blake M. Edwards, Jr.
                                           -------------------------------------
                                           Blake M. Edwards, Jr.
                                           Chief Financial Officer