UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                   FORM 10-QSB

                  Quarterly Report Under Section 13 or 15(d)
                    of the Securities Exchange Act of 1934


For Quarter Ended                            Commission File Number: 0-30541
  June 30, 2000


                            Pioneer Bankshares, Inc.

             Virginia                                         54-1278721
-----------------------------------                     ----------------
(State or Other Jurisdiction of                          (I.R.S. Employer
Incorporation or Organization)                            Identification No.)


                             263 East Market Street

                                 P. O. Box 10
                             Stanley, Virginia 22851

                                (540) 778-2294
                          --------------------
             (Registrant's Telephone Number, Including Area Code)


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

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

            Class                                Outstanding at June 30, 2000
-------------------------------                  ----------------------------
Common Stock, par value - $.50                        1,116,254 shares

Transitional Small Business Disclosure Format (check one):  Yes        No  X
                                                               -----      --


<PAGE> 1


                            PIONEER BANKSHARES, INC.

                                      INDEX
                                                                      Page

PART I     FINANCIAL INFORMATION                                        2

Item 1.    Financial Statements

           Consolidated Statements of Income - Three Months
           Ended June 30, 2000 and 1999                                 2

           Consolidated Statements of Income - Six Months
           Ended June 30, 2000 and 1999                                 3

           Consolidated Balance Sheets - June 30, 2000 and
           December 31, 1999                                            4

           Consolidated Statements of Changes in Stockholders'
           Equity - Six Months Ended June 30, 2000 and 1999             5

           Consolidated Statements of Cash Flows - Six Months
           Ended June 30, 2000 and 1999                                 6

           Notes to Consolidated Financial Statements                   7

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


PART II    OTHER INFORMATION                                           17

Item 1.    Legal Proceedings                                           17

Item 2.    Changes in Securities                                       18

Item 3.    Defaults upon Senior Securities                             18

Item 4.    Submission of Matters to a Vote of Security Holders         18

Item 5.    Other Information                                           18

Item 6.    Exhibit and Reports on Form 8K                              18


           SIGNATURES                                                  20


<PAGE> 2


Part I  Financial Information
Item 1  Financial Statements

                            PIONEER BANKSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                            (In Thousands of Dollars)

                                                          Three Months Ended
                                                               June 30,
                                                          2000            1999

Interest and Dividend Income:

   Loans including fees                                  $ 1,779        $ 1,606
   Debt securities - taxable                                 200            178
   Debt securities - nontaxable                               37             55
   Deposits and federal funds sold                            35             75
   Equity securities                                           2             15
                                                       ---------      ---------
   Total Interest and Dividend Income                      2,053          1,929
                                                       ---------      ---------
Interest Expense:

   Deposits                                                  750            710
   Borrowings                                                 28             18
                                                       ---------      ---------
   Total Interest Expense                                    778            728
                                                       ---------      ---------
Net Interest Income                                        1,275          1,201
Provision for loan losses                                     15             30
Net interest income after provision                    ---------      ---------
   for loan losses                                         1,260          1,171
                                                       ---------      ---------
Noninterest Income:

   Service charges on deposit accounts                       148            124
   Other income                                               41            127
   Gain on security transactions                             127             26
                                                       ---------      ---------
   Total Noninterest Income                                  316            277
                                                       ---------      ---------
Noninterest Expense:

   Salaries and benefits                                     443            351
   Occupancy expenses                                         56             71
   Equipment expenses                                        103             74
   Other expenses                                            382            375
                                                       ---------      ---------
   Total Noninterest Expenses                                984            871
                                                       ---------      ---------
Income before Income Taxes                                   592            577
Income Tax Expense                                           187            175
                                                       ---------      ---------
   Net Income                                               $405           $402
                                                        ========       ========
Earnings Per Share

   Net income                                              $0.36          $0.34
                                                        ========       ========
   Weighted Average Shares Outstanding                 1,116,254      1,185,140
                                                      ==========     ==========


<PAGE> 3


                            PIONEER BANKSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                            (In Thousands of Dollars)

                                                            Six Months Ended
                                                                June 30,
                                                          2001            1999

Interest and Dividend Income:

   Loans including fees                                  $ 3,502        $ 3,145
   Debt securities - taxable                                 398            320
   Debt securities - nontaxable                               70            117
   Deposits and federal funds sold                            79            166
   Equity securities                                          19             21
                                                       ---------      ---------
   Total Interest and Dividend Income                      4,068          3,769
                                                       ---------      ---------
Interest Expense:

   Deposits                                                1,489          1,433
   Borrowings                                                103             18
                                                       ---------      ---------
   Total Interest Expense                                  1,592          1,451
                                                       ---------      ---------
Net Interest Income                                        2,476          2,318
Provision for loan losses                                     30             60
Net interest income after provision                    ---------      ---------
   for loan losses                                         2,446          2,258
                                                       ---------      ---------
Noninterest Income:

   Service charges on deposit accounts                       266            221
   Other income                                              268            174
   Gain on security transactions                             336            127
                                                       ---------      ---------
   Total Noninterest Income                                  870            522
                                                       ---------      ---------
Noninterest Expense:

   Salaries and benefits                                     868            690
   Occupancy expenses                                        111            121
   Equipment expenses                                        201            148
   Other expenses                                            758            718
                                                       ---------      ---------
   Total Noninterest Expenses                              1,938          1,677
                                                       ---------      ---------
Income before Income Taxes                                 1,378          1,103
Income Tax Expense                                           459            339
                                                       ---------      ---------
   Net Income                                               $919           $764
                                                        ========       ========
Earnings Per Share

   Net income                                              $0.82          $0.64
                                                        ========       ========
   Weighted Average Shares Outstanding                 1,116,254      1,185,140
                                                      ==========     ==========


<PAGE> 4


                            PIONEER BANKSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                            (In Thousands of Dollars)

                                                      June 30,   December 31,
                                                        2000         1999
ASSETS

Cash and due from banks                                $4,893       $5,199
Federal funds sold                                        800        2,215
Interest bearing deposits in banks                        491        4,536
Investment securities                                   3,367        3,557
   Hold To Maturity                                    12,019       11,628
   Available for sale
Loans receivable, net of allowance for loan            71,925       69,252
losses of 735 and 763 respectively                      2,832        2,910
Other assets                                            2,005        1,748
                                                    ---------    ---------
   Total assets                                       $98,332     $101,045
                                                     ========     ========
LIABILITIES

Deposits

   Noninterest bearing demand                          13,586       12,246
   Interest bearing
      Demand                                           10,120       10,516
      Savings                                          10,076       10,412
      Time deposits over $100,000                       6,149        5,065
      Other time deposits                              42,979       44,200
                                                    ---------    ---------
   Total Deposits                                      82,910       82,439

Accrued expenses and other liabilities                  1,533        1,426
Borrowings                                              2,750        6,350
                                                    ---------    ---------
   Total Liabilities                                   87,193       90,215
                                                    ---------    ---------
STOCKHOLDERS' EQUITY

Common stock; $.50 par value, shares                      558          561
outstanding 1,116,254 and 1,121,670
for the current period and prior year
Retained earnings                                      10,655       10,275
Accumulated other comprehensive income (loss)            (74)          (6)
                                                    ---------    ---------
   Total Stockholders' Equity                          11,139       10,830
                                                    ---------    ---------
   Total Liabilities and Stockholders' Equity         $98,332     $101,045
                                                     ========      =======


<PAGE> 5


                            PIONEER BANKSHARES, INC.
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            (In Thousands of Dollars)

                                                           Six Months Ended
                                                              June 30,
                                                          2000        1999

Balance, beginning of period                            $10,830      $11,060

Comprehensive Income:

    Net income for period                                  $919         $764
    Net change in unrealized gains
     on securities available for sale,
     net of income taxes                                   (68)        (144)
                                                      ---------    ---------
    Total Comprehensive Income                              851          620

Dividends declared                                        (448)        (475)
Retirement of common stock                                 (94)         (47)
                                                      ---------    ---------
Balance, end of period                                  $11,139      $11,158
                                                       ========     ========


Quarterly dividends:
First quarter                                             $0.30        $0.30
Second quarter                                            $0.10        $0.10


<PAGE> 6


                            PIONEER BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In Thousands of Dollars)

                                                             Six Months Ended
                                                                  June 30,
                                                              2000        1999
Cash Flows from Operating Activities:

   Net income                                                $919        $764
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for loan losses                             30          60
         Depreciation                                         142         118
         Net Accretion/Amortization of securities            (308)       (103)
         (Gain)/Loss on sale of securities                   (336)       (127)
         Net change in:
            Accrued income                                    (45)        (93)
            Other assets                                     (194)       (173)
            Accrued expense and other liabilities             225         (73)
                                                          -------      -------
   Net Cash Provided by Operating Activities                  433         373
                                                          -------     -------
Cash Flows from Investing Activities:

   Net change in federal funds sold                         1,415       2,805
   Net increase in interest bearing deposits                4,045        (964)
   Proceeds from maturities and sales
     of securities available for sale                       1,260       1,072
   Proceeds from maturities and calls
     of securities held to maturity                           189       2,147
   Purchase of securities available for sale               (1,134)     (6,892)
   Purchase of securities held to maturity                      0         (13)
   Net increase in loans                                   (2,703)     (3,382)
   Purchase of bank premises and equipment                    (64)        (51)
   Investment in life insurance policies                      (18)        (33)
                                                          -------      -------
   Net Cash Provided by (Used in) Investing Activities      2,990      (5,311)
                                                          -------      -------
Cash Flows from Financing Activities:
   Net change in:

      Demand and savings deposits                             608       4,094
      Time deposits                                          (137)     (1,110)
      Short-term borrowings                                     0           0
   Proceeds from borrowings                                 1,000       2,000
   Curtailments of borrowings                              (4,600)        (50)
   Purchase and subsequent retirement of common stock         (94)        (47)
   Dividends paid                                            (506)       (357)
                                                           -------     -------
   Net Cash Provided by (Used in) Financing Activities     (3,729)      4,530
                                                           -------    -------
Cash and Cash Equivalents

   Net increase in cash and cash equivalents                 (306)       (408)
   Cash and Cash Equivalents, beginning of year             5,199       4,400
                                                          -------     -------
   Cash and Cash Equivalents, End of Year                  $4,893      $3,992
                                                          =======     =======

Supplemental Disclosure of Cash Paid During the Year for:
   Interest                                                $1,612      $1,465
   Income taxes                                              $233        $279


<PAGE> 7
                            PIONEER BANKSHARES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1   ACCOUNTING PRINCIPLES:

         The consolidated  financial  statements  conform to generally  accepted
         accounting principles and to general industry practices. In the opinion
         of  management,   the  accompanying  unaudited  consolidated  financial
         statements contain all adjustments (consisting of only normal recurring
         accruals) necessary to present fairly the financial position as of June
         30, 2000 and the results of operations for the three-month  periods and
         year to date periods  ended June 30, 2000 and June 30, 1999.  The notes
         included  herein  should  be read in  conjunction  with  the  notes  to
         financial statements included in the 1999 annual report to stockholders
         of Pioneer Bankshares, Inc.


NOTE 2   INVESTMENT SECURITIES:

         The  amounts  at  which  investment   securities  are  carried  in  the
         consolidated balance sheets and their approximate market values at June
         30, 2000 and December 31, 1999 follows:

                                           2000                  1999
                                    Carrying   Market     Carrying    Market
                                      Value     Value       Value      Value

Securities held to maturity:
  U.S. Treasury and agency
     obligations                      $1,753    $1,734      $1,759    $1,737
  State and municipal                  1,156     1,173       1,253     1,282
  Other securities                         -         -           -         -
  Mortgage-backed securities             458       440         545       522
                                     -------   -------     -------   -------
     Total                            $3,367    $3,347      $3,557    $3,541
                                     =======   =======     =======   =======
Securities available for sale:
  U.S. Treasury and agency
     obligations                      $9,252    $8,972     $10,563   $10,157
  Municipal Securities                 1,905     1,800           -         -
  Equity Securities                      975     1,247       1,049     1,471
  Mortgage-backed securities               -         -           -         -
                                     -------   -------     -------   -------
     Total                           $12,132   $12,019     $11,612   $11,628
                                     =======   =======     =======   =======


<PAGE> 8


                            PIONEER BANKSHARES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3   LOANS:

         Loans outstanding are summarized as follows:

                                                      June 30,   December 31,
                                                        2000         1999

Real estate loans                                     $53,665       $52,780
Commercial and industrial loans                         5,266         4,007
Loans to individuals, primarily
   collateralized by autos                             14,281        14,164
All other loans                                         1,074           364
                                                    ---------     ---------
   Total Loans                                         74,286        71,315

Less unearned discount                                (1,642)       (1,284)
                                                    ---------     ---------
Loans, less unearned discount                          72,644        70,031

Less allowance for loan losses                          (719)         (779)
                                                    ---------     ---------
   Net Loans Receivable                               $71,925       $69,252
                                                     ========      ========


NOTE 4   ALLOWANCE FOR LOAN LOSSES:

         A summary of  transactions in the allowance for loan losses for the six
         months ended June 30, 2000 and 1999 follows:

                                                           2000        1999

Balance, beginning of period                              $ 779        $ 773
Provision charged to operating expenses                      15           30
Recoveries of loans charged off                              17            9
Loans charged off                                            76           49
                                                        -------      -------
Balance, End of Period                                     $735         $763
                                                        =======      =======


<PAGE> 9


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

Overview

Loans continued to grow, increasing $2,613,000 (3.74%),  principally in the real
estate and  consumer  loan areas.  The Federal Home Loan Bank Line of Credit for
$4,500,000 was repaid in total at the beginning of the year.  Deposits increased
by $471,000 (.58%), with an increase in certificates of deposit over $100,000 of
$1,084,000.  This need for funds was met by a decrease in Federal  Funds Sold of
$1,415,000,  decrease in Interest  Bearing Deposits at Banks of $4,045,000 and a
new borrowing on the Federal Home Loan Bank Line of Credit for $1,000,000.

Results of Operations

The dollar amount of the tax equivalent net interest margin  increased  $211,000
or 15.3% for the current  year to date  period as compared to the  corresponding
period  in the  prior  year  [$65,000  or 5.27% in the  second  quarter  of 2000
compared to the second quarter of 1999]. Improvement in the yield in credit card
loans is attributable to the expiration of introductory  rates when the card was
initially issued.

A  significant  portion of the  increase  in net  interest  income is  primarily
attributable to an increase in net earning assets (i.e. volume increases),  with
the remainder coming from a decrease in the net yield on earning assets.

Noninterest  income increased $348,000 in the first half of 2000. An increase in
securities  gains  accounted for $209,000 of the total.  Other Income  increased
$94,000 in the first quarter of 2000 and included the following  three items; an
adjustment of $58,000 relating to the bank's deferred  compensation  liabilities
and the cash value of  insurance  policies  held to provide  funds to meet these
liabilities,  recognition  of  receipt of  $108,000  [receipts  of $72,000  were
recognized  in the first half of 1999] from the company's  former  president (of
which $7,000 was used to offset expenses  incurred in the current period) and an
adjustment  to  eliminate  an unused  accrual for Y2K  expenses in the amount of
$20,000.  Service charges on deposit Accounts  increased due to increases in the
per item overdraft fee and an increase in the number of accounts serviced.

Noninterest expense increased $261,000 (15.57%). Salaries and benefits accounted
for  $178,000  of this  total.  These  increases  resulted  from  normal  salary
increases,  the bank president  position only being filled for part of the first
half of 1999 while a new  president was included in expenses for the full period
in 2000.  Equipment  expense  increased  by $53,000  (35.81%)  due to  increased
depreciation  and repairs  and  maintenance.  Other  expense  increased  $40,000
(5.58%)  resulting  primarily  from;  increase  in  director  fees,  increase in
professional fees, and a decrease in Y2K related expenses.


<PAGE> 10


Financial Condition

Securities

The  Company's  securities  portfolio is held to assist the Company in liquidity
and asset liability management as well as capital  appreciation.  The securities
portfolio  consists of securities held to maturity and securities  available for
sale.  Securities  are  classified as held to maturity when  management  has the
intent and ability to hold the  securities  to maturity.  These  securities  are
carried at amortized cost. Securities available for sale include securities that
may be sold in response to general market fluctuations,  general liquidity needs
and other similar factors.  Securities available for sale are recorded at market
value.  Unrealized holding gains and losses of available for sale securities are
excluded from earnings and reported (net of deferred income taxes) as a separate
component of shareholders'  equity. As of June 30, 2000, the market value of all
securities  available  for sale  was  below  their  amortized  cost by  $113,000
($75,000  after  the  consideration  of  income  taxes).  This is the  result of
increases in the value of equity securities held by the parent, net of decreases
in the value of the bond portfolio held by the subsidiary  bank.  Management has
traditionally held debt securities (regardless of classification) until maturity
and  thus it does  not  expect  the  minor  fluctuation  in the  value  of these
securities to have a direct impact on earnings.

The  Bank  generally  invests  in  relatively   short-term   maturities  due  to
uncertainty in the direction of interest rates. Of the investments in securities
available  for sale,  10.38%  (based on market  value) are invested in equities,
some of which are  dividend  producing  and  subject to the  corporate  dividend
exclusion for taxation  purposes.  The Company believes these  investments offer
adequate returns and/or have the potential for significant increases in value.

Loan Portfolio

The Company  operates in an  agriculturally  dominated  area that  includes  the
counties of Page, and Rockingham in the western portion of Virginia. The Company
does not make a  significant  number of loans to  borrowers  outside its primary
service  area.  The  Company is very  active in local  residential  construction
mortgages.  Commercial lending includes loans to small and medium sized business
within its service area.

An inherent  risk in the lending of money is that the borrower  will not be able
to repay the loan under the terms of the original  agreement.  The allowance for
loan  losses (see  subsequent  section)  provides  for this risk and is reviewed
periodically for adequacy.  The risk associated with real estate and installment
notes to individuals is based upon employment,  the local and national economies
and consumer  confidence.  All of these affect the ability of borrowers to repay
indebtedness. The risk associated with commercial lending is substantially based
on the strength of the local and national economies in addition to the financial
strength of the borrower.

While lending is geographically diversified within the service area, the Company
does have some  concentration  in  residential  real estate loans. A significant
percentage of residential real estate loans and consumer  installment  loans are
made to borrowers employed in the agricultural sector of the economy or employed
by businesses  outside our service area. The Company monitors its past due loans
closely and has not experienced a high delinquency rate.


<PAGE> 11


Loan Portfolio (Continued)

The risk elements in lending  activities include nonaccrual loans, loans 90 days
or more past due and  restructured  loans.  Nonaccrual  loans are loans on which
interest accruals have been suspended or discontinued permanently.  Restructured
loans are loans,  which have  changed the  original  interest  rate or repayment
terms due to financial hardship. Nonaccrual loans and loans 90 days or more past
due totaled $357,000 at June 30, 2000 compared to $326,000 at December 31, 1999.
A majority  of these past due loans are  secured by real  estate.  Although  the
potential exists for some loan losses, management believes the bank is generally
well  secured and  continues  to actively  work with these  customers  to effect
payment.

Problem  loans  (serious  doubt loans) are loans  whereby  information  known by
management  indicates  that the  borrower may not be able to comply with present
payment terms. The Company had no problem loans at June 30, 2000.

As of June 30, 2000 the  Company did not hold any real estate that was  acquired
through foreclosure.

Allowance for Loan Losses

Management  evaluates the loan portfolio in light of national and local economic
trends, changes in the nature and value of the portfolio and industry standards.
Specific  factors  considered by management in  determining  the adequacy of the
level of the allowance include  internally  generated loan review reports,  past
due reports, historical loan loss experience and individual borrower's financial
condition.  This  review  also  considers  concentrations  of  loans in terms of
geography,  business  type or  level  of  risk.  Management  evaluates  the risk
elements  involved  in loans  relative to their  collateral  value and makes the
appropriate adjustments to the allowance when needed.

The provision for credit losses and changes in the allowance for loan losses are
shown in Note 4 above.

The allowance for loan losses of $719,000 at June 30, 2000 was down $60,000 from
its level at December 31,  1999.  The  allowance  was equal to .99% and 1.12% of
total loans at June 30, 2000 and December 31, 1999 respectively.  In the opinion
of  management,  the  allowance,  when taken as a whole,  is  adequate to absorb
reasonably estimated losses inherent in the Company's portfolio.

Deposits

The  Company's  main  source  of  funds  is  customer   deposits  received  from
individuals,  governmental  entities and businesses located within the Company's
service area.  Deposit accounts include demand deposits,  savings,  money market
and certificates of deposit.

Borrowings

Borrowings  from the Federal Home Loan Bank of Atlanta  (FHLB) to finance  fixed
rate  loans  occurred  at the end of the first  quarter of 1999.  The  Company's
subsidiary bank borrows funds on a fixed rate basis.  These  borrowings are used
to fund either  fifteen-year fixed rate loans or twenty-year loans, of which the
first ten years have a fixed  rate.  This  program  allows the Bank to match the
maturity of its fixed rate real estate  portfolio  with the maturity of its debt
and thus reduce its exposure to interest rate changes.


<PAGE> 12


Borrowings (Continued)

In the second quarter of 2000, the Company borrowed  $1,000,000 against its Line
Of Credit with the Federal Home Loan Bank.  This  borrowing was made by the Bank
in order to  maintain an  adequate  liquidity  level.  These  borrowings  are in
keeping with the Bank's normal asset and liability management procedures.

Capital

The Company maintains a strong capital base to expand facilities, promote public
confidence,  support  operations and grow at a manageable  level. As of June 30,
2000,  the Company's  total risk based capital and total capital to total assets
ratios  were  14.63%  and  13.48%,  respectively.  Both  ratios are in excess of
regulatory minimums.

Earnings  have been  sufficient to allow for dividends to be paid on a quarterly
basis in 2000 and management has no reason to believe this payment schedule will
not continue.

Liquidity

Liquidity  is the  ability  to meet  present  and future  financial  obligations
through  either the sale or maturity of existing  assets or the  acquisition  of
additional  funds through  liability  management.  Liquid  assets  include cash,
interest-bearing  deposits with banks, federal funds sold, investments and loans
maturing within one year. The Company's  ability to obtain deposits and purchase
funds at favorable rates determines its liquidity  exposure.  As a result of the
Company's  management  of liquid  assets and the ability to  generate  liquidity
through  borrowings,  management  believes  that the Company  maintains  overall
liquidity  sufficient  to  satisfy  its  depositors'  requirements  and meet its
customers' credit needs.

Additional  sources of liquidity  available to the Company include,  but are not
limited  to, loan  repayments,  deposits  obtained  through  the  adjustment  of
interest rates,  purchases of federal funds and borrowings.  To further meet its
liquidity  needs,  the Company also  maintains  lines of credit with the Federal
Home  Loan Bank of  Atlanta  and  correspondent  banks.  In the past,  growth in
deposits  and  proceeds  from the  maturity of  investment  securities  has been
sufficient to fund most of the net increase in loans and investment securities.

Interest Rate Sensitivity

The Company's liquidity levels remain adequate.  The Bank historically has had a
stable  core  deposit  base and,  therefore,  does not have to rely on  volatile
funding  sources.  Because of the stable core deposit base,  changes in interest
rates should not have a significant  effect on liquidity.  During 2000, the Bank
has used maturing investments, deposit growth and use of lines of credit to meet
its liquidity needs.

The  Bank's  membership  in the  Federal  Home Loan Bank  System  also  provides
liquidity.  The matching of the long-term  receivables and liabilities helps the
Bank reduce its sensitivity to interest rate changes.

The Company reviews its interest rate gap periodically and makes  adjustments as
needed.

There are no off-balance-sheet items that should impair future liquidity.


<PAGE> 13


Interest Rate Sensitivity (Continued)

Table II  contains  an  analysis,  which shows the  repricing  opportunities  of
earning assets and interest bearing liabilities as of June 30, 2000.

As of June 30, 2000, the Company had a cumulative Gap Rate Sensitivity  Ratio of
(33.39%)  for the one-year  repricing  period.  This  generally  indicates  that
earnings would improve in a declining  interest rate  environment as liabilities
reprice more quickly than assets.  Conversely,  earnings would probably decrease
in periods  during  which  interest  rates are  increasing.  However,  in actual
practice, this may not be the case as deposits may not reprice concurrently with
changes in rates within the general economy.  Management constantly monitors the
Company's  interest rate risk and has decided the current position is acceptable
for a well-capitalized community bank operating in a rural environment.

Effect of Newly Issued Accounting Standards

The  Company  does  not  believe  that any  newly  issued  but as yet  unapplied
accounting  standards  will have a material  impact on the  Company's  financial
position or operations.

Securities and Exchange Commission Web Site

The    Securities    and    Exchange    Commission    maintains   a   Web   site
(http://www.sec.gov)that  contains reports, proxy and information statements and
other  information  regarding  registrants  that  file  electronically  with the
Commission, including Pioneer Bankshares, Inc.


<PAGE> 14
TABLE 1

                            Pioneer Bankshares, Inc.
                          Net Interest Margin Analysis
                        (on a fully tax equivalent basis)
                          (dollar amounts in thousands)

                               Six Months Ended         Six Months Ended
                                 June 30,2000             June 30,1999
                              -------------------      ------------------
(In thousands)                Average  Income/          Average  Income/
                              Balance  Expense  Rates   Balance  Expense  Rates

Interest Income
    Loans 1

      Commercial                $3,969    $211  10.63%    $3,706    $205  11.06%
      Real estate               54,280  $2,341   8.63%    48,885  $2,117   8.66%
      Installment               11,935    $847  14.19%    10,596    $758  14.31%
      Credit Card                  998    $103  20.64%       848     $65  15.33%
Federal funds sold               2,680      79   5.90%     7,248     166   4.58%
 Interest bearing deposits         755      19   5.03%       870      21   4.83%
 Investments
   Taxable 3                    13,130     408   6.22%    11,556     330   5.72%
   Nontaxable 2                  2,829     106   7.50%     3,995     177   8.87%
                                ------  ------  -----     ------  ------  -----

Total earning assets            90,576   4,115  18.17%    87,704   3,840  17.51%
                                ------  ------  -----     ------  ------  -----

Interest Expense

 Demand deposits                23,367      86   0.74%    22,968      99   0.86%
 Savings                        10,180      95   1.87%    11,778     141   2.39%
 Time deposits                  49,725   1,308   5.26%    46,352   1,123   4.85%
 Borrowings                      2,499     103   8.24%     1,012      18   3.56%
                                ------  ------  -----     ------  ------  -----

  Total Interest Bearing

     Liabilities               $85,771  $1,592   3.71%   $82,110  $1,381   3.36%
                                 =====   =====   =====     =====   =====   =====
  Net Interest Margin 1                  2,523                     2,459
                                         =====                     =====
Net interest yield on
 interest earning assets                         5.57%                     5.61%
                                                 =====                     =====

1 Interest on loans includes loan fees
2 An incremental income tax rate of 34% was used to calculate the
 tax equivalent income
3 An incremental tax rate of 34% and 70% dividend exclusion was used
 to calculate the tax equivalent income




<PAGE> 15
TABLE 1 (Continued)

                            Pioneer Bankshares, Inc.
                          Net Interest Margin Analysis
                        (on a fully tax equivalent basis)
                          (dollar amounts in thousands)

                              Three Months Ended       Three Months Ended
                                 June 30,2000             June 30,1999
                              -------------------      ------------------
(In thousands)                Average  Income/          Average  Income/
                              Balance  Expense  Rates   Balance  Expense  Rates

Interest Income
    Loans 1

      Commercial                $4,112    $110  10.70%    $3,820    $102  10.68%
      Real estate               54,673  $1,190   8.71%    49,538  $1,086   8.77%
      Installment               12,166    $425  13.97%    10,726    $385  14.36%
      Credit Card                  986     $54  21.91%       823     $33  16.04%
Federal funds sold               2,253      35   6.21%     6,359      75   4.72%
 Interest bearing deposits         122       2   6.56%     1,707      15   3.51%
 Investments
   Taxable 3                    13,112     205   6.24%    12,645     183   5.78%
   Nontaxable 2                  2,981      56   7.52%     3,939      83   8.46%
                                ------  ------  -----     ------  ------  -----

Total earning assets            90,405   2,077   9.19%    89,557   1,962   8.76%
                                ------  ------  -----     ------  ------  -----

Interest Expense

 Demand deposits                23,963      43   0.72%    23,616      50   0.85%
 Savings                        10,111      47   1.86%    12,190      70   2.30%
 Time deposits                  49,563     660   5.33%    46,054     590   5.12%
 Borrowings                      1,825      28   6.14%     1,992      18   3.61%
                                ------  ------  -----     ------  ------  -----

  Total Interest Bearing

     Liabilities               $85,462    $778   3.64%   $83,852    $728   3.47%
                                 =====   =====   =====     =====   =====   =====
  Net Interest Margin 1                  1,299                     1,234
                                         =====                     =====
Net interest yield on
 interest earning assets                         5.75%                     5.51%
                                                 =====                     =====

1 Interest on loans includes loan fees
2 An incremental income tax rate of 34% was used to calculate the
 tax equivalent income
3 An incremental tax rate of 34% and 70% dividend exclusion was used
 to calculate the tax equivalent income


<PAGE> 16
TABLE 2

                            Pioneer Bankshares, Inc.
                          Interest Sensitivity Analysis
                                  June 30, 2000
                          (dollar amounts in thousands)

                            0-3      4-12     1-5   Over 5     Not      Total
                          Months    Months   Years   Years  Classified
Uses of Funds:

Loans:
Commercial                  $2,036   $1,424    $369      $0        $0  $3,829
Installment                    170      786  12,829     591         0  14,376
Real estate                  6,538    9,225  31,730   7,618         0  55,111
Credit Card                      0        0   1,006       0         0   1,006
Interest bearing bank          491        0       0       0         0     491
   deposits

Investment securities          376    1,135   6,495   6,133       448  14,587
Federal funds sold             800        0       0       0         0     800
                            ------   ------  ------  ------    ------  ------

Total                       10,411   12,570  52,429  14,342       448  90,200
                            ------   ------  ------  ------    ------  ------

Sources of Funds:

Interest bearing demand     10,120        0       0       0         0  10,120
   deposits
Regular savings             10,076        0       0       0         0  10,076
Certificates of deposit
  $100,000 and over            958    3,249   1,942       0         0   6,149
Other certificates of        6,632   18,835  17,512       0         0  42,979
   deposits

TT & L Account                   0        0       0       0         0       0
Borrowings                   1,050      150     800     750         0   2,750
                            ------   ------  ------  ------    ------  ------

Total                       28,836   22,234  20,254     750         0  72,074
                            ------   ------  ------  ------    ------  ------

Discrete Gap              (18,425)  (9,664)  32,175  13,592       448  18,126

Cumulative Gap            (18,425) (28,089)   4,086  17,678    18,126

Ratio of Cumulative Gap

 To Total Earning Assets   -20.38%  -31.07%   4.52%  19.55%    20.05%


<PAGE> 17


Part II Other Information

Item 1. Legal Proceedings -

C. Gaylon  Waters  resigned his  positions as president and director of the Bank
and president and director of the Holding  Company as of February 15, 1999.  His
resignation  occurred  as part of an  agreement  with the  Bank and the  Holding
Company  following the discovery of a pattern of  unauthorized  expenditures  of
bank  funds.  As part of the  agreement  between  Mr.  Waters,  the Bank and the
Holding  Company,  Mr.  Waters  deposited  into an escrow  account  an amount of
Holding Company stock with a market value of approximately $350,000.00 to secure
any claims by the Bank and/or the Holding Company  against Mr. Waters  involving
the unauthorized expenditures. Since the date of Mr. Waters' resignation through
March  31,  2000,  the  Bank  and  the  Holding  Company  charged  approximately
$340,000.00 against the escrowed shares. As a result of these charges,  the Bank
and the Holding Company believe that they have recovered  substantially  all the
unauthorized expenditures.

After agreeing to the vast majority of charges against the escrow  account,  Mr.
Waters has now challenged  some of those charges.  These  challenges have led to
the filing by him (in April, 2000) of a lawsuit for recovery of a portion of the
funds recovered by the Bank and the Holding Company,  which matter is pending in
the Circuit  Court for the City of  Harrisonburg,  Virginia as Waters v. Pioneer
Bank,  et al. While this  litigation  is pending,  the amount of exposure to the
Bank is  substantially  less than that for which  disclosure  is required  under
federal securities laws.

As a result of these events, the Bank and the Holding Company have implemented a
number of internal controls and procedures  designed to prevent the reoccurrence
of such events. Specifically,  the Bank and the Holding Company have implemented
new  expenditure  confirmation  policies that require proper  documentation  and
multiple signatures in order to obtain most expense reimbursements. In addition,
the internal and external audit  functions of the Bank and Holding  Company have
been enhanced to require frequent monitoring of the expenditure of Bank funds.


<PAGE> 18


Item 2.  Changes in Securities -            Not Applicable

Item 3.  Defaults Upon Senior Securities -  Not Applicable

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

On April 11, 2000,  the Annual  Shareholders  Meeting was held.  At this meeting
Patricia G. Baker [votes for 891,973,  against 4,380], Robert L. Long [votes for
892,549,  against  3,804] and Kyle L. Miller [votes for 891,413,  against
4,940] were elected to serve as directors. Their term will expire in 2003.

After the meeting, the Board of Directors consisted of Patricia G. Baker,
Louis L. Bosley, Robert E. Long, Harry F. Louderback, Edwin P. Markowitz,
Kyle L. Miller, Mark N. Reed, Thomas R. Rosazza and David N. Slye.

Item 5.  Other Information -                Not Applicable

Item 6.  Exhibits and Reports on 8-K

         (a)  Exhibits

              3  i   Articles of Incorporation of Pioneer Bankshares, Inc.
                     are incorporated by reference to Exhibits to Pioneer
                     Bankshares, Inc. Form 10SB filed May 1, 2000.

              3  ii  Bylaws of Pioneer Bankshares, Inc. are incorporated by
                     reference to Exhibits to Pioneer Bankshares, Inc. Form
                     10SB filed May 1, 2000.

              27     Financial Data Schedule attached.

         (b)  Reports on Form 8-K

              The  Company  did not file any reports on Form 8-K for the quarter
              ending June 30, 2000.


<PAGE> 19


                                  EXHIBIT INDEX

Exhibit

 Index                                                          Page Number

  27     Financial Data Schedule for the quarter
         ending June 30, 2000                                       21


<PAGE> 20


                                    Signature

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

                                 Pioneer Bankshares, Inc.



                                 THOMAS R. ROSAZZA
                                 Thomas R. Rosazza
                                 President


                                 BRENDA KITE
                                 Brenda Kite
                                 Vice President and Chief Financial Officer

Date: August 14, 2000