SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10-QSB



[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934

                  For Quarterly Period Ended September 30, 2003

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

                           Commission File No. 0-30541

                              PIONEER BANKSHARES
                                 INCORPORATED
             (Exact name of small business issuer as specified in its charter)

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

                              263 East Main Street
                                  P. O. Box 10
                            Stanley, Virginia 22851
                (Address of principal executive offices, including zip code)

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



      Check 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  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
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 November 12, 2003
Common Stock, par value - $0.50                          1,092,410 shares


<PAGE> 1


                            PIONEER BANKSHARES, INC.


                                      INDEX

                                                                      Page

PART I     FINANCIAL INFORMATION                                        2

Item 1.    Financial Statements

           Consolidated Statements of Income - Three Months
           Ended September 30, 2003 and 2002                            2

           Consolidated Statements of Income - Nine Months
           Ended September 30, 2003 and 2002                            3

           Consolidated Balance Sheets - September 30, 2003 and
           December 31, 2002                                            4

           Consolidated Statements of Changes in Stockholders'
           Equity - Nine Months Ended September 30, 2003 and 2002       5

           Consolidated Statements of Cash Flows - Nine Months
           Ended September 30, 2003 and 2002                            6

           Notes to Consolidated Financial Statements                   7

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

Item 3.    Controls and Procedures                                     17


PART II    OTHER INFORMATION                                           17

Item 1.    Legal Proceedings                                           17

Item 2.    Changes in Securities                                       17

Item 3.    Defaults upon Senior Securities                             17

Item 4.    Submission of Matters to a Vote of Security Holders         17

Item 5.    Other Information                                           17

Item 6.    Exhibits and Reports on Form 8K                             18


           SIGNATURES                                                  19


<PAGE> 2

Part I  Financial Information
Item 1  Financial Statements
                            PIONEER BANKSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                            (In Thousands of Dollars)
                                   (UNAUDITED)
                                                       Three Months Ended
                                                          September 30,
                                                        2003          2002
Interest and Dividend Income:
   Loans including fees                             $    1,846    $   2,232
   Debt securities - taxable                                81           77
   Debt securities - nontaxable                             17           22
   Deposits and federal funds sold                          11           64
   Equity securities                                        30           16
                                                     ---------     --------

   Total Interest and Dividend Income                    1,985        2,411
                                                     ---------     --------

Interest Expense:
   Deposits                                                423          746
   Borrowings                                               71           79
                                                     ---------     --------

   Total Interest Expense                                  494          825
                                                     ---------     --------

Net Interest Income                                      1,491        1,586
Provision for loan losses                                  344          493
                                                     ---------     --------

Net interest income after provision
   for loan losses                                       1,147        1,093
                                                     ---------     --------

Noninterest Income:
   Service charges on deposit accounts                     213          225
   Other income                                             47           78
   Gain (Loss) on security transactions                    174         (122)
                                                     ---------     --------

   Total Noninterest Income                                434          181
                                                     ---------     --------

Noninterest Expense:
   Salaries and benefits                                   540          524
   Occupancy expenses                                       64           61
   Equipment expenses                                      200          173
   Other expenses                                          355          378
                                                     ---------     --------

   Total Noninterest Expenses                            1,159        1,136
                                                     ---------     --------

Income before Income Taxes                                 422          138
Income Tax Expense                                         139           34
                                                     ---------     --------

Net Income                                                 283          104
                                                     ---------     --------

Per Share Data
   Net income                                       $      0.26   $     0.09
                                                     ==========    =========
   Dividends                                        $      0.11   $     0.11
                                                     ==========    =========

Weighted Average Shares Outstanding                  1,092,410     1,111,109
                                                     =========     =========


          The accompanying notes are an integral part of this statement.


<PAGE> 3

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

                                                        Nine Months Ended
                                                          September 30,
                                                        2003          2002
Interest and Dividend Income:
   Loans including fees                             $    5,776    $   6,854
   Debt securities - taxable                               302          273
   Debt securities - nontaxable                             58           68
   Deposits and federal funds sold                          42          122
   Equity securities                                        87           50
                                                     ---------     --------

   Total Interest and Dividend Income                    6,265        7,367
                                                     ---------     --------

Interest Expense:
   Deposits                                              1,364        2,286
   Borrowings                                              216          244
                                                     ---------     --------

   Total Interest Expense                                1,580        2,530
                                                     ---------     --------

Net Interest Income                                      4,685        4,837
Provision for loan losses                                  829          991
                                                     ---------     --------

Net interest income after provision
   for loan losses                                       3,856        3,846
                                                     ---------     --------

Noninterest Income:
   Service charges on deposit accounts                     642          617
   Other income                                            190          392
   Gain (loss) on security transactions                    302         (186)
                                                     ---------     --------

   Total Noninterest Income                              1,134          823
                                                     ---------     --------

Noninterest Expense:
   Salaries and benefits                                 1,584        1,637
   Occupancy expenses                                      194          196
   Equipment expenses                                      544          489
   Other expenses                                        1,042        1,349
                                                     ---------     --------

   Total Noninterest Expenses                            3,364        3,671
                                                     ---------     --------

Income before Income Taxes                               1,626          998
Income Tax Expense                                         528          312
                                                     ---------     --------

Net Income                                          $    1,098    $     686
                                                     =========     ========

Per Share Data
   Net income                                       $      1.01   $     0.62
                                                     ==========    =========
   Dividends                                        $      0.33   $     0.33
                                                     ==========    =========

Weighted Average Shares Outstanding                  1,092,410     1,111,109
                                                     =========     =========


          The accompanying notes are an integral part of this statement.


<PAGE> 4

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

                                                    September 30,  December 31
                                                        2003          2002
                                                     (Unaudited)   (Audited)
ASSETS

Cash and due from banks                              $   7,085    $   7,680
Federal funds sold                                       2,100          500
Interest bearing deposits in banks                       5,436        4,811
Investment securities
   Held to maturity                                         48           76
   Available for sale                                   17,952       19,551
Loans receivable, net of allowance for loan
   losses of $1,482 and $1,448 respectively             79,357       86,099
Premises and equipment                                   4,285        3,919
Other assets                                             2,468        2,493
                                                      --------     --------

   Total Assets                                      $ 118,731    $ 125,129
                                                      ========     ========

LIABILITIES

Deposits
   Noninterest bearing demand                        $  20,865       20,367
   Interest bearing
      Demand                                            13,418       12,986
      Savings                                           12,529       12,482
      Time deposits over $100,000                        8,370        9,949
      Other time deposits                               45,089       50,741
                                                      --------    ---------

   Total Deposits                                      100,271      106,525

Accrued expenses and other liabilities                     608          854
Borrowings                                               4,588        5,075
                                                      --------    ---------

   Total Liabilities                                   105,467      112,454
                                                      --------    ---------

STOCKHOLDERS' EQUITY

Common stock; $.50 par value, authorized
   5,000,000, outstanding 1,092,410                        546          546
Retained earnings                                       12,651       11,913
Accumulated other comprehensive income                      67          216
                                                      --------    ---------

   Total Stockholders' Equity                           13,264       12,675
                                                      --------    ---------

   Total Liabilities and Stockholders' Equity        $ 118,731    $ 125,129
                                                      ========     ========

           The accompanying notes are an integral part of this statement.


<PAGE> 5

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


                                                       Nine Months Ended
                                                         September 30,
                                                       2003         2002

Balance, beginning of period                       $  12,675     $  12,257

Comprehensive Income:

   Net income for period                               1,098           686
   Net change in unrealized gains
      on securities available for sale,
      net of income taxes                               (149)           72
                                                    ---------    ---------

   Total Comprehensive Income                            949           758

Dividends declared                                      (360)         (367)
                                                    ---------    ----------

Balance, end of period                             $  13,264     $  12,648
                                                    ========      ========

          The accompanying notes are an integral part of this statement.


<PAGE> 6

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

                                                        Nine Months Ended
                                                          September 30,
                                                        2003         2002
Cash Flows from Operating Activities:
   Net income                                        $   1,098   $     686
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for loan losses                         829         991
         Depreciation and amortization                     384         451
         Net amortization of securities                                  9
         Loss (gain) on sale of securities                (302)        186
         Income on insurance policies                      (36)        (27)
         Net change in:
            Accrued income                                  79         (53)
            Other assets                                   (18)       (190)
            Accrued expense and other liabilities         (169)       (257)
                                                      ---------   --------

   Net Cash Provided by Operating Activities             1,865       1,796
                                                      --------    --------

Cash Flows from Investing Activities:
   Net change in federal funds sold                     (1,600)    (11,150)
   Net change in interest bearing deposits                (625)     (1,375)
   Proceeds from maturities and sales
      of securities available for sale                  25,498       4,555
   Proceeds from maturities and calls
      of securities held to maturity                        28         340
   Purchase of securities available for sale           (23,823)     (5,578)
   Net increase (decrease) in loans                      5,913         (88)
   Purchase of bank premises and equipment                (750)       (600)
                                                      ---------   --------

   Net Cash Provided by (Used in)
      Investing Activities                               4,641     (13,896)
                                                      --------    ---------

Cash Flows from Financing Activities:
   Net change in:
      Demand and savings deposits                          977       5,652
      Time deposits                                     (7,231)      8,225
   Curtailments of borrowings                             (487)       (487)
   Dividends paid                                         (360)       (245)
                                                      ---------   --------

   Net Cash (Used in) Provided by
      Financing Activities                              (7,101)     13,145
                                                      ---------   --------

Cash and Cash Equivalents
   Net (decrease) increase in cash
      and cash equivalents                                (595)      1,045
   Cash and Cash Equivalents, beginning of year          7,680       4,865
                                                      --------    --------

   Cash and Cash Equivalents, End of Year            $   7,085   $   5,910
                                                      ========    ========

Supplemental Disclosure of Cash Paid
   During the Year for:
      Interest                                       $   1,831   $   2,605
      Income taxes                                   $     513   $     130

          The accompanying notes are an integral part of this statement.


<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
         September 30, 2003 and the results of operations for the three-month
         periods and year to date periods ended September 30, 2003 and September
         30, 2002. The notes included herein should be read in conjunction with
         the notes to financial statements included in the 2002 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
         September 30, 2003 and December 31, 2002 follows:

                                              2003                2002
                                        Carrying  Market   Carrying  Market
                                          Value    Value     Value    Value

         Securities held to maturity:
            Mortgage-backed securities $     48 $     51   $    76  $    78
                                        -------  -------    ------   ------

            Total                      $     48 $     51   $    76  $    78
                                        ======= ========   =======  =======

         Securities available for sale:
            U.S. Treasury and agency
              obligations              $ 15,127 $ 15,099   $15,508  $15,666
            Municipal securities          1,710    1,807     2,342    2,476
            Equity securities             1,012    1,046     1,372    1,409
                                        ------- --------   -------  -------

            Total                      $ 17,849 $ 17,952   $19,222  $19,551
                                        =======  =======    ======   ======


<PAGE> 8

                            PIONEER BANKSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3   LOANS:

         Loans outstanding are summarized as follows:

                                                   September 30,December 31,
                                                       2003        2002

         Real estate loans                            $ 42,660    $ 45,641
         Commercial and industrial loans                23,559      22,170
         Loans to individuals, primarily
            collateralized by autos                     16,161      22,388
         All other loans                                   207         220
                                                       -------    --------

            Total Loans                                 82,587      90,419

         Less unearned discount                         (1,748)     (2,872)
                                                       --------   ---------

         Loans, less unearned discount                  80,839      87,547

         Less allowance for loan losses                 (1,482)     (1,448)
                                                       --------   ---------

            Net Loans Receivable                      $ 79,357    $ 86,099
                                                       =======    ========

NOTE 4   ALLOWANCE FOR LOAN LOSSES:

         A summary of transactions in the allowance for loan losses for the nine
         months ended September 30, 2003 and 2002 follows:

                                                          2003        2002

         Balance, beginning of period                 $  1,448    $  1,154
         Provision charged to operating expenses           829         991
         Recoveries of loans charged off                   523         196
         Loans charged off                              (1,318)     (1,129)
                                                       --------    -------

         Balance, End of Period                       $  1,482    $  1,212
                                                       =======     =======


<PAGE> 9

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


The discussion covers the consolidated financial condition and operations of
Pioneer Bankshares, Inc. ("Company") and its subsidiary Pioneer Bank ("Bank").

Forward-Looking Statements

This quarterly report on Form 10-QSB contains forward-looking statements with
respect to the Company's and the Bank's financial condition, results of
operations and business. These forward-looking statements involve certain risks
and uncertainties. When used in this quarterly report or future regulatory
filings, in press releases or other public shareholder communications, or in
oral statements made with the approval of an authorized executive officer, the
words or phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project," "believe," or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. We caution the readers and
users of this information not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and advise
readers that various factors including regional and national economic
conditions, changes in the levels of market rates of interest, credit risk and
lending activities, and competitive and regulatory factors could affect the
financial performance of the Company and the Bank and could cause actual results
for future periods to differ materially from those anticipated or projected.

The Company and the Bank do not undertake and specifically disclaim any
obligation to publicly release the result of any revisions, which may be made to
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.

Overview

In the first nine months of 2003, net income including securities transactions
was $1,098,000 ($1.01 per share) compared with $686,000 ($0.62) for the first
nine months of 2002. This increase in net income can be attributed to gains on
securities transactions and reductions in non-interest expenses. The first nine
months of 2003 included significant security gains of $302,000 ($186,000 net of
tax effect), which represents $0.17 per share.

Net income per share, exclusive of security transactions, was $0.84 for the
first nine months of 2003 compared to $0.72 for the first nine months of 2002.

Results of Operations

Net Interest Margin

The tax equivalent net interest income decreased $152,000 or 3.11% in the first
nine months of 2003 compared to the first nine months of 2002. The net interest
margin increased from 5.65% for the first nine months of 2002 to 5.80% for the
first nine months of 2003. This was due to a combination of factors. The volume
and rate of time deposits decreased significantly during the first nine months
of 2003. The volume of installment loans decreased significantly during the
first nine months of 2003. During the same period, there was an increase in the
volume of investments with a lower yield.

The Company plans to invest in more securities and expand their commercial loan
portfolio during the remainder of 2003.


<PAGE> 10


Noninterest Income

In the first nine months of 2003, non-interest income increased by $311,000.
Service charge income increased $25,000 primarily generated by a deposit product
called "bounce checking." Other income decreased by $202,000 due to an insurance
reimbursement received in 2002 relating to the Company's ESOP that was not
repeated in 2003. Offsetting the decrease in other income was a significant
increase in gains on security transactions of $488,000. Non-interest income
(annualized), exclusive of security transactions and insurance reimbursements,
increased from 0.87% of average assets at September 30, 2002 to 0.94% at
September 30, 2003.

Noninterest Expense

For the nine months of 2003, noninterest expense decreased $307,000 (8.36%) from
the first nine months of 2002. Salaries and benefits decreased $53,000 due to
the departure of two officers whose positions have been filled at a lower
compensation level. Equipment expense increased $55,000 primarily due to
increased depreciation on asset purchases for technology upgrades. Other expense
decreased due to a combination of factors: a $117,000 decrease in legal fees and
$22,000 decrease in audit fees primarily related to the Company's ESOP, $32,000
decrease in supply expenses, $16,000 decrease in advertising expenses, and an
additional $15,000 in miscellaneous expenses. Non-interest expense (annualized)
decreased from 3.90% of average assets at September 30, 2002 to 3.78% at
September 30, 2003.

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 September 30, 2003, the market value of
all securities available for sale exceeded their amortized cost by $103,000
($67,000 after the consideration of income taxes). Management has traditionally
held debt securities until maturity and thus it does not expect the minor
fluctuation in the value of these securities to have a direct impact on
earnings.

Investments in securities decreased 8.29% in the first nine months of 2003. The
Company generally invests in securities with a relatively short-term maturity
due to uncertainty in the direction of interest rates. Of the investments in
securities available for sale, 5.83% (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 increases in value.

Loan Portfolio

The Company operates in a service area in the western portion of Virginia, which
includes the counties of Page, Greene, Rockingham and the City of Harrisonburg.
The Company does not make a significant number of loans to borrowers outside its
primary service area. The Company is active in local residential construction
mortgages and consumer lending. Commercial lending includes loans to small and
medium sized businesses within its service area.


<PAGE> 11


Loan Portfolio (Continued)

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
loans 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 loan concentrations in residential real estate loans and consumer auto
loans. A significant percentage of residential real estate loans and consumer
installment loans are made to borrowers employed by businesses outside the
service area.

In the first nine months of 2003, the loan portfolio decreased $6,708,000, as a
result of a substantial decrease in installment loans, primarily collateralized
by automobiles. The Company has taken proactive measures to reduce the risk
exposure related to automobile financing and plans to expand commercial lending
activities in an effort to diversify the loan portfolio in other markets. A
schedule of loans by type is shown in a note to the consolidated financial
statement included in this report.

The risk elements in lending activities include non-accrual loans, loans 90 days
or more past due and restructured loans. Non-accrual loans are loans on which
interest accruals have been suspended or discontinued permanently. Restructured
loans are loans on which the original interest rate or repayment terms have
changed due to financial hardship. Non-accrual loans and loans 90 days or more
past due totaled $1,042,000 at September 30, 2003 compared to $896,000 at
September 30, 2002. This increase is primarily attributed to increased past due
commercial loans. Although the potential exists for additional 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. Management was not aware of any problem loans at September 30,
2003 not included in the past due or non-accrual status.

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 maintains the
allowance for loan losses at a level which is adequate to absorb credit losses
inherent in the loan portfolio. In addition, regulatory agencies, as an integral
part of their examination process, periodically review the estimated losses on
loans. Such agencies may require the Bank to recognize additional losses based
on their judgment about information available to them at the time of their
examination.

The methodology used to calculate the allowance for loan losses and the
provision for loan losses is a significant accounting principle which is based
on estimates that are particularly susceptible to significant changes in the
economic environment and market conditions.

The provision for loan losses and changes in the allowance for loan losses are
shown in Note 4 to the financial statements.


<PAGE> 12


Allowance for Loan Losses (Continued)

The allowance for loan losses of $1,482,000 at September 30, 2003 increased
$34,000 from its level at December 31, 2002. The increase was due to funding for
potential charge-offs and the risks related to auto and credit card financing.
The allowance was equal to 1.83% and 1.65% of total loans at September 30, 2003
and December 31, 2002, respectively.

Premises and Equipment

During the second quarter of 2002, the company purchased a lot for a new branch
facility located in Harrisonburg for $249,000. The current Harrisonburg branch
relocated to the new office on September 8, 2003 and Valley Finance Service
relocated to the existing branch location. As of September 30, 2003, the bank
had expended $810,000 on constructing and furnishing the branch and estimates
the cost to complete the building to be $150,000.

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. The Company's deposit portfolio decreased by
$12,183,000 or 10.83% during the first nine months of 2003. This decrease is
mainly in the area of certificates of deposits and is a result of management's
efforts to reduce deposit expense by offering lower rates than in the past.
Rates offered during the period were still competitive with other financial
institutions.

Capital

The Company maintains a strong capital base to expand facilities, promote public
confidence, support operations and grow at a manageable level. As of September
30, 2003 and December 31, 2002, the Company's total capital to total assets
ratios were 11.17% and 10.13%, respectively. The capital ratios exceed
regulatory minimums. Earnings have been sufficient to allow for dividends to be
declared on a quarterly basis 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

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

Liquidity as of September 30, 2003, remains adequate and within policy
guidelines.


<PAGE> 13


Interest Rate Sensitivity

The Company 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 2003, the Company has used loan repayments and maturing
investments to meet its liquidity needs. The Bank's membership in the Federal
Home Loan Bank System also provides liquidity. The matching of long-term
receivables and liabilities helps the Company reduce its sensitivity to interest
rate changes.

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

Table II contains an analysis, which shows the re-pricing opportunities of
earning assets and interest bearing liabilities as of September 30, 2003.

As of September 30, 2003, the Company had a cumulative Gap Rate Sensitivity
Ratio of (35.19%) for the one year repricing period, compared with (33.47%) at
December 31, 2002. This was primarily due to a significant decrease in interest
bearing assets that reprice within one year. 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 Proposed 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 I

                            PIONEER BANKSHARES, INC.
                          NET INTEREST MARGIN ANALYSIS
                        (On a Fully Tax Equivalent Basis)
                          (Dollar Amounts in Thousands)


                         Nine Months Ended             Nine Months Ended
                        September 30, 2003            September 30, 2002

                     Average  Income/              Average  Income/
                    Balance5  Expense   Rates     Balance5  Expense   Rates

Interest Income
  Loans 1
    Commercial      $ 2,952   $  186    8.40%     $ 2,961   $  186    8.38%
    Real estate 4    64,114    3,603    7.49%      65,364    3,976    8.11%
    Installment      16,606    1,859   14.93%      22,806    2,547   14.89%
    Credit card         819      128   20.84%         909      145   21.27%
  Federal funds sold  5,437       42    1.03%      10,008      122    1.63%
  Interest Bearing
    Deposits          5,691       87    2.04%       4,112       50    1.62%
  Investments
    Taxable 3        11,115      324    3.89%       6,671      290    5.80%
    Nontaxable 2      2,159       88    5.43%       2,475      103    5.55%
                     ------    -----   -----       ------    -----   -----

Total earning
  assets             108,893   6,317    7.74%      115,306   7,419    8.58%
                     -------   -----   -----       -------   -----   -----

Interest Expense
  Demand deposits    13,184       56    0.57%      11,881       87    0.98%
  Savings            12,673       75    0.79%      11,243       98    1.16%
  Time deposits      54,699    1,233    3.01%      62,714    2,101    4.47%
  Borrowings          4,903      216    5.87%       5,552      244    5.86%
                     ------    -----   -----       ------    -----   -----

Total Interest Bearing
  Liabilities       $85,459   $1,580    2.47%     $91,390   $2,530    3.69%
                     ======    =====   =====       ======    =====   =====

Net Interest Income 1         $4,737                        $4,889
                               =====                         =====

Net Interest Margin                     5.80%                         5.65%
                                       =====                         =====


1 Interest on loans includes loan fees
2 An incremental 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
4 Includes residential and commercial real estate loans
5 Average balances include non-accruing loans


<PAGE> 15
TABLE I

                            PIONEER BANKSHARES, INC.
                          NET INTEREST MARGIN ANALYSIS
                        (On a Fully Tax Equivalent Basis)
                          (Dollar Amounts in Thousands)


                        Three Months Ended            Three Months Ended
                        September 30, 2003            September 30, 2002

                     Average  Income/              Average  Income/
                    Balance5  Expense   Rates     Balance5  Expense   Rates

Interest Income
  Loans 1
    Commercial      $ 2,862   $   60    8.39%     $ 2,944   $   62    8.42%
    Real estate 4    64,148    1,185    7.39%      65,983    1,312    7.95%
    Installment      14,999      560   14.93%      21,353      808   15.14%
    Credit card         797       41   20.58%         896       50   22.32%
  Federal funds sold  5,131       11    0.86%      15,848       64    1.62%
  Interest Bearing
    Deposits          5,799       30    2.07%       4,178       16    1.53%
  Investments
    Taxable 3        11,333       91    3.22%       5,895       83    5.62%
    Nontaxable 2      1,804       26    5.71%       2,399       33    5.56%
                     ------    -----   -----       ------    -----   -----

Total earning
  assets             106,873   2,004    7.50%      119,496   2,428    8.13%
                     -------   -----   -----       -------   -----   -----

Interest Expense
  Demand deposits    13,245       16    0.48%      12,244       27    0.88%
  Savings            12,637       23    0.73%      12,101       36    1.19%
  Time deposits      53,777      384    2.86%      65,681      683    4.16%
  Borrowings          4,748       71    5.98%       5,387       79    5.87%
                     ------    -----   -----       ------    -----   -----

Total Interest Bearing
  Liabilities       $84,407   $  494    2.34%     $95,413   $  825    3.46%
                     ======    -----   =====       ======    -----   =====

Net Interest Income 1         $1,510                        $1,603
                               =====                         =====

Net Interest Margin                     5.65%                         5.37%
                                       =====                         =====


1 Interest on loans includes loan fees
2 An incremental 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
4 Includes residential and commercial real estate loans
5 Average balances include non-accruing loans


<PAGE> 16
TABLE II

                            PIONEER BANKSHARES, INC.
                          INTEREST SENSITIVITY ANALYSIS
                               SEPTEMBER 30, 2003
                          (Dollar Amounts in Thousands)

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

Loans                  $ 3,862  $ 4,868  $28,659  $43,450  $        $80,839
Interest bearing
   bank deposits         5,436                                        5,436
Investment securities    3,999            11,914    1,112      975   18,000
Federal funds sold       2,100                                        2,100
                        ------   ------  -------  -------  -------  -------

Total                   15,397    4,868   40,573   44,562      975   106,375
                        ------   ------   ------   ------   ------   -------

Sources of Funds:

Interest bearing
   demand deposits      13,418                                       13,418
Regular savings         12,529                                       12,529
Certificates of deposit
   $100,000 and over     1,300    3,524    3,546                      8,370
Other certificates
   of deposit            7,587   18,689   18,813                     45,089
Borrowings                 163      487    2,600    1,338             4,588
                        ------   ------   ------   ------   ------  -------

Total                   34,997   22,700   24,959    1,338            83,994

Discrete Gap           (19,600) (17,832)  15,614   43,224      975   22,381

Cumulative Gap         (19,600) (37,432) (21,818)  21,406   22,381

Ratio of Cumulative
   Gap To Total
   Earning Assets        -18.43%  -35.19%  -20.51%   20.12%   21.04%
                         =======  =======  =======   ======   ======

Ratio of Cumulative
   Gap To Total
   Earning Assets at
   December 31, 2002     -22.90%  -33.47%    5.90%   19.69%   20.91%
                         =======  =======    =====   ======   ======


<PAGE> 17


Item 3.   Controls and Procedures

As a result of the enactment of the Sarbanes-Oxley Act of 2002, issuers such as
Pioneer Bankshares, Inc. that file periodic reports under the Securities
Exchange Act of 1934 (the "Act") are required to include in those reports
certain information concerning the issuer's controls and procedures for
complying with the disclosure requirements of the federal securities laws. These
disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by an
issuer in the reports it files or submits under the Act, is communicated to the
issuer's management, including its principal executive officer or officers and
principal financial officer or officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.

We have established disclosure controls and procedures to ensure that material
information related to Pioneer Bankshares, Inc. is made known to our principal
executive officers and principal financial officer on a regular basis, in
particular during the periods in which our quarterly and annual reports are
being prepared. As required, we evaluate the effectiveness of these disclosure
controls and procedures on a quarterly basis, and have done so as of the end of
the period covered by this report. There have been no changes in the Company's
internal control over financial reporting during the three months ended
September 30, 2003, that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.

Changes in Internal Controls

There were no significant changes in Pioneer Bankshares' internal controls
pertaining to its financial reporting and control of its assets or in other
factors that could significantly affect these controls since the date of their
evaluation.


Part II Other Information


Item 1.  Legal Proceedings -                Not Applicable

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 -              Not Applicable

Item 5.  Other Information                  Not Applicable


<PAGE> 18


Item 6.  Exhibits and Reports on 8-K

         (a)  Exhibits

              3.1    Articles of Incorporation of Pioneer Bankshares,  Inc.
                     (incorporated by  reference to Exhibit 3.1 of Pioneer
                     Bankshares,  Inc.'s Form 10-SB filed May 1, 2001).

              3.2    Bylaws of Pioneer  Bankshares,  Inc.  (incorporated  by
                     reference to Exhibit 3.2 of Pioneer Bankshares, Inc.'s
                     Form 10-SB filed May 1, 2000).

             10.1    Pioneer Bankshares,  Inc. (Formerly Page Bankshares,
                     Inc.), 1998 Stock Incentive  Plan  (incorporated  by
                     reference  to  Exhibit A of Pioneer Bankshares, Inc.'s
                     Form 10-QSB filed August 12, 2002).

             31.1.1  Certification  of Chief  Executive  Officer  pursuant to
                     Rule  13a-14(a)  (filed herewith).

             31.1.2  Certification  of Chief  Financial  Officer  pursuant to
                     Rule  13a-14(a)  (filed herewith).

             32      Certifications of Chief Executive Officer, Chief Operating
                     Officer, and Chief Financial Officer pursuant to 18 U.S.C.
                     Section 1350, as adopted pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002 (filed herewith).


         (b) Reports on Form 8-K

              The Company did not file any reports on Form 8-K for the quarter
              ending September 30, 2003.


<PAGE> 19

                                    Signature

In accordance with 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.



                                 /s/ THOMAS R. ROSAZZA
                                 ---------------------------------------------
                                 Thomas R. Rosazza
                                 President and Chief Executive Officer



                                 /s/ LORI  G.  HASSETT
                                 ---------------------------------------------
                                 Lori G. Hassett
                                 Vice President and Chief Financial Officer


Date  November 12, 2003


<PAGE> 1

                                                                 Exhibit 31.1

                                  CERTIFICATION

I, Thomas R. Rosazza, certify that:

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

   2.   Based on my knowledge, this 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 report;

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

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

        a)Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the small
          business issuer, including its consolidated subsidiaries, is made
          known to us by others within those entities, particularly during the
          period in which this report is being prepared;

        b)Evaluated the effectiveness of the small business issuer's disclosure
          controls and procedures and presented in this report our conclusions
          about the effectiveness of the disclosure controls and procedures, as
          of the end of the period covered by this report based on such
          evaluation; and

        c)Disclosed in this report any change in the small business issuer's
          internal control over financial reporting that occurred during the
          small business issuer's most recent fiscal quarter (the small business
          issuer's fourth fiscal quarter in the case of an annual report) that
          has materially affected, or is reasonably likely to materially affect,
          the small business issuer's internal control over financial reporting;
          and

   5.   The small business issuer's other certifying officer(s) and I have
        disclosed, based on our most recent evaluation of internal control over
        financial reporting, to the small business issuer's auditors and the
        audit committee of the small business issuer's board of directors (or
        persons performing the equivalent functions):

        a) All significant deficiencies and material weaknesses in the design or
           operation of internal control over financial reporting which are
           reasonably likely to adversely affect the small business issuer's
           ability to record, process, summarize and report financial
           information; and

        b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the small business issuer's
           internal control over financial reporting.



Date:  November 12, 2003          /s/ THOMAS R. ROSAZZA
                                  --------------------------------------------
                                  Thomas R. Rosazza
                                  President and Chief Executive Officer


<PAGE> 1
                                                                   Exhibit 31.2

                                  CERTIFICATION

I, Lori G. Hassett, certify that:

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

   2.   Based on my knowledge, this 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 report;

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

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

        a) Designed such disclosure controls and procedures, or caused such
           disclosure controls and procedures to be designed under our
           supervision, to ensure that material information relating to the
           small business issuer, including its consolidated subsidiaries, is
           made known to us by others within those entities, particularly during
           the period in which this report is being prepared;

        b) Evaluated the effectiveness of the small business issuer's disclosure
           controls and procedures and presented in this report our conclusions
           about the effectiveness of the disclosure controls and procedures, as
           of the end of the period covered by this report based on such
           evaluation; and

        c) Disclosed in this report any change in the small business issuer's
           internal control over financial reporting that occurred during the
           small business issuer's most recent fiscal quarter (the small
           business issuer's fourth fiscal quarter in the case of an annual
           report) that has materially affected, or is reasonably likely to
           materially affect, the small business issuer's internal control over
           financial reporting; and

   5.   The small business issuer's other certifying officer(s) and I have
        disclosed, based on our most recent evaluation of internal control over
        financial reporting, to the small business issuer's auditors and the
        audit committee of the small business issuer's board of directors (or
        persons performing the equivalent functions):

        a) All significant deficiencies and material weaknesses in the design or
           operation of internal control over financial reporting which are
           reasonably likely to adversely affect the small business issuer's
           ability to record, process, summarize and report financial
           information; and

        b) Any fraud, whether or not material, that involves management or other
           employees who have a significant role in the small business issuer's
           internal control over financial reporting.


Date:  November 12, 2003          /s/ LORI G. HASSETT
                                  ------------------------------------------
                                  Lori G. Hassett
                                  Chief Financial Officer and Vice President


<PAGE> 1
                                                                     Exhibit 32

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                           AND CHIEF FINANCIAL OFFICER

   Pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350)

The undersigned, as the Chief Executive Officer and Chief Financial Officer of
Pioneer Bankshares Incorporated, respectively, certify that, to the best of each
such individual's knowledge and belief, the Quarterly Report on Form 10-QSB for
the period ended September 30, 2003, which accompanies this certification fully
complies with the requirements of Section 13(a) of the Securities Exchange Act
of 1934 and the information contained in the periodic report fairly presents, in
all material respects, the financial condition and results of operations of
Pioneer Bankshares Incorporated at the dates and for the periods indicated. The
foregoing certification is made pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. ss. 1350) and shall not be relied upon for any other purpose.
The undersigned expressly disclaims any obligation to update the foregoing
certification except as required by law.


                                  /s/ THOMAS R. ROSAZZA
                                  -------------------------------------
                                  Thomas R. Rosazza
                                  President and Chief Executive Officer

Date: November 12, 2003

                                  /s/ LORI G. HASSETT
                                 ------------------------------------------
                                 Lori G. Hassett
                                 Vice President and Chief Financial Officer


Date: November 12, 2003