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, 2002


                            Pioneer Bankshares, Inc.

       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

                                (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, 2002
------------------------                         ----------------------------
Common Stock, par value - $.50                            1,111,109 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, 2002 and 2001                                 2

           Consolidated Statements of Income - Six Months
           Ended June 30, 2002 and 2001                                 3

           Consolidated Balance Sheets - June 30, 2002 and
           December 31, 2001                                            4

           Consolidated Statements of Changes in Stockholders'
           Equity - Six Months Ended June 30, 2002 and 2001             5

           Consolidated Statements of Cash Flows - Six Months
           Ended June 30, 2002 and 2001                                 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                                       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.    Exhibit and Reports on Form 8K                              17


           SIGNATURES                                                  18


<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,
                                                        2002          2001
Interest and Dividend Income:
   Loans including fees                             $    2,300    $   2,141
   Debt securities - taxable                                96          131
   Debt securities - nontaxable                             23           26
   Deposits and federal funds sold                          41           74
   Equity securities                                        17            4
                                                     ---------     --------

   Total Interest and Dividend Income                    2,477        2,376
                                                     ---------     --------

Interest Expense:
   Deposits                                                776          850
   Borrowings                                               83           75
                                                     ---------     --------

   Total Interest Expense                                  859          925
                                                     ---------     --------

Net Interest Income                                      1,618        1,451
Provision for loan losses                                  288          119
                                                     ---------     --------

Net interest income after provision
   for loan losses                                       1,330        1,332
                                                     ---------     --------

Noninterest Income:
   Service charges on deposit accounts                     211          164
   Other income                                            252           15
   Loss on security transactions                           (59)         (15)
                                                     ---------     --------

   Total Noninterest Income                                404          164
                                                     ---------     --------

Noninterest Expense:
   Salaries and benefits                                   559          520
   Occupancy expenses                                       66           66
   Equipment expenses                                      159          112
   Other expenses                                          500          355
                                                     ---------     --------

   Total Noninterest Expenses                            1,284        1,053
                                                     ---------     --------

Income before Income Taxes                                 450          443
Income Tax Expense                                         148          143
                                                     ---------     --------

Net Income                                          $      302    $     300
                                                     =========     ========

Per Share Data
   Net income                                       $      0.27   $     0.27
                                                     ==========    =========
   Dividends                                        $      0.11   $     0.10
                                                     ==========    =========

Weighted Average Shares Outstanding                  1,111,109     1,116,109
                                                     =========     =========


<PAGE> 3

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

                                                        Six Months Ended
                                                            June 30,
                                                        2002          2001
Interest and Dividend Income:
   Loans including fees                             $    4,622    $   4,259
   Debt securities - taxable                               196          287
   Debt securities - nontaxable                             46           61
   Deposits and federal funds sold                          58          114
   Equity securities                                        34            5
                                                     ---------     --------

   Total Interest and Dividend Income                    4,956        4,726
                                                     ---------     --------

Interest Expense:
   Deposits                                              1,540        1,687
   Borrowings                                              165          124
                                                     ---------     --------

   Total Interest Expense                                1,705        1,811
                                                     ---------     --------

Net Interest Income                                      3,251        2,915
Provision for loan losses                                  498          277
                                                     ---------     --------

Net interest income after provision
   for loan losses                                       2,753        2,638
                                                     ---------     --------

Noninterest Income:
   Service charges on deposit accounts                     392          305
   Other income                                            314          112
   Gain (loss) on security transactions                    (64)         342
                                                     ---------     --------

   Total Noninterest Income                                642          759
                                                     ---------     --------

Noninterest Expense:
   Salaries and benefits                                 1,113        1,023
   Occupancy expenses                                      135          135
   Equipment expenses                                      316          224
   Other expenses                                          971          782
                                                     ---------     --------

   Total Noninterest Expenses                            2,535        2,164
                                                     ---------     --------

Income before Income Taxes                                 860        1,233
Income Tax Expense                                         278          415
                                                     ---------     --------

Net Income                                          $      582    $     818
                                                     =========     ========

Per Share Data
   Net income                                       $      0.52   $     0.73
                                                     ==========    =========
   Dividends                                        $      0.22   $     0.20
                                                     ==========    =========

Weighted Average Shares Outstanding                  1,111,109     1,116,109
                                                     =========     =========


<PAGE> 4

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

                                                      June 30,    December 31,
                                                        2002          2001
ASSETS

Cash and due from banks                              $   5,716    $   4,865
Federal funds sold                                      13,150        2,000
Interest bearing deposits in banks                       3,752        4,258
Investment securities
   Held to maturity                                        276          433
   Available for sale                                    7,734        8,641
Loans receivable, net of allowance for loan
   losses of $1,248 and $1,153 respectively             91,342       89,619
Premises and equipment                                   3,883        3,665
Other assets                                             2,799        2,592
                                                      --------     --------

   Total assets                                      $ 128,652    $ 116,073
                                                      ========     ========

LIABILITIES

Deposits
   Noninterest bearing demand                        $  20,974    $  18,870
   Interest bearing
      Demand                                            12,199       10,626
      Savings                                           11,161       10,199
      Time deposits over $100,000                       10,640        8,407
      Other time deposits                               54,278       48,617
                                                      --------     --------

   Total Deposits                                      109,252       96,719

Accrued expenses and other liabilities                   1,348        1,372
Borrowings                                               5,400        5,725
                                                      --------     --------

   Total Liabilities                                   116,000      103,816
                                                      --------     --------

STOCKHOLDERS' EQUITY

Common stock; $.50 par value, authorized
   5,000,000, outstanding 1,111,109                        556          556
Retained earnings                                       11,964       11,627
Accumulated other comprehensive income                     132           74
                                                      --------     --------

   Total Stockholders' Equity                           12,652       12,257
                                                      --------     --------

   Total Liabilities and Stockholders' Equity        $ 128,652    $ 116,073
                                                      ========     ========


<PAGE> 5

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

                                                       Six Months Ended
                                                           June 30,
                                                       2002         2001

Balance, beginning of period                       $  12,257     $  11,753

Comprehensive Income:

   Net income for period                                 582           818
   Net change in unrealized gains
      on securities available for sale,
      net of income taxes                                 58          (218)
                                                    --------      --------

   Total Comprehensive Income                            640           600

Dividends declared                                      (245)         (223)
                                                    --------      --------

Balance, end of period                             $  12,652     $  12,130
                                                    ========      ========


<PAGE> 6

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

                                                        Six Months Ended
                                                            June 30,
                                                        2002         2001
Cash Flows from Operating Activities:
   Net income                                        $     582   $     818
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for loan losses                         498         277
         Depreciation and amortization                     331         139
         Net Accretion/Amortization of securities            8          13
         Gain (loss) on sale of securities                  64        (342)
         Income on insurance policies                      (18)        (18)
         Net change in:
            Accrued income                                 (84)         82
            Other assets                                  (118)       (106)
            Accrued expense and other liabilities         (178)       (265)
                                                      --------    --------

   Net Cash Provided by Operating Activities             1,085         616
                                                      --------    --------

Cash Flows from Investing Activities:
   Net change in federal funds sold                    (11,150)     (5,970)
   Net change in interest bearing deposits                 506      (4,637)
   Proceeds from maturities and sales
      of securities available for sale                   3,122       5,216
   Proceeds from maturities and calls
      of securities held to maturity                       159         661
   Purchase of securities available for sale            (2,199)     (1,934)
   Net increase in loans                                (2,221)     (1,820)
   Purchase of bank premises and equipment                (536)       (266)
                                                      --------    --------

   Net Cash Used in Investing Activities               (12,319)     (8,768)
                                                      --------    --------

Cash Flows from Financing Activities:
   Net change in:
      Demand and savings deposits                        4,639       3,587
      Time deposits                                      7,894       3,639
   Proceeds from borrowings                                          4,500
   Curtailments of borrowings                             (325)     (1,887)
   Dividends paid                                         (123)       (112)
                                                      --------    --------

   Net Cash Provided by Financing Activities            12,085       9,727
                                                      --------    --------

Cash and Cash Equivalents
   Net increase in cash and cash equivalents               851       1,575
   Cash and Cash Equivalents, beginning of year          4,865       4,643
                                                      --------    --------

   Cash and Cash Equivalents, End of Year            $   5,716   $   6,218
                                                      ========    ========

Supplemental Disclosure of Cash Paid
   During the Year for:
      Interest                                       $   1,756   $   1,806
      Income taxes                                   $     161   $      54


<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, 2002 and the results of operations for the
         three-month periods and year to date periods ended June 30, 2002 and
         June 30, 2001. The notes included herein should be read in conjunction
         with the notes to financial statements included in the 2001 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, 2002 and December 31, 2001 follows:

                                              2002                2001
                                        Carrying  Market   Carrying  Market
                                          Value    Value     Value    Value

         Securities held to maturity:
            U.S. Treasury and agency
              obligations              $    107 $    113   $        $
            State and municipal             169      172       273      277
            Mortgage-backed securities                         160      164
                                        -------  -------    ------   ------

            Total                      $    276 $    285   $   433  $   441
                                        =======  =======    ======   ======

         Securities available for sale:
            U.S. Treasury and agency
              obligations              $  3,801 $  3,889   $ 4,649  $ 4,748
            Municipal Securities          2,343    2,398     2,344    2,328
            Equity Securities             1,386    1,447     1,533    1,565
                                        -------  -------    ------   ------

            Total                      $  7,530 $  7,734   $ 8,526  $ 8,641
                                        =======  =======    ======   ======


<PAGE> 8


                            PIONEER BANKSHARES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3   LOANS:

         Loans outstanding are summarized as follows:

                                                      June 30,   December 31,
                                                        2002         2001

         Real estate loans                            $ 65,759    $ 61,880
         Commercial and industrial loans                 4,030       4,580
         Loans to individuals, primarily
            collateralized by autos                     25,450      26,867
         All other loans                                 1,000       1,145
                                                       -------     -------

            Total Loans                                 96,239      94,472

         Less unearned discount                         (3,649)     (3,700)
                                                       -------     -------

         Loans, less unearned discount                  92,590      90,772

         Less allowance for loan losses                 (1,248)     (1,153)
                                                       -------     -------

            Net Loans Receivable                      $ 91,342    $ 89,619
                                                       =======     =======


NOTE 4   ALLOWANCE FOR LOAN LOSSES:

         A summary of transactions in the allowance for loan losses for the six
         months ended June 30, 2002 and 2001 follows:

                                                          2002        2001

         Balance, beginning of period                 $  1,153    $    992
         Provision charged to operating expenses           498         277
         Recoveries of loans charged off                   120         129
         Loans charged off                                (523)       (384)
                                                       -------     -------

         Balance, End of Period                       $  1,248    $  1,014
                                                       =======     =======


<PAGE> 9


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


Overview

In the first half of 2002, net income including securities transactions
decreased $236,000 (28.85%) when compared with the first half of 2001 resulting
in a decrease in earnings per share of $.21. The first half of 2001 included
significant security gains of $342,000 ($212,000 net of tax effect) which
represents $0.19 a share.

Net income per share, exclusive of security transactions was $0.56 for the first
half of 2002 compared to $0.54 for the first half of 2001.

Results of Operations

Net Interest Margin

The tax equivalent net interest income increased $331,000 or 11.20% in the first
half of 2002 compared to the first half of 2001; however, the net interest
margin decreased from 6.21% to 5.81%. This occurred primarily because the funds
provided from deposit growth were invested in federal funds sold which had a
yield of only 1.65%. The federal funds rate decreased from 2001 to 2002 due to
the Federal Reserve Bank drastically lowering rates. The Company plans to invest
in more securities and expand their commercial loan portfolio during the second
half of 2002.

Noninterest Income

In the first half of 2002, noninterest income decreased $117,000. This was due
to a combination of factors. Service charge income increased $87,000 primarily
due to increased NSF charges generated by a new product called Bounce checking.
Other income increased $202,000 due to receipt of $190,000 insurance
settlement reimbursing expenses relating to the Company's ESOP. Offsetting
these increases was a significant decrease in gains on security transactions of
$406,000. Non-interest income exclusive of security transactions and insurance
proceeds, increased from 0.78% of average assets at June 30, 2001 to 0.81% at
June 30, 2002.

Noninterest Expense

Noninterest expense increased $371,000 (17.14%). Increases in other expenses
accounted for $189,000 of this total due to the following: $76,000 increase in
legal fees, $16,000 in fees for the new Bounce checking product, and a $16,000
increase in telephone expenses due to the additional branches. Legal fees
relating to the Company's ESOP totaled $108,000 for the first half of 2002.
Equipment expenses increased in the first half of 2002 due to depreciation on
significant asset purchases in the third quarter of 2001. Noninterest expense
decreased from 4.06% of average assets at June 30, 2001 to 4.00% at June 30,
2002.

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


<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, 2002, the market value of all
securities available for sale was in excess of their amortized cost by $204,000
($132,000 after the consideration of income taxes). 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.

Investments in securities decreased 11.73% in the first half of 2002. 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, 18.71% (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 an agriculturally dominated area which includes the
counties of Page, Greene, and Rockingham and the City of Harrisonburg in the
western portion of Virginia. The new branch in Stanardsville opened in April
2001 and extended the Company's market area to include Greene County. 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 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 in the agricultural sector of
the economy or employed by businesses outside our service area.  The Company
monitors its past due loans, however, delinquencies have increased moderately
at June 30, 2002.


<PAGE> 11


Loan Portfolio (Continued)

The first half of 2002 resulted in a $1,818,000 increase in the loan portfolio.
Loan growth slowed during the first half of 2002 because the Company decided to
reduce their automobile financing. In the second half of 2002, management plans
on expanding their commercial loan portfolio and reducing interest rates to slow
deposit growth. The information detailing loans is shown in a note to the
consolidated financial statement.

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 on the original interest rate or repayment terms
have changed due to financial hardship. Nonaccrual loans and loans 90 days or
more past due totaled $950,000 at June 30, 2002 compared to $865,000 at
December 31, 2001. The increase was primarily attributable to the increase in
past due installment loans secured by automobiles. Although the potential
exists for some loan losses, management believes the Company 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 June 30, 2002
not included in the past due or nonaccrual status.

As of June 30, 2002 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 loan losses and changes in the allowance for loan losses are
shown in Note 4 to the financial statements.

The allowance for loan losses of $1,248,000 at June 30, 2002 increased $95,000
from its level at December 31, 2001. The increase was primarily due to the
Company providing an additional allowance for loans secured by used automobiles.
The allowance was equal to 1.35% and 1.27% of net loans at June 30, 2002 and
December 31, 2001, respectively. In the opinion of management, the allowance is
adequate to absorb estimated losses inherent in the Company's portfolio.

Premises and Equipment

During the second quarter of 2002, the Company purchased a lot for a new branch
located in Harrisonburg for $249,000. The current Harrisonburg branch will be
relocated to the new office and Valley Finance Service will be relocated to the
existing branch location. The estimated cost of constructing the new branch is
$750,000.


<PAGE> 12


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 realized annualized deposit
growth of 25.92% in the first half of 2002. This increase was mainly in the area
of noninterest bearing demand deposits and certificates of deposits.

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,
2002 and 2001, the Company's total capital to total assets ratios were 9.83% and
10.56%, 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. In the past, growth in
deposits and proceeds from the maturity of investment securities have been
sufficient to fund most of the net increase in loans and investment securities.


<PAGE> 13


Interest Rate Sensitivity

Liquidity as of June 30, 2002 remains adequate. 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 2002, the
Company has used maturing investments and deposit growth 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
Company 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.

Table II contains an analysis, which shows the repricing opportunities of
earning assets and interest bearing liabilities as of June 30, 2002.

As of June 30, 2002, the Company had a cumulative Gap Rate Sensitivity Ratio of
(31.08%) 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 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)


                         Six Months Ended              Six Months Ended
                           June 30, 2002                 June 30, 2001

                     Average  Income/              Average  Income/
                    Balance4  Expense   Rates      Balance  Expense   Rates

Interest Income
  Loans 1
    Commercial      $ 2,969   $  124    8.35%     $ 3,755   $  217   11.56%
    Real estate      65,049    2,664    8.19%      55,920    2,467    8.82%
    Installment      23,546    1,739   14.77%      18,156    1,471   16.20%
    Credit Card         915       95   20.77%         991      104   20.99%
  Federal funds
    sold              7,040       58    1.65%       4,95  6    114    4.60%
  Equity Securities   4,078       34    1.67%         288        5    3.47%
  Investments
    Taxable 3         7,065      207    5.86%       8,552      296    6.91%
    Nontaxable 2      2,513       70    5.55%       2,516       92    7.35%
                     ------    -----   -----       ------    -----   -----

Total earning
  assets             113,175   4,991    8.82%      95,134    4,766   10.02%
                     -------   -----   -----       ------    -----   -----

Interest Expense
  Demand deposits    11,697       60    1.03%      10,202       86    1.69%
  Savings            10,807       62    1.15%       9,378       85    1.81%
  Time deposits      61,205    1,418    4.63%      53,539    1,516    5.66%
  Borrowings          5,636      165    5.86%       2,549      124    9.73%
                     ------    -----   -----       ------    -----   -----

Total Interest Bearing
  Liabilities       $89,345   $1,705    3.82%     $75,668   $1,811    4.79%
                     ======    =====   =====       ======    =====   =====

Net Interest Income 1          3,286                         2,955
                              ======                         =====

Net Interest Margin                     5.81%                         6.21%
                                       =====                         =====


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 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
                           June 30, 2002                 June 30, 2001

                     Average  Income/              Average  Income/
                    Balance4  Expense   Rates      Balance  Expense   Rates

Interest Income
  Loans 1
    Commercial      $ 2,989   $   62    8.30%     $ 3,727   $  123   13.20%
    Real estate      66,410    1,334    8.03%      55,650    1,224    8.79%
    Installment      23,203      859   14.81%      18,994      745   15.69%
    Credit Card         891       45   20.20%         961       50   20.81%
  Federal funds sold  9,924       41    1.65%       6,783       74    4.36%
  Interest bearing
    deposits          3,937       17    1.73%         516        4    3.10%
  Investments
    Taxable 3         7,150      102    5.69%       7,592      135    7.13%
    Nontaxable 2      2,512       35    5.55%       2,516       39    6.26%
                     ------    -----   -----       ------    -----   -----

Total earning
  assets             117,016   2,495    8.53%      96,739    2,394    9.90%
                     -------   -----   -----       ------    -----   -----

Interest Expense
  Demand deposits    11,958       32    1.07%      10,285       42    1.63%
  Savings            11,013       32    1.16%       9,642       44    1.83%
  Time deposits      63,921      712    4.46%      54,151      764    5.64%
  Borrowings          5,555       83    5.98%       2,598       75   11.55%
                     ------    -----   -----       ------    -----   -----

Total Interest Bearing
  Liabilities       $113,084  $  859    3.72%     $92,873   $  925    4.83%
                     =======   =====   =====       ======    =====   =====

Net Interest Income 1          1,636                         1,469
                               =====                         =====

Net Interest Margin                     5.59%                         6.07%
                                       =====                         =====


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 Average balances include non-accruing loans


<PAGE> 16
TABLE II

                            PIONEER BANKSHARES, INC.
                          INTEREST SENSITIVITY ANALYSIS
                                  JUNE 30, 2002
                          (Dollar Amounts in Thousands)

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

Loans                  $ 8,786  $ 9,611  $57,987  $16,206  $        $92,590
Interest bearing
   bank deposits         3,752                                        3,752
Investment securities      169    2,733    3,659        2    1,447    8,010
Federal funds sold      13,150                                       13,150
                        ------   ------   ------   ------   ------   ------

Total                   25,857   12,344   61,646   16,209    1,447   117,502
                        ------   ------   ------   ------   ------   -------

Sources of Funds:

Interest bearing
   demand deposits      12,199                                       12,199
Regular savings         11,161                                       11,161
Certificates of deposit
   $100,000 and over     2,449    7,248      943                     10,640
Other certificates
   of deposit           10,317   30,697   13,264                     54,278
Borrowings                 163      487    2,600    2,150             5,400
                        ------   ------   ------   ------   ------   ------

Total                   36,289   38,432   16,807    2,150            93,678

Discrete Gap           (10,432) (26,088)  44,839   14,058    1,447   23,824

Cumulative Gap         (10,432) (36,520)   8,319   22,377   23,824

Ratio of Cumulative
   Gap To Total
   Earning Assets        -8.88%  -31.08%    7.08%   19.04%   20.28%


<PAGE> 17


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 -

On May 7, 2002, the Annual Shareholders Meeting was held. At this meeting, Louis
L. Bosley [votes for 851,518, against 690], Edwin P. Markowitz [votes for
828,718, against 23,490] and Mark N. Reed [votes for 852,068, against 140] were
elected to serve as directors. Their term will expire in 2005.

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 Matters

The Company's 1998 Stock Incentive Plan (the "Plan") was adopted by the Board of
Directors on June 11, 1998 and approved by the shareholders on June 11, 1999.
The Plan makes available up to 14,000 shares of common stock for awards to
employees and to non-employee directors of the Company and its subsidiaries in
the form of stock options ("Options"), however no Options have been awarded in
previous years, under the Plan.

Generally, the Plan provides for the grants of incentive stock options and
non-qualified stock options. The exercise price of the Option cannot be less
than 100% of the fair market value of the common stock(or if greater, the book
value) on the date of the award. The option terms applicable to each grant are
determined at the grant date, but no Option can be exercisable in any event,
after ten years from its grant date. On June 13, 2002, the Board of Directors
granted the Options to current non-employee directors to which they were
entitled to under the Plan for 1998, 1999, 2000 and 2001 and granted Options for
2002. The effective date of the grant is May 7, 2002 and the Options may be
exercised on or after May 7, 2003. The Options granted are shown in the
following table:

      Class         Number          Exercise Price        Expiration Date

      1998           700               $  18.00            June 10, 2008
      1999           800                  12.75            June 7, 2009
      2000           800                  12.75            April 10, 2010
      2001           800                  12.75            May 7, 2011
      2002           800                  12.75            May 6, 2012
                    ----

      Total        3,900
                   =====

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.

              10.i   Pioneer  Bankshares,  Inc.  (Formerly  Page  Bankshares,
                     Inc.), 1998 Stock Incentive Plan filed as Exhibit A.

         (b)  Reports on Form 8-K

              The Company did not file any reports on Form 8-K for the quarter
              ending June 30, 2002.


<PAGE> 18


                                    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.



                                 /s/ THOMAS R. ROSAZZA
                                 ---------------------------------
                                 Thomas R. Rosazza
                                 President



                                 /s/ BRENDA KITE
                                 ---------------------------------
                                 Brenda Kite
                                 Vice President and Chief Financial Officer


Date  August 12, 2002