<PAGE>
 
                                  FORM - 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the nine months ended September 30, 1995
                          ------------------

Commission file number 33-17172
                       --------

                            Matewan BancShares, Inc.
                            ------------------------
             (Exact name of registrant as specified in its charter)

      Delaware                                  55-0639363
      --------                                  ----------
(State or other jurisdiction of              (I.R.S Employer
incorporation or organization)               Identification No.)

Box 100
Second Avenue and Vinson Street
Williamson, West Virginia                     25661
-------------------------                    --------
(Address of principal executive offices)    (Zip Code)

                                  304 235-1544
                                  ------------
              (registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X  No
                         --    ---    


                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock, $1 Par Value - 3,667,851 shares September 30, 1995
----------------------------------------------------------------
<PAGE>
 
                                 Matewan BancShares, Inc.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

     Consolidated balance sheets - September 30, 1995,
        December 31, 1994, and September 30, 1994
     Consolidated statements of income - Nine months and three
        months ended September 30, 1995 and September 30, 1994
     Consolidated statement of changes in shareholders' equity for
        the nine months ended September 30, 1995 and 1994
     Consolidated statements of cash flows for the nine months ended
        September 30, 1995 and 1994
     Notes to consolidated financial statements

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

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

SIGNATURES
<PAGE>
 
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands)

<TABLE>
<CAPTION>
                               September 30        December 31        September 30   
                               ------------        -----------        ------------                                    
ASSETS                                 1995               1994               1994
                                       ----               ----               ----
                                                                    
<S>                            <C>                 <C>                <C>
Cash and due from banks            $ 15,335           $ 20,539           $ 13,521
Federal funds sold                   20,503              4,770             14,519
                                   --------           --------           --------
                                                                    
 Cash and cash equivalents           35,838             25,309             28,040
                                                                    
Interest bearing deposits                                           
 in other banks                         675              2,876              3,304
                                                                    
Investment securities:                                              
 Available-for-sale at                                              
   fair value                         9,032             11,051              9,782
 Held-to-maturity at cost            96,565             98,930             97,082
  (Approximate fair value                                           
   $97,208 at September 30,                                         
   1995;$95,904 at December 31,                                     
   1994; and $95,422 at                                             
   September 30, 1994)                                              
                                                                    
Loans - net                         228,274            214,744            210,539
                                                                    
Premises and equipment                9,742              9,252              8,763
                                                                    
Accrued interest receivable                                         
 and other assets                     9,387              9,248              8,780
                                   --------           --------           --------
                                                                    
TOTAL ASSETS                       $389,513           $371,410           $366,290
                                   ========           ========           ========
 
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
 
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
 
                                          September 30      December 31     September 30
                                          ------------      -----------     ------------
LIABILITIES AND                                   1995             1994             1994
SHAREHOLDERS' EQUITY                              ----             ----             ----

<S>                                       <C>               <C>             <C>
Deposits:                                                                  
  Non-interest bearing                        $ 42,722         $ 44,130         $ 41,855
  Interest bearing                             281,317          266,517          264,508
                                              --------         --------         --------
                                                                           
  TOTAL DEPOSITS                               324,039          310,647          306,363
                                                                           
Short-term borrowings:                                                     
  Repurchase agreements                         13,968           12,089           13,071
  Other                                          3,755            2,908            2,520
                                              --------         --------         --------
  TOTAL SHORT TERM                                                         
  BORROWINGS                                    17,723           14,997           15,591
Accrued interest payable                                                   
  and other liabilities                          3,286            3,963            3,406
                                              --------         --------         --------
                                                                           
TOTAL LIABILITIES                              345,048          329,607          325,360
                                                                           
SHAREHOLDERS' EQUITY                                                       
                                                                           
Preferred stock                                                            
 $1 par value; 1,000,000 shares                                            
 authorized; none issued                                                   
Common Stock - $1 par value                      3,684            3,349            3,349
 10,000,000 shares authorized;                                             
 3,684,104 shares outstanding at                                           
 September 30, 1995, and 3,349,344                                         
 shares outstanding December 31,                                           
 1994 and September 30, 1994, including                                    
 16,253, 16,104 and 14,640 shares                                          
 in treasury stock                                                         
                                                                           
Surplus                                         12,182            6,460            6,460
Retained earnings                               28,727           32,185           31,190
Treasury stock                                     (68)             (48)             (30)
Net unrealized loss on                                                     
  available-for-sale                                                       
  securities, net of income                                                
  taxes                                            (60)            (143)             (39)
                                              --------         --------         --------
TOTAL SHAREHOLDERS' EQUITY                      44,465           41,803           40,930
                                              --------         --------         --------
                                                                           
TOTAL LIABILITIES AND                                                      
  SHAREHOLDERS' EQUITY                        $389,513         $371,410         $366,290
                                              ========         ========         ========
 
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
 
                                              Nine months ended                   Three months ended
                                              -----------------                   ------------------
                                                September 30,                        September 30,
                                                -------------                        -------------
                                          1995                1994              1995             1994
                                         -----                -----             ----             -----
<S>                                   <C>                <C>                 <C>              <C>
                                                                                           
INTEREST INCOME                                                                            
 Interest and fees on loans              $18,719             $15,698            $6,498           $5,433
 Interest and dividends                                                                   
  on investment securities:                                                                
   Taxable                                 4,651               4,660             1,622            1,574
   Tax-exempt                                 96                  41                35               18
 Other interest income                       432                 458               134              144
                                         -------             -------            ------           ------
TOTAL INTEREST INCOME                     23,898              20,857             8,289            7,169
                                                                                           
INTEREST EXPENSE                                                                           
 Deposits                                  8,885               7,430             3,130            2,578
 Short-term borrowings                       444                 283               162              119
                                         -------             -------            ------           ------
TOTAL INTEREST EXPENSE                     9,329               7,713             3,292            2,697
                                         -------             -------            ------           ------
                                                                                           
NET INTEREST INCOME                       14,569              13,144             4,997            4,472
PROVISION FOR LOAN LOSSES                  1,261               1,293               432              360
                                         -------             -------            ------           ------
                                                                                           
NET INTEREST INCOME AFTER                                                                  
PROVISION FOR LOAN LOSSES                 13,308              11,851             4,565            4,112
                                                                                           
OTHER INCOME                                                                               
 Service fees                              1,273               1,221               457              421
 Other                                       574                 325               153               95
 Credit life insurance                                                                     
   commissions                               420                 553               147              220
                                         -------             -------            ------           ------
TOTAL OTHER INCOME                         2,267               2,099               757              736
                                                                                           
OTHER EXPENSES                                                                             
 Salaries and employee                                                                     
   benefits                                4,581               3,754             1,573            1,274
 Net occupancy                               747                 623               250              197
 Advertising                                 556                 359               209              113
 Federal deposit insurance                   378                 568               (14)             190
 Other                                     3,699               3,101             1,426            1,125
                                         -------             -------                             ------
TOTAL OTHER EXPENSE                        9,961               8,406             3,444            2,899
                                         -------             -------            ------           ------
                                                                                           
INCOME BEFORE INCOME TAXES                 5,614               5,544             1,878            1,949
APPLICABLE INCOME TAXES                    2,009               2,000               677              713
                                         -------             -------            ------           ------
NET INCOME                               $ 3,605             $ 3,544            $1,201           $1,236
                                         =======             =======            ======           ======
                                                                                           
Net income per share                        $.98                $.97              $.33             $.34
                                         =======             =======            ======           ======
Average common shares
  outstanding                          3,667,696           3,668,174         3,668,088        3,668,174
                                       =========           =========         =========        =========

 
</TABLE>


See Accompanying Notes to Consolidated Financial Statements
<PAGE>
 
CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
 
 
                                                                                            Net
                                                                                     Unrealized
                                                                                        Loss on
                                                                                     Available-
                                           Common   Capital   Retained  Treasury       for-Sale
                                            Stock   Surplus   Earnings     Stock     Securities      Total
                                          -------   -------   --------  --------     ----------      -----
<S>                                       <C>       <C>       <C>       <C>          <C>           <C>
 
Balance January 1, 1994                      $837   $8,972    $28,322       ($30)          ($69)   $38,032
 
Adjustment to beginning balance for
 change in accounting method, net
 of income tax effect                                                                       127        127
Dividends on Common Stock                       0        0       (676)         0              0       (676)
  ($.2025 per share)

Change in net unrealized loss on
 available-for-sale securities, net of
 deferred income tax effect                     0        0          0          0            (97)       (97)

Net income                                      0        0      3,544          0              0      3,544

Four-for-one stock split in the form of
 a 300% stock dividend                      2,512   (2,512)         0          0              0          0
                                           ------   ------    -------       ----           ----     ------     

Balance September 30, 1994                 $3,349   $6,460    $31,190       ($30)          ($39)   $40,930
                                           ======   ======    =======       ====           ====    =======
</TABLE>


<TABLE>
<CAPTION>
 
 
                                                                                            Net
                                                                                     Unrealized
                                                                                        Loss on
                                                                                     Available-
                                           Common   Capital   Retained  Treasury       for-Sale
                                            Stock   Surplus   Earnings     Stock     Securities      Total
                                          -------   -------   --------  --------     ----------      -----
<S>                                       <C>       <C>       <C>       <C>          <C>           <C>
Balance January 1, 1995                   $3,349     $6,460    $32,185     ($48)          ($143)    $41,803
Treasury Stock Purchases                       0          0          0      (46)              0         (46)

Treasury Stock Sales                           0         31          0       26               0          57

Change in net unrealized loss on
 available-for-sale securities, net of
 deferred income taxes                         0          0          0        0              83          83

Dividends on Common Stock                      0          0     (1,034)       0               0      (1,034)
  ($.3025 per share)

Net income                                     0          0      3,605        0               0       3,605

Common Stock Dividend (10%)                  335      5,691     (6,026)       0               0           0
Cash paid on fractional shares                 0          0         (3)       0               0          (3)
                                          ------    -------    -------     ----           -----     -------     

Balance September 30, 1995                $3,684    $12,182    $28,727     ($68)          ($ 60)    $44,465
                                          ======    =======    =======     ====           =====     =======

</TABLE>

See Accompanying Notes to Consolidated Financial Statements


<PAGE>
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES
(Dollars in thousands)

<TABLE>
<CAPTION>
                                                  For the nine months ended
                                                September 30,     September 30,
                                                     1995             1994
                                                     ----             ----
<S>                                             <C>               <C>
OPERATING ACTIVITIES
 
NET INCOME                                        $  3,605        $  3,544
 
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
 DEPRECIATION                                          521             485
 AMORTIZATION                                          470             429
 PROVISION FOR LOAN LOSSES                           1,261           1,293
 PROVISION FOR DEFERRED TAXES                            4              32
 NET CHANGE IN ACCRUED INTEREST
  RECEIVABLE AND OTHER ASSETS                         (349)           (736)
 NET CHANGE IN ACCRUED INTEREST
  PAYABLE AND OTHER LIABILITIES                       (681)          1,199
                                                  --------        --------
NET CASH PROVIDED BY OPERATING ACTIVITIES            4,831           6,246
 
INVESTING ACTIVITIES
 
 PROCEEDS FROM SALES OF
  AVAILABLE-FOR-SALE SECURITIES                          0               0
 PROCEEDS FROM MATURITIES OF
  AVAILABLE-FOR-SALE SECURITIES                      8,261           7,000
 PROCEEDS FROM MATURITIES OF
  HELD-TO-MATURITY SECURITIES                       34,742          18,138
 PURCHASES OF AVAILABLE-FOR-SALE
  SECURITIES                                        (6,089)         (4,951)
 PURCHASES OF HELD-TO-MATURITY
  SECURITIES                                       (32,696)        (27,650)
 NET CHANGE IN INTEREST BEARING
  DEPOSITS IN OTHER BANKS                            2,201          (3,302)
 NET CHANGE IN LOANS                               (14,791)        (15,979)
 PURCHASES OF PREMISES
  AND EQUIPMENT                                     (1,181)         (1,636)
 PROCEEDS FROM SALE OF
  PREMISES AND EQUIPMENT                               170              22
                                                  --------        --------
NET CASH USED IN INVESTING
ACTIVITIES                                          (9,383)        (28,358)
 
FINANCING ACTIVITIES
 
 NET CHANGE IN DEPOSITS                             13,392          15,211
 NET CHANGE IN SHORT-TERM
  BORROWINGS                                         2,726           4,001
 CASH DIVIDENDS PAID                                (1,037)           (676)
                                                  --------        --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES                                15,081         (18,536)
                                                  --------        --------
 
NET CHANGE IN CASH AND CASH EQUIVALENTS             10,529          (3,576)
 
CASH AND EQUIVALENTS AT BEGINNING OF YEAR           25,309          31,616
                                                  --------        --------
 
CASH AND EQUIVALENTS AT END OF PERIOD             $ 35,838        $ 28,040
                                                  ========        ========
</TABLE>


See Accompanying Notes to Consolidated Financial Statements
<PAGE>
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MATEWAN BANCSHARES, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1994
(Dollars in thousands)

1. The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the interim period are not necessarily
indicative of the results that may be expected for the year ending December 31,
1995. For further information, refer to the consolidated financial statements
and footnotes thereto included in Matewan BancShares, Inc. and Subsidiaries'
annual report on Form 10-K for the year ended December 31, 1994.

2. The financial statements presented herein reflect Matewan BancShares, Inc.
and its consolidated subsidiaries, The Matewan National Bank, Matewan Bank FSB,
and Matewan Venture Fund, Inc.

3. The Company adopted Financial Accounting Standards Board Statement No. 114,
"Accounting by Creditors for Impairment of a Loan", on January 1, 1995.
Statement No. 114 requires that impaired loans be measured based upon present
value of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the loan's observable market price or fair
value of collateral if the loan is collateral dependent. The adoption and
implementation of this standard has not had a material effect on the Company's
financial statements.

At September 30, 1995, the recorded investment in impaired loans under Statement
No. 114 was $3,426 (of which $246 were on a nonaccrual basis). Included in this
amount is $1,096 of impaired loans for which the related allowance for credit
losses is $290 and $2,330 of impaired loans that do not have a specific
allowance for credit losses. The average recorded investment in impaired loans
during the nine month period ended September 30, 1995 approximated $3,368.

The Company recognizes interest income on impaired loans using the cash basis
method. For the nine month period ended September 30, 1995, the Company
recognized interest income on impaired loans of $174.

4. On May 19, 1995, the Board of Directors of Matewan BancShares, Inc.
authorized a ten percent (10%) common stock dividend to shareholders of record
as of June 1, 1995. Average shares outstanding and per share amounts included in
the consolidated financial statements and footnotes thereto have been adjusted
to reflect this stock dividend.

5. On September 28, 1995, the Company entered into a definitive agreement with
Banc One Corporation and Bank One Kentucky Corporation
<PAGE>
 
under which Matewan BancShares, Inc. will acquire via cash purchase all of the
outstanding common stock of the Bank One, Pikeville N.A. franchise. Bank One,
Pikeville N.A. operates eight offices and has total assets of approximately
$220,306 and total deposits of approximately $181,508. Consummation of the
transaction is expected in the first quarter of 1995. At the time of this
filing, information required for the filing of the appropriate pro forma
financial statements is not available.
<PAGE>
 
MATEWAN BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars in thousands, except for per share data)

FINANCIAL CONDITION

Total assets at September 30, 1995 have increased approximately $18,103 since
December 31, 1994 and $23,223 since Sepetember 30, 1994. This level of growth
and the concurrent asset mix reflect both increased loan demand and the
diminished appeal of holding investment securities in the interest rate
environment prevalent over these periods of time. Deposits have increased
approximately $13,392 and $17,676 and short term borrowings increased
approximately $2,726 and $2,132 over the same intervals of time.  Retained
earnings decreased approximately $3,458 from December 31, 1994 to September 30,
1995 and increased $2,869 from December 31, 1993 through September 30, 1994. The
decrease at September 30, 1995 was due to the reallocation between capital
accounts related to the June 1995 stock dividend after considering earnings and
cash dividends. The increase at September 30, 1994 is due to the retention of
earnings, net of dividends paid.

The asset structure of the Company's balance sheet at September 30, 1995
compared to December 31, 1994 and September 30, 1994 reflects several notable
differences. Net loans have increased approximately $13,530 (8.4% annualized)
from December 31, 1994 reflecting levels of 58.6% and 57.8% of total assets.
Deposit growth of $13,392 (5.8%) and $17,676 (5.8%) for the nine month and
twelve month periods ended September 30, 1995 funded almost all of this loan
growth. Investment securities have decreased approximately $4,384 since December
31, 1994 and $1,267 since September 30, 1994, representing 27.1% of the
Company's current total assets versus 29.6% and 29.2% for comparable prior
periods. Cash and cash equivalent balances increased approximately $10,529 and
$7,798. Interest bearing deposits in other banks decreased approximately $2,201
and $2,629 during the nine month and twelve month periods ended September 30,
1995. Virtually all of the growth in earning asset levels over these respective
time periods was funded through increased deposits and short-term borrowings.
Fixed assets increased approximately $490 and $979 during the nine month and
twelve month periods ended September 30, 1995. Commencement of operations of a
new office in Paintsville and two new supermarket offices account for most of
the increases along with installation of data processing equipment related to
the conversion to an external vendor (EDS).

Non-interest bearing deposits decreased approximately $1,408 (4.2% annualized)
and increased $867 (2.1%) and interest bearing deposits increased approximately
$14,800 (7.4% annualized) and $16,809 (6.4%) in the nine month period since
December 31, 1994 and in the twelve month period since September 30, 1994,
respectively. Both depository subsidiaries of the Company have interest rate
structures that offer yields that have been consistently competitive with other
deposit products available in the market over this same time periods. This
deposit pricing posture enabled the Company to insulate earnings from
<PAGE>
 
rising interest rate pressures. Short term borrowings increased $2,726 (24.3%
annualized) and $2,132 (13.7%) over the same time periods. Factors contributing
to these changes are the volatile nature of these types of funds (primarily tax
deposits), the increasing placement of public funds in accounts of this nature,
and the fact that, in the interest rate environment prevalent over the periods
addressed, these types of accounts possess most of the unattractive features of
money market accounts. Other liabilities decreased approximately $677 (22.8%)
and $120 (3.5%) over the same time periods.

Internal capital retention has allowed for equity growth of approximately $2,662
(8.5%annualized) and $3,535 (8.6%) in the respective time periods. Equity
capital as a percentage of total assets was 11.42%, 11.26%, and 11.17% at
September 30, 1995, December 31, 1994, and September 30, 1994, respectively. The
Company is now required to meet certain regulatory capital requirements for
capital on a risk-adjusted basis. Risk adjustment allows for the inclusion of
off-balance sheet items such as unused credit commitments, exclusion of certain
no-risk assets, as well as inclusion of other factors that may cause additional
risk to the Company. The Company's risk-weighted capital to risk-weighted asset
percentage was 19.23% at September 30, 1995, and 18.96% at September 30, 1994.
The percentage at December 31, 1993 was 19.23%.

On January 10, 1995, the Board of Directors authorized the Company to purchase
an additional 100,000 shares of its own Common Stock. Treasury Stock
transactions may be made from time to time, subject to regulatory requirements,
in the open market or privately negotiated transactions. Treasury shares may be
used from time to time for various corporate purposes.

On January 18, 1995, the Matewan Bank FSB filed applications with the Office of
Thrift Supervision to establish branch offices in two supermarkets in Pikeville
and Goody, Kentucky. On May 19, 1995, the office in the Goody location commenced
business, followed on June 26, 1995 by the Pikeville office.

On February 14, 1995, the Company executed a contract with Electronic Data
Services, Inc. ("EDS"). Although the immediate objective of the agreement was
the outsourcing of the core back-office and data processing operations of the
Company, the strategic implications of the association with EDS for the Company
are more broad. A worldwide leader in providing technology driven solutions in
industries far removed from the Company, EDS will provide both technology and
expertise on a much wider and diverse scale than previously available to the
Company. Access to and employment of EDS technology and expertise will enable
the Company to concentrate on growing its customer base and expanding market
share. Effective management of this technology will supply the basis for a wider
and more diverse range of product offerings. It will also provide state of the
art delivery systems that should provide the Company with a substantial
competitive advantage in any market that it chooses to operate. However, the
most immediate effect may be that the Company experiences some near term
increases in data processing expenses.
<PAGE>
 
MATEWAN BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars in thousands, except per share data)

SUMMARY

Net income for the first nine months of 1995 was approximately $3,605, or $.98
per share, versus $3,544, or $.97 per share for the same period in 1994.
Earnings per share for the year ended December 31, 1994 was $1.36 when adjusted
for the 10% stock dividend of June, 1995. Return on Average Assets was 1.28% and
1.33% for the nine month period ended September 30, 1995 and September 30, 1994,
respectively. Return on Average Assets for the year ended December 31, 1994 was
1.40%. Return on Average Equity was 11.29% and 12.03% for the respective nine
month time periods and 12.39% for the year ended December 31, 1994. Net income
for the third quarter of 1995 was $1,201 ($.33 per share) versus $1,236 ($.34
per share) for the third quarter of 1994.

ACQUISITION ACTIVITY

On September 28, 1995, the Company entered into a definitive agreement with Banc
One Corporation and Bank One Kentucky Corporation under which Matewan
BancShares, Inc. will acquire via cash purchase all of the outstanding common
stock of the Bank One, Pikeville N.A. franchise. Bank One of Pikeville operates
eight offices and has total assets of approximately $220,306 and total deposits
of approximately $181,508. Consummation of the transaction is expected in the
first quarter of 1995. The Company expects to fund this acquisition through
available cash, long-term debt, and a capital stock offering.

RESULTS OF OPERATIONS

Net interest income was $14,569 for the nine month period ended September 30,
1995 versus $13,144 for the nine month period ended September 30, 1994. This
increase of approximately $1,425 (10.8%) was attributable to the Company better
managing its net interest margin. Net interest income for the third quarter of
1995 was approximately $4,997 as compared to $4,472 for the third quarter of
1994. Under normal circumstances, in a rising interest rate environment, an
institution that is liability sensitive in the short run would expect an
unfavorable reaction in net interest income as interest-bearing liabilities
reprice at higher rates faster than interest-earning assets reprice. Because the
Company has exercised such extreme vigilance in maintaining its funds pricing
positions, as interest rates increased, net interest income was not as
vulnerable to erosion.  Actual Net Interest Margin (net interest income divided
by average earning assets) for the nine months ended September 30, 1995 was
5.75% versus 5.46% for the same period in 1994. Net interest margin for the
third quarter of 1995 was 5.79% versus 5.49% for the third quarter of 1994. In
both instances, improved yields on the loan portfolio combined with relatively
stable costs of funds to increase net interest margin over both nine month and
three month prior year
<PAGE>
 
periods. The Company continues to be liability sensitive and accordingly future
increases in market interest rates would generally adversely impact net interest
income, while decreases in market interest rates would generally have a positive
impact.

The Company's provision for loan losses for the nine months ended September 30,
1995 was approximately $32 lower than for the same period in 1994, despite
higher non-performing asset figures in the more recent period. Third quarter
provision in 1995 of $432 was actually $72 higher in 1995 than for the same
period in 1994. Non-performing loans (loans past due greater than ninety days
plus nonaccrual loans) approximated $3,136 at September 30, 1995 versus $2,391
at September 30, 1994. Starting in the fourth quarter of 1994  and continuing
throughout 1995, the Company has undertaken a comprehensive program concerning
the restructuring of or disposing of problem or higher risk credits. Concurrent
with this process, the Company has adpoted an extremely aggressive postition in
dealing with the workout or liquidation of higher risk accounts. At the
implementation of this program, management recognized that the adoption of such
an aggressive posture could entail having to absorb some additional charges to
the loan loss reserve that could, at least initially, be of a substantially
heavier volume than historical comparisons would suggest. Management also
recognized that these charges would be incurred over a period of time in which
continuing provisions to loan loss reserve would need to be made to reflect any
additional credit exposure in the loan portfolio. Management determined at the
outset that (1) there existed sufficient coverage in the loan loss reserve at
that time to absorb the effect of these anticipated charge-offs without
requiring any additional reserves and (2) on an ongoing basis, provisions to
loan loss reserve would continue to be made to reflect any ongoing additional
exposure to the loan portfolio. The mathmatical result of this process is that
the volume of charge-off activity has moved in a different direction than
activity related to loan loss provision for the nine months ended September 30,
1995. The financial result is that the credit quality of the current loan
portfolio is better than it has been for some period of time and the Company
better positioned to compete for loan activity in its present markets.
Management has analyzed and evaluated the condition of the loan portfolio, has
made provision for known anticipated losses, and does not anticipate any further
significant losses. The percentage of allowance for loan losses to total non-
performing loans was 84.18% and 130.28% at September 30, 1995 and 1994,
respectively.

Non-interest income increased $168 (8.0%) during the first nine months of 1995
when compared to the same period in 1994. The increase for the third quarter of
1995 was approximately $21 higher than for the third quarter of 1994. Service
fees and other fees generally increased in the current year due to an update in
the service fee schedule and normal business growth. Income attributable to
sales of other financial services increased approximately $249 in the the first
nine months of 1995 over same period in 1994 due predominantly to the growth in
the Bank's financial services division. Sales of credit insurance in the same
periods translate into commissions approximately
<PAGE>
 
$133 lower in 1995 than for the same nine month period in 1994. High loss
experiences by the Company's credit insurance underwriters resulted in the
underwriters' companies tightening eligibility standards for policies issued in
the Company's market area for 1995. Sales volumes have declined accordingly.
Third quarter credit insurance commissions were approximately $73 lower in 1995
than for 1994.

Non-interest expenses increased $1,555 (18.5%) for the first nine months of 1995
over the same period in 1994. Third quarter of 1995 expenses were approximately
$545 higher than for the third quarter of 1994. Most of these increases were
related to start-up and operating expenses incurred in 1995 in opening the
second office of Matewan Bank FSB and its two supermarket offices. Higher
personnel, marketing, and occupancy expenses, in particular, were experienced.
One source of relief was the refund of the FDIC assessment realized in the third
quarter of 1995.

In comparing the nine month periods ended September 30, 1995 and September 30,
1994, respectively, net income before taxes increased $70 (1.3%) For the third
quarter of 1995, net income before taxes were approximately $71 lower than for
the same quarter of 1994. Applicable income taxes increased by $9 or .45% in the
nine month period ended September 30, 1995 over the same period in 1994. Income
taxes in th third quarter of 1995 were $36 lower than for the third quarter of
1994. The effective income tax rate for the first nine months of 1995 was 35.79%
versus 36.08% for the first nine months of 1994. Effective rates for the
quarters were 36.05% and 36.58% for 1995 and 1994 respectively. These decreases
reflect both changes in composition of the Company's earnings and favorable tax
effects attributable to Matewan Bank FSB. Net income after income taxes
increased only $61 or 1.7% for the nine months ended September 30, 1995 over the
same period for 1994, a consequense of a less favorable interest rate
environment and operating expenses connected with opening Matewan Bank FSB.
Conversely, net income after income taxes for the third quarter of 1995 was
approximately $35 lower than for the third quarter of 1994, due to the same
reasons noted above.
<PAGE>
 
Analysis of the allowance for Loan Losses (Unaudited)
MATEWAN BANCSHARES, INC AND SUBSIDIARIES
(Amounts listed in thousands)

<TABLE>
<CAPTION>
                                         Nine months ended
Year-to-date amounts listed through  September 30, September 30,
                                     ------------- -------------
                                         1995         1994
                                         ----         ----
<S>                                  <C>           <C>
Balance at begining of period           $2,932       $2,961


Loans charged-off                       (1,938)      (1,390)


Recoveries                                 385          251


Provision for loan losses                1,261        1,293
                                        ------       ------


Balance at the end of period            $2,640       $3,115
                                        ======       ======


Non-performing loans                    $3,136       $2,391


Ratio of allowance for loan losses
  to non-performing loans                84.18%      130.28%

Ratio of allowance for loan losses
  to total loans                          1.14%        1.46%

</TABLE>
<PAGE>
 
                               SIGNATURES


   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.

                                          MATEWAN BANCSHARES, INC.
                                             (Registrant)



October 31, 1995                    By: /s/Dan R. Moore
                                       ----------------------------    
                                               Dan R. Moore
                                     Chairman of the Board of Directors
                                              and President





October 31, 1995                    By: /s/Lee M. Ellis
                                       ----------------------------
                                           Lee M. Ellis
                             Vice President & Chief Financial Officer
<PAGE>
 
                           MATEWAN BANCSHARES, INC.

EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibit 11

    Exhibit 27 Financial Date Schedule

    Information included in EX-27 is incorporated herein by reference.

(b) Reports on Form 8-K  - A report on Form 8-K was filed on October 13, 1995.