SECURITIES AND EXCHANGE COMMISSION

                                Washington, D.C.

                                   FORM 10-QSB

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

                For the quarterly period ended December 31, 2002

                                       OR

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

          For the transition period from ____________ to ______________

                           Commission File No. 0-24330

                            Bedford Bancshares, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Virginia                                     54-1709924
--------------------------------------------------------------------------------
         (State or other jurisdiction of                    (I.R.S. Employer
          incorporation or organization)                    Identification No.)

                  125 West Main Street, Bedford, Virginia 24523
             ------------------------------------------------------
                    (Address of principal executive offices)


                                 (540) 586-2590
             ------------------------------------------------------
              (Registrant's telephone number, including area code)


     Check whether issuer (1) filed all reports required to be filed by Sections
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements 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:   Common Stock, par value $.10 per share
                  Outstanding at January 30, 2003:  2,014,594

<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY

                              INDEX TO FORM 10-QSB

<TABLE>
<CAPTION>
<S>                                                                                                 <C>
       PART I          FINANCIAL INFORMATION                                                             PAGE
       ------          ---------------------                                                             ----

       Item 1          Financial Statements

                       Consolidated Statements of Financial Condition at December 31,
                       (unaudited) and September 30, 2002                                                   3

                       Consolidated Statements of Income for the three  months ended December
                       31, 2002 and 2001 (unaudited)                                                        4

                       Consolidated Statements of Comprehensive Income for the three months
                       ended December 31, 2002 and 2001 (unaudited)                                         5

                       Consolidated Statements of Cash Flows for the three months ended December
                       31, 2002 and 2001 (unaudited)                                                        6

                       Notes to Unaudited Interim Consolidated Financial Statements
                                                                                                            7

       Item 2          Management's Discussion and Analysis of Financial Condition and Results
                       of Operations                                                                        8


       PART II         OTHER INFORMATION
       -------         -----------------

       Item 1          Legal Proceedings                                                                   13

       Item 2          Changes in Securities                                                               13

       Item 3          Defaults upon Senior Securities                                                     13

       Item 4          Submission of Matters to a Vote of Security Holders                                 13

       Item 5          Other Information                                                                   13

       Item 6          Exhibits and Reports on Form 8-K                                                    13

     SIGNATURES                                                                                            14

                                        2
</TABLE>
<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                 Consolidated Statements of Financial Condition
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                               December 31 September 30
                                                                                   2002         2002
                                                                                ---------    ---------
<S>                                                                           <C>          <C>
                                                                                    (In Thousands)
Assets
------
Cash and cash equivalents ...................................................   $   7,475    $  15,668
Interest-bearing deposits in other banks ....................................       2,994           --
Investment securities held to maturity (estimated market value of
$2 and $518) ................................................................           2          502
Investment securities available for sale, at market value ...................      17,292       13,589
Investment in Federal Home Loan Bank stock, at cost .........................       2,700        2,600
Loans receivable, net .......................................................     223,558      219,634
Foreclosed real estate, net .................................................          26           26
Property and equipment, net .................................................       1,228        1,239
Accrued interest receivable .................................................       1,144        1,328
Deferred income taxes .......................................................         278          355
Other assets ................................................................       1,057          673
                                                                                ---------    ---------
    Total assets ............................................................   $ 257,754    $ 255,614
                                                                                =========    =========

Liabilities and Stockholders' Equity
------------------------------------
Liabilities
-----------
Deposits ....................................................................   $ 176,946    $ 177,214
Advances from the Federal Home Loan Bank ....................................      54,000       52,000
Advances from borrowers for taxes and insurance .............................         453          815
Dividends payable ...........................................................         241          241
Other liabilities ...........................................................         854          782
                                                                                ---------    ---------
    Total liabilities .......................................................     232,494      231,052
                                                                                ---------    ---------

Commitments and contingent liabilities

Stockholders' equity
--------------------
Preferred stock, par value $.10 per share, authorized 250,000; issued and ...          --           --
outstanding, none
Common stock, par value, $.10 per share, authorized 2,750,000 shares; issued
and outstanding 2,011,952 at December 31, 2002 and 2,011,952 at September 30,
2002 ........................................................................         201          201
Additional paid in capital ..................................................      10,132       10,089
Retained earnings, substantially restricted .................................      15,083       14,570
Accumulated other comprehensive income (loss) ...............................         148           22
Less stock acquired by ESOP and RRP .........................................        (304)        (320)
                                                                                ---------    ---------
    Total stockholders' equity                                                     25,260       24,562
                                                                                ---------    ---------
    Total liabilities and stockholders' equity ..............................   $ 257,754    $ 255,614
                                                                                =========    =========
</TABLE>

See notes to consolidated financial statements

                                        3
<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                        Consolidated Statements of Income
                                   (Unaudited)


                                                           Three Months Ended
                                                                December 31
                                                            2002           2001
                                                           ------         ------
                                                          (Dollars in Thousands,
                                                          Except Per Share Data)
Interest Income:
 Loans..............................................       $3,473         $3,580
 U.S. Government Obligations including agencies.....          250            290
 Other investments, including overnight deposits....           63             48
                                                           ------         ------
    Total interest income...........................        3,786          3,918
                                                           ------         ------
Interest Expense:
 Deposits...........................................        1,181          1,424
 Borrowed funds.....................................          644            597
                                                           ------         ------
    Total interest expense..........................        1,825          2,021
                                                           ------         ------
    Net interest income.............................        1,961          1,897
Provision for credit losses.........................           75             45
                                                           ------         ------
 Net interest income after provision for credit
 losses.............................................        1,886          1,852
                                                           ------         ------
Noninterest income:
 Service charges and fees on loans..................          374            249
 Other customer service fees and
 commissions........................................          145            124
 Other..............................................           17             14
                                                           ------         ------
    Total noninterest income........................          536            387
                                                           ------         ------
Noninterest expense:
 Personnel compensation and benefits................          684            685
 Occupancy and equipment............................          120            104
 Data processing....................................          151            125
 Federal insurance of accounts......................            7              6
 Advertising........................................           38             31
 Professional fees..................................           68             80
 Other..............................................          143            116
                                                           ------         ------
    Total noninterest expense.......................        1,211          1,147
                                                           ------         ------
    Income before income taxes......................        1,211          1,092
 Provision for income taxes.........................          460            415
                                                           ------         ------
   Net income.......................................       $  751         $  677
                                                           ======         ======

Basic earnings per share............................       $ 0.38         $ 0.33
                                                           ======         ======

Diluted earnings per share..........................       $ 0.36         $ 0.32
                                                           ======         ======


See notes to consolidated financial statements

                                        4

<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                 Consolidated Statements of Comprehensive Income
                                   (Unaudited)


                                                            Three Months Ended
                                                                 December 31
                                                             2002          2001
                                                             ----          ----
                                                          (Dollars in Thousands,
                                                          Except Per Share Data)

Net Income..............................................     $751          $677

Other comprehensive income, net of tax effect:

   Unrealized gains (losses) on securities
    available for sale..................................      126          (108)
                                                             ----          ----
Comprehensive income....................................     $877          $569
                                                             ====          ====


                                        5
<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                        ------December 31------
                                                                            2002        2001
                                                                          --------    --------
                                                                         (Dollars in Thousands)
<S>                                                                     <C>         <C>
Operating activities:
 Net Income ...........................................................   $    751    $    677
 Adjustments to reconcile net income to net cash provided by
 operating activities:
   Provision for credit losses ........................................         75          45
   Provision for depreciation and amortization ........................         49          42
   Amortization of investment security premiums and accretion of
   discounts, net .....................................................         --          (5)
   (Gain) loss on sale of loans, investments and foreclosed real estate         (9)         (8)
   (Increase) decrease in accrued interest receivable .................        184        (178)
   (Increase) decrease in other assets ................................       (388)         10
   Increase (decrease) in other liabilities ...........................         72        (193)
                                                                          --------    --------
    Net cash provided by (used in) operating activities ...............        734         390
                                                                          --------    --------

Investing activities:
   Increase in interest-bearing deposits in other banks ...............     (2,994)         --
   Proceeds from the maturity of held to maturity securities ..........        500          --
   Proceeds from the maturities of investments available for sale .....      9,000       1,014
   Purchases of investment securities available for sale ..............    (12,500)     (9,000)
   Purchase of Federal Home Loan Bank stock ...........................       (100)       (150)
   Net increase in loans to customers .................................     (3,924)     (7,926)
   Principal collected on mortgage-backed securities ..................         --           1
   Purchases of premises, equipment and leasehold improvements ........        (38)        (25)
   Net (increase) decrease in foreclosed real estate ..................         --          68
                                                                          --------    --------
    Net cash provided by (used in) investing activities ...............    (10,056)    (16,018)
                                                                          --------    --------
Financing activities:
   Dividends paid .....................................................       (241)       (227)
   Net increase (decrease) in customer deposits .......................       (268)      1,194
   Proceeds from (repayments of) advances and other borrowed money ....      2,000       8,000
   Repurchase of stock ................................................         --        (462)
   Stock options exercised ............................................         --          74
   Net increase (decrease) in advance payments from borrowers for taxes
   and insurance ......................................................       (362)       (270)
                                                                          --------    --------
    Net cash provided by financing activities .........................      1,129       8,309
                                                                          --------    --------
    Increase (decrease) in cash and cash equivalents ..................     (8,193)     (7,319)
Cash and cash equivalents at beginning of period ......................     15,668      16,791
                                                                          --------    --------
Cash and cash equivalents at end of period ............................   $  7,475    $  9,442
                                                                          ========    ========
</TABLE>

See notes to consolidated financial statements

                                        6


<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
          Notes to Unaudited Interim Consolidated Financial Statements
                                December 31, 2002


NOTE 1:  BASIS OF PRESENTATION
-------  ---------------------

          The accompanying  unaudited interim consolidated  financial statements
have been prepared in accordance with generally accepted  accounting  principles
("GAAP") for interim financial information. Accordingly, they do not include all
of the  information  and  footnotes  required by generally  accepted  accounting
principles for complete financial statements.

         The accompanying  unaudited interim  consolidated  financial statements
include the accounts of Bedford  Bancshares,  Inc., Bedford Federal Savings Bank
and CVFS its wholly-owned  subsidiaries.  All significant  intercompany balances
and transactions have been eliminated in consolidation.

         In the opinion of  management,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary for the fair  presentation have been
included.  The results of operations  for the interim  period ended December 31,
2002 is not necessarily  indicative of the results which may be expected for any
future  period.  For  further  information,   refer  to  consolidated  financial
statements and footnotes thereto included in the Corporation's  Annual Report on
Form 10-KSB for the year ended September 30, 2002.

NOTE 2:  EARNINGS PER SHARE
-------  ------------------


Earnings per share is calculated as follows:

                                                         Three Months Ended
                                                            December 31
                                                          2002         2001
                                                          ----         ----
Basic Earnings Per Share:
-------------------------
Net Income ........................................   $  751,000   $  677,000
                                                      ==========   ==========
Average Shares Outstanding, Net of
unallocated ESOP Shares (29,334 and 45,334 at
December 31, 2002 and 2001, respectively) .........    1,982,619    2,028,059
                                                      ==========   ==========

Basic Earnings Per Share ..........................   $     0.38   $     0.33
                                                      ==========   ==========

Diluted Earnings Per Share:
---------------------------
Net Income ........................................   $  751,000   $  677,000
                                                      ==========   ==========
Average Shares Outstanding, Net of
unallocated ESOP Shares (29,334 and 45,334
At December 31, 2002 and 2001, respectively) ......    1,982,619    2,028,059
  Dilutive effect of RRP Plan shares ..............           --          370
  Dilutive effect of Stock Options ................       75,844       86,810
                                                      ----------   ----------
Average Shares Outstanding ........................    2,058,463    2,115,239
                                                      ==========   ==========

Diluted Earnings Per Share ........................   $     0.36   $     0.32
                                                      ==========   ==========

                                       7
<PAGE>

         MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS



FORWARD-LOOKING STATEMENTS
--------------------------

         The Private  Securities  Litigation  Reform Act of 1995  contains  safe
harbor  provisions  regarding  forward-looking  statements.  When  used  in this
discussion, the words, "believes", "anticipates", "contemplates", "expects", and
similar expressions are intended to identify  forward-looking  statements.  Such
statements  are  subject to certain  risks and  uncertainties  which could cause
actual  results to differ  materially  from  those  projected.  Those  risks and
uncertainties  include changes in interest  rates,  the ability to control costs
and expenses,  and general  economic  conditions.  We undertake no obligation to
publicly release the results of any revision to those forward-looking statements
which may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

FINANCIAL CONDITION
-------------------

         At December 31, 2002,  consolidated  assets totaled $257.8 million,  an
increase of $2.1  million  from  September  30, 2002.  The asset  expansion  was
reflected in growth of the loan portfolio,  which increased $3.9 million, a $3.7
million  increase in the  investment  securities  available for sale  portfolio.
Funding  for the  growth  in the loan and  securities  portfolios  was  provided
primarily  by a $2.0  million  increase  in FHLB  advances  and an $8.2  million
decrease in cash and cash equivalents.

RESULTS OF OPERATIONS
---------------------

         General.  Net income  for the three  months  ended  December  31,  2002
increased $74,000 to $751,000 from $677,000 for the comparable quarter of fiscal
2002. A $64,000  increase in net interest  income and an increase of $149,000 in
noninterest revenues, partially offset by a $64,000 rise in noninterest expenses
and a $30,000 increase in the provision for loan losses,  resulted in the higher
level of earnings.

         Interest  Income.  Interest  income  totaled $3.8 million for the three
months ended  December 31,  2002,  compared to $3.9 million  earned in the three
months ended December 31, 2001.  Interest income on loans decreased $107,000 due
to a 129 basis  point  decline in the loan  portfolio  yield,  reflecting  lower
market rates.

         Interest  Expense.  Interest expense totaled $1.8 million for the three
months ended December 31, 2002, down $196,000 from the interest  expense for the
three  months  ended  December  31,  2001. A decrease of $243,000 in interest on
deposits due a 125 basis point  decline in the cost of average  interest-bearing
deposits was partially  offset by a rise of $47,000 in interest  expense on FHLB
advances due to a higher average balance of advances.

         Net Interest Income.  For the three months ended December 31, 2002, net
interest income was $2.0 million, up $64,000 from the net interest income earned
in the same three months of

                                       8
<PAGE>

2001. For the three months ended December 31, 2002, the net interest rate spread
and net interest  margin were 2.66% and 3.15%,  respectively,  compared to 2.94%
and 3.61%, respectively for the same period of 2001.

         Provision  for Loan Losses.  The  provision for loan losses was $75,000
for the three months ended  December  31,  2002,  up $30,000 from the  provision
recorded  in the  comparable  quarter of fiscal  2002.  An 8.7%  increase in the
commercial loan portfolio in the first quarter of fiscal 2003  precipitated  the
increase in the  provision  for loan losses for the three months ended  December
31, 2002.  Based upon the quality of the Bank's loan  portfolio,  the relatively
stable local economy and the level of nonperforming assets,  management believes
the  allowance  for loan  losses is adequate  to absorb any  anticipated  credit
losses  at  December  31,  2002.  However,  assessment  of the  adequacy  of the
allowance for loan losses involves subjective judgments and thus there can be no
assurance that additional provisions for loan losses will not be required.

         Noninterest  income.  For the three  months  ended  December  31, 2002,
noninterest  income was $536,000,  up 38.5% from the $387,000 for the comparable
2001 period.  Service charges and fees on loans were up $125,000 to $374,000 for
the first  quarter of fiscal 2003 from  $249,000  for the  comparable  period of
fiscal 2002 due primarily to the increased level of commercial  loans and a 6.2%
increase in the amount of mortgage loans closed. Other fees and commissions were
up 16.8% to $145,000 for the three months ended  December 31, 2002 from $124,000
for the  comparable  period of 2001 due  primarily  to  increases  of $13,000 in
income from checking and $6,000 in fees associated with debit cards.

         Noninterest  expense.  Noninterest expense was $1,211,000 for the three
months  December 31,  2002,  up 5.6% from  $1,147,000  for the  comparable  2001
period.  Occupancy  and  equipment  expense was up $16,000 due  primarily due to
higher equipment expenses.  Data processing expense was $151,000,  up 20.8% from
the  $125,000 for the  comparable  2001  period,  due  primarily to an increased
number of transaction accounts.

         Provision for Income Taxes. The provision for income taxes was $460,000
for the three  months  ended  December  31,  2002,  up 10.81% from the  $415,000
provision  recorded in the same three months of fiscal 2002.  The primary reason
for the increase was the increased  level of taxable  income.  It is anticipated
that the effective tax rate for fiscal 2003 will be  relatively  unchanged  from
the effective tax rate experienced in fiscal 2002.

                                       9
<PAGE>

CAPITAL COMPLIANCE
------------------

The following table presents the Bank's  compliance with its regulatory  capital
requirements of December 31, 2002. (Dollar amounts in thousands).

                                                           December 31, 2002
                                                           -----------------
                                                                      Percentage
                                                                      of assets
                                                                      ---------

GAAP Capital......................................       $22,547          8.75%
                                                         =======          ====

Tangible capital..................................       $22,399          8.71%
Tangible capital requirement......................         3,858          1.50%
                                                         -------          ----
Excess............................................       $18,541          7.21%
                                                         =======          ====

Core capital......................................       $22,399          8.71%
Core capital requirement..........................        10,288          4.00%
                                                         -------          ----
Excess............................................       $12,111          4.71%
                                                         =======          ====

Total risk-based capital (1)......................       $23,650         14.43%
Total risk-based capital requirement (1)..........        13,109          8.00%
                                                         -------          ----
Excess............................................       $10,541          6.43%
                                                         =======          ====
_____________________________
(1)  Based on risk-weighted assets of $163,867

         Management believes that under current regulations, we will continue to
meet our minimum capital  requirements in the foreseeable future.  Events beyond
our control,  such as increased  interest  rates or a downturn in the economy in
areas in which we  operate  could  adversely  affect  future  earnings  and as a
result, our ability to meet our future minimum capital requirements.


LIQUIDITY
---------

         Our  liquidity  is a measure of our ability to fund loans,  pay deposit
withdrawals and other cash outflows in an efficient,  cost effective manner. Our
primary sources of funds are deposits, and scheduled amortization and prepayment
of loans.  In addition,  we supplement our funding needs by borrowing funds from
the Federal Home Loan Bank  ("FHLB") of Atlanta.  As of December 31, 2002,  such
borrowed funds totaled $54 million. Loan payments and prepayments,  deposits and
borrowings are greatly influenced by general interest rates, economic conditions
and competition.

         The  amount of  certificate  accounts,  which are  scheduled  to mature
during the next twelve months ending  December 31, 2003,  is  approximately  $57
million.  To the extent that these deposits do not remain with us upon maturity,
we believe that we can replace these funds with other deposits, FHLB advances or
other borrowings.  It has been our experience that a substantial portion of such
maturing deposits remains with us.

         At December  31, 2002,  we had loan  commitments  outstanding  of $40.5
million.  These commitments will be funded from deposit inflows, loan repayments
and borrowings.

                                       10
<PAGE>

CONTROLS AND PROCEDURES

         (a) Evaluation of disclosure  controls and  procedures.  Based on their
evaluation  as of a date  within 90 days of the  filing  date of this  Quarterly
Report  on  Form  10-QSB,  the  Registrant's  principal  executive  officer  and
principal  financial  officer have  concluded that the  Registrant's  disclosure
controls and procedures (as defined in Rules  13a-14(c) and 15d-14(c)  under the
Securities  Exchange Act of 1934 (the  "Exchange  Act")) are effective to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

         (b) Changes in internal controls.  There were no significant changes in
the Registrant's  internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,  including any
corrective  actions  with  regard  to  significant   deficiencies  and  material
weaknesses.

                                       11
<PAGE>


                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                              Key Operating Ratios

                                                            Three Months Ended
                                                                December 31
                                                                -----------
                                                           2002(1)       2001(1)
                                                           -------       -------
                                                               (Unaudited)


Basic earnings per share........................           $0.38          $0.33
Diluted earnings per share......................           $0.36          $0.32
Return on average assets........................            1.17%          1.25%
Return on average equity........................           12.05%         11.57%
Interest rate spread............................            2.66%          2.94%
Net interest margin.............................            3.15%          3.61%
Noninterest expense to average assets...........            1.88%          2.12%
Net charge-offs to average outstanding loans....             .03%           .02%



                                                       December 31  September 30
                                                           2002          2002
                                                       -----------  ------------
                                                         (DOLLARS IN THOUSANDS)
                                                               (Unaudited)
Nonaccrual loans.......................................     $742          $630
Repossessed real estate................................       26            26
                                                            ----          ----
Total nonperforming assets.............................     $768          $656
                                                            ====          ====


Allowance for credit losses to nonperforming assets....   162.83%       182.01%
Nonperforming loans to total loans.....................     0.33%         0.29%
Nonperforming assets to total assets...................     0.30%         0.26%


Book value per share...................................   $12.56        $12.21
                                                          ======        ======
________________________
(1)     The ratios for the three month periods are annualized

                                       12
<PAGE>

                           PART II - OTHER INFORMATION
                           ---------------------------


Item 1.           Legal Proceedings
                  -----------------
                    Neither  the  Corporation  nor the Bank was  engaged  in any
                    legal proceedings of a material nature at December 31, 2002.
                    From  time to  time,  the  Corporation  is a party  to legal
                    proceedings  in the ordinary  course of business  wherein it
                    enforces its security interest in loans.

Item 2.           Changes in Securities
                  ---------------------
                     Not applicable.

Item 3.           Defaults upon Senior Securities
                  -------------------------------
                     Not applicable.

Item 4.           Submission of Matters to a Vote of Security Holders
                  ---------------------------------------------------
                     Not applicable.


Item 5.           Other Information
                  -----------------
                     Not applicable.

Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------
<TABLE>
<CAPTION>
                <S>     <C>
                    (a)  List of Exhibits:

                         3(i)  Restated Articles of Incorporation of Bedford Bancshares, Inc.*
                         3(ii) Bylaws of Bedford Bancshares, Inc.*
                         4      Specimen of Stock Certificate*
                         10.1  1994 Stock Option Plan*
                         10.2  Recognition and Retention Plan and Trust Agreement*
                         10.3  Employment Agreement between the Registrant and Harold K. Neal*
                         99.0  Certification  pursuant  to  18  U.S.C.  Section 1350,
                               as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
                    (b)  Reports on Form 8-K
                         Not applicable.

</TABLE>
_______________________
*    Incorporated  by reference to the  Registrant's  Form 10-KSB filed with the
     SEC on December 9, 1994 (File No. 000-24330).

                                       13
<PAGE>

                     BEDFORD BANCSHARES, INC. AND SUBSIDIARY

                                   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.



                                            BEDFORD BANCSHARES, INC.

Date:    February 4, 2003                   By: /s/Harold K. Neal
                                                --------------------------------
                                                Harold K. Neal
                                                President and
                                                Chief Executive Officer
                                                (Principal Executive Officer)


Date:    February 4, 2003                   By: /s/James W. Smith
                                                --------------------------------
                                                James W. Smith
                                                Vice President and Treasurer
                                                (Principal Accounting and
                                                   Financial Officer)


                                       14
<PAGE>

                            SECTION 302 CERTIFICATION

         I, Harold K. Neal,  President  and Chief  Executive  Officer of Bedford
Bancshares, Inc., certify that:

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

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

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

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  February 4, 2003                    /s/Harold K. Neal
                                           -------------------------------------
                                           Harold K. Neal
                                           President and Chief Executive Officer

<PAGE>

                            SECTION 302 CERTIFICATION

         I,  James W.  Smith,  Vice  President,  Treasurer  and Chief  Financial
Officer, certify that:

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

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

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

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  February 4, 2003                            /s/James W. Smith
                                                   -----------------------------
                                                   James W. Smith
                                                   Vice President, Treasurer and
                                                   Chief Financial Officer