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                                    FORM 10-K
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 2000.

                                       OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 For the transition period from _____________ to
      _____________.

Commission file number 000-18445.

                           Benchmark Bankshares, Inc.
             (Exact name of registrant as specified in its charter)

           Virginia                                     54-1380808
           --------                                     ----------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

      100 South Broad Street
        Kenbridge, Virginia                                          23944
        -------------------                                          -----
(Address of principal executive offices)                           (Zip Code)

Registrant's telephone number, including area code (804)676-8444.

Securities registered pursuant to Section 12(b) of the Act:  None

    Title of each class               Name of each exchange on which registered
    -------------------               -----------------------------------------

-----------------------------                 -----------------------------

           Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock, Par Value $.21 a share
                                (Title of Class)

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

     Indicate by check mark if the disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of the  registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

Based on the closing sales price of March 1, 2001, the aggregate market value of
the voting and nonvoting common equity held by nonaffiliates of the registrant
was $26,992,963.

The number of shares outstanding of the registrant's common stock, $.21 par
value was 2,999,218.132 at March 1, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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                           Benchmark Bankshares, Inc.

                                Table of Contents


                                                                      Page No.

Part I
     Item 1.      Business                                                   3
     Item 2.      Properties                                                 6
     Item 3.      Legal Proceedings                                          7
     Item 4.      Submission of Matters to a Vote of Security Holders        7

Part II
     Item 5.      Market for Registrant's Common Equity and Related
                     Stockholder Matters                                     8
     Item 6.      Selected Financial Data                                   10
     Item 7.      Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                    11
     Item 7A.     Quantitative and Qualitative Disclosures About
                     Market Risk                                            35
     Item 8.      Financial Statements and Supplementary Data               35
     Item 9.      Changes in and Disagreements with Accountants
                     on Accounting and Financial Disclosure                 64

Part III
     Item 10.     Directors and Executive Officers of the Registrant        65
     Item 11.     Executive Compensation                                    66
     Item 12.     Security Ownership of Certain Beneficial Owners
                     and Management                                         67
     Item 13.     Certain Relationships and Related Transactions            69

Part IV
     Item 14.     Exhibits, Financial Statement Schedules,
                     and Reports on Form 8-K                                70



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PART I

ITEM I    BUSINESS

Benchmark Bankshares, Inc.

         Benchmark Bankshares, Inc. (the "Company"), formerly Lunenburg
Community Bankshares, Inc., is a bank holding company incorporated under the
laws of the Commonwealth of Virginia on March 7, 1986. The Company became a one
bank holding company under the Bank Holding Company Act of 1956 on January 1,
1987 subsequent to its acquiring all of the issued and outstanding shares of The
Lunenburg County Bank's, now Benchmark Community Bank (the "Bank"), common
stock. The Company does not own or operate any other businesses.

         At December 31, 2000, the Company and its subsidiary employed 91
full-time and 20 part-time persons.

Benchmark Community Bank

         The Bank opened for business on September 8, 1971 under its original
name of The Lunenburg County Bank. It started business in temporary quarters and
in 1974 moved to its present location at 100 South Broad Street, Kenbridge,
Virginia 23944.

         Also in 1974, the Bank opened its first full-service branch in the Town
of Victoria, Virginia. Today, the Bank has nine full-service branch offices in
the Towns of Kenbridge and Victoria in Lunenburg County, the Town of Farmville
(two offices) in Prince Edward County, the Town of Crewe in Nottoway County, the
Towns of South Hill, Clarksville, and Chase City in Mecklenburg County, and the
Town of Lawrenceville in Brunswick County. All offices are located in the State
of Virginia.

         The Bank offers a wide range of banking and related financial services
to individuals and small to medium ranged businesses. The services offered are
in the form of checking, savings accounts, NOW and money market accounts,
certificates of deposit, business loans, personal loans, mortgage loans, and
other consumer oriented financial services including IRA's, safe deposit,
drive-up, night deposit, and automatic-teller machines at each office. The Bank
does not offer any trust services.

Competition

         The Bank encounters strong competition for its banking services within
its primary market area. There are eight commercial banks actively engaged in
business in the market area, including five major statewide banking
organizations. The Bank is the only community bank actively engaged in business
in Lunenburg and Brunswick Counties, and one of two such banks in the Town of
Farmville, Prince Edward County, and one of three community banks in Mecklenburg
County. Finance companies, mortgage companies, credit unions, and savings banks
also compete with the Bank for loans and deposits. In addition, in some
instances, the Bank must compete for deposits with money market mutual funds
that are marketed nationally.

Supervision and Regulation

         The summaries of statutes and regulations included in the information
provided below do not purport to be complete and are qualified in their entirety
by reference to the pertinent statutes and regulations.

         The Company is subject to the Bank Holding Company Act of 1956. As
such, the Company is required to file with the Federal Reserve Board annual
reports and other information regarding the business operations of itself and
its subsidiaries and is subject to examination by the Federal Reserve Board.



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         A bank holding company is required to obtain Federal Reserve Board
approval prior to acquiring ownership or control of the voting shares of any
bank if, after the acquisition, it would own or control more than 5% of the
voting stock of that bank, unless it already owns a majority of the voting stock
of the bank. A bank holding company is, with limited exceptions, prohibited from
acquiring ownership or control of voting stock of any company which is not a
bank or a bank holding company and must engage only in the business of banking,
managing or controlling banks, or furnishing services to or performing services
for subsidiary banks. The Federal Reserve Board is authorized to approve the
ownership of shares by a bank holding company in any company, the activities of
which the Federal Reserve Board has determined to be so closely related to
banking or to managing or controlling banks as to be a proper incident thereto.
The Federal Reserve Board has determined that certain activities are closely
related to banking, including making loans that would be made by mortgage,
finance, credit card, or factoring companies; acting as an investment or
financial advisor; performing the functions of a trust company; providing
certain data processing services; leasing certain personal property; and acting
as an insurance agent or broker for insurance directly related to the extension
of credit or other financial services. Although, a bank holding company may file
an application for approval of other nonbanking activities involved in a
particular case, the Federal Reserve Board has stated that, at present,
permissible nonbanking activities do not include real estate brokerage and
syndication, land development, property management, underwriting, operation of
savings and loan associations, management consulting, or industrial development
corporations.

         A bank holding company and its subsidiaries are also prohibited from
acquiring any voting shares of, or interest in, any banks located outside of the
state in which the operations of the bank holding company's banking subsidiaries
are located unless the acquisition is specifically authorized by the statutes of
the state in which the bank to be acquired is located. Further, a bank holding
company and its subsidiaries generally may not extend credit, lease or sell
property, or furnish any services on the condition that the customer obtain or
provide some additional credit, property or services from or to the bank holding
company or its subsidiaries, or that the customer obtain some other credit,
property, or services from a competitor.

Bank Supervision and Regulation

         The Bank is a member of the Federal Reserve System and is subject to
regulation and supervision, of which regular bank examinations are a part, by
the Virginia Bureau of Financial Institutions and the Federal Reserve Bank as
are all state member banks. The Bank by virtue of its Federal Reserve membership
qualifies for Federal Deposit Insurance Corporation (FDIC) insurance coverage of
up to a maximum of $100,000 per depositor. For the deposit insurance protection,
the Bank pays a semi-annual statutory assessment and is subject to the rules and
regulations of the FDIC. The Company is an "affiliate" of the Bank, and that
status imposes restrictions on loans by the Bank to the Company, on investment
by the Bank in the Company, and on the use of Company stock or securities as
collateral security for loans by the Bank to any borrower. The Company is also
subject to certain restrictions on its engaging in the business of issuing,
floatation, underwriting, public sale, and distribution of securities.

Government Monetary Policies and Economic Controls

         The monetary policies of regulatory authorities, most notably the
Federal Reserve Bank, have a significant effect on the operating results of bank
holding companies and banks. In particular, the Federal Reserve Board regulates
money and credit conditions and interest rates in order to influence general
economic conditions. These policies have a significant influence on the overall
growth and distribution of bank loans, investments and deposits, and affect
interest rates charged on loans or paid for time and savings deposits. Federal
Reserve Board monetary policies have had a significant effect on the operating
results of commercial banks in the past and are expected to continue to do so in
the future; however, the Company and its subsidiary bank are unable to predict
the specific nature or extent of these effects on their business and earnings.




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Restrictions

Investments

         As required by the Virginia Security for Public Deposits Act, the Bank
has pledged $4,905,625 at cost of its investment portfolio to safeguard State
and local municipalities' deposits as of December 31, 2000.

         By virtue of the Bank holding deposits for the Federal government, it
is subject to Section 31CFR202 of the Code of Federal Regulation, which
requires, in part, the collateralization of Federal deposits. As of December 31,
2000, the Bank had $316,971 pledged for Federal deposits.

         The Bank is required by Section 19 of the Federal Reserve Act to
maintain a certain level of reserves consisting of cash and other liquid assets
in proportion to types of deposit accounts held. At year end 2000, the Bank's
vault cash met the statutory requirement so designated by the Act.

Anti-Takeover Provisions

         The Articles of Incorporation and Bylaws of the Company contain certain
anti-takeover provisions. Said provisions provide (i) for division of the Board
of Directors into three classes, with one class elected each year to serve a
three year term; (ii) that Directors may be removed only upon the affirmative
vote of the holders of 80% of the outstanding voting stock; (iii) that any
vacancy on the Board may be filled by the remaining Directors; (iv) that advance
notification is required for a stockholder to bring business before a
stockholders' meeting or to nominate a person for election as a Director; and
(v) that the affirmative vote of the holders of 80% of the outstanding voting
stock is required to alter, amend, or repeal the foregoing provisions.

         The Articles also contain a "fair price" provision that requires the
affirmative vote of the holders of 80% of the outstanding voting stock as a
condition for certain mergers or business combinations, unless the transaction
is either approved by a majority of the disinterested Directors or certain
minimum price and procedural requirements are met.

         The foregoing provisions of the Articles and Bylaws are intended to
prevent inequitable stockholder treatment in a two-tier takeover and to reduce
the possibility that a third party could effect a sudden or surprise change in
majority control of the Board of Directors without the support of the incumbent
Board, even if such a change were desired by or would be beneficial to a
majority of the Company's stockholders. Such provisions may have the effect of
discouraging certain unsolicited tender offers for the Company's capital stock
and, at the same time, may provide for a continuation of current Company's
philosophy and leadership style.

Limitation on Liability

         The Company's Articles of Incorporation provide, in part in accordance
with the provisions of a recent amendment to the Virginia Stock Corporation Act
(the "Act"), that in every instance permitted by the Act, the liability of a
Director or Officer of the Company for monetary damages arising out of a single
transaction, occurrence, or course of conduct shall be limited to one dollar.
This limit on damages does not apply in the event of willful misconduct or a
knowing violation of the criminal law or any Federal or State securities law.
The limitation does not change or eliminate a Director's or Officer's duty of
care to the Company; it only eliminates, in certain circumstances, monetary
damages occasioned by a breach of that duty. It should also be noted that such
limitation of liability in no way limits or otherwise affects liability for the
violation of, or otherwise relieves the Company or its Directors or Officers
from the necessity of complying with, the Federal or State securities laws.





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Indemnification

         The Articles of Incorporation of the Company mandate indemnification of
Directors and Officers as a result of liability incurred by them in proceedings
instituted against them by third parties, or by or on behalf of the Company
itself, relating to the manner in which they have performed their duties unless
they have been guilty of "willful misconduct or a knowing violation of the
criminal law" in the performance of their duties. The indemnification provision
is consistent with another recent amendment to the Corporation Act. Thus, the
protection of the proposed amendment will extend to grossly negligent conduct
but not to willful misconduct.

         The Company's Board of Directors is authorized to contract in advance
to indemnify any Director or Officer and to indemnify or contract in advance to
indemnify other persons including Directors and Officers of subsidiaries and
employees and agents of the Company and its subsidiaries, to the same extent
that it is required to indemnify Directors and Officers of the Company.

         The Act and the Company's Articles of Incorporation permit the
advancement of expenses incurred by a Director or Officer in a proceeding.

         The Company has entered into indemnification agreements with each of
its Directors and Officers, entitling them to (i) indemnification to the full
extent permitted by the Act, and (ii) reimbursement of all expense advancements,
including attorneys' fees, paid or incurred in connection with any claim
relating to any indemnifiable event.

Executive Officers

         For information concerning the Executive Officers of the Company, refer
to Item 10 found on pages 65 and 66 of this report.

ITEM 2    PROPERTIES

         The main office of the Bank, which is owned by the Bank, consists of
three contiguous buildings. The combined office is a two-story building of
masonry construction and contains approximately 6,200 square feet of space on
the first floor, all of which is used for a full-service banking operation,
including five teller windows, loan offices, an automatic-teller machine, and
customer service for Kenbridge. The bookkeeping and computer operations for the
entire bank are located on the second floor of the office, which has 3,200
square feet of floor space. Additionally, there is an adjacent, but separate,
three-lane drive-up facility located just behind the office.

         The Victoria branch office, also owned by the Bank, was constructed in
1982 and contains approximately 2,500 square feet of floor space. It houses four
teller windows, has a drive-up window, which serves two lanes of traffic, and an
automatic-teller machine.

         The Farmville branch office, which opened in June of 1989, contains
approximately 1,650 square feet of floor space and is a leased facility. The
Bank signed a new lease effective October 15, 1998. The lease has a five year
original term with five additional options to renew for additional twelve month
terms. The current monthly lease amount as of December 31, 2000 was $1,150. The
office contains three teller windows. Currently, the office has no drive-up
window. The Bank added a third office to the Branch in 1998.

         The South Hill office, which opened for business in September, 1989, is
also housed in a leased facility. During 1997, the Bank renegotiated its lease
to extend the agreement to June 30, 2000. The lease provides for renewal options
of twelve month periods for an additional five years. The current monthly lease
amount as of December 31, 2000 was $1,250. This amount can be renegotiated in
June of 2001. This office contains approximately 2,900 square feet of floor
space and operates four teller windows, a drive-up window, which serves two
lanes of traffic, and an automatic-teller machine.


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         In 1993, the Bank opened a second office in the Town of Farmville on
Milnwood Road. The office is a two story structure of modern design. The first
floor contains 3,967 square feet and provides space for the operation of three
loan offices, four teller windows, a large customer lobby and new accounts area,
a three lane drive-up, and an automatic-teller machine. The branch office's
second floor has 2,240 square feet of space available for future expansion.

         On May 31, 1996, the Bank opened a full-service branch in Crewe. The
office is a one story brick structure. The office contains 2,600 square feet of
floor space, which provides for an open lobby with three teller windows, two
loan offices, and a new accounts area. The office has a three lane drive-up unit
with an automatic-teller machine.

         During 1999, the Bank opened three offices, one each in the Towns of
Chase City, Clarksville, and Lawrenceville.

         In Chase City, the Bank as of the end of the year rented temporary
quarters on Main Street. This facility serves as a loan production office and a
limited depository. Additionally, the Bank has purchased property that was
formally a banking office. The Bank has remodeled the facility and opened a
full-service office in January of 2001. The new branch building consists of
2,142 square feet and contains a lobby, teller windows, a drive-up unit, and
automatic-teller machine. The facility is constructed of brick and is situated
in a shopping center on the north side of town.

         The Bank leases office space on Virginia Avenue in Clarksville. The
office which includes a reception area, a loan office, and a conference room is
used as a loan production and limited depository office. The Bank has also
purchased property on College Avenue for a potential site of a full-service
branch.

         During 1999, the Bank began operating a full-service bank in a
temporary facility in Lawrenceville. In 2000, the Bank moved to a permanent
banking facility which is a one story brick building. The facility contains
2,021 square feet on the ground level which houses a lobby, teller stations, a
drive-up window, and an automatic-teller machine. There is also a full basement
which is currently being utilized for storage.

ITEM 3      LEGAL PROCEEDINGS

         None

ITEM 4      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None



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PART II

ITEM 5      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
            MATTERS

Market for Common Equity

         The Company's stock is listed and quoted daily in the Virginia Over the
Counter Section. This information is supplied daily by the National Association
of Security Dealers to Virginia newspapers.

         The following table sets forth information concerning the closing
market price of the stock since its initial listing:

                                Bid Price
                             of Common Stock

         2000

First Quarter                      $9.00
Second Quarter                      8.88
Third Quarter                       9.75
Fourth Quarter                      9.25

          1999

First Quarter                     $12.50
Second Quarter                     12.75
Third Quarter                      12.00
Fourth Quarter                     10.75

         1998

First Quarter(1)                  $19.00
Second Quarter(1)                  19.00
Third Quarter(1)                   15.50
Fourth Quarter                     13.75

        1997(1)

First Quarter                     $ 8.88
Second Quarter                      9.63
Third Quarter                      12.50
Fourth Quarter                     15.50

        1996(1)

First Quarter                     $ 7.88
Second Quarter                      8.38
Third Quarter                       8.38
Fourth Quarter                      8.63


         During 2000, the Company declared a $.16 per share semi-annual dividend
in June and $.18 per share semi-annual dividend in December. The semi-annual
dividends declared in 1999 amounted to $.16 per share in June and $.16 per share
in December.

         As of December 31, 2000, there were 978 stock certificates issued to
holders of record.

(1)Adjusted for a 2 for 1 stock split on October 2, 1997.

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Related Stockholder Matters

         Article III, Section 1 of the Articles of Incorporation of the Company
authorize the issuance of 200,000 shares of a preferred class stock with a par
value of $25.00. Except to the extent to which the Board of Directors shall have
specified voting power with respect to the preferred stock of any series and
except as otherwise provided by law, the exclusive voting power shall be vested
in the common stock. The dividends of the preferred stock shall have a fixed
rate of dividends if and when declared by the Board of Directors. Such dividends
shall be cumulative.

         As of December 31, 2000, there has been no issuance of preferred stock
as authorized in the Articles of Incorporation.



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ITEM 6      SELECTED FINANCIAL DATA
                                           Years Ended December 31,
                                  2000      1999      1998      1997      1996
                                  ----      ----      ----      ----      ----
                             (In thousands of dollars, except per share amounts)

Interest income                 $16,422   $15,126   $14,328   $13,653   $12,729
Interest expense                  8,002     7,376     7,006     6,508     6,162
                                -------   -------   -------   -------   -------
Net interest income               8,420     7,750     7,322     7,145     6,567
Provision for loan losses           201       606       357       360       295
Other operating revenue           1,006       742       647       586       565
Other operating expense           5,069     4,317     3,825     3,600     3,327
                                -------   -------   -------   -------   -------

    Income Before Income Taxes    4,156     3,569     3,787     3,771     3,510

Income Taxes                      1,311     1,057     1,143     1,192     1,064
                                -------   -------   -------   -------   -------

Net Income                        2,845     2,512     2,644     2,579     2,446

Per Share Data (1) (2)
   Net income                      0.95      0.83      0.89      0.88      0.85
   Cash dividends declared         0.34      0.32      0.31      0.29      0.24

Balance Sheet Amounts
   (at end of period)
      Total assets              205,253   193,324   185,381   158,735   150,908
      Total loans (3)           163,038   150,675   133,033   125,422   118,864
      Total deposits            181,197   164,741   164,892   140,742   135,360
      Total equity               22,185    20,048    19,015    16,652    14,362

Book value per share
(at end of period) (2)             7.38      6.65      6.34      5.66      4.96

Selected Financial Ratios
(as a percentage)
   Net income to average equity   14.89     13.30     15.65     17.31     17.91
   Net income to average assets    1.42      1.31      1.53      1.66      1.70
   Loans to deposits (4)          90.90     92.39     81.62     90.10     88.70
   Primary capital to total
      assets (at end
      of period) (5)              11.46     10.65     10.95     10.99      9.25
   Net interest yield (6)          4.50      4.33      4.54      4.90      4.57
   Allowance for loan losses to
      loans (at end of
      period) (7)                  1.01      1.00      1.16      1.00      1.00
   Nonperforming loans to loans
      (at end of period) (8)       0.92      1.04      1.05      1.12      1.02
   Net charge offs to average
      loans (4)                    0.04      0.45      0.15      0.14      0.11

(1) Average shares outstanding.
(2) 1996 adjusted for a 2 for 1 stock split occurring on October 2, 1997.
(3) Total loans net of unearned discount on installment loans and reserve for
       loan losses.
(4) For purposes of this ratio, loans represent gross loans less
       unearned interest income.
(5) Equity exclusive of unrealized securities gains plus allowance for loan
       loss less the deferred taxes related to loan losses to assets.
(6) Net interest income to total average earning assets.
(7) The difference of gross loans minus unearned interest income divided into
       the allowance for loan losses.
(8) Nonperforming loans are loans accounted for on a nonaccrual basis and loans
       which are contractually past due 90 days or more.  Average loans are
       gross average loans minus the average unearned interest income.


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ITEM 7    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

         This section of the report should be read in conjunction with the
statistical information, financial statements and related notes, and the
selected financial data appearing elsewhere in the report. Since the Bank is the
only subsidiary of the Company, all operating data will be referred to in this
discussion as that of the Bank.

Overview

         The Company continued to grow through its subsidiary, Benchmark
Community Bank, as the Bank reached out to serve an extended trade area. The
Bank experienced steady growth in loans and deposits which led to record levels
of interest earned and increased net interest margins. A majority of the growth
resulted from the Bank converting its three loan production offices in
Lawrenceville, Clarksville, and Chase City into full-service banking facilities.

A Comparison of 2000 Versus 1999

Results of Operations and Financial Conditions

         Net income of $2,845,061 in 2000 increased $333,554 or 13.28% from net
income of $2,511,507 in 1999. Earnings per share of $.95 in 2000 increased $.12
or 14.46% from earnings per share of $.83 in 1999.

         Growth in deposits with a corresponding but lesser growth in loans
resulted in a decline in the loan to deposit ratio to 90.90% from 92.39% for the
previous year. Deposits increased $16,456,277 or 9.99% while gross loans grew
$12,508,203 or 8.18%.

         In 2000, the Bank achieved a return on average assets of 1.42% as
compared to a 1.31% return on average assets in 1999. The higher rate of return
was a result of profitable growth in loans and deposits that pushed the net
interest spread up to 4.18% on interest sensitive instruments.

         The year ended 2000 reflected an increase in return on equity as net
income to average equity rose to 14.89% as compared to the 1999 level of 13.30%.
The higher rate of return resulted from not only increases in earnings but also
a decrease in outstanding shares of common stock as the Company initiated a
stock buyback program.

Net Interest Income

         Net interest income of $8,419,817 in 2000 reflected an increase of
$670,658 or 8.65% over net interest income of $7,749,159 in 1999.

         Total interest income of $16,421,718 in 2000 grew by $1,296,178 or
8.57% over total interest income of $15,125,540 in 1999. Total interest expense
of $8,001,901 in 2000 reflected an increase of $625,520 or 8.48% over total
interest expense of $7,376,381 in 1999.

         The increase in interest income resulted from a significant increase in
loans rather than being a function of rate increases. (Refer to Table D,
"Analysis of Changes in Net Interest Income," for an analysis of the impact of
volume and rate.)

         Even though the Bank remained competitive in the marketplace, the Bank
was able to increase loan rates by an average of 3 basis points. During the same
period of time, deposit rates increased on average by 22 basis points as
slightly higher market rates were the norm for the industry. (Refer to Table C,
"Interest Rates Earned and Paid," for further analysis of interest rate
activity.)




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Page 12 of 85


Loans

         The Bank utilizes the following types of loans in servicing the trade
area:

          Commercial (Time and Demand)                  12.03%
          Consumer (Installment)                        16.70%
          Real Estate (Construction)                      .74%
          Real Estate (Mortgage)                        70.53%

         These types of loans have traditionally provided the Bank with a steady
source of quality interest-earning assets. The maturities of these loans range
from commercial loans and real estate construction loans maturing in less than
one year to installment and real estate credits that may exceed five years. With
the exception of home equity loans which are short-term in nature, mortgage
loans, which represent 70.53% of the portfolio, are typically fifteen to twenty
year payback loans with three to five year balloon options. By setting
maturities of loans for a short-term, the Bank can effectively manage its
asset/liability mix, as most deposit accounts mature in one year or less.

Allowance for Loan Losses

         The 2000 year ending level of the allowance for loan losses amounted to
$1,667,723. This amount represented an increase of $145,091 or 9.53% over the
1999 level of $1,522,632. Loans collateralized by real estate represented a
majority of the loans. By obtaining a high degree of collateral, the Bank has
avoided a portion of credit risk; however, the Bank constantly monitors its loan
portfolio for credit weaknesses. As of the year end 2000, the Bank's allowance
for loan losses represented 1.01% of gross loans.

         The Bank incurred net charge offs for loan losses for the year of
$56,096. As a result of the low level of net charge offs, the current year
provision was $404,843 lower when compared to the prior year. The year 2000
level represented a 66.80% decrease over the amount expended in 1999.

Noninterest Income and Noninterest Expense

         Total noninterest income, i.e., fees charged for customer services, for
2000 was $1,006,638. This represents an increase of $264,266 or 35.60% over the
1999 level of $742,372. The increase was directly related to an increase in
other operating income as the Bank continued to experience the effect of
diversification into the area of investments, expanded automatic-teller machine
markets, and the increase in full-service branches in the extended trade area.

         Total noninterest expense in 2000 of $5,068,832 reflects an increase of
$751,689 or 17.41% over the 1999 level of $4,317,143. The increase resulted from
normal increases in operations and salaries and benefits, as the Bank's three
loan production offices converted to full-service banking offices.

Premises and Equipment

         The Bank's premises and equipment increased $604,714 during the year.












<PAGE>


Page 13 of 85


                 Increase in Capitalized Premises and Equipment
                            (in thousands of dollars)


                                                                   Equipment,
                                                   Leasehold     Furniture, and
Office/Area                   Land     Building   Improvements      Fixtures

Kenbridge                   $      -   $      -       $  -          $ 11,045
Victoria                           -          -          -            12,397
Farmville #1                       -          -          -             4,140
South Hill                         -          -        869            16,027
Farmville #2                       -          -          -             8,613
Crewe                              -          -          -             4,638
Lawrenceville                 82,500    232,367          -           142,107
Clarksville                   35,558          -          -             3,904
Chase City                         -          -          -            21,476
Construction in Progress -
   Net                             -     29,073          -                 -
                            --------   --------       ----          --------

     Total                  $118,058   $261,440       $869          $224,347
                            ========   ========       ====          ========

Securities

         Pursuant to guidelines established in FAS 115, the Bank has elected to
classify a majority of its current portfolio as securities available-for-sale.
This category refers to investments that are not actively traded but are not
anticipated by management to be held-to-maturity. Typically, these types of
investments will be utilized by management to meet short-term asset/liability
management needs.

         For purposes of financial statement reporting, securities classified as
available-for-sale are to be reported at fair market value as of the date of the
statements; however, unrealized holding gains and losses are to be excluded from
earnings and reported as a net amount in a separate component of stockholders'
equity until realized. The impact of this unrealized loss on securities
negatively impacted stockholders' equity in the amount of $.04, therefore,
affecting the book value of the Company's stock. The book value per share of the
stock inclusive of the FAS 115 adjustment was $7.38, while the book value per
share is $7.42 when reported exclusive of the FAS 115 impact.

Off-Balance-Sheet Instruments/Credit Concentrations

         The Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to facilitate the transaction of business
between these parties where the exact financial amount of the transaction is
unknown, but a limit can be projected. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. There is a fee charged for this service.

         As of December 31, 2000, the Bank had $1,397,471 in outstanding letters
of credit. These instruments are based on the financial strength of the customer
and the existing relationship between the Bank and the customer.

         At current year end, the Bank also had unused commitments resulting
from credit line deeds of trust, home equity lines, and unfunded business loans.
The total amount of these commitments amounted to $22,875,073.

<PAGE>


Page 14 of 85


Concentrations

         The Bank has no concentrations of credit involving an individual
borrower and his related interest. The Bank does have a concentration in loan
type in that a majority of the loan portfolio is secured by noncommercial real
estate. Due to the subjectivity of the real estate market to the condition of
the economy and sensitivity to interest rate fluctuation, there is an inherent
risk; however, the Bank has, as a matter of policy, a loan-to-collateral
percentage that allows for a level of decline in collateral value without
affecting the quality of the loan.

Liquidity

         The Bank's funding requirements are supplied by a wide range of
traditional banking sources, including various types of demand, money market,
savings, certificates of deposit, and Federal funds purchased. Large
certificates of deposit of $100,000 or more increased by $2,803,185 or 16.93% in
2000. These deposits currently represent 10.69% of the total deposit base. The
Bank feels that the large certificates are more of a function of customer
service than a competitive bid situation. The amount of these certificates of
deposit maturing during 2001 is $10,453,237, while $8,910,874 matures between
one and five years.

         A GAP analysis is presented in Table L. This analysis reflects the
difference between maturing and repricing of interest-earning assets and
interest-bearing liabilities. A positive gap indicates more assets are maturing
than liabilities. Conversely, a negative gap indicates more liabilities mature
than assets during a given period. Assets classified as immediately maturing are
those assets which can be repriced or converted to cash immediately upon demand.
Liabilities classified as immediately maturing are those which can be withdrawn
on demand except that the Bank has assigned a 90% retention rate on core
deposits. The GAP analysis shows a net negative gap of $3,911,000 when
immediately maturing interest-bearing liabilities are deducted from immediately
maturing interest-earning assets. The cumulative gap increases to a negative gap
of $13,986,000 when comparing assets and liabilities maturing up to one year;
however, the cumulative gap shifts to a positive position of $28,475,000 for
over five years. The deficit gap results from the customer preference for
short-term liquidity in the current period of fluctuating rates, which affects
not only deposits but also callable investments.

         The nature of the large gap deficit is an industry-wide situation that
is typical of the banking industry where a bulk of the assets is financed by
short-term deposits. To further compound the situation, Bank customers have
shown a preference for longer terms on loans versus deposits as financial rates
fluctuate.

         The Bank is satisfied that it can meet the liquidity needs by utilizing
three to five year balloon notes for real estate financing and a one year
maturity for commercial loans. This strategy, while not meeting exact liquidity
needs on a dollar for dollar asset/liability mix, does provide a near match
without sacrificing a positive interest rate spread.

         To compensate for the resultant mismatching of assets and liabilities,
the Bank has invested in highly liquid investments. In the unlikely event of a
liquidity hardship, these investments are available to be sold to fund assets
currently being supported by deposit liabilities.

         The GAP model does not consider the impact of core deposit loyalty.
Management feels that these core deposits along with the highly marketable
securities available will provide sufficient reserves to fund any short-term
loss of deposits. As mentioned previously, management has factored in an
anticipated retention level for core deposits.

Capital Resources and Adequacy

         In the past, the Company has blended internally generated retained
earnings with capital stock sales to maintain a strong capital position
necessary to support future growth.




<PAGE>


Page 15 of 85


         The Company began a capital buyback program during 1999. Through this
program, the Company has repurchased 16,932 shares of stock amounting to
$155,297 during the year of 2000. The Company continued to experience strong
earnings through the operation of the Bank. Through earnings, the Company
generated an additional $1,820,232 in capital. This activity, plus the sale of
$55,985 common stock through the stock option plan, raised year end capital
exclusive of unrealized security gains net of tax effect to a level of
$22,316,522 or an 8.38% increase over the 1999 year ending level of $20,590,290.

         The primary capital to total assets ratio stands at 10.81% as of
December 31, 2000. This amount is well above current industry standards. Refer
to Item 14(d)(5) for additional capital ratio analysis. Due to the increase in
earnings, subsequent earnings retention, and sale of common stock, the Company's
capital position was strengthened and, as a result, the Company remains well
capitalized for the banking industry even after initiating a stock buyback
program.

         Pursuant to regulations of the Federal Reserve Board, the Company is
required to maintain certain minimum levels of capital in its bank subsidiary.
At December 31, 2000, the Bank maintained the following capital ratios:

          Total Capital to Risk Weighted Assets         13.07%
          Tier I Capital to Risk Weighted Assets        11.97%
          Tier I Capital to Total Book Assets            8.73%

         These ratios exceed the minimum ratios required by regulatory
authorities for the Bank to be considered well capitalized.

Inflationary Factors

         The Bank's earnings are greatly impacted by inflation and the actions
of the Federal Reserve Board. The year 2000 was a period of rising interest
rates as the Federal Reserve attempted to slow down the economy by raising the
Federal discount window rate. The interest spread margin for the year was 4.18%
versus a 4.12% margin spread for 1999. Refer to Table C.

Lending and Funding Strategies

         The Bank relies on traditional sources of funding such as demand
deposits, interest- bearing checking, money market deposit accounts, savings
accounts, and certificates of deposit for funding its activities. These funds
are subsequently loaned to the local community, with the exception of cash and
prudent liquidity needs. Traditionally, the Bank has experienced a strong loan
demand.

         At year end 2000, the loan-to-deposit ratio remained strong as loan and
deposit growth grew at parallel rates.

Looking Forward

         The Bank has experienced tremendous success in its operation since 1989
when it moved into two new market areas and raised additional capital. The
capital provided a solid foundation upon which to grow by affording the Bank a
degree of aggressiveness in operation during a favorable economic climate for
banks and banking services. This aggressiveness took the form of expansion and
competitive pricing of services. Management plans to utilize this capital in a
way that will increase market share without sacrificing quality of service to
its customers.

         The Bank experienced significant growth during the last decade. By
expanding the trade area into neighboring counties and towns, the Bank has been
able to attract quality loans and deposits at profitable levels. As management
looks to the future, they feel that the trade area provides future growth
potential as the Bank offers new financial services. The new computer system
acquired during 1998 has the capability to expand the Bank's services beyond the
traditional services offered thus providing a solid technological platform upon
which to grow.

<PAGE>


Page 16 of 85


         With the expansion of the trade area through three new locations, the
Bank has increased its loan portfolio as well as its deposit base. With the
conversion of the three loan production offices into full-service branches in
2000, management intends to follow the successful pattern of the 1989 expansion
project by developing new loan and deposit markets and new products to compete
in the Bank's defined financial marketplace.




<PAGE>


Page 17 of 85


A Comparison of 1999 Versus 1998

Results of Operations and Financial Conditions

         Net income of $2,511,507 in 1999 decreased $132,658 or 5.02% from net
income of $2,644,165 in 1998. Earnings per share of $.83 in 1999 decreased $.06
or 6.74% from earnings per share of $.89 in 1998.

         The growth in loans without a corresponding growth in deposits led to a
loan to deposit ratio increase to 92.39% from 81.62% for the previous year.
Deposits decreased $151,616 or .09% while gross loans grew $17,444,507 or
12.94%. As a result, the Bank liquidated short-term investments and purchased
Federal funds.

         In 1999, the Bank achieved a return on average assets of 1.31% as
compared to a 1.53% return on average assets in 1998. While the rate of return
was strong once again, it was lower than the previous year as rates declined on
loans and investments at a greater rate than the rates on deposits.

         The year ended 1999 reflected a decrease in return on equity as net
income to average equity amounted to 13.30% as compared to the 1998 level of
15.65%. This decrease resulted from equity increasing through the sale of stock
from the dividend reinvestment plan and the exercising of stock options at a
greater rate than the income grew. During 1999, the Bank discontinued its
dividend reinvestment plan.

Net Interest Income

         Net interest income of $7,749,159 in 1999 reflected an increase of
$427,750 or 5.84% over net interest income of $7,321,409 in 1998.

         Total interest income of $15,125,540 in 1999 showed an increase of
$798,056 or 5.57% over total interest income of $14,327,484 in 1998. Total
interest expense of $7,376,381 in 1999 reflected an increase of $370,306 or
5.29% over total interest expense of $7,006,075 in 1998.

         The increase in interest income resulted from a significant increase in
loans rather than being a function of rate increases. (Refer to Table D,
"Analysis of Changes in Net Interest Income," for an analysis of the impact of
volume and rate.)

         To remain competitive in the marketplace, the Bank lowered loan rates
by an average of 53 basis points. During the same period of time, deposit rates
declined on average by 24 basis points as lower market rates were the norm for
the industry. (Refer to Table C, "Interest Rates Earned and Paid," for further
analysis of interest rate activity.)

Loans

         The Bank utilizes the following types of loans in servicing the trade
area:

          Commercial (Time and Demand)                  15.38%
          Consumer (Installment)                        17.23%
          Real Estate (Construction)                      .75%
          Real Estate (Mortgage)                        66.64%

         These types of loans have traditionally provided the Bank with a steady
source of quality interest-earning assets. The maturities of these loans range
from commercial loans and real estate construction loans maturing in less than
one year to installment and real estate credits that may exceed five years. The
mortgage loans, which represent 67.39% of the portfolio, are typically fifteen
to twenty year payback loans with three to five year balloon options. By setting
maturities of loans for a short-term, the Bank can effectively manage its
asset/liability match, as most deposit accounts mature in one year or less.


<PAGE>


Page 18 of 85


Allowance for Loan Losses

         The 1999 year ending level of the allowance for loan losses amounted to
$1,522,632. This amount represented a decrease of $36,109 or 2.32% over the 1998
level of $1,558,741. During 1999, the gross loan portfolio increased 12.94% as
the Bank opened three loan production offices to secure quality loans. Loans
collateralized by real estate represented a majority of the loans. As of the
year end 1999, the Bank's allowance for loan losses represented 1.00% of gross
loans.

         The Bank incurred net charge offs for loan losses for the year of
$642,139. As a result of the net charge offs, the provision was $249,515 higher
which represented a 69.99% increase over the amount expended in 1998.

Noninterest Income and Noninterest Expense

         Total noninterest income, i.e., fees charged for customer services, for
1999 was $742,372. This represents an increase of $95,573 or 14.78% over the
1998 level of $646,799. The increase was directly related to an increase in
other operating income as the Bank continued to experience the effect of
diversification into the area of investments and expanded automatic-teller
machine markets in 1998.

         Total noninterest expense in 1999 of $4,317,143 reflects an increase of
$492,241 or 12.87% over the 1998 level of $3,824,902. The increase resulted from
normal increases in operations and salaries and benefits, as the Bank's three
loan production offices opened and then prepared to be converted to full-service
banking offices.

Premises and Equipment

         The Bank's premises and equipment increased $494,982 during the year.

                 Increase in Capitalized Premises and Equipment
                            (in thousands of dollars)


                                                                    Equipment,
                                                   Leasehold     Furniture, and
Office/Area                   Land     Building   Improvements      Fixtures

Kenbridge                   $      -   $      -     $     -         $ 30,795
Victoria                           -          -           -           13,720
Farmville #1                       -          -           -           20,408
South Hill                         -          -           -           46,841
Farmville #2                       -          -           -            3,603
Crewe                              -          -           -            6,509
Chase City                         -          -           -            2,565
Clarksville                  110,429     50,000           -           11,602
Lawrenceville                      -          -           -           10,541
Construction in Progress           -    187,969           -                -
                            --------   --------     -------         --------

     Total                  $110,429   $237,969     $     -         $146,584
                            ========   ========     =======         ========

Federal Funds Purchased

         The 1999 year end level of Federal funds purchased was $7,035,000.
Federal funds purchased were used to fund short-term deficits in cash flow since
loan growth exceeded deposit growth.


<PAGE>


Page 19 of 85


Securities

         Pursuant to guidelines established in FAS 115, the Bank has elected to
classify a majority of its current portfolio as securities available-for-sale.
This category refers to investments that are not actively traded but are not
anticipated by management to be held-to-maturity. Typically, these types of
investments will be utilized by management to meet short-term asset/liability
management needs.

         For purposes of financial statement reporting, securities classified as
available-for-sale are to be reported at fair market value as of the date of the
statements; however, unrealized holding gains and losses are to be excluded from
earnings and reported as a net amount in a separate component of stockholders'
equity until realized. The impact of this unrealized loss on securities
negatively impacted stockholders' equity in the amount of $542,544, therefore,
affecting the book value of the Company's stock. The book value per share of the
stock inclusive of the FAS 115 adjustment was $6.65, while the book value per
share would have been $6.83 if reported exclusive of the FAS 115 impact.

Off-Balance-Sheet Instruments/Credit Concentrations

         The Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. Standby letters of credit are conditional commitments issued by the
Bank to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to facilitate the transaction of business
between these parties where the exact financial amount of the transaction is
unknown, but a limit can be projected. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending loan
facilities to customers. There is a fee charged for this service.

         As of December 31, 1999, the Bank had $1,825,989 in outstanding letters
of credit. These instruments are based on the financial strength of the customer
and the existing relationship between the Bank and the customer.

         At current year end, the Bank also had unused commitments resulting
from credit line deeds of trust, home equity lines, and unfunded business loans.
The total amount of these commitments amounted to $18,561,686.

Concentrations

         The Bank has no concentrations of credit involving an individual
borrower and his related interest. The Bank does have a concentration in loan
type in that a majority of the loan portfolio is secured by noncommercial real
estate. Due to the subjectivity of the real estate market to the condition of
the economy and sensitivity to interest rate fluctuation, there is an inherent
risk; however, the Bank has, as a matter of policy, a loan-to-collateral
percentage that allows for a level of decline in collateral value without
affecting the quality of the loan.

Liquidity

         The Bank's funding requirements are supplied by a wide range of
traditional banking sources, including various types of demand, money market,
savings, certificates of deposit, and, more recently, Federal funds purchased.
Large certificates of deposit of $100,000 or more decreased by $1,615,442 or
8.89% in 1999. These deposits currently represent 10.05% of the total deposit
base. The Bank feels that the large certificates are more of a function of
customer service than a competitive bid situation. The amount of these
certificates of deposit maturing during 2000 is $9,850,919, while $6,710,000
matures between one and five years.







<PAGE>


Page 20 of 85


         A GAP analysis is presented in Table L. This analysis reflects the
difference between maturing and repricing of interest-earning assets and
interest-bearing liabilities. A positive gap indicates more assets are maturing
than liabilities. Conversely, a negative gap indicates more liabilities mature
than assets during a given period. Assets classified as immediately maturing are
those assets which can be repriced or converted to cash immediately upon demand.
Liabilities classified as immediately maturing are those which can be withdrawn
on demand. The GAP analysis shows a net negative gap of $43,981,000 when
immediately maturing interest-bearing liabilities are deducted from immediately
maturing interest-earning assets. The cumulative gap increases to a negative gap
of $51,255,000 when comparing assets and liabilities maturing up to one year;
however, the cumulative gap shifts to a positive position of $25,599,000 for
five years. The deficit gap results from the customer preference for short-term
liquidity in the current period of fluctuating rates, which affects not only
deposits but also callable investments.

         The nature of the large gap deficit is an industry-wide situation that
is typical of the banking industry where a bulk of the assets is financed by
short-term deposits. To further compound the situation, Bank customers have
shown a preference for longer terms on loans versus deposits as financial rates
remain low.

         The Bank is satisfied that it can meet the liquidity needs by utilizing
three to five year balloon notes for real estate financing and a one year
maturity for commercial loans. This strategy, while not meeting exact liquidity
needs on a dollar for dollar asset/liability mix, does provide a near match
without sacrificing a positive interest rate spread.

         To compensate for the resultant mismatching of assets and liabilities,
the Bank has invested in highly liquid investments. In the unlikely event of a
liquidity hardship, these investments are available to be sold to fund assets
currently being supported by deposit liabilities.

         The GAP model does not consider the impact of core deposit loyalty.
Management feels that these core deposits along with the highly marketable
securities available will provide sufficient reserves to fund any short-term
loss of deposits.

Capital Resources and Adequacy

         In the past, the Company has blended internally generated retained
earnings with capital stock sales to maintain a strong capital position
necessary to support future growth.

         The Company began a capital buyback program during 1999. Through this
program, the Company has repurchased 21,300 shares of stock amounting to
$267,094. The Company continued to experience strong earnings through the
operation of the Bank. Through earnings, the Company generated an additional
$712,586 in capital. This activity, plus the net sale of $457,857 common stock
through the dividend reinvestment plan and the stock option plan, raised year
end capital exclusive of unrealized security gains net of tax effect to a level
of $20,590,290 or a 9.22% increase over the 1998 year ending level of
$18,852,113.

         The primary capital to total assets ratio stands at 10.37% as of
December 31, 1999. This amount is well above current industry standards. Refer
to Item 14(d)(5) for additional capital ratio analysis. Due to the increase in
earnings, subsequent earnings retention, and sale of common stock, the Company's
capital position was strengthened and, as a result, the Company remains well
capitalized for the banking industry.

         Pursuant to regulations of the Federal Reserve Board, the Company is
required to maintain certain minimum levels of capital in its bank subsidiary.
At December 31, 1999, the Bank maintained the following capital ratios:

          Total Capital to Risk Weighted Assets         13.38%
          Tier I Capital to Risk Weighted Assets        12.30%
          Tier I Capital to Total Book Assets            9.09%

         These ratios exceed the minimum ratios required by regulatory
authorities for the Bank to be considered well capitalized.

<PAGE>


Page 21 of 85


Inflationary Factors

         The Bank's earnings are greatly impacted by inflation and the actions
of the Federal Reserve Board. The year 1999 saw declining rates that resulted in
decreases in deposit rates and more significant declines in loan rates. The
interest spread for the year was 4.12% or a 4.85% decline from 1998's interest
spread margin.

Lending and Funding Strategies

         The Bank relies on traditional sources of funding such as demand
deposits, interest- bearing checking, money market deposit accounts, savings
accounts, and certificates of deposit for funding its activities. These funds
are subsequently loaned to the local community, with the exception of cash and
prudent liquidity needs. Traditionally, the Bank has experienced a strong loan
demand.

         At year end 1999, the loan-to-deposit ratio amounted to 92.39%. This
represents an increase of 12.89% over the year end level of 1998 as the Bank
experienced a greater rate of growth from loans versus deposits.




<PAGE>


Page 22 of 85

TABLE A.  COMPARATIVE SUMMARY OF EARNINGS
                                           Years Ending December 31,
                                      2000            1999           1998
                                      ----            ----           ----
                               (In thousands of dollars, except per share data)
Interest Income
   Interest and fees on loans     $      14,557   $      13,209   $      12,456
   Interest on investment securities
     U. S. Government agencies              980             931             680
     State and political subdivisions       451             616             493
     Other securities                        24               6               6
     Interest on Federal funds sold         410             363             693
                                  -------------    ------------    ------------
       Total Interest Income             16,422          15,125          14,328

Interest Expense
   Interest-bearing checking
      deposits                              768             811             760
   Savings deposits                         287             299             286
   Time deposits                          6,892           6,225           5,960
   Federal funds purchased                   54              41               -
   Other                                      1               -               -
                                  -------------    ------------    ------------
       Total Interest Expense             8,002           7,376           7,006
                                  -------------    ------------    ------------

Net Interest Income                       8,420           7,749           7,322

Provision for Loan Losses                   201             606             357
                                  -------------    ------------    ------------
       Net Interest Income
         After Provision for
         Loan Losses                      8,219           7,143           6,965

Noninterest Income
   Service charges on deposit
      accounts                              509             450             431
   Other operating income                   456             292             214
   Net investment securities
      gains (losses)                         (3)             (1)             (1)
   Gain (Loss) on sale of other
      real estate                            45              (4)              3
   Rental                                     -               5               -
                                  -------------    ------------    ------------

       Total Noninterest Income           1,007             742             647

Noninterest Expense
   Salaries                               2,661           2,300           2,036
   Employee benefits                        600             517             448
   Occupancy expense                        297             226             199
   Other operating expense                1,512           1,274           1,142
                                  -------------    ------------    ------------

       Total Noninterest Expense          5,070           4,317           3,825
                                  -------------    ------------    ------------

Net Income Before Taxes                   4,156           3,568           3,787
Provision for Income Tax                  1,311           1,056           1,143
                                  -------------    ------------    ------------

       Net Income                 $       2,845    $      2,512    $      2,644
                                  =============    ============    ============

Per Share - Based on Weighted Average
   Net income                     $        0.95   $        0.83   $        0.89
   Average shares outstanding     3,008,522.578   3,011,913.354   2,978,930.855

<PAGE>


Page 23 of 85


TABLE B.  AVERAGE BALANCE SHEETS

                                         (In thousands of dollars)

                                          Years Ended December 31,
                                  2000              1999              1998
                                  ----              ----              ----

                            Amount      %     Amount      %     Amount      %
                            ------      -     ------      -     ------      -

Assets
  Cash and due from banks  $  5,480    2.74  $  5,924    3.10  $  5,056    2.94
  Investment securities      24,529   12.28    27,657   14.47    20,492   11.90
  Federal funds sold          6,351    3.18     7,557    3.95    12,941    7.51
  Loans                     156,089   78.13   143,610   75.12   128,054   74.34
  Bank premises and
     equipment                3,673    1.84     3,273    1.71     3,121    1.81
  Accrued interest            1,578    0.79     1,462    0.76     1,471    0.85
  Other assets                2,072    1.04     1,682    0.89     1,122    0.65
                           --------  ------  --------  ------  --------  ------

                           $199,772  100.00  $191,165  100.00  $172,257  100.00
                           ========  ======  ========  ======  ========  ======

Liabilities and Stockholders' Equity
   Deposits
      Demand               $ 41,582   20.81  $ 38,866   20.33  $ 34,661   20.12
      Savings and MMA        17,591    8.81    18,454    9.65    16,043    9.31
      Time                  119,671   59.90   113,178   59.20   103,770   60.24
   Federal funds purchased      867    0.43       822    0.43         -       -
   Accrued interest             810    0.41       726    0.38       717    0.42
   Other liabilities            150    0.08       225    0.12       174    0.10
   Stockholders' equity      19,101    9.56    18,894    9.89    16,892    9.81
                           --------  ------  --------  ------  --------  ------

                           $199,772  100.00  $191,165  100.00  $172,257  100.00
                           ========  ======  ========  ======  ========  ======




<PAGE>



Page 24 of 85


TABLE C.  INTEREST RATES EARNED AND PAID (In thousands of dollars)

<TABLE>
<CAPTION>
<S>                                   <C>       <C>       <C>       <C>       <C>        <C>       <C>        <C>       <C>
                                                 2000                          1999                           1998
                                                 ----                          ----                           ----
                                      Average             Yield/    Average              Yield/    Average              Yield/
Description                           Balance   Interest   Rate     Balance   Interest    Rate     Balance   Interest    Rate
-----------                           -------   --------   ----     -------   --------    ----     -------   --------    ----

Interest-Earning Assets
   Investment securities             $ 24,529   $ 1,455    5.93%   $ 27,657   $ 1,502     5.43%   $ 20,492   $ 1,179     5.75%
   Federal funds sold                   6,351       410    6.46%      7,557       363     4.80%     12,941       693     5.36%
   Loans (1) (2)                      157,671    14,557    9.23%    143,610    13,209     9.20%    128,054    12,456     9.73%
                                     --------   -------    -----   --------   -------     -----   --------   -------     -----

                                     $188,551    16,422    8.71%   $178,824    15,074     8.43%   $161,487    14,328     8.87%
                                     ========   =======    =====   ========   =======     =====   ========   =======     =====

Interest-Bearing Liabilities
   Deposits                          $175,844     7,948    4.52%   $170,498     7,335     4.30%   $154,474     7,006     4.54%
   Federal funds purchased                867        54    6.23%        822        41     4.99%          -         -     0.00%
                                     --------   -------    -----   --------   -------     -----   --------   -------     -----

            Total Interest-Bearing
              Liabilities            $176,711     8,002    4.53%   $171,320     7,376     4.31%   $154,474     7,006     4.54%
                                     ========   -------            ========   -------             ========   -------

Net interest income/yield (3) (4)               $ 8,420                       $ 7,698                        $ 7,322
                                                =======                       =======                        =======

Interest spread (5)                                        4.18%                          4.12%                          4.33%
</TABLE>




(1) Loans net of unearned income.

(2) These figures do not reflect interest and fees to be collected on nonaccrual
    loans.  To date, the impact of nonaccrual loans on the interest income
    earned has been minimal.  Refer to Table G.

(3) Net interest income is the difference between income from earning assets
    and interest expense.

(4) Net interest yield is net interest income divided by total average earning
    assets.

(5) Interest spread is the difference between the average interest rate received
    on earning assets and the average interest rate paid for interest-earning
    liabilities.



<PAGE>


Page 25 of 85


TABLE D.  ANALYSIS OF CHANGE IN NET INTEREST INCOME (In thousands of dollars)
<TABLE>
<CAPTION>
<S>                                    <C>       <C>          <C>        <C>       <C>        <C>

                                            Year 2000 over 1999               Year 1999 over 1998
                                       Increase (Decrease)    Total      Increase (Decrease)   Total
                                        Due to Change In:    Increase     Due to Change In:   Increase
                                        Volume     Rate     (Decrease)    Volume    Rate     (Decrease)
Increase (Decrease) in
  Investment securities                $ (185)   $    87      $  (98)    $  389    $ (15)       $374
  Federal funds sold                      (78)       124          46       (288)     (42)       (330)
  Loans                                 1,298         50       1,348      1,515     (761)        754
                                       -------   --------     -------    -------   ------       -----

          Total                         1,035        261       1,296      1,616     (818)        798

Interest Expense
  Deposit accounts                        242        370         612        689     (360)         329
  Federal funds purchased                   3         10          13         41        -           41
                                       -------   --------     -------    -------   ------       ------

          Total                           245        380         625        730     (360)         370
                                       -------   --------     -------    -------   ------       ------

Increase (Decrease) in
  Net Interest Income                  $  790    $  (119)     $   671    $  886    $(458)       $ 428
                                       =======   ========     ========   =======   ======       ======


                                             Year 1998 over 1997
                                        Increase (Decrease)     Total
                                         Due to Change In:     Increase
                                         Volume     Rate      (Decrease)
Increase (Decrease) in
  Investment securities                $   313   $ (165)      $   148
  Federal funds sold                       647     (342)          305
  Loans                                    747     (526)          221
                                       --------  -------      --------

          Total                          1,707   (1,033)          674

Interest Expense
  Deposit accounts                       1,096     (598)          498
  Federal funds purchased                    -        -             -
                                       --------  -------      --------

          Total                          1,096     (598)          498
                                       --------  -------      --------

Increase (Decrease) in
  Net Interest Income                  $   611   $ (435)      $   176
                                       ========  =======      =======
</TABLE>





<PAGE>


Page 26 of 85


TABLE E.  INVESTMENT SECURITIES

         The carrying amount and approximate market values of investment
securities are summarized below:

                                     Book     Unrealized  Unrealized    Market
                                     Value       Gains      Losses      Value
Available-for-Sale
  December 31, 2000
     U. S. Government agencies    $ 9,289,397   $ 1,795   $ 88,572   $ 9,202,620
     State and political
        subdivisions                8,741,141    58,556    146,928     8,652,769
     Pooled securities              1,645,364       830     24,667     1,621,527
     Other securities                 200,492         -          -       200,492
                                  -----------   -------   --------   -----------

                                  $19,876,394   $61,181   $260,167   $19,677,408
                                  ===========   =======   ========   ===========
  December 31, 1999
     U. S. Government agencies    $ 9,287,788   $     -   $465,636   $ 8,822,152
     State and political
        subdivisions               12,109,027    71,068    335,864    11,844,231
     Pooled securities              2,359,516       909     92,510     2,267,915
     Other securities                 137,000         -          -       137,000
                                  -----------   -------   --------   -----------

                                  $23,893,331   $71,977   $894,010   $23,071,298
                                  ===========   =======   ========   ===========
Held-to-Maturity
  December 31, 2000
     U. S. Government agencies    $ 4,500,000   $     -   $ 65,455   $ 4,434,545
     State and political
        subdivisions                  744,718     1,745     13,143       733,320
                                  -----------   -------   --------   -----------

                                  $ 5,244,718   $ 1,745   $ 78,598   $ 5,167,865
                                  ===========   =======   ========   ===========
  December 31, 1999
     U. S. Government agencies    $ 4,500,000   $     -   $280,105   $ 4,219,895
     State and political
        subdivisions                  746,170       971     31,889       715,252
                                  -----------   -------   --------   -----------

                                  $ 5,246,170   $   971   $311,994   $ 4,935,147
                                  ===========   =======   ========   ===========

         The maturities of investment securities at December 31, 2000 were as
follows:

                                   Book Value    Market Value

Available-for-Sale
   Due in one year or less         $     5,000   $     5,000
   Due from one to five years        5,935,079     5,883,716
   Due from five to ten years       10,476,316    10,377,019
   After ten years                   3,264,507     3,216,181
   Other securities                    195,492       195,492

Held-to-Maturity
   Due from one to five years        1,774,720     1,722,070
   Due from five to ten years        3,500,000     3,445,795

         Securities having a book value of $5,222,596 and $5,064,105 at December
31, 2000 and 1999, respectively, were pledged to secure public deposits and for
other purposes.

         In the event of the sale of securities, the cost basis of the security,
adjusted for the amortization of premium or discounts, will be used when
calculating gains or losses.

<PAGE>


Page 27 of 85


         The maturity distribution, book value, and approximate tax equivalent
yield (assuming a 34% Federal income tax rate) of the investment securities
portfolio at December 31, 2000 is presented in the following table (in thousands
of dollars):

<TABLE>
<CAPTION>
<S>                     <C>      <C>        <C>      <C>        <C>       <C>        <C>      <C>

                                              Maturity

                                             After One but       After Five but
                        Within One Year       Within Five          Within Ten           After Ten
                        Amount   Yield(2)   Amount   Yield(2)    Amount   Yield(2)   Amount   Yield(2)

U. S. Government
   Securities           $  -         -      $4,999    5.84%     $ 8,790    6.84%     $    -       -
State and Political
   Subdivisions          230      7.07%         65    8.41%       5,079    6.42%      3,265    6.55%
Pooled Securities          -         -       2,416    5.54%         107    6.50%          -       -
Other                      5      3.25%          -       -            -       -           -       -
                        ----                ------              -------              ------

          Total(1)      $235                $7,480              $13,976              $3,265
                        ====                ======              =======              ======
</TABLE>



(1) Values stated at book value, exclusive of other securities, which include
    Federal Reserve Bank stock, Community Bankers' Bank stock, and Bankers'
    Title which amount to $200,492 at year end 2000.

(2) The yield is the weighted average Federal Tax Equivalent yield on cost.




<PAGE>


Page 28 of 85


TABLE F.  LOAN PORTFOLIO

         The table below classifies gross loans by major category and percentage
distribution at December 31 for 2000, 1999, and 1998:

                                 2000               1999               1998
                            Amount     %       Amount     %       Amount     %

Commercial               $19,810,083 12.03  $23,423,032 15.38  $20,978,190 15.56
Installment               27,509,990 16.70   26,232,943 17.23   23,240,533 17.24
Real Estate-Construction   1,211,625  0.74    1,132,526  7.44    1,079,593  0.80
Real Estate-Mortgage     116,185,571 70.53  101,474,226 59.95   89,519,904 66.40


         The following table shows maturities of the major loan categories and
their sensitivity to changes in investment rates at December 31, 2000 for fixed
interest rate and floating interest rate loans:

                                           Due After
                                           One Year
                              One Year     but Within   Due After
                              or Less      Five Years   Five Years
                             Fixed Rate    Fixed Rate   Fixed Rate      Total

Commercial                  $19,230,685  $    579,398  $         -  $ 19,810,083
Installment                   3,027,497    24,236,661      245,832    27,509,990
Real Estate - Construction    1,211,625             -            -     1,211,625
Real Estate - Mortgage       23,935,092    77,245,482   11,224,183   112,404,757
                            -----------  ------------  -----------  ------------

     Total                  $47,404,899  $102,061,541  $11,470,015  $160,936,455
                            ===========  ============  ===========  ============


                                         Over One
                                         Year but
                           One Year     Within Five      Over
                           or Less         Years       Five Years
                        Floating Rate  Floating Rate  Floating Rate    Total

Commercial               $        -    $          -   $         -    $        -
Installment                       -               -             -             -
Real Estate               3,780,814               -             -     3,780,814
                         ----------    ------------   -----------    ----------

     Total               $3,780,814    $          -   $         -    $3,780,814
                         ==========    ============   ===========    ==========




<PAGE>


Page 29 of 85


TABLE G.  NONPERFORMING LOANS

         The loan portfolio of the Bank is reviewed by senior officers to
evaluate loan performance. The frequency of the review is based on predefined
guidelines approved by the Board of Directors that include individual review of
certain loans by the Loan Committee and the Board if certain past due or
nonperformance criteria are met. The areas of criteria include in part net
worth, credit history, and customer relationship. The evaluations emphasize
different factors depending upon the type of loan involved. Commercial and real
estate loans are reviewed on the basis of estimated net realizable value through
an evaluation of collateral and the financial strength of the borrower.
Installment loans are evaluated largely on the basis of delinquency data because
of the large number of such loans and relatively small size of each individual
loan.

         Management's review of commercial and other loans may result in a
determination that a loan should be placed on a nonaccrual basis. Nonaccrual
loans consist of loans which are both contractually past due 90 days or more and
are not considered fully secured or in the process of liquidation. It is the
policy of the Bank to discontinue the accrual of interest of any loan on which
full collection of principal and/or interest is doubtful. Subsequent collection
of interest is recognized as income on a cash basis upon receipt. Placing a loan
on nonaccrual status for the purpose of income recognition is not in itself a
reliable indication of potential loss of principal. Other factors, such as the
value of the collateral securing the loan and the financial condition of the
borrower, serve as more reliable indications of potential loss of principal.

         Nonperforming loans consist of loans accounted for on a nonaccrual
basis and loans which are contractually past due 90 days or more as to interest
and/or principal payments regardless of the amount of collateral held. The
following table presents information concerning nonperforming loans for the
periods indicated:
                                                             December 31,
                                                       2000     1999     1998
                                                       ----     ----     ----
                                                      (In thousands of dollars)

Commercial
  Nonaccrual                                          $    -   $   49   $  115
  Contractually past due 90 days or more                   6       14        3

Installment
  Nonaccrual                                              22      212       97
  Contractually past due 90 days or more                  40       54       59

Real Estate
  Nonaccrual                                             393      534      378
  Contractually past due 90 days or more                 989      629      709
                                                      ------   ------   ------

                                                      $1,450   $1,492   $1,361
                                                      ======   ======   ======

Nonperforming loans to gross loans at year end         0.92%    1.04%    1.05%

Effect of nonaccrual loans on interest revenue        $   37   $   54   $   50









<PAGE>


Page 30 of 85


TABLE H.  SUMMARY OF LOAN LOSS EXPERIENCE

         Loan losses have not been a significant negative factor for the Bank.
The following table presents the Bank's loan loss experience and selected loan
ratios for the three years ended December 31, 2000, 1999, and 1998:

                                                  2000       1999        1998
                                                  ----       ----        ----
                                                   (In thousands of dollars)

Allowance for loan losses at beginning of year  $  1,523   $  1,559    $  1,392

Loan Charge Offs
   Commercial                                        (35)       (23)        (16)
   Installment                                      (181)      (622)       (236)
   Real Estate                                       (60)      (109)        (54)
                                                ---------  ---------   ---------

               Total Charge Offs                    (276)      (754)       (306)

Recoveries of Loans Previously Charged Off
   Commercial                                        107          -           -
   Installment                                       100         91         117
   Real Estate                                        13         21           -
                                                ---------  ---------   ---------

               Total Recoveries                      220        112         117
                                                ---------  ---------   --------

Net loans charged off                                496       (642)       (189)

Provision for loan losses                            201        606         356
                                                ---------  ---------   ---------

Allowance for loan losses at end of year        $  2,220   $  1,523    $  1,559
                                                =========  =========   ========

Average total loans (net of unearned income)    $157,671   $145,139    $129,534
Total loans (net of unearned income) at
   year end                                      164,706    152,198     134,591

Selected Loan Loss Ratios
   Net charge offs to average loans                0.04%      0.45%       0.15%
   Provision for loan losses to average loans      0.13%      0.42%       0.28%
   Provision for loan losses to net
      charge offs %                              358.93%     81.67%     188.36%
   Allowance for loan losses to year end loans     1.01%      1.02%       1.15%
   Loan loss coverage(1)                          77.81X      6.50X      21.92X












(1) Income before income taxes plus provision for loan losses, divided by net
    charge offs.



<PAGE>




Page 31 of 85


TABLE I.  COMPOSITION OF ALLOWANCE FOR LOAN LOSSES (In thousands of dollars)
<TABLE>
<CAPTION>
<S>                          <C>       <C>        <C>          <C>        <C>        <C>          <C>         <C>        <C>

                                         2000                               1999                               1998
                                         ----                               ----                               ----
                                                  Percentage                         Percentage                         Percentage
                            Allowance  Breakdown   of Loans    Allowance  Breakdown    of Loans   Allowance  Breakdown    of Loans
                             Amount        %      Outstanding   Amount        %      Outstanding   Amount        %      Outstanding
                             ------        -      -----------   ------        -      -----------   ------        -      -----------

Commercial                   $  215       12.89       12.03     $   61       4.01        15.38     $  324      20.78        15.56
Installment                     689       41.31       16.70      1,249      82.01        17.23        923      59.20        17.24
Real Estate - Construction        -           -        0.74          -          -         0.75          -          -         0.80
Real Estate - Mortgage          764       45.80       70.53        213      13.98        66.64        312      20.02        66.40
                             ------      ------      ------     ------     ------       ------     ------     ------       ------

          Total              $1,668      100.00      100.00     $1,523     100.00       100.00     $1,559     100.00       100.00
                             ======      ======      ======     ======     ======       ======     ======     ======       ======
</TABLE>




<PAGE>


Page 32 of 85


TABLE J.  DEPOSITS

         The breakdown on average deposits for the years indicated is as follows
(in thousands of dollars):

                                        2000            1999            1998
                                        ----            ----            ----
                                   Average         Average         Average
                                   Balance  Rate   Balance  Rate   Balance  Rate

Noninterest-bearing demand
   deposits                       $ 21,816     -  $ 18,113     -  $ 17,263     -
Interest-bearing demand deposits    19,766  2.59    20,753  2.63    17,398  3.00
Money market accounts                7,544  3.38     8,303  3.13     6,785  3.50
Savings                             10,047  2.85    10,151  2.93     9,258  3.07
Time                               119,671  5.77   113,178  5.36   103,770  5.78
                                  --------        --------        --------

                                  $178,844        $170,498        $154,474
                                  ========        ========        =========


         Remaining maturities of time certificates of deposit of $100,000 or
more at December 31, 2000 are shown below (in thousands of dollars):

      Maturity                                      December 31, 2000

Three months or less                                      $ 4,788
Three to six months                                         3,028
Six to twelve months                                        2,637
One to three years                                          4,535
Three to five years                                         4,376
                                                          -------

                    Total                                 $19,364
                                                          =======




<PAGE>


Page 33 of 85


TABLE K.  RETURN ON EQUITY AND ASSETS

         The following table highlights certain ratios for the three years ended
December 31, 2000, 1999, and 1998 (in thousands of dollars):

                                                        2000     1999     1998
                                                        ----     ----     ----

Income before securities gains and losses to
   Average total assets                                 1.43%    1.31%    1.54%
   Average stockholders' equity                        14.91%   13.29%   15.66%

Net income to
   Average total assets                                 1.42%    1.31%    1.53%
   Average stockholders' equity                        14.91%   13.29%   15.65%

Dividend pay out ratio (dividends declared per
   share divided by net income per share)              35.93%   38.55%   34.83%

Average stockholders' equity to average total
   assets ratio                                         9.56%    9.88%    9.81%



<PAGE>



Page 34 of 85


TABLE L.
                                  GAP Analysis
                                December 31, 2000


         The following table reflects interest-rate sensitive assets and
liabilities only. The following table sets forth at December 31, 2000
interest-earning assets and interest-bearing liabilities scheduled to mature or
reprice within a specific period (in thousands of dollars):
<TABLE>
<CAPTION>
<S>                                   <C>           <C>        <C>           <C>         <C>         <C>            <C>

                         Scheduled Maturity or Repricing

                                      Immediately   3 Months
                                       Adjusted     or Less    3-12 Months   1-3 Years   3-5 Years   Over 5 Years     Total
                                       --------     -------    -----------   ---------   ---------   ------------     -----

Gross loans                            $    29      $16,165      $34,778      $45,974     $55,874       $11,897     $164,717
Investment securities (1)(2)                 -            -          230        2,781       4,167        17,294       24,922
                                       --------     --------     ---------    --------    --------      -------     --------

     Total Interest-Earning Assets     $    29      $16,165      $35,008      $48,755     $60,491       $29,191     $189,639
                                       ========     ========     ========     ========    ========      =======     ========

Interest-Bearing Liabilities
   Interest-bearing demand deposits(3) $ 2,236      $     -      $     -      $     -     $20,121       $     -     $ 22,357
   Money market deposits(3)                738            -            -            -       6,647             -        7,385
   Savings(3)                              966            -            -            -       8,699             -        9,665
   Time deposits                             -       18,817       42,431       37,145      23,364             -      121,757
                                       --------     --------     --------     --------    --------      -------     --------

      Total Interest-Bearing Deposits  $ 3,940      $18,817      $42,431      $37,145     $58,831       $     -     $161,164
                                       ========     ========     ========     ========    ========      =======     ========

Difference Between Interest-Earning
   Assets and Interest-Bearing
      Liabilities (GAP)                $(3,911)     $(2,652)     $(7,423)     $11,610     $ 1,660       $29,191     $ 28,475
      Cumulative (GAP)                  (3,911)      (6,563)     (13,986)      (2,376)       (716)       28,475
      Cumulative interest-earning
         assets to interest-bearing
         liabilities                      0.74%       71.16%       78.55%       97.68%      99.56%      117.67%
</TABLE>

(1) Does not include $87,000 in Federal Reserve stock and $50,000 in Community
       Bankers' Bank stock.
(2) All securities are stated at book value regardless of security
       classification as to available-for-sale and held-to-maturity.
(3) Assumes core deposits will retain 90% up to five years.



<PAGE>


Page 35 of 85


ITEM 7A       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Refer to Footnote 18 in the annual financial statements included in
this document on page 58.


ITEM 8        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management's Report on Financial Statements
Independent Auditor's Report

Financial Statements

     Consolidated Statements of Financial Condition - December 31, 2000 and 1999
     Consolidated Statements of Income - Years Ended December 31, 2000, 1999,
        and 1998
     Consolidated Statements of Changes in Stockholders' Equity - Years
        Ended December 31, 2000 and 1999
     Consolidated Statements of Cash Flows - Years Ended December 31, 2000,
        1999, and 1998
     Notes to Consolidated Financial Statements - December 31, 2000, 1999,
        and 1998



<PAGE>


Page 36 of 85


Management's Report on Financial Statements

         The following consolidated financial statements and related notes of
Benchmark Bankshares, Inc. and its subsidiary, Benchmark Community Bank, were
prepared by management which has the primary responsibility for the integrity of
the financial information. The statements have been prepared in conformity with
generally accepted accounting principles appropriate in the circumstances and
include amounts that are based on management's best estimates and judgments.
Financial information elsewhere in the Annual Report is presented on a basis
consistent with that in the financial statements.

         In meeting its responsibility for the accuracy of the financial
statements, management relies on the Company's internal accounting controls.
This system provides reasonable assurance that assets are safeguarded and
transactions are recorded to permit the preparation of appropriate financial
information.

         The financial statements have been audited by Creedle, Jones, and Alga,
P. C., the Company's independent certified public accountants. Their audit is
conducted in accordance with generally accepted auditing standards and includes
a review of internal controls and a test of transactions in sufficient detail to
allow them to report on the fair presentation of the consolidated operating
results and financing condition of Benchmark Bankshares, Inc. and its
subsidiary, Benchmark Community Bank.


<PAGE>


Page 37 of 85



















                           Benchmark Bankshares, Inc.

                     Report on Audit of Financial Statements




<PAGE>


Page 38 of 85



                           Benchmark Bankshares, Inc.

                                Table of Contents


                                                                         Pages

Independent Auditor's Report                                                 i

Exhibits

     A            Consolidated Statements of Financial Condition           1-2

     B            Consolidated Statements of Income                        3-4

     C            Consolidated Statements of Changes in
                     Stockholders' Equity                                    5

     D            Consolidated Statements of Cash Flows                    6-7

Notes to Consolidated Financial Statements                                8-24



<PAGE>


Page 39 of 85












                                January 19, 2001


                          Independent Auditor's Report


Board of Directors
Benchmark Bankshares, Inc.
Kenbridge, Virginia


         We have audited the accompanying consolidated statements of financial
condition of Benchmark Bankshares, Inc. (a Virginia corporation) and Subsidiary,
as of December 31, 2000 and 1999, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for each of the three
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Benchmark Bankshares, Inc. and Subsidiary, as of December 31, 2000 and 1999, and
the consolidated results of their operations and their cash flows for each of
the three years then ended, in conformity with generally accepted accounting
principles.





                                     Creedle, Jones, and Alga, P. C.
                                     Certified Public Accountants



<PAGE>


Page 40 of 85
                                                                      Exhibit A
                                                                         Page 1

                           Benchmark Bankshares, Inc.

                 Consolidated Statements of Financial Condition

                           December 31, 2000 and 1999


                                   A S S E T S

                                                   2000              1999
                                                   ----              ----

Cash and due from banks                        $   5,587,737     $   7,533,280

Federal funds sold                                 4,281,000                 -
Investment securities                             24,922,126        28,317,465

Loans                                            164,717,269       152,262,727
  Less
    Unearned interest income                         (10,982)          (64,643)
    Allowance for loan losses                     (1,667,723)       (1,522,632)
                                                -------------    -------------

               Net Loans                         163,038,564       150,675,452

Premises and equipment - net                       3,752,830         3,423,779
Accrued interest receivable                        1,578,538         1,390,010
Deferred income taxes                                489,635           642,481
Other real estate                                    808,508           667,808
Other assets                                         793,598           674,670
                                                -------------    -------------

               Total Assets                     $205,252,536     $193,324,945
                                                =============    =============




<PAGE>


Page 41 of 85
                                                                      Exhibit A
                                                                         Page 2

                           Benchmark Bankshares, Inc.

                 Consolidated Statements of Financial Condition

                           December 31, 2000 and 1999


                      Liabilities and Stockholders' Equity

                                                     2000            1999
                                                     ----            ----

Deposits
   Demand (noninterest-bearing)                   $ 20,033,199    $ 16,213,541
   NOW accounts                                     22,356,687      19,905,599
   Money market accounts                             7,384,741       8,046,212
   Savings                                           9,665,332       9,763,624
   Time, $100,000 and over                          19,364,111      16,560,926
   Other time                                      102,392,747      94,250,638
                                                  -------------   -------------

               Total Deposits                      181,196,817     164,740,540

Federal funds purchased                                      -       7,035,000
Accrued interest payable                               984,159         766,964
Accrued income tax payable                              11,441          23,005
Dividends payable                                      541,120         482,493
Other liabilities                                      333,808         229,197
                                                  -------------   -------------

               Total Liabilities                   183,067,345     173,277,199

Stockholders' Equity
   Common stock, par value $.21 per share,
      authorized 4,000,000 shares; issued
      and outstanding 12-31-00 3,006,219.501,
      issued and outstanding 12-31-99
      3,015,577.591 shares                             631,307         633,272
   Capital surplus                                   4,404,047       4,501,508
   Retained earnings                                17,281,168      15,455,510
   Unrealized security gains net of tax effect        (131,331)       (542,544)
                                                  -------------   -------------

               Total Stockholders' Equity           22,185,191      20,047,746
                                                  -------------   -------------

               Total Liabilities and
                  Stockholders' Equity            $205,252,536    $193,324,945
                                                  =============   =============









See independent auditor's report and accompanying notes to financial statements.



<PAGE>


Page 42 of 85
                                                                      Exhibit B
                                                                         Page 1

                           Benchmark Bankshares, Inc.

                        Consolidated Statements of Income

                  Years Ended December 31, 2000, 1999, and 1998

                                        2000           1999           1998
                                        ----           ----           ----
Interest Income
  Interest and fees on loans        $  14,556,973  $  13,209,176  $  12,455,825
  Interest on investment securities
     U. S. Government agencies            980,155        931,242        680,074
     State and political subdivisions     451,320        615,887        492,758
     Other securities                      23,537          5,845          5,795
     Interest on Federal funds sold       409,733        363,390        693,032
                                    -------------  -------------  -------------
          Total Interest Income        16,421,718     15,125,540     14,327,484

Interest Expense
  Interest-bearing checking deposits      768,009        811,399        759,973
  Savings deposits                        286,908        298,675        286,247
  Time deposits                         6,892,050      6,225,469      5,959,855
  Federal funds purchased                  54,283         40,838              -
  Other                                       651              -              -
                                    -------------  -------------  -------------
          Total Interest Expense        8,001,901      7,376,381      7,006,075
                                    -------------  -------------  -------------

Net Interest Income                     8,419,817      7,749,159      7,321,409

Provision for Loan Losses                 201,187        606,030        356,515
                                    -------------  -------------  -------------

Net Interest Income After Provision
  for Loan Losses                       8,218,630      7,143,129      6,964,894

Other Income
  Service charges on deposit accounts     508,704        449,641        431,144
  Other operating income                  455,775        292,618        213,641
  Net investment securities gains
    (losses)                               (3,308)          (547)          (986)
  Gain (Loss) on sale of other real
    estate                                 45,467         (3,854)         3,000
  Rental                                        -          4,514              -
                                    -------------  -------------  -------------
          Total Other Income            1,006,638        742,372        646,799

Other Expenses
  Salaries                              2,660,892      2,300,266      2,036,436
  Employee benefits                       599,515        517,009        447,663
  Occupancy expense                       296,888        225,530        198,601
  Other operating expenses              1,511,537      1,274,338      1,142,202
                                    -------------  -------------  -------------
          Total Other Expenses          5,068,832      4,317,143      3,824,902
                                    -------------  -------------  -------------

Income Before Income Taxes              4,156,436      3,568,358      3,786,791
Provision for Income Taxes              1,311,375      1,056,851      1,142,626
                                    -------------  -------------  -------------

          Net Income                    2,845,061      2,511,507      2,644,165


<PAGE>


Page 43 of 85
                                                                      Exhibit B
                                                                         Page 2


                                        2000           1999            1998
                                        ----           ----            ----

Other Comprehensive Income, Net of Tax
   Net unrealized holding losses
      arising during period              (131,331)      (705,644)       (14,445)
                                    -------------- -------------- --------------

Comprehensive Income                $   2,713,730  $   1,805,863  $   2,629,720
                                    ============== ============== ==============

Earnings Per Share of Common Stock  $        0.95  $        0.83  $        0.89
                                    ============== ============== ==============

Average Shares Outstanding          3,008,522.578  3,011,913.354  2,978,930.855
                                    ============== ============== ==============











































See independent auditor's report and accompanying notes to financial statements.



<PAGE>


Page 44 of 85
                                                                      Exhibit C


                           Benchmark Bankshares, Inc.

           Consolidated Statements of Changes in Stockholders' Equity

                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>
<S>                                <C>             <C>         <C>           <C>            <C>          <C>

                                                                                            Unrealized
                                                    Common                     Retained      SEC Gain
                                       Shares        Stock       Surplus       Earnings      (Loss)(1)      Total

Balance January 1, 1999            2,997,465.366   $629,678    $4,314,339    $13,908,096    $ 163,100    $19,015,213

Net Income                                                                     2,511,507                   2,511,507

Sale of Stock                         39,438.237      8,072       450,102                                    458,174
Redemption of Stock                      (23.947)        (5)         (312)                                      (317)
Stock repurchase                     (21,300.000)    (4,473)     (262,621)                                  (267,094)

Semi-Annual Cash
   Dividend Declared
      June 17, 1999, $.16 per share                                             (481,426)                   (481,426)
      December 16, 1999, $.16
         per share                                                              (482,493)                   (482,493)

Adjustments                                                                         (174)                       (174)

Unrealized Security Gains
   (Losses)                                                                                  (705,644)      (705,644)
                                   _____________   _________   ___________   ____________   __________   ____________

Balance December 31, 1999          3,015,579.656    633,272     4,501,508     15,455,510     (542,544)    20,047,746

Net Income
   Parent                                                                      2,276,791                   2,276,791
   Equity in income of
      subsidiary                                                                 568,270                     568,270

Sale of Stock                          7,586.000      1,593        54,391                                     55,984
Redemption of Stock                      (12.091)        (3)         (111)                                      (114)
Stock repurchase                     (16,932.000)    (3,555)     (151,741)                                  (155,296)

Semi-Annual Cash
   Dividend Declared
      June 15, 2000, $.16 per share                                             (480,996)                   (480,996)
      December 21, 2000, $.18
         per share                                                              (541,120)                   (541,120)

Adjustments                               (2.064)                                  2,713                       2,713

Unrealized Security Gains
   (Losses)                                                                                   411,213        411,213
                                   _____________   _________   ___________   ____________   __________   ____________

Balance December 31, 2000          3,006,219.501   $631,307    $4,404,047    $17,281,168    $(131,331)   $22,185,191
                                   =============   =========   ===========   ============   ==========   ============
</TABLE>

(1) Net of tax effect.

See independent auditor's report and accompanying notes to financial statements.



<PAGE>


Page 45 of 85
                                                                      Exhibit D
                                                                         Page 1

                           Benchmark Bankshares, Inc.

                      Consolidated Statements of Cash Flows

                  Years Ended December 31, 2000, 1999, and 1998

                                           2000          1999          1998
                                           ----          ----          ----
Cash Flows from Operating Activities
   Interest received                    $15,400,186   $15,297,744   $14,001,654
   Fees and commissions received            833,005       556,706       765,183
   Interest paid                         (7,997,952)   (7,417,701)   (6,906,106)
   Cash paid to suppliers and employees  (3,813,312)   (4,270,751)   (3,780,710)
   Income taxes paid                     (1,381,930)     (950,460)   (1,314,685)
                                        ------------  ------------  ------------
               Net Cash Provided by
                  Operating Activities    3,039,997     3,215,538     2,765,336

Cash Flows from Investing Activities
   Proceeds from sale of investment
      securities available-for-sale       4,958,619       280,167       190,951
   Proceeds from maturity of investments    105,000     1,087,343    10,978,575
   Purchase of investment securities     (1,235,466)   (8,070,160)  (17,021,520)
   Loans originated                     (92,018,273)  (90,308,177)  (84,916,074)
   Principal collected on loans          79,574,713    72,863,670    77,208,816
   Purchase premises and equipment         (795,249)     (494,982)     (453,986)
                                        ------------  ------------  ------------
               Net Cash (Used) by
                  Investing Activities   (9,410,656)  (24,642,139)  (14,013,238)

Cash Flows from Financing Activities
   Net increase (decrease) in Federal
      funds purchased                    (7,035,000)    7,035,000             -
   Net increase in demand deposits and
      savings accounts                    5,510,983     1,486,879     7,990,732
   Payments for maturing certificates
      of deposit                        (50,604,717)  (41,821,954)  (24,428,638)
   Proceeds from sales of certificates
      of deposit                         61,550,011    40,183,459    40,587,957
   Dividends paid                          (963,489)     (961,020)     (888,454)
   Proceeds from sale of common stock        55,985       458,174       658,470
   Payments to reacquire stock             (155,410)     (267,411)            -
   Proceeds from sale of other real
      estate                                347,753       196,624        29,871
                                        ------------  ------------  ------------
               Net Cash Provided by
                  Financing Activities    8,706,116     6,309,751    23,949,938
                                        ------------  ------------  ------------

Net Increase (Decrease) in Cash and
   Cash Equivalents                       2,335,457   (15,116,850)   12,702,036

Cash and Cash Equivalents -
   Beginning of Year                      7,533,280    22,650,130     9,948,094
                                        ------------  ------------  ------------

Cash and Cash Equivalents -
   End of Year                          $ 9,868,737   $ 7,533,280   $22,650,130
                                        ============  ============  ============
<PAGE>


Page 46 of 85
                                                                      Exhibit D
                                                                         Page 2


                                              2000         1999         1998
                                              ----         ----         ----

Reconciliation of Net Income to Net
   Cash Provided by Operating Activities
      Net income                           $2,845,061   $2,511,507   $2,644,165
      Adjustments to reconcile net income
         to net cash provided by operating
         activities
            Depreciation                      288,909      271,594      221,590
            Provision for probable credit
               losses and recoveries          145,091      718,293      473,736
            Increase (Decrease) in taxes
               payable                        (11,564)      23,005      (49,867)
            (Increase) Decrease in refundable
               taxes                                -       33,961      (33,961)
            (Increase) Decrease in interest
               receivable                    (188,528)     172,204     (325,830)
            Increase (Decrease) in interest
               payable                        217,195      (41,320)      99,969
            (Increase) Decrease in other
               real estate                   (140,700)    (166,570)    (164,628)
            (Increase) Decrease in other
               assets                        (118,928)    (306,906)     (91,105)
            (Increase) Decrease in deferred
               taxes exclusive of unrealized
               security gains (losses)        (58,991)     (48,124)     (50,911)
            Increase (Decrease) in other
               liabilities                    104,611       43,493       44,192
            Loss on sale of securities          3,308          547          986
            (Gain) Loss on sale of other
               real estate                    (45,467)       3,854       (3,000)
                                           -----------  -----------  -----------

               Net Cash Provided by
                  Operating Activities     $3,039,997   $3,215,538   $2,765,336
                                           ===========  ===========  ===========

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, and Federal funds sold. Generally, Federal funds
sold are purchased and sold for one day periods.

During 2000 and 1999, net losses of $3,308 and $547, respectively, in securities
available-for-sale resulted from sales of mortgage backed securities that had
experienced significant paydowns. Capitalized interest amounted to $13,426.












See independent auditor's report and accompanying notes to financial statements.



<PAGE>



Page 47 of 85


                           Benchmark Bankshares, Inc.

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2000, 1999, and 1998


1.       Significant Accounting Policies and Practices

                  The accounting policies and practices of Benchmark Bankshares,
         Inc. conform to generally accepted accounting principles and general
         practice within the banking industry. Certain of the more significant
         policies and practices follow:

         (a)      Consolidated Financial Statements.  The consolidated financial
                  statements of Benchmark Bankshares, Inc. and its wholly-owned
                  subsidiary, Benchmark Community Bank, include the accounts of
                  both companies.  All material inter-company balances and
                  transactions have been eliminated in consolidation.

         (b)      Use of Estimates in Preparation of Financial Statements. The
                  preparation of the accompanying combined financial statements
                  in conformity with generally accepted accounting principles
                  requires management to make certain estimates and assumptions
                  that directly affect the results of reported assets,
                  liabilities, revenue, and expenses. Actual results may differ
                  from these estimates.

         (c)      Cash and Cash Equivalents. The term cash as used in the
                  Condensed Consolidated Statement of Cash Flows refers to all
                  cash and cash equivalent investments. For purposes of the
                  statement, Federal funds sold, which have a one day maturity,
                  are classified as cash equivalents.

         (d)      Investment Securities. Pursuant to guidelines established in
                  FAS 115, Accounting for Certain Investments in Debt and Equity
                  Securities, the Company has elected to classify a majority of
                  its current portfolio as securities available-for-sale. This
                  category refers to investments that are not actively traded
                  but are not anticipated by management to be held-to-maturity.
                  Typically, these types of investments will be utilized by
                  management to meet short-term asset/liability management
                  needs.

                  For purposes of financial statement reporting, securities
                  classified as available-for-sale are to be reported at fair
                  market value as of the date of the statements; however,
                  unrealized holding gains or losses are to be excluded from
                  earnings and reported as a net amount in a separate component
                  of stockholders' equity until realized. The impact of this
                  unrealized loss on securities negatively impacted
                  stockholders' equity in the amount of $131,331 as of December
                  31, 2000.

                  Premiums and discounts are amortized or accreted over the life
                  of the related security as an adjustment to yield using
                  methods that approximate the interest method.

          (e)     Loans. Interest on loans is computed by methods which
                  generally result in level rates of return on principal amounts
                  outstanding (simple interest). Unearned interest on certain
                  installment loans is recognized as income using the Rule of
                  78ths Method, which materially approximates the effective
                  interest method. The Bank has initiated a policy that no
                  longer provides for the Rule of 78ths for any new credit.
                  Management estimates that all unearned interest will clear the
                  Bank's books within three years.


<PAGE>


Page 48 of 85


                  In December, 1986, the Financial Accounting Standards Board
                  issued Statement of Financial Accounting Standards No. 91,
                  Accounting for Nonrefundable Fees and Costs Associated with
                  Originating or Acquiring Loans and Initial Direct Costs of
                  Leases. This statement requires loan origination and
                  commitment fees and certain direct loan origination costs to
                  be deferred and the net amount amortized as an adjustment of
                  the related loan's yield. This standard has been adopted for
                  all loan types with an original maturity greater than one
                  year.

         (f)      Allowance for Loan Losses.  The allowance for loan losses is
                  increased by provisions charged to expense and decreased by
                  loan losses net of recoveries.  The provision for loan losses
                  is based on the Bank's loan loss experience and management's
                  detailed review of the loan portfolio which considers economic
                  conditions, prior loan loss experience, and other factors
                  affecting the collectibility of loans.  With the exception of
                  loans secured by 1-4 family residential property, accrual of
                  interest is discontinued on loans past due 90 days or more
                  when collateral is inadequate to cover principal and interest
                  or immediately if management believes, after considering
                  economic and business conditions and collection efforts, that
                  the borrower's financial condition is such that collection is
                  doubtful.

         (g)      Premises and Equipment. Premises and equipment are stated at
                  cost less accumulated depreciation. Depreciation is computed
                  generally by the straight-line method over the estimated
                  useful lives of the assets. Additions to premises and
                  equipment and major betterments and replacements are added to
                  the accounts at cost. Maintenance, repairs, and minor
                  replacements are expensed as incurred. Gains and losses on
                  dispositions are reflected in current earnings.

         (h)      Other Real Estate.  As a normal course of business, the Bank
                  periodically has to foreclose on property used as collateral
                  on nonperforming loans.  The assets are recorded at cost plus
                  capital improvement cost.

         (i)      Depreciation. For financial reporting, property and equipment
                  are depreciated using the straight-line method; for income tax
                  reporting, depreciation is computed using statutory
                  accelerated methods. Leasehold improvements are amortized on
                  the straight-line method over the estimated useful lives of
                  the improvements. Income taxes in the accompanying financial
                  statements reflect the depreciation method used for financial
                  reporting and, accordingly, include a provision for the
                  deferred income tax effect of depreciation which will be
                  recognized in different periods for income tax reporting.

         (j)      Earnings Per Share.  Earnings per share of common stock are
                  calculated on the basis of the weighted average number of
                  shares outstanding during the period.

         (k)      Income Taxes. Deferred income taxes are reported for temporary
                  differences between items of income or expense reported in the
                  financial statements and those reported for income tax
                  purposes. Deferred taxes also reflect the impact of the
                  unrealized security losses which are reflected on the balance
                  sheet only, pursuant to FAS 115 guidelines. The differences
                  relate principally to the provision for loan losses,
                  depreciation, and unrealized security losses.










<PAGE>


Page 49 of 85


                  The table below reflects the components of the Net Deferred
                  Tax Asset account as of December 31, 2000:

                  Deferred tax assets resulting from
                     loan loss reserves                              $463,534
                  Deferred tax asset resulting from deferred
                     compensation                                      81,566
                  Deferred tax asset resulting from unrealized
                     security gains                                    67,655
                  Deferred tax liabilities resulting from
                     depreciation                                    (123,120)
                                                                     ---------

                                 Net Deferred Tax Asset              $489,635
                                                                     =========

2.         Investment Securities

                  The carrying amount and approximate market values of
           investment securities are summarized below:

                                  Book      Unrealized  Unrealized     Market
                                  Value       Gains       Losses       Value
Available-for-Sale
  December 31, 2000
     U. S. Government agencies $ 9,289,397   $ 1,795     $ 88,572   $ 9,202,620
     State and political
        subdivisions             8,741,141    58,556      146,928     8,652,769
     Pooled securities           1,645,364       830       24,667     1,621,527
     Other securities              200,492         -            -       200,492
                               -----------   -------     --------   -----------

                               $19,876,394   $61,181     $260,167   $19,677,408
                               ===========   =======     ========   ===========
  December 31, 1999
     U. S. Government agencies $ 9,287,788   $     -     $465,636   $ 8,822,152
     State and political
        subdivisions            12,109,027    71,068      335,864    11,844,231
     Pooled securities           2,359,516       909       92,510     2,267,915
     Other securities              137,000         -            -       137,000
                               -----------   -------     --------   -----------

                               $23,893,331   $71,977     $894,010   $23,071,298
                               ===========   =======     ========   ===========
Held-to-Maturity
  December 31, 2000
     U. S. Government agencies $ 4,500,000   $     -     $ 65,455   $ 4,434,545
     State and political
        subdivisions               744,718     1,745       13,143       733,320
                               -----------   -------     --------   -----------

                               $ 5,244,718   $ 1,745     $ 78,598   $ 5,167,865
                               ===========   =======     ========   ===========
  December 31, 1999
     U. S. Government agencies $ 4,500,000   $     -     $280,105   $ 4,219,895
     State and political
        subdivisions               746,170       971       31,889       715,252
                               -----------   -------     --------   -----------

                               $ 5,246,170   $   971     $311,994   $ 4,935,147
                               ===========   =======     ========   ===========




<PAGE>


Page 50 of 85


                  The maturities of investment securities at December 31, 2000
         were as follows:
                                              Book Value     Market Value

         Available-for-Sale
            Due in one year or less           $     5,000     $     5,000
            Due from one to five years          5,935,079       5,883,716
            Due from five to ten years         10,476,316      10,377,019
            After ten years                     3,264,507       3,216,181
            Other securities                      195,492         195,492

         Held-to-Maturity
            Due from one to five years          1,774,720       1,722,070
            Due from five to ten years          3,500,000       3,445,795

                  Securities having a book value of $5,222,596 and $5,064,105 at
         December 31, 2000 and 1999, respectively, were pledged to secure public
         deposits and for other purposes.

                  In the event of the sale of securities, the cost basis of the
         security, adjusted for the amortization of premium or discounts, will
         be used when calculating gains or losses.

                  Other securities consist of required investments in Federal
         Reserve Bank stock and a regional bankers' bank stock. These
         investments are recorded at original cost.

3.       Loans

                  A summary of loans net of participation-out activity by type
         follows:
                                               2000              1999
                                               ----              ----

              Demand                       $          -     $    769,352
              Time                           19,810,083       22,653,680
              Installment                    27,509,990       26,232,943
              Real estate                   117,397,196      102,606,752
                                           ------------     ------------

                                           $164,717,269     $152,262,727
                                           ============     ============

                  Demand deposit overdrafts amounting to $28,589 have been
         reclassified as short-term loans for reporting purposes.

4.       Allowance for Loan Losses

                An analysis of the transactions in the allowance for loan losses
         follows:

                                          2000          1999           1998
                                          ----          ----           ----

Balance - Beginning of Year            $1,522,632    $1,558,741     $1,391,424
Provision for loan losses                 201,187       606,030        356,046
Recoveries on loans                       219,806       112,263        117,690
Loans charged off                        (275,902)     (754,402)      (306,419)
                                       -----------   -----------    -----------

Balance - End of Year                  $1,667,723    $1,522,632     $1,558,741
                                       ===========   ===========    ===========


<PAGE>


Page 51 of 85


                  As of December 31, 2000, the Bank had $464,227 in loans that
         resulted from restructuring of nonperforming loans and $829,066
         classified as nonaccrual loans. A loan in this status ceases to accrue
         interest.

5.       Office Buildings, Equipment, and Leasehold Improvements

                  Major classifications of these assets are summarized as
         follows:

                                      Estimated
                                       Useful
                                    Lives (Years)       2000           1999
                                    -------------       ----           ----

Land                                                 $  917,748     $  799,690
Buildings and improvements              6-40          2,633,457      2,401,090
Furniture and equipment                 2-10          2,257,534      2,033,002
Leasehold improvements                  5-6             167,390        166,521
Buildings under construction                            230,104        187,969
                                                     -----------    -----------

                                                      6,206,233      5,588,272
Less:  Accumulated depreciation                      (2,453,403)    (2,164,493)
                                                     -----------    -----------

                                                     $3,752,830     $3,423,779
                                                     ===========    ===========

                  The cost basis of fully depreciated assets totaled $362,287 at
         December 31, 2000.

6.       Other Real Estate

                As of December 31, 2000, the Bank held other real estate in the
         amount of $808,508. The amount represents cost related to converting
         collateral on nonperforming loans from the customer to the Bank. All
         lots are being marketed or being prepared for marketing.

7.       Time Deposits

                  The maturities of time deposits are as follows:

                                                   $100,000 or       Less Than
                                                     Greater         $100,000

         Due in six months                         $ 7,815,999    $ 31,028,420
         Due from six months to one year             2,637,238      19,765,837
         Due from one year to three years            4,534,847      32,610,033
         Due from three years to five years          4,376,027      18,988,457
                                                   -----------    ------------

                        Total                      $19,364,111    $102,392,747
                                                   ===========    ============

                  Interest expense on time deposits exceeding $100,000 was
         $972,343 in 2000.






<PAGE>


Page 52 of 85


8.       Federal Income Taxes

                  Federal income taxes payable, as of December 31, 2000 and
         1999, were as follows:

                                                    2000           1999

         Currently payable                       $  11,440      $  23,005
         Deferred                                 (489,635)      (642,481)
                                                 ----------     ----------

                                                 $(478,195)     $(619,476)
                                                 ==========     ==========

                  The components of applicable income taxes are as follows:

                                                   2000            1999
                                                   ----            ----

         Current                                $1,464,221      $1,370,939
         Deferred from income and
            expense items                         (152,846)       (314,088)
                                                -----------     -----------

                        Total                   $1,311,375      $1,056,851
                                                ===========     ===========

                  Temporary differences in the recognition of income and
         expenses for tax and financial reporting purposes resulted in the
         deferred income tax asset as follows:

                                                       2000         1999

         Accelerated depreciation                   $    (568)   $ (15,861)
         Excess (Deficiency) of provision for loan
            losses over deduction for Federal
            income tax purposes                        36,907      (35,965)
         Deferred compensation                         22,652       17,230
                                                    ----------   ----------
                   Total Tax Impact of
                     Temporary Differences in
                     Recognition of Income and
                     Expenses                          58,991      (34,596)

         Tax impact of balance sheet recognition
            of unrealized security losses            (211,837)    (279,492)
                                                    ----------   ----------

                   Total Change to Deferred Tax
                     for the Year                   $(152,846)   $(314,088)
                                                    ==========   ==========

                  The reasons for the difference between income tax expense and
         the amount computed by applying the statutory Federal income tax rates
         are as follows:
                                                  2000           1999
                                                  ----           ----

         Statutory rates                           34%            34%

         Income tax expense at statutory
            rates                              $1,311,375      $1,211,880
         Increase (Decrease) due to
            Tax exempt income                     (50,251)       (159,581)
            Other                                 109,242           4,552
                                               -----------     -----------

                                               $1,370,366      $1,056,851
                                               ===========     ===========



<PAGE>


Page 53 of 85


                  Federal income tax returns are subject to examination for all
         years which are not barred by the statute of limitations.

9.       Commitments and Contingent Liabilities

                  At December 31, 2000 and 1999, commitments under standby
         letters of credit aggregated $1,397,471 and $1,825,989, respectively.
         These commitments are an integral part of the banking business and the
         Bank does not anticipate any losses as a result of these commitments.
         These commitments are not reflected in the consolidated financial
         statements. (See Note 13).

                  During the year ended December 31, 2000, the Bank incurred
         operating lease expense amounting to $50,339 in addition to $6,631
         depreciated for leasehold improvements.

                  Minimum lease payments at December 31, 2000 under
         noncancelable real property operating lease commitments for succeeding
         years are:

                       2001                      $22,300
                       2002                       13,800
                       2003                       10,925
                                                 -------

                       Total                     $47,025
                                                 =======

                  The Bank has options to renew the leased properties. The
         additional lease expense resulting from the future exercising of these
         options is not included in the 2000 totals listed herein.

                  The Bank has entered into several agreements to service and
         maintain equipment. The only long-term commitment relates to a
         maintenance agreement on the elevator. The amount of payments can be
         adjusted annually based on labor cost. The terms based on current rates
         are as follows:

                       2001                      $1,608
                       2002                       1,608
                       2003                       1,474
                                                 ------

                       Total                     $4,690
                                                 =======

10.      Retirement Plan

                  The Bank provides for a retirement program for all qualified
         employees through a 401(k) plan. The plan offers a salary reduction
         election of up to 14% of W-2 compensation less incentive pay. The plan
         also has a proportional matching feature by the Company. In addition,
         the plan provides for the Company to make discretionary contributions.
         Both the percentage of the employer match and the annual discretionary
         contribution are based on the Bank's performance.

                  During 2000, Bank payments through matching and discretionary
         contributions totaled $109,409 while employees' salary reduction
         amounted to $115,883. The cost of administration for the 401(k) plan
         paid in 2000 amounted to $14,086.







<PAGE>


Page 54 of 85


11.      Incentive Compensation

                  The Bank offers its employees incentive compensation and/or
         bonus arrangements based on the Bank's annual financial performance and
         other criteria such as length of service and officer classification.
         Incentive compensation totaled $179,022 and $129,419 for the years
         ended December 31, 2000 and 1999, respectively.

12.      Related Parties

         Loans

                  Loans to Directors and Executive Officers of the Bank and
         loans to companies in which they have a significant interest are made
         on substantially the same terms as those prevailing at the time for
         other loan customers. The balances of such loans outstanding were
         $4,444,931 and $3,212,221 at December 31, 2000 and 1999, respectively.
         During the year of 2000, new loans to the group totaled $2,117,778,
         while repayments amounted to $885,068. Certain Directors and Executive
         Officers have home equity loans. The net activity of these open-end
         credits has been reported herein.

                  As of December 31, 2000, W. J. Callis, Director, had
         outstanding loans in excess of 5% of stockholders' equity. The
         beginning balance of loans was $1,996,624 with current year activity
         consisting of $790,000 in advances and $352,701 in repayments for an
         ending balance of $2,433,923.

         Deposits

                  As of December 31, 2000, the Bank held deposits of Directors,
         Executive Officers, and their related interest amounting to $1,234,173.

13.      Off-Balance-Sheet Instruments/Credit Concentrations

                  The Bank is a party to financial instruments with off-balance-
         sheet risk in the normal course of business to meet the financing needs
         of its customers. Unless noted otherwise, the Bank does not require
         collateral or other security to support these financial instruments.
         Standby letters of credit are conditional commitments issued by the
         Bank to guarantee the performance of a customer to a third party. Those
         guarantees are primarily issued to facilitate the transaction of
         business between these parties where the exact financial amount of the
         transaction is unknown but a limit can be projected. The credit risk
         involved in issuing letters of credit is essentially the same as that
         involved in extending loan facilities to customers. There is a fee
         charged for this service.

                  As noted in Note 9 on December 31, 2000, the Bank had
         outstanding letters of credit. These instruments are based on the
         financial strength of the customer and the existing relationship
         between the Bank and the customer.

                  As of December 31, 2000, the Bank also had unused commitments
         resulting from credit line deeds of trust, home equity lines, and an
         unfunded business loan. The total amount of these commitments amounted
         to $22,875,073.

                  For related information concerning contract commitments not
         reflected in the balance sheet refer to Note 9.









<PAGE>


Page 55 of 85


         Concentrations

                  The Bank has no concentrations of credit concerning an
         individual borrower or economic segment. The Bank confines its lending
         activities to within the state and more specifically its local
         geographic areas. The concentrations of credit by loan type are set
         forth in Note 3. Regulatory requirements limit the Bank's aggregate
         loans to any one borrower to a level of approximately $3,000,000.

14.      Regulatory Matters

                  Pursuant to regulations of the Federal Reserve Board, the
         banking operation of the Company is required to maintain certain
         minimum levels of capital. The Bank maintained the following capital
         ratios as of December 31:

                                                    2000     1999
                                                   Actual   Actual    Minimum
                                                    Rate     Rate    Standards

Total Capital to Risk Weighted Assets              13.07%   13.38%     8.00%
                                                   ======   ======     =====

Tier I Capital to Risk Weighted Assets             11.97%   12.30%     4.00%
                                                   ======   ======     =====

Tier I Capital to Total Average Assets              8.73%    9.09%     4.00%
                                                    =====    =====     =====

                  While the level of capital declined on a percentage basis due
         to growth and the initiation of a stock repurchase program, the capital
         ratios exceed the minimum ratios required by regulatory authorities.

15.      Capital

                  Beginning in 2000, the Company discontinued the dividend
         reinvestment plan and continued the stock repurchase program initiated
         in 1999. Through the repurchase program, the Company bought back
         16,944.091 shares of common stock in 2000.

                  The Company also sold stock through the employee stock option
         plan. The sales for the year amounted to 7,586 shares of common stock.
         The net result of the stock plans resulted in a decline of $1,965 in
         common stock and $97,461 in capital surplus.

                  The Company is authorized to issue 200,000 shares of preferred
         stock with a par value of $25.00. To date, no preferred stock has been
         issued by the Company. Currently, management has no plans to utilize
         this second class of stock.

16.      Stock Option Plan

                  On April 20, 1995, the stockholders retroactively approved two
         incentive stock option plans with an effective date of March 16, 1995.
         One plan consisting of option awards to purchase 120,000 shares of the
         Company's common stock was approved for the employees of the Company,
         while the second plan consisting of option awards to purchase 80,000
         shares of the Company's common stock was approved for the "outside"
         Directors of the Company. All participants must have been employed for
         two calendar years.

                  At the annual stockholders meeting held on April 15, 1999, the
         stockholders approved a plan that increased the number of shares in the
         Employee Stock Option Plan from 120,000 shares by an additional 150,000
         shares for a total of 270,000 shares. All of the options expire ten
         years from the date of grant.



<PAGE>


Page 56 of 85


                  The table below details the status of the shares in the plan
         as of December 31, 2000 and 1999:

                                      2000

                            Prior Year          Current Year Activity
                            Exercised
                               and
Incentive Stock  Original  Outstanding  Options   Options   Options   Remaining
  Option Plan      Pool      Options    Granted  Exercised  Canceled   in Pool

Employees        270,000     138,157    13,000     1,586     20,000    121,928
Directors         80,000      54,000    12,000     6,000          -     14,000

                                      1999

                            Prior Year          Current Year Activity
                            Exercised
                               and
Incentive Stock  Original  Outstanding  Options   Options   Options   Remaining
  Option Plan     Pool(1)    Options    Granted  Exercised  Canceled   in Pool


Employees        270,000     120,000    14,072     8,085      4,000    139,928
Directors         80,000      54,000         -         -          -     26,000

(1)Amended in 1999.

                  The Company has elected to report the results of the plan
         pursuant to APB Opinion Number 25. Due to the pricing schedule, there
         is no impact on earnings under the fair value based method.

17.      Disclosures about Fair Value of Financial Instruments

                  The intent of FAS 107 is to depict the market's assessment of
         the present value of net future cash flows discounted to reflect
         current interest rates.

                  The following methods and assumptions were used to estimate
         the fair value of each class of financial instruments for which it is
         practicable to estimate that value.

         Cash and Short-Term Investments

                  For those short-term investments, the carrying amount is a
         reasonable estimate of fair value. For reporting purposes, the Bank has
         included Cash and Due from Banks as well as Federal Funds Sold in this
         category.

         Investment Securities

                  For marketable equity securities classified as
         available-for-sale and held-to- maturity, fair values are based on
         quoted market prices or dealer quotes. If a quoted market price is not
         available, fair value is estimated using quoted market prices for
         similar securities.

         Loans Receivable

                  The fair value of the basic loan groups is estimated by
         discounting the future cash flows using the current rates at which
         similar loans would be made to borrowers with similar credit ratings
         and for the same remaining maturities. For open-end revolving loans,
         the carrying amount is a reasonable estimate of fair value.


<PAGE>


Page 57 of 85


         Deposit Liabilities

                  The fair value of demand deposits, savings accounts, and
         certain money market deposits is the amount payable on demand at the
         reporting date. The fair value of fixed-maturity certificates of
         deposit is estimated using the rates currently offered for deposits of
         similar remaining maturities.

         Other Borrowed Money

                  For short-term borrowings, the carrying amount is a reasonable
         estimate of fair value.

         Commitments to Extend Credit and Letters of Credit

                  The fair value of commitments and letters of credit is the
         amount of the unfunded commitment, as a market rate will be set at the
         time of the funding of the commitment.

                  The estimated fair values of the Bank's financial instruments
         are as follows:

                                      2000                       1999
                                      ----                       ----

                             Carrying      Fair         Carrying       Fair
                              Amount       Value         Amount        Value
Financial Assets
 Cash and due from banks $  5,587,737  $  5,587,737  $  7,533,280  $  7,533,280
 Federal funds sold         4,281,000     4,281,000             -             -
 Investments
   Available-for-sale      19,876,394    19,677,408    22,934,298    22,934,298
   Held-to-maturity         5,244,718     5,167,865     5,383,170     5,072,147
 Loans
   Demand loans                     -             -       769,352       769,352
   Accrual loans           20,969,201    20,968,201    22,653,680    22,653,680
   Installment loans       27,509,990    28,181,606    26,232,943    25,146,525
   Real estate loans      120,839,070   103,831,473   108,649,662   107,206,239
   Participation loans -
     out                   (4,600,992)   (4,600,992)    6,042,910     6,042,910

Financial Liabilities
 Deposits
   Demand (noninterest-
     bearing)              20,033,199    20,033,199    16,213,541    16,213,541
   Demand (interest-
     bearing)              29,741,428    29,741,428    27,951,811    27,951,811
   Savings                  9,665,332     9,665,332     9,763,624     9,763,624
   Certificates of
     deposit              121,756,858   119,871,696   110,811,564   108,012,019
   Federal funds purchased          -             -     7,035,000     7,035,000

Unrecognized Financial
  Instruments
   Unused loan commitments 22,875,073    22,875,073    18,561,686    18,561,686
   Unissued letters of
     credit                 1,397,471     1,397,471     1,825,989     1,825,989










<PAGE>


Page 58 of 85


18.      Quantitative and Qualitative Disclosures About Market Risk

                  As with the banking industry in general, market risk is
         inherent in the Company's operation. A majority of the business is
         built around financial products, which are sensitive to changes in
         market rates. Such products, categorized as loans, investments, and
         deposits are utilized to transfer financial resources. These products
         have varying maturities, however, and this provides an opportunity to
         match assets and liabilities so as to offset a portion of the market
         risk.

                  Management follows an operating strategy that limits the
         interest rate risk by offering only shorter-term products that
         typically have a term of no more than five years. By effectively
         matching the maturities of inflows and outflows, management feels it
         can effectively limit the amount of exposure that is inherent in its
         financial portfolio.

                  As a separate issue, there is also the inherent risk of loss
         related to loans and investments. The impact of loss through default
         has been considered by management through the utilization of an
         aggressive loan loss reserve policy and a conservative investment
         policy that limits investments to higher quality issues; therefore,
         only the risk of interest rate variations is considered in the
         following analysis.

                  The Company does not currently utilize derivatives as part of
         its investment strategy.

                  The tables below present principal amounts of cash flow as it
         relates to the major financial components of the Company's balance
         sheet. The cash flow totals represent the amount that will be generated
         over the life of the product at its stated interest rate. The present
         value discount is then applied to the cash flow stream at the current
         market rate for the instrument to determine the current value of the
         individual category. Through this two-tiered analysis, management has
         attempted to measure the impact not only of a rate change, but also the
         value at risk in each financial product category. Only financial
         instruments that do not have price adjustment capabilities are herein
         presented.

                  In Table One, the cash flows are spread over the life of the
         financial products in annual increments as of December 31 each year
         with the final column detailing the present value discounting of the
         cash flows at current market rates.


                           Benchmark Bankshares, Inc.

                         Fair Value of Financial Assets

                                December 31, 2000

<TABLE>
<CAPTION>
<S>                             <C>           <C>           <C>           <C>           <C>           <C>          <C>

                                                                                                                     Current
Categories                         2001          2002          2003          2004          2005       Thereafter      Value
----------                         ----          ----          ----          ----          ----       ----------      -----

Loans
  Commercial                    $21,783,557   $         -   $         -   $         -   $         -   $        -   $19,810,083
  Mortgage                       27,781,083    20,163,550    29,879,405    23,856,228    19,481,072    6,612,452    99,230,481
  Consumer                       14,328,662     9,917,637     6,039,151     3,490,698     1,186,279      143,234    28,181,606

Investments
  U. S. Government Agencies         863,810     1,363,810     2,820,410     3,190,273     1,847,380    8,762,213    13,637,165
  Municipals
   Nontaxable                       967,015       707,516     1,590,368       286,249       286,249    5,781,836     8,404,564
   Taxable                           61,693        61,693        61,693       556,572        31,450      141,525       981,525
  Mortgage Backed Securities        278,301       250,799       226,295       204,393       311,052      582,795     1,621,527
</TABLE>



<PAGE>



Page 59 of 85


<TABLE>
<CAPTION>
<S>                             <C>           <C>           <C>           <C>           <C>           <C>          <C>

                                                                                                                     Current
Categories                         2001          2002          2003          2004          2005       Thereafter      Value
----------                         ----          ----          ----          ----          ----       ----------      -----

Certificates of Deposits
  < 182 days                      2,557,822             -             -             -             -            -     2,557,822
  182 - 364 days                  5,314,777             -             -             -             -            -     5,193,509
  1 year - 2 years               41,086,493    10,557,182             -             -             -            -    48,783,498
  2 years - 3 years               4,913,432     9,282,392        64,775             -             -            -    13,113,620
  3 years - 4 years               1,808,424     1,249,333     4,931,492             -             -            -     7,066,088
  4 years - 5 years                 975,834       585,096       856,603     1,004,637             -            -     2,998,838
  5 years and over                5,369,310     4,050,441    11,623,861     6,861,594    21,373,872      199,265    40,158,321
</TABLE>

                  In Table Two, the cash flows are present value discounted by
         predetermined factors to measure the impact on the financial products
         portfolio at six and twelve month intervals.



                           Benchmark Bankshares, Inc.

                        Variable Interest Rate Disclosure

                                December 31, 2000

<TABLE>
<CAPTION>
<S>                           <C>              <C>              <C>             <C>             <C>
                                  Valuation of Securities           No             Valuation of Securities
                                  Given an Interest Rate         Change In         Given an Interest Rate
                               Decrease of (x) Basis Points      Interest       Increase of (x) Basis Points
Categories                      (200 BPS)        (100 BPS)         Rate            100 BPS         200 BPS
----------                      ---------        ---------         ----            -------         -------

Loans
  Commercial                  $ 20,202,631     $ 20,004,913     $19,810,083     $19,618,084     $19,428,861
  Mortgage                     104,765,506      101,935,947      99,230,481      96,641,926      94,163,613
  Consumer                      29,195,195       28,680,222      28,181,606      27,698,626      27,230,604

Investments
  U. S. Government Agencies     14,710,533       14,156,988       13,637,165     13,061,783      12,530,109
  Municipals
    Nontaxable                   9,124,123        8,808,902        8,404,564      7,902,559       7,433,229
    Taxable                      1,084,942        1,030,885          981,525        936,645         896,018
  Pooled Securities              1,773,452        1,697,490        1,621,527      1,621,527       1,545,565

Certificates of Deposit
  < 182 days                     2,583,256        2,570,519        2,557,822      2,545,328       2,532,872
  182 - 364 days                 5,295,336        5,244,049        5,193,509      5,143,702       5,094,613
  1 year - 2 years              49,922,355       49,346,537       48,783,498     48,232,827      47,694,127
  2 years - 3 years             13,535,676       13,321,820       13,113,620     12,910,873      12,713,382
  3 years - 4 years              7,394,070        7,227,193        7,066,088      6,910,495       6,760,173
  4 years - 5 years              3,145,484        3,070,736        2,998,838      2,929,648       2,863,035
  5 plus years                  43,031,596       41,559,545       40,158,321     38,823,744      37,551,920
</TABLE>

                  Only financial instruments that do not have daily price
         adjustment capabilities are herein presented.


<PAGE>


Page 60 of 85


19.      Parent Company

                  Financial statements for Benchmark Bankshares, Inc. (not
         consolidated) are herein presented.  Since the parent company has not
         entered into any substantial transactions, only the parent company's
         statements are presented.




<PAGE>


Page 61 of 85

                           Benchmark Bankshares, Inc.

                              (Parent Company Only)

                                 Balance Sheets

                        December 31, 2000, 1999, and 1998

                                   A S S E T S

                                           2000          1999          1998
                                           ----          ----          ----
Cash                                    $ 4,324,894   $ 3,111,052   $ 1,909,855
Investment in subsidiary                 18,401,336    17,419,106    17,584,952
Receivable - reimbursement                       81            81             -
                                        -----------   -----------   -----------
               Total Assets             $22,726,311   $20,530,239   $19,494,807
                                        ===========   ===========   ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
   Dividends payable                    $   541,120   $   482,493   $   479,594

Stockholders' Equity
   Common stock, par value $.21 per
      share, authorized 4,000,000
      shares; issued and outstanding
      3,006,219.501 12-31-00, issued
      and outstanding 3,015,577.591
      12-31-99, issued and outstanding
      2,997,465.366 12-31-98                631,307       633,272       629,678
   Surplus                                4,404,047     4,501,508     4,314,339
   Retained earnings                     17,149,837    14,912,966    14,071,196
                                        -----------   -----------   -----------
              Total Stockholders'
                 Equity                  22,185,191    20,047,746    19,015,213
                                        -----------   -----------   -----------

              Total Liabilities and
                 Stockholders' Equity   $22,726,311   $20,530,239   $19,494,807
                                        ===========   ===========   ===========

                              Statements of Income

                  Years Ended December 31, 2000, 1999, and 1998

                                           2000          1999          1998
                                           ----          ----          ----
Income
   Dividends from subsidiary            $ 2,300,000   $ 2,000,000   $   600,000
                                        -----------   -----------   -----------
               Total Income               2,300,000     2,000,000       600,000

Expenses
   Professional fees                         11,500        20,038        16,470
   Supplies, printing, and postage           10,809         7,410         8,654
   Taxes - miscellaneous                        900           825           850
                                        -----------   -----------   -----------
               Total Expenses                23,209        28,273        25,974
                                        -----------   -----------   -----------

Income (Loss) Before Equity in
   Undistributed Income of Subsidiary     2,276,791     1,971,727       574,026

Equity in Income of Subsidiary
   (includes tax benefit of parent
   company operating loss)                  568,270       739,780     2,070,139
                                        -----------   -----------   -----------
               Net Income               $ 2,845,061   $ 2,711,507   $ 2,644,165
                                        ===========   ===========   ===========




<PAGE>


Page 62 of 85
                           Benchmark Bankshares, Inc.
                              (Parent Company Only)

                  Statements of Changes in Stockholders' Equity

                  Years Ended December 31, 2000, 1999, and 1998
<TABLE>
<CAPTION>
<S>                                 <C>        <C>          <C>           <C>           <C>

                                                                          Unrealized
                                     Common                   Retained    SEC Gain
                                      Stock      Surplus      Earnings     (Loss) *        Total

Balance January 1, 1998             $617,990   $3,667,557   $12,189,180   $ 177,545     $16,652,272

Net Income
   Parent                                                       574,026                     574,026
   Equity in income of subsidiary                             2,070,139                   2,070,139

Sale of Stock                         11,562      653,800                                   665,362
Redemption of Stock                      (84)      (7,018)                                   (7,102)

Semi-Annual Cash
   Dividend Declared
      June 18, 1998, $.15 per share                            (447,630)                   (447,630)
      December 17, 1998, $.16 per share                        (479,594)                   (479,594)

Adjustments                              210                      1,975                       2,185
Unrealized Security Gains (Losses)                                          (14,445)        (14,445)
                                    ________   __________   ___________   _________     ____________

Balance December 31, 1998            629,678    4,314,339    13,908,096     163,100      19,015,213

Net Income
   Parent                                                     1,971,727                   1,971,727
   Equity in income of subsidiary                               539,780                     539,780
Sale of Stock                          8,072      450,102                                   458,174
Redemption of Stock                       (5)        (312)                                     (317)
Stock repurchase                      (4,473)    (262,621)                                 (267,094)
Semi-Annual Cash
   Dividend Declared
      June 17, 1999, $.16 per share                            (481,426)                   (481,426)
      December 16, 1999, $.16 per share                        (482,493)                   (482,493)

Adjustments                                                        (174)                       (174)
Unrealized Security Gains (Losses)                                         (705,644)       (705,644)
                                    ________   __________   ___________   _________     ____________

Balance December 31, 1999            633,272    4,501,508    15,455,510    (542,544)     20,047,746

Net Income
   Parent                                                     2,276,791                   2,276,791
   Equity in income of subsidiary                               568,270                     568,270

Sale of Stock                          1,593       54,391                                    55,984
Redemption of Stock                       (3)        (111)                                     (114)
Stock repurchase                      (3,555)    (151,741)                                 (155,296)

Semi-Annual Cash
   Dividend Declared
      June 15, 2000, $.16 per share                            (480,996)                   (480,996)
      December 21, 2000, $.18 per share                        (541,120)                   (541,120)

Adjustments                                                       2,713                       2,713
Unrealized Security Gains (Losses)                                          411,213         411,213
                                    ________   __________   ___________   _________     ____________

Balance December 31, 2000           $631,307   $4,404,047   $17,281,168   $(131,331)    $22,185,191
                                    ========   ==========   ===========   ==========    ============
</TABLE>

* Net of tax effect.


<PAGE>


Page 63 of 85


                           Benchmark Bankshares, Inc.

                              (Parent Company Only)

                            Statements of Cash Flows

                  Years Ended December 31, 2000, 1999, and 1998


                                           2000          1999          1998
                                           ----          ----          ----
Cash Flows from Operating Activities
   Net income                           $2,845,061    $2,711,507    $2,644,165
   Increase in receivable                        -           (81)            -
                                        -----------   -----------   -----------

               Net Cash Provided by
                  Operating Activities   2,845,061     2,711,426     2,644,165

Cash Flows from Investing Activities
   Undistributed earnings of subsidiary   (568,270)     (739,972)   (2,031,902)
   Capital adjustment                          (34)            -             -
                                        -----------   -----------   -----------

               Net Cash (Used) by
                  Investing Activities    (568,304)     (739,972)   (2,031,902)

Cash Flows from Financing Activities
   Sale of stock                            55,984       458,174       665,362
   Redemption of stock                        (114)     (267,411)       (7,102)
   Stock repurchase                       (155,296)            -             -
   Dividends paid                         (963,489)     (961,020)     (927,224)
                                        -----------   -----------   -----------

               Net Cash (Used) by
                  Financing Activities  (1,062,915)     (770,257)     (268,964)
                                        -----------   -----------   -----------

Net Increase (Decrease) in Cash          1,213,842     1,201,197       343,299

Cash - Beginning of Year                 3,111,052     1,909,855     1,566,556
                                        -----------   -----------   -----------

Cash - End of Year                      $4,324,894    $3,111,052    $1,909,855
                                        ===========   ===========   ===========





<PAGE>


Page 64 of 85


ITEM 9    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE

                  None


<PAGE>


Page 65 of 85


PART III

ITEM 10    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The Directors of the Company, their ages, and principal occupations are
set forth in the table below as of December 31, 2000:
<TABLE>
<CAPTION>
<S>                             <C>                                                            <C>

                                Principal Occupation for Last Five Years                       Director of the Company
          Name (Age)            Position Held with Company and Subsidiary                        or Subsidiary Since

R. Michael Berryman             Pharmacist                                                               1978
   (60)                         Principal, Smith's Pharmacy, Inc.
                                Pharmacy Associates, Inc.
                                Chairman of Board, Company and Subsidiary

Mark F. Bragg                   Principal, Atlantic Medical, Inc.                                        1999
   (39)

Lewis W. Bridgforth             Physician                                                                1971
   (61)

William J. Callis               Building Contractor                                                      1989
   (58)                         Vice President, Kenbridge Construction Co., Inc.
                                Vice Chairman of Board, Company and Subsidiary

Earl H. Carter, Jr.             Principal, Taylor-Forbes Equipment                                       2000
   (52)                         Company, Inc.

Earl C. Currin, Jr.             Provost,                                                                 1986
   (57)                         John H. Daniel Campus of Southside
                                Virginia Community College

C. Edward Hall                  Pharmacist                                                               1971
   (60)                         Partner, Victoria Drug Company

J. Ryland Hamlett               Retired Personnel Manager,                                               1986
   (58)                         Southside Electric Cooperative

Wayne J. Parrish                Principal, Parrish Trucking Co., Inc.                                    1979
   (62)

Ben L. Watson, III              President and CEO,                                                       1976
   (57)                         Company and Subsidiary

Executive Officers of the Company

         The Executive Officers of the Bank and their positions are set forth
below:

          Name (Age)            Position Held with Subsidiary                                       Officer Since

Ben L. Watson, III  (A)         Director, President and CEO                                             1971
   (57)

Michael O. Walker (B)           Senior Vice President for Branch Administration and                     1975
   (50)                         Marketing and Recording Secretary

Janice W. Pernell  (C)          Senior Vice President, Cashier, Assistant                               1976
   (54)                         Secretary, and Compliance Officer
</TABLE>



<PAGE>


Page 66 of 85


(A)      Mr. Watson serves in a dual capacity of President and CEO for both the
         Company and the subsidiary.

(B)      Mr. Walker also serves as Recording Secretary of the Company.

(C)      Mrs. Pernell also serves as Cashier and Treasurer of the Company.

         Mr. Watson and Mrs. Pernell have served the Bank since it commenced
business in 1971.  Mr. Watson started with the Bank as Operations Officer, was
appointed Cashier in 1973, appointed Executive Vice President in 1975, and
appointed to his current position in March of 1990.  Mrs. Pernell was appointed
Operations Officer and Cashier in 1978, Assistant Vice President and Cashier in
1980, Vice President, Cashier, and Compliance Officer in 1988, and to her
current position of Senior Vice President, Cashier, Assistant Secretary, and
Compliance Officer in 1993.

         Mr. Walker came to the Bank in 1974 as Branch Manager of the Victoria
office. He was appointed Assistant Vice President in 1980, Vice President in
1988, Vice President for Branch Administration and Marketing in 1989, and to his
current position of Senior Vice President in 1993.

ITEM 11    EXECUTIVE COMPENSATION

A.       Summary of Cash and Certain Other Compensation to Executive Officer

<TABLE>
<CAPTION>
<S>                       <C>      <C>       <C>           <C>               <C>                <C>
                                                                              Long-Term
                                    Annual Compensation Compensation         Compensation
                                                             (1) (2)          Number of
                                                              Other           Securities
   Name and Principal                        Incentive        Annual          Underlying        All Other
        Position          Year     Salary      Bonus       Compensation         Option         Compensation
        --------          ----     ------      -----       ------------         ------         ------------

Ben L. Watson, III        2000    $116,004    $24,039         $5,050           6,000(3)            None

President and Chief       1999     116,004     21,442          4,200           6,000(3)            None

Executive Officer         1998     112,500     34,271          4,800           7,000(3)            None


Michael O. Walker         2000      85,008     16,709          1,950           6,000               None

Senior Vice President     1999      85,008     15,167          1,800           6,000               None

                          1998      82,500     22,277          1,800           6,000               None

Janice W. Pernell         2000      85,008     15,167           None           5,850(3)            None
Senior Vice President     1999      85,008     15,167           None           5,850(3)            None
                          1998      82,500     22,277           None           5,850(3)            None
</TABLE>


         (1)    The value of perquisites and other personal benefits did not
                exceed the lesser of $50,000 or 10% of total annual salary and
                incentive bonus.

         (2)    Other Annual Compensation represents Director's fees paid to Mr.
                Watson for services performed as a Director of the Bank, and
                fees paid to Mr. Walker for services performed as Recording
                Secretary of the Board of the Bank.

         (3)    Mr. Watson exercised 1,000 options on March 2, 1998 and 1,000
                options on February 5, 1999 and Mrs. Pernell exercised 150
                options on January 27, 1998.

B.       Compensation to Directors

                  No fees are paid to Directors for service on the Board of the
         Company. During 2000, for service on the Board of the Bank, a fee of
         $1,200 per Director was paid, based on the performance of the Bank,
         plus $250 for each Bank Board meeting attended and, except to Mr.
         Watson, $175 for each Bank Board Committee meeting attended during the
         year.


<PAGE>


Page 67 of 85


C.       Employment Agreements

                  The Company, or its subsidiary, has no employment agreements
         with any of its employees.

ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

                  The following table sets forth information regarding the
         beneficial ownership of the Company's common stock as of March 1, 2001:
<TABLE>
<CAPTION>
<S>                          <C>                                 <C>                       <C>

                                                                                              Shares
                                                                                           Beneficially
                                                                                              Owned
                                                                                            % of Shares
                                                                 Director/Officer of       Beneficially
       Name and Age          Principal Occupation                Company/Subsidiary           Owned

R. Michael Berryman          Pharmacist                                 1978               89,843.886(1)
   (60)                                                                                        2.99%

Mark F. Bragg                Principal, Atlantic                        1999               3,097.409(2)
   (39)                      Medical, Inc.                                                     1.03%

Lewis W. Bridgforth          Physician                                  1971               35,680.657(3)
   (61)                                                                                        1.19%

William J. Callis            Building Contractor                        1989               32,120.974(4)
   (58)                                                                                        1.07%

Earl H. Carter, Jr.          Principal, Taylor-Forbes                   2000                  755.000
   (52)                      Equipment Company, Inc.                                           .03%

Earl C. Currin, Jr.          Provost                                    1986                13,178.000
   (57)                                                                                        .44%

C. Edward Hall               Pharmacist                                 1971               38,101.037(5)
   (60)                                                                                        1.27%

J. Ryland Hamlett            Retired Personnel Manager                  1986               44,977.000(6)
   (58)                                                                                        1.50%

Wayne J. Parrish             Principal, Parrish                         1979               28,384.872(7)
   (62)                      Trucking Co., Inc.                                                .95%

Ben L. Watson, III           President and CEO                          1971               16,471.508(8)
   (57)                      Company and Subsidiary                                            .55%

Michael O. Walker            Senior Vice President for                  1975                 46,000(9)
   (50)                      Branch Administration and                                         1.53%
                             Marketing and Recording
                             Secretary, Benchmark Community
                             Bank

Janice W. Pernell            Senior Vice President,                     1976                 5,486.375
   (54)                      Cashier, Assistant Secretary,                                     .18%
                             and Compliance Officer,
                             Benchmark Community Bank
</TABLE>





<PAGE>


Page 68 of 85

<TABLE>
<CAPTION>
<S>                                                                                        <C>

                                                                                              Shares
                                                                                           Beneficially
                                                                                              Owned
                                                                                           % of Shares
                                                                                           Beneficially
                                                                                              Owned

Number and Percentage of Company Common Stock Held
Beneficially as of March 1, 2001 by Directors and Executive                                354,096.718
Officers of the Company (12 persons).                                                         12.73%
</TABLE>


(1) Includes 2,114.494 shares held jointly with Mr. Berryman's wife,
    38,302.704 shares owned solely by her, and 5,728.074 shares held as
    custodian for one of his children.

(2) Includes 97.409 shares held jointly with Mr. Bragg's wife.

(3) Includes 20,337.218 shares owned solely by Dr. Bridgforth's wife.

(4) Includes 21,140.644 shares held jointly with Mr. Callis's wife.

(5) Includes 260 shares owned solely by Mr. Hall's wife, and 5,040 shares held
    jointly with his mother.

(6) Includes 34,256 shares held as trustee for the John A. and Mary F. Cordle
    Revocable Trust.

(7) Includes 6,971.168 shares held jointly with Mr. Parrish's wife and
    6,925.035 shares owned solely by her.

(8) Includes 457.508 shares owned solely by Mr. Watson's wife.

(9) Includes 25,000 shares owned jointly with Mr. Walker's wife.

The share ownership listed above reflects the shares necessary to meet the
ownership requirements for bank directors pursuant to the Virginia Banking Act.

No person owned of record or was known to own beneficially more than 5.0% of the
outstanding common stock of the Company as of December 31, 2000. The following
table details information concerning a stock certificate holder that is in the
business of marketing investments.

Actual ownership of shares or partial shares by investors through this company
is not known by management. The following table provides certificate holder
information:

                                    No. of Shares                 Percentage
               Name                in Certificates              Of Shares Held

CEDE & Company                         797,824                      26.54%
Box 20
Bowling Green Station
New York, New York  10081




<PAGE>


Page 69 of 85


ITEM 13    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loans to Related Parties

         During the past year, Directors and Executive Officers of the Company,
their affiliates, and members of their immediate families were customers of, and
had borrowing transactions with, the Company's banking subsidiary in the normal
course of business. All outstanding loans and commitments included in such
transactions are made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than normal risk of collectivity or
present other unfavorable features.

         Balances, as of December 31, of the year are summarized below:

                                              2000         1999         1998
                                              ----         ----         ----

Executive Officers and their families      $  377,564   $  235,034   $  204,123
Directors and their families (1)              679,499      188,610      397,172
Corporations in which Directors and
   Officers had an interest                 3,387,868    2,788,577    1,728,987
                                           ----------   ----------   ----------

               Total                       $4,444,931   $3,212,221   $2,330,282
                                           ==========   ==========   ==========

(1) Loans to Mr. Watson that are reported as loans to Executive Officers are not
    included in loans to Directors.

Refer to Item 14(a) - Financial Statement Schedules

         At year end 2000, Directors and Executive Officers had been granted
lines of credit in the amount of $2,001,500. As of December 31, 2000, $899,183
of these lines was unexercised and available.

Stock Sales to Related Parties

         The current Directors and Executive Officers acquired 3,755 shares of
Company stock during 2000 through exercising of stock options and purchases of
shares on the open market. All shares were purchased through the dividend
reinvestment program. The average price of shares purchased through dividend
reinvestment was $9.40.




<PAGE>


Page 70 of 85


PART IV

ITEM 14    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
           ON FORM 8-K

(a)  (1)          The following consolidated financial statements of Benchmark
           Bankshares, Inc. and its subsidiary, Benchmark Community Bank,
           included in the annual report of the registrant to its stockholders
           for the year ended December 31, 2000 are included in Item 8:

                  Consolidated Statements of Financial Condition - December 31,
                     2000 and 1999
                  Consolidated Statements of Income - Years Ended December 31,
                     2000, 1999, and 1998
                  Consolidated Statements of Changes in Stockholders' Equity -
                     Years Ended December 31, 2000 and 1999
                  Consolidated Statements of Cash Flows - Years Ended December
                     31, 2000, 1999, and 1998
                  Notes to Consolidated Financial Statements - December 31,
                     2000, 1999, and 1998

     (2)          The following consolidated financial statement schedules of
           Benchmark Bankshares, Inc. and its subsidiary, Benchmark Community
           Bank, are included in Item 14 (d):

                  Schedule II - Indebtedness to Related Parties

                  Schedule V - Property, Plant, and Equipment

                  Schedule VI - Accumulated Depreciation, Depletion, and
                     Amortization of Property, Plant, and Equipment

                  Supplemental Information to the Audited Financial Statements
                     pursuant to SEC regulations.

                  All other schedules for which provision is made in the
           applicable accounting regulation of the Securities and Exchange
           Commission are not required under the related instructions or are
           inapplicable and, therefore, have been omitted.



<PAGE>


Page 71 of 85


ITEM 14 (a) (3)    LISTING OF EXHIBITS INCLUDED IN 14 (c)

                                                         Page Number of
                                                  Incorporation by Reference to

( 1)  Articles of Incorporation             Page 57 - Item 14(c) - Exhibit 1 of
                                            Form 10K, December 31, 1989

( 2)  (a)  Amendments to Articles of        Page 76 - Item 14(c) - Exhibit 2 of
             Incorporation                  Form 10K, December 31, 1989

       (b)  Amendments to Articles of       Page 58 - Item 14(c) - Exhibit 2(b)
             Incorporation                  of Form 10K, December 31, 1990

       (c)  Amendment to Articles of        Page 68 - Item 14(c) - Exhibit 2(c)
             Incorporation                  of Form 10K, December 31, 1992

( 3)  Bylaws of Incorporation               Page 83 - Item 14(c) - Exhibit 3 of
                                            Form 10K, December 31, 1989

( 4)  Amendments to Bylaws                  Page 106 - Item 14(c) - Exhibit 4 of
                                            Form 10K, December 31, 1989

( 5)  Indemnity Agreement                   Page II-11-26 in Exhibit 10.1 of
                                            Form S-1 filed September 1, 1989

( 6)  List of Subsidiaries

( 7)  Bonus Plans of Bank Officers          Page 60 - Item 14(c) - Exhibit 7(a)-
                                            7(b) of Form 10K, December 31, 1990

( 8)  Directors Performance                 Page 72 - Item 14(c) - Exhibit 8 of
         Compensation Schedule              Form 10K, December 31, 1992

( 9)  Resolution to Amend the Articles      Page 71 - Item 14(c) - Exhibit 9(a)
         of Incorporation to increase the   of Form 10K, December 31, 1993
         number of authorized shares
         from 2,000,000 to 4,000,000
         concurrent with the Directors
         election to have a 2 for 1 stock
         split

(10)  Stock Option Plans                    Exhibits A and B of 1995 Proxy and
                                            Information Statement for the
                                            April 20, 1995 Annual Meeting of
                                            Stockholders





<PAGE>


Page 72 of 85


ITEM 14(b)    REPORTS ON FORM 8-K

         There was no required filing of Form 8-K warranted as a result of
action taken by the Company during the reporting period.

<PAGE>
Page 73 of 85












                     INDEPENDENT ACCOUNTANT'S REVIEW REPORT


Board of Directors
Benchmark Bankshares, Inc.
Kenbridge, Virginia


     We have reviewed the  accompanying  10-K filing including the balance sheet
of Benchmark Bankshares,  Inc. (a corporation) as of December 31, 2000 and 1999,
and the related  consolidated  statements  of income,  changes in  stockholders'
equity,  and cash flows for each of the three  years then ended,  in  accordance
with  Statements on Standards for Accounting and Review  Services  issued by the
American Institute of Certified Public Accountants.  All information included in
these financial  statements is the representation of the management of Benchmark
Bankshares, Inc.

     A review  consists  principally  of  inquiries  of  Company  personnel  and
analytical  procedures  applied to financial data. It is  substantially  less in
scope than an audit in accordance with generally  accepted  auditing  standards,
the objective of which is the  expression of an opinion  regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

     Based on our review,  we are not aware of any material  modifications  that
should be made to the accompanying  financial statements in order for them to be
in conformity with generally accepted accounting principles.

     Our review was made for the purpose of expressing  limited  assurance  that
there  are no  material  modifications  that  should  be made  to the  financial
statements  in  order  for  them to be in  conformity  with  generally  accepted
accounting principles.  The additional required information included in the 10-K
filing for  December  31,  2000 is  presented  only for  supplementary  analysis
purposes.  Such  information  has been  subjected to the inquiry and  analytical
procedures applied in the review of the basic financial  statements,  and we are
not aware of any material modifications that should be made thereto.




                                     Creedle, Jones, and Alga, P. C.
                                     Certified Public Accountants

March 1, 2001


<PAGE>


Page 74 of 85


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant had duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 15, 2001.

                           Benchmark Bankshares, Inc.
                 (formerly Lunenburg Community Bankshares, Inc.)
                                  (Registrant)




By       Ben L. Watson, III                     By          Janice W. Pernell,
               President                                  Cashier and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the registrant and in the capacities have signed
this report on March 15, 2001.


C. Edward Hall, Director       03-15-01  Ben L. Watson, III, President  03-15-01
---------------------------------------  ---------------------------------------




Mark F. Bragg, Director        03-15-01  Earl C. Currin, Jr., Director  03-15-01
---------------------------------------  ---------------------------------------




J. Ryland Hamlett, Director    03-15-01  Lewis W. Bridgforth, Director  03-15-01
---------------------------------------  ---------------------------------------




William J. Callis, Director    03-15-01  R. Michael Berryman, Director  03-15-01
---------------------------------------  ---------------------------------------




Earl H. Carter, Jr., Director  03-15-01  Wayne J. Parrish, Director     03-15-01
---------------------------------------  ---------------------------------------




<PAGE>


Page 75 of 85


ITEM 14(c)    EXHIBIT 6

         The only subsidiary of the Registrant is Benchmark Community Bank, a
Virginia banking corporation, located in Kenbridge, Lunenburg County, Virginia.
It is owned 100% by Registrant.


<PAGE>


Page 76 of 85


ITEM 14(d)    SCHEDULE II - INDEBTEDNESS TO RELATED PARTIES

                          Year Ended December 31, 2000

                                   Balance                              Balance
                                 at Beginning                          at End of
        Name of Person            of Period    Additions   Deductions   Period

Executive Officers,
   Directors, and Their
   Related Interest              $3,212,221   $2,117,778  $  885,068  $4,444,931

W. J. Callis, Director(1)(2)(3)   1,996,624      790,000     352,701   2,433,923



                          Year Ended December 31, 1999

Executive Officers,
   Directors, and Their
   Related Interest              $2,330,282   $1,890,791  $1,008,852  $3,212,221

W. J. Callis, Director(1)(2)(3)   1,405,724      912,963     322,063   1,996,624



                          Year Ended December 31, 1998

Executive Officers,
   Directors, and Their
   Related Interest              $1,952,802   $1,424,928  $1,047,448  $2,330,282

W. J. Callis, Director(1)(2)(3)     945,664    1,284,062     824,002   1,405,724















(1) Loans to related parties that exceed 5% of the capital of the Company.

(2) Loans to business interest.

(3) Loans are included in the totals presented for the Executive Officers,
    Directors, and their interest.



<PAGE>


Page 77 of 85


ITEM 14(d)    SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
Page 1

                           Benchmark Bankshares, Inc.

                          Year Ended December 31, 2000

<TABLE>
<CAPTION>
<S>                          <C>          <C>          <C>          <C>            <C>

       Col. A                  Col. B        Col. C      Col. D       Col. E         Col. F
                             Balance at                               Other          Balance
                             Beginning     Additions                  Changes       at End of
   Classification            of Period      at Cost    Retirement   Add (Deduct)     Period

Land                         $  799,690   $  118,058   $        -    $       -     $  917,748

Buildings and improvements    2,401,090      232,367            -            -      2,633,457
Leasehold improvements          166,521          869            -            -        167,390
Construction in progress        187,969      430,668            -     (401,595)       217,042
                             ----------   ----------   ----------    ----------    ----------

                              2,755,580      663,904            -     (401,595)     3,017,889

Equipment, furniture, and
   fixtures                   2,033,002      224,347            -            -      2,257,349
                             ----------   ----------   ----------    ----------    ----------

            Total            $5,588,272   $1,006,309   $        -    $(401,595)    $6,192,986
                             ==========   ==========   ==========    ==========    ==========


                          Year Ended December 31, 1999


Land                         $  689,261   $  110,429   $        -    $       -     $  799,690

Buildings and improvements    2,351,090       50,000            -            -      2,401,090
Leasehold improvements          166,521            -            -            -        166,521
Construction in progress              -      187,969            -            -        187,969
                             ----------   ----------   ----------    ----------    ----------

Equipment, furniture, and
   fixtures                   1,886,461      146,541            -            -      2,033,002
                             ----------   ----------   ----------    ----------    ----------

            Total            $5,093,333   $  494,939   $        -    $       -     $5,588,272
                             ==========   ==========   ==========    ==========    ==========
</TABLE>












<PAGE>


Page 78 of 85


ITEM 14(d)    SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
Page 2

                          Year Ended December 31, 1998


<TABLE>
<CAPTION>
<S>                          <C>          <C>          <C>          <C>            <C>

Land                         $  689,261   $        -   $        -    $       -     $  689,261

Buildings and improvements    2,351,090            -            -            -      2,351,090
Leasehold improvements          142,690       23,831            -            -        166,521
                             ----------   ----------   ----------    ---------     ----------

                              2,493,780       23,831            -            -      2,517,611

Equipment, furniture, and
   fixtures                   1,485,634      400,827            -            -      1,886,461
                             ----------   ----------   ----------    ---------     ----------

            Total            $4,668,675   $  424,658   $        -    $       -     $5,093,333
                             ==========   ==========   ==========    =========     ==========
</TABLE>




<PAGE>


Page 79 of 85


ITEM 14(d)    SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND
              AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT


                           Benchmark Bankshares, Inc.

                          Year Ended December 31, 2000
<TABLE>
<CAPTION>
<S>                          <C>         <C>         <C>          <C>          <C>

                                         Additions
                             Balance at  Charged to                  Other     Balance at
                             Beginning   Cost and                   Changes     End of
          Description        of Period   Expenses    Retirements  Add (Deduct)  Period

Building and improvements    $  784,675  $101,681     $      -      $     -    $  886,356
Leasehold improvements          122,409     6,631            -            -       129,040
                             ----------  --------     --------      --------   ----------

          Total                 907,084   108,312            -            -     1,015,396

Equipment, furniture, and
   fixtures                   1,257,409   180,597            -            -     1,438,006
                             ----------  --------     --------      --------   ----------

          Total              $2,164,493  $288,909     $      -      $     -    $2,453,402
                             ==========  ========     ========      ========   ==========


                          Year Ended December 31, 1999

Building and improvements    $  685,890  $ 98,785     $      -      $     -    $  784,675
Leasehold improvements          115,820     6,589            -            -       122,409
                             ----------  --------     --------      --------   ----------

          Total                 801,710   105,374            -            -       907,084

Equipment, furniture, and
   fixtures                   1,091,232   166,220            -          (43)    1,257,409
                             ----------  --------     --------      --------   ----------

          Total              $1,892,942  $271,594     $      -      $   (43)   $2,164,493
                             ==========  ========     ========      ========   ==========


                          Year Ended December 31, 1998

Building and improvements    $  581,308  $ 98,963     $      -      $ 5,619    $  685,890
Leasehold improvements          111,657     4,163            -            -       115,820
                             ----------  --------     --------      --------   ----------

          Total                 692,965   103,126            -        5,619       801,710

Equipment, furniture, and
   fixtures                     977,844   119,007            -       (5,619)    1,091,232
                             ----------  --------     --------      --------   ----------

          Total              $1,670,809  $222,133     $      -      $     -    $1,892,942
                             ==========  ========     ========      ========   ==========
</TABLE>




<PAGE>


Page 80 of 85


ITEM 14(d)(1)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
                 PURSUANT TO SEC REGULATIONS

                           Benchmark Bankshares, Inc.

                              (Parent Company Only)

                    Balance Sheet, December 31, 2000 and 1999


                                     Assets

                                                         2000          1999
                                                         ----          ----

Cash                                                 $ 4,324,894   $ 3,111,052
Investment in subsidiary                              18,401,336    17,419,106
Receivable - reimbursement                                    81            81
                                                     -----------   -----------

               Total Assets                          $22,726,311   $20,530,239
                                                     ===========   ===========


                      Liabilities and Stockholders' Equity

Liabilities
   Dividends payable                                 $   541,120   $   482,493

Stockholders' Equity
   Common stock, par value $.21 per share,
      authorized 4,000,000 shares; issued
      and outstanding 3,006,219.501 12-31-00,
      issued and outstanding 3,015,577.591
      12-31-99                                           631,307       633,272
   Surplus                                             4,404,047     4,501,508
   Retained earnings                                  17,149,837    14,912,966
                                                     -----------   -----------

               Total Stockholders' Equity             22,185,191    20,047,746
                                                     -----------   -----------

               Total Liabilities and
                  Stockholders' Equity               $22,726,311   $20,530,239
                                                     ===========   ===========



















<PAGE>


Page 81 of 85


ITEM 14(d)(2)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
Page 1           PURSUANT TO SEC REGULATIONS


                           Benchmark Bankshares, Inc.

                              (Parent Company Only)

                              Statements of Income

                  Years Ended December 31, 2000, 1999, and 1998


                                             2000         1999          1998
                                             ----         ----          ----

Income
   Dividends from subsidiary              $2,300,000   $2,000,000    $  600,000
                                          ----------   ----------    ----------

               Total Income                2,300,000    2,000,000       600,000

Expenses
   Professional fees                          11,500       20,038        16,470
   Supplies, printing, and postage            10,809        7,410         8,654
   Taxes - miscellaneous                         900          825           850
                                          ----------   ----------    ----------

               Total Expenses                 23,209       28,273        25,974
                                          ----------   ----------    ----------

Income (Loss) Before Equity in
   Undistributed Income of Subsidiary      2,276,791    1,971,727       574,026

Equity in Income of Subsidiary (includes
   tax benefit of parent company
   operating loss)                           568,270      739,780     2,070,139
                                          ----------   ----------    ----------

               Net Income                 $2,845,061   $2,711,507    $2,644,165
                                          ==========   ==========    ==========




<PAGE>

Page 82 of 85

ITEM 14(d)(2)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
Page 2           PURSUANT TO SEC REGULATIONS

                           Benchmark Bankshares, Inc.
                              (Parent Company Only)

                  Statement of Changes in Stockholders' Equity

                  Years Ended December 31, 2000, 1999, and 1998
<TABLE>
<CAPTION>
<S>                                   <C>         <C>           <C>            <C>          <C>
                                                                               Unrealized
                                       Common                    Retained       SEC Gain
                                        Stock       Surplus       Earnings       (Loss) *      Total

Balance January 1, 1998               $617,990    $3,667,557    $12,189,180    $ 177,545    $16,652,272

Net Income
   Parent                                                           574,026                     574,026
   Equity in income of subsidiary                                 2,070,139                   2,070,139

Sale of Stock                           11,562       653,800                                    665,362
Redemption of Stock                        (84)       (7,018)                                    (7,102)

Semi-Annual Cash
   Dividend Declared
      June 18, 1998, $.15 per share                                (447,630)                   (447,630)
      December 17, 1998, $.16 per
         share                                                     (479,594)                   (479,594)
Adjustments                                210                        1,975                       2,185
Unrealized Security Gains (Losses)                                               (14,445)       (14,445)
                                      _________   ___________   ____________   __________   ____________

Balance December 31, 1998              629,678     4,314,339     13,908,096     163,100      19,015,213

Net Income
   Parent                                                         1,971,727                   1,971,727
   Equity in income of subsidiary                                   539,780                     539,780

Sale of Stock                            8,072       450,102                                    458,174
Redemption of Stock                         (5)         (312)                                      (317)
Stock Repurchase                        (4,473)     (262,621)                                  (267,094)

Semi-Annual Cash
   Dividend Declared
      June 17, 1999, $.16 per share                                (481,426)                   (481,426)
      December 16, 1999, $.16 per
         share                                                     (482,493)                   (482,493)

Adjustments                                                            (174)                       (174)
Unrealized Security Gains (Losses)                                 (705,644)                   (705,644)
                                      _________   ___________   ____________   __________   ____________

Balance December 31, 1999              633,272     4,501,508     15,455,510     (542,544)    20,047,746

Net Income
   Parent                                                         2,276,791                   2,276,791
   Equity in income of subsidiary                                   568,270                     568,270

Sale of Stock                            1,593        54,391                                     55,984
Redemption of Stock                         (3)         (111)                                      (114)
Stock Repurchase                        (3,555)     (151,741)                                  (155,296)

Semi-Annual Cash
   Dividend Declared
      June 15, 2000, $.16 per share                                (480,996)                   (480,996)
      December 21, 2000, $.18 per
         share                                                     (541,120)                   (541,120)

Adjustments                                                           2,713                       2,713
Unrealized Security Gains (Losses)                                               411,213        411,213
                                      _________   ___________   ____________   __________   ____________

Balance December 31, 2000             $631,307    $4,404,047    $17,281,168    $(131,331)   $22,185,191
                                      =========   ===========   ============   ==========   ============
</TABLE>

* Net of tax effect.

<PAGE>


Page 83 of 85


ITEM 14(d)(3)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
                 PURSUANT TO SEC REGULATIONS

                           Benchmark Bankshares, Inc.

                              (Parent Company Only)

                            Statements of Cash Flows

                  Years Ended December 31, 2000, 1999, and 1998


                                           2000          1999          1998
                                           ----          ----          ----

Cash Flows from Operating Activities
   Net income                           $2,845,061    $2,711,507    $2,644,165
   Increase in receivable                        -           (81)            -
                                        -----------   -----------   -----------

               Net Cash Provided by
                  Operating Activities   2,845,061     2,711,426     2,644,165

Cash Flows from Investing Activities
   Undistributed earnings of subsidiary   (568,270)     (739,972)   (2,031,902)
   Capital adjustment                          (34)            -             -
                                        -----------   -----------   -----------

               Net Cash (Used) by
                  Investing Activities    (568,304)     (739,972)   (2,031,902)

Cash Flows from Financing Activities
   Sale of stock                            55,984       458,174       665,362
   Redemption of stock                        (114)     (267,411)       (7,102)
   Stock repurchase                       (155,296)            -             -
   Dividends paid                         (963,489)     (961,020)     (927,224)
                                        -----------   -----------   -----------

               Net Cash (Used) by
                  Financing Activities  (1,062,915)     (770,257)     (268,964)
                                        -----------   -----------   -----------

Net Increase (Decrease) in Cash          1,213,842     1,201,197       343,299

Cash - Beginning of Year                 3,111,052     1,909,855     1,566,556
                                        -----------   -----------   -----------

Cash - End of Year                      $4,324,894    $3,111,052    $1,909,855
                                        ===========   ===========   ===========





<PAGE>


Page 84 of 85


ITEM 14(d)(4)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
                 PURSUANT TO SEC REGULATIONS

Investment Securities - Realized Gains and Losses

                                                 Realized    Realized
                                                   Gains      Losses

For the Year Ended December 31, 2000
   U. S. Government Agencies                      $    -      $    -
   Pooled Securities                                 300       2,428
   State and Political Subdivisions                3,199       4,379
                                                  ------      ------

               Total                              $3,499      $6,807
                                                  ======      ======

For the Year Ended December 31, 1999
   U. S. Government Agencies                      $    -      $  547
   State and Political Subdivisions                    -           -
                                                  ------      ------

               Total                              $    -      $  547
                                                  ======      ======




<PAGE>


Page 85 of 85


ITEM 14(d)(5)    SUPPLEMENTAL INFORMATION TO AUDITED FINANCIAL STATEMENTS
                 PURSUANT TO SEC REGULATIONS


Capital Ratios for the Bank Subsidiary

                                                                    Bank
                                                                   Ratios

Total Capital to Risk Weighted Assets                              13.07%

Tier I Capital to Risk Based Assets                                11.97%

Tier I Capital to Total Book Assets                                 8.73%