Edgar Filing: FAUQUIER BANKSHARES INC

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

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[ ] Definitive Additional Materials by Rule 14a-6(e)(2)) [ ]
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FAUQUIER BANKSHARES, INC.

(Name of Registrant as Specified in its Charter)

N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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FAUQUIER BANKSHARES, INC.
10 COURTHOUSE SQUARE
WARRENTON, VIRGINIA 20186

April 18, 2003

Fellow Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Fauquier Bankshares, Inc. (the "Company"), the holding
company for The Fauquier Bank, to be held on May 20, 2003, at 11:00 a.m.,
Eastern Time, at The Fauquier Springs Country Club, Springs Road, Warrenton,
Virginia.

The attached Notice of Annual Meeting and proxy statement describe the formal
business to be transacted at the Annual Meeting. Directors and officers of the
Company, as well as a representative of Yount, Hyde & Barbour, P.C., the
Company's independent auditors, will be present at the Annual Meeting to respond
to any questions that shareholders may have regarding the business to be
transacted. Detailed information relating to the Company's activities and
operating performance is contained in our 2002 Annual Report, which is also
enclosed.

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE
PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED. IF YOUR SHARES ARE HELD IN THE
NAME OF A BROKER OR OTHER NOMINEE, YOU SHOULD INSTRUCT YOUR BROKER OR NOMINEE
HOW TO VOTE ON YOUR BEHALF, OR, IF YOU PLAN TO ATTEND THE MEETING, BRING WITH
YOU A PROXY OR LETTER FROM YOUR BROKER OR NOMINEE TO CONFIRM YOUR OWNERSHIP OF
SHARES.

On behalf of the Board of Directors and all of the employees of the Company and
the Bank, I thank you for your continued interest and support.

Sincerely yours,

C. Hunton Tiffany
Chairman, President & Chief Executive Officer
Fauquier Bankshares, Inc.

FAUQUIER BANKSHARES, INC.
10 COURTHOUSE SQUARE
WARRENTON, VIRGINIA 20186
(540) 347-2700

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 20, 2003

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

Warrenton, Virginia
April 18, 2003

To the Shareholders of Fauquier Bankshares, Inc.:

NOTICE is hereby given that the ANNUAL MEETING OF SHAREHOLDERS OF FAUQUIER
BANKSHARES, INC. (the "Company") will be held at THE FAUQUIER SPRINGS COUNTRY
CLUB, SPRINGS ROAD, WARRENTON, VIRGINIA, ON TUESDAY, MAY 20, 2003, AT 11:00
A.M., EASTERN TIME (THE "ANNUAL MEETING"), for the following purposes:

1. To elect the Class I members of the Board of Directors to serve until
the third succeeding Annual Meeting of Shareholders of the Company
subsequent to this Annual Meeting, i.e. until 2006, and until their
successors are duly elected and qualify.

2. To ratify the appointment of Yount, Hyde & Barbour, P.C. as the
Company's independent public accountants to audit the books of the
Company and its subsidiary for the current year.

3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof, including whether or not to
adjourn the Annual Meeting.

The Board of Directors has fixed the close of business on April 9, 2003, as the
record date for determining shareholders entitled to notice of, and to vote at,
the Annual Meeting.

A copy of the annual report of the Company for the year ended December 31, 2002,
a form of proxy and a proxy statement accompany this notice.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU ARE EXPECTING TO BE PRESENT IN PERSON, PLEASE COMPLETE, SIGN, DATE, AND
PROMPTLY MAIL THE ENCLOSED PROXY CARD. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE THAT REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. IF YOU
ARE PRESENT AT THE MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE
YOUR SHARES PERSONALLY. ANY SHAREHOLDER GIVING A PROXY HAS THE RIGHT TO REVOKE
IT AT ANY TIME BEFORE IT IS EXERCISED BY PROVIDING WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY.

IF YOUR SHARES ARE HELD IN A BROKERAGE ACCOUNT OR BY A BANK OR OTHER NOMINEE,
YOU ARE CONSIDERED THE BENEFICIAL OWNER OF SHARES "HELD IN STREET NAME," AND
THESE PROXY MATERIALS ARE BEING FORWARDED TO YOU BY YOUR BROKER OR NOMINEE. YOUR
NAME DOES NOT APPEAR ON THE REGISTER OF SHAREHOLDERS AND IN ORDER TO BE ADMITTED
TO THE MEETING, YOU MUST BRING A PROXY OR LETTER SHOWING THAT YOU ARE THE
BENEFICIAL OWNER OF THE SHARES. UNLESS YOU HAVE OBTAINED A PROXY FROM YOUR
BROKER OR NOMINEE, YOU WILL NOT BE ABLE TO VOTE AT THE MEETING AND SHOULD
INSTRUCT YOUR BROKER OR NOMINEE HOW TO VOTE ON YOUR BEHALF.

FAUQUIER BANKSHARES, INC.

By Order of the Board of Directors

H. Frances Stringfellow, Secretary

FAUQUIER BANKSHARES, INC.
10 COURTHOUSE SQUARE
WARRENTON, VIRGINIA 20186
(540) 347-2700

PROXY STATEMENT

SOLICITATION AND VOTING OF PROXIES

This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Fauquier Bankshares, Inc. (the "Company") for use
at the Annual Meeting of Shareholders to be held at THE FAUQUIER SPRINGS COUNTRY
CLUB, SPRINGS ROAD, WARRENTON, VIRGINIA, ON TUESDAY, MAY 20, 2003 AT 11:00 A.M.,
EASTERN TIME (THE "ANNUAL MEETING"), and at any adjournments thereof.

The cost of solicitation will be borne by the Company. Additional solicitations
may be made by letter, e-mail, telephone or telefax by the Company or by its
directors or regular employees, without additional compensation therefor.

The Company began mailing this proxy statement and the form of proxy solicited
hereby to its shareholders on or about April 18, 2003.

Any proxy given pursuant to this solicitation may be revoked by the person
executing it at any time prior to its exercise by submitting a written notice of
revocation to the Secretary of the Company or a properly-executed proxy bearing
a later date, or by attending the meeting and voting in person.

Other than the matters set forth in the attached Notice of Annual Meeting of
Shareholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournment
thereof, including whether or not to adjourn the Annual Meeting.

VOTING SECURITIES

As of April 9, 2003, the record date fixed for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting, there were 3,298,938
outstanding shares of common stock, which is the only class of stock of the
Company. Each such share of common stock is entitled to one vote. Shares of
stock represented by valid proxies received pursuant to this solicitation, and
not revoked before they are exercised, will be voted as specified therein. If no
specification is made, signed proxy cards will be voted for the election of each
of the nominees for director named in this proxy statement and in favor of the
ratification of the appointment of Yount, Hyde & Barbour, P.C. as the Company's
independent auditors.

The presence, in person or by proxy, of the holders of at least a majority of
the total number of shares of common stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. In the event that there are not
sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies.

As to the election of directors, the form of proxy being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board of Directors or to "WITHHOLD AUTHORITY" to vote for one or
more of the nominees being proposed. Under Virginia law, directors are elected
by a plurality of votes cast at a meeting in which a quorum is present, without
regard to either broker non-votes or proxies as to which authority to vote for
one or more of the nominees being proposed is withheld.

ELECTION OF CLASS I DIRECTORS

The Company's articles of incorporation provide that the Board of Directors of
the Company is classified into three classes. Only the terms of office of the
Class I directors expire this year, and only nominees to fill the vacancies
created by the expiration of such terms will be considered at the Annual
Meeting. The Class II directors serve until 2004, and the Class III directors
serve until 2005.

The three (3) individuals listed immediately below are proposed for election as
Class I directors. These individuals shall hold office until the third
succeeding Annual Meeting of the shareholders of the Company subsequent to this
Annual Meeting, and until their successors shall have been elected and shall
qualify.

NOMINEES FOR ELECTION FOR THREE-YEAR TERM ENDING IN 2006
--------------------------------------------------------

CLASS I

C. H. Lawrence, Jr., 58, has been a director of the Company since 1984 and a
director of The Fauquier Bank, the Company's operating subsidiary (the "Bank"),
since 1980. Mr. Lawrence is a business development consultant and has been an
independent contractor with the Bank since February 1998. He was owner and
general manager of Country Chevrolet, Inc. from 1976 to 1997. Mr. Lawrence
served as Chairman of the Bank Board from March 1996 to March 1997.

C. Hunton Tiffany, 63, has been a director of the Company since 1984 and a
director of the Bank since 1974. He has been Chairman of the Company since March
1996 and of the Bank since March 1997. Mr. Tiffany has been President & Chief
Executive Officer of the Company since 1984, and Chief Executive Officer of the
Bank since 1982. He also served as President of the Bank from 1982 through
January 2002. He was Executive Vice President from 1974 to 1982, and has served
in various other capacities with the Bank since being hired in 1965.

John J. Norman, Jr., 40, has been a director of the Company and a director of
the Bank since 1998. Mr. Norman has served as President and Principal Broker of
Norman Realty, Inc., a commercial real estate sales and leasing brokerage in
Manassas, Virginia, since June 2001. He served as Vice President and Associate
Broker for Norman Realty, Inc. from 1991 to June 2001, and as a sales agent of
the company from 1989 to 1991.

The Board recommends that the shareholders vote in favor of the above nominees
as Class I directors. The Board of Directors has no reason to believe that any
of the above nominees will be unable to serve as a director. However, if any
should be unable for any reason to accept the nomination or election, it is the
intention of the persons named in the enclosed form of proxy to vote those
proxies authorizing them to vote for the election of directors for the election
of such other person or persons as the Board of Directors may in its discretion
recommend.

DIRECTORS WHOSE TERMS DO NOT EXPIRE THIS YEAR
---------------------------------------------

CLASS II (TERMS EXPIRE IN 2004)

Stanley C. Haworth, 78, has been a director of the Company since 1984 and a
director of the Bank since 1971. Mr. Haworth has been an independent auctioneer
since 1955 and the owner and general manager of Warrenton Nurseries since 1960.

Harold Paul Neale, 81, has been a director of the Company since 1984 and a
director of the Bank since 1971. Mr. Neale has been a self-employed dairy farmer
in Fauquier County, Virginia since 1965.

Brian S. Montgomery, 50, has been a director of the Company and a director of
the Bank since 1990. Mr. Montgomery has been owner and President of Warrenton
Foreign Car, Inc. and Montgomery Auto Parts, both located in Warrenton,
Virginia, since 1972.

Pat H. Nevill, 56, has been a director of the Company and a director of the Bank
since 1993. Ms. Nevill has been associated with The Stable Door, Ltd., a retail
clothing, gifts and tack sales business located in Warrenton, Virginia, as
co-owner, director and Secretary-Treasurer, since 1976.

CLASS III (TERMS EXPIRE IN 2005)

Alexander G. Green, Jr., 86, has been a director of the Company since 1984 and a
director of the Bank since 1950. He is a retired U. S. Postmaster, merchant and
farmer.

Douglas C. Larson, 56, has been a director of the Company and a director of the
Bank since 1996. Mr. Larson has been Vice President of the Piedmont
Environmental Council since December 2000. The Piedmont Environmental Council is
a non-profit organization working to promote and protect the natural resources,
the rural economy, the history and the beauty of the nine county Piedmont
region. From 1990 through November 2000, he served as Executive Director of
Airlie Foundation, a conference and research center in Fauquier County,
Virginia.

D. Harcourt Lees, Jr., 80, has been a director of the Company since 1984 and a
director of the Bank since 1954. He has owned and operated D. H. Lees & Company,
Inc., a real estate brokerage, since 1946.

Randolph T. Minter, 43, has been a director of the Company and a director of the
Bank since 1996. Mr. Minter has been President and owner of Moser Funeral Home,
Inc. since 1990, having worked prior to that time in various positions at the
funeral home since 1980. He also has owned and operated Bright View Cemetery,
Inc. in Fauquier County, Virginia, since 1990.

H. Frances Stringfellow, 64, has been a director of the Company since 1999 and a
director of the Bank since 2000. Ms. Stringfellow has been Corporate Secretary
of the Company since 1991. She is an administrative consultant and was an
independent contractor with the Bank from June 1999 through December 2002,
focusing on internal audit and strategic planning support. Ms. Stringfellow was
employed by the Bank and served in various executive and other positions from
1986 until she retired as Senior Vice President, Administrative Services, in May
1999.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the year ended December 31, 2002, the Board of Directors held ten
meetings. Each director has attended at least 75% of the aggregate of: (1) the
number of Board meetings held during the period in which he or she has been a
director and (2) the number of meetings of all committees on which he or she
served.

The Board has an Audit Committee, which makes recommendations to the Board as it
deems appropriate, including recommendations as to the appointment of
independent auditors. The Audit Committee had seven official meetings and
several informal discussions in fiscal 2002. The Audit Committee report is set
forth below. The members of the Audit Committee are Messrs. Ross, Haworth,
Larson, Neale and Norman, and Ms. Stringfellow.

The Board established a Compensation and Benefits Committee on October 10, 2002,
whose sole function is to act with respect to the Fauquier Bankshares, Inc.
Director Deferred Compensation Plan, and the Fauquier Bankshares, Inc. Omnibus
Stock Ownership and Long Term Incentive Plan. The committee met officially on
November 8, 2002. The members of the Company's Compensation and Benefits
Committee are Messrs. Montgomery, Larson, Haworth and Minter, and Mses. Nevill
and Stringfellow.

Executive compensation is primarily paid by the Bank. The Bank's Board also has
a Compensation and Benefits Committee, which approves the policies under which
compensation is awarded to the Bank's Chief Executive Officer and to the Bank's
other executive officers and oversees the administration of executive
compensation programs. The Bank's Compensation and Benefits Committee had four
meetings and several informal discussions during fiscal 2002.

The members of the Bank's Compensation and Benefits Committee are Messrs.
Montgomery, Larson, Haworth and Minter, and Mses. Nevill and Stringfellow. These
individuals also comprise the Company's Compensation and Benefits Committee.

The Board has a Committee on Board Governance, which is responsible for
evaluating the Board's structure, personnel and processes, and makes
recommendations to the full Board regarding nominations of individuals for
election to the Board of Directors. The committee will consider nominations
submitted by shareholders, along with biographical and business experience
information, to the Chief Executive Officer. During 2002, the committee held no
official meetings. The nominees for Class I members of the Board of Directors
were considered and determined by the entire Board at its meetings. The members
of the Committee on Board Governance are Messrs. Lees, Lawrence, Montgomery,
Norman, Ross and Tiffany, and Ms. Nevill.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, officers,
directors and beneficial owners of more than 10% of the Company's common stock
are required to file reports on Forms 3, 4 and 5 with the Securities and
Exchange Commission to report their beneficial ownership of the Company's common
stock as well as certain changes in such beneficial ownership. Based solely upon
the Company's review of such reports, the Company believes that no officer,
director or more than 10% beneficial owner failed to file required reports on
Forms 3, 4 or 5 on a timely basis during the fiscal year ended December 31,
2002, except Pat H. Nevill, who filed a late Form 4 disclosing one transaction
that was not reported on a timely basis.

COMPENSATION OF MANAGEMENT

DIRECTORS' COMPENSATION
-----------------------

MEETING FEES. Non-employee directors of the Company receive a fee of $200 for
each Board and committee meeting attended. Non-employee directors of the Bank
receive a fee of $500 for each Bank Board meeting and $200 for each Bank
committee meeting attended. However, no director may receive fees for more than
two meetings held in any one day. Mr. Tiffany, the Company's sole employee
director, receives no additional compensation from the Company for his services
performed as a director.

DIRECTOR DEFERRED COMPENSATION PLAN. Effective April 1, 1995, the Board approved
and established a Director Deferred Compensation Plan (the "Deferred
Compensation Plan"). This plan provides that any non-employee director of the
Company or the Bank may elect to defer receipt of all or any portion of his or
her compensation as a director. A participating director may elect to have
amounts deferred under the Deferred Compensation Plan held in a deferred cash
account credited on a quarterly basis with interest equal to the highest rate
offered by the Bank at the end of the preceding quarter. Alternatively, a
participant may elect to have a deferred stock account in which deferred amounts
are treated as if invested in the Company's common stock at the fair market
value on the date of deferral. The value of a stock account will increase and
decrease based upon the fair market value of an equivalent number of shares of
common stock. In addition, the deferred amounts deemed invested in common stock
will be credited with dividends on an equivalent number of shares. Amounts
considered invested in the Company's common stock are paid, at the election of
the director, either in cash or in whole shares of common stock and cash in lieu
of fractional shares. Directors may elect to receive amounts contributed to
their respective accounts through up to five installment payments. The Company
may establish a trust to hold amounts deferred and which accumulate under the
plan. The purpose of the Deferred Compensation Plan is to give the non-employee
directors the option of deferring current taxation on directors' fee income.

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. The Board established, effective April
1, 1995, a Non-Employee Director Stock Option Plan (the "Option Plan"). The
five-year term of the Option Plan expired in 1999. Under the Option Plan each
director who is not an employee of the Company or the Bank received an option
grant covering 2,240 shares of Company common stock on April 1 of each year
during the five-year term of the Option Plan. The

first grant under the Option Plan was made on May 1, 1995. The exercise price of
awards was fixed at the fair market value of the shares on the date the option
was granted. During the term of the Option Plan, a total of 123,200 shares of
common stock could be granted and 120,960 shares of common stock were granted
under the Option Plan. The options granted under the Option Plan were
exercisable six months from the date of grant except in the case of death or
disability. Options that were not exercisable at the time a director's services
on the Board terminated for reasons other than death, disability or retirement
in accordance with the Company's policy were forfeited. The purpose of the
Option Plan was to promote a greater identity of interest between non-employee
directors and the Company's shareholders by increasing each participant's
proprietary interest in the Company through the award of options to purchase
Company common stock.

THE OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN. Effective January 1,
2000, the Omnibus Stock Ownership and Long Term Incentive Plan (the "Omnibus
Plan") established in 1998 for employees, was amended and restated to include
non-employee directors. The Omnibus Plan has a ten-year term and the first grant
to non-employee directors was made on May 23, 2000. The exercise price of awards
is fixed at the fair market value of the shares on the date the option is
granted. During the term of the Omnibus Plan, a total of 180,000 options for
shares of common stock may be granted to non-employee directors. The Omnibus
Plan provides for an annual issuance of 3,734 options to non-employee directors
during their initial three-year term to achieve total holdings of 11,200
options. The annual issuance of options to non-employee directors subsequent to
their initial three-year term requires Board action each year. Directors who had
completed their initial three-year term received 2,000 options per non-employee
director, per year, for each of 2002, 2001 and 2000. The options are exercisable
six months from the date of grant except in the case of death or disability.

A total of 120,960 options for shares of common stock were granted to the
non-employee directors during the five-year term of the Option Plan. There are
104,040 options under the Option Plan remaining available to be exercised. Under
the Omnibus Plan, 28,694 options were granted to non-employee directors at an
exercise price of $8.13 in 2000, 28,214 options were granted to non-employee
directors at an exercise price of $8.07 in 2001, and 25,732 options were granted
to non-employee directors at an exercise price of $13.00 in 2002. No options
issued to non-employee directors had been exercised as of December 31, 2002. All
options have been adjusted to reflect the effect of stock splits.

EXECUTIVE COMPENSATION
----------------------

SUMMARY COMPENSATION TABLE. The following table sets forth the remuneration
accrued or paid by the Company or the Bank, respectively, to the Chief Executive
Officer of the Company and the Bank, C. Hunton Tiffany, and to the other four
most highly compensated executive officers of the Company and the Bank, Randy K.
Ferrell, Rosanne T. Gorkowski, Eric P. Graap and Gary R. Shook (together with
Mr. Tiffany, the "Named Executive Officers"), during the years 2002, 2001, and
2000.

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ----------------
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS/ ALL OTHER
NAME AND SALARY BONUS (1) COMPENSATION SARS (3) COMPENSATION (4)
PRINCIPAL POSITION* YEAR $ ($) (2) ($) (#) ($)
---------------------------- ------- ---------- ------------- ---------------- ---------------- -----------------

C. Hunton Tiffany 2002 193,816 74,402 -- 4,000 5,100
Chairman, President & 2001 190,389 76,871 -- 21,748 5,100
Chief Executive Officer 2000 178,017 68,756 -- 29,538 5,100

Randy K. Ferrell 2002 142,000 51,899 -- 8,756 10,473
Senior Vice President 2001 130,000 45,961 -- 10,058 10,004
2000 101,000 27,310 -- 10,732 9,268

Gary R. Shook 2002 119,666 29,552 -- 4,000 17,781
Senior Vice President 2001 116,000 30,533 -- 9,020 2,819
2000 101,000 27,310 -- 10,732 4,086

Eric P. Graap (5) 2002 110,000 29,552 -- 5,514 4,200
Senior Vice President & 2001 97,000 30,533 9,344 1,334
Chief Financial Officer

Rosanne T. Gorkowski, 2002 83,253 21,035 -- 4,128 3,151
Senior Vice President 2001 79,250 21,733 6,208 2,850
(Bank officer only) (5)

*Positions shown in table are Company positions. The following executive
officers also hold the offices listed after their names, with the Bank: Mr.
Tiffany, Chairman & Chief Executive Officer; Mr. Ferrell, President & Chief
Operating Officer; Mr. Shook, Senior Vice President, Mr. Graap, Senior Vice
President & Chief Financial Officer; and Ms. Gorkowski, Senior Vice President.

(1) Reflects incentive compensation paid under the Management Incentive
Plan.

(2) The dollar value of perquisites and other personal benefits for each of
the Named Executive Officers was less than the established reporting
thresholds.

(3) Reflects the number of incentive stock options and non-qualified stock
options granted under the Omnibus Plan. Numbers have been adjusted to
reflect stock splits.

(4) Represents 401(k) Savings Plan match paid by the Bank for Mr. Tiffany,
Mr. Graap and Ms. Gorkowski; represents the portion of split dollar
life insurance premiums paid by the Bank on Mr. Ferrell's behalf of
$5,373 in 2002, $5,471 in 2001, and $5,608 in 2000, and 401(k) Savings
Plan match paid by the Bank for Mr. Ferrell of $5,100 in 2002, $4,533
in 2001, and $3,660 in 2000; represents 401(k) Savings Plan match paid
by the Bank in 2002 for Mr. Shook of $3,900, and $13,881 in income as a
result of Mr. Shook's exercise and sale of incentive stock options
prior to the expiration of the one-year holding period required for
incentive stock option treatment under the Internal Revenue Code, and
represents the 401(k) Savings Plan match paid by the Bank for Mr. Shook
in 2001 and 2000.

(5) Mr. Graap was named Senior Vice President and Chief Financial Officer
of the Company and the Bank, and Ms. Gorkowski was named Senior Vice
President of the Bank on December 19, 2000.

OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN. In 2002, the Named
Executive Officers were granted incentive stock options and non-qualified stock
options pursuant to the Omnibus Plan, which options, if exercised, would equal
26,398 shares of common stock. The options have an exercise price of $12.70 per
share. Generally, the options are not exercisable until three years from the
date of grant and generally require continuous employment during the period
prior to exercise. The options will expire no more than ten years after the date
of grant.

OPTION GRANT TABLE. The following table provides certain information with
respect to options granted to the Named Executive Officers during the fiscal
year ended December 31, 2002.

OPTIONS/SAR GRANTS IN 2002

Potential realizable
value at assumed annual
Number of Percent of total Rates of stock price
securities options/SARs appreciation for
underlying granted to Exercise or option term
options/SARs employees base price Expiration ---------------------------
Name granted (#) in fiscal year ($/sh) date 5% ($) 10% ($)
---- ---------- -------------- ------ ---- ---------------------------

C. Hunton Tiffany 4,000 15.15% $12.70 01/30/2012 $31,948 $80,962
Randy K. Ferrell 8,756 33.17% $12.70 01/30/2012 $69,934 $177,226
Gary R. Shook 4,000 15.15% $12.70 01/30/2012 $31,948 $80,962
Eric P. Graap 5,514 20.89% $12.70 01/30/2012 $44,040 $111,606
Rosanne T. Gorkowski 4,128 15.64% $12.70 01/30/2012 $32,970 $83,553

OPTION EXERCISE TABLE. The following table provides certain information with
respect to the number of shares of common stock represented by outstanding stock
options held by the Named Executive Officers at December 31, 2002.

AGGREGATED OPTION EXERCISES IN 2002 AND 2002 FISCAL YEAR-END OPTION VALUES

Value Number of Securities Value of Unexercised
Shares Realized Underlying Unexercised In-the-
Acquired On -------- Options Money Options
Name Exercise (#) ($) At Fiscal Year-End (#) At Fiscal Year-End ($)(1)
---- ------------ --- ----------------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------

C. Hunton Tiffany 19,678 106,621 17,150 55,286 97,927 374,450
Randy K. Ferrell -- -- 11,046 29,546 57,959 169,774
Gary R. Shook 2,400 13,881 8,518 23,752 43,651 150,425
Eric P. Graap -- -- -- 14,858 -- 80,556
Rosanne T. Gorkowski -- -- -- 10,336 -- 54,686

----------
(1) In-the-money options are those for which the December 31, 2002 fair market
value of the underlying shares of Company common stock (as determined by the
closing price on The NASDAQ Small Cap Market) exceeds the exercise price of the
option.

PENSION PLAN. The Bank has a non-contributory defined benefit plan which covers
substantially all employees of the Bank who are 21 years of age or older, who
have at least one year of service, and work a minimum of 1,000 hours per year.

The plan's normal retirement benefit formula is as follows:

(a) 1.35% of the participant's final 5-year average compensation per year
of service up to 35 years, plus

(b) 0.60% of the participant's final 5-year average compensation, in
excess of his/her covered compensation level, per year of service up
to 35 years.

For purposes of the pension plan, "covered compensation level" equals the
average of the last 35 years of the social security wage base at normal
retirement. The Bank's pension plan expense for the fiscal year ended December
31, 2002 was $433,036. Cash benefits under the plan generally commence on
retirement, death or other termination of employment and are payable in various
forms, generally at the participant's election. The plan is based on a straight
life annuity assuming full benefit at age 65, no offsets, and covered
compensation of $39,444 for a person age 65 in 2002. Compensation that may be
taken into account for purposes of the pension plan is currently limited to
$200,000 by Internal Revenue Code regulations and includes all regular pay,
overtime and regular bonuses.

PENSION PLAN TABLE

YEARS OF SERVICE

Renumeration 10 15 20 25 30 35
------------ --- --- --- --- --- --

$50,000 7,383 11,075 14,767 18,458 22,150 25,842
$65,000 10,308 15,463 20,617 25,771 30,925 36,079
$80,000 13,233 19,850 26,467 33,083 39,700 46,317
$100,000 17,133 25,700 34,267 42,833 51,400 59,967
$125,000 22,008 33,013 44,017 55,021 66,025 77,029
$150,000 26,883 40,325 53,767 67,208 80,650 94,092
$175,000 31,758 47,638 63,517 79,396 95,275 111,154
$200,000 36,633 54,950 73,267 91,583 109,900 128,217
and above

The monthly retirement benefit based on current compensation and assuming
retirement at age 65, as well as final average earnings and approximate years of
service as of October 1, 2002 for the Named Executive Officers is as follows:

Monthly Benefit Final Average Years of
Name at 65 Earnings Service
------------------------------ ---------------------- ---------------------- ----------------

C. Hunton Tiffany $10,569 $198,719 38.00
Randy K. Ferrell 6,079 137,710 8.00
Gary R. Shook 6,754 126,710 8.00
Eric P. Graap 3,258 123,911 2.00
Rosanne T. Gorkowski 1,551 90,776 3.00

401(K) SAVINGS PLAN. The Bank has a defined contribution retirement plan under
Section 401(k) of the Internal Revenue Code of 1986, as amended, covering
employees who have completed six months of service and who are at least 18 years
of age (the "401(k) Savings Plan"). Under the plan a participant may contribute
an amount up to 15% of their covered compensation for the year, subject to
certain limitations. The Bank may also make, but is not required to make, a
discretionary matching contribution. The amount of this matching contribution,
if any, is determined on an annual basis by the Bank's Board of Directors. The
Bank made a contribution to the plan for the year ended December 31, 2002 of
$101,265.

MANAGEMENT INCENTIVE PLAN. For performance during 2002, the Bank awarded cash
incentive compensation under a management incentive plan (the "Management
Incentive Plan") totaling $204,440 for the Chief Executive

Officer and other Named Executive Officers. The incentive compensation awards
granted to Mr. Tiffany, Mr. Ferrell, Ms. Gorkowski, Mr. Graap and Mr. Shook were
based solely upon the Bank's performance as measured by the corporate
objectives. Each of the executive officers met the performance objectives
established for him or her for 2002.

No Named Executive Officer received remuneration in the form of bonus,
profit-sharing, pension, retirement, options or warrants to purchase stock, or
under any other remuneration plan, other than as indicated in the Summary
Compensation Table above, for the year ended December 31, 2002. An incentive
compensation plan for Bank employees, however, was approved by the Bank's Board
of Directors to be shared by all employees of the Bank, other than the Named
Executive Officers (the "Employee Incentive Plan"). An incentive pool of
$301,814 for 2002 was divided among all employees of the Bank, other than the
Named Executive Officers.

There are no commission agreements between the Company or the Bank and their
respective directors or officers.

SPLIT DOLLAR LIFE INSURANCE AGREEMENT. On January 1, 1996, the Bank entered into
a split dollar life insurance agreement with Mr. Ferrell pursuant to which the
Bank purchased two existing policies of insurance on Mr. Ferrell's life.
Pursuant to the agreement, the Bank pays a portion of the annual premium on the
insurance policies. The policies provide for a combined death benefit of
$440,000 to be paid to the beneficiaries named therein, and the Bank is entitled
to the total policy proceeds in excess of the death benefits. The Bank paid
$5,373 for premiums in 2002 in connection with this agreement.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In 2000, the Board of Directors
authorized the investment of a specially designed life insurance policy to be
carried as an asset of the Bank and to be used to fund a supplemental retirement
plan for Mr. Tiffany (the "SERP"). The initial investment of $749,000 was
implemented on August 10, 2000, and was split equally between Jefferson Pilot
Life Insurance and Southland Life Insurance Companies. At December 31, 2002, the
approximate cash surrender value was $846,941.

CHANGE OF CONTROL AGREEMENTS. The Bank has entered into change of control
agreements with the Named Executive Officers. The change of control agreements
are intended to attract and retain experienced, well-qualified executive
officers who will advance the best interests of the Bank. The continued success
of the Bank and the Company depends to a significant degree on the skills and
competence of these executive officers.

The agreements become operative upon a change of control in the Bank. For
purposes of the agreements, a change of control of the Bank occurs if, (i) any
person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 (but excluding any group of which an executive officer is a
member), becomes the beneficial owner of securities of the Bank or of the
Company having 20% or more of the combined voting power of the then outstanding
Bank or Company securities that may be cast for the election of the Bank or
Company directors, other than as a result of an issuance of securities initiated
by the Bank or Company, as long as the majority of the Bank's Board of Directors
approving the purchases is a majority at the time the purchases are made; or
(ii) as the direct or indirect result of, or in connection with, a tender or
exchange offer, a merger or other business combination, a sale of assets,
contested election, or any combination of these events, the persons who were
directors of the Bank or Company before such events cease to constitute a
majority of the Bank or Company's Board of Directors, or any successor's board,
within two years of the last of such transactions.

If, after a change of control occurs, an executive officer's employment is
terminated within three (3) years, depending upon the agreement, the executive
officer is entitled to receive the payments specified in the agreements, unless
such termination was for cause or the executive officer terminates employment
without good reason. "Cause" means the executive officer's gross negligence or
willful misconduct, which is detrimental to the best interests of the Bank's
business operations. "Good reason" means (i) a material change in the executive
officer's functions, duties, responsibilities, authority, benefits or
perquisites, or relocation of the executive officer's principal place of
employment, (ii) removal from or failure to re-elect the executive officer to a
current position, (iii) a reduction of the executive officer's base salary or a
failure to increase such salary in accordance with cost-of-living increases, or
(iv) the failure of any successor to assume and agree to perform the agreements.

If an executive officer is terminated not for cause or terminates employment for
good reason: (i) the Bank is required to pay the executive officer as
compensation for services rendered to the Bank a cash amount, subject to any
applicable payroll or other taxes required to be withheld, equal to 2.99 times
the highest annual compensation paid to the executive officer by the Bank for
any six months ending with the executive officer's termination; (ii) in addition
to the benefits to which an executive officer is entitled under the retirement
plans or programs, in effect, the Bank is required to pay an executive officer a
cash amount equal to the actuarial equivalent of the retirement pension to which
the executive officer would have been entitled under the terms of such
retirement plan or programs, without regard to "vesting" thereunder, had the
executive officer accumulated three (3) additional years of continuous service
after termination at the executive officer's base rate in effect at the time of
termination, reduced by the single sum actuarial equivalent of any amounts to
which the executive officer is entitled pursuant to the provisions of the
retirement plans or programs; (iii) the Bank is required to maintain in full
force and effect, for the continued benefit of the executive officer for a
three-year period after termination, all employee benefit plans and programs or
arrangements in which the executive officer was entitled to participate
immediately prior to termination, or substantially similar programs if the
executive officer's continued participation is not possible under the general
terms and provisions of such existing plans and programs; and (iv) all stock
options granted to the executive officer under any of the Bank's stock option
plans shall become immediately exercisable with respect to all or any portion of
the shares covered thereby, regardless of whether such options are otherwise
exercisable. The Bank is required to reimburse the executive officer for any
federal income tax liability incurred by the executive officer in connection
with the exercise of such options that would not have been incurred by the
executive officer in the absence of such options becoming immediately available
upon a change of control.

If any payment made or benefit provided to an executive officer pursuant to the
agreements would constitute an "excessive parachute payment" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended and any
regulations thereunder, thereby resulting in a loss of an income tax deduction
by the Bank or the imposition of an excise tax on the executive officer under
Section 4999 of the Internal Revenue Code of 1986, as amended, then the payments
scheduled under the agreements will be reduced to one dollar less than the
maximum amount which may be paid without causing any such payment or benefit to
be nondeductible.

REPORT OF THE COMPENSATION AND BENEFITS COMMITTEES
ON EXECUTIVE COMPENSATION

The following report of the Company's Compensation and Benefits Committee (the
"Company Committee") and the Bank's Compensation and Benefits Committee (the
"Bank Committee") provides information with respect to the compensation paid to
the Named Executive Officers for the year ended December 31, 2002.

Executive compensation is primarily paid by the Bank. Therefore, the executive
compensation program of the Company and the Bank is primarily administered by
the Bank Committee. The Bank Committee is comprised of Messrs. Montgomery,
Larson, Haworth and Minter, and Mses. Nevill and Stringfellow, each of whom is a
non-employee director of the Bank and the Company. The compensation program for
executive officers consists of some or all of the following elements: base
salary; performance-based cash rewards under the Management Incentive Plan;
annual grants of options under the Omnibus Plan; annual matching contributions
under the 401(k) Savings Plan; split dollar life insurance, automobile
allowances, and SERP compensation.

The Company's Board of Directors established the Company Committee on October
10, 2002. Its sole function is to act with respect to the Deferred Compensation
Plan and the Omnibus Plan. The Company Committee is comprised of the same
individuals as the Bank Committee.

The executive compensation program is designed to enable the Company and the
Bank to attract, retain and reward executive officers. The Company Committee and
the Bank Committee intend to keep compensation levels competitive with a
representative sample of the Bank's peer institutions. The peer group used by
the Company Committee and the Bank Committee includes other community banks of
similar size located in Virginia. The committees' strategy is to maintain a
structure within the executive compensation program that

strengthens the link between executive compensation, the Bank's performance,
individual performance of the executive officers and shareholder interests.

The following sections of this report describe the compensation program for
executive officers in effect in 2002.

BASE SALARY. The base salary paid to the Bank's Chief Executive Officer, C.
Hunton Tiffany, is determined by the Bank Committee. The Bank Committee
establishes performance thresholds or other measures that directly relate his
base salary to operating performance and a review of the range of salaries
earned by Chief Executive Officers within a representative peer group, although
there is no predetermined point within such range at which the Bank Committee
targets the salary. Mr. Tiffany's 2002 salary was at the midpoint of the range
of salaries paid to the Chief Executive Officers of the Bank's peer group. The
Bank Committee believes that Mr. Tiffany's 2002 base salary is appropriate in
relation to the Bank's performance and consistent with the salaries earned by
executive officers of the Bank's peer group.

In 2002, the base salary paid to the Bank's President, Randy Ferrell, was
determined by the Bank's Chief Executive Officer. The President determined the
base salaries paid to the other executive officers. The Bank's Chief Executive
Officer and President managed executive salaries in relation to the salaries
paid to executive officers in peer institutions, giving effect to operating
performance, their relative contributions, and the experience of each executive
officer. In determining base salary, they utilized a computer based model
developed by the Bank's outside consultants for computing salary increases based
on performance reviews. The Bank Committee believes that the base salaries paid
to the executive officers gave fair consideration to their individual
contributions in 2002 and are competitive with the Bank's peer group.

MANAGEMENT INCENTIVE COMPENSATION. The Management Incentive Plan is recommended
by the Bank Committee and approved by the Bank's Board of Directors. The Bank
Committee determined the Chief Executive Officer's incentive compensation in
2002. The Chief Executive Officer and President managed the incentive
compensation awards for executive officers of the Bank in 2002, based on each
executive officer's achievement of his or her individual performance objectives.
These objectives were tied to measurements directly related to corporate
strategic objectives. These actions reflect a commitment to maintaining a strong
incentive compensation plan that is directly related to maximizing long-term
shareholder value.

For performance during 2002, the Bank awarded cash incentive compensation under
the Management Incentive Plan totaling $204,440 for the Chief Executive Officer
and other Named Executive Officers. The incentive compensation awards granted to
Mr. Tiffany, Mr. Ferrell, Ms. Gorkowski, Mr. Graap and Mr. Shook were based
solely upon the Bank's performance as measured by the corporate objectives. Each
of the Named Executive Officers met the performance objectives established for
him or her for 2002.

Effective January 1, 2003, the Bank Committee began determining the compensation
and benefits awarded to all executive officers, including the President, in
addition to determining the compensation and benefits awarded to the Chief
Executive Officer. The Company Committee will make all stock option grants under
the Omnibus Plan, upon consideration of the recommendations of the Bank
Committee.

401(K) SAVINGS PLAN MATCHING CONTRIBUTIONS. The 401(k) Savings Plan is a
voluntary defined contribution benefit plan designed to provide additional
incentive and retirement security for eligible employees of the Bank. All Bank
employees over the age of 18 are eligible to participate in the 401(k) Savings
Plan. The executive officers of the Bank participate in the 401(k) Savings Plan
on the same basis as all other eligible employees of the Bank. Under the 401(k)
Savings Plan, each eligible employee of the Bank may elect to contribute on a
pre-tax basis to the 401(k) Savings Plan between 2% to 15% of his or her
compensation, subject to certain limitations that may lower the maximum
contributions of more highly compensated participants.

The Bank's Board of Directors determines each year whether to match employee
contributions based on the previous year's profitability. In 2002, the Bank
matched fifty cents ($0.50) on each dollar contributed by an employee up to six
percent (6%) of that employee's contribution. For 2002, the Bank's matching
contributions to the Named Executive Officers totaled $21,451, including $5,100
contributed to the account of Mr. Tiffany,

$5,100 contributed to the account of Mr. Ferrell, $3,151 contributed to the
account of Ms. Gorkowski, $4,200 contributed to the account of Mr. Graap and
$3,900 contributed to the account of Mr. Shook.

SPLIT DOLLAR LIFE INSURANCE AGREEMENT. The Bank currently has a split dollar
life insurance agreement with Mr. Ferrell, entered into on January 1, 1996. The
policy provides for a combined death benefit of $440,000 to be paid to named
beneficiaries, and the Bank is entitled to policy proceeds in excess of death
benefits. The Bank paid $5,373 for premiums in January 2002 in connection with
this agreement.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In 2001, the Bank's Board of Directors
authorized the investment of a specially designed life insurance policy to be
carried as an asset of the Bank and to be used to fund a supplemental retirement
plan for Mr. Tiffany. The initial investment of $749,000 was implemented on
August 10, 2000, and was split equally between Jefferson Pilot Life Insurance
and Southland Life Insurance Companies. At December 31, 2002, the approximate
cash surrender value was $846,941. The Board's objective was to supplement Mr.
Tiffany's expected retirement earnings under current plans to provide him with
approximately 70% of his annual income at the time of retirement. The expected
tax attributes, increases in cash value, and receipt of death benefits were
believed to make the life insurance investment an effective means of paying for,
or off-setting the cost of, the SERP.

STOCK OPTIONS. The Company awards stock options to executive officers as a
long-term incentive to align the executive officer's interest with those of
other shareholders and to encourage significant stock ownership. Under the
Omnibus Plan, the Company Committee grants to selected key employees options to
purchase common stock at a price equal to the fair market value of the common
stock on the date of grant. Employees selected under the Omnibus Plan are those
key employees who, in the judgment of the Company Committee, are in a position
to materially affect the overall success of the Bank and its subsidiaries by
reason of the nature and extent of their duties.

In 2002, the Bank Committee granted options for 26,398 shares of common stock to
employees of the Bank, including options for 4,000 shares granted to Mr.
Tiffany, 8,756 granted to Mr. Ferrell, 4,000 granted to Mr. Shook, 5,514 granted
to Mr. Graap, and 4,128 granted to Ms. Gorkowski. These grants were approved and
ratified by the Company Committee and the Company Board of Directors. Neither
the Company Committee nor the Bank Committee has adopted any objective criterion
that relates the level of options granted to the executive officers to
performance of the Bank or the individuals. In awarding the grant to the
executive officers, the Bank Committee considered numerous factors, including
the Bank's operating performance, each executive officer's prior contributions
and potential to contribute in the future and practices within the Bank's peer
group with respect to granting options, although, none of these factors was
individually determinative.

The stock options granted under the Omnibus Plan to employees generally become
exercisable on the third anniversary of the date of grant. The option
recipients, including Mr. Tiffany, will receive value from these grants only to
the extent that the price of the Company's common stock exceeds the grant price.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS. The Bank Committee and the Company Committee are composed of outside,
independent directors, none of whom was, during the fiscal year 2002, an
employee of the Company, the Bank or their subsidiaries. Ms. Stringfellow has
served as the Company's Corporate Secretary since 1991 and also served as an
independent contractor from June 1999 until December 31, 2002.

This report is submitted by the Compensation and Benefits Committees of the
Company and the Bank.

COMPENSATION AND BENEFITS COMMITTEE:
(BOTH THE COMPANY COMMITTEE AND THE BANK COMMITTEE)
Brian S. Montgomery, Chairman Stanley C. Haworth
Douglas C. Larson Randolph T. Minter
Pat H. Nevill H. Frances Stringfellow

STOCK PERFORMANCE

The following graph shows a comparison of total shareholder return on the
Company's common stock based on its market price, assuming the reinvestment of
dividends, with the cumulative total returns for the companies on the NASDAQ
Stock Market (U.S.), and SNL Bank Stocks indices for the period beginning on
June 16, 1999, the date that the Company's common stock became registered
pursuant to the Securities Exchange Act of 1934, as amended, and ending on
December 31, 2002. We believe the Company's performance is more accurately
compared to companies in the banking industry, rather than the NASDAQ Total U.S.
Index, which includes companies in diverse industries with market
capitalizations many times the size of the Company's market capitalization.

The Stock Performance Graph also compares the Company's stock performance to the
SNL $250M-$500M Bank Index in addition to the SNL Bank Index. The SNL
$250M-$500M Bank Index, which includes the Bank, contains all banks and related
holding companies from throughout the United States with total assets of between
$250 million and $500 million, thus providing a larger and more appropriate
measurement base to compare with the Company's stock performance. We believe
that a comparison of the Company's stock performance to banks with similar
assets is more accurate than a comparison of banks of all asset sizes.

[OBJECT OMITTED]

PERIOD ENDING
------------------------------------------------------------
INDEX 06/16/99 12/31/99 12/31/00 12/31/01 12/31/02
-------------------------------------------------------------------------------------------------

Fauquier Bankshares, Inc. 100.00 95.64 82.76 140.16 181.78
NASDAQ - Total US* 100.00 161.94 97.49 77.34 53.46
SNL $250M-$500M Bank Index 100.00 95.60 92.05 130.77 168.63

*Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 2003. Used with
permission. All rights reserved. crsp.com

RELATED PARTY TRANSACTIONS

The Bank has had, and may be expected to have in the future, banking
transactions in the ordinary course of business with executive officers,
directors, their immediate families and affiliated companies in which they are
principal stockholders. Such loans were made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectability or present other unfavorable features. At December
31, 2002, these loans amounted to $2,217,571. During 2002, total principal
additions were $873,258 and total principal payments were $3,308,206.

INDEPENDENT CONTRACTOR AGREEMENTS. C. H. Lawrence, Jr., a non-employee director
of the Company and the Bank, continues to provide business development and
customer relations services to the Bank under an Independent Contractor
Agreement dated February 23, 1998, which contract is renewable annually. In
2002, compensation for his business development services amounted to $77,400.

H. Frances Stringfellow, a non-employee director of the Company and the Bank,
and Corporate Secretary of the Company has been a consultant to the Bank and
Company under an Independent Contractor Agreement dated June 1, 1999, which
contract was renewable annually. Ms. Stringfellow managed the internal audit
function, provided administrative and advisory support to the Board of Directors
and Committees of the Bank and the Company, and coordinated the strategic
planning efforts. Compensation for her contractual services in 2002 amounted to
$45,925. Her contract ended December 31, 2002 and was not renewed.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No person or entity is known to the Company to be the beneficial owner of more
than five percent (5%) of the Company's common stock.

The following table sets forth, as of April 9, 2003, the number and percentage
of shares of Company common stock held by each director and nominee of the
Company, the Named Executive Officers, and all directors and executive officers
of the Company and the Bank as a group who are the beneficial owners of any
Company common stock. The business address of each beneficial owner is c/o
Fauquier Bankshares, Inc., 10 Courthouse Square, Warrenton, Virginia 20186.

NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER(S) BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------

Randy K. Ferrell 50,074 (1) 1.52%
Rosanne T. Gorkowski 2,547 (2) *
Eric P. Graap 2,600 (3) *
Alexander G. Green, Jr. 154,000 (4) 4.46%
Stanley C. Haworth 97,400 (5) 2.87%
John J. Norman, Jr. 15,200 (6) *
Douglas C. Larson 18,320 (7) *
C.H. Lawrence, Jr. 49,286 (8) 1.47%
D. Harcourt Lees, Jr. 39,600 (9) 1.19%
Randolph T. Minter 16,800 (10) *
B.S. Montgomery 35,864 (11) 1.08%
H.P. Neale 59,808 (12) 1.78%
Pat H. Nevill 34,680 (13) 1.04%
Henry M. Ross 43,480 (14) 1.30%
Gary R. Shook 17,278 (15) *
H. Frances Stringfellow 23,392 (16) *
C. Hunton Tiffany 129,661 (17) 3.78%
Bank & Company directors and executive officers 794,914 (18) 24.10%
as a group (19 persons):

*Percentage ownership is less than one percent of the outstanding shares of
common stock.

All shares of common stock indicated in the above table are subject to the sole
investment and voting power of the identified director or officer, except as
otherwise set forth in the footnotes below.

(1) Includes 21,778 shares that could be acquired within 60 days through
the exercise of stock options.

(2) Includes 2,547 shares held jointly with John P. Gorkowski, her
husband, over which she shares voting power and investment power.

(3) Includes 300 shares owned by Barbara Graap, his wife, as to which
shares he disclaims beneficial ownership.

(4) Includes 5,440 shares held jointly with Alexander G. Green, III, his
son; 5,440 shares held jointly with Courtenay G. Mullen, his daughter;
and 5,440 shares held jointly with Mary Blake Green, his daughter. Mr.
Green shares voting and investment power with each of his children.
Also includes 14,960 shares that could be acquired within 60 days
through the exercise of stock options.

(5) Includes 65,880 shares held jointly with Mildred W. Haworth, his wife,
over which he shares voting and investment power; and includes 17,200
shares that could be acquired within 60 days through the exercise of
stock options.

(6) Includes 13,200 shares that could be acquired within 60 days through
the exercise of stock options.

(7) Includes 2,000 shares held jointly with Edith J. Larson, his mother,
and 1,240 shares held jointly with Eliza C. Larson, his wife, over
which he shares voting and investment power; and 13,960 shares that
could be acquired within 60 days through the exercise of stock
options.

(8) Includes 17,200 shares that could be acquired within 60 days through
the exercise of stock options.

(9) Includes 17,200 shares that could be acquired within 60 days through
the exercise of stock options.

(10) Includes 15,200 shares that could be acquired within 60 days through
the exercise of stock options.

(11) Includes 10,376 shares held jointly with Patty M. Montgomery, his
wife, over which he shares voting and investment power; and 17,200
shares that could be acquired within 60 days through the exercise of
stock options.

(12) Includes 20,576 shares owned by Fontaine G. Neale, his wife, as to
which shares he disclaims beneficial ownership; and 14,960 shares that
could be acquired within 60 days through the exercise of stock
options.

(13) Includes 1,600 shares owned jointly with H. T. A. Nevill, her husband,
over which she shares voting and investment power; 12,000 shares owned
by H. T. A. Nevill, as to which shares she disclaims beneficial
ownership; 3,000 shares over which Mr. Nevill has voting power, as to
which shares she disclaims beneficial ownership; and 17,200 shares
that could be acquired within 60 days through the exercise of stock
options.

(14) Includes 1,600 shares held jointly with Lois B. Ross, his wife, over
which he shares voting and investment power; 200 shares held by Lois
B. Ross, as to which shares he disclaims beneficial ownership; and
17,200 shares that could be acquired within 60 days through the
exercise of stock options.

(15) Includes 420 shares held by Ann Rodman Shook, his wife, as custodian
for their children, as to which shares he disclaims beneficial
ownership; and 15,718 shares that could be acquired within 60 days
through the exercise of stock options.

(16) Includes 5,176 shares owned jointly with Dallas F. Stringfellow, her
husband, over which she shares voting and investment power; 1,400
shares owned by Dallas F. Stringfellow, as to which shares she
disclaims beneficial ownership; and 11,200 shares that could be
acquired within 60 days through the exercise of stock options.

(17) Includes 29,162 shares owned by Susanne J. McC. Tiffany, his wife, as
to which shares he disclaims beneficial ownership; and 46,688 shares
that could be acquired within 60 days through the exercise of stock
options.

(18) Includes 270,864 shares that could be acquired within 60 days through
the exercise of stock options.

The Company is not aware of any arrangement that may operate at a subsequent
date to effect a change in control of the Company.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The responsibilities include providing effective external audits of all
corporate subsidiaries by a suitable independent accountant, providing an
effective and efficient internal audit program to serve all subsidiaries in an
examining and advisory capacity, assisting the Board of Directors in fulfilling
its fiduciary responsibilities for financial reporting and internal accounting
and operations controls, and to act as an agent for the Board of Directors to
help insure the independence of internal and external auditors, the integrity of
management, and the adequacy of disclosures to shareholders.

The Company's management is responsible for preparing the Company's financial
statements. The Company's independent auditors are responsible for auditing the
financial statements. The activities of the Committee are in no way designed to
supersede or alter these traditional responsibilities. Except to the extent
required by the rules of the NASDAQ stock market, membership on the Audit
Committee does not call for the professional training and technical skills
generally associated with career professionals in the field of accounting and
auditing. In addition, the Company's independent auditors and the independent
internal auditors have more available time and information than does the
Committee. Accordingly, the Committee's role does not provide any special
assurances with regard to the Company's financial statements, nor does it
involve a professional evaluation of the quality of the audits performed by the
independent auditors.

In this context, the Audit Committee has reviewed and discussed the audited 2002
financial statements with management, and has discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees.

The Audit Committee has received and has discussed the written disclosures from
the independent auditors required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, has considered the
compatibility of non audit services with the auditors' independence, and has
discussed with the auditors the auditor's independence.

Based on its review and discussions with the auditors, the Audit Committee
recommended, and the Board of Directors approved, that the audited financial
statements be included in the Company's 2002 Annual Report and in the Company's
Form 10-K for 2002 filed with the Securities and Exchange Commission.

The Audit Committee and the Board of Directors have adopted a written charter
for the Audit Committee that is reviewed annually. A copy was provided in the
proxy material for the Annual Meeting of Shareholders held in 2001.

The six members of the Audit Committee are independent as defined by NASD
Marketplace Rule 4200(a)(15) of the NASD listing standards.

AUDIT COMMITTEE:
Henry M. Ross, Chairman H. P. Neale
Stanley C. Haworth John J. Norman, Jr.
Douglas C. Larson H. Frances Stringfellow

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors selected Yount, Hyde & Barbour, P.C., independent public
accountants to certify the Company's annual financial statements for the year
ending December 31, 2002. Yount, Hyde & Barbour, P.C. has acted as the
independent accountant for the Company since January 1, 1986. Yount, Hyde &
Barbour, P.C. has also acted as the independent accountant for the Bank, the
Company's wholly owned subsidiary, since January 1, 1986. A representative of
Yount, Hyde & Barbour, P.C. is expected to be present at the meeting with the
opportunity of making a statement if he so desires, and to respond to
appropriate questions of the shareholders.

In addition to the audit of the 2002 financial statements of the Company and the
Bank, Yount, Hyde & Barbour, P.C. performed non-audit related services for the
Bank, including the preparation of the Bank's income tax returns, tax planning,
and other accounting services, including performing specific agreed upon
procedures as directed by the Bank's internal audit coordinator. The retention
of Yount, Hyde & Barbour, P.C. to perform the audit-related services was
authorized by the Boards of Directors of the Company and the Bank with the
knowledge that they also assisted in the preparation of the Bank's income tax
returns, did tax planning, and performed other accounting services, as is
compatible with maintaining the accountants' independence.

FEES AND SERVICES
-----------------

Audit Fees. Yount, Hyde & Barbour, P.C.'s fees for the 2002 annual audit and
review of interim financial statements were $45,468.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. Yount, Hyde &
Barbour, P.C. did not render any professional services to the Company or the
Bank in 2002 with respect to financial information systems design and
implementation.

ALL OTHER FEES. Yount, Hyde & Barbour, P.C.'s fees for all other professional
services rendered to the Company and the Bank during 2002 were $75,667.

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------

The Board, upon the recommendation of the Audit Committee, has approved the
selection of the firm of Yount, Hyde & Barbour, P.C. as independent public
accountants to audit the books of the Company and the Bank for the current year,
to report on the consolidated statement of financial position and related
statement of earnings of the Company and the Bank, and to perform such other
appropriate accounting services as may be required by the Board. The Board
recommends that the shareholders vote in favor of ratifying and approving the
selection of Yount, Hyde & Barbour, P.C. for the purposes set forth above. The
Company has been advised by Yount, Hyde & Barbour, P.C. that the firm did not
have any direct financial interest or any material indirect financial interest
in the Company and the Bank in 2002. Should the shareholders vote negatively,
the Board will consider a change in auditors for the next year.

FINANCIAL STATEMENTS
--------------------

Financial statements of the Company are contained in the Annual Report for the
year ended December 31, 2002, which accompanies this proxy statement. However,
the Annual Report and the financial statements contained therein are not to be
considered as part of this soliciting material. Upon request, the Company will
provide, at no cost to the shareholder, a copy of the Company's Form 10-K for
the year ended December 31, 2002, as filed with the Securities and Exchange
Commission.

PROPOSALS FOR 2004 ANNUAL MEETING OF SHAREHOLDERS

The deadline for submitting shareholder proposals to be considered for inclusion
in the proxy statement and form of proxy relating to the 2004 Annual Meeting of
Shareholders is on or before December 20, 2003. Any such proposal

received at the Company's principal executive offices after such date will be
considered untimely and may be excluded from the proxy statement and form of
proxy.

The deadline for submitting stockholder proposals to be presented at the 2004
Annual Meeting of Shareholders, but which will not be included in the proxy
statement and form of proxy relating to such meeting, is March 4, 2004. Any such
proposal received by the Company's principal executive offices after such date
will be considered untimely and the persons named in the proxy for such meeting
may exercise their discretionary voting power with respect to such proposal.

OTHER MATTERS

The Board of Directors is not aware of any other matters to come before the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote each proxy in accordance with their judgment in such matters.

RETURN OF PROXIES

WHETHER OR NOT YOU EXPECT TO ATTEND THIS ANNUAL MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN YOUR PROXY CARD AS PROMPTLY AS POSSIBLE TO ASSURE REPRESENTATION
OF YOUR SHARES AND HELP ASSURE A QUORUM FOR THE ANNUAL MEETING. YOU MAY REVOKE
YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE.

FAUQUIER BANKSHARES, INC.

By Order of the Board of Directors

C. Hunton Tiffany
Chairman, President and Chief Executive
Officer

Warrenton, Virginia
April 18, 2003

REVOCABLE PROXY - THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FAUQUIER BANKSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS MAY 20, 2003, 11:00 A.M. EASTERN TIME

The undersigned hereby appoints Douglas C. Larson, Randolph T. Minter and Pat H. Nevill and each
of them (with full power to act without the others) to act as proxy for the undersigned, and to
vote all shares of Common Stock of Fauquier Bankshares, Inc. (the "Company") which the
undersigned is entitled to vote only at the Annual Meeting of Shareholders, to be held on
May 20, 2003, at 11:00 a.m. Eastern Time, at The Fauquier Springs Country Club, Springs THE BOARD OF DIRECTORS RECOMMENDS A VOTE
Road, Warrenton, Virginia, and at any adjournments thereof, as set forth on the reverse "FOR" EACH OF THE PROPOSALS PRESENTED
side.
The undersigned acknowledges receipt
from the Company prior to the
execution of this proxy of a Notice
of Annual Meeting of Shareholders
and Proxy Statement dated April 18,
2003 and of the Annual Report to
Shareholders.

Dated: _______________________, 2003,

_____________________________________
Signature(s)

NOTE: Please sign exactly as your
name appears on this card. When as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held
jointly, each holder may sign but
only one signature is required.

PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED (Continued, and to be marked
POSTAGE-PAID ENVELOPE. on the other side)

REVOCABLE PROXY - THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FAUQUIER BANKSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS MAY 20, 2003, 11:00 A.M. EASTERN TIME

Dated: _______________________, 2003,

_____________________________________
Signature(s)

PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED (Continued, and to be marked
POSTAGE-PAID ENVELOPE. on the other side)

REVOCABLE PROXY - THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FAUQUIER BANKSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS MAY 20, 2003, 11:00 A.M. EASTERN TIME

Dated: _______________________, 2003,

_____________________________________
Signature(s)

PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED (Continued, and to be marked
POSTAGE-PAID ENVELOPE. on the other side)

1. The election as directors of all nominees listed
(except as marked to the contrary below).

VOTE
FOR WITHHELD
C.H. Lawrence, Jr., J.J. Norman, Jr. and C.H. Tiffany
[ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee,
write that nominee's name on the line provided below.

___________________________________________________________________
FOR AGAINST ABSTAIN
2. The ratification of the selection of Yount, Hyde & Barbour, P.C., as
independent public accountants for the corporation for 2003. [ ] [ ] [ ]

THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, INCLUDING WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY
WILL BE VOTED BY THE PROXY HOLDERS IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE PROXY HOLDERS KNOW OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING.

1. The election as directors of all nominees listed
(except as marked to the contrary below).

VOTE
FOR WITHHELD
C.H. Lawrence, Jr., J.J. Norman, Jr. and C.H. Tiffany
[ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee,
write that nominee's name on the line provided below.

1. The election as directors of all nominees listed
(except as marked to the contrary below).

VOTE
FOR WITHHELD
C.H. Lawrence, Jr., J.J. Norman, Jr. and C.H. Tiffany
[ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee,
write that nominee's name on the line provided below.