SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                             2000             1999             1998           1997          1996
                                                             ----             ----             ----           ----          ----
                                                                                     (Dollars in Thousands)
<S>                                                    <C>            <C>                <C>             <C>            <C>
Total interest income................................. $    67,696    $      55,229      $    50,792     $    49,005    $    39,521
Total interest expense................................      29,143           19,742           18,572          19,144         15,825
                                                       -----------    -------------      -----------     -----------    -----------
Net interest income...................................      38,553           35,487           32,220          29,861         23,696
Provision for loan losses.............................      (8,009)          (3,133)          (3,417)         (5,953)        (2,973)
                                                       ------------   --------------     ------------    ------------   ------------
Net interest income after provision for loan losses...      30,544           32,354           28,803          23,908         20,723
Non-interest income:
  Investment securities gains.........................          --               --               --               2             --
  Other income........................................       6,568            6,331            4,555           3,919          3,411
Non-interest expense..................................     (29,393)         (24,610)         (20,462)       (17,009)        (14,800)
                                                       ------------  ---------------    -------------   ------------   ------------
Income before income taxes............................       7,719           14,075           12,896          10,820          9,334
Income tax expense....................................      (2,206)          (5,250)          (4,690)         (3,990)        (3,371)
                                                       ------------   --------------     ------------    ------------   ------------
Net income............................................ $      5,513   $        8,825     $     8,206     $    6,830     $     5,963
                                                       ============   ==============     ===========     ===========    ===========

Per Share Data:1
  Net income, basic................................... $      4.05    $        6.50      $      6.05     $      5.04    $      4.43
  Net income, assuming dilution....................... $      4.01    $        6.44      $      6.02     $      5.03    $      4.43
  Dividends declared.................................. $      2.76    $        2.60      $      2.30     $      1.92    $      1.72
  Book value.......................................... $     46.20    $       44.70      $     40.81     $     37.00    $     33.76

Financial Condition Data:
  Assets.............................................. $   789,117    $     656,012      $   568,179     $   534,102    $   478,048
  Loans, net.......................................... $   657,065    $     546,897      $   466,661     $   441,390    $   381,272
  Cash and investment securities...................... $    76,816    $      72,223      $    49,939     $    62,166    $    73,713
  Federal funds sold.................................. $     8,130    $          --      $    24,300     $     5,500    $        --
  Deposits............................................ $   648,641    $     522,382      $   459,183     $   461,728    $   408,722
  Notes Payable....................................... $    59,949    $      46,309      $    36,627     $    15,487    $    15,806
  Federal funds purchased and repurchase agreements... $     4,713    $      14,581      $     7,216     $     1,414    $     3,272
  Shareholders' equity................................ $    63,010    $      60,772      $    55,386     $    50,113    $    45,725

Selected Ratios:
  Interest rate spread................................       5.18%            5.90%            5.96%           5.70%          5.16%
  Net yield on interest-earning assets................       5.67%            6.39%            6.53%           6.21%          5.65%
  Return on average assets............................       0.75%            1.47%            1.56%           1.33%          1.32%
  Return on average equity............................       8.58%           14.90%           15.63%          13.93%         13.23%
  Average equity to average assets....................       8.78%            9.89%            9.97%           9.55%          9.94%
  Dividend payout ratio...............................      68.22%           40.02%           37.99%          38.08%         39.05%
  Ratio of nonperforming assets to total assets.......       0.96%            0.96%            1.15%           0.81%          0.49%
  Ratio of allowance for loan losses to
    nonperforming assets..............................     154.83%          163.48%          156.34%         210.15%        315.27%
  Ratio of allowance for loan losses to total loans...       1.72%            1.81%            2.11%           2.01%          1.87%

</TABLE>

1 Amounts have been restated to reflect the effect of the Company's 3-for-1
stock split effected in October 1997.

                                       1
<PAGE>

                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF CHANGES
                IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

     THE INFORMATION CONTAINED HEREIN CONTAINS  FORWARD-LOOKING  STATEMENTS THAT
INVOLVE A NUMBER  OF RISKS AND  UNCERTAINTIES.  A NUMBER OF  FACTORS,  INCLUDING
THOSE  DISCUSSED  HEREIN,  COULD CAUSE RESULTS TO DIFFER  MATERIALLY  FROM THOSE
ANTICIPATED   BY   SUCH   FORWARD-LOOKING    STATEMENTS.   IN   ADDITION,   SUCH
FORWARD-LOOKING STATEMENTS ARE NECESSARILY DEPENDENT UPON ASSUMPTIONS, ESTIMATES
AND DATA THAT MAY BE INCORRECT OR IMPRECISE.  ACCORDINGLY,  ANY  FORWARD-LOOKING
STATEMENTS  INCLUDED HEREIN DO NOT PURPORT TO BE PREDICTIONS OF FUTURE EVENTS OR
CIRCUMSTANCES  AND  MAY  NOT  BE  REALIZED.  FORWARD-LOOKING  STATEMENTS  CAN BE
IDENTIFIED BY, AMONG OTHER THINGS, THE USE OF  FORWARD-LOOKING  TERMINOLOGY SUCH
AS "INTENDS,"  "BELIEVES,"  "EXPECTS,"  "MAY," "WILL,"  "SHOULD,"  "SEEKS," "PRO
FORMA" OR "ANTICIPATES," OR THE NEGATIVES  THEREOF,  OR OTHER VARIATIONS THEREON
OF COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY OR INTENTIONS.

     ALL DOLLAR  AMOUNTS  SET FORTH  BELOW,  OTHER THAN  PER-SHARE  AMOUNTS  AND
PERCENTAGES, ARE IN THOUSANDS UNLESS OTHERWISE NOTED.

GENERAL

     Greene  County  Bancshares,  Inc.  (the  "Company")  was formed in 1985 and
serves as the bank holding company for Greene County Bank (the "Bank"), which is
a  Tennessee-chartered  commercial bank that conducts the principal  business of
the Company. The Bank wholly owned American Fidelity Bank, whose operations were
combined into the Bank during 1996,  and Premier Bank of East  Tennessee,  whose
operations  were combined  into the Bank in 1998. In addition to its  commercial
banking  operations,   the  Bank  conducts  separate  businesses  through  three
wholly-owned   subsidiaries:   Superior  Financial  Services,   Inc.  ("Superior
Financial"),  a consumer  finance  company;  GCB  Acceptance  Corporation  ("GCB
Acceptance"),  a consumer  finance company  specializing in subprime  automobile
lending;  and Fairway Title Co., a title company. The Bank also operates a trust
and money management  function,  doing business as President's  Trust, in Wilson
County, Tennessee and also operates a mortgage banking function headquartered in
Knoxville, Tennessee. At December 31, 2000, the Company maintained a main office
in  Greeneville,  Tennessee  and 25 bank  branches (of which seven are in leased
operating   premises)  and  19  separate   locations   operated  by  the  Bank's
subsidiaries and other operating divisions.

     The principal  business of the Company consists of accepting  deposits from
the general  public and investing  these funds and borrowed  funds  primarily in
loans  and,  to a  limited  extent,  securities  available  for  sale or held to
maturity.  Loans are originated by the Company within its primary market area of
east Tennessee and include  commercial  loans,  commercial and residential  real
estate loans, and installment consumer loans.

     The Company's net income is dependent primarily on its net interest income,
which is the difference between interest income earned on its loans,  investment
assets and other interest-earning assets and interest paid on deposits and other
interest-bearing  liabilities. To a lesser extent, the Company's net income also
is affected  by the level of  non-interest  expenses  such as  compensation  and
employee benefits and Federal Deposit Insurance Corporation premiums.

     The  operations  of the Company are  significantly  affected by  prevailing
economic  conditions,  competition  and  the  monetary,  fiscal  and  regulatory
policies of  governmental  agencies.  Lending  activities  are influenced by the
general  credit  needs  of  small  businesses  in  the  Company's  market  area,
competition

                                       2
<PAGE>

among  lenders,  the  level of  interest  rates and the  availability  of funds.
Deposit flows and costs of funds are  influenced  by prevailing  market rates of
interest, primarily on competing investments,  account maturities and the levels
of personal income and savings in the Company's market area.

BRANCH PURCHASE AND SALE

     On March 8, 2001,  the Bank acquired a bank branch  located in Hot Springs,
North  Carolina  (the  "North   Carolina   Branch")  from  Wachovia  Bank,  N.A.
("Wachovia")  and sold its bank  branch  located  in  Farragut,  Tennessee  (the
"Farragut  Branch") to Wachovia.  The purchase of the North Carolina  Branch and
the sale of the  Farragut  Branch were  pursuant to two  separate  Purchase  and
Assumption Agreements between the Bank and Wachovia as entered into on September
20, 2000 and subsequently amended on February 7, 2001.

BRANCH EXPANSION

     During the early part of 2000,  the Company  continued the expansion of its
branch network,  opening new branches in Hawkins,  Loudon and Sullivan Counties,
Tennessee.  Further,  the Company opened an additional  branch in Blount County,
Tennessee in the fall of 2000.

LIQUIDITY AND CAPITAL RESOURCES

     LIQUIDITY.  Liquidity refers to the ability or the financial flexibility to
manage future cash flows to meet the needs of depositors  and borrowers and fund
operations.  Maintaining  appropriate  levels of liquidity allows the Company to
have sufficient  funds available for reserve  requirements,  customer demand for
loans,  withdrawal  of deposit  balances  and  maturities  of deposits and other
liabilities.  The Company's primary source of liquidity is dividends paid by the
Bank.  Applicable  Tennessee statutes and regulations impose restrictions on the
amount of  dividends  that may be declared by the Bank.  Further,  any  dividend
payments  are  subject  to the  continuing  ability  of  the  Bank  to  maintain
compliance with minimum federal  regulatory  capital  requirements and to retain
its   characterization   under  federal  regulations  as  a   "well-capitalized"
institution.  In addition,  the Company  maintains  lines of credit totaling $20
million with the Federal Home Loan Bank of Cincinnati ("FHLB") and federal funds
lines of credit  totaling  $57.5 million at six  correspondent  banks.  Of these
lines, the Company had $57.5 million immediately available at December 31, 2000.

     In 2000,  operating  activities  of the  Company  provided  $11,188 of cash
flows,  reflecting  net  income of  $5,513  and  adjusted  to  include  non-cash
operating  expenses such as $8,009 in provision for loan losses and amortization
and depreciation of $1,601, and exclude non-cash operating income,  such as $822
in the increased  cash surrender  value of life insurance  contracts and $865 in
the net  change in  accrued  interest  and other  liabilities.  Cash  flows from
operating  activities  were  also  increased  by the  proceeds  from the sale of
held-for-sale  loans  of  $31,220,  offset  in part by  cash  used to  originate
held-for-sale   loans  of  $31,553.   This  decrease  in  overall   activity  in
held-for-sale loans from 1999 and 1998, as compared to 2000, reflects a slowdown
in mortgages  originated and sold by the Bank's mortgage banking  operation in a
rising interest rate environment.

     Investing  activities,  including  lending,  used $150,234 of the Company's
cash flows,  a 61.87%  increase from 1999 levels.  Origination  of loans held to
maturity net of principal  collected used $120,951 in funds,  up from $89,989 in
1999 as the Company's loan  originations  increased as a result of the Company's
expansion of branches into additional  areas of East Tennessee  during 2000, the
Company's  hiring of experienced  lending  officers in targeted market areas and
aggressive  loan pricing in order to build market share.  Purchase of securities
available  for sale,  net of proceeds  from  maturities  of  securities  held to
maturity,  used $24,554 in cash flows,  as the Company  entered into a leveraged
transaction  with

                                       3
<PAGE>

the FHLB to purchase  $25,000 in federal agency bonds for the primary purpose of
utilizing such bonds to pledge public  deposits.  The transaction  also enhanced
earnings per share and return on equity. The use of cash by investing activities
also  increased in part from the Company's  investment in premises and equipment
of $7,357 resulting from the Company's branch expansion and furnishings  related
thereto.

     Net  additional  cash  inflows  of  $126,659  were  provided  by  financing
activities,   an  increase  of  $44,564  from  1999  levels.  The  increase  was
attributable  primarily  to  deposit  inflow  from  certificates  of  deposit of
$117,621 and non-certificate deposits of $8,638. This increase in deposit inflow
as compared to 1999 was  attributable  to the Company's  payment of  competitive
interest rates and its branch expansion throughout East Tennessee. Cash provided
by financing activities also included the Company's reliance on notes payable of
$70,000  during 2000,  of which  $56,360 was repaid during the year. As in prior
years,  the Company's cash flow from  financing  activities was decreased by the
Company's dividend payments during 2000 of $3,761.

     CAPITAL  RESOURCES.  The  Company's  capital  position is  reflected in its
shareholders'  equity,  subject to certain adjustments for regulatory  purposes.
Shareholders'  equity,  or  capital,  is a measure of the  Company's  net worth,
soundness and viability.  The Company's  capital  continued to exceed regulatory
requirements  at  December  31, 2000 and its record of paying  dividends  to its
stockholders  continued  uninterrupted  during  2000.  Management  believes  the
capital  base  of  the  Company   allows  it  to  take   advantage  of  business
opportunities  while  maintaining the level of resources  deemed  appropriate by
management of the Company to address  business  risks  inherent in the Company's
daily operations.

     Shareholders'  equity on  December  31,  2000 was  $63,010,  an increase of
$2,238,   or  3.68%,  from  $60,772  on  December  31,  1999.  The  increase  in
shareholders'  equity arises primarily from net income for 2000 of $5,513 ($4.05
per share, or $4.01 per share assuming dilution), and proceeds from the exercise
of stock options during 1999 totaling $389.  This increase was offset in part by
quarterly dividend payments during 2000 that totaled $3,761 ($2.76 per share).

     Risk-based  capital  regulations  adopted by the Board of  Governors of the
Federal Reserve Board (the "FRB") and the Federal Deposit Insurance  Corporation
("FDIC") require bank holding companies and banks, respectively,  to achieve and
maintain  specified  ratios of capital to risk-weighted  assets.  The risk-based
capital  rules  are  designed  to  measure  "Tier  1"  capital   (consisting  of
stockholders' equity, less goodwill) and total capital in relation to the credit
risk of both on- and off-balance sheet items. Under the guidelines,  one of four
risk weights is applied to the  different  on-balance  sheet items.  Off-balance
sheet items, such as loan commitments,  are also subject to risk weighting after
conversion to balance sheet equivalent  amounts.  All bank holding companies and
banks must maintain a minimum total capital to total risk-weighted  assets ratio
of  8.00%,  at  least  half of which  must be in the  form of  core,  or Tier 1,
capital.  At December 31, 2000,  the Company and the Bank each  satisfied  their
respective   minimum  regulatory   capital   requirements,   and  the  Bank  was
"well-capitalized" within the meaning of federal regulatory requirements.

ASSET/LIABILITY MANAGEMENT

     The operations  and  profitability  of the Company are largely  impacted by
changes in interest  rates and  management's  ability to control  interest  rate
sensitivity.  Management believes that its asset/liability  strategy reduces the
risk  associated with  fluctuation in interest rates.  The Company strives to be
neither asset  sensitive nor liability  sensitive by relying upon a mix of fixed
rate and variable rate products.  At December 31, 2000,  approximately  38.8% of
the Company's  gross loans had  adjustable  rates.  The Company has a mixture of
fixed rate loans and loans tied to its Prime Rate and the  investment  portfolio
also has a substantial amount of adjustable-rate  securities. It is management's
belief that while this mixture may not give maximum returns under certain market
conditions,  it can prevent  severe swings in

                                       4
<PAGE>

earnings  under other  conditions.  Management  believes the Company is somewhat
asset sensitive;  therefore, in a falling rate environment earnings will tend to
fall, while in a rising rate environment earnings will tend to improve.  Despite
the  implementation  of strategies to achieve a matching  position of assets and
liabilities  and to reduce the  exposure  to  fluctuating  interest  rates,  the
results  of  operations  of the  Company  will  remain  subject to the level and
movement of interest rates.

CHANGES IN RESULTS OF OPERATIONS

     NET  INCOME.  Net income for 2000 was  $5,513,  a  decrease  of $3,312,  or
37.53%,  as compared  to net income of $8,825 for 1999.  The  decrease  resulted
primarily  from an increase in provision for loan losses of $4,876,  or 155.63%,
to $8,009 in 2000 from $3,133 in 1999, and an increase in  non-interest  expense
of $4,783,  or 19.43%,  to $29,393 in 2000 from $24,610 in 1999. The increase in
provision  for  loan  losses  reflects   significant   charge-offs  at  Superior
Financial,   the  Company's  consumer  finance   subsidiary.   The  increase  in
non-interest  expense is  attributable  primarily  to  increases in salaries and
benefits and in other  expenses.  These  changes were  offset,  in part,  by the
$3,066,  or 8.64%,  increase  in net  interest  income to  $38,553  in 2000 from
$35,487 in 1999.  The  increase in net  interest  income  primarily  reflects an
increased  volume of loans  that more than  offset the  increases  in volume and
average rate associated with the Company's interest-bearing liabilities.

     Net income for 1999 was $8,825,  an increase of $619, or 7.54%, as compared
to net  income of $8,206  for 1998.  The  increase  resulted  primarily  from an
increase in net interest  income of $3,267,  or 10.14%,  to $35,487 in 1999 from
$32,220 in 1998, and an increase in non-interest income of $1,776, or 38.99%, to
$6,331  in 1999  from  $4,555  in 1998.  The  increase  in net  interest  income
primarily  reflects an increased  volume of loans that offset the dollar effects
of spread compression as the average yield on  interest-earning  assets declined
to a greater  extent than the  average  rate on the  Company's  interest-bearing
liabilities. These changes were offset in part by the $4,148, or 20.27% increase
in  non-interest  expense to $24,610 in 1999 from $20,462 in 1998,  attributable
primarily to increases in salaries and benefits and in other expenses.

     NET INTEREST INCOME.  The largest source of earnings for the Company is net
interest   income,   which  is  the  difference   between   interest  income  on
interest-earning assets and interest paid on deposits and other interest-bearing
liabilities. The primary factors which affect net interest income are changes in
volume and yields of earning assets and interest-bearing liabilities,  which are
affected in part by management's  responses to changes in interest rates through
asset/liability  management.  During 2000,  net  interest  income was $38,553 as
compared  to  $35,487 in 1999,  an  increase  of 8.64%.  This  increase  was due
primarily to an increase in average loan balances,  which increased $97,884,  or
19.18%,  to $608,351 in 2000 from  $510,467 in 1999,  while the yield on average
loans remained  constant at 10.34%.  While the Company's  yield on average loans
was enhanced by the environment of increasing interest rates during 2000, as the
Company's asset/liability position is slightly  asset-sensitive,  such yield was
correspondingly  decreased by the Company's  aggressive loan pricing in order to
obtain market share in new markets and increase share in existing  markets.  The
increase  in net  interest  income was offset,  in part,  by  increases  in both
average  balances  and rates  related to  interest-bearing  liabilities,  as the
Company  aggressively  funded the growth in loans. In particular,  the Company's
rate on average  interest-bearing  liabilities  increased  to 4.78% in 2000 from
4.04% in 1999,  reflecting both an increasing  interest rate environment as well
as a very  competitive  market in which to attract  deposits.  As a result,  the
Company's  interest  rate spread and net interest  margin  declined in 2000 from
1999. In view of the Company's  slightly  asset-sensitive  position,  management
anticipates  further  declines in both  interest  rate  spread and net  interest
margin if product mixes remain relatively  unchanged and interest rates continue
to decline as evidenced during the first quarter of 2001.

                                       5
<PAGE>

     During  1999,  net  interest  income was  $35,487 as compared to $32,220 in
1998, an increase of 10.14%. This increase was due primarily to an increase from
1998 in the average balance of  interest-earning  assets that offset the effects
of a decline in average rates earned on such assets.  In addition,  the increase
in net interest income was also  attributable to the decline in the average rate
of interest-bearing  liabilities to 4.04% in 1999 from 4.34% in 1998 that offset
in large  part the  cost of the  Company's  increased  reliance  during  1999 of
deposits to fund loan growth. Among such liabilities,  the Company increased its
average  level of deposits  to $460,450 in 1999 from  $416,647 in 1998 while the
average rate paid declined to 3.97% in 1999 from 4.28% in 1998.

     Average  Balances,  Interest  Rates  and  Yields.  Net  interest  income is
affected by (i) the difference between yields earned on interest-earning  assets
and rates paid on interest-bearing liabilities ("interest rate spread") and (ii)
the   relative   amounts  of   interest-earning   assets  and   interest-bearing
liabilities.  The  Company's  interest  rate spread is  affected by  regulatory,
economic and competitive  factors that influence interest rates, loan demand and
deposit flows. When the total of interest-earning assets approximates or exceeds
the total of  interest-bearing  liabilities,  any positive  interest rate spread
will generate net interest  income.  An indication  of the  effectiveness  of an
institution's   net   interest   income   management   is  its  "net   yield  on
interest-earning  assets,"  which is net  interest  income  divided  by  average
interest-earning assets.

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  consolidated  average  interest-earning  assets and  interest-bearing
liabilities  and  reflects  the  average  yield on assets  and  average  cost of
liabilities  for the  periods  indicated.  Such  yields and costs are derived by
dividing   income  or  expense  by  the  average  daily  balance  of  assets  or
liabilities,  respectively,  for  the  periods  presented.  During  the  periods
indicated, non-accruing loans, if any, are included in the net loan category.

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                               2000                                1999                            1998
                              ----------------------------------   -------------------------------   ------------------------------
                               Average                  Average       Average              Average     Average              Average
                               Balance       Interest     Rate        Balance    Interest   Rate       Balance   Interest     Rate
                               -------       --------     ----        -------    --------   ----       -------   --------     ----
                                                                       (Dollars in Thousands)
INTEREST-EARNING ASSETS:
Loans1
------
<S>                           <C>           <C>           <C>       <C>         <C>         <C>      <C>         <C>         <C>
Real estate loans.............$  448,808    $  39,316     8.76%     $  370,529  $  32,429   8.75%    $ 310,850   $ 27,954    8.99%
Commercial loans..............    80,399        7,646     9.51%         64,268      5,790   9.01%       51,177      4,785    9.35%
Consumer and other loans-
   net2                           79,144       11,304    14.28%         75,670     10,253  13.55%       80,858     11,328   14.01%
Fees on loans.................                  4,608                               4,314                           3,754
                              ----------    ---------               ----------  ---------            ---------   --------

  Total loans
   (including fees)...........$  608,351    $  62,874    10.34%     $  510,467  $  52,786  10.34%    $ 442,885   $ 47,821   10.80%
                               ---------     --------                ---------   --------             --------    -------

Investment securities3
---------------------
Taxable                       $   44,427    $   3,153     7.10%     $   20,384  $   1,196   5.87%    $  27,015   $  1,684    6.23%
Tax-exempt4...................     3,213          140     4.36%          4,085        160   3.92%        6,251        282    4.51%
FHLB and Bankers
  Bank Stock..................     3,986          288     7.23%          3,377        244   7.23%        2,312        181    7.83%
                              ----------    ---------               ----------  ---------            ---------   --------

  Total investment
    securities................$   51,626    $   3,581     6.94%     $   27,846  $   1,600   5.75%    $  35,578   $  2,147    6.03%

Other short-term
  Investments.................    19,495        1,241     6.37%         17,309        843   4.87%       14,809        824    5.56%
                              ----------    ---------               ----------  ---------            ---------   --------

  Total interest-
    earning assets............$  679,472    $  67,696     9.96%     $  555,622  $  55,229   9.94%    $ 493,272   $ 50,792   10.30%
                               ---------     --------                ---------   --------             --------    -------

NON-INTEREST-EARNING ASSETS:
Cash and due from
 banks                        $   21,757                            $   22,252                       $  17,855
Premises and
  equipment...................    21,351                                12,936                           9,968
Other, less allowance
  for loan losses.............     8,471                                 8,001                           5,346
                              ----------                            ----------                       ---------

  Total non-interest-
    earning assets............$   51,579                            $   43,189                       $  33,169
                               ---------                             ---------                        --------

  Total Assets................$  731,051                            $  598,811                       $ 526,441
                              ==========                             =========                        ========
</TABLE>
----------------------------
1 Average loan balances include  nonaccrual loans.  Interest income collected on
nonaccrual loans has been included.
2 Installment loans are stated net of unearned income.
3 The  average  balance of and the  related  yield  associated  with  securities
available for sale are based on the cost of such securities.
4 Tax exempt  income has not been adjusted to  tax-equivalent  basis since it is
not material.

                                       7
<PAGE>
<TABLE>
<CAPTION>
                                               2000                                1999                            1998
                              ----------------------------------   -------------------------------   ------------------------------
                               Average                  Average     Average             Average     Average              Average
                               Balance      Interest     Rate       Balance   Interest   Rate       Balance   Interest     Rate
                               -------      --------     ----       -------   --------   ----       -------   --------     ----
                                                                        (Dollars in Thousands)
<S>                            <C>         <C>          <C>      <C>         <C>         <C>      <C>         <C>         <C>
INTEREST-BEARING LIABILITIES:
Deposits
--------
  Savings, NOW
    accounts, and
    money markets............. $  193,889  $    5,116   2.64%    $  187,058   $    4,629  2.47%  $   160,775  $    3,850   2.39%
  Time deposits...............    353,278      20,175   5.71%       273,392       13,671  5.00%      255,872      13,975   5.46%
                               ----------  ----------            ----------   ----------         -----------  ----------

     Total deposits........... $  547,167  $   25,291   4.62%    $  460,450   $   18,300  3.97%  $   416,647  $   17,825   4.28%

Securities sold
  under repurchase
  agreements and
        short-term
        borrowings............      6,036         304   5.04%         7,326          318  4.35%       2,944          116   3.94%

Notes Payable.................     56,934       3,548   6.23%        21,401        1,124  5.25%       8,503          631   7.42%
                               ----------  ----------            ----------   ----------         ----------   ----------

Total interest-bearing
        liabilities........... $  610,137  $   29,143   4.78%    $  489,177   $   19,742  4.04%  $  428,094   $   18,752   4.34%

NON-INTEREST-BEARING
  LIABILITIES:
  Demand deposits............. $   46,010                        $   42,278                      $   39,822
  Other liabilities...........     10,685                             8,113                           6,034
                               ----------                        ----------                      ----------
  Total liabilities........... $   56,695                        $   50,391                      $   45,856

  Stockholders' equity........     64,219                            59,243                          52,491
                               ----------                        ----------                      ----------

Total liabilities and
  stockholders' equity........ $  731,051                        $  598,811                      $  526,441
                               ==========                        ==========                      ==========

Net interest income...........             $   38,553                         $   35,487                       $  32,220
                                           ==========                         ==========                       =========

MARGIN ANALYSIS:
  Interest rate spread........                          5.18%                             5.90%                            5.96%

Net yield on interest-
  earning assets (net
  interest margin)............                          5.67%                             6.39%                            6.53%
                                                        =====                             =====                            =====
</TABLE>
                                       8
<PAGE>


     Rate/Volume  Analysis.  The following table analyzes net interest income in
terms of changes in the volume of interest-earning  assets and  interest-bearing
liabilities  and changes in yields and rates.  The table  reflects the extent to
which changes in the interest  income and interest  expense are  attributable to
changes in volume (changes in volume  multiplied by prior year rate) and changes
in rate (changes in rate multiplied by prior year volume).  Changes attributable
to the combined impact of volume and rate have been separately identified.
<TABLE>
<CAPTION>
                                                     2000 vs. 1999                                    1999 vs. 1998
                                     -----------------------------------------------   --------------------------------------------
                                                                Rate/        Total                              Rate/      Total
                                       Volume        Rate       Volume       Change     Volume      Rate        Volume     Change
                                       ------        ----       ------       ------     ------      ----        ------     ------
                                                                              (In thousands)
INTEREST INCOME:
<S>                                  <C>          <C>         <C>          <C>         <C>        <C>          <C>        <C>
    Loans net of unearned income...  $  10,123    $     (29)  $      (6)   $  10,088   $  7,297   $   (2,023)  $   (309)  $   4,965
    Investment securities:
      Taxable......................      1,411          251         295        1,957       (413)         (99)        24        (488)
      Tax exempt...................        (34)          18          (4)         (20)       (98)         (37)        13        (122)
      FHLB and Bankers Bank Stock..         44            -           -           44         83          (14)        (6)         63
    Other short-term investments...        106          259          33          398        139         (103)       (17)         19
                                     ---------    ---------   ---------    ---------   --------   ----------   --------   ---------

  Total interest income............     11,650          499         318       12,467      7,008       (2,276)      (295)      4,437
                                     ---------    ---------   ---------    ---------   --------   ----------   --------   ---------

INTEREST EXPENSE:
    Savings, NOW accounts, and
        money market accounts......        169          307          11          487        629          129         21         779
    Time deposits..................      3,995        1,941         568        6,504        957       (1,181)       (81)       (305)
    Short-term borrowings..........        (56)          51          (9)         (14)       172           12         18         202
    Debt   ........................      1,866          210         348        2,424        956         (184)      (278)        494
                                     ---------    ---------   ---------    ---------   --------   ----------   --------   ---------

    Total interest expense.........      5,974        2,509         918        9,401      2,714       (1,224)      (320)      1,170
                                     ---------    ---------   ---------    ---------   --------   ----------   --------   ---------

Net interest income................  $   5,676    $  (2,010)  $    (600)   $   3,066   $  4,294   $   (1,052)   $    25   $   3,267
                                      ========     ========    ========     ========    =======    =========    =======    ========
</TABLE>

     At December 31, 2000,  loans  outstanding and loans  held-for-sale,  net of
unearned  income and  allowance  for loan  losses,  were  $657,065  compared  to
$546,897  at 1999 year end.  The  increase  is  primarily  due to the  Company's
presence in new markets  during 2000, as well as the  combination  of additional
lenders,  first-hand knowledge of the local lending markets and competitive loan
rates.  Average  outstanding  loans,  net of  unearned  interest,  for 2000 were
$608,351,  an increase of 19.18% from the 1999 average of $510,467.  The average
outstanding  loans for 1998 were  $442,885.  The growth in average loans for the
past three years can be attributed to the Company's  continuing market expansion
into surrounding  counties through the Company's branch network, the development
of its other  financing  businesses and indirect  financing and aggressive  loan
pricing.  During 1999, the Company  continued its expansion with new branches in
Monroe  and  Blount  Counties  and moved  operations  of an  existing  branch in
Sullivan  County to a new  facility.  In  addition,  the loan growth in 1999 was
attributable  to a new  management  group that  joined the  Company.  Management
cannot predict at what rate the loan portfolio will grow in the future; however,
it does not believe the Company will match 2000 growth levels.

     Average investment securities for 2000 were $51,626, compared to $27,846 in
1999, and $35,577 in 1998. The increase of $23,780, or 85.40%, from 1999 to 2000
primarily  reflects the purchase of $25,000 of federal agency  securities at the
beginning of 2000 for the principal  purpose of pledging  public  deposits.  The
decline in the average  balance of investment  securities  from 1998 to 1999 was
the  result  of the  Company's  use of  the  proceeds  from  the  maturities  of
available-for-sale  securities  to fund  higher-yielding  loans.  In  2000,  the
average yield on investments was 6.94%, an increase from the 5.75% yield in 1999
and the 6.04% yield in 1998.  The  increase in 2000 results  primarily  from the
7.33% yield on the $25,000 federal agency  security  referenced  previously,  as
well as the beneficial  effect of the higher  interest rate  environment  during
2000 on the Company's adjustable-rate investment securities. The decline in 1999
reflects  the  prepayment  of a  substantial  amount  of  loans  underlying  the
adjustable-rate

                                       9
<PAGE>

securities,  and thus the amortization of the associated premiums,  as borrowers
tended to refinance their  adjustable-rate  loans with fixed rate loans.  Income
provided by the investment portfolio in 2000 was $3,581 as compared to $1,600 in
1999, and $2,147 in 1998.

     PROVISION  FOR  LOAN  LOSSES.  Management  assesses  the  adequacy  of  the
allowance for loan losses by  considering a combination of regulatory and credit
risk  criteria.  The entire loan  portfolio is graded and potential loss factors
are assigned  accordingly.  The  potential  loss factors for impaired  loans are
assigned based on regulatory  guidelines.  The regulatory criteria are set forth
in the Interagency  Policy Statement on the Allowance for Loan and Lease Losses.
The  potential  loss  factors  associated  with  unimpaired  loans  are based on
historical  net loss  experience  and  management's  review of trends within the
portfolio and related industries.

     Generally,  commercial,  commercial real estate and residential real estate
loans are  assigned a level of risk at  inception.  Thereafter,  these loans are
reviewed on an ongoing  basis.  The review  includes loan payment and collateral
status, borrowers' financial data and borrowers' internal operating factors such
as cash flows, operating income, liquidity, leverage and loan documentation, and
any  significant  change can result in an  increase  or  decrease  in the loan's
assigned  risk grade.  Aggregate  dollar volume by risk grade is monitored on an
ongoing basis. The  establishment of and any changes to risk grades for consumer
loans are generally based upon payment performance.

     Generally,  the Bank  maintains  only a general loan loss  allowance.  This
allowance  is increased or decreased  based on  management's  assessment  of the
overall risk of its loan portfolio. Occasionally, a portion of the allowance may
be allocated to a specific loan to reflect unusual circumstances associated with
that loan.

     Management  reviews  certain key indicators on a monthly  basis,  including
current  economic  conditions,  delinquency  trends and  ratios,  portfolio  mix
changes and other  information  management deems necessary,  as well as year-end
loss results.  This review  process  provides a degree of objective  measurement
that is used in conjunction with periodic  internal  evaluations.  To the extent
that this process  yields  differences  between  estimated  and actual  observed
losses, adjustments are made to provisions and/or the level of the allowance.

     Increases  and decreases in the allowance for loan losses due to changes in
the  measurement  of the impaired  loans are included in the  provision for loan
losses.  Loans  continue to be  classified  as impaired  unless they are brought
fully  current  and the  collection  of  scheduled  interest  and  principal  is
considered probable.

     The Company's  provision for loan losses increased $4,876,  or 155.63%,  to
$8,009 in 2000 from  $3,133 in 1999.  The  increase  in the  provision  for loan
losses  is  primarily  attributable  to  significant   charge-offs  at  Superior
Financial,  the Company's consumer lending  subsidiary.  Charge-offs at Superior
Financial,  net of  recoveries,  exceeded  such net  charge-offs  in the Bank by
22.29%.  Net charge-offs in Superior  Financial were $3,210 versus $2,625 in the
Bank.  Such  net  charge-offs  were a  result  of a  decline  in  loan  quality,
implementation of a more aggressive  charge-off  policy,  and significantly high
bankruptcy  rates in Tennessee.  Assuming no further  deterioration of the local
and regional economy, and based upon information presently available, management
anticipates that net charge-offs in the Superior Financial loan portfolio should
decline in the near future.

     The ratio of  non-performing  assets to total  assets was 0.96% at December
31, 2000 and December 31, 1999.  Despite the Company's  increased  provision for
loan losses in 2000 compared to 1999 and the $1,396, or 13.51%,  increase in the
allowance for loan losses to $11,728 at December 31, 2000 as compared to $10,332
at December 31, 1999,  the ratio of the  Company's  allowance for loan losses

                                       10
<PAGE>

to  non-performing  assets  decreased  in 2000 to 154.83%  from  163.48% in 1999
primarily due to an increase in nonaccrual  loans.  Nonaccrual  loans  increased
$1,861,  or 63.04%,  to $4,813 at December  31, 2000 from $2,952 at December 31,
1999.  The  increase  consists  primarily  of  four  commercial  loans  totaling
approximately  $1,000 in Washington  County,  Tennessee and on which the Company
expects no  significant  loss;  one  commercial  real estate loan in  Washington
County,  Tennessee  in the  approximate  amount of $500,  on which  the  Company
expects no significant  loss;  and four consumer  loans  totaling  approximately
$1,000 in Hamblen County, Tennessee,  which are adequately secured by 1-4 family
residences and on which the Company expects no significant loss. These increases
were offset,  in part, by reductions in  non-accrual  loans  primarily in Greene
County, Tennessee.

     The Company's provision for loan losses decreased $284, or 8.31%, to $3,133
in 1999 from $3,417 in 1998.  The decrease in the  provision  for loan losses is
primarily  attributable  to the  Company's  assessment of the risk of collection
inherent in its existing loan portfolio.  The ratio of non-performing  assets to
total  assets  decreased  to 0.96% at December  31, 1999 as compared to 1.15% at
December 31, 1998. Management attributes the decline in non-performing assets to
the  Company's   increased  emphasis  on  collection   efforts,   including  the
recruitment of an experienced collection professional.  As a result, despite the
Company's  reduced  provision  for loan losses in 1999 as compared to 1998,  the
ratio of the  Company's  allowance  for loan  losses  to  non-performing  assets
increased in 1999 to 163.48% from 156.34% in 1998.

     To further manage its credit risk on loans, the Company  maintains a "watch
list" of loans that, although currently  performing,  have  characteristics that
require closer  supervision by management.  At December 31, 2000 the Company had
identified  approximately $14,700 in loans that were placed on its "watch list,"
a  significant  increase  from the  approximate  $5,900 as of December  31, 1999
because of an enhanced risk rating system for loans and better identification of
potential  problem loans due, in part,  to an improved loan review  function and
increased reliance thereon.  Management believes the level of "watchlist" loans,
as a percentage of total loans, will improve during 2001.

     NON-INTEREST INCOME. Income that is not related to interest-earning assets,
consisting  primarily of service charges,  commissions and fees, has become more
important  as  increases  in  levels  of  interest-bearing  deposits  and  other
liabilities make it more difficult to maintain interest rate spreads.

     Total  non-interest  income for 2000  increased  to $6,568 as  compared  to
$6,331 in 1999 and $4,555 in 1998. The largest components of non-interest income
are service charges,  commissions and fees, which totaled $5,200 in 2000, $5,258
in 1999 and $3,840 in 1998.  While  deposit  growth in 2000 aided the  Company's
continued  focus on  enhancing  fee income via  associated  service  charges and
commissions,   a  decrease  in  fees  and  commissions  at  Superior  Financial,
attributable  mainly to reduced loan  originations  in 2000 as compared to 1999,
negated this enhancement.

     NON-INTEREST EXPENSE.  Control of non-interest expense also is an important
aspect in managing net income.  Non-interest  expense  includes,  among  others,
personnel,  occupancy, and other expenses such as data processing,  printing and
supplies,  legal and professional  fees,  postage and Federal Deposit  Insurance
Corporation  assessments.  Total  non-interest  expense  was  $29,393  in  2000,
compared to $24,610 in 1999 and $20,462 in 1998.

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses. In 2000, salaries and benefits represented $16,734, or 56.9%, of total
non-interest  expenses.  This was an increase of $2,395,  or 16.7%,  over 1999's
total of $14,339.  Personnel  costs for 1999 increased  $2,880,  or 25.1%,  over
1998's total of $11,459. These increases reflect the increased staffing needs of
the Company's  continued  expansion of the Bank and  subsidiary  branch  network
throughout  East Tennessee.  The higher costs in 2000 were also  attributable to
the  usually  higher  expense  of hiring and  retaining  more  seasoned

                                       11
<PAGE>

lending  personnel as part of the Company's overall goal to increase loan growth
without a decline in the overall quality of loans being originated. Overall, the
number of full-time equivalent employees at December 31, 2000 was 388 versus 363
at December 31, 1999, an increase of 6.9%.

     Occupancy and furniture  and  equipment  expense  exhibited the same upward
trend during the past three years as did personnel  costs due to essentially the
same reasons referenced above. At December 31, 2000, the Company had 44 branches
compared to 48 branches at December 31, 1999.

     Loss on sale of real estate owned and  repossessed  assets  increased  over
1999  levels as a result of a $280  writedown  related to one large real  estate
property. The writedown was a result of a decline in the net realizable value of
the  property  during  2000.  Management  believes  the  property  is  currently
reflected at its realizable value.

     Other expenses  increased $1,309, or 23.6%, from 1999 to 2000. The increase
was  primarily   attributable  to  higher  operating  expenses  associated  with
additional  branches,   additional   Financing   Corporation  ("FICO")  premiums
associated with the higher deposit level, increased foreclosure costs associated
with  more  aggressive  loan  collection  efforts  and  higher  charge-offs  and
increased costs associated with certain software  conversion  efforts and issues
related thereto. The increase from 1998 to 1999 was $543, or 10.8%.

     Provision for income taxes decreased  significantly during 2000 as compared
to 1999 levels due to the Company's reevaluation of its estimated liability as a
result of Internal Revenue Service examinations of certain prior tax years and a
change in the estimated state tax liability associated with bad debts.

CHANGES IN FINANCIAL CONDITION

     Total assets at December 31, 2000 were  $789,117,  an increase of $133,105,
or 20.29%,  over 1999's year end total  assets of $656,012.  Average  assets for
2000 were $731,051, an increase of $132,240, or 22.08%, over 1999 average assets
of  $598,811.  This  increase  was  primarily  the result of an  increase in the
average  balance of loans to $608,351 in 2000 as compared to an average  balance
of $510,467 in 1999.  Return on average  assets was .75% in 2000, as compared to
1.47%  in 1999 and  1.56%  in 1998,  reflecting  the  Company's  compressed  net
interest  margin  over  prior  years in a period  of  continuing  asset  growth,
increasing  non-interest expense,  coupled with the increased provision for loan
losses in 2000.

     Total assets at December 31, 1999 were $656,012, an increase of $87,833, or
15.46%,  over 1998's year-end total assets of $568,179.  Average assets for 1999
were $598,811,  an increase of $72,370,  or 13.75%,  over 1998 average assets of
$526,441.  This  increase was primarily the result of an increase in the average
balance  of loans to  $510,467  in 1999 as  compared  to an  average  balance of
$442,885 in 1998. This increase was offset in part by the decline in the average
balance of investment securities to $27,846 in 1999 from $35,577 in 1998, as the
Company  shifted its funding  focus to loans  because of the  relatively  higher
yields  available  and because of the loan demand  generated  by its  additional
lending  personnel.  Return on average  assets was 1.47% in 1999, as compared to
1.56% in 1998.

     Earning  assets  consist of loans,  investment  securities  and  short-term
investments  that  earn  interest.  Average  earning  assets  during  2000  were
$679,472, an increase of 22.29% from an average of $555,621 in 1999.

     Non-performing  loans include non-accrual and classified loans. The Company
has a policy of  placing  loans 90 days  delinquent  in  non-accrual  status and
charging  them off at 120 days  past  due.  Other  loans  past due that are well
secured and in the process of collection continue to be carried on the

                                       12
<PAGE>

Company's  balance sheet.  For further  information,  see Note 1 of the Notes to
Consolidated  Financial  Statements.   The  Company  has  aggressive  collection
practices in which senior management is significantly and directly involved.

     The Company  maintains an  investment  portfolio to provide  liquidity  and
earnings.  Investments at December 31, 2000 had an amortized cost of $48,441 and
a market value of $48,527.  At December 31, 1999,  investments  had an amortized
cost of $24,076 and market value of $24,052.  This  increase in  investments  in
2000  primarily  reflects the  Company's  purchase of $25,000 in federal  agency
securities,  as previously discussed, for the primary purpose of pledging public
deposits.  Because the  securities  were  callable,  their market value does not
differ  significantly  from their cost and, in combination with the shorter-term
and  adjustable   securities  in  the  remainder  of  the  Company's  investment
portfolio, the Company's investments are less susceptible to significant changes
in market  value.  An effect of this approach is reflected in the absence of any
significant  difference between the securities'  amortized cost and market value
at December 31, 2000.

     The Company's  deposits were $648,641 at December 31, 2000. This represents
an increase of  $126,259,  or 24.17%,  from the $522,382 of deposits at December
31, 1999. Average  interest-bearing  deposits  increased $86,717,  or 18.83%, in
2000. In 1999, average  interest-bearing  deposits increased $43,803, or 10.51%,
over 1998. These increases in deposits are primarily the result of the Company's
expansion  of  full-service  branches  of the  Bank  into  new  markets  in East
Tennessee.  In  addition,  the Company has  actively  marketed  its money market
accounts and certificates of deposits with  competitive  interest rates in order
to fund loan growth.  Non-interest  bearing  demand deposit  balances  increased
20.00% to $47,794 at December 31, 2000 from $39,830 at December 31, 1999.

     The Company's  continued  ability to fund its loan and overall asset growth
remains dependent upon the availability of deposit market share in the Company's
existing market of East Tennessee.  As of June 30, 2000,  approximately 61.5% of
the deposit base of East Tennessee was controlled  primarily by five  commercial
banks,  one savings bank and one credit union and, as of September 30, 2000, the
total deposit base of Tennessee  commercial banks had a weighted average rate of
3.66%.  Management of the Company does not anticipate further significant growth
in its  deposit  base  unless it either  offers  interest  rates  well above its
prevailing  rate on average  interest-bearing  deposits  of 4.62% or it acquires
deposits from other financial institutions. During 2000, the premiums charged in
Tennessee by selling financial  institutions for deposit accounts ranged from 7%
to 29%. If the Company  takes  action to increase  its deposit  base by offering
above-market  interest  rates or by  acquiring  deposits  from  other  financial
institutions  and  thereby  increases  its  overall  cost of  deposits,  its net
interest income could be adversely  affected if it is unable to  correspondingly
increase the rates it charges on its loans.

     Interest paid on deposits in 2000 totaled  $25,291  reflecting a 4.62% cost
on average  interest-bearing  deposits of $547,167. In 1999, interest of $18,300
was paid at a cost of 3.97% on average deposits of $460,450.  In 1998,  interest
of $17,825 was paid at a cost of 4.28% on average deposits of $416,647.

INTEREST RATE SENSITIVITY

     Deregulation   of   interest   rates   and   more   volatile    short-term,
interest-bearing  deposits have created a need for shorter maturities of earning
assets.  An increasing  percentage of commercial and installment loans are being
made with  variable  rates or  shorter  maturities  to  increase  liquidity  and
interest rate sensitivity.

     The   difference   between    interest-sensitive    asset   repricing   and
interest-sensitive liability repricing within time periods is referred to as the
interest rate sensitivity gap. Gaps are identified as either positive

                                       13
<PAGE>

(interest  sensitive  assets in excess of  interest  sensitive  liabilities)  or
negative  (interest  sensitive  liabilities  in  excess  of  interest  sensitive
assets).

     The following  table  reflects the Company's  interest rate gap position at
December 31, 2000 based upon repricing  dates rather than maturity  dates.  This
table  represents a static point in time and does not consider  other  variables
such as changes in  relationships  or interest  rate  levels.  According  to the
table, on December 31, 2000, the Company had a negative  cumulative one-year gap
position  of  $44,200,  indicating  that  while  $538,778  in  liabilities  were
repricing,  only  $494,578 in assets would  reprice in the same time frame.  The
table  depicts  all money  market  and  transaction  accounts  with an  expected
maturity date in 2001, thus giving rise to the negative gap position. Management
believes   this   depiction   is  a  strict   interpretation   of  the  maturity
characteristics of such accounts,  as they technically are available upon demand
and, thus,  can mature  immediately.  However,  for  asset/liability  management
purposes and based upon its experience  with its deposit base over the years and
modeling  analyses  prepared by independent  firms, the Company  considers these
accounts, as well as certain other savings deposits, as having longer maturities
than those depicted in the table and, thus, the Company believes its liabilities
would not be as sensitive to changes in interest rates as depicted in the table.
In fact,  based on the  Company's  asset/liability  modeling data prepared by an
independent consulting firm as of December 31, 2000 and based upon data provided
by the  Company,  the Company  currently  believes it has a positive  cumulative
one-year gap and is, thus, slightly asset-sensitive.


                                       14
<PAGE>
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                                       Expected Maturity Date
                                   -------------------------------------------------------------------------------------------------

                                     2001        2002        2003        2004         2005      Thereafter    Total    Fair Value(1)
                                     ----        ----        ----        ----         ----      ----------    -----    -------------
                                                                      (Dollars in Thousands)
Interest-Earning Assets:
<S>                               <C>         <C>         <C>          <C>         <C>          <C>          <C>          <C>
    Loans, net of allowance for
        loan losses...............$ 436,927   $  86,522   $  64,575    $  36,217   $  16,762    $  16,062    $ 657,065    $ 653,848
        Average interest rate.....     9.59%       8.52%       8.40%        8.61%       8.98%        8.90%        9.25%

    Investment securities.........$  45,267   $   1,000   $     207    $      94   $      82    $   1,874    $  48,524    $  48,527
        Average interest rate.....     6.90%       4.93%       5.92%        7.15%       7.15%        5.40%        6.82%

    Federal Funds Sold............$   8,130   $      --   $      --    $      --   $      --    $      --    $   8,130    $   8,130
      Average interest rate.......     5.81%                                                                      5.81%

    FHLB and Bankers Bank
        stock.....................$   4,254   $      --   $      --    $      --   $      --    $      --    $   4,254    $   4,254
        Average interest rate.....     7.25%                                                                      7.25%

    Total interest-earning
      assets......................$ 494,578   $  87,522   $  64,782    $  36,311   $  16,844    $  17,936    $ 717,973    $ 714,759

Interest-Bearing Liabilities:
    Savings and time deposits.....$ 330,628   $  66,094   $  19,958    $   3,244   $   5,458    $  27,259    $ 452,641    $ 440,720
       Average interest rate......     6.05%       6.33%       6.06%        3.07%       4.77%        2.36%        5.82%

    Money market and
      transaction accounts........$ 148,206   $      --   $      --    $      --   $      --    $      --    $ 148,206    $ 112,809
       Average interest rate......     2.72%                                                                      2.72%

    Debt and other borrowed
      money(1)....................$  55,231   $   1,040   $   1,072    $     240   $     340    $   2,026    $  59,949    $  59,833
        Average interest rate.....     5.71%       6.01%       6.07%        8.00%       8.00%        7.56%        5.81%

    Securities sold under
      agreement to repurchase.....$   4,713   $      --   $      --    $      --   $      --    $      --    $   4,713    $   4,713
       Average interest rate......     5.80%                                                                      5.80%

    Total interest-bearing
      liabilities.................$ 538,778   $  67,134   $  21,030    $   3,484   $   5,798    $  29,285    $ 665,509    $ 618,075

Interest sensitivity gap..........$ (44,200)  $  20,388   $  43,752    $  32,827   $  11,046    $ (11,349)   $  52,464    $  96,684
Cumulative interest
  sensitivity gap.................$ (44,200)  $ (23,812)  $  19,940    $  52,767   $  63,813    $  52,464    $  52,464    $  96,684
Interest sensitivity gap to
  total assets....................    -5.60%       2.58%       5.54%        4.16%       1.40%       -1.44%        6.65%       12.25%
Cumulative interest
  sensitivity gap to total assets.    -5.60%      -3.02%       2.53%        6.69%       8.09%        6.65%        6.65%       12.25%
</TABLE>
(1) For further information regarding fair value of debt instruments, see Note 1
of  Notes  to  Consolidated  Financial  Statements.  See  Note  6  of  Notes  to
Consolidated Financial Statements.

     The above table was prepared for the Company by an  independent  consulting
firm as of December 31, 2000 and is based upon data provided by the Company. The
table is based on a number of assumptions regarding the future annual prepayment
rate  for  the  Company's  various  categories  of  loans  and   adjustable-rate
securities  and the  attrition  rate of certain  deposits.  With  respect to the
computation  of the fair value of certain  transaction  and time  deposits,  the
model makes  certain  assumptions  regarding  the core  deposit  status of these
deposits which tends to decrease the fair value of these liabilities as interest
rates increase.

                                       15
<PAGE>


     The above table also reflects a negative cumulative gap position in certain
maturity classifications and a positive cumulative gap position in certain other
maturity  classifications.  A negative  cumulative  gap  position  implies  that
interest-bearing  liabilities  (deposits)  will  reprice  at a faster  rate than
interest-earning assets (loans and investments), while a positive cumulative gap
position  implies that  interest  earning  assets (loans and  investments)  will
reprice at a faster  rate than  interest-bearing  liabilities  (deposits).  In a
rising rate environment,  a cumulative positive gap position will generally have
a positive effect on earnings, while in a falling rate environment this position
will generally have a negative effect on earnings.  Conversely, in a rising rate
environment,  a cumulative  negative gap position will generally have a negative
effect on  earnings,  while in a falling rate  environment  this  position  will
generally have a positive effect on earnings. Other factors, however,  including
the speed at which  assets and  liabilities  reprice in  response  to changes in
market rates and the interplay of  competitive  factors,  can also influence the
overall  impact on net income of changes in  interest  rates.  While  management
believes,  based on its asset/liability  modeling,  that the Company is slightly
asset  sensitive,  it also  believes  that a rapid,  significant  and  prolonged
increase or decrease in rates  could have a  substantial  adverse  impact on the
Company's net interest margin.

INFLATION

     The effect of inflation on financial  institutions  differs from its impact
on other  types  of  businesses.  Since  assets  and  liabilities  of banks  are
primarily  monetary  in nature,  they are more  affected  by changes in interest
rates than by the rate of inflation.

     Inflation  generates  increased  credit demand and  fluctuation in interest
rates.  Although  credit  demand and  interest  rates are not  directly  tied to
inflation, each can significantly impact net interest income. As in any business
or  industry,  expenses  such  as  salaries,  equipment,  occupancy,  and  other
operating  expenses  also  are  subject  to  the  upward  pressures  created  by
inflation.

     Since the rate of inflation has been stable during the last several  years,
the impact of inflation on the earnings of the Company has been insignificant.

EFFECT OF NEW ACCOUNTING STANDARDS

     Beginning  January  1,  2001,  a  new  accounting   standard  required  all
derivatives to be recorded at fair value.  Unless designated as hedges,  changes
in these  fair  values  will be  recorded  in the income  statement.  Fair value
changes  involving  hedges will  generally be recorded by  offsetting  gains and
losses on the hedge and on the hedged item, even if the fair value of the hedged
item is not otherwise recorded. Application of this statement on January 1, 2001
did not have a material effect.


                                       16
<PAGE>

                CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUNTING AND FINANCIAL DISCLOSURE

     On  October  18,  2000,  PricewaterhouseCoopers  LLP was  dismissed  as the
principal  accountants  of the  Company  and Crowe,  Chizek and  Company LLP was
engaged as its principal  accountants.  The decision to change  accountants  was
approved  by  the  Audit  Committee  of  the  Company.   The  audit  reports  of
PricewaterhouseCoopers  LLP  on the  consolidated  financial  statements  of the
Company  as of and for the years  ended  December  31,  1999 and  1998,  did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty,  audit scope or accounting principle.  In connection
with the audits of the two most recent fiscal years ended  December 31, 1999 and
1998, and the subsequent  interim  period through  October 18, 2000,  there have
been  no  disagreements  with   PricewaterhouseCoopers  LLP  on  any  matter  of
accounting principles or practices, financial statement disclosures, or auditing
scope  or   procedure,   which,   if  not  resolved  to  the   satisfaction   of
PricewaterhouseCoopers  LLP, would have caused them to make reference thereto in
their reports on the financial statements for such years.


                                       17
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Shareholders
Greene County Bancshares, Inc.
Greeneville, Tennessee



We have audited the  accompanying  consolidated  balance  sheet of Greene County
Bancshares,  Inc.  as  of  December  31,  2000,  and  the  related  consolidated
statements of income,  changes in shareholders'  equity,  and cash flows for the
year 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 audit. The 1999 and 1998 financial statements
of Greene County  Bancshares,  Inc. were audited by other  auditors whose report
dated January 28, 2000 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit 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  balance sheet  presentation.  We
believe our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of Greene  County
Bancshares, Inc. as of December 31, 2000, and its results of operations and cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.


                                              /s/ Crowe, Chizek and Company LLP


                                              Crowe, Chizek and Company LLP

Louisville, Kentucky
January 18, 2001


                                       18
<PAGE>
                        Report of Independent Accountants




The Board of Directors and Shareholders
     of Greene County Bankshares, Inc.

In our opinion, the accompanying consolidated balance sheet as December 31, 1999
and the related  consolidated  statements of income, of changes in shareholders'
equity  and of cash  flows,  for the years  ended  December  31,  1999 and 1998,
present  fairly,  in all material  respects,  the  financial  position of Greene
County  Bancshares,  Inc.  as of  December  31,  1999,  and the  results  of its
operations  and its cash  flows  for each of the two years in the  period  ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in  the  United  States  of  America.   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 of these  statements in  accordance  with  auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit 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,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.


                                                /s/ PricewaterhouseCoopers LLP


January 28, 2000
Knoxville, Tennessee

                                      18.1

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                             2000                1999
                                                                             ----                ----
ASSETS
<S>                                                                      <C>                   <C>
        Cash and due from banks                                          $  24,038             $  44,555
        Federal funds sold                                                   8,130                    --
                                                                         ---------             ---------
               Cash and cash equivalents                                    32,168                44,555
        Securities available for sale                                       46,658                20,726
        Securities held to maturity (fair value
           $1,869 and $3,326)                                                1,866                 3,321
        Loans held for sale                                                  1,725                 1,210
        Loans, net                                                         655,340               545,687
        Premises and equipment, net                                         23,934                18,106
        FHLB and Bankers Bank stock, at cost                                 4,254                 3,621
        Cash surrender value of life insurance                               7,242                 6,421
        Accrued interest receivable and other assets                        15,930                12,365
                                                                         ---------             ---------

Total assets                                                             $ 789,117             $ 656,012
                                                                         =========             =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
        Noninterest-bearing deposits                                     $  47,794             $  39,830
        Interest-bearing deposits                                          600,847               482,552
                                                                         ---------             ---------
               Total deposits                                              648,641               522,382

        Federal funds purchased and repurchase agreements                    4,713                14,581
        Notes payable                                                       59,949                46,309
        Accrued interest payable and other liabilities                      12,804                11,968
                                                                         ---------             ---------
               Total liabilities                                           726,107               595,240

Shareholders' equity
        Common stock: $10 par value, 5,000,000
           shares authorized, 1,363,778 and
           1,359,647 shares outstanding                                  $  13,638             $  13,596
        Additional paid-in capital                                           4,854                 4,479
        Retained earnings                                                   44,467                42,715
        Accumulated other comprehensive
           Income                                                               51                   (18)
                                                                         ---------             ---------
               Total shareholders' equity                                   63,010                60,772
                                                                         ---------             ---------

Total liabilities and shareholders' equity                               $ 789,117             $ 656,012
                                                                         =========             =========
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.

                                       19
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended December 31, 2000, 1999 and 1998
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                        2000               1999               1998
                                                                        ----               ----               ----

Interest income
<S>                                                                   <C>               <C>               <C>
        Interest and fees on loans                                    $ 62,874          $ 52,786          $ 47,821
        Taxable securities                                               3,153             1,196             1,684
        Nontaxable securities                                              140               160               282
        FHLB and Bankers Bank stock                                        288               244               181
        Federal funds sold and other                                     1,241               843               824
                                                                      --------          --------          --------
                                                                        67,696            55,229            50,792

Interest expense
        Deposits                                                        25,291            18,300            17,825
        Federal funds purchased and repurchase agreements                  304               318               116
        FHLB advances and other debt                                     3,548             1,124               631
                                                                      --------          --------          --------
                                                                        29,143            19,742            18,572

Net interest income                                                     38,553            35,487            32,220

Provision for loan losses                                                8,009             3,133             3,417
                                                                      --------          --------          --------

Net interest income after provision
    for loan losses                                                     30,544            32,354            28,803

Noninterest income
        Service charges and fees                                         5,200             5,258             3,840
        Other                                                            1,368             1,073               715
                                                                      --------          --------          --------
                                                                         6,568             6,331             4,555

Noninterest expense
        Salaries and employee benefits                                  16,734            14,339            11,459
        Occupancy expense                                                1,961             1,541             1,414
        Equipment expense                                                1,794             1,782             1,373
        Professional services                                              887               751               825
        Advertising                                                        673               520               381
        Loss (gain) on OREO and repossessed assets                         477               119                (5)
        Other                                                            6,867             5,558             5,015
                                                                      --------          --------          --------
                                                                        29,393            24,610            20,462

Income before income taxes                                               7,719            14,075            12,896

Provision for income taxes                                               2,206             5,250             4,690
                                                                      --------          --------          --------

Net income                                                            $  5,513          $  8,825          $  8,206
                                                                      ========          ========          ========

Earnings per share:
        Basic                                                         $   4.05          $   6.50          $   6.05
        Diluted                                                           4.01              6.44              6.02
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.

                                       20

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  Years ended December 31, 2000, 1999 and 1998
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                          Accumulated
                                                                                                             Other           Total
                                                                            Additional                      Compre-         Share-
                                                              Common         Paid-in       Retained         hensive        holders'
                                                              Stock          Capital       Earnings         Income          Equity
                                                              -----          -------       --------         ------          ------

<S>                                                          <C>            <C>            <C>             <C>             <C>
BALANCE, JANUARY 1, 1998                                     $ 13,545       $  4,135       $ 32,333        $    100        $ 50,113

Issuance of 2,698 shares                                           27            120             --              --             147
Dividends paid ($2.30 per share)                                   --             --         (3,118)             --          (3,118)
Tax benefit from exercise of
    nonincentive stock options                                     --             43             --              --              43
Comprehensive income:
    Net income                                                     --             --          8,206              --           8,206
    Change in unrealized gains
      (losses), net of reclassification                            --             --             --              (6)             (6)
                                                                                                                           --------
         Total comprehensive income                             8,200
                                                             --------       --------       --------        --------        --------

BALANCE, DECEMBER 31, 1998                                     13,572          4,298         37,421              94          55,385

Issuance of 2,449 shares                                           24            133             --              --             157
Dividends paid ($2.60 per share)                                   --             --         (3,531)             --          (3,531)
Tax benefit from exercise of
    nonincentive stock options                                     --             48             --              --              48
Comprehensive income:
    Net income                                                     --             --          8,825              --           8,825
    Change in unrealized gains
      (losses), net of reclassification                            --             --             --            (112)           (112)
                                                                                                                           --------
         Total comprehensive income                                                                                           8,713
                                                             --------       --------       --------        --------        --------

BALANCE, DECEMBER 31, 1999                                     13,596          4,479         42,715             (18)         60,772

Issuance of 4,131 shares                                           42            347             --              --             389
Dividends paid ($2.76 per share)                                   --             --         (3,761)             --          (3,761)
Tax benefit from exercise of
    nonincentive stock options                                     --             28             --              --              28
Comprehensive income:
    Net income                                                     --             --          5,513              --           5,513
    Change in unrealized gains
      (losses), net of reclassification                            --             --             --              69              69
                                                                                                                           --------
         Total comprehensive income                                                                                          5,582
                                                             --------       --------       --------        --------        --------

BALANCE, DECEMBER 31, 2000                                   $ 13,638       $  4,854       $ 44,467        $     51        $ 63,010
                                                             ========       ========       ========        ========        ========
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.

                                       21

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 2000, 1999 and 1998
         (Dollar amounts in thousands, except share and per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                         2000              1999             1998
                                                                                         ----              ----             ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                   <C>               <C>               <C>
        Net income                                                                    $   5,513         $   8,825         $   8,206
        Adjustments to reconcile net income to net cash from
        operating activities
           Provision for loan losses                                                      8,009             3,133             3,417
           Depreciation and amortization                                                  1,601             1,304               994
           Security amortization and accretion, net                                         188               291               315
           FHLB stock dividends                                                            (288)             (244)             (181)
           Net gain on sale of mortgage loans                                              (182)             (536)             (466)
           Originations of mortgage loans held for sale                                 (31,553)          (57,166)          (30,999)
           Proceeds from sales of mortgage loans                                         31,220            61,535            33,706
           Net (gains) losses on sales of fixed assets                                      121               202                (5)
           Net (gain) loss on OREO and repossessed assets                                   477               119                (5)
           Cash surrender value of life insurance                                          (822)           (2,284)             (231)
           Net changes:
                 Accrued interest receivable and other assets                            (3,961)             (845)              237
                 Accrued interest payable and other liabilities                             865            (2,954)            4,928
                                                                                      ---------         ---------         ---------
                      Net cash from operating activities                                 11,188            11,380            19,916

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of securities available for sale                                         (29,039)           (7,083)           (1,770)
      Proceeds from maturities of securities available for sale                           3,030             9,239             8,770
      Purchase of securities held to maturity                                                --              (100)              (75)
      Proceeds from maturities of securities held to maturity                             1,455               395             4,065
      Purchase of FHLB stock                                                               (345)               --                --
      Net increase in loans                                                            (120,951)          (89,989)          (32,488)
      Proceeds from sale of other real estate                                             2,994             2,683               544
      Improvements to other real estate                                                     (95)             (276)               --
      Proceeds from sale of fixed assets                                                     74               375                34
      Premises and equipment expenditures                                                (7,357)           (8,056)           (2,718)
                                                                                      ---------         ---------         ---------
           Net cash from investing activities                                          (150,234)          (92,812)          (23,638)

CASH FLOWS FROM FINANCING ACTIVITIES
      Net change in deposits                                                            126,259            68,422            (2,545)
      Net change in federal funds purchased and
        repurchase agreements                                                            (9,868)            7,365             5,802
      Proceeds from notes payable                                                        70,000            79,000            23,500
      Repayment of notes payable                                                        (56,360)          (69,318)           (2,360)
      Dividends paid                                                                     (3,761)           (3,531)           (3,118)
      Proceeds from issuance of common stock                                                389               157               147
                                                                                      ---------         ---------         ---------
           Net cash from financing activities                                           126,659            82,095            21,426
                                                                                      ---------         ---------         ---------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                 (12,387)              663            17,704

Cash and cash equivalents, beginning of year                                             44,555            43,892            26,188
                                                                                      ---------         ---------         ---------

CASH AND CASH EQUIVALENTS, END OF YEAR                                                $  32,168         $  44,555         $  43,892
                                                                                      =========         =========         =========

Supplemental disclosures - cash and noncash
      Interest paid                                                                   $  27,993         $  19,595         $  18,846
      Income taxes paid                                                                   4,031             3,510             4,523
      Loans converted to other real estate                                                4,152             3,136             1,559
      Financed sales of other real estate                                                   861               433                --
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.

                                       22

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:  The consolidated  financial statements include the
accounts of Greene  County  Bancshares,  Inc. and its  wholly-owned  subsidiary,
Greene County Bank, and Greene County Bank's wholly-owned subsidiaries, Superior
Financial Services, Inc., GCB Acceptance Corp., Inc., Superior Mortgage Company,
and Fairway Title Company, Inc., collectively referred to as the "Company".  All
significant  inter-company  balances and  transactions  have been  eliminated in
consolidation.

Nature of  Operations:  The  Company  provides  financial  services  through its
offices in Eastern and Southeastern Tennessee.  Its primary deposit products are
checking,  savings,  and term  certificate  accounts,  and its  primary  lending
products  are  residential   mortgage,   commercial,   and  installment   loans.
Substantially  all loans are secured by specific  items of collateral  including
business assets, consumer assets and real estate.  Commercial loans are expected
to be repaid from cash flow from operations of businesses. Real estate loans are
secured  by  both  residential  and  commercial  real  estate.  Other  financial
instruments that  potentially  represent  concentrations  of credit risk include
deposit accounts in other financial institutions.

Use of Estimates:  To prepare financial  statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available  information.  These estimates and  assumptions  affect the amounts
reported in the financial  statements and the disclosures  provided,  and future
results could differ. The allowance for loan losses and fair values of financial
instruments are particularly subject to change.

Cash  Flows:  Cash and cash  equivalents  includes  cash,  deposits  with  other
financial institutions under 90 days, and federal funds sold. Net cash flows are
reported for loan, deposit and other borrowing transactions.

Securities:  Securities  are  classified  as held to  maturity  and  carried  at
amortized cost when  management has the positive intent and ability to hold them
to maturity.  Securities are classified as available for sale when they might be
sold before maturity.  Securities  available for sale are carried at fair value,
with  unrealized   holding  gains  and  losses  reported  in  accumulated  other
comprehensive income.

Interest income includes amortization of purchase premium or discount. Gains and
losses on sales are based on the amortized cost of the security sold. Securities
are written down to fair value when a decline in fair value is not temporary.

Loans: Loans are reported at the principal balance outstanding,  net of unearned
interest and an allowance for loan losses.


--------------------------------------------------------------------------------
                                   (Continued)

                                       23

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interest income is reported on the interest method over the loan term.  Interest
income on mortgage and commercial  loans is discontinued at the time the loan is
90 days delinquent unless the loan is well secured and in process of collection.
Most  consumer  loans are  charged  off no later than 120 days past due.  In all
cases,  loans are  placed on  nonaccrual  or charged  off at an earlier  date if
collection  of  principal  and interest is  doubtful.  Interest  accrued but not
collected is reversed against interest income.  Interest  received is recognized
on the cash basis or cost recovery method until qualifying for return to accrual
status.  Accrual is resumed  when all  contractually  due  payments  are brought
current and future payments are reasonably assured.

Allowance  for Loan  Losses:  The  allowance  for  loan  losses  is a  valuation
allowance for probable  incurred  credit losses,  increased by the provision for
loan losses and decreased by charge-offs less recoveries.  Management  estimates
the  allowance  balance  required  using  past loan loss  experience,  known and
inherent  risks in the  nature and volume of the  portfolio,  information  about
specific  borrower   situations  and  estimated   collateral  values,   economic
conditions,  and other  factors.  Allocations  of the  allowance may be made for
specific  loans,  but the entire  allowance is available  for any loan that,  in
management's  judgment,  should be charged-off.  Loan losses are charged against
the  allowance  when  management  believes  the  uncollectibility  of a loan  is
confirmed.

The Bank uses several factors in determining if a loan is impaired. The internal
asset  classification  procedures include a thorough review of significant loans
and lending  relationships  and include the  accumulation  of related data. This
data includes loan payment and collateral status,  borrowers' financial data and
borrowers'  operating factors such as cash flows,  operating income,  liquidity,
leverage  and  loan  documentation,  and  any  significant  changes.  A loan  is
considered impaired,  based on current information and events, if it is probable
that the Bank will be unable to collect the  scheduled  payments of principal or
interest  when due  according to the  contractual  terms of the loan  agreement.
Uncollateralized loans are measured for impairment based on the present value of
expected future cash flows discounted at the historical effective interest rate,
while all  collateral-dependent  loans are measured for impairment  based on the
fair value of the collateral.

Foreclosed  Assets:  Assets acquired  through or instead of loan foreclosure are
initially recorded at lower of cost or market when acquired,  establishing a new
cost basis. If fair value declines,  a valuation  allowance is recorded  through
expense. Costs after acquisition are expensed.

Premises  and  Equipment:  Premises  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation is computed over the asset useful lives
on a straight line basis.

Mortgage Banking Activities:  Mortgage loans originated and intended for sale in
the secondary market are carried at the lower of aggregate cost or market value.
The Company  controls its interest rate risk with respect to mortgage loans held
for sale and loan  commitments  expected to close by entering into agreements to
sell loans. The aggregate market value of mortgage loans held for sale considers
the sales prices of such agreements. The Company also provides currently for any
losses on uncovered  commitments  to lend or sell.  The Company  sells  mortgage
loans servicing released.


--------------------------------------------------------------------------------
                                   (Continued)

                                       24

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangibles:  Purchased intangibles, core deposits and goodwill, are recorded at
cost  and  amortized  over  the  estimated  life.  Core  deposits  and  goodwill
amortization is straight-line over 10 years.

Long-term Assets: Premises and equipment and other long-term assets are reviewed
for impairment when events indicate their carrying amount may not be recoverable
from future  undiscounted  cash flows.  If impaired,  the assets are recorded at
discounted amounts.

Repurchase  Agreements:   Substantially  all  repurchase  agreement  liabilities
represent amounts advanced by various customers. Securities are pledged to cover
these liabilities, which are not covered by federal deposit insurance.

Benefit Plans:  Retirement plan expense is the amount contributed to the plan as
determined by Board decision.  Deferred  compensation plan expense is recognized
during the year the benefit is earned.

Stock Compensation:  Employee  compensation  expense under stock option plans is
reported if options  are granted  below  market  price at grant date.  Pro forma
disclosures  of net income and earnings per share are shown using the fair value
method of SFAS No. 123 to measure  expense for options  using an option  pricing
model to estimate fair value.

Income Taxes: Income tax expense is the total of the current year income tax due
or refundable  and the change in deferred tax assets and  liabilities.  Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences  between  carrying  amounts and tax bases of assets and liabilities,
computed  using enacted tax rates.  A valuation  allowance,  if needed,  reduces
deferred tax assets to the amount expected to be realized.

Financial Instruments: Financial instruments include credit instruments, such as
commitments to make loans and standby letters of credit, issued to meet customer
financing needs. The face amount for these items represents the exposure to loss
before  considering  customer  collateral  or ability to repay.  Such  financial
instruments are recorded when they are funded.

Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares  outstanding  during the period.
Diluted  earnings per common share  includes the dilutive  effect of  additional
potential common shares issuable under stock options. Earnings and dividends per
share are restated for all stock splits and dividends  through the date of issue
of the financial statements.

Comprehensive  Income:  Comprehensive  income  consists  of net income and other
comprehensive  income.  Other comprehensive income includes unrealized gains and
losses on securities  available for sale which are also recognized as a separate
component  of equity.  Comprehensive  income is  presented  in the  consolidated
statements of changes in shareholders' equity.

--------------------------------------------------------------------------------
                                   (Continued)

                                       25

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New  Accounting  Pronouncements:  Beginning  January 1, 2001,  a new  accounting
standard  required  all  derivatives  to  be  recorded  at  fair  value.  Unless
designated  as hedges,  changes in these fair  values  will be  recorded  in the
income statement. Fair value changes involving hedges will generally be recorded
by offsetting  gains and losses on the hedge and on the hedged item, even if the
fair value of the hedged item is not  otherwise  recorded.  Application  of this
statement on January 1, 2001 did not have a material effect.

Loss  Contingencies:  Loss  contingencies,  including  claims and legal  actions
arising in the ordinary course of business, are recorded as liabilities when the
likelihood  of loss is probable and an amount or range of loss can be reasonably
estimated. Management does not believe there are any such matters that will have
a material effect on the financial statements.

Restrictions  on Cash:  Cash on hand or on deposit with the Federal Reserve Bank
of $2,312  and $2,290 was  required  to meet  regulatory  reserve  and  clearing
requirements at year end 2000 and 1999. These balances do not earn interest.

Segments:  Internal financial  reporting is primarily reported and aggregated in
five lines of business,  banking,  mortgage banking,  consumer finance, subprime
automobile lending, and title insurance.  Banking accounts for 90.2% of revenues
for 2000.

Fair Value of Financial  Instruments:  Fair values of financial  instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed in a separate note. Fair value  estimates  involve  uncertainties  and
matters  of  significant   judgment  regarding  interest  rates,   credit  risk,
prepayments,  and other factors,  especially in the absence of broad markets for
particular  items.   Changes  in  assumptions  or  in  market  conditions  could
significantly affect the estimates.

Reclassifications:  Certain items in prior year financial  statements  have been
reclassified to conform to the 2000 presentation.

--------------------------------------------------------------------------------
                                   (Continued)

                                       26

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 2 - SECURITIES

Securities are summarized as follows:
<TABLE>
<CAPTION>
                                                                              Gross           Gross
                                                               Amortized    Unrealized      Unrealized      Fair
                                                                  Cost         Gains          Losses        Value
                                                                  ----         -----          ------        -----

                           2000
                           ----
Available for Sale
------------------
<S>                                                           <C>            <C>          <C>            <C>
        U. S. Treasury and government
          agency                                              $ 43,302       $    98      $     (37)     $   43,363
        Obligations of states and political
           subdivisions                                          1,416             2             (2)          1,416
        Mortgage-backed                                          1,857            23             (1)          1,879


                                                              $ 46,575       $   123      $     (40)     $   46,658
                                                              ========       =======      =========      ==========
Held to Maturity
        Obligations of states and political
           subdivisions                                       $  1,866       $     4      $      (1)     $    1,869
                                                              ========       =======      =========      ==========

                                          1999
                                          ----
Available for Sale
------------------
        U. S. Treasury and government
          agency                                              $ 18,117       $    92      $    (131)     $   18,078
        Obligations of states and political
           subdivisions                                          1,535             1             (1)          1,535
        Mortgage-backed                                          1,103            13             (3)          1,113
                                                              --------       -------      ---------      ----------

                                                              $ 20,755       $   106      $    (135)     $   20,726
                                                              ========       =======      =========      ==========
Held to Maturity
        Obligations of states and political
           subdivisions                                       $  3,321       $     7      $      (2)     $    3,326
                                                              ========       =======      =========      ==========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       27

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 2 - SECURITIES (Continued)

Contractual   maturities  of  securities  at  year-end  2000  are  shown  below.
Securities  not  due  at  a  single  maturity  date,  primarily  mortgage-backed
securities, are shown separately.
<TABLE>
<CAPTION>
                                                    Available for Sale           Held to Maturity
                                                    ------------------           ----------------
                                                  Amortized       Fair          Amortized       Fair
                                                    Cost         Value            Cost         Value
                                                    ----         -----            ----         -----
<S>                                               <C>            <C>            <C>            <C>
Due in one year or less                           $ 3,048        $ 3,038        $   827        $   828
Due after one year through five years              32,147         32,150            592            593
Due after five years through ten years              2,922          2,949             --             --
Due after ten years                                 6,601          6,642            447            448
Mortgage-backed securities                          1,857          1,879             --             --
                                                  -------        -------        -------        -------
        Total maturities                          $46,575        $46,658        $ 1,866        $ 1,869
                                                  =======        =======        =======        =======
</TABLE>

There were no security sales during 2000, 1999 or 1998.

Securities with a carrying value of $38,897 and $8,611 at year-end 2000 and 1999
were  pledged  for public  deposits  and  securities  sold under  agreements  to
repurchase.

NOTE 3 - LOANS

Loans at year-end were as follows:

                                                         2000           1999
                                                         ----           ----

Commercial                                            $  87,680       $  68,793
Commercial real estate                                  288,254         242,574
Residential real estate                                 204,202         170,299
Consumer                                                 88,687          71,169
Other                                                    12,493          16,774
                                                      ---------       ---------
                                                        681,316         569,609

Less:  Unearned interest income                         (14,248)        (13,590)
             Allowance for loan losses                  (11,728)        (10,332)
                                                      ---------       ---------

                                                      $ 655,340       $ 545,687
                                                      =========       =========

--------------------------------------------------------------------------------
                                   (Continued)

                                       28

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 3 - LOANS (Continued)

Activity in the allowance for loan losses is as follows:

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

Beginning balance                          $ 10,332      $ 10,253      $  9,154
Provision                                     8,009         3,133         3,417
Loans charged off                            (7,788)       (4,017)       (3,234)
Recoveries of loans charged off               1,175           963           916
                                           --------      --------      --------

Balance, end of year                       $ 11,728      $ 10,332      $ 10,253
                                           ========      ========      ========

Impaired loans were as follows:
                                                            2000           1999
                                                            ----           ----

Loans with allowance allocated                              $8,742        $5,591
Amount of allowance allocated                                1,311           709
Average balance during the year                              9,535         6,264
Interest income recognized during
    impairment                                                 310           267
Cash-basis interest income recognized                           --            --

Nonperforming loans were as follows:

                                                              2000         1999
                                                              ----         ----

Loans past due 90 days still on accrual                      $  475       $  996
Nonaccrual loans                                              4,813        2,952
                                                             ------       ------

Total                                                        $5,288       $3,948
                                                             ======       ======

The aggregate amount of loans to executive officers and directors of the Company
and their related  interests was  approximately  $12,881 and $12,215 at year-end
2000 and 1999. During 2000 and 1999, new loans aggregating approximately $14,661
and $12,937 and amounts  collected  of  approximately  $13,995 and $11,230  were
transacted with such parties.

--------------------------------------------------------------------------------
                                   (Continued)

                                       29

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 4 - PREMISES AND EQUIPMENT

Year-end premises and equipment follows:

                                                         2000            1999
                                                         ----            ----

Land                                                   $  4,577        $  3,521
Premises                                                 13,089           8,522
Leasehold improvements                                    1,791           1,832
Furniture, fixtures and equipment                         8,458           7,622
Automobiles                                                 781             675
Construction in progress                                  2,634           3,473
                                                       --------        --------
                                                         31,330          25,645
Accumulated depreciation                                 (7,396)         (7,539)
                                                       --------        --------

                                                       $ 23,934        $ 18,106
                                                       ========        ========


Rent expense for operating leases was $600 for 2000, $467 for 1999, and $397 for
1998. Rent  commitments  under  noncancelable  operating leases were as follows,
before considering renewal options that generally are present:

        2001                        $               427
        2002                                        373
        2003                                        255
        2004                                        154
        2005                                         68
        Thereafter                                  348
                                    -------------------
               Total                $             1,625
                                    ===================

NOTE 5 - DEPOSITS

Time  deposits of $100  thousand or more were  $130,450  and $75,516 at year-end
2000 and 1999.

Scheduled  maturities  of all time  deposits  for the next  five  years  were as
follows:

        2001                       $           323,816
        2002                                    63,100
        2003                                    17,152
        2004                                       992
        2005                                     2,875

The  aggregate  amount of deposits to executive  officers  and  directors of the
Company  and their  related  interests  was  approximately  $2,393 and $1,936 at
year-end 2000 and 1999.

--------------------------------------------------------------------------------
                                   (Continued)

                                       30

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 6 - BORROWINGS

Federal funds  purchased,  securities  sold under  agreements to repurchase  and
treasury tax and loan deposits are financing  arrangements.  Securities involved
with the agreements  are recorded as assets and are held by a safekeeping  agent
and the  obligations to repurchase the securities are reflected as  liabilities.
Securities  sold under  agreements  to  repurchase  consist of short term excess
funds  and  overnight  liabilities  to  deposit  customers  arising  from a cash
management program. While effectively deposit equivalents, such arrangements are
in the form of repurchase agreements.

Information  concerning  securities  sold  under  agreements  to  repurchase  at
year-end 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
                                                                                          2000             1999
                                                                                          ----             ----
<S>                                                                                     <C>              <C>
Average month-end balance during the year                                               $ 5,725          $ 5,424
Average interest rate during the year                                                      4.95%            3.77%
Maximum month-end balance during the year                                               $ 9,928          $ 6,383

Notes payable consist of the following at year-end:
                                                                                           2000             1999
                                                                                        -------          -------

Fixed rate FHLB advances, from 5.65% to 6.35%,
maturities from July 2003 to September 2013                                             $ 2,018          $ 2,338

Variable rate FHLB advances, from 4.23% to 6.25%,
maturities from January 2000 to January 2010                                             55,500           41,500

Notes payable, interest due quarterly at 8%, principal due January 2002 through
January 2008 (related party note - $231)
                                                                                          2,431            2,431

Related party non-compete agreement, payable annually through January 2000
                                                                                             --               40
                                                                                        -------          -------
                                                                                        $59,949          $46,309
                                                                                        =======          =======
</TABLE>

Each advance is payable at its maturity date; however,  prepayment penalties are
required if paid before maturity.  The advances are collateralized by a required
blanket  pledge of qualifying  mortgage  loans  totaling  $92,499 and $65,757 at
year-end 2000 and 1999.

--------------------------------------------------------------------------------
                                   (Continued)

                                       31

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 6 - BORROWINGS (Continued)

Scheduled maturities of notes payable over the next five years are:

                                              Total
                                              -----

        2001                           $         6,339
        2002                                       460
        2003                                       402
        2004                                       368
        2005                                       477
        Thereafter                              51,903
                                       ---------------
                                       $        59,949
                                       ===============

At year-end 2000, the Company had  approximately  $57,500 of federal funds lines
of credit available from correspondent institutions,  $20,000 in unused lines of
credit with the FHLB, and an $11,000 letter of credit with the FHLB.


NOTE 7 - BENEFIT PLANS

The Company has a profit  sharing  plan and a money  purchase  plan.  The profit
sharing  plan  allows   employees  to  contribute   from  3%  to  10%  of  their
compensation,  which is matched at a discretionary rate established  annually by
the Board of Directors. Employees may not contribute to the money purchase plan;
however, the Company may make contributions  determined annually by the Board of
Directors. Company contributions to both Plans was $923, $707 and $615 for 2000,
1999 and 1998.

Directors  have  deferred  some of their  fees  for  future  payment,  including
interest.  The amount accrued for deferred compensation was $1,269 and $1,121 at
year-end 2000 and 1999.  Amounts  expensed  under the plan were $222,  $188, and
$130 during 2000, 1999, and 1998.  Related to these plans, the Company purchased
single   premium  life   insurance   contracts  on  the  lives  of  the  related
participants.  The cash  surrender  value of these  contracts  is recorded as an
asset of the Company.

--------------------------------------------------------------------------------
                                   (Continued)

                                       32

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 8 - INCOME TAXES

Income tax expense is summarized as follows:

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

Current - federal          $     3,075          $   4,341        $        4,211
Current - state                    314              1,059                   679
Deferred                        (1,183)              (150)                 (200)
                           -----------          ---------        --------------
                           $     2,206          $   5,250        $        4,690
                           ===========          =========        ==============

Deferred  income taxes  reflect the effect of  "temporary  differences"  between
values recorded for assets and liabilities for financial  reporting purposes and
values  utilized for measurement in accordance with tax laws. The tax effects of
the primary temporary  differences giving rise to the Company's net deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
                                                               2000                                    1999
                                                               ----                                    ----
                                                    Assets           Liabilities             Assets             Liabilities
                                                    ------           -----------             ------             -----------
<S>                                           <C>                   <C>                   <C>                   <C>
Allowance for loan losses                     $      4,562          $          -          $     3,902           $        -
Deferred compensation                                  708                     -                  522                    -
Depreciation                                             -                  (786)                   -                 (642)
FHLB dividends                                           -                  (418)                   -                 (306)
Core deposit intangible                                  -                  (214)                   -                 (257)
Unrealized (gain) loss on securities                     -                   (32)                  11                    -
Other                                                  186                     -                    -                 (363)
                                              ------------          ------------          -----------           ----------
        Total deferred income taxes           $      5,456          $     (1,450)         $     4,435           $   (1,568)
                                              ============          ============          ===========           ==========
</TABLE>

A reconciliation  of expected income tax expense at the statutory federal income
tax rate of 35% with the actual effective income tax rates is as follows:

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

Statutory federal tax rate                      35.0%        35.0%        35.0%
State income tax, net of federal benefit        (1.6)         4.9          3.1
Tax exempt income                                (.7)         (.1)         (.1)
Other                                           (4.1)        (2.5)        (1.6)
                                           ---------    ---------      -------

                                                28.6%        37.3%        36.4%
                                           =========    =========      =======


--------------------------------------------------------------------------------
                                   (Continued)

                                       33

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 9 - COMMITMENTS AND FINANCIAL INSTRUMENTS WITH OFF-BALANCE-  SHEET RISK

Some financial instruments,  such as loan commitments,  credit lines, letters of
credit, and overdraft  protection,  are issued to meet customer financing needs.
These are  agreements to provide  credit or to support the credit of others,  as
long as  conditions  established  in the  contract  are met,  and  usually  have
expiration dates.  Commitments may expire without being used.  Off-balance-sheet
risk to credit loss exists up to the face amount of these instruments,  although
material losses are not  anticipated.  The same credit policies are used to make
such  commitments  as are used for  loans,  including  obtaining  collateral  at
exercise of the commitment.

Financial instruments with off-balance-sheet risk were as follows at year-end:

                                                      2000            1999
                                                      ----            ----

Commitments to make loans - fixed              $     1,431         $   10,223
Commitments to make loans - variable                 2,480              9,378
Unused lines of credit                              95,321             83,036
Letters of credit                                    6,231              4,579



The fixed rate loan commitments have interest rates ranging from 8.5% to 10% and
maturities ranging from one year to five years.


NOTE 10 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

Banks and bank holding companies are subject to regulatory capital  requirements
administered  by federal  banking  agencies.  Capital  adequacy  guidelines and,
additionally  for  banks,   prompt   corrective   action   regulations   involve
quantitative  measures of assets,  liabilities,  and  certain  off-balance-sheet
items  calculated  under regulatory  accounting  practices.  Capital amounts and
classifications are also subject to qualitative judgments by regulators. Failure
to meet capital requirements can initiate regulatory action.

Prompt  corrective  action  regulations  provide  five   classifications:   well
capitalized,    adequately    capitalized,    undercapitalized,    significantly
undercapitalized, and critically undercapitalized,  although these terms are not
used to  represent  overall  financial  condition.  If  adequately  capitalized,
regulatory   approval   is   required   to   accept   brokered   deposits.    If
undercapitalized,  capital  distributions  are  limited,  as is asset growth and
expansion, and capital restoration plans are required.

--------------------------------------------------------------------------------
                                   (Continued)

                                       34

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 10 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

At year-end, the capital requirements were met, as the Company and the bank were
considered well capitalized under regulations. Actual capital levels and minimum
required levels (in millions) were:
<TABLE>
<CAPTION>
                                                                                                       Minimum Amounts
                                                                                                         to be Well
                                                                             Minimum Required         Capitalized Under
                                                                             for Capital              Prompt Corrective
                                                        Actual             Adequacy Purposes          Action Provisions
                                                --------------------     -----------------------    --------------------
                                                  Actual      Ratio       Actual         Ratio       Actual        Ratio
                                                  ------      -----       ------         -----       ------        -----

2000
----
<S>                                            <C>              <C>      <C>               <C>     <C>              <C>
Total Capital (to Risk Weighted Assets)
        Consolidated                           $    69.2        11.1%    $    50.1         8.0%    $    62.7        10.0%
        Bank                                        70.1        11.2          50.0         8.0          62.6        10.0
Tier 1 Capital (to Risk Weighted Assets)
        Consolidated                           $    61.4         9.8%    $    25.1         4.0%    $    37.6         6.0%
        Bank                                        62.2        10.0          25.0         4.0          37.6         6.0
Tier 1 Capital  (to Average Assets)
        Consolidated                           $    61.4         7.9%    $    31.2         4.0%    $    39.0         5.0%
        Bank                                        62.2         8.0          31.3         4.0          39.1         5.0

1999
----

Total Capital (to Risk Weighted Assets)
        Consolidated                           $    65.3        12.8%    $    41.0         8.0%    $    51.3        10.0%
        Bank                                        66.6        13.0          41.1         8.0          51.3        10.0
Tier 1 Capital (to Risk Weighted Assets)
        Consolidated                           $    58.9        11.5%    $    20.5         4.0%    $    30.8         6.0%
        Bank                                        60.2        11.7          20.5         4.0          30.8         6.0
Tier 1 Capital  (to Average Assets)
        Consolidated                           $    58.9         9.5%    $    24.9         4.0%    $    31.1         5.0%
        Bank                                        60.2         9.6          24.9         4.0          31.2         5.0
</TABLE>

The Company's  primary source of funds to pay dividends to  shareholders  is the
dividends it receives from the Bank. The Bank is subject to certain  regulations
on the amount of dividends it may declare  without  prior  regulatory  approval.
Under these  regulations,  the amount of  dividends  that may be paid is limited
only to the extent that the remaining  balance of retained  earnings is at least
equal to the capital stock amounts of the Bank. As a practical matter,  dividend
payments  by the Bank are  limited  by the  necessity  to  maintain  appropriate
amounts for capital adequacy purposes.


--------------------------------------------------------------------------------
                                   (Continued)

                                       35


<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 11 - STOCK OPTIONS

The Company  maintains a stock  option  plan,  whereby a maximum of 96,000 stock
options may be issued to selected key  executives.  The  exercise  price of each
option is the fair market  value of the  Company's  common  stock on the date of
grant.  The maximum  term of the options is ten years and the options vest at an
annual rate of 20%. At year-end  2000,  56,425 shares are  authorized for future
grant.

The  Company  also has a stock  option plan that  grants a key  executive  fully
vested  options to  purchase  1,800  shares per year at one and  one-half  times
year-end book value. Compensation expense associated with these options was $168
for 2000, $156 for 1999, and $93 for 1998.

A summary of the  Company's  option  activity  and related  information  for the
year-ended 2000, 1999, and 1998 is presented below:
<TABLE>
<CAPTION>
                                             Key Executive               Other Key                      Total
                                             -------------               ---------                      -----
                                                                         Executives
                                                                         ----------

                                                        Weighted                     Weighted                    Weighted
                                                         Average                      Average                     Average
                                                        Exercise                     Exercise                    Exercise
2000                                       Options        Price       Options          Price       Options         Price
----                                       -------        -----       -------          -----       -------         -----
<S>                                         <C>         <C>           <C>           <C>            <C>           <C>
Outstanding at beginning of year            7,200       $   58.60     25,031        $   107.67     32,231        $    96.70
Granted                                     1,800           69.30      8,413            160.00     10,213            144.01
Exercised                                      --           --        (4,131)            93.90     (4,131)            93.90
Forfeited                                      --           --          (140)           150.00       (140)           150.00
                                           ------                     ------                      -------

Outstanding at end of year                  9,000       $   60.74     29,173        $   124.51     38,173        $   109.47
                                           ======                    =======                      =======

Options exercisable at year-end             9,000       $   60.74     10,457        $    91.62     19,457        $    77.34
                                           ------                     ------                      -------

Weighted-average fair value of
    options granted during the
    year                                  $ 93.27                    $ 32.85
                                           ======                    =======
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       36


<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 11 - STOCK OPTIONS (Continued)
<TABLE>
<CAPTION>
                                             Key Executive               Other Key                      Total
                                             -------------               ---------                      -----
                                                                         Executives
                                                                         ----------

                                                        Weighted                     Weighted                    Weighted
                                                         Average                      Average                     Average
                                                        Exercise                     Exercise                    Exercise
1999                                       Options        Price       Options          Price       Options         Price
----                                       -------        -----       -------          -----       -------         -----
<S>                                         <C>         <C>           <C>           <C>            <C>           <C>

Outstanding at beginning of year            5,400       $   55.78     20,723        $    86.15     26,123        $    79.87
Granted                                     1,800           67.05      7,747            150.00      9,547            134.36
Exercised                                      --           --        (2,449)            64.12     (2,449)            64.12
Forfeited                                      --           --          (990)            96.24       (990)            96.24
                                          -------                    -------                      -------

Outstanding at end of year                  7,200       $   58.60     25,031        $   107.67     32,231        $    96.70
                                          =======                    =======                      =======

Options exercisable at year-end             7,200       $   58.60      8,464        $    76.06     15,664        $    68.03
                                          =======                    =======                      =======

Weighted-average fair value of
    options granted during the
    year                                  $ 86.18                   $  35.29
                                          =======                   ========

1998
----

Outstanding at beginning of year            3,600       $   53.07     19,298        $    72.19     22,898        $    69.19
Granted                                     1,800           61.21      6,000            115.00      7,800            102.59
Exercised                                      --           --        (2,698)            54.30     (2,698)            54.30
Forfeited                                      --           --        (1,877)            80.63     (1,877)            80.63
                                          -------                    -------                      -------

Outstanding at end of year                  5,400       $   55.78     20,723        $    86.15     26,123        $    79.87
                                          =======                    =======                      =======

Options exercisable at year-end             5,400       $   55.78      7,785        $    68.19     13,185        $    63.11
                                          =======                    =======                      =======

Weighted-average fair value of
    options granted during the
    year                                  $ 51.50                 $    17.42
                                          =======                   ========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       37

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 11 - STOCK OPTIONS (Continued)

Options outstanding at year-end 2000 were as follows:
<TABLE>
<CAPTION>
                                             Outstanding                         Exercisable
                                             -----------                         -----------

                                                       Average
                                                       Weighted                               Average
                                                      Remaining                              Weighted
                                    Number           Contractual        Number               Exercise
Range of Exercise Prices          Outstanding            Life        Exercisable               Price
------------------------          -----------            ----        -----------               -----
<S>                               <C>                   <C>                 <C>           <C>
*$50.64 - $67.05                   9,000                8.0                 9,000         $    60.74

$48.33 - $71.67                    5,643                5.3                 5,062              63.57

$100.00 - $160.00                 23,530                8.9                 5,395             117.92
</TABLE>

*Granted in connection with compensation for the key executive.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions used for grants in 2000, 1999, and 1998: dividend growth rate of 5%,
15%, and 15%, risk-free  interest rate of 5.10%, 6.45% and 5.0%,  expected lives
of seven years, and estimated volatility of 9.62 %, 10.07%, and 9.8%.

No expense for stock options to other key  executives is recorded,  as the grant
price  equals  the  market  price  of the  stock at grant  date.  The  following
disclosures  show the effect on income and  earnings  per share had the options'
fair value been recorded using an option pricing  model.  If additional  options
are granted, the pro forma effect will increase in the future.
<TABLE>
<CAPTION>
                                           2000                          1999                         1998
                                           ----                          ----                         ----
                                     As                           As                            As
                                  Reported       Proforma      Reported        Proforma      Reported       Proforma
                                  --------       --------      --------        --------      --------       --------
<S>                             <C>            <C>            <C>            <C>            <C>            <C>
Net income                      $      5,513   $      5,348   $      8,825   $      8,743   $   8,206      $      8,152
Basic earnings per share        $       4.05   $       3.93   $       6.50   $       6.44   $    6.05      $       6.01
Diluted earnings per share      $       4.01   $       3.89   $       6.44   $       6.38   $    6.02      $       5.98
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       38

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 12 - EARNINGS PER SHARE

A  reconciliation  of the numerators and denominators of the earnings per common
share and earnings per common share assuming dilution computations are presented
below.
<TABLE>
<CAPTION>
                                                  2000        1999          1998
                                                  ----        ----          ----

BASIC EARNINGS PER SHARE
------------------------
<S>                                           <C>          <C>          <C>
        Net income                            $    5,513   $    8,825   $    8,206

        Weighted average common
           shares outstanding                  1,362,815    1,358,313    1,355,498

Basic Earnings Per Share                      $     4.05   $     6.50   $     6.05
                                              ==========   ==========   ==========

DILUTED EARNINGS PER SHARE
--------------------------

        Net income                            $    5,513   $    8,825   $    8,206

        Weighted average common
           share outstanding                   1,362,815    1,358,313    1,355,498
        Add:  Dilutive effects of assumed
           conversions and exercises of
           stock options                          11,483       11,025        7,782
                                              ----------   ----------   ----------

        Weighted average common and
           dilutive potential common shares
           outstanding                         1,374,298    1,369,338    1,363,280
                                              ----------   ----------   ----------

DILUTED EARNINGS PER SHARE                    $     4.01   $     6.44   $     6.02
                                              ==========   ==========   ==========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       39

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  value  and  estimated  fair  value  of  the  Company's  financial
instruments are as follows at year-end 2000 and 1999.
<TABLE>
<CAPTION>
                                                          2000                                  1999
                                                          ----                                  ----
                                                Carrying             Fair              Carrying            Fair
                                                 Value               Value              Value              Value
Financial assets:
<S>                                             <C>                <C>                <C>                <C>
        Cash and cash equivalents               $ 32,168           $ 32,168           $ 44,555           $ 44,555
        Securities available for sale             46,658             46,658             20,726             20,726
        Securities held to maturity                1,866              1,869              3,321              3,326
        Loans held for sale                        1,725              1,725              1,210              1,210
        Loans, net                               655,340            652,123            545,687            545,579
        FHLB and Bankers Bank stock                4,254              4,254              3,621              3,621
        Accrued interest receivable                6,311              6,311              3,853              3,853

Financial liabilities:
        Deposit accounts                        $648,641           $649,675           $522,382           $522,979
        Federal funds purchased and
           repurchase agreement                    4,713              4,713             14,581             14,581
        Notes payable                             59,949             59,833             46,309             46,205
        Accrued interest payable                   3,516              3,516              2,366              2,366
</TABLE>

The following  methods and assumptions were used to estimate the fair values for
financial instruments.  The carrying amount is considered to estimate fair value
for cash and short-term instruments,  demand deposits,  liabilities for borrowed
money,  variable rate loans or deposits that reprice  frequently and fully,  and
accrued  interest  receivable  and payable.  Securities  available for sale fair
values are based on quoted market prices or, if no quotes are available,  on the
rate and term of the security  and on  information  about the issuer.  For fixed
rate loans or deposits and for variable rate loans or deposits  with  infrequent
repricing or repricing  limits,  the fair value is estimated by discounted  cash
flow analysis using current market rates for the estimated life and credit risk.
Fair values for impaired loans are estimated using discounted cash flow analyses
or underlying collateral values, where applicable.  Fair value of mortgage loans
held for sale is based on current market price for such loans.  Liabilities  for
borrowed  money  are  estimated  using  rates of debt  with  similar  terms  and
remaining  maturities.  The fair value of  off-balance  sheet  items is based on
current  fees or costs that would be  charged  to enter into or  terminate  such
arrangements.  The  fair  value  of  commitments  to sell  loans is based on the
difference  between  the  interest  rates  committed  to sell at and the  quoted
secondary market price for similar loans, which is not material.

--------------------------------------------------------------------------------
                                   (Continued)

                                       40

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 14 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

                                 BALANCE SHEETS
                     YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<CAPTION>
                                                                             2000               1999
                                                                             ----               ----

Assets
<S>                                                                        <C>               <C>
        Cash and due from financial institutions                           $   1,027         $      868
        Investment in subsidiary                                              62,739             60,725
        Cash surrender value of life insurance contracts                         223                213
        Other                                                                  2,146              2,057
                                                                           ---------         ----------

               Total assets                                                $  66,135         $   63,863
                                                                           =========         ==========

Total liabilities                                                          $   3,125         $    3,091

Shareholders' equity                                                          63,010             60,772
                                                                           ---------         ----------

        Total liabilities and shareholders' equity                         $  66,135         $   63,863
                                                                           =========         ==========
</TABLE>


                              STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>
<CAPTION>
                                                                  2000                1999                1998
                                                                  ----                ----                ----

<S>                                                              <C>                 <C>                 <C>
Dividends from subsidiaries                                      $ 3,959             $ 3,769             $ 3,355
Other income                                                         187                 198                 147
Interest expense                                                    (198)               (197)               (198)
Other expense                                                       (741)               (707)               (745)
                                                                 -------             -------             -------
Income before income taxes                                         3,207               3,063               2,559
Income tax benefit                                                  (310)               (296)               (313)
Equity in undistributed net income of subsidiaries                 1,996               5,466               5,334
                                                                 -------             -------             -------

Net income                                                       $ 5,513             $ 8,825             $ 8,206
                                                                 =======             =======             =======
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       41

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 14 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS (Continued)


                            STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>
<CAPTION>
                                                                                         2000              1999              1998
                                                                                         ----              ----              ----

OPERATING ACTIVITIES
<S>                                                                                     <C>               <C>               <C>
        Net income                                                                      $ 5,513           $ 8,825           $ 8,206
        Adjustments to reconcile net income to net
           cash provided by operating activities:
               Undistributed net income of subsidiaries                                  (1,996)           (5,466)           (5,334)
               Depreciation and amortization                                                216               216               216
               Change in assets                                                            (213)             (297)             (239)
               Change in liabilities                                                         61                86               126
                                                                                        -------           -------           -------
                      Net cash from operating activities                                  3,581             3,364             2,975

INVESTING ACTIVITIES
        Increase in cash surrender value of life insurance                                  (10)              (10)               (9)
                                                                                        -------           -------           -------
               Net cash from investing activities                                           (10)              (10)               (9)

FINANCING ACTIVITIES
        Dividends paid                                                                   (3,761)           (3,531)           (3,118)
        Proceeds from issuance of common stock                                              389               157               147
        Repayment of debt                                                                   (40)              (40)              (50)
                                                                                        -------           -------           -------
               Net cash from financing activities                                        (3,412)           (3,414)           (3,021)
                                                                                        -------           -------           -------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                     159               (60)              (55)

Cash and cash equivalents, beginning of year                                                868               928               983
                                                                                        -------           -------           -------

CASH AND CASH EQUIVALENTS, END OF YEAR                                                  $ 1,027           $   868           $   928
                                                                                        =======           =======           =======

</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)

                                       42

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 15 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components were as follows.

                                                     2000      1999       1998
                                                     ----      ----       ----
Unrealized holding gains and losses on
    securities available for sale, net of tax      $    69   $   (112)   $   (6)
Less reclassification adjustments for gains and
  losses later recognized in income, net of tax          -          -         -
                                                   -------   --------    ------

Other comprehensive income                         $    69   $   (112)   $   (6)
                                                   =======   ========     =====


NOTE 16 - SEGMENT INFORMATION

The Company's  operating  segments include banking,  mortgage banking,  consumer
finance,  subprime  automobile  lending  and  title  insurance.  The  reportable
segments are  determined  by the products  and  services  offered,  and internal
reporting. Loans, investments,  and deposits provide the revenues in the banking
operation,  loans and fees  provide the revenues in consumer  finance,  mortgage
banking, and subprime lending and insurance commissions provide revenues for the
title insurance company. Mortgage banking, consumer finance, subprime automobile
lending  and  title  insurance  do not meet  the  quantitative  threshold  on an
individual  basis, and are therefore shown below in "other".  All operations are
domestic.

The accounting  policies used are the same as those  described in the summary of
significant  accounting  policies.  Segment  performance is evaluated  using net
interest  income and  noninterest  income.  Income taxes are allocated  based on
income before income taxes and indirect expenses (includes  management fees) are
allocated based on time spent for each segment.  Transactions among segments are
made at fair value.  Information reported internally for performance  assessment
follows.

                                                          Other
2000                                      Banking        Segments       Total
----                                      -------        --------       -----

Net interest income                        $ 32,643      $  5,910       $ 38,553
Provision for loan losses                     3,727         4,282          8,009
Noninterest income                            4,785         1,783          6,568
Noninterest expense                          22,328         7,065         29,393
Income tax expense                            3,701        (1,495)         2,206
                                           --------      --------       --------
Segment profit                             $  7,672      $ (2,159)      $  5,513
                                           ========      ========       ========

Segment assets                             $747,805      $ 41,312       $789,117
                                           ========      ========       ========

--------------------------------------------------------------------------------
                                   (Continued)

                                       43

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 17 - SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>
                                                             Other             Total
1999                                         Banking        Segments          Segments
----                                         -------        --------          --------
<S>                                         <C>             <C>                <C>
Net interest income                         $ 28,575        $  6,912           $ 35,487
Provision for loan loss                        1,287           1,846              3,133
Noninterest income                             4,035           2,296              6,331
Noninterest expense                           18,404           6,206             24,610
Income tax expense                             4,844             406              5,250
                                            --------        --------           --------
Segment profit                              $  8,075        $    750           $  8,825
                                            ========        ========           ========

Segment assets                              $611,420        $ 44,592           $656,012
                                            ========        ========           ========

1998
----

Net interest income                         $ 26,661        $  5,559           $ 32,220
Provision for loan loss                        1,469           1,948              3,417
Noninterest income                             3,266           1,289              4,555
Noninterest expense                           15,767           4,695             20,462
Income tax expense                             4,617              73              4,690
                                            --------        --------           --------
Segment profit                              $  8,074        $    132           $  8,206
                                            ========        ========           ========

Segment assets                              $522,985        $ 45,194           $568,179
                                            ========        ========           ========
</TABLE>

NOTE 18 - SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Presented below is a summary of the consolidated quarterly financial data:
<TABLE>
<CAPTION>
                                                                       For the three months ended
    Summary of Operations                              3/31/00           6/30/00           9/30/00          12/31/00
    ---------------------                              -------           -------           -------          --------
<S>                                                  <C>               <C>               <C>               <C>
Interest income                                      $    15,585       $    16,647       $    17,231       $    18,233
Net interest income                                        9,524             9,715             9,592             9,722
Provision for loan losses                                  1,717             1,077             1,122             4,093
Income before income taxes                                 3,008             3,119             3,188            (1,596)
Net income                                                 2,157             1,894             1,926              (464)

Basic earnings per share                                    1.59              1.39              1.41             (0.34)
Diluted earning per share                                   1.57              1.38              1.40             (0.34)
Dividends per common share                                  0.60              0.60              0.60              0.96
Average common shares outstanding                      1,360,431         1,361,961         1,362,529         1,363,667
Average common shares outstanding - diluted            1,371,637         1,372,611         1,374,139         1,374,775
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)

                                       44

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (Dollar amounts in thousands, except share and per share data)
                        December 31, 2000, 1999 and 1998
--------------------------------------------------------------------------------


NOTE 18 - SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
   (Continued)
<TABLE>
<CAPTION>
                                                                    For the three months ended
    Summary of Operations                          3/31/99          6/30/99           9/30/99          12/31/99
    ---------------------                          -------          -------           -------          --------
<S>                                              <C>               <C>               <C>               <C>
Interest income                                  $   13,628        $   13,610        $   13,692        $   14,299
Net interest income                                   8,954             8,602             8,908             9,023
Provision for loan losses                               801               762               811               759
Income before income taxes                            4,261             3,339             3,980             2,495
Net income                                            2,655             2,288             2,413             1,469

Basic earnings per share                               1.96              1.68              1.78              1.08
Diluted earning per share                              1.94              1.67              1.76              1.07
Dividends per common share                             0.56              0.56              0.56              0.92
Average common shares outstanding                 1,357,861         1,357,986         1,358,189         1,358,680
Average common shares outstanding - diluted       1,367,044         1,368,309         1,368,679         1,369,343
</TABLE>
Note:The large  increase  in the  provision  for loan  losses  during the fourth
     quarter of 2000, as compared to prior  periods,  is primarily a result of a
     decline in consumer loan quality.


--------------------------------------------------------------------------------
                                   (Continued)

                                       45

<PAGE>
                         MARKET AND DIVIDEND INFORMATION

     There are 1,363,778  shares of Common Stock  outstanding and  approximately
1,870 shareholders of record of the Common Stock as of March 30, 2001.

     There is no established public trading market in which shares of the Common
Stock are regularly traded, nor are there any uniformly quoted prices for shares
of the Common Stock. The following table sets forth certain information known to
management  as to the prices at the end of each quarter for the Common Stock and
cash  dividends  declared per share of Common  Stock for the  calendar  quarters
indicated.

                                  Sales Price at           Dividends Declared
                                    Quarter-End               Per Share(1)
                                    -----------               ------------
       2000:

         First quarter                $150.00                      $0.60
         Second quarter                150.00                       0.60
         Third quarter                 160.00                       0.60
         Fourth quarter                160.00                       0.96
                                                                    ----
                                                                   $2.76

       1999:
         First quarter                 $125.00                     $0.56
         Second quarter                 135.00                      0.56
         Third quarter                  145.00                      0.56
         Fourth quarter                 150.00                      0.92
                                                                    ----
                                                                   $2.60


---------------------
(1)  For information  regarding  restrictions on the payment of dividends by the
     Bank to the Company, see "Management's Discussion and Analysis of Financial
     Condition  and Results of Operation - Liquidity  and Capital  Resources" in
     this Annual  Report.  See also Note 10 of Notes to  Consolidated  Financial
     Statements.

                                       46

<PAGE>
                              CORPORATE INFORMATION
                                    DIRECTORS
                                    ---------
<TABLE>
<CAPTION>
<S>                                                     <C>
Ralph T. Brown, Chairman of the Board                   James A. Emory, Director
  Retired dentist                                         Retired; former President, J.A.E. Foods, Inc.
                                                         (restaurant management)

Phil M. Bachman, Director                               Jerald K. Jaynes, Director
  President, Bachman-Bernard Motors                       Retired; former President and Chief
  (automobile dealer)                                     Executive Officer, Unmake Co., Inc.
                                                          (manufacturing)

Charles S. Brooks, Director                             Terry Leonard, Director
  Chairman of the Board, McInturff,                       Owner/Operator Leonard & Associates
  Milligan & Brooks (insurance agency)                    (manufacturing)

Bruce Campbell, Director                                H.J. Moser, III, Director
    President and Chief Operating Officer,                President, Tennessee Valley Resources, Inc. (limestone and sand
    Forward Air Corporation (transportation)              distribution company)

W.T. Daniels, Director                                  R. Stan Puckett, President,
  Property Manager                                        Chief Executive Officer and Director
                                                          Greene County Bancshares, Inc

J.W. Douthat, Director*                                 Davis Stroud, Director and Secretary
  Retired; former President, Tri State                    Retired; former Executive Vice President
  Tractor & Turf                                          Greene County Bancshares, Inc.

                                                        Charles H. Whitfield, Jr., Director
                                                            President and Chief Executive Officer,
                                                            Laughlin Memorial Hospital (hospital management)
</TABLE>
* Mr. Douthat is retiring from the Board of Directors effective at the 2001
Annual Meeting of Shareholders.

                                   ----------

                               DIRECTORS EMERITUS
                               ------------------

                 Helen Horner Dr. Nathan Horner Harrison Lamons
                                   ----------

                                    OFFICERS
                                    --------

             R. Stan Puckett, President and Chief Executive Officer
     William F. Richmond, Senior Vice President and Chief Financial Officer
                                   ----------
                                 ANNUAL MEETING
                                 --------------
      The 2001 Annual Meeting of Shareholders will be held at 11:00 a.m.,
                                 local time, on
                        Wednesday, April 25, 2001 at the
       General Morgan Inn, 111 North Main Street, Greeneville, Tennessee.
                                   ----------
                           ANNUAL REPORT ON FORM 10-K
                           --------------------------
     A COPY OF THE  COMPANY'S  ANNUAL  REPORT ON FORM 10-K FOR THE  FISCAL  YEAR
ENDED DECEMBER 31, 2000, AS FILED WITH THE  SECURITIES AND EXCHANGE  COMMISSION,
WILL BE FURNISHED  WITHOUT CHARGE TO  SHAREHOLDERS AS OF THE RECORD DATE FOR THE
2001  ANNUAL  MEETING  UPON  WRITTEN  REQUEST TO THE  SECRETARY,  GREENE  COUNTY
BANCSHARES, INC., 100 NORTH MAIN STREET, GREENEVILLE, TENNESSEE 37743.

                                       47