SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
(Mark One)                SECURITIES EXCHANGE ACT OF 1934

|X|  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR
|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _____________________ to ________________

Commission file number     0-14289
                           -------

                         GREENE COUNTY BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

           TENNESSEE                                    62-1222567
---------------------------------                ----------------------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                      Identification No.)


1100 NORTH MAIN STREET, GREENEVILLE, TENNESSEE              37743-4992
----------------------------------------------             -----------
(Address of principal executive offices)                    (Zip Code)

       Registrant's telephone number, including area code: (423) 639-5111.

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

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

                    COMMON STOCK, PAR VALUE $10.00 PER SHARE
                    ----------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES X NO____

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

The  registrant's  voting  stock is not  regularly  and  actively  traded in any
established  market,  and there are no regularly quoted bid and asked prices for
the  registrant's  common  stock.  Based upon recent  negotiated  trading of the
common stock at a price of $16.15 per share,  the  registrant  believes that the
aggregate market value of the voting stock on March 26, 2002 was $110.1 million.
For purposes of this  calculation,  it is assumed that  directors,  officers and
beneficial owners of more than 5% of the registrant's  outstanding  voting stock
are not  affiliates.  On such date,  6,818,890  shares of the common  stock were
issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

The following lists the documents  incorporated by reference and the Part of the
Form 10-K into which the document is incorporated:

     1.  Portions of Proxy  Statement for 2002 Annual  Meeting of  Shareholders.
(Part III)

<PAGE>
                                     PART I

FORWARD-LOOKING STATEMENTS

     THIS  ANNUAL  REPORT ON FORM 10-K,  INCLUDING  ALL  DOCUMENTS  INCORPORATED
HEREIN BY REFERENCE, CONTAINS FORWARD-LOOKING STATEMENTS.  ADDITIONAL WRITTEN OR
ORAL FORWARD-LOOKING  STATEMENTS MAY BE MADE BY THE COMPANY FROM TIME TO TIME IN
FILINGS WITH THE  SECURITIES  AND EXCHANGE  COMMISSION OR  OTHERWISE.  THE WORDS
"BELIEVE,"  "EXPECT,"  "SEEK," AND  "INTEND"  AND SIMILAR  EXPRESSIONS  IDENTIFY
FORWARD-LOOKING  STATEMENTS,  WHICH SPEAK ONLY AS OF THE DATE THE  STATEMENT  IS
MADE.  SUCH  FORWARD-LOOKING  STATEMENTS  ARE WITHIN THE MEANING OF THAT TERM IN
SECTION 27A OF THE  SECURITIES  ACT OF 1933, AS AMENDED,  AND SECTION 21E OF THE
SECURITIES  EXCHANGE ACT OF 1934, AS AMENDED.  SUCH STATEMENTS MAY INCLUDE,  BUT
ARE NOT LIMITED TO, PROJECTIONS OF INCOME OR LOSS,  EXPENDITURES,  ACQUISITIONS,
PLANS FOR FUTURE  OPERATIONS,  FINANCING  NEEDS OR PLANS RELATING TO SERVICES OF
THE COMPANY, AS WELL AS ASSUMPTIONS  RELATING TO THE FOREGOING.  FORWARD-LOOKING
STATEMENTS  ARE  INHERENTLY  SUBJECT TO RISKS AND  UNCERTAINTIES,  SOME OF WHICH
CANNOT BE PREDICTED OR QUANTIFIED. FUTURE EVENTS AND ACTUAL RESULTS COULD DIFFER
MATERIALLY  FROM  THOSE  SET  FORTH  IN,   CONTEMPLATED  BY  OR  UNDERLYING  THE
FORWARD-LOOKING STATEMENTS.

ITEM 1.  BUSINESS

PRESENTATION OF AMOUNTS

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

THE COMPANY

     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.  At December  31,  2001,  the Company  maintained a main office in
Greeneville,  Tennessee  and 29  bank  branches  (of  which  six  are in  leased
operating   premises)  and  12  separate   locations   operated  by  the  Bank's
subsidiaries.

     The Company's  assets  consist  primarily of its investment in the Bank and
liquid  investments.  Its primary  activities are conducted through the Bank. At
December 31, 2001, the Company's  consolidated  total assets were $811,612,  its
consolidated net loans,  including loans held for sale, were $679,271, its total
deposits were $653,913 and its total stockholders' equity was $68,627.

     The Company's net income is dependent primarily on its net interest income,
which is the  difference  between  the  interest  income  earned  on its  loans,
investment  assets and other  interest-earning  assets and the interest  paid on
deposits  and  other  interest-bearing  liabilities.  To a  lesser  extent,  the
Company's  net  income  also is  affected  by its  non-interest  income  derived
principally  from service  charges and fees as well as the level of non-interest
expenses such as salaries and employee benefits.

     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  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.

     The  principal  executive  offices of the  Company are located at 100 North
Main Street, Greeneville, Tennessee 37743-4992 and its telephone number is (423)
639-5111.

THE BANK

     The Bank is a  Tennessee-chartered  commercial bank established in 1890 and
which  has its  principal  executive  offices  in  Greeneville,  Tennessee.  The
principal business of the Bank consists of attracting  deposits from the general
public and investing those funds,  together with funds generated from operations
and from principal and


<PAGE>

interest payments on loans, primarily in commercial,  commercial and residential
real estate  loans,  and  installment  consumer  loans.  The Bank also  provides
collection  and other  banking  services,  directly  and  through  its  finance,
acceptance and title subsidiary corporations. At December 31, 2001, the Bank had
27 full service banking offices  located in East  Tennessee,  including  Greene,
Washington,  Blount,  Hamblen,  McMinn, Loudon,  Hawkins,  Sullivan,  Cocke, and
Monroe Counties. The Bank also had one full service branch located in nearby Hot
Springs, North Carolina. Further, the Bank operates a trust and money management
function  located in Wilson County,  Tennessee and doing business as President's
Trust, and operates a mortgage loan operation in Knox County,  Tennessee.  These
functions and  operations are defined as Bank branches but are not considered to
be full service branches.

     The Bank also  conducts  separate  businesses  through  three  wholly owned
subsidiaries.  Through Superior Financial Services, Inc. ("Superior Financial"),
the Bank operates ten consumer finance company offices and one collection office
located in Greene, Blount, Hamblen, McMinn,  Washington,  Sullivan, Sevier, Knox
and Hamilton  Counties,  Tennessee.  The Bank also  operates a mortgage  banking
operation  through its main  office in Knox  County,  Tennessee  and it also has
representatives  located  throughout the Company's  branch  system.  Through GCB
Acceptance  Corporation  ("GCB  Acceptance"),   the  Bank  operates  a  subprime
automobile  lending  company  with a sole  office in  Johnson  City,  Tennessee.
Through  Fairway Title Co., the Bank operates a title company  headquartered  in
Knoxville, Tennessee and an office in Johnson City, Tennessee.

     Deposits of the Bank are insured by the Bank  Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation ("FDIC") to a maximum of $100,000 for each
insured  depositor.  The Bank is subject to  supervision  and  regulation by the
Tennessee  Department of Financial  Institutions (the "Banking  Department") and
the FDIC. See "Regulation, Supervision and Governmental Policy."

BRANCH PURCHASES 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.

     On December  7, 2001,  the Bank  acquired  three bank  branches  located in
eastern  Tennessee from SunTrust Bank. In conjunction with the acquisition,  the
Bank closed one of its branches in Rogersville, Tennessee.

BRANCH EXPANSION

     During  the  early  and  mid  part  of  2001,  the  Company  continued  the
geographical  expansion  of its branch  network,  opening a new branch in Blount
County,  Tennessee  along with its  acquisition of the North Carolina branch and
the branches  acquired from SunTrust Bank referenced  above.  This expansion was
offset,  in part,  by the  closures  of two Bank  branches  and four  offices of
Superior Financial for administrative consolidation purposes.

LENDING ACTIVITIES

     General.  The loan  portfolio of the Company is  comprised  of  commercial,
commercial and  residential  real estate and installment  consumer  loans.  Such
loans  are  primarily  originated  within  the  Company's  market  area  of East
Tennessee and are generally  secured by residential or commercial real estate or
business or personal  property  located in the  counties of Greene,  Washington,
Hamblen,  Sullivan,  Hawkins,  Blount,  Knox, McMinn,  Loudon,  Monroe and Cocke
Counties, Tennessee.


                                       2
<PAGE>

     Loan  Composition.  The following  table sets forth the  composition of the
Company's loans at December 31 for each of the periods indicated.
<TABLE>
<CAPTION>
                                                2001          2000             1999          1998            1997
                                                ----          ----             ----          ----            ----
<S>                                        <C>             <C>            <C>            <C>             <C>
Commercial..........................       $   96,122      $  87,680      $   68,793     $  57,860       $  51,661
Commercial real estate..............          295,002        288,254         242,574       185,063         182,837
Residential real estate.............          210,489        218,007         181,960       143,500         135,433
Loans held for sale.................            7,945          1,725           1,210         5,043           7,284
Consumer............................           80,314         74,882          59,508        68,092          67,227
Other...............................           13,779         12,493          16,774        27,349          12,035
                                           ----------      ---------      ----------     ---------       ---------
   Total............................          703,651        683,041         570,819       486,907         456,477

Less:
Unearned Income.....................          (13,159)      (14,248)         (13,590)       (9,993)         (5,933)
Allowance for loan losses...........          (11,221)      (11,728)         (10,332)      (10,253)         (9,154)
                                           -----------     ---------      -----------    ----------      ----------
   Net loans........................       $  679,271      $ 657,065      $   546,897    $ 466,661       $ 441,390
                                           ===========     =========      ===========    ==========      ==========
</TABLE>

         Loan Maturities.  The following table reflects at December 31, 2001 the
dollar  amount of loans  maturing or subject to rate  adjustment  based on their
contractual  terms to maturity.  Loans with fixed rates are reflected based upon
the contractual  repayment schedule while loans with variable interest rates are
reflected  based upon the contractual  repayment  schedule up to the contractual
rate  adjustment  date.  Demand  loans,  loans  having  no  stated  schedule  of
repayments and loans having no stated  maturity are reported as due within three
months.
<TABLE>
<CAPTION>
                                                Due in One      Due After One Year       Due After
                                               Year or Less     Through Five Years      Five Years         Total
                                               ------------     ------------------      ----------         -----
<S>                                             <C>                 <C>                 <C>              <C>
Commercial.............................         $   69,787          $    23,594         $   2,741        $   96,122
Commercial real estate.................            144,192              143,787             7,023           295,002
Residential real estate................             88,123               93,678            28,688           210,489
Loans held-for-sale....................              7,945                   --                --             7,945
Consumer...............................             16,178               63,595               541            80,314
Other..................................              4,765                1,480             7,534            13,779
                                                  --------             --------           -------          --------
     Total.............................           $330,990             $326,134           $46,527          $703,651
                                                  ========             ========           =======          ========
</TABLE>

     The  following  table sets forth the  dollar  amount of the loans  maturing
subsequent to the year ending December 31, 2002 between those with predetermined
interest rates and those with floating, or variable, interest rates.

                              Fixed Rate       Variable Rate          Total
                              ----------       -------------          -----
                                               (In thousands)
Commercial.................... $  26,193        $  10,939           $  37,132
Commercial real estate........   148,675           49,937             198,612
Residential real estate.......   111,037           67,585             178,622
Loans held-for-sale...........     7,945               --               7,945
Consumer......................    64,227              153              64,380
Other.........................     1,541              200               1,741
                                --------        ---------           ---------
     Total....................  $359,618         $128,814            $488,432
                                ========        =========           =========

     Commercial  Real Estate Loans.  The Company  originates  commercial  loans,
generally to existing business customers,  secured by real estate located in the
Company's  market  area.  At December  31,  2001,  commercial  real estate loans
totaled $295,002,  or 43.43%, of the Company's net loan portfolio.  The terms of
such loans are  generally  for ten to twenty  years and are priced based in part
upon the prime rate,  as reported in The Wall Street  Journal.  Commercial  real
estate loans are generally  underwritten  by addressing  cash flow (debt service
coverage), primary and secondary source of repayment,  financial strength of any
guarantor,  strength  of the tenant (if any),  liquidity,  leverage,  management
experience,  ownership  structure,  economic  conditions  and industry  specific
trends and  collateral.  Generally,  the  Company  will loan up to 80-85% of the
value of improved property, 65% of the value

                                       3
<PAGE>

of raw land and 75% of the value of land to be acquired and  developed.  A first
lien on the property and  assignment  of lease is required if the  collateral is
rental property, with second lien positions considered on a case-by-case basis.

     Commercial  Loans.  Commercial  loans  are made for a variety  of  business
purposes,  including  working  capital,  inventory  and  equipment  and  capital
expansion.  At December 31, 2001,  commercial loans outstanding totaled $96,122,
or 14.15%,  of the Company's net loan portfolio.  The terms for commercial loans
are generally one to seven years. Commercial loan applications must be supported
by current  financial  information  on the borrower and, where  appropriate,  by
adequate collateral.  Commercial loans are generally  underwritten by addressing
cash flow (debt service  coverage),  primary and secondary sources of repayment,
financial strength of any guarantor, liquidity, leverage, management experience,
ownership  structure,  economic  conditions  and  industry-specific  trends  and
collateral. The loan to value ratio depends on the type of collateral. Generally
speaking,  accounts  receivable are financed at 70% of accounts  receivable less
than 90 days past due. If other  collateral  is taken to support  the loan,  the
loan to value of accounts  receivable may approach 85%. Inventory financing will
range between 50% and 60% depending on the borrower and nature of inventory. The
Company requires a first lien position for such loans.  These types of loans are
generally  considered to be a higher credit risk than other loans  originated by
the Company.

     Residential Real Estate.  The Company also originates  one-to-four  family,
owner-occupied  residential  mortgage  loans secured by property  located in the
Company's  primary  market  area.  The  majority  of the  Company's  residential
mortgage  loans  consists  of loans  secured  by  owner-occupied,  single-family
residences.  At December 31, 2001, the Company had $210,489,  or 30.99%,  of its
net loan portfolio in  residential  real estate loans.  Residential  real estate
loans generally have a loan to value ratio of 85%. These loans are  underwritten
by giving consideration to the ability to pay, stability of employment or source
of income,  credit  history and loan to value  ratio.  Home equity loans make up
approximately  13% of residential real estate loans.  Home equity loans may have
higher loan to value ratios when the  borrower's  repayment  capacity and credit
history conform to underwriting standards.  Superior Financial extends sub-prime
mortgages  to  borrowers  who  generally  have a  higher  risk of  default  than
mortgages extended by the Bank.  Sub-prime  mortgages totaled $13,282, or 6.31%,
of the Company's residential real estate loans.

     Mortgage loans  originated by the Bank were not previously  underwritten in
conformity  with  secondary  market  guidelines  and therefore  were not readily
salable.  Beginning in April 1997, the Company began selling  one-to-four family
mortgage  loans in the  secondary  market to  Freddie  Mac  through  the  Bank's
mortgage  banking  operation.  Sales of such  loans  to  Freddie  Mac and  other
mortgage  investors  totaled  $70,809  during  2001,  and the  related  mortgage
servicing rights were sold together with the loans.

     Installment Consumer Loans. At December 31, 2001, the Company's installment
consumer loan portfolio  totaled $80,314,  or 11.82%, of the Company's total net
loan  portfolio.  The Company's  consumer loan portfolio is comprised of secured
and  unsecured  loans  originated  by  the  Bank,  Superior  Financial  and  GCB
Acceptance.  The  consumer  loans of the Bank have a higher risk of default than
other loans  originated  by the Bank.  Further,  consumer  loans  originated  by
Superior Financial and GCB Acceptance, which are finance companies rather than a
bank,  generally  have a greater risk of default than such loans  originated  by
commercial  banks  and  accordingly  carry  a  higher  interest  rate.  Superior
Financial and GCB Acceptance  installment  consumer loans totaled  approximately
$35,900, or 44.70%, of the Company's installment consumer loans. The performance
of consumer loans will be affected by the local and regional  economy as well as
the   rates  of   personal   bankruptcies,   job   loss,   divorce   and   other
individual-specific characteristics.

     Past Due,  Special Mention,  Classified and Non-Accrual  Loans. The Company
classifies  its problem  loans into three  categories:  past due loans,  special
mention loans and classified loans (both accruing and non-accruing interest).

     When management  determines that a loan is no longer  performing,  and that
collection  of  interest  appears  doubtful,  the loan is placed on  non-accrual
status.  All loans that are 90 days past due are considered  non-accrual  unless
they are adequately secured and there is reasonable assurance of full collection
of  principal  and  interest.  Management  closely  monitors  all loans that are
contractually  90 days past due,  treated  as  "special  mention"  or  otherwise
classified or on non-accrual  status.  Non-accrual  loans that are 120 days past
due without  assurance of repayment  are charged off against the  allowance  for
loan losses.

                                       4
<PAGE>

     The following  table sets forth  information  with respect to the Company's
non-performing  assets at the dates  indicated.  At these dates, the Company did
not have any  restructured  loans  within the meaning of  Statement of Financial
Accounting Standards No. 15.
<TABLE>
<CAPTION>
                                                                          At December 31,
                                              ------------------------------------------------------------------------
                                                   2001          2000          1999            1998           1997
                                                   ----          ----          ----            ----           ----
                                                                          (In thousands)
<S>                                               <C>           <C>            <C>            <C>           <C>
Loans accounted for on a non-accrual
   basis................................          $5,857        $4,813         $2,952         $4,159        $2,265
Accruing loans which are contractually
   past due 90 days or more as to interest
   or principal payments................             871           475            996            872         1,583
                                                  ------        ------         ------         ------        ------
Total non-performing loans..............           6,728         5,288          3,948          5,031         3,848
Real estate owned:
   Foreclosures.........................           2,589         1,937          1,546            920           411
   Other real estate held and
     repossessed assets.................             623           350            826            607            97
                                                  ------       -------         ------         ------        ------
   Total non-performing assets..........          $9,940       $ 7,575         $6,320         $6,558        $4,356
                                                  ======       =======         ======         ======        ======
</TABLE>

     The  Company's   continuing   efforts  to  resolve   non-performing   loans
occasionally  include  foreclosures,  which result in the Company's ownership of
the real estate  underlying the mortgage.  If non-accrual  loans at December 31,
2001 had been current according to their original terms and had been outstanding
throughout 2001, or since  origination if originated  during the year,  interest
income on these  loans would have been  approximately  $505.  Interest  actually
recognized on these loans during 2001 was not significant.

     Foreclosed real estate increased $652, or 33.66%, to $2,589 at December 31,
2001  from  $1,937  at  December  31,  2000.  The  real  estate  consists  of 32
properties,  of which four are  commercial  properties  valued at $847,  and the
remainder are  residential  properties.  Management  expects to liquidate  these
properties  during  2002.  Management  has  recorded  these  properties  at  net
realizable  value and the subsequent  sale of such properties is not expected to
result in any adverse  effect on the Company,  subject to business and marketing
conditions at the time of sale.  Other real estate held and  repossessed  assets
increased  $273,  or 78%, to $623 at December 31, 2001 from $350 at December 31,
2000.  This  increase  is  primarily  due to  enhanced  repossessed  activity at
Superior Financial and GCB Acceptance.

     Total  impaired  loans  increased  by  $2,099,  or 22.95%,  from  $9,144 at
December 31, 2000 to $11,243 at December 31, 2001.  This  increase is reflective
of additional  impaired loans at Superior Financial resulting primarily from the
declining  local  and  regional  economies  and the  effect of this  decline  on
Superior Financial's main customer base.

     At December 31, 2001,  the Company had  approximately  $4,760 in loans that
are not  currently  classified as  non-accrual  or 90 days past due or otherwise
restructured  and where known  information  about  possible  credit  problems of
borrowers caused  management to have concerns as to the ability of the borrowers
to comply  with  present  loan  repayment  terms.  Such  loans  were  considered
classified  by the  Company  and  were  comprised  of  various  consumer  loans,
residential  real estate  loans,  commercial  loans and  commercial  real estate
loans.  One  commercial  relationship  in the  amount of $2,104 is  secured by a
blanket lien on accounts receivable and equipment of the business. Subsequent to
year-end,  investors have offered to purchase the business  assets for an amount
that would  substantially  cover the principal amounts of the  relationship.  In
lieu of this purchase, a bank liquidation of the collateral may not sufficiently
cover the total principal  amount of the  relationship.  This  relationship  was
considered  classified based upon cash flows of the business deemed insufficient
to cover debt service. In addition, other loans included approximately $1,358 in
loan balances,  consisting of  approximately  72 consumer  loans,  which were in
bankruptcy  status.  Generally,  these consumer  bankruptcy loans are adequately
secured and management expects substantial  collection of these accounts through
reaffirmation or liquidation of collateral.

     Allowance for Loan Losses. The allowance for loan losses is maintained at a
level which  management  believes is adequate to absorb all potential  losses on
loans  then  present  in the loan  portfolio.  The  amount of the  allowance  is
affected by: (1) loan charge-offs,  which decrease the allowance; (2) recoveries
on loans  previously  charged-off,  which  increase the  allowance;  and (3) the
provision  of  possible  loan  losses  charged to income,  which  increases  the
allowance.  In  determining  the  provision  for  possible  loan  losses,  it is
necessary for management to monitor fluctuations in the allowance resulting from
actual  charge-offs  and  recoveries,  and to  periodically  review

                                       5
<PAGE>

the size  and  composition  of the  loan  portfolio  in  light  of  current  and
anticipated  economic  conditions in an effort to evaluate  portfolio  risks. If
actual losses  exceed the amount of the  allowance for loan losses,  earnings of
the Company could be adversely affected. The amount of the provision is based on
management's  judgment of those risks.  During the year ended December 31, 2001,
the  Company's  provision  for loan losses  decreased by $2,050 to $5,959 as the
Company  adjusted the allowance for loan losses to a level it deemed adequate as
of December 31, 2001.

     The following is a summary of activity in the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                          2001          2000         1999        1998         1997
                                          ----          ----         ----        ----         ----
                                                                        (In thousands)
<S>                                     <C>          <C>          <C>          <C>          <C>
Balance at beginning of year ........   $ 11,728     $ 10,332     $ 10,253     $  9,154     $  7,330
                                        --------     --------     --------     --------     --------
Charge-offs:
   Commercial .......................       (411)        (429)        (298)        (440)        (563)
   Commercial real estate ...........       (997)        (537)        (302)         (87)        (129)
                                        --------     --------     --------     --------     --------
          Subtotal ..................     (1,408)        (966)        (600)        (527)        (692)

   Residential real estate ..........       (669)        (800)        (407)          --           --
   Consumer .........................     (5,753)      (6,022)      (3,010)      (2,707)      (4,450)
   Other ............................         --           --           --           --           --
                                        --------     --------     --------     --------     --------
     Total charge-offs ..............     (7,830)      (7,788)      (4,017)      (3,234)      (5,142)
                                        --------     --------     --------     --------     --------

Recoveries:
   Commercial .......................         11           43          295          216           56
   Commercial real estate ...........         54          137           --           24            4
                                        --------     --------     --------     --------     --------
          Subtotal ..................         65          180          295          240           60

   Residential real estate ..........        102           69           93           --           --
   Consumer .........................      1,197          926          575          673          951
   Other ............................         --           --           --            3            2
                                        --------     --------     --------     --------     --------
     Total recoveries ...............      1,364        1,175          963          916        1,013
                                        --------     --------     --------     --------     --------
Net charge-offs .....................     (6,466)      (6,613)      (3,054)      (2,318)      (4,129)

Provision for loan losses ...........      5,959        8,009        3,133        3,417        5,953
                                        --------     --------     --------     --------     --------
Balance at end of year ..............   $ 11,221     $ 11,728     $ 10,332     $ 10,253     $  9,154
                                        ========     ========     ========     ========     ========

Ratio of net charge-offs to average
     loans outstanding, net of
     unearned discount, during
     the period .....................       0.94%        1.09%        0.60%        0.52%        0.96%
                                        ========     ========     ========     ========     ========
Ratio of allowance for loan losses to
     non-performing loans ...........     166.78%      221.79%      261.70%      203.80%      237.89%
                                        ========     ========     ========     ========     ========
Ratio of allowance for loan losses to
     total loans ....................       1.61%        1.72%        1.81%        2.11%        2.01%
                                        ========     ========     ========     ========     ========
</TABLE>

                                       6
<PAGE>

     Breakdown of allowance  for loan losses by category.  The  following  table
presents an allocation  among the listed  categories of the Company's  allowance
for loan  losses  at the dates  indicated  and the  percentage  of loans in each
category to the total amount of loans at the respective  year-ends.
<TABLE>
<CAPTION>
                                                                   At December 31,
                              -------------------------------------------------------------------------------------------
                                         2001                          2000                           1999
                                         ----                          ----                           ----
                                                               (Dollars in thousands)

                                              Percent of                      Percent of                     Percent of
                                             loan in each                    loan in each                   loan in each
   Balance at end of period                  category to                      category to                    category to
     applicable to:             Amount       total loans        Amount        total loans       Amount       total loans
                                ------       -----------        ------        -----------       ------       -----------
<S>                            <C>               <C>          <C>                 <C>         <C>                <C>
Commercial.................... $   1,852         13.66%       $   1,602           12.84%      $   2,168          12.05%
Commercial real estate........     5,601         41.93%           6,901           42.20%          3,234          42.50%
Residential real estate.......       807         29.91%             947           29.90%          3,299          29.83%
Loans held-for-sale...........        16          1.13%               4            0.25%             --           0.21%
Consumer......................     2,293         11.41%           2,042           12.98%          1,305          12.47%
Other.........................       652          1.96%             232            1.83%            326           2.94%
                              ----------      ---------         -------        ---------      ---------       ---------

   Totals.....................   $11,221        100.00%         $11,728          100.00%        $10,332         100.00%
                                 =======        =======         =======          =======        =======         =======
</TABLE>
INVESTMENT ACTIVITIES

     General.  The  Company  maintains  a portfolio  of  investments  to provide
liquidity and an additional source of income.

     Securities by Category.  The following  table sets forth the carrying value
of the  securities,  by major  categories,  held by the Company at December  31,
2001, 2000 and 1999.
<TABLE>
<CAPTION>
                                                              At December 31,
                                                       ---------------------------
                                                         2001      2000     1999
                                                         ----      ----     ----
                                                              (In thousands)
Securities Held to Maturity:
<S>                                                    <C>       <C>       <C>
    Obligations of state and political subdivisions.   $   833   $ 1,866   $ 3,321
                                                       -------   -------   -------

         Total .....................................   $   833   $ 1,866   $ 3,321
                                                       =======   =======   =======
Securities Available for Sale:
    U.S. Treasury securities and obligations of U.S.
         Government, corporations and agencies .....   $20,695   $45,242   $19,191
    Obligations of state and political subdivisions      1,372     1,416     1,535
    Trust Preferred Securities .....................     6,500        --        --
                                                       -------   -------   -------

         Total .....................................   $28,567   $46,658   $20,726
                                                       =======   =======   =======
</TABLE>

     For further information regarding securities at December 31, 2001, 2000 and
1999, see Note 2 of Notes to Consolidated Financial Statements.

     Maturity  Distributions  of Securities.  The following table sets forth the
distributions  of maturities of securities at amortized  cost as of December 31,
2001.

                                       7
<PAGE>
<TABLE>
<CAPTION>
                                                         Due After One
                                           Due in One    Year through   Due After Five Years       Due
                                          Year or Less    Five Years     through Ten Years   After Ten Years     Total
                                          ------------    ----------     -----------------   ---------------     -----
                                                                      (Dollars in thousands)
<S>                                          <C>           <C>              <C>                 <C>             <C>
Federal agency obligations - available
         for sale                            $  1,013      $ 11,864         $  2,538            $  5,182        $ 20,597
Obligations of state and political
         subdivisions - available for sale        325           150              892                  --           1,367
Obligations of state and political
         subdivisions - held to maturity          385            --               98                 350             833
Other securities - available for sale              --            --               --               6,500           6,500
                                             --------      --------         --------            --------        --------

         Subtotal                            $  1,723      $ 12,014         $  3,528            $ 12,032        $ 29,297

Market value adjustment on
available-for-sale securities                $      4      $     (6)        $     29            $     76        $    103
                                             --------      --------         --------            --------        --------

         Total                               $  1,727      $ 12,008         $  3,557            $ 12,108        $ 29,400
                                             ========      ========         ========            ========        ========

Weighted average yield (a)                       3.98%         3.58%            5.55%               6.12%           4.89%
                                             ========      ========         ========            ========        ========
</TABLE>
(a) Actual yields on tax-exempt obligations do not differ materially from yields
computed on a tax equivalent basis.

     Expected   maturities  may  differ  from  contractual   maturities  because
borrowers may have the right to call or prepay  obligations with or without call
or prepayment  penalties.  For  information  regarding  the  amortized  cost and
approximate  market value of  securities  at December 31, 2001,  by  contractual
maturity, see Note 2 of Notes to Consolidated Financial Statements.

DEPOSITS

     Deposits  are the primary  source of funds for the Company.  Such  deposits
consist of checking  accounts,  regular savings  deposits,  NOW accounts,  Money
Market Accounts and market rate Certificates of Deposit.  Deposits are attracted
from individuals, partnerships and corporations in the Company's market area. In
addition,  the Company obtains  deposits from state and local entities and, to a
lesser extent, U.S. Government and other depository institutions.  The Company's
policy permits the acceptance of limited amounts of brokered deposits.

                                       8
<PAGE>

     The following  table sets forth the average  balances and average  interest
rates based on daily balances for deposits for the periods indicated.
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                         -----------------------------------------------------------------------------------
                                                    2001                        2000                         1999
                                         --------------------------     ------------------------     -----------------------
                                            Average       Average       Average        Average       Average        Average
                                            Balance      Rate Paid      Balance       Rate Paid      Balance       Rate Paid
                                            -------      ---------      -------       ---------      -------       ---------
                                                                        (Dollars in thousands)
<S>                                         <C>            <C>        <C>                 <C>        <C>                <C>
Types of deposits (all in domestic
offices):
Non-interest-bearing demand
   deposits.........................        $ 49,773         --%      $  46,010             --%      $  42,278            --%
Interest-bearing demand deposits....         162,917       2.00%        148,428           2.67%        140,009          2.57%
Savings deposits....................          45,137       1.80%         45,461           2.55%         47,049          2.18%
Time deposits.......................         375,825       5.47%        353,278           5.71%        273,392          5.00%
                                             -------                  ---------                        -------
     Total deposits.................        $633,652                  $ 593,177                       $502,728
                                            ========                  =========                       ========
</TABLE>
     The following table  indicates the amount of the Company's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
2001.

                                                      Certificates of
                        Maturity Period                   Deposits
                        ---------------                   --------
                                                       (In thousands)

    Three months or less..........................         $ 27,504
    Over three through six months.................           21,056
    Over six through twelve months................           21,737
    Over twelve months............................           30,804
                                                           --------
       Total......................................         $101,101
                                                           ========
COMPETITION

     To  compete   effectively,   the  Company  relies  substantially  on  local
commercial  activity;  personal  contacts  by  its  directors,  officers,  other
employees and  shareholders;  personalized  services;  and its reputation in the
communities it serves.

     According to data as of June 30, 2001 supplied by the FDIC, the Bank ranked
as the largest  independent  commercial bank in its market area,  which includes
Greene, Hamblen,  Hawkins,  Sullivan,  Washington,  Madison,  Loudon, Blount and
McMinn Counties, Tennessee and portions of Cocke, Monroe and Jefferson Counties,
Tennessee.  In Greene County,  there were seven commercial banks and one savings
bank,  operating  22 branches and holding an  aggregate  of  approximately  $757
million in deposits as of June 30, 2001.

     Under the federal Bank Holding  Company Act of 1956 (the  "Holding  Company
Act"), as amended by the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Riegle-Neal Act"), Tennessee banks and their holding companies
may be acquired by out-of-state banks or their holding companies,  and Tennessee
banks and their holding companies may acquire  out-of-state banks without regard
to whether the  transaction is prohibited by the laws of any state. In addition,
the federal banking agencies may approve interstate merger transactions  without
regard to whether  such  transactions  are  prohibited  by the law of any state,
unless  the home state of one of the banks  opts out of the  Riegle-Neal  Act by
adopting a law that  applies  equally to all  out-of-state  banks and  expressly
prohibits merger  transactions  involving  out-of-state banks. The effect of the
Riegle-Neal  Act may be to increase  competition  within the State of  Tennessee
among  banking  institutions  located in Tennessee  and from  banking  companies
located anywhere in the country.

                                       9
<PAGE>

EMPLOYEES

     As of December  31,  2001 the Company  employed  372  full-time  equivalent
employees.  None of the Company's employees are presently represented by a union
or covered under a collective  bargaining  agreement.  Management of the Company
considers relations with employees to be good.

REGULATION, SUPERVISION AND GOVERNMENTAL POLICY

     The following is a brief summary of certain statutes, rules and regulations
affecting the Company and the Bank. A number of other  statutes and  regulations
have an impact on their operations. The following summary of applicable statutes
and regulations does not purport to be complete and is qualified in its entirety
by reference to such statutes and regulations.

     Bank  Holding  Company  Regulation.  The  Company is  registered  as a bank
holding  company  under  the  Holding  Company  Act  and,  as such,  subject  to
supervision, regulation and examination by the Board of Governors of the Federal
Reserve Board (the "FRB").

     Acquisitions  and  Mergers.  Under the Holding  Company Act, a bank holding
company must obtain the prior approval of the FRB before (1) acquiring direct or
indirect  ownership or control of any voting  shares of any bank or bank holding
company if, after such  acquisition,  the bank holding company would directly or
indirectly  own or control more than 5% of such  shares;  (2)  acquiring  all or
substantially all of the assets of another bank or bank holding company;  or (3)
merging or consolidating  with another bank holding  company.  Also, any company
must obtain approval of the FRB prior to acquiring control of the Company or the
Bank. For purposes of the Holding Company Act, "control" is defined as ownership
of more than 25% of any class of voting  securities  of the Company or the Bank,
the ability to control  the  election  of a majority  of the  directors,  or the
exercise of a controlling  influence over  management or policies of the Company
or the Bank.

     The Holding  Company  Act,  as amended by the  Riegle-Neal  Act,  generally
permits  the  FRB to  approve  interstate  bank  acquisitions  by  bank  holding
companies without regard to any prohibitions of state law. See "Competition."

     The  Change in Bank  Control  Act and the  related  regulations  of the FRB
require any person or persons acting in concert  (except for companies  required
to make  application  under the Holding  Company Act), to file a written  notice
with the FRB before such person or persons may acquire control of the Company or
the Bank.  The  Change in Bank  Control  Act  defines  "control"  as the  power,
directly  or  indirectly,  to vote 25% or more of any  voting  securities  or to
direct the management or policies of a bank holding company or an insured bank.

     Bank  holding  companies  like the Company are  currently  prohibited  from
engaging in activities  other than banking and activities so closely  related to
banking or managing or controlling banks as to be a proper incident thereto. The
FRB's regulations contain a list of permissible  nonbanking  activities that are
closely  related to banking or managing or  controlling  banks.  A bank  holding
company must file an  application  or notice with the Federal  Reserve  prior to
acquiring  more  than 5% of the  voting  shares  of a  company  engaged  in such
activities.  Financial  modernization  legislation enacted on November 12, 1999,
however,  greatly broadened the scope of activities permissible for bank holding
companies.  Effective  March 11,  2000,  this  legislation  permits bank holding
companies,  upon  classification as financial holding companies,  to engage in a
broad   variety  of  activities   "financial"   in  nature.   See   "--Financial
Modernization Legislation."

     Capital  Requirements.  The Company is also subject to FRB guidelines  that
require bank holding  companies to maintain  specified minimum ratios of capital
to  total  assets  and  capital  to  risk-weighted   assets.   See  "--  Capital
Requirements."

     Dividends.  The FRB has the power to  prohibit  dividends  by bank  holding
companies if their actions constitute unsafe or unsound  practices.  The FRB has
issued a policy statement expressing its view that a bank holding company should
pay cash dividends only to the extent that the company's net income for the past
year is  sufficient  to  cover  both the cash  dividends  and a rate of  earning
retention that is consistent  with the company's  capital needs,  asset quality,
and  overall  financial  condition.  The Company  does not  believe  this policy
statement  will limit the  Company's  activity to maintain its dividend  payment
rate.

                                       10
<PAGE>

     Support of Banking Subsidiaries.  Under FRB policy, the Company is expected
to act as a source of financial strength to its banking  subsidiaries and, where
required, to commit resources to support each of such subsidiaries.  Further, if
the Bank's capital levels were to fall below minimum regulatory guidelines,  the
Bank would need to develop a capital plan to increase its capital levels and the
Company  would be required to guarantee the Bank's  compliance  with the capital
plan in order for such plan to be accepted by the federal regulatory authority.

     Under the "cross guarantee" provisions of the Federal Deposit Insurance Act
(the "FDI Act"),  any  FDIC-insured  subsidiary  of the Company such as the Bank
could be liable for any loss incurred by, or reasonably  expected to be incurred
by,  the FDIC in  connection  with (i) the  default  of any  other  FDIC-insured
subsidiary also controlled by the Company or (ii) any assistance provided by the
FDIC to any FDIC-insured subsidiary of the Company in danger of default.

     Transactions  with  Affiliates.  The  Federal  Reserve  Act  imposes  legal
restrictions  on the quality and amount of credit that a bank holding company or
its non-bank  subsidiaries  ("affiliates")  may obtain from bank subsidiaries of
the holding company. For instance, these restrictions generally require that any
such  extensions  of credit by a bank to its  affiliates  be on  nonpreferential
terms and be secured by designated amounts of specified  collateral.  Further, a
bank's ability to lend to its affiliates is limited to 10% per affiliate (20% in
the aggregate to all affiliates) of the bank's capital and surplus.

     Bank Regulation. As a Tennessee banking institution, the Bank is subject to
regulation,  supervision and regular examination by the Banking Department.  The
deposits of the Bank are insured by the FDIC to the maximum  extent  provided by
law (a maximum of $100,000 for each insured  depositor).  Tennessee  and federal
banking laws and regulations  control,  among other things,  required  reserves,
investments, loans, mergers and consolidations,  issuance of securities, payment
of  dividends,  and  establishment  of branches and other  aspects of the Bank's
operations.  Supervision, regulation and examination of the Company and the Bank
by the bank  regulatory  agencies are intended  primarily for the  protection of
depositors rather than for holders of the Common Stock of the Company.

     Extensions  of Credit.  Under  joint  regulations  of the  federal  banking
agencies,  including the FDIC,  banks must adopt and maintain  written  policies
that  establish  appropriate  limits and standards for extensions of credit that
are secured by liens or  interests in real estate or are made for the purpose of
financing permanent  improvements to real estate.  These policies must establish
loan  portfolio  diversification  standards,   prudent  underwriting  standards,
including   loan-to-value   limits   that  are   clear  and   measurable,   loan
administration   procedures   and   documentation,    approval   and   reporting
requirements.  A bank's real estate lending policy must reflect consideration of
the Interagency  Guidelines for Real Estate Lending  Policies (the  "Interagency
Guidelines")  that  have  been  adopted  by the  federal  bank  regulators.  The
Interagency Guidelines, among other things, call upon depository institutions to
establish  internal  loan-to-value  limits for real estate loans that are not in
excess of the  loan-to-value  limits specified in the Guidelines for the various
types of real estate  loans.  The  Interagency  Guidelines  state that it may be
appropriate   in   individual   cases  to  originate  or  purchase   loans  with
loan-to-value  ratios in excess of the  supervisory  loan-to-value  limits.  The
aggregate  amount of loans in excess of the  supervisory  loan-to-value  limits,
however,  should not exceed  100% of total  capital  and the total of such loans
secured  by  commercial,  agricultural,  multifamily  and other  non-one-to-four
family residential properties should not exceed 30% of total capital.

     Federal Deposit  Insurance.  The Bank is subject to FDIC deposit  insurance
assessments.  The FDIC has established a risk-based deposit insurance assessment
system for insured depository institutions, under which insured institutions are
assigned  assessment  risk   classifications   based  upon  capital  levels  and
supervisory  evaluations.  Insurance assessment rates for BIF-insured banks such
as the Bank depend on the capital  category and supervisory  category to which a
bank is  assigned  and  currently  range from $0.00 to $0.27 per $100 of insured
deposits.

     Safety and Soundness Standards.  The Federal Deposit Insurance  Corporation
Improvement Act of 1991 ("FDICIA") required the federal bank regulatory agencies
to prescribe, by regulation,  non-capital safety and soundness standards for all
insured depository  institutions and depository  institution  holding companies.
The  FDIC  and the  other  federal  banking  agencies  have  adopted  guidelines
prescribing  safety and soundness  standards  pursuant to FDICIA. The safety and
soundness  guidelines  establish general standards relating to internal controls
and information  systems,  internal audit systems,  loan  documentation,  credit
underwriting,  interest rate exposure, asset growth, and compensation,  fees and
benefits.   Among  other  things,  the  guidelines  require  banks  to  maintain
appropriate  systems and  practices to identify  and manage risks and  exposures
identified in the guidelines.

                                       11
<PAGE>

     Capital  Requirements.  The FRB has established  guidelines with respect to
the  maintenance  of  appropriate  levels of capital by registered  bank holding
companies,  and the FDIC has established  similar guidelines for state-chartered
banks  that are not  members  of the FRB.  The  regulations  of the FRB and FDIC
impose two sets of capital adequacy requirements:  minimum leverage rules, which
require the maintenance of a specified minimum ratio of capital to total assets,
and risk-based capital rules, which require the maintenance of specified minimum
ratios of capital to  "risk-weighted"  assets. At December 31, 2001, the Company
and the Bank satisfied the minimum required regulatory capital requirements. See
Note 10 of Notes to Consolidated Financial Statements.

     The FDIC has issued final  regulations  that  classify  insured  depository
institutions  by capital  levels and require  the  appropriate  federal  banking
regulator to take prompt action to resolve the problems of any institution  that
fails  to  satisfy   the   capital   standards.   Under  such   regulations,   a
"well-capitalized"  bank is one that is not subject to any  regulatory  order or
directive  to meet any  specific  capital  level  and that  has or  exceeds  the
following  capital  levels:  a total  risk-based  capital ratio of 10%, a Tier 1
risk-based  capital ratio of 6%, and a leverage  ratio of 5%. As of December 31,
2001, the Bank was "well-capitalized" as defined by the regulations. See Note 10
of Notes to Consolidated Financial Statements for further information.

     Financial   Modernization   Legislation.   On  November   12,   1999,   the
Gramm-Leach-Bliley  Act of 1999  (the  "GLBA")  was  signed  into  law.  The Act
includes  a  number  of  provisions   intended  to  modernize  and  to  increase
competition in the American financial services industry, including authority for
bank  holding  companies  to engage in a wider range of  nonbanking  activities,
including securities  underwriting and general insurance  activities.  Under the
GLBA,  a bank  holding  company  that elects to be deemed a  "financial  holding
company" will be permitted to engage in any activity  that the Federal  Reserve,
in consultation with the Secretary of the Treasury,  determines by regulation or
order  is (i)  financial  in  nature,  (ii)  incidental  to any  such  financial
activity,  or (iii)  complementary  to any such financial  activity and does not
pose a substantial risk to the safety or soundness of depository institutions or
the financial system generally.  The GLBA identifies certain activities that are
deemed  to  be  financial  in  nature,  including  those  nonbanking  activities
currently  authorized for bank holding  companies by the Federal Reserve as well
as insurance and securities underwriting,  insurance agency and merchant banking
activities.  In order to take  advantage of this new  authority,  a bank holding
company's  depository  institution  subsidiaries  must be  well-capitalized  and
well-managed  and have at least a  satisfactory  examination  rating  under  the
Community Reinvestment Act.

     In  addition,  the  GLBA  authorizes  national  banks  to  engage,  through
"financial  subsidiaries,"  in any activity that is permissible  for a financial
holding company (as described  above) and any activity that the Secretary of the
Treasury,  in consultation with the Federal Reserve,  determines is financial in
nature or  incidental  to any such  financial  activity,  except  (i)  insurance
underwriting,  (ii) real estate development or real estate investment activities
(unless   otherwise   permitted  by  law),  (iii)  insurance  company  portfolio
investments  and  (iv)  merchant  banking.  In order to  invest  in a  financial
subsidiary,  a national bank must be well-managed  and  well-capitalized  (after
deducting  from  capital  the  bank's   outstanding   investments  in  financial
subsidiaries)  and have at least a "satisfactory"  examination  rating under the
Community Reinvestment Act.

     The GLBA  provides  that  state  banks,  such as the  Bank,  may  invest in
financial  subsidiaries  (assuming they have the requisite  investment authority
under  applicable  state law) that engage as principal in activities  that would
only be  permissible  for a national bank to conduct in a financial  subsidiary.
This  authority  is  generally  subject  to the same  conditions  that  apply to
investments  made  by  a  national  bank  in  financial  subsidiaries.  Since  a
Tennessee-chartered  bank is  authorized  by state law to exercise  any power or
engage in any activity that it could exercise or engage in if it were a national
bank located in Tennessee,  the financial  subsidiary  authority  under the GLBA
could result in the  expansion of  activities  permissible  for  Tennessee  bank
subsidiaries.

     Most of the GLBA's  provisions have delayed effective dates and require the
adoption of federal banking  regulations to implement the statutory  provisions.
The Federal Reserve and the FDIC have yet to issue final  regulations  under the
GLBA,  and the effect of such  regulations,  when adopted,  cannot be predicted.
However, the legislation is expected to present opportunities to the Company and
the Bank for new business activities,  although no such activities are presently
planned, and may also have the effect of increasing  competition for the Company
and the Bank.

                                       12
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table sets forth information regarding the executive officers
of the Company.

                           Age At
         Name         December 31, 2001              Title
         ----         -----------------              -----
R. Stan Puckett              45            Chairman of the Board,  President and
                                               Chief Executive Officer
William F. Richmond          52            Senior Vice President and
                                               Chief Financial Officer

     R. STAN PUCKETT  currently serves as President and Chief Executive  Officer
of the  Company and has held that  position  since  1990.  He is also  currently
Chairman  of the  Board of  Directors.  He has  served  as  President  and Chief
Executive  Officer of the Bank since  February 1989. He is a graduate of Bristol
University with a degree in business  administration.  He served as President of
First  American  National Bank of Johnson City,  Tennessee from December 1987 to
February 1989 and as its Vice  President from June 1986 to December 1987. He was
Assistant  Vice  President  of First Union  National  Bank in  Asheville,  North
Carolina from September 1983 to June 1986 and served as commercial  loan officer
of Signet Bank in Bristol, Virginia from September 1977 to June 1983.

     WILLIAM F.  RICHMOND  joined the  Company in  February  1996 and  currently
serves as Senior Vice President and Chief  Financial  Officer of the Company and
the Bank. Prior to joining the Company,  Mr. Richmond served,  subsequent to the
acquisition of Heritage Federal Bancshares,  Inc. ("Heritage") by First American
Corporation (now a part of AmSouth  Bancorporation),  as transition  coordinator
for various financial matters from November 1995 through January 1996.  Heritage
was the parent of  Heritage  Federal  Bank for  Savings  located  in  Kingsport,
Tennessee.  He served as Senior Vice President and Chief  Financial  Officer for
Heritage from June 1991 through  October 1995 and as controller  from April 1985
through May 1991. He has been active in community  activities in the Tri-Cities,
Tennessee area,  having served on the Board of Directors of Boys and Girls Club,
Inc. and as President of the Tri-Cities Estate Planning  Council.  He has served
in various  capacities  with the United Way of Greater  Kingsport  and is a Paul
Harris  Fellow  in  Rotary  International.  He  holds a B.S.  in  Commerce  with
Distinction from the University of Virginia and also an M.B.A.  from the Colgate
Darden Graduate School of Business Administration at the University of Virginia.
He is licensed as a Certified Public Accountant in Virginia and Tennessee and is
also a Certified Financial Planner.

ITEM 2.  PROPERTIES

     At December 31, 2001, the Company  maintained a main office in Greeneville,
Tennessee and 29 bank branches (of which six are in leased  operating  premises)
and 12 separate locations operated by the Bank's subsidiaries.

ITEM 3.  LEGAL PROCEEDINGS

     From time to time, the Company and its  subsidiaries are parties to various
legal proceedings incident to its business.  At December 31, 2001, there were no
legal  proceedings  which management  anticipates  would have a material adverse
effect on the Company.

                                       13

<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were  submitted  during the fourth  quarter of 2001 to a vote of
security holders of the Company through a solicitation of proxies or otherwise.

                                     PART II

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

     There are 6,818,890  shares of Common Stock  outstanding and  approximately
1,860 shareholders of record of the Common Stock as of March 26, 2002.

     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)
                                    -----------             ------------
       2001:
       First quarter               $32.00                    $0.12
       Second quarter               26.88                     0.12
       Third quarter                18.00                     0.12
       Fourth quarter               16.00                     0.20
                                                              ----
                                                             $0.56
                                                              ====
       2000:
       First quarter               $30.00                    $0.12
       Second quarter               30.00                     0.12
       Third quarter                32.00                     0.12
       Fourth quarter               32.00                     0.19
                                                              ----
                                                             $0.55
                                                              ====
-------------------------
(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" under
     Item 7  herein.  See  also  Note  10 of  Notes  to  Consolidated  Financial
     Statements.

                                       14
<PAGE>

ITEM 6.       SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                        2001         2000          1999          1998        1997
                                                        ----         ----          ----          ----        ----
                                                                          (Dollars in Thousands)
<S>                                                   <C>          <C>          <C>          <C>          <C>
Total interest income                                 $  67,964    $  67,696    $  55,229    $  50,792    $  49,005
Total interest expense                                   28,463       29,143       19,742       18,572       19,144
                                                      ---------    ---------    ---------    ---------    ---------
Net interest income                                      39,501       38,553       35,487       32,220       29,861
Provision for loan losses                                (5,959)      (8,009)      (3,133)      (3,417)      (5,953)
                                                      ---------    ---------    ---------    ---------    ---------
Net interest income after provision for loan losses      33,542       30,544       32,354       28,803       23,908
Non-interest income:
Investment securities gains                                  --           --           --           --            2
Other income                                              9,593        6,568        6,331        4,555        3,919
Non-interest expense                                    (28,665)     (29,393)     (24,610)     (20,462)     (17,009)
                                                      ---------    ---------    ---------    ---------    ---------
Income before income taxes                               14,470        7,719       14,075       12,896       10,820
Income tax expense                                       (5,047)      (2,206)      (5,250)      (4,690)      (3,990)
                                                      ---------    ---------    ---------    ---------    ---------
Net income                                            $   9,423    $   5,513    $   8,825    $   8,206    $   6,830
                                                      =========    =========    =========    =========    =========

PER SHARE DATA:1
Net income, basic                                     $    1.38    $     .81    $    1.30    $    1.21    $    1.01
Net income, assuming dilution                         $    1.38    $     .80    $    1.29    $    1.20    $    1.01
Dividends declared                                    $    0.56    $    0.55    $    0.52    $    0.46    $    0.38
Book value                                            $   10.06    $    9.24    $    8.94    $    8.16    $    7.40

FINANCIAL CONDITION DATA:
Assets                                                $ 811,612    $ 789,117    $ 656,012    $ 568,179    $ 534,102
Loans, net                                            $ 679,271    $ 657,065    $ 546,897    $ 466,661    $ 441,390
Cash and investments                                  $  57,470    $  76,816    $  72,223    $  49,939    $  62,166
Federal funds sold                                    $  25,621    $   8,130    $      --    $  24,300    $   5,500
Deposits                                              $ 653,913    $ 648,641    $ 522,382    $ 459,183    $ 461,728
Notes Payable                                         $  67,978    $  59,949    $  46,309    $  36,627    $  15,487
Federal funds purchased and repurchase agreements     $  10,375    $   4,713    $  14,581    $   7,216    $   1,414
Shareholders' equity                                  $  68,627    $  63,010    $  60,772    $  55,386    $  50,113

SELECTED RATIOS:
Interest rate spread                                      4.98%         5.18%       5.90%         5.96%        5.70%
Net yield on interest-earning assets                      5.41%         5.67%       6.39%         6.53%        6.21%
Return on average assets                                  1.20%         0.75%       1.47%         1.56%        1.33%
Return on average equity                                 13.96%         8.58%      14.90%        15.63%       13.93%
Average equity to average assets                          8.59%         8.78%       9.89%         9.97%        9.55%
Dividend payout ratio                                    40.53%        68.22%      40.02%        37.99%       38.08%
Ratio of nonperforming assets to total assets             1.22%         0.96%       0.96%         1.15%        0.81%
Ratio of allowance for loan losses to
nonperforming assets                                    112.89%       154.83%     163.48%       156.34%      210.15%
Ratio of allowance for loan losses to total loans         1.61%         1.72%       1.81%         2.11%        2.01%
</TABLE>
---------------------------
1    Amounts have been restated to reflect the effect of the  Company's  3-for-1
     stock  split  effected  in October  1997 and for the  5-for-1  stock  split
     effected May 2001.

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

CHANGES IN RESULTS OF OPERATIONS

     Net  income.  Net income for 2001 was $9,423,  an  increase  of $3,910,  or
70.92%,  as compared to net income of $5,513 for 2000. The increase is primarily
attributable  to an increase in  non-interest  income of $3,025,  or 46.06%,  to
$9,593 in 2001 from $6,568 in 2000 and a decrease of $2,050,  or 25.60%,  in the
provision  for loan loss to $5,959 in 2001 from $8,009 in 2000.  The increase in
non-interest  income resulted from the Company's continued emphasis on fee-based
income and the  related  growth in its  lending  activities.  The decline in the
provision for loan losses  reflects the  adjustment in 2001 of the allowance for
loan losses to a level that management deemed adequate. Even with the decline in
the  provision,  the  Company's  allowance  for loan  losses was  112.89% of its
nonperforming assets.

                                       15
<PAGE>

     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 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 2001,  net  interest  income was $39,501 as
compared  to  $38,553 in 2000,  an  increase  of 2.46%.  This  increase  was due
primarily to an increase in average loan balances,  which increased $81,982,  or
13.48%,  to $690,333 in 2001 from  $608,351 in 2000,  while the yield on average
loans  declined to 9.56% from  10.34% in 2000.  The  Company's  yield on average
loans during 2001 decreased as compared to 2000 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 the average balance of interest-bearing liabilities, as the Company
aggressively  funded the growth in loans.  The increase in such average balances
was  offset  in  part  by  the  decline  in  the   Company's   rate  on  average
interest-bearing   liabilities   to  4.33%  in  2001  from  4.78%  in  2000,  as
rate-sensitive  liabilities priced downward in a declining rate environment.  In
the  aggregate,  the  Company's  interest  rate spread and net  interest  margin
declined in 2001 from 2000.  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.

     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.

                                       16
<PAGE>

     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.
<TABLE>
<CAPTION>

                                        2001                              2000                              1999
                          ---------------------------------- -------------------------------- ----------------------------------
                            Average                Average    Average              Average      Average               Average
                            Balance     Interest     Rate     Balance   Interest     Rate       Balance    Interest     Rate
                            -------     --------     ----     -------   --------     ----       -------    --------     ----
INTEREST-EARNING ASSETS:
Loans1
<S>                         <C>          <C>          <C>      <C>        <C>        <C>       <C>         <C>           <C>
Real estate loans           $ 496,304    $ 41,219     8.31%    $448,808   $39,316    8.76%     $ 370,529   $ 32,429      8.75%
Commercial loans               98,260       7,789     7.93%      80,399     7,646    9.51%        64,268      5,790      9.01%
Consumer and other loans-
  net2                         95,769      11,610    12.12%      79,144    11,304   14.28%        75,670     10,253     13.55%
Fees on loans                               5,352                           4,608                             4,314
                                         --------                         -------                          --------

Total loans
(including fees)            $ 690,333    $ 65,970     9.56%    $608,351   $62,874   10.34%     $ 510,467   $ 52,786     10.34%
                             --------     -------               -------    ------               --------    -------

Investment securities3
---------------------
Taxable                     $  16,294    $  1,010     6.20%    $ 44,427   $ 3,153    7.10%     $  20,384   $  1,196      5.87%
Tax-exempt4                     1,973          87     4.41%       3,213       140    4.36%         4,085        160      3.92%
FHLB and Bankers  Bank
  Stock                         4,367         289     6.62%       3,986       288    7.23%         3,377        244      7.23%
                            ---------    --------              --------   -------              ---------   --------

Total investment
  securities                $  22,634    $  1,386     6.12%    $ 51,626   $ 3,581    6.94%     $  27,846   $  1,600      5.75%

Other short-term
Investments                    17,007         608     3.57%      19,495     1,241    6.37%        17,309        843      4.87%
                            ---------    --------              --------   -------              ---------   --------

Total interest-
earning assets              $ 729,974    $ 67,964     9.31%    $679,472   $67,696    9.96%     $ 555,622   $ 55,229      9.94%
                             --------     -------               -------    ------               --------    -------

NON-INTEREST-EARNING
ASSETS:
Cash and due from
 banks                      $  21,163                          $ 21,757                        $  22,252
Premises and
  equipment                    25,092                            21,351                           12,936
Other, less allowance
  for loan losses               9,567                             8,471                            8,001
                            ---------                          --------                        ---------

Total non-interest-
earning assets              $  55,822                          $ 51,579                        $  43,189
                             --------                           -------                         --------

Total Assets                $ 785,796                          $731,051                        $ 598,811
                            =========                           =======                         ========
</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.

                                       17
<PAGE>
<TABLE>
<CAPTION>
                                        2001                                 2000                                1999
                            ------------------------------ ----------------------------------------- ------------------------------
                              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                $ 208,054   $ 4,066   1.95%      $193,889         $5,116     2.64%      $ 187,058   $  4,629     2.47%
Time deposits                  375,825    20,557   5.47%       353,278         20,175     5.71%        273,392     13,671     5.00%
                             ---------   -------              --------        -------                ---------   --------

Total deposits               $ 583,879   $24,623   4.22%      $547,167        $25,291     4.62%      $ 460,450   $ 18,300     3.97%

Securities sold
  under repurchase
  agreements and
  short-term
  borrowings                     7,620       181   2.38%         6,036            304     5.04%          7,326        318     4.35%

Notes Payable                   66,301     3,659   5.52%        56,934          3,548     6.23%         21,401      1,124     5.25%
                             ---------  --------              --------     ----------                ---------   --------


Total interest-bearing
     liabilities             $ 657,800   $28,463   4.33%      $610,137        $29,143     4.78%      $ 489,177   $ 19,742     4.04%

NON-INTEREST-BEARING
LIABILITIES:
Demand deposits              $  49,773                        $ 46,010                               $  42,278
Other liabilities               10,740                          10,685                                   8,113
                            ----------                        --------                               ---------
Total liabilities            $  60,513                        $ 56,695                               $  50,391

Stockholders' equity            67,483                          64,219                                  59,243
                             ---------                        --------                               ---------

Total liabilities and
stockholders' equity         $ 785,796                        $731,051                               $ 598,811
                             =========                        ========                               =========


Net interest income                      $39,501                              $38,553                $  35,487
                                         =======                              =======                =========


MARGIN ANALYSIS:
Interest rate spread                               4.98%                                  5.18%                               5.90%

Net yield on interest-
  earning assets (net
  interest margin)                                 5.41%                                  5.67%                               6.39%
                                                   =====                                  =====                               =====
</TABLE>
                                       18
<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>
                                                2001 vs. 2000                                    2000 vs. 1999
                                  -------------------------------------------   ----------------------------------------------
                                                          Rate/       Total                               Rate/        Total
                                    Volume     Rate      Volume      Change       Volume      Rate        Volume       Change
                                    ------     ----      ------      ------       ------      ----        ------       ------
INTEREST INCOME:                                                       (In thousands)
<S>                               <C>       <C>         <C>        <C>          <C>        <C>          <C>         <C>
   Loans net of unearned income   $   8,473 $ (4,738)   $   (639)  $    3,096   $  10,123  $    (29)    $     (6)   $   10,088
   Investment securities:
   Taxable                          (1,997)     (399)         253     (2,143)       1,411        251          295        1,957
   Tax exempt                          (54)         2         (1)        (53)        (34)         18          (4)         (20)
    FHLB and Bankers Bank Stock          28      (25)         (2)           1          44         --           --           44
   Other short-term investments       (193)     (543)         103       (633)         106        259           33          398
                                  --------- ---------   ---------  ----------   ---------  ---------    ---------   ----------

Total interest income                 6,257   (5,703)       (286)         268      11,650        499          318       12,467
                                  --------- ---------   ---------  ----------   ---------  ---------    ---------   ----------

INTEREST EXPENSE:
   Savings, NOW accounts, and
     money market accounts              501   (1,408)       (143)     (1,050)         169        307           11          487
   Time deposits                      1,287     (851)        (54)         382       3,995      1,941          568        6,504
   Short-term borrowings                 61     (168)        (16)       (123)        (56)         51          (9)         (14)
   Debt                                 436     (472)         147         111       1,866        210          348        2,424
                                  --------- ---------   ---------  ----------   ---------  ---------    ---------   ----------

   Total interest expense             2,285   (2,899)        (66)       (680)       5,974      2,509          918        9,401
                                  --------- ---------   ---------  ----------   ---------  ---------    ---------   ----------

Net interest income               $   3,972 $ (2,804)   $   (220)  $      948   $   5,676  $ (2,010)    $   (600)   $    3,066
                                   ========  ========    ========   =========    ========   ========     ========    =========
</TABLE>

     At December 31, 2001,  loans  outstanding and loans  held-for-sale,  net of
unearned  income and  allowance  for loan  losses,  were  $679,271  compared  to
$657,065 at 2000 year end. The increase is primarily due to 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
2001 were $690,333, an increase of 13.48% from the 2000 average of $608,351. The
average  outstanding  loans for 1999 were $510,467.  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 2001, the Company  continued its expansion with
new  branches  as  previously   discussed.   See  "ITEM  1  --  Business--Branch
Expansion."

     Average investment securities for 2001 were $22,634, compared to $51,626 in
2000, and $27,846 in 1999. The decrease of $28,992, or 56.16%, from 2000 to 2001
primarily  reflects the purchase of $25,000 of federal agency  securities at the
beginning of 2000 for the principal  purpose of pledging public  deposits.  Such
securities were not held throughout  2001. The decline in the average balance of
investment  securities  from 1999 to 2000 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 2001, the average yield on investments  was 6.12%, a
decrease  from the 6.94% yield in 2000 and up from the 5.75% yield in 1999.  The
decrease in 2001  results  primarily  from the  absence  during 2001 of the full
effect of the 7.33% yield on the $25,000  federal  agency  security  held during
2000, as well as the beneficial  effect of the higher interest rate  environment
during  2000 on the  Company's  adjustable-rate  investment  securities.  Income
provided by the investment portfolio in 2001 was $1,386 as compared to $3,581 in
2000, and $1,600 in 1999.

     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 a
combination  of both  internal  and  industry  net loss  experience,  as well as
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

                                       19
<PAGE>

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.

     The Bank generally  maintains only a general loan loss allowance,  which 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 loan quality indicators on a monthly basis,
including current economic conditions,  delinquency trends and ratios, portfolio
mix  changes  and other  information  management  deems  necessary.  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 for loan losses.

     Increases  and decreases in the allowance for loan losses due to changes in
the  measurement  of impaired  loans are  reflected  in the  provision  for loan
losses.  Loans continue to be classified as impaired unless payments are brought
fully current and management also considers the collection of scheduled interest
and principal to be probable.

     The Company's  provision for loan losses decreased  $2,050,  or 25.60%,  to
$5,959  in  2001  from  $8,009  in  2000.  Management  recognized  the  need  to
substantially  increase the  provision  from $3,133 in 1999 to $8,009 in 2000 to
address  the  accelerated  loss  experience  throughout  the  Company.  In 2001,
management  determined  that loan losses had stabilized;  accordingly,  the same
level of provisions as made in 2000 was unnecessary.  In 2001 net charge-offs in
Superior  Financial  and GCB  Acceptance  were $2,818 and $1,038,  respectively,
versus $2,610 in the Bank.  Such net  charge-offs  were a result of a decline in
loan quality,  continued  implementation of an aggressive  charge-off  policy, a
downturn in the local and regional  economy 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  within  the  Company's  overall  loan  portfolios  should
continue the stabilized trend.

     The ratio of  non-performing  assets to total  assets was 1.22% at December
31, 2001 and .96% at December 31, 2000.  Primarily due to the Company's increase
in non-performing  assets, the ratio of the Company's  allowance for loan losses
to  non-performing  assets  decreased  in 2001 to 112.89%  from 154.83% in 2000.
Total  non-performing loans increased $1,440, or 27.23%, from $5,288 at December
31,  2000  to  $6,728  at  December  31,  2001.  Non-accrual  loans,  which  are
non-performing  loans as to which the Bank no longer recognizes interest income,
increased  $1,044  or  21.69% to $5,857  at  December  31,  2001 from  $4,813 at
December 31, 2000.  The increase  consists  primarily of  additional  nonaccrual
loans at Superior Financial  principally due to the declining local and regional
economies  and the effect of this  decline on Superior  Financial's  demographic
base.

     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, 2001 the Company had
identified  approximately $15,100 in loans that were placed on its "watch list,"
a  slight  increase  from the  approximate  $14,700  as of  December  31,  2000.
Management  believes the level of "watch list" loans,  as a percentage  of total
loans, will improve during 2002.

     Non-Interest  Income.  Non-interest  income,  which is  income  that is not
related to  interest-earning  assets and consists  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 2001  increased  to $9,593 as  compared  to
$6,568 in 2000 and $6,331 in 1999. The largest components of non-interest income
are service charges,  commissions and fees, which totaled $7,606 in 2001, $5,200
in 2000 and $5,258 in 1999.  The  increase in 2001 was due  primarily to service
charges  and  commissions  associated  with  2001  deposit  growth,  as  well as
additional fees generated by the Bank's mortgage  banking  operation,  offset in
part by a decrease in fees and commissions at Superior  Financial,  attributable
mainly to reduced loan originations in 2001 as compared to 2000. Management does
not anticipate any significant  increase in service charge and fee income in the
near future absent  continued  deposit growth and an expanding  mortgage lending
market.

                                       20
<PAGE>

     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  $28,665  in  2001,
compared to $29,393 in 2000 and $24,610 in 1999.

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses.  In 2001,  salaries and benefits  represented  $16,977,  or 59.23%, of
total non-interest expenses. This was an increase of $243, or 1.45%, over 2000's
total of $16,734.  Personnel costs for 2000 increased  $2,395,  or 16.70%,  over
1999's total of $14,339.  The increases in 2000 reflect the  increased  staffing
needs of the Company's  continued  expansion of the Bank and  subsidiary  branch
network  throughout East Tennessee.  The minimal  increase in 2001,  compared to
2000,  was a reflection  of  management's  continued  focus on overall  staffing
levels and  associated  benefits.  Overall,  the number of full-time  equivalent
employees  at December  31,  2001,  was 372 versus 388 at December  31,  2000, a
decrease of 4.12%.

     Occupancy 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, 2001, the Company had 42 branches compared to
44 branches at December 31, 2000.

     Other expenses  decreased $728, or 10.60%,  from 2000 to 2001. The decrease
was primarily  attributable to management's continued focus on overhead control.
The increase from 1999 to 2000 was $1,309, or 23.55%.

CHANGES IN FINANCIAL CONDITION

     Total assets at December 31, 2001 were $811,612, an increase of $22,495, or
2.85%, over total assets of $789,117 at December 31, 2000. The increase reflects
an increase in loans,  net, of $15,986,  or 2.44%,  to $671,326 at December  31,
2001 from $655,340 at December 31, 2000.  Average assets for 2001 also increased
to $785,796, an increase of $54,745, or 7.49%, from the average asset balance of
$731,051 for 2000.  This increase was primarily the result of a 13.48%  increase
in the  average  balance of loans to  $690,333  in 2001 from  $608,351  in 2000,
offset in part by a decline in the average  balance of investment  securities in
2001 to $22,634 from $51,626 in 2000.  Even with the increase in average  assets
in 2001, the Company's  return on average assets increased in 2001 to 1.20% from
0.75% in 2000 as the Company's increasing  non-interest income continued to more
than offset its  declining  net interest  margin.  The  Company's  interest rate
spread declined to 4.98% in 2001 from 5.18% in 2000.

     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.

     Earning  assets  consist of loans,  investment  securities  and  short-term
investments  that  earn  interest.  Average  earning  assets  during  2001  were
$729,974, an increase of 7.43% from an average of $679,472 in 2000.

     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 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, 2001 had an amortized cost of $29,297 and
a market value of $29,407 as compared to an amortized cost of $48,441 and market
value of $48,527 at December  31, 2000.  This  decrease in  investments  in 2001
primarily   reflects  the  Company's  purchase  of  $25,000  of  federal  agency
securities in 2000, as previously discussed, for the primary purpose of pledging
public  deposits.  Because the securities were callable,  their market value did
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, 2001 and December 31, 2000.

                                       21
<PAGE>

     The Company's  deposits were $653,913 at December 31, 2001. This represents
an increase of $5,272,  or 0.81%,  from the $648,641 of deposits at December 31,
2000.  Non-interest  bearing demand deposit balances increased 36.37% to $65,179
at December 31, 2001 from $47,794 at December 31, 2000. Average interest-bearing
deposits increased $36,712, or 6.71%, in 2001. In 2000, average interest-bearing
deposits  increased $86,717,  or 18.83%,  over 1999. 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  and also branch  acquisitions.  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.

     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, 2001, approximately 59% 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, 2001, the
total deposit base of Tennessee  commercial banks had a weighted average rate of
4.27%.  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 4.22% or it acquires
deposits from other financial institutions. During 2001, the premiums charged in
Tennessee by selling  financial  institutions  for deposit  accounts ranged from
3.4% to 14.3%.  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 2001 totaled  $24,623  reflecting a 4.22% cost
on average  interest-bearing  deposits of $583,879. In 2000, interest of $25,291
was paid at a cost of 4.62% on average deposits of $547,167.  In 1999,  interest
of $18,300 was paid at a cost of 3.97% on average deposits of $460,450.

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 $40
million with the Federal Home Loan Bank of Cincinnati  ("FHLB"),  of which $18.3
million was available at December 31, 2001. The Company also  maintains  federal
funds lines of credit totaling $70.9 million at seven  correspondent  banks. The
Company believes it has sufficient liquidity to satisfy its current operations.

     In 2001, operating activities of the Company provided $9,457 of cash flows,
reflecting  net income of $9,423 and  adjusted  to  include  non-cash  operating
expenses  such as $5,959 in  provision  for loan  losses  and  amortization  and
depreciation of $1,604, and exclude non-cash  operating income,  such as $107 in
the increased cash surrender value of life insurance contracts and $2,085 in the
net change in accrued interest and other liabilities.  Cash flows from operating
activities were reduced by the proceeds from the sale of held-for-sale  loans of
$70,809,  offset by cash used to originate  held-for-sale loans of $76,608. This
increase  in overall  activity  in  held-for-sale  loans from 2000 and 1999,  as
compared to 2001,  reflects an increase in mortgages  originated and sold by the
Bank's mortgage banking operation in a declining interest rate environment.

     Investing activities,  including lending, provided $11,208 of the Company's
cash flows,  as opposed to using cash flows of $150,234 in 2000.  Origination of
loans held to maturity net of principal  collected  used $27,321 in funds,  down
from $120,951 in 2000 as the Company's loan originations  decreased primarily as
a result of slowing economic activity.  Maturities and calls of securities,  net
of purchases of securities  available for sale,  provided $19,043 in cash flows.
Cash flows from  investing  activities  also increased from the cash received in
branch  acquisitions,  from the sale of other  real  estate and from the sale of
fixed  assets in the amounts of $19,924,  $4,087 and $312,  respectively.  These
cash inflows were  reduced,  in part, by investment in premises and equipment of
$3,731  resulting from the Company's branch  expansions and furnishings  related
thereto.

                                       22
<PAGE>

     Net additional  cash outflows of $4,780 were used by financing  activities,
as  opposed  to  providing  cash  flows of  $126,659  in 2000.  The  change  was
attributable primarily to net deposit outflows,  excluding deposits acquired via
branch  acquisitions,  of $14,652  versus net deposit  increases  in 2000 in the
amount of  $126,259.  Management  elected to allow  higher-costing  and non-core
deposits to runoff in order to alleviate pressures on net interest margin. As in
prior years, the Company's cash flow from financing  activities was decreased by
the Company's  dividend  payments  during 2001 of $3,819.  Offsetting,  in part,
these cash outflows was an increase in cash resulting from the change in federal
funds purchased and repurchase agreements in the amount of $5,662.

     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, 2001 and its record of paying  dividends  to its
stockholders  continued  uninterrupted  during  2001.  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,  2001 was  $68,627,  an increase of
$5,617,   or  8.91%,  from  $63,010  on  December  31,  2000.  The  increase  in
shareholders'  equity arises primarily from net income for 2001 of $9,423 ($1.38
per share,  assuming  dilution).  This  increase was offset in part by quarterly
dividend payments during 2001 that totaled $3,819 ($0.56 per share).

     Risk-based capital regulations adopted by the FRB and the FDIC require both
bank holding  companies  and banks 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,
2001,  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 Company's  Asset/Liability  Committee  ("ALCO")  actively  measures and
manages  interest rate risk using a process  developed by the Bank.  The ALCO is
also  responsible  for  approving  the  Company's   asset/liability   management
policies, overseeing the formulation and implementation of strategies to improve
balance sheet  positioning  and earnings,  and reviewing the Company's  interest
rate sensitivity position.

     The primary tool that management uses to measure  short-term  interest rate
risk is a net  interest  income  simulation  model  prepared  by an  independent
national  consulting  firm and  reviewed  by another  separate  and  independent
national  consulting  firm. These  simulations  estimate the impact that various
changes in the  overall  level of  interest  rates over one- and  two-year  time
horizons would have on net interest income. The results help the Company develop
strategies for managing exposure to interest rate risk.

     Like any forecasting technique,  interest rate simulation modeling is based
on a large number of assumptions. In this case, the assumptions relate primarily
to loan and deposit growth, asset and liability prepayments,  interest rates and
balance sheet management strategies.  Management believes that both individually
and  in  the  aggregate  the  assumptions  are  reasonable.   Nevertheless,  the
simulation  modeling  process  produces  only a  sophisticated  estimate,  not a
precise calculation of exposure.

     The Company's  guidelines for risk management call for preventive  measures
if a gradual 200 basis point  increase or decrease in short-term  rates over the
next twelve months would affect net interest income over the same period by more
than 15%. The Company has been  operating  well within these  guidelines.  As of
December 31, 2001 and 2000,  based on the results of the independent  consulting
firm's  simulation  model,  the  Company  could  expect net  interest  income to
increase by approximately 7.66% and 7.68%, respectively,  if short-term interest
rates gradually increase by 200 basis points. Conversely, if short-term interest
rates  gradually  decrease by 200 basis  points,  net  interest  income could be
expected to decrease by approximately 8.89% and 9.71%, respectively.

                                       23
<PAGE>

     The scenario  described  above, in which net interest income increases when
interest rates increase and decreases when interest rates decline,  is typically
referred to as being "asset sensitive" because  interest-earning  assets reprice
at a faster  pace than  interest-bearing  liabilities.  At  December  31,  2001,
approximately  43% of the  Company's  gross loans had  adjustable  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.

     The  Company  also uses an economic  value of equity  model,  prepared  and
reviewed by the same independent  national  consulting  firms, to complement its
short-term  interest  rate risk  analysis.  The benefit of this model is that it
measures  exposure to interest  rate  changes  over time frames  longer than the
two-year net interest  income  simulation.  The economic  value of the Company's
equity is determined by  calculating  the net present value of projected  future
cash flows for current asset and liability  positions based on the current yield
curve.

     Economic value analysis has several limitations.  For example, the economic
values of asset and liability  balance sheet positions do not represent the true
fair values of the positions,  since economic  values reflect an analysis at one
particular  point  in  time  and do not  consider  the  value  of the  Company's
franchise.  In addition,  we must estimate cash flow for assets and  liabilities
with indeterminate maturities.  Moreover, the model's present value calculations
do not take into  consideration  future  changes in the balance  sheet that will
likely  result  from  ongoing  loan  and  deposit  activities  conducted  by the
Company's core business. Finally, the analysis requires assumptions about events
which span several years. Despite its limitations,  the economic value of equity
model is a relatively  sophisticated  tool for evaluating the longer-term effect
of possible interest rate movements.

     The Company's  guidelines for risk management call for preventive  measures
if an  immediate  200 basis point  increase or decrease in interest  rates would
reduce  the  economic  value of equity by more than 15%.  The  Company  has been
operating  within these  guidelines.  As of December 31, 2001 and 2000, based on
the results of the independent  national  consulting firm's simulation model and
reviewed by the separate and independent  national  consulting firm, the Company
could expect its economic  value of equity to increase by  approximately  10.90%
and 6.77%,  respectively,  if short-term interest rates immediately increased by
200 basis points.  Conversely, if short-term interest rates immediately decrease
by 200 basis points,  economic  value of equity could be expected to decrease by
approximately 13.72% and 14.42%,  respectively.  The greater percentage increase
in economic  value of equity as of December 31,  2001,  compared to December 31,
2000,  is primarily due to shorter  effective  asset lives at December 31, 2001,
compared to December 31, 2000, resulting primarily from the natural evolution of
the balance  sheet in a declining  interest  rate  environment  associated  with
increased prepayments.

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

     A new accounting standard requires all business combinations to be recorded
using the purchase method of accounting for any transaction initiated after June
30, 2001.  Under the purchase method,  all identifiable  tangible and intangible
assets and liabilities of the acquired company must be recorded at fair value at
date of  acquisition,  and the  excess  of cost over  fair  value of net  assets
acquired  is  recorded  as  goodwill.  Identifiable  intangible  assets  must be
separated from goodwill. Identifiable intangible assets with finite useful lives
will be  amortized  under  the new  standard,  whereas  goodwill,  both  amounts
previously  recorded and future amounts  purchased,  will cease being  amortized
starting in 2002. Annual  impairment  testing will be required for goodwill with
impairment being recorded if the carrying amount of goodwill exceeds its implied
fair value.  Adoption  of this  standard on January 1, 2002 will result in lower
annual amortization expense of $106.

                                       24
<PAGE>

ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  information  set forth  under  Item 7,  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations  -  Asset/Liability
Management" is incorporated herein by reference.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Greene County Bancshares, Inc.

We have audited the  accompanying  consolidated  balance sheets of Greene County
Bancshares,  Inc. as of December 31, 2001 and 2000, and the related consolidated
statements of income,  changes in shareholders'  equity,  and cash flows for the
years then ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit. The 1999 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 audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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 audits provide 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, 2001 and 2000, and its results of operations
and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.





                                               /s/ Crowe, Chizek and Company LLP


Louisville, Kentucky
January 17, 2002

                                       25
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
--------------------------------------------------------------------------------


                                                            2001      2000
                                                            ----      ----
ASSETS
     Cash and due from banks                             $ 22,432   $ 24,038
     Federal funds sold                                    25,621      8,130
                                                         --------   --------
         Cash and cash equivalents                         48,053     32,168
     Interest bearing deposits in other banks               1,100         --
     Securities available for sale                         28,567     46,658
     Securities held to maturity (fair value
       $840 and $1,869)                                       833      1,866
     Loans held for sale                                    7,945      1,725
     Loans, net                                           671,326    655,340
     Premises and equipment, net                           25,611     23,934
     FHLB and Bankers Bank stock, at cost                   4,538      4,254
     Cash surrender value of life insurance                 7,349      7,242
     Accrued interest receivable and other assets          16,290     15,930
                                                         --------   --------

Total assets                                             $811,612   $789,117
                                                         ========   ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Noninterest-bearing deposits                        $ 65,179   $ 47,794
     Interest-bearing deposits                            588,734    600,847
                                                         --------   --------
         Total deposits                                   653,913    648,641

     Federal funds purchased and repurchase agreements     10,375      4,713
     Notes payable                                         67,978     59,949
     Accrued interest payable and other liabilities        10,719     12,804
                                                         --------   --------
         Total liabilities                                742,985    726,107

Shareholders' equity
     Common stock: 15,000,000 shares authorized,
     6,818,890 shares outstanding                        $ 13,638   $ 13,638
     Additional paid-in capital                             4,854      4,854
     Retained earnings                                     50,071     44,467
     Accumulated other comprehensive income                    64         51
                                                         --------   --------
         Total shareholders' equity                        68,627     63,010
                                                         --------   --------

Total liabilities and shareholders' equity               $811,612   $789,117
                                                         ========   ========

--------------------------------------------------------------------------------
                             See accompanying notes.
                                       26
<PAGE>

                         GREENE COUNTY BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                           2001      2000      1999
                                                           ----      ----      ----
Interest income
<S>                                                      <C>       <C>       <C>
     Interest and fees on loans                          $65,970   $62,874   $52,786
     Taxable securities                                    1,010     3,153     1,196
     Nontaxable securities                                    87       140       160
     FHLB and Bankers Bank stock                             289       288       244
     Federal funds sold and other                            608     1,241       843
                                                         -------   -------   -------
                                                          67,964    67,696    55,229

Interest expense
     Deposits                                             24,623    25,291    18,300
     Federal funds purchased and repurchase agreements       181       304       318
     Notes payable                                         3,659     3,548     1,124
                                                         -------   -------   -------
                                                          28,463    29,143    19,742

Net interest income                                       39,501    38,553    35,487

Provision for loan losses                                  5,959     8,009     3,133
                                                         -------   -------   -------

Net interest income after provision
   for loan losses                                        33,542    30,544    32,354

Noninterest income
     Service charges and fees                              7,606     5,200     5,258
     Other                                                 1,987     1,368     1,073
                                                         -------   -------   -------
                                                           9,593     6,568     6,331

Noninterest expense
     Salaries and employee benefits                       16,977    16,734    14,339
     Occupancy expense                                     2,078     1,961     1,541
     Equipment expense                                     2,046     1,794     1,782
     Professional services                                   636       887       751
     Advertising                                             419       673       520
     Loss on OREO and repossessed assets                     370       477       119
     Other                                                 6,139     6,867     5,558
                                                         -------   -------   -------
                                                          28,665    29,393    24,610

Income before income taxes                                14,470     7,719    14,075

Provision for income taxes                                 5,047     2,206     5,250
                                                         -------   -------   -------

Net income                                               $ 9,423   $ 5,513   $ 8,825
                                                         =======   =======   =======

Earnings per share:
     Basic                                               $  1.38   $   .81   $  1.30
     Diluted                                                1.38       .80      1.29
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.
                                       27
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
         (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, 1999                $   13,572       $    4,298     $   37,421      $       94       $   55,385

Issuance of 12,245 shares                       24              133              -               -              157
Dividends paid ($.52 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 20,655 shares                       42              347              -               -              389
Dividends paid ($.55 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

Dividends paid ($.56 per share)                  -                -         (3,819)              -           (3,819)
Comprehensive income:
   Net income                                    -                -          9,423               -            9,423
   Change in unrealized gains
   (losses), net of reclassification             -                -              -              13               13
                                                                                                         ----------
      Total comprehensive income                                                                              9,436
                                                                                                         ----------
BALANCE, DECEMBER 31, 2001              $   13,638       $    4,854     $   50,071      $       64       $   68,627
                                        ==========       ==========     ==========      ==========       ==========
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.
                                       28
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                                                   2001         2000         1999
                                                                   ----         ----         ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                             <C>          <C>          <C>
     Net income                                                 $   9,423    $   5,513    $   8,825
     Adjustments to reconcile net income to net cash from
      operating activities
       Provision for loan losses                                    5,959        8,009        3,133
       Depreciation and amortization                                1,604        1,601        1,304
       Security amortization and accretion, net                       102          188          291
       FHLB stock dividends                                          (284)        (288)        (244)
       Net gain on sale of mortgage loans                            (421)        (182)        (536)
       Originations of mortgage loans held for sale               (76,608)     (31,553)     (57,166)
       Proceeds from sales of mortgage loans                       70,809       31,220       61,535
       Net (gain) losses on sales of fixed assets                     138          121          202
       Net (gain) loss on OREO and repossessed assets                 370          477          119
       Cash surrender value of life insurance                        (107)        (822)      (2,284)
       Net changes:
          Accrued interest receivable and other assets                557       (3,961)        (845)
          Accrued interest payable and other liabilities           (2,085)         865       (2,954)
                                                                ---------    ---------    ---------
              Net cash from operating activities                    9,457       11,188       11,380

CASH FLOWS FROM INVESTING ACTIVITIES
    Net increase in interest-bearing deposits with banks           (1,100)          --           --
    Purchase of securities available for sale                     (18,500)     (29,039)      (7,083)
    Proceeds from maturities of securities available for sale      36,508        3,030        9,239
    Purchase of securities held to maturity                            --           --         (100)
    Proceeds from maturities of securities held to maturity         1,035        1,455          395
    Purchase of FHLB stock                                             --         (345)          --
    Net increase in loans                                         (27,321)    (120,951)     (89,989)
    Net cash received in branch acquisitions                       19,924           --           --
    Proceeds from sale of other real estate                         4,087        2,994        2,683
    Improvements to other real estate                                  (6)         (95)        (276)
    Proceeds from sale of fixed assets                                312           74          375
    Premises and equipment expenditures                            (3,731)      (7,357)      (8,056)
                                                                ---------    ---------    ---------
       Net cash from investing activities                          11,208     (150,234)     (92,812)

CASH FLOWS FROM FINANCING ACTIVITIES
    Net change in deposits, excluding deposits acquired
    via branch acquisitions                                       (14,652)     126,259       68,422
    Net change in federal funds purchased and
     repurchase agreements                                          5,662       (9,868)       7,365
    Proceeds from notes payable                                   106,800       70,000       79,000
    Repayment of notes payable                                    (98,771)     (56,360)     (69,318)
    Dividends paid                                                 (3,819)      (3,761)      (3,531)
    Proceeds from issuance of common stock                             --          389          157
                                                                ---------    ---------    ---------
       Net cash from financing activities                          (4,780)     126,659       82,095
                                                                ---------    ---------    ---------

NET CHANGE IN CASH AND CASH EQUIVALENTS                            15,885      (12,387)         663

Cash and cash equivalents, beginning of year                       32,168       44,555       43,892
                                                                ---------    ---------    ---------

CASH AND CASH EQUIVALENTS, END OF YEAR                          $  48,053    $  32,168    $  44,555
                                                                =========    =========    =========

Supplemental disclosures - cash and noncash
    Interest paid                                               $  28,427    $  27,993    $  19,595
    Income taxes paid                                               4,127        4,031        3,510
    Loans converted to other real estate                            5,941        4,152        3,136
</TABLE>
--------------------------------------------------------------------------------
                             See accompanying notes.
                                       29
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Nature of Operations:  The Company primarily 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 accounting
principles generally accepted in the United States of America,  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,  loans  held for sale,  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.

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.

--------------------------------------------------------------------------------
                                   (Continued)
                                       30
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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. Commitments to extend credit primarily represent fixed rate mortgage
loans.  The  commitments  are generally for a period of 60 to 90 days and are at
market  rates.  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)
                                       31

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

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. Beginning January 1, 2002, goodwill
will cease being amortized in accordance  with the new accounting  pronouncement
described  later in the footnote.  Total  goodwill and core deposit  intangibles
were $424 and $2,715 at year-end 2001.

On March 8,  2001,  the Bank  acquired  a bank  branch  and sold one of its bank
branches.  As a result of this transaction,  the Company's deposits decreased by
approximately $7,600. Other than the reduction in deposits referenced above, the
effect of this transaction on the Company's  financial  condition and results of
operations was not material.

On December 7, 2001, the Bank completed its acquisition of three branch offices,
acquiring  approximately $31,000 in deposits and an immaterial amount of certain
assets. A core deposit intangible asset of $1,584 was recorded.

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.

--------------------------------------------------------------------------------
                                   (Continued)
                                       32

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings  Per Common  Share:  Basic  earnings  per  common  share are 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.  During May
2001, the Company affected a five for one stock split in the form of a dividend.
Earnings and dividends per share are restated for all stock splits and dividends
through the issuance date 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.

New Accounting  Pronouncements:  A new accounting standard requires all business
combinations  to be recorded  using the purchase  method of  accounting  for any
transaction  initiated  after June 30,  2001.  Under the  purchase  method,  all
identifiable  tangible and  intangible  assets and  liabilities  of the acquired
company must be recorded at fair value at date of acquisition, and the excess of
cost  over  fair  value  of  net  assets   acquired  is  recorded  as  goodwill.
Identifiable  intangible  assets must be separated from  goodwill.  Identifiable
intangible  assets  with finite  useful  lives will be  amortized  under the new
standard,  whereas goodwill, both amounts previously recorded and future amounts
purchased,  will cease  being  amortized  starting  in 2002.  Annual  impairment
testing will be required  for goodwill  with  impairment  being  recorded if the
carrying  amount of goodwill  exceeds its implied  fair value.  Adoption of this
standard on January 1, 2002 will result in lower annual amortization  expense of
$106.

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 $3,042  and $2,312 was  required  to meet  regulatory  reserve  and  clearing
requirements at year-end 2001 and 2000. 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 89.5% of revenues
for 2001.

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 2001 presentation.

--------------------------------------------------------------------------------
                                   (Continued)
                                       33
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 2 - SECURITIES

Securities are summarized as follows:
<TABLE>
<CAPTION>
                                                           Gross      Gross
                                           Amortized    Unrealized  Unrealized   Fair
                                              Cost         Gains      Losses     Value
                                              ----         -----      ------     -----
                         2001
                         ----
Available for Sale
------------------
<S>                                         <C>        <C>         <C>         <C>
     U. S. Treasury and government agency   $ 19,098   $     84    $    (21)   $ 19,161
     Obligations of states and political
       subdivisions                            1,367          5          --       1,372
     Mortgage-backed                           1,499         36          (1)      1,534
     Trust preferred securities                6,500         --          --       6,500
                                            --------   --------    --------    --------
                                            $ 28,464   $    125    $    (22)   $ 28,567
                                            ========   ========    ========    ========
Held to Maturity
----------------
     Obligations of states and political
       subdivisions                         $    833   $      7    $     --    $    840
                                            ========   ========    ========    ========

                          2000
                          ----
Available for Sale
------------------
     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
                                            ========   ========    ========    ========

Hold to Maturity
----------------
     Obligations of states and political
       subdivisions                         $  1,866   $      4    $     (1)   $  1,869
                                            ========   ========    ========    ========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)
                                       34
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 2 - SECURITIES (Continued)

Contractual   maturities  of  securities  at  year-end  2001  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                     $       1,332   $      1,334    $        385    $        388
Due after one year through five years              11,962         11,957               -               -
Due after five years through ten years              3,413          3,438              98             102
Due after ten years                                10,258         10,304             350             350
Mortgage-backed securities                          1,499          1,534               -               -
                                            -------------   ------------    ------------    ------------
     Total maturities                       $      28,464   $     28,567    $        833    $        840
                                            =============   ============    ============    ============
</TABLE>

There were no security sales during 2001, 2000 or 1999.

Securities  with a carrying  value of $13,784 and  $38,897 at year-end  2001 and
2000 were pledged for public  deposits and securities  sold under  agreements to
repurchase.

NOTE 3 - LOANS

Loans at year-end were as follows:

                                                      2001           2000
                                                      ----           ----

Commercial                                       $     96,122   $     87,680
Commercial real estate                                295,002        288,254
Residential real estate                               210,489        204,202
Consumer                                               80,314         88,687
Other                                                  13,779         12,493
                                                 ------------   ------------
                                                      695,706        681,316

Less:  Unearned interest income                       (13,159)       (14,248)
        Allowance for loan losses                     (11,221)       (11,728)
                                                 ------------   ------------
                                                 $    671,326   $    655,340
                                                 ============   ============

--------------------------------------------------------------------------------
                                   (Continued)
                                       35
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 3 - LOANS (Continued)

Activity in the allowance for loan losses is as follows:

                                          2001        2000        1999
                                          ----        ----        ----

Beginning balance                       $ 11,728    $ 10,332    $ 10,253
Provision                                  5,959       8,009       3,133
Loans charged off                         (7,830)     (7,788)     (4,017)
Recoveries of loans charged off            1,364       1,175         963
                                        --------    --------    --------

Balance, end of year                    $ 11,221    $ 11,728    $ 10,332
                                        ========    ========    ========

Impaired loans were as follows:

                                          2001        2000        1999
                                          ----        ----        ----

Loans with allowance allocated          $ 11,243    $  9,144    $  5,591
Amount of allowance allocated              1,686       1,372         709
Average balance during the year           10,482       9,535       6,264
Interest income recognized during
   impairment                                253         310         267
Cash-basis interest income recognized         --          --          --


Nonperforming loans were as follows:

                                                  2001            2000
                                                  ----            ----

Loans past due 90 days still on accrual        $      871      $      475
Nonaccrual loans                                    5,857           4,813
                                               ----------      ----------

Total                                          $    6,728      $    5,288
                                               ==========      ==========


The aggregate amount of loans to executive officers and directors of the Company
and their  related  interests was  approximately  $9,249 and $12,881 at year-end
2001 and 2000. During 2001 and 2000, new loans aggregating approximately $15,230
and $14,661 and amounts  collected  of  approximately  $18,862 and $13,995  were
transacted with such parties.

--------------------------------------------------------------------------------
                                   (Continued)
                                       36

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 4 - PREMISES AND EQUIPMENT

Year-end premises and equipment follows:

                                              2001            2000
                                              ----            ----

Land                                       $    4,752      $    4,577
Premises                                       15,608          13,089
Leasehold improvements                          1,591           1,791
Furniture, fixtures and equipment               9,727           8,458
Automobiles                                        59             781
Construction in progress                        2,227           2,634
                                           ----------      ----------
                                               33,964          31,330
Accumulated depreciation                       (8,353)         (7,396)
                                           ----------      ----------

                                           $   25,611      $   23,934
                                           ==========      ==========

Rent expense for operating leases was $490 for 2001, $600 for 2000, and $467 for
1999. Rent  commitments  under  noncancelable  operating leases were as follows,
before considering renewal options that generally are present:

     2002                                         $       358
     2003                                                 276
     2004                                                 181
     2005                                                  82
     2006                                                  61
     Thereafter                                           398
                                                  -----------

         Total                                    $     1,356
                                                  ===========


NOTE 5 - DEPOSITS

Time  deposits of $100  thousand or more were  $101,101 and $130,450 at year-end
2001 and 2000.

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

     2002                  $   228,268
     2003                       39,020
     2004                       64,294
     2005                        3,202
     2006                          414

The  aggregate  amount of deposits to executive  officers  and  directors of the
Company  and their  related  interests  was  approximately  $4,497 and $2,393 at
year-end 2001 and 2000.

--------------------------------------------------------------------------------
                                   (Continued)
                                       37
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

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 2001 and 2000 is as follows:

                                                          2001          2000
                                                          ----          ----

Average month-end balance during the year             $    6,833    $    5,725
Average interest rate during the year                       2.25%         4.95%
Maximum month-end balance during the year             $   10,375    $    9,928

NOTES PAYABLE CONSIST OF THE FOLLOWING AT YEAR-END:

                                                          2001         2000
                                                          ----         ----

Fixed rate FHLB advances, from 4.60% to 6.35%,
maturities from April, 2002 to September, 2013       $    16,678   $     2,018

Variable rate FHLB advances, from 4.56% to 5.76%,
maturities from November, 2008 to January, 2010           49,500        55,500

Notes  payable,  interest due quarterly at 4.83%,
principal  due October,  2004 (2001).
Note payable,  interest due quarterly at 8%,
principal due January, 2002 through
January, 2008 (2000).
                                                           1,800         2,431
                                                      ----------    ----------
                                                      $   67,978    $   59,949
                                                      ==========    ==========

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  $165,346 and $92,499 at
year-end 2001 and 2000.

--------------------------------------------------------------------------------
                                   (Continued)
                                       38

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 6 - BORROWINGS (Continued)

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

                                            Total

     2002                                 $  15,357
     2003                                       268
     2004                                     1,925
     2005                                       133
     2006                                       146
     Thereafter                              50,149
                                          ---------
                                          $  67,978
                                          =========

At year-end 2001, the Company had  approximately  $70,900 of federal funds lines
of credit available from correspondent institutions,  $18,569 in unused lines of
credit with the FHLB, and $56,300 letters of credit with the FHLB.

NOTE 7 - BENEFIT PLANS

The Company has a profit sharing plan which allows  employees to contribute from
1% to 20% of their compensation. The Company contributes an additional amount at
a discretionary  rate  established  annually by the Board of Directors.  Company
contributions to the Plan were $512, $923 and $707 for 2001, 2000 and 1999.

Directors  have  deferred  some of their  fees  for  future  payment,  including
interest.  The amount accrued for deferred compensation was $1,435 and $1,269 at
year-end 2001 and 2000. Amounts expensed under the plan were $262, $222 and $188
during  2001,  2000,  and 1999.  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.

NOTE 8 - INCOME TAXES

Income tax expense is summarized as follows:

                                 2001            2000           1999
                                 ----            ----           ----

Current - federal             $    3,974      $    3,075      $   4,341
Current - state                      530             314          1,059
Deferred                             543          (1,183)          (150)
                              ----------      ----------      ---------
                              $    5,047      $    2,206      $   5,250
                              ==========      ==========      =========

--------------------------------------------------------------------------------
                                   (Continued)
                                       39
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 8 - INCOME TAXES (Continued)

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>
                                                      2001                            2000
                                                      ----                            ----
                                              Assets       Liabilities       Assets       Liabilities
                                              ------       -----------       ------       -----------
<S>                                        <C>             <C>             <C>             <C>
Allowance for loan losses                  $    4,365      $        -      $    4,562      $        -
Deferred compensation                             778               -             708               -
Depreciation                                        -            (965)              -            (786)
FHLB dividends                                      -            (529)              -            (418)
Core deposit intangible                             -            (171)              -            (214)
Unrealized (gain) loss on securities                -             (39)              -             (32)
Other                                              17               -             186               -
                                           ----------      ----------      ----------      ----------

     Total deferred income taxes           $    5,160      $   (1,704)     $    5,456      $   (1,450)
                                           ==========      ==========      ==========      ==========
</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:

                                               2001         2000        1999
                                               ----         ----        ----

Statutory federal tax rate                     35.0%       35.0%         35.0%
State income tax, net of federal benefit        3.1        (1.6)          4.9
Tax exempt income                               (.3)        (.7)          (.1)
Other                                          (2.9)       (4.1)         (2.5)
                                            -------     -------        ------

                                               34.9%       28.6%         37.3%
                                            =======     =======        ======

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.

--------------------------------------------------------------------------------
                                   (Continued)
                                       40
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

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

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

                                                      2001            2000
                                                      ----            ----

Commitments to make loans - fixed                 $     8,358     $     1,431
Commitments to make loans - variable                    8,653           2,480
Unused lines of credit                                 96,037          95,321
Letters of credit                                       6,304           6,231


The fixed rate loan  commitments have interest rates ranging from 6.49% to 8.00%
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)
                                       41
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 10 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS (Continued)

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
                                                                   Minimum Required    Well Capitalized Under
                                                                      for Capital        Prompt Corrective
                                                   Actual          Adequacy Purposes     Action Provisions
                                           -------------------   -------------------   ----------------------
                                              Actual     Ratio     Actual      Ratio     Actual      Ratio
                                              ------     -----     ------      -----     ------      -----
<S>                                        <C>           <C>     <C>            <C>    <C>           <C>
2001
----
Total Capital (to Risk Weighted Assets)
     Consolidated                          $    73.9     11.1%   $    53.1      8.0%   $    66.4     10.0%
     Bank                                       74.8     11.3         52.9      8.0         66.2     10.0
Tier 1 Capital (to Risk Weighted Assets)
     Consolidated                          $    65.7      9.9%   $    26.6      4.0%   $    39.9      6.0%
     Bank                                       66.4     10.0         26.5      4.0         39.7      6.0
Tier 1 Capital  (to Average Assets)
     Consolidated                          $    65.7      8.2%   $    32.3      4.0%   $    40.4      5.0%
     Bank                                       66.4      8.3         32.3      4.0         40.3      5.0

2000
----
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
</TABLE>
The Company's  primary source of funds to pay dividends to  shareholders  is the
dividends it receives from the Bank.  Applicable  state laws and the regulations
of the  Federal  Reserve  Bank and the  Federal  Deposit  Insurance  Corporation
regulate the payment of dividends.  Under the state  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; however,  future dividends will be dependent on the level of earnings,
capital and liquidity requirements and considerations of the Bank and Company.

--------------------------------------------------------------------------------
                                   (Continued)
                                       42

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 11 - STOCK OPTIONS

The Company  maintains a stock option plan,  whereby a maximum of 480,000  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  2001,  244,260 shares are authorized for future
grant.

The  Company  also has a stock  option plan that  grants a key  executive  fully
vested  options to purchase 9,000 shares per year at one and one-half times year
end book value.  Compensation  expense associated with these options was $20 for
2001, $168 for 2000, and $156 for 1999.

A summary of the Company's option activity and related information for the years
ended 2001, 2000, and 1999 is presented below:
<TABLE>
<CAPTION>

                                             Key Executive           Other Key Executives             Total
                                             -------------           --------------------             -----
                                                      Weighted                   Weighted                  Weighted
                                                       Average                    Average                   Average
                                                      Exercise                   Exercise                   Exercise
2001                                      Options       Price       Options        Price       Options       Price
----                                      -------       -----       -------        -----       -------       -----
<S>                                         <C>        <C>          <C>           <C>           <C>         <C>
Outstanding at beginning of year            45,000     $  12.15     145,865       $  24.90      190,865     $  21.89
Granted                                      9,000        15.09      42,065          16.00       51,065        15.84
Exercised                                        -            -           -              -            -            -
Forfeited                                        -            -     (4,200)          31.00      (4,200)        31.00
                                                 -                  ------                      ------

Outstanding at end of year                  54,000     $  12.64     183,730       $  22.72      237,730       $20.43
                                            ======                  =======                     =======

Options exercisable at year-end             54,000     $  12.64      77,458       $  20.85      131,458       $17.48
                                            ======                   ======                     =======

Fair  value  of  each  option  granted
   during the year                                    $    3.58                  $    3.26
                                                      =========                  =========
</TABLE>

--------------------------------------------------------------------------------
                                   (Continued)
                                       43
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 11 - STOCK OPTIONS (Continued)
<TABLE>
<CAPTION>
                                              Key Executive          Other Key Executives              Total
                                              -------------          --------------------              -----
                                                       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             36,000     $   11.72     125,155     $   21.53      161,155    $   19.34
Granted                                       9,000         13.86      42,065         32.00       51,065        28.80
Exercised                                         -            -      (20,655)        18.78      (20,655)       18.78
Forfeited                                         -            -         (700)        30.00         (700)       30.00
                                                  -                      -----                      -----

Outstanding at end of year                   45,000     $   12.15     145,865     $   24.90      190,865    $   21.89
                                             ======                   =======                    =======

Options exercisable at year-end              45,000     $   12.15      52,285     $   18.32       97,285    $   15.47
                                             ======                    ======                     ======

Fair value of each option
granted during the year                                 $   18.65                 $    6.57
                                                        =========                 =========

1999
----

Outstanding at beginning of year             27,000     $   11.16     103,615     $   17.23      130,615    $   15.97
Granted                                       9,000         13.41      38,735         30.00       47,735        26.87
Exercised                                         -            -      (12,245)        12.82      (12,245)       12.82
Forfeited                                         -            -       (4,950)        19.25       (4,950)       19.25
                                                  -                    -------                    -------

Outstanding at end of year                   36,000     $   11.72     125,155     $   21.53      161,155    $   19.34
                                             ======                   =======                    =======

Options exercisable at year-end              36,000     $   11.72      42,320     $   15.21       78,320    $   13.61
                                             ======                    ======                     ======

Fair value of each option
granted during the year                                 $   17.24                 $    7.06
                                                        =========                 =========
</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, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 11 - STOCK OPTIONS (Continued)

Options outstanding at year-end 2001 were as follows:

                                 Outstanding                 Exercisable
                                 -----------                 -----------
                                           Average
                                          Weighted                    Average
                                          Remaining                  Weighted
                              Number     Contractual      Number     Exercise
Range of Exercise Prices    Outstanding     Life       Exercisable     Price
------------------------    -----------     ----       -----------     -----

*$10.13 - $15.09               54,000         7.5          54,000     $  12.64

$  9.67 - $32.00              183,730         7.8          77,458     $  20.85

*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 2001,  2000, and 1999:  dividend  growth rate of
2.5%, 5%, and 15%, risk-free  interest rate of 5.17%, 5.10% and 6.45%,  expected
lives of seven years, and estimated volatility of 20.14%, 9.62 % and 10.07%.

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>
                                         2001                      2000                      1999
                                         ----                      ----                      ----
                                   As                        As                        As
                                Reported     Proforma     Reported     Proforma     Reported      Proforma
                                --------     --------     --------     --------     --------      --------
<S>                             <C>         <C>           <C>          <C>         <C>          <C>
Net income                      $  9,423    $   9,286     $  5,513     $  5,348    $  8,825     $  8,743
Basic earnings per share        $   1.38    $    1.36     $    .81     $    .79    $   1.30     $   1.29
Diluted earnings per share      $   1.38    $    1.36     $    .80     $    .78    $   1.29     $   1.28
</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)
                                       45

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

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.

                                             2001         2000        1999
                                             ----         ----        ----
BASIC EARNINGS PER SHARE
------------------------

     Net income                           $    9,423   $    5,513   $    8,825

     Weighted average common
       shares outstanding                  6,818,890    6,814,075    6,791,565

Basic Earnings Per Share                  $     1.38   $      .81   $     1.30
                                          ==========   ==========   ==========

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

     Net income                           $    9,423   $    5,513   $    8,825

     Weighted average common
       share outstanding                   6,818,890    6,814,075    6,791,565
     Add:  Dilutive effects of assumed
       conversions and exercises of
       stock options                          18,490       57,415       55,125
                                          ----------   ----------   ----------

     Weighted average common and
       dilutive potential common shares
       outstanding                         6,837,380    6,871,490    6,846,690
                                          ----------   ----------   ----------

Diluted Earnings Per Share                $     1.38   $      .80   $     1.29
                                          ==========   ==========   ==========

Stock options of 114,937 were excluded from the 2001 diluted  earnings per share
because their impact was antidilutive.

--------------------------------------------------------------------------------
                                   (Continued)
                                       46
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

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 2001 and 2000.
<TABLE>
<CAPTION>
                                                         2001                  2000
                                                         ----                  ----
                                                   Carrying     Fair     Carrying     Fair
                                                    Value      Value      Value       Value
                                                    -----      -----      -----       -----
Financial assets:
<S>                                               <C>        <C>        <C>        <C>
     Cash and cash equivalents                    $ 48,053   $ 48,053   $ 32,168   $ 32,168
     Interest bearing deposits with other banks      1,100      1,100         --         --
     Securities available for sale                  28,567     28,567     46,658     46,658
     Securities held to maturity                       833        840      1,866      1,869
     Loans held for sale                             7,945      7,960      1,725      1,725
     Loans, net                                    671,326    671,862    655,340    652,123
     FHLB and Bankers Bank stock                     4,538      4,538      4,254      4,254
     Accrued interest receivable                     4,506      4,506      6,311      6,311

Financial liabilities:
     Deposit accounts                             $653,913   $661,348   $648,641   $649,675
     Federal funds purchased and
       repurchase agreement                         10,375     10,375      4,713      4,713
     Notes payable                                  67,978     66,879     59,949     59,833
     Accrued interest payable                        3,552      3,552      3,516      3,516
</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 which is not material.  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)
                                       47
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 14 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

                                 BALANCE SHEETS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

                                                           2001        2000
                                                           ----        ----
Assets
     Cash and due from financial institutions          $      176   $    1,027
     Investment in subsidiary                              68,480       62,739
     Cash surrender value of life insurance contracts         234          223
     Other                                                  2,151        2,146
                                                       ----------   ----------

         Total assets                                  $   71,041   $   66,135
                                                       ==========   ==========

Total liabilities                                      $    2,414   $    3,125

Shareholders' equity                                       68,627       63,010
                                                       ----------   ----------

     Total liabilities and shareholders' equity        $   71,041   $   66,135
                                                       ==========   ==========

                              STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
<TABLE>
<CAPTION>
                                                           2001            2000           1999
                                                           ----            ----           ----
<S>                                                    <C>              <C>          <C>
Dividends from subsidiaries                            $    4,006       $    3,959   $     3,769
Other income                                                  245              187           198
Interest expense                                             (190)            (198)         (197)
Other expense                                                (642)            (741)         (707)
                                                       ----------       ----------   -----------
Income before income taxes                                  3,419            3,207         3,063
Income tax benefit                                           (263)            (310)         (296)
Equity in undistributed net income of subsidiaries          5,741            1,996         5,466
                                                       ----------       ----------     ---------

Net income                                             $    9,423       $    5,513     $   8,825
                                                       ==========       ==========     =========
</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)
                                       48
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 14 - PARENT COMPANY CONDENSED FINANCIAL STATEMENTS (Continued)

                            STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
<TABLE>
<CAPTION>
                                                            2001       2000      1999
                                                            ----       ----      ----
OPERATING ACTIVITIES
<S>                                                       <C>        <C>        <C>
     Net income                                           $ 9,423    $ 5,513    $ 8,825
     Adjustments to reconcile net income to net
       cash provided by operating activities:
         Undistributed net income of subsidiaries          (5,741)    (1,996)    (5,466)
         Depreciation and amortization                        216        216        216
         Change in assets                                    (157)      (213)      (297)
         Change in liabilities                               (131)        61         86
                                                          -------    -------    -------
              Net cash from operating activities            3,610      3,581      3,364

INVESTING ACTIVITIES
     Increase in cash surrender value of life insurance       (11)       (10)       (10)
                                                          -------    -------    -------
         Net cash from investing activities                   (11)       (10)       (10)

FINANCING ACTIVITIES
     Dividends paid                                        (3,819)    (3,761)    (3,531)
     Proceeds from issuance of common stock                    --        389        157
     Proceeds from notes payable                            1,800         --         --
     Repayment of debt                                     (2,431)       (40)       (40)
                                                          -------    -------    -------
         Net cash from financing activities                (4,450)    (3,412)    (3,414)
                                                          -------    -------    -------

NET CHANGE IN CASH AND CASH EQUIVALENTS                      (851)       159        (60)

Cash and cash equivalents, beginning of year                1,027        868        928
                                                          -------    -------    -------

CASH AND CASH EQUIVALENTS, END OF YEAR                    $   176    $ 1,027    $   868
                                                          =======    =======    =======
</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)
                                       49
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 15 - OTHER COMPREHENSIVE INCOME

Other comprehensive income components were as follows.

                                                    2001      2000       1999
                                                    ----      ----       ----
Unrealized holding gains and losses on
   securities available for sale, net of tax      $   13    $   69     $   (112)
Less reclassification adjustments for gains and
  losses later recognized in income, net of tax        -         -            -
                                                  ------    ------     --------

Other comprehensive income                        $   13    $   69     $  (112)
                                                  ======    ======     ========

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
2001                                   Banking      Segments         Total
----                                   -------      --------         -----

Net interest income                $    33,441      $    6,060     $    39,501
Provision for loan losses                1,258           4,701           5,959
Noninterest income                       7,707           1,886           9,593
Noninterest expense                     23,601           5,064          28,665
Income tax expense                       5,778            (731)          5,047
                                   -----------      ----------     -----------
Segment profit                     $    10,511      $   (1,088)    $     9,423
                                   ===========      ==========     ===========

Segment assets                     $   773,567      $   38,045     $   811,612
                                   ===========      ==========     ===========

--------------------------------------------------------------------------------
                                   (Continued)
                                       50

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 16 - SEGMENT INFORMATION (Continued)

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

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
                                 ===========      ==========     ===========

1999
----

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
                                 ===========      ==========     ===========

NOTE 17 - 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                                  3/31/01         6/30/01         9/30/01        12/31/01
   ---------------------                                  -------         -------         -------        --------
<S>                                                   <C>              <C>             <C>            <C>
   Interest income                                    $     18,182     $     17,150    $     16,783   $     15,849
   Net interest income                                      10,260            9,794           9,727          9,720
   Provision for loan losses                                 1,439            1,168           1,493          1,859
   Income before income taxes                                4,602            4,065           3,678          2,125
   Net income                                                2,908            2,441           2,335          1,739

   Basic earnings per share                                    .43              .36             .34            .26
   Diluted earning per share                                   .42              .36             .33            .25
   Dividends per common share                                  .12              .12             .12            .20
   Average common shares outstanding                     6,818,890        6,818,890       6,818,890      6,818,890
   Average common shares outstanding - diluted           6,879,165        6,858,866       6,851,779      6,837,380
</TABLE>
--------------------------------------------------------------------------------
                                   (Continued)
                                       51
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
         (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                        DECEMBER 31, 2001, 2000 AND 1999
--------------------------------------------------------------------------------

NOTE 17 - SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

(Continued)
<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                                    .32              .28             .28          (0.07)
   Diluted earnings per share                                  .31              .28             .28          (0.07)
   Dividends per common share                                  .12              .12             .12           0.19
   Average common shares outstanding                     6,802,155        6,809,805       6,812,645      6,818,335
   Average common shares outstanding - diluted           6,858,185        6,863,055       6,870,695      6,873,875
</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.

                                       52
<PAGE>

ITEM  9.  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.

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For  information  concerning  the Board of Directors  of the  Company,  the
information contained under the section captioned "Election of Directors" in the
Company's  definitive  proxy  statement for the Company's 2002 Annual Meeting of
Shareholders (the "Proxy Statement") is incorporated herein by reference.

     Information regarding executive officers of the Company is contained in the
section captioned "Executive Officers of the Registrant" under Part I hereof and
is incorporated herein by reference.

     Information  regarding  delinquent  Form 3, 4 or 5 filers  is  incorporated
herein by reference to the section entitled "Section 16(a) Beneficial  Ownership
Reporting Compliance" in the Proxy Statement.

ITEM 11.      EXECUTIVE COMPENSATION

     The  information   contained  under  the  section  captioned  "Election  of
Directors -- Executive  Compensation  and Other Benefits" in the Proxy Statement
is incorporated herein by reference.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  (a)      Security Ownership of Certain Beneficial Owners

                           Information  required  by this  item is  incorporated
                           herein  by   reference   to  the  section   captioned
                           "Security  Ownership of Certain Beneficial Owners and
                           Management" in the Proxy Statement.

                  (b)      Security Ownership of Management

                           Information  required  by this  item is  incorporated
                           herein  by  reference   to  the  sections   captioned
                           "Security  Ownership of Certain Beneficial Owners and
                           Management"  and "Election of Directors" in the Proxy
                           Statement.

                  (c)      Changes in Control

                           Management of the Company  knows of no  arrangements,
                           including  any pledge by any person of  securities of
                           the  Company,   the  operation  of  which  may  at  a
                           subsequent  date result in a change in control of the
                           registrant.

                                       53
<PAGE>

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this  item  is  incorporated  herein  by
reference  to the  section  captioned  "Election  of  Directors"  in  the  Proxy
Statement.

                                     PART IV

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

     (a)(1) The  following  consolidated  financial  statements  of the  Company
included in the Company's  2001 Annual Report to the  Shareholders  (the "Annual
Report") are  incorporated  herein by reference from Item 8 of this Report.  The
remaining  information  appearing in the Annual Report is not deemed to be filed
as part of this Report, except as expressly provided herein.

               1.   Report of Independent Accountants.

               2.   Consolidated Balance Sheets - December 31, 2001 and 2000.

               3.   Consolidated  Statements  of  Income  for  the  Years  Ended
                    December 31, 2001, 2000 and 1999.

               4.   Consolidated  Statements of Changes in Shareholders'  Equity
                    for the Years Ended December 31, 2001, 2000 and 1999.

               5.   Consolidated  Statements  of Cash Flows for the Years  Ended
                    December 31, 2001, 2000 and 1999.

               6.   Notes to Consolidated Financial Statements.

     (a)(2)  All  schedules  for  which  provision  is  made  in the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required under the related  instructions or are  inapplicable and therefore have
been omitted.

     (a)(3) The  following  exhibits  either are filed as part of this Report or
are incorporated herein by reference:

                  Exhibit No. 3.  Articles of Incorporation and Bylaws
                                  ------------------------------------

                           (i)      Amended and Restated Charter, effective June
                                    18, 1998 -- incorporated herein by reference
                                    to the Company's  Annual Report on Form 10-K
                                    for the year ended December 31, 1998.

                           (ii)     Amended and Restated Bylaws  -- incorporated
                                    herein by reference  to the Company's Annual
                                    Report  on  Form 10-K  for  the  year  ended
                                    December 31, 2000

                  Exhibit No. 10.  Employment Agreements
                                   ---------------------

                           (i)      Employment agreement between the Company and
                                    R. Stan  Puckett --  incorporated  herein by
                                    reference to the Company's  Annual Report on
                                    Form 10-K for the year  ended  December  31,
                                    1995.

                  Exhibit No. 11. Statement re Computation of Per Share Earnings
                                  ----------------------------------------------

                                    Incorporated  by reference to Note 12 of the
                                    Notes to Consolidated Financial Statements.

                                       54
<PAGE>

                  Exhibit No. 21. Subsidiaries of the Registrant
                                  ------------------------------

                                    A list of  subsidiaries of the Registrant is
                                    included as an exhibit to this Report.

                  Exhibit No. 23.1. Consent of PricewaterhouseCoopers LLP
                                    -------------------------------------

                  Exhibit No. 23.2. Consent of Crowe, Chizek and Company LLP
                                    ----------------------------------------

         (b)      Reports on Form 8-K. On December 11, 2001, the Company filed a
                  Report  on  Form  8-K  to  report  the   consummation  of  its
                  acquisition   of  three  bank  branches   located  in  eastern
                  Tennessee  from SunTrust  Bank. No financial  statements  were
                  filed with the report.

         (c)      Exhibits.  The exhibits required by Item 601 of Regulation S-K
                  are either filed as part of this Annual Report on Form 10-K or
                  incorporated herein by reference.

         (d)      Financial   Statements  and  Financial   Statement   Schedules
                  Excluded From Annual Report. There are no financial statements
                  and financial statement schedules which were excluded from the
                  Annual Report pursuant to Rule 14a-3(b)(1)  which are required
                  to be included herein.

                                       55
<PAGE>
                                   SIGNATURES

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

                                     GREENE COUNTY BANCSHARES, INC.


Date:  March 27, 2002                By: /s/ R. Stan Puckett
                                        --------------------------------------
                                         R. Stan Puckett
                                         Chairman of the Board, President and
                                         Chief Executive Officer
                                         (Duly Authorized Representative)

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated and on the dates indicated.

SIGNATURE AND TITLE:                                        DATE:



/s/ R. Stan Puckett                                         March 27, 2002
-------------------
R. Stan Puckett
Chairman of the Board, President and Chief
Executive Officer
(Principal Executive Officer)



/s/ William F. Richmond                                     March 27, 2002
-----------------------
William F. Richmond
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)



/s/ Ralph T. Brown                                          March 27, 2002
------------------
Ralph T. Brown
Director



/s/ Phil M. Bachman                                         March 27, 2002
-------------------
Phil M. Bachman
Director



/s/ Charles S. Brooks                                       March 27, 2002
---------------------
Charles S. Brooks
Director



/s/ Bruce Campbell                                          March 27, 2002
------------------
Bruce Campbell
Director

                                       56
<PAGE>

/s/ W. T. Daniels                                           March 27, 2002
-----------------
W.T. Daniels
Director



/s/ James A. Emory                                          March 27, 2002
------------------
James A. Emory
Director



/s/ Jerald K. Jaynes                                        March 27, 2002
--------------------
Jerald K. Jaynes
Director



/s/ Terry Leonard                                           March 27, 2002
-----------------
Terry Leonard
Director



/s/ H.J. Moser, III                                         March 27, 2002
-------------------
H.J. Moser, III
Director



/s/ Davis Stroud                                            March 27, 2002
----------------
Davis Stroud
Director and Secretary
Director



/s/ Charles H. Whitfield, Jr.                               March 27, 2002
-----------------------------
Charles H. Whitfield, Jr.
Director

                                       57