FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


For Quarter ended September 30, 2002                    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                     (IRS Employer Identification
incorporated or organization)                       Number)


Main & Depot Street
Greeneville, Tennessee                                        37743
---------------------------------                   ----------------------------
(Address of principal                                       (Zip Code)
executive offices)

Registrant's telephone number, including area code 423-639-5111
                                                   ------------

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  the number or shares  outstanding  of each of the  Issuers  classes of
common stock as of the latest practicable date: 6,820,540.

                                       1
<PAGE>

                         PART 1 - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

The unaudited condensed  consolidated financial statements of the Registrant and
its wholly owned subsidiaries are as follows:

     Condensed Consolidated Balance Sheets - September 30, 2002 and December 31,
     2001.

     Condensed Consolidated  Statements of Income and Comprehensive Income - For
     the three and nine months ended September 30, 2002 and 2001.

     Condensed  Consolidated  Statement of  Shareholders'  Equity - For the nine
     months ended September 30, 2002.

     Condensed Consolidated Statements of Cash Flows - For the nine months ended
     September 30, 2002 and 2001.

     Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,              DECEMBER 31,
                                                                                   2002                      2001*
                                                                              ----------------           ---------------
                                                                                (UNAUDITED)
                                         ASSETS
                                         ------

    <S>                                                                     <C>                       <C>
    Cash and due from banks                                                 $          25,520         $          22,432

    Federal funds sold                                                                      0                    25,621

    Interest bearing deposits in other banks                                                0                     1,100

    Securities available-for-sale ("AFS")                                              34,090                    28,567
    Securities held-to-maturity (market value of $456
      on September 30, 2002 and $840 on December 31, 2001).                               448                       833

    FHLB and Bankers Bank stock, at cost                                                4,693                     4,538

    Loans held for sale                                                                 3,700                     7,945

    Loans                                                                             728,204                   682,547

      Less: allowance for loan losses                                                 (11,880)                  (11,221)
                                                                              ----------------           ---------------

      Net Loans                                                                       716,324                   671,326
                                                                              ----------------           ---------------

    Bank premises and equipment, net                                                   25,779                    25,611

    Other assets                                                                       24,315                    23,639
                                                                              ----------------           ---------------

         TOTAL ASSETS                                                       $         834,869         $         811,612
                                                                              ================           ===============

                          LIABILITIES AND SHAREHOLDERS' EQUITY
                          ------------------------------------

    Deposits                                                                $         665,050         $         653,913
    Federal funds purchased and repurchase agreements                                  16,267                    10,375
    Notes payable                                                                      67,429                    67,978
    Accrued interest payable and other liabilities                                     11,780                    10,719
                                                                              ----------------           ---------------

        TOTAL LIABILITIES                                                             760,526                   742,985
                                                                              ----------------           ---------------

                                  SHAREHOLDERS' EQUITY
                                  --------------------

    Common stock: par value $2; 15,000,000 shares authorized;
        6,820,540 and 6,818,890 shares issued and outstanding at
        September 30, 2002 and December 31, 2001                                       13,641                    13,638
    Paid in capital                                                                     4,870                     4,854
    Retained earnings                                                                  55,657                    50,071
    Accumulated other comprehensive income (loss)                                         175                        64
                                                                              ----------------           ---------------

        TOTAL SHAREHOLDERS' EQUITY                                                     74,343                    68,627
                                                                              ----------------           ---------------

        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                          $         834,869         $         811,612
                                                                              ================           ===============
</TABLE>
* Condensed from Audited Financial Statements.
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       3
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
      CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>

                                                               THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                  SEPTEMBER 30,               SEPTEMBER 30,
                                                             -----------------------    ---------------------------
                                                               2002          2001           2002          2001
                                                             --------     ----------    ----------     ------------
                                                                   (UNAUDITED)                  (UNAUDITED)
                                                             -----------------------    ---------------------------

    INTEREST INCOME:
<S>                                                        <C>           <C>             <C>            <C>
      Interest and fees on loans                           $   14,757    $    16,352     $    43,450    $    50,542
      Interest on investment securities                           364            277           1,187          1,135
      Interest on federal funds sold and interest-earning
        deposits                                                   53            154             425            438
                                                            ----------    -----------     -----------    -----------
                                     TOTAL INTEREST INCOME     15,174         16,783          45,062         52,115
                                                            ----------    -----------     -----------    -----------

    INTEREST EXPENSE:
      Interest on deposits                                      3,600          6,065          11,601         19,506
      Interest on borrowings                                      906            991           2,617          2,828
                                                                          -----------     -----------    -----------
                                                            ----------
                                    TOTAL INTEREST EXPENSE      4,506          7,056          14,218         22,334
                                                            ----------    -----------     -----------    -----------

                                       NET INTEREST INCOME     10,668          9,727          30,844         29,781

    Provision for loan losses                                   1,354          1,493           4,030          4,100
                                                                          -----------     -----------    -----------
                                                            ----------

         NET INTEREST INCOME AFTER
           PROVISION FOR LOAN LOSSES                            9,314          8,234          26,814         25,681
                                                            ----------    -----------     -----------    -----------

    NONINTEREST INCOME:
      Service charges, commissions and fees                     2,079          1,872           5,947          5,593
      Other income                                                457            494           1,748          1,480
                                                            ----------    -----------     -----------    -----------
                                  TOTAL NONINTEREST INCOME      2,536          2,366           7,695          7,073
                                                            ----------    -----------     -----------    -----------
    NONINTEREST EXPENSE:
      Salaries and benefits                                     4,326          3,999          12,866         12,323
      Occupancy and furniture and equipment expense               968            992           3,001          2,926
      Other expenses                                            1,974          1,931           5,709          5,160
                                                                          -----------     -----------    -----------
                                                            ----------
                                 TOTAL NONINTEREST EXPENSE      7,268          6,922          21,576         20,409
                                                            ----------    -----------     -----------    -----------

         INCOME BEFORE INCOME TAXES                             4,582          3,678          12,933         12,345

    Income taxes                                                1,777          1,343           4,892          4,661
                                                            ----------    -----------     -----------    -----------

        NET INCOME                                         $    2,805    $     2,335     $     8,041    $     7,684
                                                            ==========    ===========     ===========    ===========

        COMPREHENSIVE INCOME                               $    2,824    $     2,337     $     8,152    $     7,690
                                                            ==========    ===========     ===========    ===========

    PER SHARE OF COMMON STOCK:
      Basic earnings                                            $0.41          $0.34           $1.18          $1.13
                                                                ======         ======          ======         =====
      Diluted earnings                                          $0.41          $0.34           $1.18          $1.12
                                                                ======         ======          ======         =====
      Dividends                                                 $0.12          $0.12           $0.36          $0.36
                                                                ======         ======          ======         =====
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       4
<PAGE>

                         GREENE COUNTY BANCSHARES, INC.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                           ACCUMULATED
                                                                                             OTHER
                                                                                         COMPREHENSIVE
                                           COMMON         PAID IN         RETAINED           INCOME
                                           STOCK          CAPITAL         EARNINGS           (LOSS)            TOTAL
                                         -----------    ------------     ------------      -----------      ------------
                                                                         (UNAUDITED)
                                         ---------------------------------------------------------------------------------


   <S>                                 <C>               <C>            <C>               <C>            <C>
   JANUARY 1, 2002                     $  13,638         $    4,854     $     50,071      $       64     $     68,627

     Net income                                -                  -            8,041               -            8,041

     Change in unrealized gain on
        AFS securities, net of tax             -                  -                -             111              111
                                                                                                         ------------
        Comprehensive income                                                                                    8,152

     Tax benefit from exercise
       of nonincentive
       stock options                                              3                                                 3

     Dividends paid                            -                  -           (2,455)              -           (2,455)

     Exercise of stock options                 3                 13                -               -               16
                                         -------        -----------     ------------      -----------      ------------
   SEPTEMBER 30, 2002                  $  13,641       $      4,870    $      55,657      $      175     $     74,343
                                         =======        ===========     ============      ===========      ============
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       5
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30, SEPTEMBER 30,
                                                                                    2002      2001
                                                                                    ----      ----
                                                                                      (UNAUDITED)
                                                                                ----------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES:
<S>                                                                              <C>         <C>
  Net income                                                                     $  8,041    $  7,684
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Provision for loan losses                                                     4,030       4,100
      Depreciation and amortization                                                 1,412       1,189
      Amortization of premiums on securities, net of accretion                         16         107
      FHLB stock dividends                                                           (155)       (224)
      Loans originated for sale                                                   (39,137)    (51,472)
      Proceeds from loans originated for sale                                      43,744      50,527
      Net realized (gain) on sale of loans originated for sale                       (362)       (259)
      Loss on other real estate owned                                                 181         183
      Net changes:
       Accrued interest receivable and other assets, net of intangibles            (1,336)        852
       Accrued interest payable and other liabilities                               1,064          70
                                                                                 --------    --------
                        NET CASH PROVIDED BY OPERATING ACTIVITIES                  17,498      12,757
                                                                                 --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease (increase) in interest-bearing deposits with banks                       1,100      (2,100)
  Net (increase) decrease in securities and other interest-earning investments     (4,975)     34,346
  Net originations of loans held-to-maturity                                      (52,324)    (38,147)
  Improvements in other real estate owned and proceeds from
    sales of other real estate owned, net                                           3,401       3,224
  Fixed asset additions and proceeds from sales of fixed assets, net               (1,274)     (2,619)
                                                                                 --------    --------
             NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES                     (54,072)     (5,296)
                                                                                 --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in deposits                                              11,137      (8,798)
  Increase in federal funds purchased                                               3,775           0
  Increase (decrease) in securities sold under repurchase agreements                2,117       5,576
  (Decrease) increase in notes payable, net                                          (549)      8,747
  Proceeds from issuance of common stock                                               16           0
  Cash dividends paid                                                              (2,455)     (2,455)
                                                                                 --------    --------
                        NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES           14,041       3,070
                                                                                 --------    --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                              (22,533)     10,531
                                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                   48,053      32,168
                                                                                 --------    --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                       $ 25,520    $ 42,699
                                                                                 ========    ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       6
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------


1-PRINCIPLES OF CONSOLIDATION
-----------------------------

     The accompanying  unaudited condensed  consolidated financial statements of
     Greene  County  Bancshares,  Inc.  (the  "Company")  and its  wholly  owned
     subsidiary,  Greene  County  Bank  (the  "Bank"),  have  been  prepared  in
     accordance  with  accounting  principles  generally  accepted in the United
     States of  America  for  interim  information  and in  accordance  with the
     instructions  to Form 10-Q and Article 10 of Regulation  S-X as promulgated
     by the Securities and Exchange Commission. Accordingly, they do not include
     all  the  information  and  footnotes  required  by  accounting  principles
     generally  accepted in the United States of America for complete  financial
     statements.  In the opinion of management,  all adjustments  (consisting of
     normal recurring  accruals)  considered  necessary for a fair  presentation
     have been included.  Operating  results for the three and nine months ended
     September 30, 2002 are not  necessarily  indicative of the results that may
     be expected for the year ending December 31, 2002. For further information,
     refer  to the  consolidated  financial  statements  and  footnotes  thereto
     included  in the  Company's  Annual  Report on Form 10-K for the year ended
     December 31, 2001.  Certain amounts from prior period financial  statements
     have been reclassified to conform to the current year's presentation.

                                       7
<PAGE>

2-ALLOWANCE FOR LOAN LOSSES
---------------------------

Transactions  in the  allowance  for  loan  losses  for the  nine  months  ended
September 30, 2002 and twelve months ended December 31, 2001 were as follows:


                                      SEPTEMBER 30,            DECEMBER 31,
                                          2002                    2001
                                   -----------------        ----------------
                                                (IN THOUSANDS)

Balance at beginning of year   $        11,221         $         11,728
Add (deduct):
  Charge-offs                           (4,861)                  (7,830)
  Recoveries                             1,490                    1,364
  Provisions                             4,030                    5,959
                                   ----------------         ----------------
ENDING BALANCE                 $        11,880         $         11,221
                                   ================         ================


                                      SEPTEMBER 30,            DECEMBER 31,
                                          2002                    2001
                                   -----------------        ----------------
                                                 (IN THOUSANDS)

Loans past due 90 days
  still on accrual             $           503         $            871
Nonaccrual Loans                         8,954                    5,857
                                   ----------------         ----------------
TOTAL                          $         9,457         $          6,728
                                   ================         ================

                                       8
<PAGE>

3-EARNINGS PER SHARE OF COMMON STOCK
------------------------------------

Basic  earnings  per share (EPS) of common  stock is  computed  by dividing  net
income by the weighted  average number of common shares  outstanding  during the
period.  Diluted  earnings per share of common stock is computed by dividing net
income by the weighted  average  number of common  shares and  potential  common
shares  outstanding  during the period.  Stock options are regarded as potential
common  shares.  Potential  common shares are computed  using the treasury stock
method.  For the three and nine month periods ending September 30, 2002, 113,870
options are  excluded  from the effect of dilutive  securities  because they are
anti-dilutive; 96,340 options are similarly excluded from the effect of dilutive
securities for the three and nine months ended September 30, 2001.

The following is a reconciliation of the numerators and denominators used in the
basic and diluted earnings per share  computations for the three and nine months
ended September 30, 2002 and 2001:
<TABLE>
<CAPTION>
                                                   (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                               THREE MONTHS ENDED SEPTEMBER 30,
                                         -------------------------------------------------------------------------
                                                      2002                                   2001
                                         ---------------------------------    ------------------------------------

                                            INCOME            SHARES             INCOME              SHARES
                                          (NUMERATOR)      (DENOMINATOR)       (NUMERATOR)        (DENOMINATOR)
     <S>                                    <C>              <C>                  <C>               <C>
     BASIC EPS
     Income available to
       common shareholders                  $2,805           6,820,540            $2,335            6,818,890

     EFFECT OF DILUTIVE SECURITIES
     Stock options outstanding                   -              18,853                 -               32,889
                                         -------------------------------------------------------------------------

     DILUTED EPS
     Income available to common
       shareholders plus assumed
       conversions                          $2,805           6,839,393            $2,335            6,851,779
                                         =========================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                   (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                         -------------------------------------------------------------------------
                                                      2002                                   2001
                                         ---------------------------------    ------------------------------------

                                            INCOME            SHARES             INCOME              SHARES
                                          (NUMERATOR)      (DENOMINATOR)       (NUMERATOR)        (DENOMINATOR)
     <S>                                    <C>              <C>                  <C>               <C>
     BASIC EPS
     Income available to
       common shareholders                  $8,041           6,819,446            $7,684            6,818,890

     EFFECT OF DILUTIVE SECURITIES
     Stock options outstanding                   -              19,303                 -               32,889
                                         -------------------------------------------------------------------------

     DILUTED EPS
     Income available to common
       shareholders plus assumed
       conversions                          $8,041           6,838,749            $7,684            6,851,779
                                         =========================================================================
</TABLE>
                                       9
<PAGE>

4-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. 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".  Mortgage  banking  operations are included in
"Bank". All operations are domestic.

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.
<TABLE>
<CAPTION>
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
     SEGMENT INFORMATION:
     --------------------

     THREE MONTHS ENDED SEPTEMBER 30, 2002                       BANK                OTHER                TOTAL
     -------------------------------------                -----------------    -----------------    ----------------

     <S>                                                  <C>                  <C>                  <C>
     Net interest income                                  $           9,054    $           1,614    $         10,668
     Provision for loan losses                                          756                  598               1,354
     Noninterest income                                               2,412                  124               2,536
     Noninterest expense                                              5,979                1,289               7,268
     Income tax expense                                               1,761                   16               1,777
                                                          -----------------    -----------------    ----------------
     SEGMENT PROFIT                                       $           2,970    $            (165)   $          2,805
                                                          =================    =================    ================

     SEGMENT ASSETS AT SEPTEMBER 30, 2002                 $         797,707    $          37,162    $        834,869
                                                          =================    =================    ================


     THREE MONTHS ENDED SEPTEMBER 30, 2001                       BANK                OTHER                TOTAL
     -------------------------------------                -----------------    -----------------    ----------------

     Net interest income                                  $           8,243    $           1,484    $          9,727
     Provision for loan losses                                          637                  856               1,493
     Noninterest income                                               2,117                  249               2,366
     Noninterest expense                                              5,719                1,203               6,922
     Income tax expense                                               1,419                  (76)              1,343
                                                          -----------------    -----------------    ----------------
     SEGMENT PROFIT                                       $           2,585    $            (250)   $          2,335
                                                          =================    =================    ================

     SEGMENT ASSETS AT SEPTEMBER 30, 2001                 $         760,982    $          38,965    $        799,947
                                                          =================    =================    ================


     NINE MONTHS ENDED SEPTEMBER 30, 2002                        BANK                OTHER                TOTAL
     ------------------------------------                 -----------------    -----------------    ----------------

     Net interest income                                  $          25,916    $           4,928    $         30,844
     Provision for loan losses                                        1,389                2,641               4,030
     Noninterest income                                               6,847                  848               7,695
     Noninterest expense                                             18,025                3,551              21,576
     Income tax expense                                               5,036                 (144)              4,892
                                                          -----------------    -----------------    ----------------
     SEGMENT PROFIT                                       $           8,313    $            (272)   $          8,041
                                                          =================    =================    ================

     SEGMENT ASSETS AT SEPTEMBER 30, 2002                 $         797,707    $          37,162    $        834,869
                                                          =================    =================    ================


     NINE MONTHS ENDED SEPTEMBER 30, 2001                        BANK                OTHER                TOTAL
     ------------------------------------                 -----------------    -----------------    ----------------

     Net interest income                                  $          25,270    $           4,511    $         29,781
     Provision for loan losses                                          497                3,603               4,100
     Noninterest income                                               5,735                1,338               7,073
     Noninterest expense                                             16,793                3,616              20,409
     Income tax expense                                               5,170                 (509)              4,661
                                                          -----------------    -----------------    ----------------
     SEGMENT PROFIT                                       $           8,545    $            (861)   $          7,684
                                                          =================    =================    ================

     SEGMENT ASSETS AT SEPTEMBER 30, 2001                 $         760,982    $          38,965    $        799,947
                                                          =================    =================    ================
</TABLE>
                                       10
<PAGE>

5-INTANGIBLE ASSETS
-------------------

Core deposit intangible of $2,279, net of amortization,  is being amortized over
ten years.  Related  amortization  expenses  for the three and nine months ended
September 30, 2002 was $82 and $244, respectively. Annual estimated amortization
expense for the next five years is:

2002                           $                325
2003                                            321
2004                                            321
2005                                            321
2006                                            215
                                   -----------------
    TOTAL                      $              1,503
                                   =================

Non-amortizable goodwill of $424 is periodically evaluated for impairment. There
were no impairment losses recognized during the third quarter of 2002.

Information  about the impact on net income of  non-amortizable  goodwill  is as
follows:
<TABLE>
<CAPTION>
                                                          (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                                                       THREE MONTHS ENDED                NINE MONTHS ENDED
                                                           SEPTEMBER 30,                   SEPTEMBER 30,
                                                     ----------------------          ------------------------
                                                       2002          2001              2002            2001
                                                     --------      --------          --------        --------

<S>                                               <C>           <C>                 <C>            <C>
Reported net income                               $     2,805   $      2,335        $     8,041    $     7,684
Add back:  goodwill amortization                            0             26                  0             79
                                                     ---------     ----------          ---------      ---------
    ADJUSTED NET INCOME                           $     2,805   $      2,361        $     8,041    $     7,763
                                                     =========     ==========          =========      =========

Reported basic earnings per share                 $      0.41   $       0.34        $      1.18    $      1.13
Add back: goodwill amortization per share                0.00           0.00               0.00           0.01
                                                     ---------     ----------          ---------      ---------
    ADJUSTED BASIC EARNINGS PER SHARE             $      0.41   $       0.34        $      1.18    $      1.14
                                                     =========     ==========          =========      =========

Reported diluted earnings per share               $      0.41   $       0.34        $      1.18    $      1.12
Add back: goodwill amortization per share                0.00           0.00               0.00           0.01
                                                     ---------     ----------          ---------      ---------
    ADJUSTED DILUTED EARNINGS PER SHARE           $      0.41   $       0.34        $      1.18    $      1.13
                                                     =========     ==========          =========      =========
</TABLE>

On October 1, 2002, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement of Financial Accounting  Standards ("SFAS") No. 147,  "Acquisitions of
Certain  Financial  Institutions."  Adoption  of SFAS No. 147 on October 1, 2002
resulted   in  the   reclassification   of  $1,496  of   previously   recognized
unidentifiable  intangible  assets  (previously  included  in the  core  deposit
classification listed above) associated with the Company's branch acquisition in
2001 to goodwill. Additionally, prior period amortization expense, totaling $126
for the year-to-date period ended September 30, 2002 and $7 for the year-to-date
period  ended  December  31, 2001,  will be reversed  during the quarter  ending
December 31, 2002.

                                       11
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         ---------------------------------------
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS
         ---------------------------------------------

FORWARD-LOOKING STATEMENTS

     THIS QUARTERLY  REPORT ON FORM 10-Q,  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.

PRESENTATION OF AMOUNTS

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

GENERAL

     Greene County Bancshares,  Inc. (the "Company") is the bank holding company
for Greene County Bank ("the Bank"), a Tennessee-chartered  commercial bank that
conducts the principal  business of the Company.  In addition to its  commercial
banking  operations,  the Bank conducts  separate  businesses  through its three
wholly-owned   subsidiaries:   Superior  Financial  Services,   Inc.  ("Superior
Financial"),  a consumer  finance  company;  GCB  Acceptance  Corporation  ("GCB
Acceptance"),  a subprime  automobile lending company;  and Fairway Title Co., a
title  company  formed  in 1998.  The Bank  also  operates  a  mortgage  banking
operation  through its main  office in Knox  County,  Tennessee  and it also has
representatives located through out the Company's branch system.

NASDAQ LISTING

     On October 1,  2002,  the  Company's  common  shares  began to trade on the
Nasdaq National Market System under the symbol "GCBS".  The Company expects this
listing will provide greater  liquidity and  marketability to the trading of its
common  shares and,  accordingly,  will  facilitate  its growth  strategy  which
includes  acquisitions of other institutions,  selected branch acquisitions,  de
novo branching and internal growth.

                                       12
<PAGE>

GROWTH AND BUSINESS STRATEGY

     The Company  expects that,  over the  intermediate  term, a majority of its
growth will result from mergers and acquisitions  including acquisitions of both
entire financial  institutions and selected branches of financial  institutions.
De novo branching will also be a method of growth,  particularly  in high-growth
and other demographically-desirable markets.

     The Company's strategic plan outlines a geographic  expansion policy within
a 300-mile radius of its major markets.  This policy could result in the Company
expanding  westward and eastward up to and  including  Nashville,  Tennessee and
Roanoke, Virginia, respectively, east/southeast up to and including the Piedmont
area of North Carolina and western North Carolina, southward to northern Georgia
and northward into eastern and central Kentucky.

     In addition to the  Company's  business  model,  which is summarized in the
paragraph  above  entitled  "General"  and  described  in further  detail in the
Company's  Form 10-K for the year  ended  December  31,  2001,  the  Company  is
continuously  investigating  and  analyzing  other lines and areas of  business.
These include,  but are not limited to, various types of insurance,  real estate
activities,  etc. Conversely,  the Company frequently evaluates and analyzes the
profitability,  risk  factors and  viability of its various  business  lines and
segments and, depending upon the results of these evaluations and analyses,  may
conclude to exit certain segments and/or business lines. Further, in conjunction
with these ongoing  evaluations  and  analyses,  the Company may decide to sell,
merge or close certain branch facilities.  However, at this time, management has
no specific plans to exit any segments or business lines,  or to sell,  merge or
close any branch facilities.

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 liquid assets include investment securities,  federal
funds sold and other  interest-earning  deposits,  and cash and due from  banks.
Including securities pledged to collateralize  municipal deposits,  these assets
represented  8.6% of the total liquidity base at September 30, 2002, as compared
to 11.3% at December  31,  2001.  The  liquidity  base is  generally  defined to
include  deposits,  securities sold under  repurchase  agreements and short-term
borrowed funds and other borrowings. In addition, the Company maintains lines of
credit totaling $40,000 with the Federal Home Loan Bank of Cincinnati  ("FHLB"),
of which $25,000 was available at September 30, 2002. The Company also maintains
federal funds lines of credit totaling $70,900 at seven  correspondent  banks of
which $67,100 was available at September 30, 2002.  The Company  believes it has
sufficient liquidity to satisfy its current operating needs.

     For the nine months ended September 30, 2002,  operating  activities of the
Company  provided  $17,498  of cash  flows.  Net income of $8,041  adjusted  for
non-cash  operating

                                       13
<PAGE>

activities,  including  $4,607 in net proceeds from loans  originated  for sale,
$4,030 in provision for loan losses and depreciation and amortization, including
premium  amortization on securities,  net of accretion of $1,428,  comprised the
majority of the cash generated from  operations.  These  increases in cash flows
were  offset,  in part,  by the $272 in cash  flows  used from the net change in
interest  receivable and other assets,  net of intangibles and accrued  interest
payable and other liabilities.

     The Company's increase in investment securities and other  interest-earning
investments   used   $4,975  in  cash   flows,   while  the  net   increase   in
held-to-maturity loans originated,  net of principal collected,  used $52,324 in
cash flows.

     The net increase in deposits and federal funds purchased  provided  $11,137
and $3,775 in cash flows, respectively.  In addition, the increase in securities
sold under repurchase agreements provided $2,117 in cash flows.  Offsetting,  in
part, these increases in cash flows were quarterly  dividends paid in the amount
of $2,455 and the $549 decrease in notes payable, net.

     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  continues  to exhibit a strong  capital
position while consistently paying dividends to its shareholders.  Further,  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  September  30, 2002 was  $74,343,  an increase of
$5,716,   or  8.33%,  from  $68,627  on  December  31,  2001.  The  increase  in
shareholders'  equity  primarily  reflected net income for the nine months ended
September 30, 2002 of $8,041 ($1.18 per share, assuming dilution). This increase
was offset by quarterly dividend payments during the nine months ended September
30, 2002 totaling $2,455 ($0.36 per share).

     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  its  compliance
with  minimum  federal  regulatory  capital   requirements  and  to  retain  its
characterization under federal regulations as a "well-capitalized" institution.

     Risk-based  capital  regulations  adopted by the Board of  Governors of the
Federal Reserve Board (the "FRB") and the Federal Deposit Insurance  Corporation
require bank holding companies and banks, respectively,  to achieve and maintain
specified  ratios of capital to  risk-weighted  assets.  The risk-based  capital
rules are  designed to measure  Tier 1 Capital 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

                                       14
<PAGE>

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 (consisting of shareholders'  equity,  less goodwill).  At September 30,
2002,  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.  The  capital  ratios of the Bank
contained  within  the table  below do not differ  materially  from those of the
Company.


===============================================================================
                      Capital Ratios at September 30, 2002
-------------------------------------------------------------------------------
                                           Required
                                           Minimum                    Bank
                                            Ratio
--------------------------------- ---------------------- ---------------------
   Tier 1 risk-based capital                      4.00%                10.28%
--------------------------------- ---------------------- ---------------------
    Total risk-based capital                      8.00%                11.53%
--------------------------------- ---------------------- ---------------------
         Leverage Ratio                           4.00%                 8.72%
==============================================================================

CHANGES IN RESULTS OF OPERATIONS

     NET INCOME.  Net income for the three months ended  September  30, 2002 was
$2,805 as compared to $2,335 for the same period in 2001. This increase of $470,
or 20.1%,  resulted  primarily  from a $941,  or 9.7%,  increase in net interest
income from $9,727 for the three months ended  September 30, 2001 to $10,668 for
the same period of 2002. This increase resulted  principally from an increase in
average balances of interest-earning assets and a decline in average balances of
interest-bearing  liabilities.  The $470 increase in net income also reflected a
$207, or 11.1%,  increase in service  charges,  commissions and fees from $1,872
for the three months ended  September  30, 2001 to $2,079 for the same period of
2002.  This increase  reflected  mainly  additional  volume  associated with the
Company's  retail service charge program,  certain fee increases in the business
account  analysis  structure,  additional  income  generated  from the Company's
mortgage banking division and additional fees from certain  insurance  products.
Offsetting these increases,  in part, was a $327, or 8.2%,  increase in salaries
and benefits from $3,999 for the three months ended September 30, 2001 to $4,326
for the  same  period  of  2002.  This  increase  was  primarily  reflective  of
additional  employees  resulting from certain branch  acquisitions in the fourth
quarter of 2001, as well as salary increases occurring in mid-2002. Finally, the
Company's  provision for loan losses  decreased $139, or 9.3%, to $1,354 for the
three months ended  September  30, 2002 from $1,493 for the same period of 2001,
reflecting  primarily  lower  provisions  in Superior  Financial  as a result of
decreased  net charge offs in the quarter  ended  September 30, 2002 compared to
the same period in 2001.

     Net income  for the nine  months  ended  September  30,  2002 was $8,041 as
compared to $7,684 for the same period in 2001.  This increase of $357, or 4.6%,
is  primarily  reflective  of an increase in net interest  income of $1,063,  or
3.6%,  from $29,781 for the nine months ended  September 30, 2001 to $30,844 for
the same period of 2002. This increase  resulted  primarily for the same reasons
discussed  above with  respect to the  quarter  ended  September

                                       15
<PAGE>

30, 2002. In addition,  total  noninterest  income  increased  $622, or 8.8%, to
$7,695 for the nine months ended  September  30, 2002 compared to $7,073 for the
same period of 2001.  Service  charges,  commissions and fees increased $354, or
6.3%, to $5,947 for the nine months ended September 30, 2002 from $5,593 for the
same period in 2001, primarily for the same reasons discussed above with respect
to the three months ended  September 30, 2002.  Other income  increased $268, or
18.1%,  to $1,748 for the nine months ended  September  30, 2002 from $1,480 for
the same  period of 2001  resulting  primarily  from income  generated  from the
Company's  annuity sales program,  as well as gains on the sale of fixed assets.
Offsetting these increases,  in part, was a $543, or 4.4%,  increase in salaries
and  benefits  to $12,866  for the nine  months  ended  September  30, 2002 from
$12,323 for the same period of 2001,  primarily  for the same reasons  discussed
above with respect to the three months ended  September  30, 2002.  In addition,
other  expenses  increased  $549, or 10.6%,  to $5,709 for the nine months ended
September 30, 2002 from $5,160 for the same period of 2001,  resulting primarily
from  additional  amortization  of  intangibles  associated  with recent  branch
acquisitions and also a non-recurring  reduction in other operating  expenses in
the second half of 2001.

     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 interest-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 the three and nine months ended
September 30, 2002, net interest  income was $10,668 and $30,844,  respectively,
as compared to $9,727 and $29,781,  respectively,  for the same periods in 2001,
representing  an increase of 9.7% and 3.6%,  respectively.  With  respect to the
three months  ended  September  30,  2002,  most of the increase in net interest
income resulted from an increase in average balances of interest-earning  assets
and a decline in average  balances  of  interest-bearing  liabilities,  with the
decline in cost of average  balances of  interest-bearing  liabilities more than
offsetting the decline in yield on average balances of interest-earning  assets.
As a result,  the Company's net interest margin increased  slightly in the three
months ended September 30, 2002 as compared to the same period in 2001. Further,
the  Company's  net  interest  margin  has now  increased  sequentially  for two
consecutive quarters from the quarter ended March 31, 2002, primarily due to the
cost decline of  interest-bearing  liabilities in the low rate environment.  The
Company  believes its net interest margin has stabilized and will continue in an
upward  trend if  interest  rates  begin to rise,  based on the  current  mix of
interest-earning assets and interest-bearing  liabilities.  However, if interest
rates continue to decline, management believes the Company's net interest margin
will begin to compress.

     As to the nine months ended  September 30, 2002, the modest increase in net
interest  income,  as compared  to the same period in the prior year,  primarily
reflected  an increase  and  decrease in volume of  interest-earning  assets and
interest-bearing   liabilities,   respectively,   offset  by  rate  declines  on
interest-earning   assets  which  exceeded  such  declines  on  interest-bearing
liabilities.

                                       16
<PAGE>

     PROVISION  FOR LOAN LOSSES.  During the three and nine month  periods ended
September 30, 2002, loan charge-offs were $1,621 and $4,861,  respectively,  and
recoveries  of  charged-off  loans  were  $452  and  $1,490,  respectively.  The
Company's  provision  for loan losses  decreased by $139,  or 9.3%,  and $70, or
1.7%,  to $1,354 and $4,030 for the three and nine months  ended  September  30,
2002,  respectively,  as compared  to $1,493 and $4,100 for the same  periods in
2001.  Despite this trend, the Company's  allowance for loan losses increased by
$659 to $11,880 at September  30, 2002 from  $11,221 at December 31, 2001,  with
the ratio of the allowance for loan losses to total loans remaining  essentially
constant from period to period.  As of September 30, 2002,  indicators of credit
quality,  as discussed below,  have declined  compared to December 31, 2001. The
ratio of  allowance  for loan  losses to  nonperforming  assets  was  95.95% and
112.89% at September 30, 2002 and December 31, 2001, respectively, and the ratio
of  nonperforming  assets to total assets was 1.48% and 1.22% at  September  30,
2002 and December 31, 2001,  respectively.  The ratio of nonperforming  loans to
total loans,  excluding loans held for sale, was 1.28% and .97% at September 30,
2002 and December 31,  2001,  respectively.  The main reasons for the decline in
credit quality indicators are two large commercial credits that have been placed
on nonaccrual  since December 31, 2001. The largest credit is a commercial  real
estate  development  project of $2,538 that was placed on nonaccrual  during the
third quarter of 2002. The Company has since  foreclosed on the property  during
October 2002 and approximately  $730 has been charged-off in order to record the
property at net realizable  value. This charge-off was higher than the amount of
the allowance for loan loss allocated for this  relationship as of September 30,
2002, as management became aware of additional  information  regarding the value
of the property  during  October  2002.  The other large credit in the amount of
$1,217 is a business loan secured by real estate.  Management  believes that the
Company is  adequately  secured  with  respect to this  credit and any  realized
losses should be immaterial.

     The  Company's  annualized  net  charge-offs  for  the  nine  months  ended
September 30, 2002 were $4,495  compared to actual net charge-offs of $6,466 for
the year ended  December  31,  2001.  Annualized  net  charge-offs  in  Superior
Financial for the nine months ended  September 30, 2002 were $1,697  compared to
actual  net  charge-offs  of  $2,818  for the  year  ended  December  31,  2001.
Annualized net  charge-offs in the Bank for the nine months ended  September 30,
2002 were $1,557 compared to actual net charge-offs of $2,610 for the year ended
December 31, 2001.  Annualized  net  charge-offs  in GCB Acceptance for the nine
months ended  September 30, 2002 were $1,240  compared to actual net charge-offs
of $1,038 for the year ended  December  31,  2001.  At this point,  based on the
current  trends  and  significant   charge-off  in  the  Bank  described  above,
management  believes  that  total  charge-offs  for  2002  in the  Bank  and GCB
Acceptance will slightly exceed 2001 charge-offs.

     Despite the above trends,  based on the  Company's  allowance for loan loss
calculation,   and  more   specifically,   the  collateral   values   underlying
nonperforming  assets,  management  believes  the  allowance  for loan losses is
adequate  at  September  30,  2002.  However,  management  anticipates  that the
provision for loan losses during the fourth  quarter of 2002 will be higher than
other  quarters  during 2002 and also  anticipates  that the  provision for loan
losses  for the  entire  year of 2002  may  exceed  the  provision  for  2001 if
indicators of credit quality continue to deteriorate.

                                       17
<PAGE>

     NON-INTEREST INCOME. Income that is not related to interest-earning assets,
consisting  primarily of service  charges,  commissions  and fees, has become an
important  supplement  to the  traditional  method  of  earning  income  through
interest rate spreads.

     Total non-interest income for the three and nine months ended September 30,
2002 was $2,536 and $7,695, as compared to $2,366 and $7,073 for the same period
in 2001.  Service charges,  commissions and fees remain the largest component of
total  non-interest  income and increased from $1,872 for the three months ended
September  30,  2001 to  $2,079  for the  same  period  in 2002.  This  increase
reflected mainly  additional volume associated with the Company's retail service
charge  program,   certain  fee  increases  in  the  business  account  analysis
structure,  additional  income  generated  from the Company's  mortgage  banking
division and additional fees from certain insurance products.

     Service  charges,  commissions  and fees increased $354, or 6.3%, to $5,947
for the nine months ended  September 30, 2002 from $5,593 for the same period in
2001,  primarily for the same reasons  discussed above with respect to the three
months ended  September 30, 2002.  Other income  increased by $268, or 18.1%, to
$1,748 for the nine  months  ended  September  30, 2002 from $1,480 for the same
period in 2001.  Most of this increase  resulted from income  generated from the
Company's annuity sales program, as well as gains on the sale of fixed assets.

     NON-INTEREST EXPENSE.  Control of non-interest expense also is an important
aspect in enhancing income. Non-interest expense includes personnel,  occupancy,
and other  expenses such as data  processing,  printing and supplies,  legal and
professional fees, postage,  Federal Deposit Insurance  Corporation  assessment,
etc.  Total  non-interest  expense was $7,268 and $21,576 for the three and nine
months  ended  September  30,  2002  compared to $6,922 and $20,409 for the same
periods in 2001. The $346, or 5.0%,  increase in total non-interest  expense for
the three months ended  September  30, 2002  compared to the same period of 2001
resulted  primarily  from  additional  employees  reflective  of certain  branch
acquisitions  in the  fourth  quarter  of  2001,  as  well as  salary  increases
occurring  in  mid-2002.  The $1,167,  or 5.7%,  increase in total  non-interest
expense to $21,576 for the nine months ended September 30, 2002 from $20,409 for
the same  period in the prior year  reflected  increases  in all  components  of
noninterest expense; in particular,  other expenses increased $549, or 10.6%, to
$5,709 for the nine  months  ended  September  30, 2002 from $5,160 for the same
period of 2001, resulting primarily from additional  amortization of intangibles
associated with recent branch acquisitions and also a non-recurring reduction in
other operating expenses in the second half of 2001.

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses.  For the three and nine months ended September 30, 2002,  salaries and
benefits represented $4,326, or 59.5%, and $12,866, or 59.6%,  respectively,  of
total non-interest  expense. This was an increase of $327, or 8.2%, and $543, or
4.4%,  over the $3,999 and $12,323 for the three and nine months,  respectively,
ended September 30, 2001.  This increase was primarily  reflective of additional
employees  resulting from certain branch  acquisitions  in the fourth quarter of
2001,  as well as salary  increases  occurring in  mid-2002.  The Company had 41

                                       18
<PAGE>

branches at September 30, 2002, and the number of full-time equivalent employees
increased 5.7% from 366 at September 30, 2001 to 387 at September 30, 2002.

     Primarily as a result of this overall increase in non-interest expense, the
Company's efficiency ratio was negatively affected,  as the ratio increased from
55.38% at September  30, 2001 to 55.98% at September  30, 2002.  The  efficiency
ratio illustrates how much it cost the Company to generate revenue; for example,
it cost the Company  55.98 cents to generate  one dollar of revenue for the nine
months ended September 30, 2002.

CHANGES IN FINANCIAL CONDITION

     Total assets at September 30, 2002 were  $834,869,  an increase of $23,257,
or 2.9%,  from total assets of $811,612 at December  31,  2001.  The increase in
assets was primarily reflective of the $44,998 increase in net loans,  excluding
loans held for sale, and the $5,293 net increase in securities,  as set forth on
the Condensed  Consolidated  Balance Sheet,  which were funded,  in part, by the
$25,621 and $1,100 decline in federal funds sold and interest  bearing  deposits
in other banks, respectively.  The remaining funding for this increase in assets
came  primarily  from the deposit  increase of $11,137,  or 1.7%, to $665,050 at
September  30,  2002 from  $653,913 at December  31,  2001,  and from the $5,892
increase in federal funds purchased and repurchase agreements.

     At September 30, 2002, loans, net of unearned income and allowance for loan
losses,  were $716,324 compared to $671,326 at December 31, 2001, an increase of
$44,998, or 6.7%, from December 31, 2001. The increase in loans during the first
nine months of 2002  primarily  reflects an increase in  commercial  real estate
loans  and  residential   real  estate  loans.   Non-performing   loans  include
non-accrual loans and loans 90 or more days past due. 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.
Non-accrual  loans that 120 days past due without  assurance  of  repayment  are
charged off against the  allowance for loan losses.  The Company has  aggressive
collection practices in which senior management is heavily involved.  Nonaccrual
loans and loans past due 90 days and still  accruing  increased  by  $2,729,  or
40.6%,  during the nine months ended September 30, 2002 to $9,457.  The increase
is mainly attributable to the two credit relationships  discussed in the earlier
section entitled "Provision for Loan Losses" of this document.  At September 30,
2002,  the ratio of the Company's  allowance  for loan losses to  non-performing
assets (which include non-accrual loans) was 95.95%.

     The Company  maintains an  investment  portfolio to provide  liquidity  and
earnings.  Investments  at September 30, 2002 with an amortized  cost of $34,256
had a market value of $34,546.  At year-end 2001,  investments with an amortized
cost of $29,297 had a market value of $29,407.  This increase consists primarily
of short-term agency securities.

                                       19
<PAGE>

EFFECT OF NEW ACCOUNTING STANDARDS

     A new accounting  standard dealing with asset  retirement  obligations will
apply for 2003.  The Company does not believe this standard will have a material
affect on its financial position or results of operations.

     Effective January 1, 2002, the Company adopted a new standard on impairment
and disposal of long-lived  assets. The effect of this on the financial position
and results of operations of the Company is not material.

     On October 1, 2002,  the  Financial  Accounting  Standards  Board  ("FASB")
issued   Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  147,
"Acquisitions  of Certain  Financial  Institutions."  SFAS No. 147 is  effective
October 1, 2002. Under SFAS No. 147, the excess of the fair value of liabilities
assumed  over the fair value of  tangible  and  identifiable  intangible  assets
acquired in a financial  institution  business  combination  represents goodwill
that should be accounted for under SFAS No. 142,  "Goodwill and Other Intangible
Assets."  If  certain  criteria  are  met,  the  amount  of  the  unidentifiable
intangible asset resulting from prior financial institutions  acquisitions is to
be  reclassified  to  goodwill  upon  adoption  of  this  Statement.   Financial
institutions meeting conditions outlined in SFAS No. 147 are required to restate
previously issued financial  statements.  The objective of the restatement is to
present the balance  sheet and income  statement as if the amount  accounted for
under SFAS No. 72 as an unidentifiable intangible asset had been reclassified to
goodwill as of the date the Company  adopted SFAS No. 142. See Footnote 5 of the
Condensed Consolidated Financial Statements for additional discussion.

                                       20
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A comprehensive  qualitative and quantitative analysis regarding market risk was
disclosed  in the  Company's  December  31, 2001 Form 10-K.  This  analysis  was
prepared using a simulation  model based upon various  assumptions.  No material
changes in the assumptions used or results obtained from the model have occurred
since  December 31, 2001,  with respect to how changes in  short-term  rates may
affect net  interest  income over the next twelve  months if a gradual 200 basis
point increase or decrease in such rates occurred over the same time period, and
the Company has continued to operate well within the guidelines discussed in the
December 31, 2001 Form 10-K.  However,  as of September  30, 2002,  based on the
results of the Company's simulation model, the Company could expect net interest
income to increase by approximately 9.22% if short-term interest rates gradually
increase by 200 basis  points,  compared to an increase of  approximately  7.66%
disclosed in the Company's December 31, 2001 Form 10-K. Further, as of September
30, 2002, if short-term  interest rates gradually  decrease by 200 basis points,
net  interest  income  could be expected to  decrease by  approximately  10.70%,
compared  to a  decrease  of  approximately  8.89%  disclosed  in the  Company's
December  31, 2001 Form 10-K.  Accordingly,  the Company is somewhat  more asset
sensitive at September 30, 2002  compared to December 31, 2001,  with respect to
net interest income.

The  Company  also uses an  economic  value of equity  model to  complement  its
short-term interest rate risk analysis and this model and analysis are discussed
in detail in the Company's  Form 10-K for the year ended  December 31, 2001. 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%. As of September  30, 2002,  the
Company  slightly  exceeded  these  guidelines  in  a  declining  interest  rate
environment,  with the  model  indicating  that the  Company  could  expect  its
economic  value of equity to  decrease  by  approximately  18.79% if  short-term
interest rates immediately decreased by 200 basis points. However, if short-term
interest  rates  immediately  increase by 200 basis  points,  economic  value of
equity could be expected to increase by approximately 13.84%. By comparison,  as
of December 31, 2001, based on the Company's model, an immediate 200 basis point
increase  and  decrease  in  short-term   interest  rates  would  result  in  an
approximate increase and decrease in economic value of equity of only 10.90% and
13.72%, respectively.

The  Company's  increased  asset  sensitivity  with respect to both net interest
income and economic value of equity has occurred mainly during the quarter ended
September 30, 2002, and has been caused primarily by additional  originations of
loans  which  have  shorter  maturities  and/or  repricing  periods,  as well as
increased  balances of longer-term  deposits.  In addition,  the increased asset
sensitivity  affecting economic value of equity is being largely  exaggerated by
abnormally low core deposit  premiums  resulting from the unusually low interest
rate  environment.  As the core  deposit  cash flow  discount  rates used in the
Company's  simulation model have declined during the quarter ended September 30,
2002, the Company's  market value of these deposits  increased by  approximately
$11,000,  thus  lowering the economic  value of equity by the same amount.  When
this core  deposit  premium

                                       21
<PAGE>

amount is  restored  to the  simulation  model,  the  immediate  200 basis point
increase and decrease in short-term  interest  rates  results in an  approximate
increase and decrease of 10.34% and 16.43%,  respectively,  in economic value of
equity,  indicating  lower  asset  sensitivity  than  set  forth  in  the  above
paragraph.  Thus, while the analysis above appropriately describes the Company's
asset sensitivity and its effect on the increases or decreases to economic value
of equity,  the Company  believes it reflects  the  significant  decline in core
deposit  premiums  over which the Company has  little,  if any,  control in this
interest rate environment.

During  October  2002,  management  implemented  a deposit  promotional  program
intended to increase the Company's shorter-term liabilities, thus mitigating its
asset  sensitivity.  Further,  management  is  continuing  its  review  of  risk
management guidelines and may modify them prior to December 31, 2002.

Actual results for the year ending  December 31, 2002 will differ from simulated
results due to timing,  magnitude,  and frequency of interest  rate changes,  as
well as changes in market conditions and management strategies.


ITEM 4. CONTROLS AND PROCEDURES

     A  review  and  evaluation  was  performed  by  the  Company's  management,
including the Company's Chief Executive  Officer (the "CEO") and Chief Financial
Officer (the "CFO"),  of the  effectiveness  of the design and  operation of the
Company's  disclosure  controls and procedures as of a date within 90 days prior
to the filing of this quarterly report. Based on that review and evaluation, the
CEO and CFO have concluded that the Company's  current  disclosure  controls and
procedures,  as designed and  implemented,  were  effective.  There have been no
significant  changes in the Company's internal controls or in other factors that
could  significantly  affect the Company's  internal controls  subsequent to the
date  of  their  evaluation.  There  were  no  significant  material  weaknesses
identified  in the  course of such  review and  evaluation  and,  therefore,  no
corrective measures were taken by the Company.

                                       22
<PAGE>

PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

          The Company and its  subsidiaries  are involved in various  claims and
          legal actions arising in the ordinary  course of business.  Management
          currently is not aware of any material legal  proceedings to which the
          Company or any of its subsidiaries is a party or to which any of their
          property is subject.


Item 2.   Changes in Securities and Use of Proceeds

          None.


Item 3.   Defaults upon Senior Securities

          None.


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

          None


Item 5.   Other Information

          None.


Item 6.   Exhibits and Reports on Form 8-K

          (a)Exhibits

          None


          (b)Reports on Form 8-K

          The  Company  filed a Form 8-K on July 22,  2002  for the  purpose  of
          reporting that the Registrant's Board of Directors noted its intent to
          make  application  to list its common  shares on the  Nasdaq  National
          Market   System  during  the  third  quarter  of  2002.  No  financial
          statements were filed with the Form 8-K.

                                       23
<PAGE>

          The  Company  filed a Form 8-K on August 9,  2002 for the  purpose  of
          reporting  that the  Principal  Executive  Officer  and the  Principal
          Financial  Officer of Greene County  Bancshares,  Inc. (the "Company")
          each submitted to the Securities and Exchange  Commission on August 9,
          2002 the certifications  required by ss. 906 of the Sarbanes-Oxley Act
          of 2002 in  connection  with the  filing  of the  Company's  Quarterly
          Report on Form 10-Q for the period ended June 30, 2002.

          The Company  filed a Form 8-K on September 19, 2002 for the purpose of
          reporting  that the Board of  Directors of Greene  County  Bancshares,
          Inc.  authorized  the  repurchase of up to $2,000,000 of the Company's
          outstanding common stock beginning in October 2002.


                                       24
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                          Greene County Bancshares, Inc.
                          ------------------------------
                                   Registrant



Date: 11/12/02            By:  /s/ R. Stan Puckett
     -------------            -------------------------------------------
                                   R. Stan Puckett
                                   Chairman and Chief Executive Officer
                                   (Duly authorized representative)


Date: 11/12/02                 /s/ William F. Richmond
     -------------             ------------------------------------------
                                   William F. Richmond
                                   Sr. Vice President and Chief Financial
                                   Officer (Principal financial and accounting
                                   officer)

                                       25

<PAGE>
                                 CERTIFICATIONS

I, R. Stan Puckett, certify that:

1)   I have  reviewed  this  quarterly  report  on Form  10-Q of  Greene  County
     Bancshares, Inc.(the "registrant");

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

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

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

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6)   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date:  11/12/02                        /s/ R. Stan Puckett
          -------------------               ---------------------------------
                                            R. Stan Puckett
                                            Chairman and Chief Executive Officer


                                       26
<PAGE>

I, William F. Richmond, certify that:

1)   I have  reviewed  this  quarterly  report  on Form  10-Q of  Greene  County
     Bancshares, Inc.(the "registrant");

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

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

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

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6)   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date:  11/12/02                      /s/ William F. Richmond
          -------------------             ------------------------------------
                                          William F. Richmond
                                          Sr. Vice President and Chief Financial
                                          Officer

                                       27