FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


For Quarter ended September 30, 2001                  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: 6,818,890.

                                       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, 2001 and December 31,
     2000.

     Condensed Consolidated  Statements of Income and Comprehensive Income - For
     the three and nine months ended September 30, 2001 and 2000.

     Condensed  Consolidated  Statement of  Stockholders'  Equity - For the nine
     months ended September 30, 2001.

     Condensed Consolidated Statements of Cash Flows - For the nine months ended
     September 30, 2001 and 2000.

     Notes to Condensed Consolidated Financial Statements.


                                       2

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                         (UNAUDITED)
                                                                         SEPTEMBER 30,              DECEMBER 31,
                                                                             2001                      2000*
                                                                       ----------------           ---------------
                                         ASSETS
                                         ------

<S>                                                                      <C>                       <C>
Cash and due from banks                                              $          20,187         $          24,038
Federal funds sold                                                              22,512                     8,130
Certificates of deposit                                                          2,100                         0
Securities available-for-sale ("AFS")                                           12,858                    46,658
Securities held-to-maturity (with a market value of $1,254
  on September 30, 2001 and $1,869 on December 31, 2000)                         1,243                     1,866
FHLB and Bankers Bank stock, at cost                                             4,478                     4,254
Loans held for sale                                                              2,930                     1,725
Loans                                                                          697,743                   667,068

  Less: allowance for loan losses                                               12,134                    11,728
                                                                       ----------------           ---------------
  NET LOANS                                                                    685,609                   655,340
                                                                       ----------------           ---------------

Bank premises and equipment, net of
    accumulated depreciation                                                    25,362                    23,934

Other assets                                                                    22,668                    23,172
                                                                       ----------------           ---------------
     TOTAL ASSETS                                                    $         799,947         $         789,117
                                                                       ================           ===============

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

Deposits                                                             $         639,843         $         648,641
Repurchase agreements                                                           10,289                     4,713
Notes payable                                                                   68,697                    59,949
Accrued interest payable and other liabilities                                  12,873                    12,804
                                                                       ----------------           ---------------
    TOTAL LIABILITIES                                                          731,702                   726,107
                                                                       ----------------           ---------------

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

Common Stock, authorized 15,000,000 shares; issued and
    outstanding 6,818,890 shares at September 30, 2001 and
    and December 31, 2000                                                       13,638                    13,638
Paid in Capital                                                                  4,854                     4,854
Retained Earnings                                                               49,696                    44,467
Accumulated Other Comprehensive Income (Loss)                                       57                        51
                                                                       ----------------           ---------------
    TOTAL SHAREHOLDERS' EQUITY                                                  68,245                    63,010
                                                                       ----------------           ---------------
    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                         $         799,947         $         789,117
                                                                       ================           ===============
</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, 2001 AND 2000
                                   (UNAUDITED)

             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED  NINE MONTHS ENDED
                                                             SEPTEMBER 30,       SEPTEMBER 30,
                                                           ------------------ ------------------
                                                             2001      2000     2001      2000
                                                           --------  -------- --------  --------
INTEREST INCOME:
----------------
<S>                                                        <C>       <C>       <C>       <C>
  Interest and Fees on Loans                               $16,352   $15,934   $50,542   $45,836
  Interest on Investment Securities                            277       917     1,135     2,655
  Interest on Federal Funds Sold and Other
    Interest-earning Deposits                                  154       333       438       760
                                                           -------   -------   -------   -------
                                   TOTAL INTEREST INCOME    16,783    17,184    52,115    49,251
                                                           -------   -------   -------   -------

INTEREST EXPENSE:
-----------------
  Interest on Deposits                                       6,065     6,679    19,506    17,842
  Interest on Borrowings                                       991       960     2,828     2,814
                                                           -------   -------   -------   -------
                                  TOTAL INTEREST EXPENSE     7,056     7,639    22,334    20,656
                                                           -------   -------   -------   -------

                                     NET INTEREST INCOME     9,727     9,545    29,781    28,595

Provision for Loan Losses                                    1,493     1,122     4,100     3,916
                                                           -------   -------   -------   -------
     NET INTEREST INCOME AFTER
       PROVISION FOR LOAN LOSSES                             8,234     8,423    25,681    24,679
                                                           -------   -------   -------   -------

NONINTEREST INCOME:
-------------------
  Service Charges, Commissions and Fees                      1,872     1,497     5,593     3,870
  Other Income                                                 494       297     1,480     1,036
                                                           -------   -------   -------   -------
                                TOTAL NONINTEREST INCOME     2,366     1,794     7,073     4,906
                                                           -------   -------   -------   -------
NONINTEREST EXPENSE:
--------------------
  Salaries and Benefits                                      3,999     4,277    12,323    12,319
  Occupancy and Furniture and Equipment Expense                992       904     2,926     2,686
  Other Expenses                                             1,931     1,848     5,160     5,265
                                                           -------   -------   -------   -------
                               TOTAL NONINTEREST EXPENSE     6,922     7,029    20,409    20,270
                                                           -------   -------   -------   -------

     INCOME BEFORE INCOME TAXES                              3,678     3,188    12,345     9,315

Income Taxes                                                 1,343     1,262     4,661     3,338
                                                           -------   -------   -------   -------

     NET INCOME                                            $ 2,335   $ 1,926   $ 7,684   $ 5,977
                                                           =======   =======   =======   =======

PER SHARE OF COMMON STOCK:
--------------------------
  Net Income, Basic                                        $  0.34   $  0.28   $  1.13   $  0.88
                                                           =======   =======   =======   =======
  Net Income, Assuming Dilution                            $  0.33   $  0.28   $  1.12   $  0.87
                                                           =======   =======   =======   =======
  Dividends                                                $  0.12   $  0.12   $  0.36   $  0.36
                                                           =======   =======   =======   =======

COMPREHENSIVE INCOME                                       $ 2,337   $ 1,930   $ 7,690   $ 6,018
                                                           =======   =======   =======   =======
</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, 2001
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                               ACCUMULATED
                                                                                                  OTHER
                                                                                             COMPREHENSIVE
                                             COMMON           PAID IN         RETAINED           INCOME
                                              STOCK           CAPITAL         EARNINGS           (LOSS)        TOTAL
                                           ------------     ------------     -----------      ------------    --------
<S>                                          <C>             <C>             <C>              <C>             <C>
JANUARY 1, 2001                              $ 13,638        $  4,854        $ 44,467         $     51        $ 63,010

  Net income                                        -               -           7,684                -           7,684

  Change in unrealized gain on AFS
     securities, net of tax:                        -               -               -                6               6
                                                                                                              --------
     Comprehensive income                                                                                        7,690

  Dividends paid                                    -               -          (2,455)               -          (2,455)
                                             --------        --------        --------         --------        --------
SEPTEMBER 30, 2001                           $ 13,638        $  4,854        $ 49,696         $     57        $ 68,245
                                             ========        ========        ========         ========        ========
</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, 2001 AND 2000
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30,     SEPTEMBER 30,
                                                                                  2001               2000
                                                                                  ----               ----
<S>                                                                         <C>               <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES:
  Net Income                                                                $       7,684     $      5,977
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Provision for loan losses                                                     4,100            3,916
      Depreciation and amortization                                                 1,189            1,147
      Amortization of premiums on securities, net of accretion                        107              145
      FHLB stock dividends                                                           (224)            (206)
      Loans originated for sale                                                   (51,472)         (24,945)
      Proceeds from loans originated for sale                                      50,527           24,561
      Net realized (gain) on sale of loans originated for sale                       (259)            (141)
      Loss on other real estate owned                                                 183              281
      Net Changes:
       Accrued interest receivable and other assets, net of intangibles               852              306
       Accrued interest payable and other liabilities                                  70           (2,924)
                                                                            -------------     ------------
                                 NET CASH PROVIDED BY OPERATING ACTIVITIES         12,757            8,117
                                                                            -------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (increase) in interest-bearing deposits with banks                           (2,100)               0
  Net decrease (increase) in securities and other interest-earning investments     34,346          (24,105)
  Net originations of loans held-to-maturity                                      (38,147)         (80,681)
  Improvements in other real estate owned and proceeds from
    sales of other real estate owned, net                                           3,224            2,269
  Fixed asset additions and proceeds from sales of fixed assets, net               (2,619)          (5,252)
                                                                            -------------     ------------
                          NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES         (5,296)        (107,769)
                                                                            -------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (decrease) increase in deposits                                              (8,798)          98,198
  Decrease in federal funds purchased                                                   0          (11,620)
  Increase in securities sold under repurchase agreements                           5,576            1,776
  Increase in notes payable, net                                                    8,747           15,722
  Proceeds from issuance of common stock                                                0              381
  Cash dividends paid                                                              (2,455)          (2,452)
                                                                            -------------     ------------
                         NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES           3,070          102,005
                                                                            -------------     ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                          10,531            2,353
                                                                            -------------     ------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                   32,168           44,555
                                                                            -------------     ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $      42,699     $     46,908
                                                                            =============     ============
</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.  All interim  amounts are subject to year-end
audit and the  results  of  operations  for the  interim  period  herein are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2001. 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, 2000.  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, 2001 and twelve months ended December 31, 2000 were as follows:

                                                 September 30,    December 31,
                                                     2001            2000
                                               ---------------  --------------
                                                         (in thousands)

Balance at beginning of year                  $    11,728      $    10,332
Add (Deduct):
  Charge-offs                                      (4,748)          (7,788)
  Recoveries                                        1,054            1,175
  Provisions                                        4,100            8,009
                                               ---------------  --------------
Ending Balance                                $    12,134      $    11,728
                                               ===============  ==============

                                                 September 30,    December 31,
                                                     2001            2000
                                               ---------------  --------------
                                                        (in thousands)

Loans past due 90 days still on accrual       $     1,716      $       475
Nonaccrual Loans                                    9,443            4,813
                                               ---------------  --------------
Total                                         $    11,159      $     5,288
                                               ===============  ==============

                                       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  common  stock
equivalents  outstanding during the period. Stock options are regarded as common
stock  equivalents.  Common stock  equivalents  are computed  using the treasury
stock method. 97,732 options are excluded from the effect of dilutive securities
because they are anti-dilutive.

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, 2001 and 2000:
<TABLE>
<CAPTION>
                                                       (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                                  THREE MONTHS ENDED SEPTEMBER 30,
                                     ---------------------------------------------------------------------------------
                                                     2001                                      2000
                                     ---------------------------------------     -------------------------------------
                                            INCOME            SHARES                  INCOME            SHARES
                                          (NUMERATOR)      (DENOMINATOR)            (NUMERATOR)     (DENOMINATOR)
<S>                                         <C>              <C>                      <C>             <C>
BASIC EPS
Income available to
  common shareholders                       $2,335           6,818,890                $1,926          6,818,260

EFFECT OF DILUTIVE SECURITIES
Stock options outstanding                        -              32,889                     -             55,635
                                     ---------------------------------------------------------------------------------
DILUTED EPS
Income available to common
  shareholders plus assumed
  conversions                               $2,335           6,851,779                $1,926          6,873,895
                                     =================================================================================
</TABLE>
<TABLE>
<CAPTION>
                                                       (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                                  NINE MONTHS ENDED SEPTEMBER 30,
                                     ---------------------------------------------------------------------------------
                                                     2001                                      2000
                                     ---------------------------------------     -------------------------------------
                                            INCOME            SHARES                  INCOME            SHARES
                                          (NUMERATOR)      (DENOMINATOR)            (NUMERATOR)     (DENOMINATOR)
<S>                                         <C>              <C>                      <C>             <C>
BASIC EPS
Income available to
  common shareholders                       $7,684           6,818,890                $5,977          6,812,645

EFFECT OF DILUTIVE SECURITIES
Stock options outstanding                        -              32,889                     -             58,050
                                     ---------------------------------------------------------------------------------
DILUTED EPS
Income available to common
  shareholders plus assumed
  conversions                               $7,684           6,851,779                $5,977          6,870,695
                                     =================================================================================
</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. 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.

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, 2001       BANK        OTHER         TOTAL
-------------------------------------    -----------   ---------    ----------
<S>                                      <C>          <C>          <C>
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
                                          ==========   =========    ==========

THREE MONTHS ENDED SEPTEMBER 30, 2000       BANK        OTHER         TOTAL
-------------------------------------    -----------   ---------    ----------

Net interest income                      $    8,221   $   1,324    $    9,545
Provision for loan losses                       300         822         1,122
Noninterest income                            1,455         339         1,794
Noninterest expense                           5,706       1,323         7,029
Income tax expense                            1,381        (119)        1,262
                                          ----------   ---------    ----------
SEGMENT PROFIT                           $    2,289   $    (363)   $    1,926
                                          ==========   =========    ==========
SEGMENT ASSETS AT SEPTEMBER 30, 2000     $  720,828   $  41,762    $  762,590
                                          ==========   =========    ==========

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

NINE MONTHS ENDED SEPTEMBER 30, 2000        BANK        OTHER         TOTAL
------------------------------------     -----------   ---------    ----------

Net interest income                      $   24,223   $   4,372    $   28,595
Provision for loan losses                       900       3,016         3,916
Noninterest income                            3,453       1,453         4,906
Noninterest expense                          15,961       4,309        20,270
Income tax expense                            3,932        (594)        3,338
                                          ----------   ---------    ---------
SEGMENT PROFIT                           $    6,883   $    (906)   $    5,977
                                          ==========   =========    ==========
SEGMENT ASSETS AT SEPTEMBER 30, 2000     $  720,828   $  41,762    $  762,590
                                          ==========   =========    ==========
</TABLE>
                                       10
<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.

     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.

BRANCH PURCHASE AND SALE

     On September  26,  2001,  the Bank and  SunTrust  Bank,  a Georgia  banking
corporation  ("SunTrust"),   entered  into  a  Branch  Purchase  Agreement  (the
"Agreement")  providing  for  the  assumption  by  the  Bank  of  the  deposits,
approximating  $34  million as of June 30,  2001,  and its  purchase  of certain
assets of three SunTrust branch offices  located in Hawkins  County,  Tennessee.
The transaction is pending regulatory approval.

     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

                                       11
<PAGE>

its bank  branch  located in  Farragut,  Tennessee  (the  "Farragut  Branch") to
Wachovia.  As a result of the  acquisition of the North Carolina  Branch and the
attendant  sale of the Farragut  Branch,  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.

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  8.8% of the total liquidity base at September 30, 2001, as compared
to 11.9% at December  31,  2000.  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  million  with the  Federal  Home Loan Bank of  Cincinnati
("FHLB"),  of which $19 million was available at September 30, 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 operating needs.

     For the nine months ended September 30, 2001,  operating  activities of the
Company  provided  $12,757  of cash  flows.  Net income of $7,684  adjusted  for
non-cash operating activities, including $4,100 in provision for loan losses and
depreciation  and  amortization  of $1,189  provided  the  majority  of the cash
generated from operations. These cash flows were offset, in part, by the $945 in
funds used for loans  originated for sale, net of proceeds from the sale of such
loans.

     The Company's decrease in investment securities and other  interest-earning
investments   provided  $34,346  in  cash  flows,  while  the  net  increase  in
held-to-maturity loans originated,  net of principal collected,  used $38,147 in
cash flows.

     The net reduction in deposits and cash dividends paid to shareholders  used
$8,798 and  $2,455 in cash  flows,  respectively.  These uses of cash flows were
offset, in part, by the $8,747 increase in notes payable,  net and by the $5,576
increase in securities sold under repurchase agreements.

     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 stockholders.  Further,  the
capital  base  of  the  Company   allows  it  to  take   advantage  of  business
opportunities  while  maintaining the level of resources  deemed  appropriate by

                                       12
<PAGE>

management of the Company to address  business  risks  inherent in the Company's
daily operations. At the Company's annual shareholder meeting on April 25, 2001,
shareholders  approved an increase in the number of authorized  shares of common
stock from five million  shares to fifteen  million  shares.  Also, on April 25,
2001,  the  Company  declared a 5-for-1  stock  split,  effected  as a dividend,
payable on May 29, 2001 to shareholders of record as of the close of business on
May 15, 2001. All share and per share data have been retroactively restated.

     Shareholders'  equity on  September  30, 2001 was  $68,245,  an increase of
$5,235,   or  8.31%,  from  $63,010  on  December  31,  2000.  The  increase  in
shareholders'  equity  primarily  reflects  net income for the nine months ended
September 30, 2001 of $7,684 ($1.13 per share, assuming dilution). This increase
was offset by quarterly dividend payments during the nine months ended September
30, 2001 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  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 stockholders' equity, less goodwill).
At September 30, 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. 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, 2001
-------------------------------------------------------------------------------
                                           Required
                                           Minimum                    Bank
                                            Ratio
-------------------------------------------------------------------------------
   Tier 1 risk-based capital                4.00%                    10.18%
-------------------------------------------------------------------------------
    Total risk-based capital                8.00%                    11.44%
-------------------------------------------------------------------------------
         Leverage Ratio                     4.00%                     8.60%
===============================================================================

                                       13
<PAGE>

CHANGES IN RESULTS OF OPERATIONS

     NET INCOME.  Net income for the three and nine months ended  September  30,
2001 was $2,335 and $7,684,  respectively,  an  increase  of $409,  or 21.2% and
$1,707, or 28.6%, as compared to net income of $1,926 and $5,977,  respectively,
for the same periods in 2000. The increase for the three months ended  September
30, 2001 resulted primarily from an increase in non-interest  income of $572, or
31.9%,  to $2,366 for the three months ended  September 30, 2001 from $1,794 for
the same period in 2000.  This  increase  primarily  reflects  growth in service
charges  associated with the Company's new checking account programs as a result
of both increases in rates and volume,  as well as additional  fees generated by
the Company's mortgage banking operation.

     The  increase  for the  nine  months  ended  September  30,  2001  resulted
primarily from an increase in non-interest  income of $2,167 or 44.2%, to $7,073
for the nine months ended  September 30, 2001 from $4,906 for the same period in
2000. This increase in  non-interest  income for the nine months ended September
30, 2001 is primarily  reflective of the same factors discussed above related to
the three months ended September 30, 2001. Further  contributing to the increase
in net income for the nine months ended  September 30, 2001 compared to the same
period in the prior year was an increase in net  interest  income of $1,186,  or
4.1%,  to $29,781 for the nine months ended  September 30, 2001 from $28,595 for
the same  period in 2000.  This  increase  was due  primarily  to an increase in
volume  of  average  interest-earning  assets,  including  an  increase  in loan
originations, primarily in the Bank.

     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, 2001, net interest income was $9,727 and $29,781, respectively, as
compared  to $9,545 and  $28,595,  respectively,  for the same  periods in 2000,
representing  an increase of 1.9% and 4.1%,  respectively.  The increase for the
three months  ended  September  30,  2001,  compared to the same period in 2000,
resulted  primarily  from a decrease in interest  expense due  principally  to a
reduction in the cost of interest-bearing  liabilities.  While the Company's net
interest  margin  continued a sequential  calendar year decline during the three
months ended September 30, 2001, due to its asset  sensitive  interest rate risk
posture in a declining  interest  rate  environment,  the  Company's  ability to
reprice a significant portion of its interest-bearing  liabilities allowed it to
reduce interest  expense in the three months ended September 30, 2001,  compared
to the same  period in 2000,  despite an  increase in the balance of its average
interest-bearing  liabilities.  With  respect to the  increase  in net  interest
income for the nine months ended  September 30, 2001 compared to the same period
in the prior year,  such  increase  was  primarily  the result of a  significant
increase in average balances of interest-earning assets which offset the decline
in the yield earned on these assets.

     PROVISION  FOR LOAN LOSSES.  During the three and nine month  periods ended
September 30, 2001, loan charge-offs  were $1,566 and $4,748,  and recoveries of
charged-off

                                       14
<PAGE>

loans were $331 and  $1,054,  respectively.  The  Company's  provision  for loan
losses  increased  by $371,  or 33.1%,  to $1,493  for the  three  months  ended
September 30, 2001 from $1,122 for the same period in 2000. Most of the increase
occurred in the Bank,  which was  reflective of  management's  assessment of the
risk of  collection  inherent in its  existing  loan  portfolio.  Despite  lower
provisions in the Bank for the nine months ended September 30, 2001, compared to
the same period in 2000,  the Company's  provision for loan losses  increased by
$184, or 4.7%,  to $4,100 from $3,916 for the same period in 2000.  The decrease
in  the  Bank  reflected  management's  risk  assessment  in its  existing  loan
portfolio during the period.  Offsetting, in part, these lower provisions in the
Bank were higher provisions in Superior Financial and GCB Acceptance  indicative
of both higher loan balances in GCB  Acceptance,  as compared to the same period
in  2000,  and  also  management's  evaluation  of  the  loan  quality  in  both
portfolios.  However,  as noted in the  above  discussion  related  to the three
months ended September 30, 2001,  management,  upon further analyses of the loan
portfolio in each of its operating entities, began to increase the provisions in
the Bank. The Company's  allowance for loan losses  increased by $406 to $12,134
at September  30, 2001 from $11,728 at December 31, 2000,  with the ratio of the
allowance  for loan losses to total loans  remaining  essentially  constant from
period to period. The ratio of allowance for loan losses to nonperforming assets
was  87.95%  and  154.83%  at   September   30,  2001  and  December  31,  2000,
respectively,  and the ratio of  nonperforming  assets to total assets was 1.71%
and .96% at September 30, 2001 and December 31, 2000, respectively. The ratio of
nonperforming  loans to total loans was 1.57% and .78% at September 30, 2001 and
December 31, 2000, respectively.

     The  Company's  annualized  net  charge-offs  for  the  nine  months  ended
September 30, 2001 were $4,925  compared to actual net charge-offs of $6,613 for
the year ended  December  31,  2000.  Annualized  net  charge-offs  in  Superior
Financial for the nine months ended  September 30, 2001 were $2,901  compared to
actual  net  charge-offs  of  $3,210  for the  year  ended  December  31,  2000.
Annualized net  charge-offs in the Bank for the nine months ended  September 30,
2001 were $1,245 compared to actual net charge-offs of $2,625 for the year ended
December 31, 2000.

     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,
2001 was $2,366 and $7,073, as compared to $1,794 and $4,906 for the same period
in 2000. The largest component of non-interest  income,  i.e.,  service charges,
commissions  and fees  totaled  $1,872 and $5,593 for the three and nine  months
ended  September 30, 2001, as compared to $1,497 and $3,870 for the same periods
in 2000.  This  increase  of $375,  or 25.1%,  and $1,723,  or 44.5%,  primarily
reflects  growth in service  charges  associated with the Company's new checking
account  programs as a result of both increases in rates and volume,  as well as
additional fees generated by the Company's  mortgage  banking  operation.  Other
income also increased by $197, or 66.3%,  and $444, or 42.9%, to $494 and $1,480
for the three and nine months ended  September 30, 2001 from $297 and $1,036 for
the  same  periods

                                       15
<PAGE>

in 2000. Most of this increase resulted from fees and commissions generated from
insurance and annuity products and from the Bank's trust operation.

     Primarily as a result of this  increase in  non-interest  income along with
the increase in net interest  income and  essentially no change in  non-interest
expense,  as discussed  below,  the Company's  efficiency  ratio was  positively
affected,  as the ratio decreased from 60.44% at September 30, 2000 to 55.38% at
September  30,  2001.  The  efficiency  ratio  illustrates  how much it cost the
Company to generate  revenue;  for example,  it cost the Company  55.38 cents to
generate one dollar of revenue for the three months ended September 30, 2001.

     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 $6,922 and $20,409 for the three and nine
months  ended  September  30,  2001  compared to $7,029 and $20,270 for the same
periods in 2000.

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses.  For the three and nine months ended September 30, 2001,  salaries and
benefits  represented  $3,999,  or  57.8%,  and  $12,323,  or  60.4%,  of  total
non-interest expense, respectively. This was a decrease of $278, or 6.5%, and an
increase  of $4, or  essentially  no  percentage  increase,  over the $4,277 and
$12,319 for the three and nine months ended  September  30, 2000. As the Company
decreased  its size to 41  branches  at  September  30, 2001 from 44 branches at
September 30, 2000, the number of full-time  equivalent  employees declined 2.1%
from 374 at September  30, 2000 to 366 at September  30, 2001.  This decrease in
employees was primarily the result of consolidating  certain Superior  Financial
offices into other, more centrally-located branches for the purpose of achieving
greater operating  efficiencies as well as certain position  eliminations in the
Bank.  Because some of the related  employees were consolidated into other areas
of the Company,  the reduction in the number of the  Company's  branches did not
create a proportional decline in the number of employees.

     Occupancy and furniture  and equipment  expense  increased by $88, or 9.7%,
and $240,  or 8.9%,  to $992 and  $2,926  for the three  and nine  months  ended
September 30, 2001, as compared to $904 and $2,686 for the same periods in 2000.
Although the actual number of Company branches declined,  increased depreciation
expense associated with technology  expenditures and branches  previously placed
in service  during  early 2000,  as well as higher  utility and other  operating
costs, put upward pressure on these expenses.

CHANGES IN FINANCIAL CONDITION

     Total assets at September 30, 2001 were  $799,947,  an increase of $10,830,
or 1.4%, from 2000's  year-end total assets of $789,117.  The increase in assets
was primarily  reflective  of the $30,269  increase in net loans and the $16,482
increase in federal funds sold and certificates of deposit,  offset, in part, by
the $34,423 decline in overall securities.

                                       16
<PAGE>

     At September 30, 2001, loans, net of unearned income and allowance for loan
losses,  were $685,609 compared to $655,340 at December 31, 2000, an increase of
$30,269, or 4.6%, from December 31, 2000. The increase in loans during the first
nine  months  of  2001  is  primarily  due  to an  increase  in  commercial  and
residential  real estate loans  resulting  primarily from increased loan demand.
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.
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 $4,630 and  $1,241,  respectively,  during the nine  months  ended
September 30, 2001 to $9,443 and $1,716,  respectively.  In general,  management
attributes the increase in loans past due 90 days and still accruing, as well as
the increase in  nonperforming  assets and the downward  trend in related credit
quality  ratios,  to  additional  bankruptcy  filings by borrowers  and also the
slowing  economy in certain  market  areas.  Specifically,  the  increase in the
Bank's  nonaccrual  loans  during  the nine  months  ended  September  30,  2001
consisted principally of one commercial  relationship  headquartered in Sullivan
County, Tennessee in the approximate amount of $3,500.  Management believes that
this commercial credit  relationship is adequately  secured and that the Company
will not incur any  material  loss.  At  September  30,  2001,  the ratio of the
Company's  allowance for loan losses to  non-performing  assets  (which  include
non-accrual loans) was 87.95%.

     The Company  maintains an  investment  portfolio to provide  liquidity  and
earnings.  Investments  at September 30, 2001 with an amortized  cost of $14,009
had a market value of $14,112.  At year-end 2000,  investments with an amortized
cost of $48,441 had a market value of $48,527.  This decrease resulted primarily
from the calling,  at par, of securities  as interest  rates began to decline in
the first part of 2001.

     Deposits  declined $8,798,  or 1.4%, to $639,843 at September 30, 2001 from
$648,641  at  December  31,  2000.  Most  of the  decrease  in  deposits  was in
higher-costing  certificates  of deposits.  The Company also increased its notes
payable, consisting primarily of borrowings from the FHLB, by $8,748 in order to
offset most of the  deposit  reduction  and to  partially  fund the  increase in
loans.

EFFECT OF NEW ACCOUNTING STANDARDS

     In 2001, new accounting  guidance was issued that will,  beginning in 2002,
revise the accounting for goodwill and intangible assets. Intangible assets with
indefinite lives and goodwill will no longer be amortized, but will periodically
be reviewed for impairment and written down if impaired.  Additional disclosures
about  intangible  assets and  goodwill  may be  required.  An initial  goodwill
impairment  test is  required  during  the  first six  months of 2002.  However,
management  does not expect this new guideline to have a material  effect on the
financial statements.

                                       17
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

The information  called for by this item is incorporated  herein by reference to
the "Interest Rate Sensitivity" and "Asset/Liability  Management" Subsections of
the Management's Discussion and Analysis section contained in the Company's 2000
Annual Report to shareholders.

Management  believes there has been no material  change in either  interest rate
risk or market risk since December 31, 2000.

                                       18
<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

          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 August 29, 2001 and another Form
               8-K on October 1, 2001. The Form 8-K filed on August 29, 2001 was
               to report that the Company had entered into a non-binding  letter
               of intent with  SunTrust to acquire  three  SunTrust  branches in
               Hawkins County,  Tennessee.  The second form 8-K filed on October
               1,  2001 was to  report  that the  Company  had  entered  into an
               Agreement with SunTrust for the Bank's assumption of deposits and
               purchase of certain

                                       19
<PAGE>

               assets of three  branch  offices of SunTrust  located at 210 West
               Main  Street,   Rogersville,   Tennessee,   410  Park  Boulevard,
               Rogersville,  Tennessee  and 290 Bellamy  Avenue,  Surgoinsville,
               Tennessee.  No financial  statements  were filed with either Form
               8-K.

                                       20
<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.


Date: 11/08/01                Greene County Bancshares, Inc.
     ----------               ------------------------------
                                    Registrant



Date: 11/08/01                 /s/  R. Stan Puckett
     ----------               -------------------------------------------
                                    R. Stan Puckett
                                    President and CEO
                                    (Duly authorized officer)


Date: 11/08/01                 /s/  William F. Richmond
     ---------                -------------------------------------------
                                    William F. Richmond
                                    Sr. Vice President and Chief Financial
                                    Officer (Principal financial and accounting
                                    officer)

                                       21