FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


  For Quarter ended June 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 Number)
incorporated or organization)


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 - June 30, 2001 and  December  31,
     2000.

     Condensed Consolidated  Statements of Income - For the three and six months
     ended June 30, 2001 and 2000.

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

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

     Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2001 AND DECEMBER 31, 2000
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                           (UNAUDITED)
                                                             JUNE 30,   DECEMBER 31,
                                                               2001         2000*
                                                           ----------- --------------
                                     ASSETS
                                     ------
<S>                                                          <C>          <C>
Cash and due from banks                                      $ 22,362     $ 24,038
Federal funds sold                                              2,004        8,130
Securities available-for-sale ("AFS")                          14,279       46,658
Securities held-to-maturity (with a market value of $1,555
  on June 30, 2001 and $1,869 on December 31, 2000)             1,543        1,866
FHLB and Bankers Bank stock, at cost                            4,403        4,254
Loans held for sale                                             5,892        1,725
Loans                                                         679,957      667,068
  Less: allowance for loan losses                              11,876       11,728
                                                             --------     --------

  NET LOANS                                                   668,081      655,340
                                                             --------     --------

Bank premises and equipment, net of
    accumulated depreciation                                   25,357       23,934
Other assets                                                   21,041       23,172
                                                             --------     --------

     TOTAL ASSETS                                            $764,962     $789,117
                                                             ========     ========

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

Deposits                                                     $612,868     $648,641
Federal funds purchased and repurchase agreements               6,173        4,713
Notes payable                                                  68,770       59,949
Accrued interest payable and other liabilities                 10,425       12,804
                                                             --------     --------

    TOTAL LIABILITIES                                         698,236      726,107
                                                             --------     --------

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

Common Stock, authorized 15,000,000 shares; issued and
    outstanding 6,818,890 shares at June 30, 2001 and
    and December 31, 2000                                      13,638       13,638
Paid in Capital                                                 4,854        4,854
Retained Earnings                                              48,179       44,467
Accumulated Other Comprehensive Income (Loss)                      55           51
                                                             --------     --------

    TOTAL SHAREHOLDERS' EQUITY                                 66,726       63,010
                                                             --------     --------

    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                 $764,962     $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
                THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                     JUNE 30,                     JUNE 30,
                                                           -------------------------      ------------------------
                                                              2001           2000           2001           2000
                                                           ----------     ----------      ---------     ----------
INTEREST INCOME:
<S>                                                          <C>            <C>            <C>            <C>
  Interest and Fees on Loans                                 $16,706        $15,275        $34,190        $29,902
  Interest on Investment Securities                              389            879            858          1,738
  Interest on Federal Funds Sold and Other
    Interest-earning Deposits                                     55            383            284            427
                                                             -------        -------        -------        -------
                                 TOTAL INTEREST INCOME        17,150         16,537         35,332         32,067
                                                             -------        -------        -------        -------

INTEREST EXPENSE:
  Interest on Deposits                                         6,360          5,934         13,441         11,163
  Interest on Borrowings                                         996          1,005          1,837          1,854
                                                             -------        -------        -------        -------
                                TOTAL INTEREST EXPENSE         7,356          6,939         15,278         13,017
                                                             -------        -------        -------        -------

                                   NET INTEREST INCOME         9,794          9,598         20,054         19,050

Provision for Loan Losses                                      1,168          1,077          2,607          2,794
                                                             -------        -------        -------        -------

     NET INTEREST INCOME AFTER
       PROVISION FOR LOAN LOSSES                               8,626          8,521         17,447         16,256
                                                             -------        -------        -------        -------

NONINTEREST INCOME:
  Service Charges, Commissions and Fees                        1,991          1,261          3,721          2,373
  Other Income                                                   400            294            986            739
                                                             -------        -------        -------        -------
                              TOTAL NONINTEREST INCOME         2,391          1,555          4,707          3,112
                                                             -------        -------        -------        -------
NONINTEREST EXPENSE:
  Salaries and Benefits                                        4,200          4,172          8,324          8,042
  Occupancy and Furniture and Equipment Expense                  980            924          1,934          1,782
  Other Expenses                                               1,772          1,861          3,229          3,417
                                                             -------        -------        -------        -------
                             TOTAL NONINTEREST EXPENSE         6,952          6,957         13,487         13,241
                                                             -------        -------        -------        -------

     INCOME BEFORE INCOME TAXES                                4,065          3,119          8,667          6,127

Income Taxes                                                   1,624          1,225          3,318          2,076
                                                             -------        -------        -------        -------
     NET INCOME                                              $ 2,441        $ 1,894        $ 5,349        $ 4,051
                                                             =======        =======        =======        =======

    PER SHARE OF COMMON STOCK:
      Net Income, Basic                                        $0.36          $0.28          $0.79          $0.60
                                                              ======         ======         ======         ======
      Net Income, Assuming Dilution                            $0.36          $0.28          $0.78          $0.59
                                                              ======         ======         ======         ======
      Dividends                                                $0.12          $0.12          $0.24          $0.24
                                                              ======         ======         ======         ======
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                        4
<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 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                          -            -         5,349            -           5,349

  Change in unrealized gain
    on AFS securities,
    net of tax:                       -            -             -            4               4
                                                                                   ------------
     Comprehensive income                                                                 5,353

  Dividends paid                      -            -        (1,637)           -          (1,637)


                               --------   ----------   -----------    ---------     -----------
JUNE 30, 2001                 $  13,638  $     4,854  $     48,179   $       55    $     66,726
                               ========   ==========   ===========    =========     ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       5

<PAGE>
                         GREENE COUNTY BANCSHARES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                           JUNE 30,      JUNE 30,
                                                                                             2001          2000
                                                                                         -----------   -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES:
<S>                                                                                      <C>            <C>
  Net Income                                                                             $     5,349    $   4,051
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Provision for loan losses                                                                2,607        2,794
      Depreciation and amortization                                                              776          754
      Amortization of premiums on securities, net of accretion                                    78          111
      FHLB stock dividends                                                                      (149)        (132)
      Loans originated for sale                                                              (36,944)     (18,653)
      Proceeds from loans originated for sale                                                 32,944       17,363
      Net realized (gain) on sale of loans originated for sale                                  (168)         (93)
      Loss on other real estate owned                                                             64            0
      Net Changes:
       Accrued interest receivable and other assets, net of intangibles                        2,250          248
       Accrued interest payable and other liabilities                                         (2,391)      (3,165)
                                                                                         -----------    ---------
                                       NET CASH PROVIDED BY OPERATING ACTIVITIES               4,416        3,278
                                                                                         -----------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net decrease (increase) in securities and other interest-earning investments                32,630      (23,012)
  Net originations of loans held-to-maturity                                                 (17,592)     (50,158)
  Improvements in other real estate owned and proceeds from
    sales of other real estate owned, net                                                      2,058        1,500
  Fixed asset additions and proceeds from sales of fixed assets, net                          (2,197)      (4,292)
                                                                                         -----------    ---------
                                NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES              14,899      (75,962)
                                                                                         -----------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (decrease) increase in deposits                                                        (35,772)      59,135
  Decrease in federal funds purchased                                                              0      (11,620)
  Increase in securities sold under repurchase agreements                                      1,459        1,431
  Increase in notes payable, net                                                               8,833       15,802
  Proceeds from issuance of common stock                                                           0          381
  Cash dividends paid                                                                         (1,637)      (1,634)
                                                                                         -----------    ---------
                                NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES             (27,117)      63,495
                                                                                         -----------    ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                     (7,802)      (9,189)
                                                                                         -----------    ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                              32,168       44,555
                                                                                         -----------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $    24,366    $  35,366
                                                                                         ===========    =========
</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 six months ended June 30,
2001 and twelve months ended December 31, 2000 were as follows:

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

Balance at beginning of year                $    11,728      $    10,332
Add (Deduct):
  Charge-offs                                    (3,182)          (7,788)
  Recoveries                                        723            1,175
  Provisions                                      2,607            8,009
                                             ---------------  --------------
Ending Balance                              $    11,876      $    11,728
                                             ===============  ==============

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

Loans past due 90 days still on accrual     $     1,317      $       475
Nonaccrual Loans                                  4,806            4,813
                                             ---------------  --------------
Total                                       $     6,123      $     5,288
                                             ===============  ==============

                                       8
<PAGE>

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

At the  Company's  annual  shareholder  meeting on April 25,  2001,  the Company
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.

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.

The following is a reconciliation of the numerators and denominators used in the
basic and diluted  earnings per share  computations for the three and six months
ended June 30, 2001 and 2000:
<TABLE>
<CAPTION>
                                               (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                            THREE MONTHS ENDED JUNE 30,
                                    ----------------------------------------------------------------------------------
                                                   2001                                          2000
                                    ------------------------------------     -----------------------------------------
                                        INCOME                SHARES                 INCOME               SHARES
                                      (NUMERATOR)         (DENOMINATOR)            (NUMERATOR)          (DENOMINATOR)
<S>                                     <C>                 <C>                       <C>                 <C>
BASIC EPS
Income available to
  common shareholders                   $2,441              6,818,890                 $1,894              6,817,455

EFFECT OF DILUTIVE SECURITIES
Stock options outstanding                    -                 39,976                      -                 50,470
                                    ----------------------------------------------------------------------------------
DILUTED EPS
Income available to common
  shareholders plus assumed
  conversions                           $2,441              6,858,866                 $1,894              6,867,925
                                    ==================================================================================

                                               (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                              SIX MONTHS ENDED JUNE 30,
                                    ----------------------------------------------------------------------------------
                                                   2001                                            2000
                                    --------------------------------------      --------------------------------------
                                        INCOME                SHARES                 INCOME               SHARES
                                      (NUMERATOR)         (DENOMINATOR)            (NUMERATOR)         (DENOMINATOR)
BASIC EPS
Income available to
  common shareholders                   $5,349              6,818,890                 $4,051              6,809,805

EFFECT OF DILUTIVE SECURITIES
Stock options outstanding                    -                 39,772                      -                 53,250
                                    ----------------------------------------------------------------------------------
DILUTED EPS
Income available to common
  shareholders plus assumed
  conversions                           $5,349              6,858,662                 $4,051              6,863,055
                                    ==================================================================================
</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.

         (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

SEGMENT INFORMATION:
--------------------

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

Net interest income                 $      8,369    $     1,425    $     9,794
Provision for loan losses                    (53)         1,221          1,168
Noninterest income                         1,973            418          2,391
Noninterest expense                        5,724          1,228          6,952
Income tax expense                         1,806           (182)         1,624
                                     ------------    -----------    -----------
SEGMENT PROFIT                      $      2,865    $      (424)   $     2,441
                                     ============    ===========    ===========

SEGMENT ASSETS AT JUNE 30, 2001     $    725,179    $    39,783    $   764,962
                                     ============    ===========    ===========


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

Net interest income                 $      8,193    $     1,405    $     9,598
Provision for loan losses                    300            777          1,077
Noninterest income                         1,000            555          1,555
Noninterest expense                        5,439          1,518          6,957
Income tax expense                         1,395           (170)         1,225
                                     ------------    -----------    -----------
SEGMENT PROFIT                      $      2,059    $      (165)   $     1,894
                                     ============    ===========    ===========

SEGMENT ASSETS AT JUNE 30, 2000     $    675,957    $    45,656    $   721,613
                                     ============    ===========    ===========

                                       10
<PAGE>

SIX MONTHS ENDED JUNE 30, 2001           BANK           OTHER         TOTAL
------------------------------      -------------   ------------   -----------

Net interest income                 $     17,027    $     3,027    $    20,054
Provision for loan losses                   (140)         2,747          2,607
Noninterest income                         3,618          1,089          4,707
Noninterest expense                       11,074          2,413         13,487
Income tax expense                         3,751           (433)         3,318
                                     ------------    -----------    -----------
SEGMENT PROFIT                      $      5,960    $      (611)   $     5,349
                                     ============    ===========    ===========

SEGMENT ASSETS AT JUNE 30, 2001     $    725,179    $    39,783    $   764,962
                                     ============    ===========    ===========


SIX MONTHS ENDED JUNE 30, 2000           BANK           OTHER         TOTAL
------------------------------      -------------   ------------   -----------

Net interest income                 $     16,002    $     3,048    $    19,050
Provision for loan losses                    600          2,194          2,794
Noninterest income                         1,998          1,114          3,112
Noninterest expense                       10,255          2,986         13,241
Income tax expense                         2,551           (475)         2,076
                                     ------------    -----------    -----------
SEGMENT PROFIT                      $      4,594    $      (543)   $     4,051
                                     ============    ===========    ===========

SEGMENT ASSETS AT JUNE 30, 2000     $    675,957    $    45,656   $    721,613
                                     ============    ===========    ===========

                                       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.

     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 March 8, 2001,  the Bank acquired a bank branch  located in Hot Springs,
North  Carolina  (the  "North   Carolina   Branch")  from  Wachovia  Bank,  N.A.
("Wachovia")  and sold its bank  branch  located  in  Farragut,  Tennessee  (the
"Farragut  Branch") to  Wachovia.  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.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     LIQUIDITY.  Liquidity refers to the ability or the financial flexibility to
manage future cash flows to meet the needs of depositors  and borrowers and fund
operations.  Maintaining  appropriate  levels of liquidity allows the Company to
have sufficient  funds available for reserve  requirements,  customer demand for
loans,  withdrawal  of deposit  balances  and  maturities  of deposits and other
liabilities.  The Company's primary source of liquidity is dividends paid by the
Bank.  Applicable  Tennessee statutes and regulations impose restrictions on the
amount of  dividends  that may be declared by the Bank.  Further,  any  dividend
payments  are  subject to the  continuing  ability of the Bank to  maintain  its
compliance with minimum federal  regulatory  capital  requirements and to retain
its   characterization   under  federal  regulations  as  a   "well-capitalized"
institution.  In addition,  the Company  maintains  lines of credit totaling $40
million with the Federal  Home Loan Bank of  Cincinnati  ("FHLB"),  of which $40
million was available at June 30, 2001. The Company also maintains federal funds
lines of credit totaling $70.9 million at seven correspondent banks.

     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
6.5% of the total  liquidity  base at June 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.

     For the six months ended June 30, 2001, operating activities of the Company
provided  $4,416 of cash  flows.  Net  income of $5,349  adjusted  for  non-cash
operating  activities,  including  $2,607  in  provision  for  loan  losses  and
depreciation   of  $776  provided  the  majority  of  the  cash  generated  from
operations.  These cash flows were offset,  in part, by the $4,000 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
deposits   provided   $32,630  in  cash  flows,   while  the  net   increase  in
held-to-maturity loans originated,  net of principal collected,  used $17,592 in
cash flows.

     The net reduction in deposits and cash dividends paid to shareholders  used
$35,772  and $1,637 in cash flows,  respectively.  These uses of cash flows were
offset, in part, by the $8,833 increase 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 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

                                       13
<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 June 30, 2001 was $66,726,  an increase of $3,716,
or 5.90%,  from  $63,010 on December 31,  2000.  The  increase in  shareholders'
equity  primarily  reflects net income for the six months ended June 30, 2001 of
$5,349  ($0.78  per  share,  assuming  dilution).  This  increase  was offset by
quarterly  dividend  payments during the six months ended June 30, 2001 totaling
$1,637 ($0.24 per share).

     Risk-based  capital  regulations  adopted by the Board of  Governors of the
Federal Reserve Board (the "FRB") and the Federal Deposit Insurance  Corporation
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 June 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.

================================================================================
                             Capital Ratios at June 30, 2001
--------------------------------------------------------------------------------
                                   Required
                                    Minimum       Company          Bank
                                     Ratio
--------------------------------------------------------------------------------
 Tier 1 risk-based capital           4.00%         10.19%         10.29%
--------------------------------------------------------------------------------
  Total risk-based capital           8.00%         11.45%         11.55%
--------------------------------------------------------------------------------
       Leverage Ratio                4.00%          8.47%          8.59%
================================================================================

CHANGES IN RESULTS OF OPERATIONS

     NET INCOME. Net income for the three and six months ended June 30, 2001 was
$2,441 and $5,349,  respectively,  an increase of $547, or 28.9% and $1,298,  or
32.0%,  as compared to net income of $1,894 and  $4,051,  respectively,  for the
same  periods in 2000.  The  increase  for the three  months ended June 30, 2001
resulted primarily from an increase in non-interest income of $836, or 53.8%, to
$2,391 for the three  months ended June 30, 2001

                                       14
<PAGE>

from $1,555 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 six months ended June 30, 2001 resulted primarily from
an increase  in  non-interest  income of $1,595 or 51.3%,  to $4,707 for the six
months  ended  June 30,  2001 from  $3,112  for the same  period  in 2000.  This
increase  in  non-interest  income  for the six months  ended  June 30,  2001 is
primarily  reflective of the same factors  discussed  above related to the three
months ended June 30, 2001.

     Income taxes increased  $399, or 32.6% and $1,242,  or 59.8%, to $1,624 and
$3,318 for the three and six months  ended June 30,  2001 from $1,225 and $2,076
for the same  periods in 2000.  The  increase  associated  with the three months
ended  June  30,  2001 as  compared  to the same  period  in the  prior  year is
primarily  associated  with the increase in income before  income taxes,  as the
effective tax rate remained essentially  unchanged.  The increase in tax expense
associated  with the six months ended June 30, 2001  compared to the same period
in the prior year  reflects the Company's  revision  during the first quarter of
2000 of its estimate of corporate income tax liability for 2000,  primarily from
its then-current analysis of loan charge-offs and tax examination results.

     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 six months ended
June 30, 2001,  net interest  income was $9,794 and  $20,054,  respectively,  as
compared  to $9,598 and  $19,050,  respectively,  for the same  periods in 2000,
representing an increase of 2.0% and 5.3%,  respectively.  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.

     PROVISION  FOR LOAN LOSSES.  During the three and six month  periods  ended
June 30,  2001,  loan  charge-offs  were $1,906 and $3,182,  and  recoveries  of
charged-off loans were $343 and $723, respectively.  Despite lower provisions in
the Bank for both the three and six months  ended June 30, 2001  compared to the
same periods in 2000, the Company's  provision for loan losses increased by $91,
or 8.4%, to $1,168,  and slightly decreased by $187, or 6.7%, to $2,607, for the
three and six months ended June 30, 2001,  respectively,  from $1,077 and $2,794
for the same  periods  in  2000.  The  decrease  in the  Bank is  reflective  of
management's  assessment of the risk of collection inherent in its existing loan
portfolio.  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 quarter in 2000,  and
also  management's  evaluation  of the  loan  quality  in both  portfolios.  The
Company's  allowance  for loan losses  increased  by $148 to

                                       15
<PAGE>

$11,876 at June 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 139.18% and 154.83% at June 30, 2001 and December  31,  2000,  respectively,
and the ratio of nonperforming assets to total assets was 1.12% and .96% at June
30, 2001 and December 31, 2000,  respectively.  The ratio of nonperforming loans
to  total  loans  was .88% and .78% at June  30,  2001 and  December  31,  2000,
respectively.

     The Company's  annualized net charge-offs for the six months ended June 30,
2001 were  $4,918  compared to actual  charge-offs  of $6,613 for the year ended
December 31, 2000.  Annualized net charge-offs in Superior Financial for the six
months  ended June 30, 2001 were $3,192  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 six months  ended June 30, 2001 were $1,028  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 six months ended June 30, 2001
was $2,391 and  $4,707,  as compared to $1,555 and $3,112 for the same period in
2000. The largest  component of  non-interest  income,  i.e.,  service  charges,
commissions  and fees  totaled  $1,991  and  $3,721 for the three and six months
ended June 30,  2001,  as compared to $1,261 and $2,373 for the same  periods in
2000. This increase of $730, or 57.9%, and $1,348, or 56.8%,  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 $106, or 36.1%,  and $247, or 33.4%,  to $400 and $986
for the three and six months ended June 30, 2001 from $294 and $739 for the same
periods  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  minimal  increase  in  non-interest
expense,  as discussed  below,  the Company's  efficiency  ratio was  positively
affected,  as the ratio decreased from 59.68% at June 30, 2000 to 54.47% at June
30,  2001.  The  efficiency  ratio  illustrates  how much it cost the Company to
generate revenue;  for example,  it cost the Company 54.47 cents to generate one
dollar of revenue for the three months ended June 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 $6,952 and $13,487 for the three and six
months  ended June 30, 2001  compared to $6,957 and $13,241 for the same periods
in 2000.

                                       16
<PAGE>

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses.  For the  three and six  months  ended  June 30,  2001,  salaries  and
benefits   represented  $4,200,  or  60.4%,  and  $8,324,  or  61.7%,  of  total
non-interest  expense,  respectively.  This was an increase of $28, or .7%,  and
$282,  or 3.5%,  over the $4,172  and $8,042 for the three and six months  ended
June 30, 2000. As the Company decreased its size to 39 branches at June 30, 2001
from 45 branches at June 30, 2000, the number of full-time  equivalent employees
was 358 versus 384 at June 30,  2000,  representing  a  decrease  of 6.8%.  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.  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 $56, or 6.1%,
and $152, or 8.5%, to $980 and $1934 for the three and six months ended June 30,
2001,  as compared to $924 and $1782 for the some 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.

     Income taxes increased  $399, or 32.6% and $1,242,  or 59.8%, to $1,624 and
$3,318 for the three and six months  ended June 30,  2001 from $1,225 and $2,076
for the same  periods in 2000.  The  increase  associated  with the three months
ended  June  30,  2001 as  compared  to the same  period  in the  prior  year is
primarily  associated  with the increase in income before  income taxes,  as the
effective tax rate remained essentially  unchanged.  The increase in tax expense
associated  with the six months ended June 30, 2001  compared to the same period
in the prior year  reflects the Company's  revision  during the first quarter of
2000 of its estimate of corporate income tax liability for 2000,  primarily from
its then-current analysis of loan charge-offs and tax examination results.

CHANGES IN FINANCIAL CONDITION

     Total  assets at June 30, 2001 were  $764,962,  a decrease  of $24,155,  or
3.1%, from 2000's year-end total assets of $789,117.  The decrease in assets was
reflective  of  the  substantial  reduction  in  securities  available-for-sale,
offset, in part, by the increase in loans.

     At June 30, 2001,  loans,  net of unearned  income and  allowance  for loan
losses,  were $668,081 compared to $655,340 at December 31, 2000, an increase of
$12,741, or 1.9%, from December 31, 2000. The increase in loans during the first
six 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

                                       17
<PAGE>

heavily  involved.  Nonaccrual  loans  decreased  and loans past due 90 days and
still  accruing  increased by $7 and $842,  respectively,  during the six months
ended June 30, 2001 to $4,806 and $1,317,  respectively.  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.  At June 30, 2001,  the ratio of the
Company's  allowance for loan losses to  non-performing  assets  (which  include
non-accrual loans) was 139.18%.

     The Company  maintains an  investment  portfolio to provide  liquidity  and
earnings.  Investments  at June 30, 2001 with an amortized cost of $15,733 had a
market value of $15,834. 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 2000.

     Deposits  declined  $35,773,  or 5.5%,  to  $612,868  at June 30, 2001 from
$648,641 at  December  31,  2000.  As the Company  downsized  its balance  sheet
slightly in order to effectively manage its capital position, it sought to do so
in the most cost-effective manner possible. Accordingly, 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 $8,821 in order to offset some of the deposit reduction and to partially fund
the increase in loans.

                                       18
<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.

                                       19

<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

          (a)  The Annual  Meeting of  Shareholders  of the  Company was held on
               April 25, 2001.

          (b)  Not Applicable

          (c)  The following  proposals were  considered by  shareholders at the
               Annual Meeting:

          Proposal 1 - Election of Directors
          ----------------------------------
          The following directors were re-elected:

                                             Votes*
                                ----------------------------------
                                   For      Against       Abstain
                                   ---      -------       -------
          Phil M. Bachman        886,070       0           8,513
          Ralph T. Brown         886,070       0           8,513
          James A. Emory         886,070       0           8,513
          Terry Leonard          893,192       0           1,391

                                       20
<PAGE>


          Proposal 2 - Amendment to the Company's  Amended and Restated  Charter
          ----------------------------------------------------------------------
          to increase the number of authorized  shares to  15,000,000  shares of
          ----------------------------------------------------------------------
          Common Stock.
          -------------
                                             Votes*
                                -----------------------------------
                                   For       Against       Abstain
                                   ---       -------       -------
                                 838,100      32,775        23,708

          * Does not reflect the subsequent  5-for-1 stock split effected on May
          29, 2001.

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 two  Reports on Form 8-K  during the  quarter
               ended  June 30,  2001.  The first Form 8-K was filed on April 26,
               2001 to report the  Company's  earnings  results  for the quarter
               ended  March 31,  2001.  The second  Form 8-K was filed on May 4,
               2001 to report that it had declared a 5-for-1  stock split of its
               common  stock  effected  in the  form  of a  stock  dividend.  No
               financial statements were filed with either Form 8-K.

                                       21
<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: 08/09/01                Greene County Bancshares, Inc.
     ----------               ------------------------------
                                       Registrant



Date: 08/09/01                 /s/  R. Stan Puckett
     ----------               -------------------------------------------------
                                    R. Stan Puckett
                                    President and CEO
                                    (Duly authorized officer)


Date: 08/09/01                 /s/  William F. Richmond
     ---------                -------------------------------------------------
                                    William F. Richmond
                                    Sr. Vice President and Chief Financial
                                    Officer (Principal financial and accounting
                                     officer)

                                       22