FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


For Quarter ended March 31, 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: 1,363,778.

                                       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 - March 31, 2001 and  December 31,
     2000.

     Condensed  Consolidated  Statements  of Income - For the three months ended
     March 31, 2001 and 2000.

     Condensed  Consolidated  Statement of Stockholders'  Equity - For the three
     months ended March 31, 2001.

     Condensed  Consolidated  Statements  of Cash  Flows - For the three  months
     ended March 31, 2001 and 2000.

     Notes to Condensed Consolidated Financial Statements.

                                       2

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

<S>                                                           <C>        <C>
Cash and due from banks                                       $ 22,996   $ 24,038

Federal funds sold                                              12,928      8,130

Securities available-for-sale ("AFS")                           18,341     46,658
Securities held-to-maturity (with a market value of $1,774
  on March 31, 2001 and $1,869 on December 31, 2000)             1,767      1,866

FHLB and Bankers Bank stock, at cost                             4,327      4,254

Loans held for sale                                              3,724      1,725

Loans                                                          683,900    667,068

  Less: allowance for loan losses                               12,271     11,728
                                                              --------   --------

  NET LOANS                                                    671,629    655,340
                                                              --------   --------

Bank premises and equipment, net of
    accumulated depreciation                                    24,986     23,934

Other assets                                                    20,849     23,172
                                                              --------   --------

     TOTAL ASSETS                                             $781,547   $789,117
                                                              ========   ========

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

Deposits                                                      $631,329   $648,641
Federal funds purchased and repurchase agreements                4,634      4,713
Notes payable                                                   68,836     59,949
Accrued interest payable and other liabilities                  11,582     12,804
                                                              --------   --------

    TOTAL LIABILITIES                                          716,381    726,107
                                                              --------   --------

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

Common Stock, par value $10, authorized 5,000,000 shares;
    issued and outstanding 1,363,778 shares at
    March 31, 2001 and December 31, 2000                        13,638     13,638
Paid in Capital                                                  4,854      4,854
Retained Earnings                                               46,557     44,467
Accumulated Other Comprehensive Income (Loss)                      117         51
                                                              --------   --------

    TOTAL SHAREHOLDERS' EQUITY                                  65,166     63,010
                                                              --------   --------
    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                  $781,547   $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 MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)

             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                             MARCH 31,
                                                               --------------------------------------
                                                                    2001                  2000
                                                               ----------------      ----------------
    INTEREST INCOME:
    ----------------
<S>                                                          <C>                   <C>
      Interest and Fees on Loans                             $          17,484     $          14,627
      Interest on Investment Securities                                    469                   859
      Interest on Federal Funds Sold and Other
        Interest-earning Deposits                                          229                    44
                                                               ----------------      ----------------
                                       TOTAL INTEREST INCOME            18,182                15,530
                                                               ----------------      ----------------
    INTEREST EXPENSE:
    -----------------
      Interest on Deposits                                               7,081                 5,229
      Interest on Borrowings                                               841                   849
                                                               ----------------      ----------------
                                      TOTAL INTEREST EXPENSE             7,922                 6,078
                                                               ----------------      ----------------

                                         NET INTEREST INCOME            10,260                 9,452

    Provision for Loan Losses                                            1,439                 1,717
                                                               ----------------      ----------------

         NET INTEREST INCOME AFTER
           PROVISION FOR LOAN LOSSES                                     8,821                 7,735
                                                               ----------------      ----------------

    NONINTEREST INCOME:
    -------------------
      Service Charges, Commissions and Fees                              1,730                 1,112
      Other Income                                                         586                   445
                                                               ----------------      ----------------
                                    TOTAL NONINTEREST INCOME             2,316                 1,557
                                                               ----------------      ----------------
    NONINTEREST EXPENSE:
    --------------------
      Salaries and Benefits                                              4,124                 3,870
      Occupancy and Furniture and Equipment Expense                        954                   858
      Other Expenses                                                     1,457                 1,556
                                                               ----------------      ----------------
                                   TOTAL NONINTEREST EXPENSE             6,535                 6,284
                                                               ----------------      ----------------

         INCOME BEFORE INCOME TAXES                                      4,602                 3,008

    Income Taxes                                                         1,694                   851
                                                               ----------------      ----------------

         NET INCOME                                          $           2,908     $           2,157
                                                               ================      ================

    PER SHARE OF COMMON STOCK:
    --------------------------
      Net Income, Basic                                                  $2.13                 $1.59
                                                                         =====                 =====
      Net Income, Assuming Dilution                                      $2.11                 $1.57
                                                                         =====                 =====
      Dividends                                                          $0.60                 $0.60
                                                                         =====                 =====
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)

                                       4
<PAGE>

                         GREENE COUNTY BANCSHARES, INC.
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                    FOR THE THREE MONTHS ENDED MARCH 31, 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                               --            --         2,908             --         2,908

  Change in unrealized gain on AFS
     securities, net of tax:               --            --            --             66            66
                                                                                              --------
     Comprehensive income               2,974

  Dividends paid                           --            --          (818)            --          (818)


                                     --------      --------      --------       --------      --------
MARCH 31, 2001                       $ 13,638      $  4,854      $ 46,557       $    117      $ 65,166
                                     ========      ========      ========       ========      ========
</TABLE>

See accompanying notes to Condensed Consolidated Financial Statements(Unaudited)


                                       5
<PAGE>

                         GREENE COUNTY BANCSHARES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)
             (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                       MARCH 31,         MARCH 31,
                                                                                          2001              2000
                                                                                      ----------        -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES:
<S>                                                                                    <C>               <C>
  Net Income                                                                           $  2,908          $  2,157
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Provision for loan losses                                                           1,439             1,717
      Depreciation and amortization                                                         372               345
      Amortization of premiums on securities, net of accretion                               38               (61)
      FHLB stock dividends                                                                  (73)              (61)
      Loans originated for sale                                                         (14,655)           (7,296)
      Proceeds from loans originated for sale                                            12,730             6,663
      Net realized (gain) loss on sale of loans originated for sale                         (74)              (48)
      Loss on other real estate owned                                                        56                59
      Net Changes:
       Accrued interest receivable and other assets, net of intangibles                   2,383               149
       Accrued interest payable and other liabilities                                    (1,251)           (1,938)
                                                                                       --------          --------
                                       NET CASH PROVIDED BY OPERATING ACTIVITIES          3,873             1,686
                                                                                       --------          --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net decrease (increase) in securities and other interest-earning investments           28,485           (24,337)
  Net originations of loans held-to-maturity                                            (19,011)          (30,586)
  Improvements in other real estate owned and proceeds from
    sales of other real estate owned, net                                                 1,125               868
  Fixed asset additions and proceeds from sales of fixed asset, net                      (1,424)           (2,615)
                                                                                       --------          --------
                                NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES          9,175           (56,670)
                                                                                       --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (decrease) increase in deposits                                                   (17,311)           56,015
  Decrease in federal funds purchased                                                         0           (11,620)
  (Decrease) increase in securities sold under repurchase agreements                        (80)            2,621
  Increase in notes payable, net                                                          8,917            33,882
  Proceeds from issuance of common stock                                                      0               350
  Cash dividends paid                                                                      (818)             (816)
                                                                                       --------          --------
                                NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES         (9,292)           80,432
                                                                                       --------          --------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 3,756            25,448
                                                                                       --------          --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                         32,168            44,555
                                                                                       --------          --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $ 35,924          $ 70,003
                                                                                       ========          ========
</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  generally
accepted  accounting  principles 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 generally accepted  accounting  principles
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.

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

Transactions  in the  Allowance for Loan Losses for the three months ended March
31, 2001 and twelve months ended December 31, 2000 were as follows:

                                                March 31,        December 31,
                                                  2001              2000
                                               -----------       ------------
                                                     (in thousands)

Balance at beginning of year                 $   11,728         $    10,332
Add (Deduct):
  Charge-offs                                    (1,276)             (7,788)
  Recoveries                                        380               1,175
  Provisions                                      1,439               8,009
                                              -------------      -----------
Ending Balance                               $   12,271         $    11,728
                                              =============      ===========

                                                 March 31,        December 31,
                                                   2001               2000
                                              -------------      -------------
                                                         (in thousands)

Loans past due 90 days still on accrual      $      791         $       475
Nonaccrual Loans                                  5,218               4,813
                                              -------------      -----------
Total                                        $    6,009         $     5,288
                                              =============      ===========

                                       7
<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.

The following is a reconciliation of the numerators and denominators used in the
basic and diluted  earnings  per share  computations  for the three months ended
March 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                    (DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
                                                  THREE MONTHS ENDED MARCH 31,
                                -----------------------------------------------------------------------
                                              2001                                  2000
                                --------------------------------     ----------------------------------

                                   INCOME         SHARES                  INCOME             SHARES
                                 (NUMERATOR)   (DENOMINATOR)            (NUMERATOR)      (DENOMINATOR)
<S>                                <C>           <C>                      <C>              <C>
BASIC EPS
Income available to
  common shareholders              $2,908        1,363,778                $2,157           1,360,431

EFFECT OF DILUTIVE SECURITIES
Stock options outstanding              --           12,055                    --              11,206
                                -----------------------------------------------------------------------

DILUTED EPS
Income available to common
  shareholders plus assumed
  conversions                      $2,908        1,375,833                $2,157           1,371,637
                                =======================================================================
</TABLE>
                                       8
<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 MARCH 31, 2001            BANK             OTHER              TOTAL
---------------------------------      ---------------  -----------------  ------------------
<S>                                  <C>                <C>                <C>
Net interest income                  $          8,658   $          1,602   $          10,260
Provision for loan losses                         (87)             1,526               1,439
Noninterest income                              1,645                671               2,316
Noninterest expense                             5,350              1,185               6,535
Income tax expense                              1,945               (251)              1,694
                                      ----------------   ----------------   -----------------
SEGMENT PROFIT                       $          3,095   $           (187)  $           2,908
                                      ================   ================   =================

SEGMENT ASSETS                       $        740,196   $         41,351   $         781,547
                                      ================   ================   =================



THREE MONTHS ENDED MARCH 31, 2000            BANK             OTHER              TOTAL
---------------------------------     ----------------   ----------------   -----------------

Net interest income                  $          7,809   $          1,643   $           9,452
Provision for loan losses                         300              1,417               1,717
Noninterest income                                998                559               1,557
Noninterest expense                             4,816              1,468               6,284
Income tax expense                              1,156               (305)                851
                                      ----------------   ----------------   -----------------
SEGMENT PROFIT                       $          2,535   $           (378)  $           2,157
                                      ================   ================   =================

SEGMENT ASSETS                       $        747,805   $         41,312   $         789,117
                                      ================   ================   =================
</TABLE>
                                       9
<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.

                                       10
<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 $25
million was  available at March 31, 2001.  The Company  also  maintains  federal
funds lines of credit totaling $80.9 million at eight 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
8.6% of the total  liquidity  base at March 31,  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 three  months  ended March 31, 2001,  operating  activities  of the
Company  provided  $3,873 of cash  flows.  Net  income of  $2,908  adjusted  for
non-cash operating activities, including $1,439 in provision for loan losses and
depreciation   of  $410  provided  the  majority  of  the  cash  generated  from
operations.  These  cash  flows  were  offset,  in part,  by the $1,925 in funds
received from 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   $28,485  in  cash  flows,   while  the  net   increase  in
held-to-maturity loans originated,  net of principle collected,  used $19,011 in
cash flows.

     The net reduction in deposits and cash dividends paid to shareholders  used
$17,311  and $818 in cash  flows,  respectively.  These  uses of cash flows were
offset, in part, by the $8,917 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
management of the Company to address  business  risks  inherent in the Company's
daily


                                       11
<PAGE>


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.

     Shareholders'  equity on March 31, 2001 was $65,166, an increase of $2,156,
or 3.42%,  from  $63,010 on December 31,  2000.  The  increase in  shareholders'
equity  primarily  reflects net income for the three months ended March 31, 2001
of $2,908 ($2.11 per share,  assuming  dilution).  This increase was offset by a
quarterly dividend payment during the three months ended March 31, 2001 totaling
$818 ($.60 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 March 31,  2001,  the Company and the Bank each  satisfied  their  respective
minimum regulatory  capital  requirements,  and the Bank was  "well-capitalized"
within the meaning of federal regulatory requirements.


=====================================================================
                        Capital Ratios at March 31, 2001
---------------------------------------------------------------------
                                      Required
                                      Minimum   Company        Bank
                                       Ratio
----------------------------------------------------------------------
 Tier 1 risk-based capital             4.00%     9.99%         10.11%
----------------------------------------------------------------------
  Total risk-based capital             8.00%    11.25%         11.37%
----------------------------------------------------------------------
       Leverage Ratio                  4.00%     8.20%          8.28%
======================================================================

CHANGES IN RESULTS OF OPERATIONS

     NET  INCOME.  Net  income for the three  months  ended  March 31,  2001 was
$2,908, an increase of $751, or 34.8%, as compared to net income of $2,157,  for
the same period in 2000.  The increase for the three months ended March 31, 2001
resulted primarily from an increase in non-interest  income of $759 or 48.7%, to
$2,316 for the three months ended March 31, 2001 from $1,557 for the same period
in 2000. This increase  primarily  reflects growth in service charges associated
with the Company's new checking  account  programs,  as well as additional  fees
generated by the Company's mortgage banking operation.  Further  contributing to
the  increase  in net income was the $808,  or 8.5%,  increase  in net  interest

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income to $10,260 for the three  months ended March 31, 2001 from $9,452 for the
same period in 2000. The increase in net interest income primarily  reflects the
Company's  continued  growth in loan production for the three months ended March
31, 2001,  as compared to the same period in 2000,  through its expanded  branch
network,  primarily  through increases in commercial and residential real estate
loans.

     Income taxes increased $843, or 99.1%, to $1,694 for the three months ended
March 31,  2001 from $851 for the same  period in 2000.  The  difference  in tax
expense  from 2000 to 2001  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 months ended March
31, 2001,  net interest  income was $10,260,  as compared to $9,452 for the same
period  in 2000,  representing  an  increase  of  8.5%.  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 month period ended March 31,
2001,  loan  charge-offs  were $1,276 and recoveries of  charged-off  loans were
$380. The Company's  provision for loan losses  decreased by $278, or 16.2%,  to
$1,439 for the three  months  ended  March 31,  2001,  from  $1,717 for the same
period in 2000. The decrease is primarily  reflective of lower provisions in the
Bank based on management's  assessment of the risk of collection inherent in its
existing loan portfolio. Offsetting, in part, these lower provisions in the Bank
were  slightly  higher  provisions  in Superior  Financial  and GCB  Acceptance,
indicative of both higher loan balances in both subsidiaries, as compared to the
same quarter in 2000,  and also  management's  evaluation of the loan quality in
both portfolios.  Despite this decrease in provisions,  the Company's  allowance
for loan losses  increased  by $543 to $12,271 at March 31, 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 146.14% and 154.83% at
March  31,  2001  and  December  31,  2000,  respectively,   and  the  ratio  of
nonperforming  assets to total  assets was 1.07% and .96% at March 31,  2001 and
December 31, 2000, respectively. The ratio of nonperforming loans to total loans
was .86% and .78% at March 31, 2001 and December 31, 2000, respectively.

     Annualized  net  charge-offs  in Superior  Financial  for the quarter ended
March 31, 2001 were $1,817 versus $1,182 in the Bank.  This compares with $3,210
and $2,625, respectively, for 2000.

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<PAGE>

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

     Total  non-interest  income for the three  months  ended March 31, 2001 was
$2,316, as compared to $1,557 for the same period in 2000. The largest component
of non-interest  income,  i.e.,  service  charges,  commissions and fees totaled
$1,730 for the three months ended March 31, 2001,  as compared to $1,112 for the
same period in 2000. This increase of $618, or 55.6%,  primarily reflects growth
in service charges  associated with the Company's new checking account programs,
as  well  as  additional  fees  generated  by  the  Company's  mortgage  banking
operation.  Other income also increased by $141, or 31.7%, to $586 for the three
months ended March 31, 2001 from $445 for the same period in 2000.  Most of this
increase  resulted from fees and commissions  generated from insurance  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  57.01% at March 31,  2000 to 51.96% at
March 31, 2001. The efficiency ratio illustrates how much it cost the Company to
generate revenue;  for example,  it cost the Company 51.96 cents to generate one
dollar of revenue for the three months ended March 31, 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 $6,535 for the three months ended March 31,
2001 compared to $6,284 for the same period in 2000.

     Personnel  costs are the  primary  element  of the  Company's  non-interest
expenses.  For the three  months  ended March 31,  2001,  salaries  and benefits
represented  $4,124,  or  63.1%,  of  total  non-interest  expense.  This was an
increase of $254, or 6.6%,  over the $3,870 for the three months ended March 31,
2000. While the Company decreased its size to 44 branches at March 31, 2001 from
47 branches at March 31, 2000, the number of full-time  equivalent employees was
394  versus  378 at March 31,  2000,  representing  an  increase  of 4.2%.  This
increase in employees  was primarily due to  strengthening  certain  operational
areas,  which required  increased staff at varying  experience and  compensation
levels.  Further,  the reduction in the number of the Company's branches did not
create a proportional decline in the number of employees, as some of the related
employees were consolidated into other areas of the Company.

     Occupancy and furniture and equipment  expense  increased by $96, or 11.2%,
to $954 for the three months  ended March 31, 2001,  as compared to $858 for the
some period in 2000.  Although the actual number of Company  branches  declined,
increased  depreciation  expense  associated  with technology  expenditures  and
branches  previously  placed in service

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<PAGE>

during early 2000, as well as higher  utility costs  associated  with  increased
energy prices, put upward pressure on these expenses.

     Income taxes increased $843, or 99.1%, to $1,694 for the three months ended
March 31,  2001 from $851 for the same  period in 2000.  The  difference  in tax
expense  from 2000 to 2001  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 March 31, 2001 were  $781,547,  a decrease  of $7,570,  or
1.0%, 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 March 31, 2001,  loans,  net of unearned  income and  allowance for loan
losses,  were $671,629 compared to $655,340 at December 31, 2000, an increase of
$16,289, or 2.5%, from December 31, 2000. The increase in loans during the first
three  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 $405 and $316,  respectively,  during the three months ended March
31, 2001 to $5,218 and $791,  respectively.  The  increase in  nonaccrual  loans
consisted  primarily of one  commercial  real estate and one consumer  loan. The
increase in loans past due 90 days and still accruing consisted primarily of two
commercial  real estate loans and one consumer  loan.  Management  believes they
have adequately  provided for any potential  losses related to these loans as of
March 31, 2001. At March 31, 2001, the ratio of the Company's allowance for loan
losses to non-performing assets (which include non-accrual loans) was 146.14%.

     The Company  maintains an  investment  portfolio to provide  liquidity  and
earnings.  Investments at March 31, 2001 with an amortized cost of $19,920 had a
market value of $20,115. 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 a $25,000 security as interest rates began to decline in the
first part of 2000.

     Deposits  declined  $17,312,  or 2.7%,  to  $631,329 at March 31, 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 $8,887 in order to offset some of the deposit reduction and to partially fund
the increase in loans.

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EFFECT OF NEW ACCOUNTING STANDARDS

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


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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.


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<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 two  Reports on Form 8-K  during the  quarter
               ended  March 31,  2001.  The first Form 8-K was filed on February
               28, 2001 to report that the Bank had amended its branch  purchase
               agreement  with  Wachovia  Bank,  N.A.,  on  February  7, 2001 to
               acquire only the Hot  Springs,  North  Carolina  bank branch from
               Wachovia and not Wachovia's Abingdon, Virginia branch. The second
               Form 8-K was filed on March 27, 2001 to report that it had issued
               a press  release that

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<PAGE>

               day announcing its engagement of Morgan Keegan and Company,  Inc.
               to enhance the ability of the Company's  stockholders to identify
               potential purchasers or sellers of the Company's common stock. No
               financial statements were filed with either Form 8-K.

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<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: 05/11/01                Greene County Bancshares, Inc.
     ----------               ------------------------------
                                    Registrant



Date: 05/11/01                 /s/  R. Stan Puckett
     ----------               -------------------------------------------------
                                    R. Stan Puckett
                                    President and CEO
                                    (Duly authorized officer)


Date: 05/11/01                 /s/  William F. Richmond
     ---------                -------------------------------------------------
                                    William F. Richmond
                                    Sr. Vice President and Chief Financial
                                    Officer (Principal financial and accounting
                                     officer)

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