FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                   For the fiscal year ended December 31, 2001
                                       OR

[   ] TRANSITION  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                         Commission file number 33-94050

                             VOLUNTEER BANCORP, INC.
                 (Name of small business issuer in its charter)

          TENNESSEE                                      62-1271025
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

                              210 East Main Street
                          Rogersville, Tennessee 37857
              (Address of principal executive offices and Zip Code)

                    Issuer's telephone number (423) 272-2200


Securities registered under Section 12(b) of the Exchange Act:  None
Securities registered under Section 12(g) of the Exchange Act:  Common Stock

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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____

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

     The  registrant's  revenues for the twelve  months ended  December 31, 2001
were $8,986,971.

     The  aggregate  market  value  of  the  shares  of  Common  Stock  held  by
nonaffiliates  of the  registrant  as of March 15, 2002 is  approximately  $4.97
million.  (For purposes of this  calculation  only,  all executive  officers and
directors are classified as affiliates.)

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.  Outstanding at March 15, 2002,
Common Stock, $.01 par value, 539,027.

                    Documents Incorporated by Reference: None



                                      - 1 -

<PAGE>



                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS

THE COMPANY

Volunteer Bancorp, Inc. is a registered bank holding company organized under the
laws of Tennessee,  chartered in 1985. Volunteer, with consolidated total assets
of  approximately  $114  million at  December  31,  2001,  is  headquartered  in
Rogersville,  Tennessee with offices in Church Hill and  Sneedville,  Tennessee,
and we conduct  operations  through our  subsidiary,  The Citizens  Bank of East
Tennessee (the "Bank"),  a state bank  organized  under the laws of the State of
Tennessee in April 1906. We do not engage in any activities other than acting as
a bank holding company for the Bank. We believe we can present an alternative to
recent mega-mergers by offering local ownership, local decision making and other
personalized  service  characteristics  of community  banks. The holding company
structure  provides  flexibility for expansion of our banking  business  through
acquisition  of  other  financial   institutions  and  provision  of  additional
banking-related  services which the traditional  commercial bank may not provide
under present laws.

The Bank  provides a full range of retail  banking  services,  including (i) the
acceptance  of demand,  savings and time  deposits;  (ii) the making of loans to
consumers,  businesses  and other  institutions;  (iii) the investment of excess
funds in the sale of federal funds, U.S. government and agency obligations,  and
state,  county  and  municipal  bonds;  and (iv) other  miscellaneous  financial
services usually handled for customers by commercial banks.

MARKET AREA AND COMPETITION

We compete with other commercial banks,  savings and loan  associations,  credit
unions and finance  companies  operating  in Hancock and  Hawkins  counties  and
elsewhere. One other commercial bank is doing business in Hancock County, and in
Hawkins   County  there  are  five   commercial   banks  and  savings  and  loan
associations.  The Bank is subject to substantial  competition in all aspects of
its  business.  Intense  competition  for loans and  deposits  comes  from other
financial  institutions  in the market area. In certain aspects of its business,
the Bank also  competes  with credit  unions,  small loan  companies,  insurance
companies,  mortgage  companies,  finance companies,  brokerage houses and other
financial  institutions,  some of which are not  subject  to the same  degree of
regulation  and  restriction  as the  Bank  and  some of  which  have  financial
resources  greater than those of the Bank.  The future  success of the Bank will
depend  primarily  upon  the  difference  between  the  cost  of  its  borrowing
(primarily  interest  paid on deposits)  and income from  operations  (primarily
interest  or fees  earned on loans,  sales of loans and  investments).  The Bank
competes  for  funds  with  other  institutions,   which,  in  most  cases,  are
significantly  larger and are able to provide a greater variety of services than
the Bank and thus may obtain deposits at lower rates of interest.



































                                      - 2 -

<PAGE>



NET INTEREST INCOME

The following  table sets forth  weighted  average yields earned by Volunteer on
our earning assets and the weighted  average rates paid on our average  deposits
and other  interest-bearing  liabilities  for the years  indicated,  and certain
other information:
<TABLE>
<CAPTION>
                                                    2001                                           2000
                                      ---------------------------------              --------------------------------
(Fully taxable equivalent)                        Interest      Average                          Interest     Average
(Dollars in thousands except          Average      Income/      Yields/              Average      Income/     Yields/
for per share data)                   Balance      Expense       Rate                Balance      Expense       Rate
                                      -------      -------       ----                -------      -------       ----
Assets:

Interest-earning assets:

<S>                                      <C>           <C>           <C>                <C>           <C>          <C>
Loans net of unearned income             $74,989       $7,137        9.52%              $71,927       $7,156       9.95%
U.S. Treasury and other U.S.
  government agencies                     24,585        1,468        5.97%               22,237        1,427       6.42%
States and municipalities                  2,889          190        6.58%                4,424          286       6.46%
FHLB stock                                   341           23        6.74%                  317           23       7.26%
Federal funds sold                         6,056          234        3.86%                2,812          175       6.22%
                                           -----          ---                             -----          ---
    Total interest-earning
      assets/interest income             108,860        9,052        8.32%              101,717        9,067       8.91%
                                         -------        -----                           -------        -----
Cash and due from banks                    2,953                                          2,883
Other assets                               6,626                                          6,247
Allowance for loan losses                  (971)                                          (937)
                                           -----                                          -----
    Total                               $117,468                                       $109,910
                                        ========                                       ========

Liabilities and stockholders'
  equity:

Interest-bearing liabilities:

Demand deposits                          $21,541          644        2.99%              $19,998         $852       4.26%
Savings                                    5,477          135        2.46%                4,706          142       3.02%
Individual retirement accounts             8,829          471        5.33%                8,813          504       5.72%
Time certificates                         59,843        3,331        5.57%               55,609        3,255       5.85%
FHLB advances                                162            7        4.32%                  143            9       6.29%
Securities sold under repurchase             992           53        5.34%                1,196           68       5.69%
Note payable                               2,186          139        6.36%                2,520          212       8.41%
                                           -----          ---                             -----          ---
  Total interest-bearing
    liabilities/interest expense          99,030        4,780        4.83%               92,985        5,042       5.42%
                                          ------        -----                            ------        -----
Non-interest bearing demand
  deposits                                11,328                                         10,917
Other liabilities                          1,510                                          1,303
Stockholders' equity                       5,600                                          4,705
                                           -----                                          -----
  Total                                 $117,468                                       $109,910
                                        ========                                       ========
Net interest earnings                                  $4,272                                         $4,025
                                                       ======                                         ======
Net interest on interest earning
  assets                                                             3.92%                                         3.96%
                                                                     ====                                          ====

Return on average assets                   0.53%                                          0.66%
Return on average equity                  11.19%                                         15.52%
Cash dividends declared                  $75,464                                        $64,683
Dividend payout ratio                     12.04%                                          8.86%
Net income                              $626,659                                       $730,077
</TABLE>




                                      - 3 -

<PAGE>



The following table presents a summary of changes in interest  income,  interest
expense, and the interest rate differential aggregated by the changes in volumes
and rates:

<TABLE>
<CAPTION>

                                              December 31,                                    December 31,
                                                  2001                                            2000
                                                 versus                                          versus
                                              December 31,                                    December 31,
                                                  2000                                            1999
                                         Increases (decreases)                           Increases (decreases)
(Dollars in Thousands)                     Change Due To: (1)                              Change Due To: (1)
                                   ---------------------------------               ---------------------------------
                                   Volume        Rate          Total               Volume        Rate          Total
                                   ------        ----          -----               ------        ----          -----
Increase (decrease) in:
<S>                             <C>          <C>             <C>                  <C>         <C>             <C>
Loans, net of unearned income   $     297    $   (316)       $   (19)             $   881     $  (160)        $  721
U.S. Treasury and other U.S.
  government agency securities        146        (105)            41                  221          14            235
States and municipal securities       (99)          3            (96)                 168           1            169
FHLB stock                              2          (2)             0                   20                         20
Federal funds sold                    183        (124)            59                 (175)        (25)          (200)
                                ---------    --------        -------              -------     -------         ------
Total interest income           $     529    $   (544)       $   (15)             $ 1,115     $  (170)        $  945
                                =========    ========        =======              =======     =======         ======



Increase (decrease) in:
Demand deposits                 $      50    $   (258)       $  (208)             $    79     $    (9)        $   70
Savings deposits                       21         (28)            (7)                  32           1             33
Individual retirement accounts          1         (34)           (33)                  87         (54)            33
Time certificates                     243        (167)            76                  371        (220)           151
Federal funds purchased                 0           0              0                    8                          8
Securities sold under repurchase        1          (3)            (2)                  (2)        (10)           (12)
FHLB advances                         (12)         (3)           (15)                  48                         48
Note payable                          (23)        (50)           (73)                 (19)         (9)           (28)
                                ---------    --------        -------              -------     -------         ------
Total interest expense          $     281    $   (543)       $  (262)             $   604     $  (301)        $  303
                                =========    ========        =======              =======     =======         ======
Increase (decrease) in
  net interest income           $     248    $     (1)       $   247              $   511     $   131         $  642
                                =========    ========        =======              =======     =======         ======
</TABLE>


(1)  Increases  (decreases) are  attributable to volume changes and rate changes
     on the following  basis:  Volume Change equals change in volume times prior
     year rate.  Rate Change equals change in rate times prior year volume.  The
     Rate/Volume  Change  equals the change in volume  times the change in rate,
     and it is allocated between Volume Change and Rate Change at the ratio that
     the absolute value of each of these  components bears to the absolute value
     of their total.

For purposes of this  schedule,  non-accruing  loans are included in the average
balances and tax exempt income is reflected on a tax  equivalent  basis.  As tax
exempt  income is exempt only for Federal  income tax purposes and not Tennessee
purposes,  tax equivalent  income is based upon an effective 34% tax rate.  Loan
fees included in interest income are not material to the presentation.


LIABILITY AND ASSET MANAGEMENT

The matching of assets and  liabilities  may be analyzed by examining the extent
to which such  assets and  liabilities  are  "interest  rate  sensitive"  and by
monitoring  an  institution's  interest  rate  sensitivity  "gap."  An  asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference  between the amount of interest- earning assets
maturing  or  repricing  within  a  specific  time  period  and  the  amount  of
interest-bearing  liabilities  maturing or repricing  within that time period. A
gap is considered  positive when the amount of interest  rate  sensitive  assets
exceeds the amount of interest rate sensitive  liabilities.  A gap is considered
negative  when the amount of interest  rate  sensitive  liabilities  exceeds the
amount of interest rate  sensitive  assets.  During a period of rising  interest
rates, a negative gap would tend to adversely affect net interest income while a
positive gap would tend to result in an increase in net interest income.  During
a period of falling  interest  rates,  a negative gap would tend to result in an
increase in net  interest  income  while a positive  gap would tend to adversely
affect net interest income.



                                      - 4 -

<PAGE>

The asset/liability committee, which consists of H. Lyons Price, Reed D. Matney,
William  E.  Phillips,  Terry  Moreloch  and other  officers,  is  charged  with
monitoring  the  liquidity  and funds  position of the  Company.  The  Committee
regularly reviews (a) the rate sensitivity position on a three-month, six-month,
and one-year time horizon; (b) loans to deposit ratios; and (c) average maturity
for certain categories of liabilities.

We currently operate an  asset/liability  model,  using Sendero Vision software,
with which we simulate  operations and subsequently  develop policies  regarding
permitted gap positions,  permitted risks in deviations from budget earnings and
liquidity. We apply the System quarterly using rate fluctuations of +/-2%.

At December 31, 2001, we had a negative cumulative repricing gap within one year
of approximately $41.8 million, or approximately 39.49% of total earning assets.
This negative repricing gap indicates that our future earnings may be materially
adversely  impacted  by a rise in market  interest  rates,  as occurred in early
1995,  and such impact would  primarily be felt in the twelve month period after
such a rise in rates.

The following table represents an interest  sensitivity profile for Volunteer as
of December 31, 2001 and 2000.  The table  represents a static point in time and
does not consider other  variables,  such as changing  spread  relationships  or
interest  rate levels.  "Net  repricing  gap" is the  difference  between  total
earning  assets and total  interest-bearing  liabilities  repricing in any given
period and  "cumulative  gap" is the sum of the net repricing gap from period to
period.  Interest-bearing  demand, savings and money market account deposits are
presented as repricing in the earliest period presented.

<TABLE>
<CAPTION>

                                                          December 31, 2001
                                       -----------------------------------------------------
                                                   After 3    After 12
                                                    months     months
                                        Within     Within 12  Within 5      After
                                       3 months     months      years      5 years     Total
                                       --------     ------      -----      -------     -----
(Dollars in thousands) Earning assets:

<S>                                       <C>         <C>        <C>          <C>       <C>
Loans                                     $22,733     $16,073    $27,656      $6,604    $73,066
Investment securities:
   Available for sale                       2,849         523      5,705      16,535     25,612
   Held to maturity                                                  584          43        627
FHLB stock                                    355                                           355

Federal funds sold                          6,275                                         6,275
                                          -------     -------    -------     -------   --------
    Total earning assets                  $32,212     $16,596    $33,945     $23,182   $105,935
                                          =======     =======    =======     =======   ========


Interest-bearing liabilities:

Interest-bearing deposits                 $53,637     $33,725     $5,213                $92,575
Securities sold under
  repurchase agreements                     1,110                                         1,110

Long-term debt                              2,170                                         2,170
                                          -------     -------    -------     -------   --------
  Total interest-bearing liabilities      $56,917     $33,725    $ 5,213     $     0   $ 95,855
                                          =======     =======    =======     =======   ========

Net repricing gap                        $(24,705)   $(17,129)   $28,732     $23,182   $ 10,080
                                         ========    ========    =======     =======   ========
Rate sensitivity gap:

Net repricing gap as a percentage
  of total earning assets                  (23.32)%    (16.17)%    27.12%      21.88%      9.52%
                                         ========    ========    =======     =======   ========
Cumulative gap                           $(24,705)   $(41,834)  $(13,102)    $10,080
                                         ========    ========    =======     =======
Cumulative gap as a percentage of
  total earning assets                     (23.32)%    (39.49)%   (12.37)%      9.52%
                                         ========    ========    =======     =======
</TABLE>






                                      - 5 -

<PAGE>






<TABLE>
<CAPTION>
                                                            December 31, 2000
                                         -----------------------------------------------------
                                                     After 3    After 12
                                                      months     months
                                          Within     Within 12  Within 5      After
                                         3 months     months      years      5 years     Total
                                         --------     ------      -----      -------     -----
(Dollars in thousands) Earning assets:
<S>                                       <C>         <C>        <C>          <C>       <C>
Loans                                     $22,748     $17,624    $28,786      $4,867    $74,025
Investment securities:
   Available for sale                         874         940      3,864      19,413     25,091
   Held to maturity                                        43                  1,023      1,066
FHLB stock                                    332                                           332

Federal funds sold                          6,950                                         6,950
                                          -------     -------    -------     -------   --------
    Total earning assets                  $30,904     $18,607    $32,650     $25,303   $107,464
                                          =======     =======    =======     =======   ========


Interest-bearing liabilities:

Interest-bearing deposits                 $47,815     $43,273     $4,025                $95,113
Securities sold under
   repurchase agreements                    1,052                                         1,052

Long-term debt                              2,495                                         2,495
                                          -------     -------    -------     -------   --------
  Total interest-bearing liabilities        51362       43273       4025           0      98660
                                         ========    ========    =======     =======     ======

Net repricing gap                        $(20,458)   $(24,666)   $28,625     $25,303     $8,804
                                         ========    ========    =======     =======     ======
Rate sensitivity gap:

Net repricing gap as a percentage
  of total earning assets                  (19.04)%    (22.95)%    26.64%      23.55%      8.19%
                                         ========    ========    =======     =======     ======
Cumulative gap                           $(20,458)   $(45,124)  $(16,499)     $8,804
                                         ========    ========    =======     =======
Cumulative gap as a percentage of
  total earning assets                    (19.04)%     (41.99)%   (15.35)%      8.19%
                                         ========    ========    =======     =======
</TABLE>

Management has made the following assumptions in the above analysis:

(a)  Assets and liabilities are generally  assigned to a period based upon their
     earliest  repricing  period when the repricing is less than the contractual
     maturity.

(b)  Nonaccrual loans are included in the loan category.

(c)  Investment  securities available for sale are currently treated in the same
     manner  as  comparable  securities  in the  investment  securities  held to
     maturity  portfolio in that they are scheduled  according to the earlier of
     their  contractual  maturities or earliest  repricing dates;  however,  the
     maturities of callable agency  securities are scheduled  according to their
     call dates when valued at a premium to par.

(d)  Money  market  deposits  and  savings  deposits  that  have no  contractual
     maturities are scheduled in the within 3 months category.



















                                      - 6 -

<PAGE>

DEPOSITS

Our primary source of funds are interest-bearing  deposits.  The following table
sets forth our deposit structure at December 31, 2001 and 2000.


                                             December 31
                                         -------------------
                                         2001           2000
                                         ----           ----

Non interest-bearing
deposits:
Individuals, partnerships
and corporations                      $10,604        $10,549
U.S. Government and states
and political subdivisions                106             57
Commercial banks and                                      --
other depository institutions             133
Certified and official checks             492            289
                                          ---            ---
  Total non-interest bearing
deposits                               11,335         10,895
                                       ------         ------

Interest-bearing deposits:
Interest-bearing demand
accounts                               18,455         22,530
Savings accounts                        6,112          4,612
Individual retirement
accounts                                2,204          1,967
Certificates of deposit, less
than $100,000                          45,548         45,721
Certificates of deposit,
greater than $100,000                  20,256         20,283
                                       ------         ------
  Total interest-bearing
deposits                               92,575         95,113
                                       ------         ------

  Total deposits                     $103,910       $106,008
                                     ========       ========



The following  table presents a breakdown by category of the average  amounts of
deposits  and the  weighted  average  rate  paid  on  deposits  for the  periods
indicated:

<TABLE>
<CAPTION>

                                                                         December 31,
                                                   --------------------------------------------------------
                                                             2001                            2000
                                                   ------------------------         -----------------------

<S>                                                <C>                              <C>
Non-interest bearing deposits                      $11,328                          $10,917
Savings deposits                                     5,477            2.46%           4,706           3.02%
Individual retirement accounts                       8,829            5.33%           8,813           5.72%
Time deposits                                       59,843            5.57%          55,609           5.85%
Interest bearing demand deposits                    21,541            2.99%          19,998           4.26%
                                                    ------                           ------
  Total deposits                                  $107,018                         $100,043
                                                  ========                         ========
</TABLE>

At December 31, 2001 and 2000,  time deposits  greater than $100,000  aggregated
approximately  $20 million.  The following table  indicates,  as of December 31,
2001 and 2000,  the dollar amount of $100,000 or more deposits by time remaining
until maturity:


<TABLE>
<CAPTION>

                                    December 31, 2001                             December 31, 2000
                             ----------------------------------            ----------------------------------
                                                1 year                                        1 year
                           3 Months   3 to 12  through                   3 Months   3 to 12  through
                            or less    Months  5 years    Total           or less    Months  5 years    Total
                            -------    ------  -------    -----           -------    ------  -------    -----
(In thousands)
<S>                          <C>       <C>       <C>    <C>                <C>      <C>         <C>   <C>
Time Certificates            $5,927   $12,905   $1,424  $20,256            $6,309   $13,182     $792  $20,283
                             ======   =======   ======  =======            ======   =======     ====  =======
</TABLE>





                                      - 7 -





ASSETS

Our   management   considers  many  criteria  in  managing   assets,   including
creditworthiness,  diversification and structural characteristics,  maturity and
interest rate  sensitivity.  The following table sets forth our interest earning
assets by category at December 31, 2001 and 2000.



                                                           December 31,
                                                     ----------------------
                                                      2001             2000
                                                     -----            -----
(In thousands) Investment securities:
  Available for sale                               $25,612          $25,091
  Held to maturity                                     627            1,066
FHLB stock                                             355              332
Federal funds sold                                   6,275            6,950
Loans:
  Real estate                                       46,552           48,283
  Commercial and other                              26,514           25,756
                                                    ------           ------
    Total loans                                     73,066           74,039
  Less unearned income                                  --              (14)
                                                    ------             ----
Loans, net of unearned
  income                                            73,066           74,025
                                                    ------           ------
Interest earning assets                           $105,935         $107,464
                                                  ========         ========


INVESTMENT PORTFOLIO

At year end 2001,  obligations  of the United States  Government or its agencies
and obligations of states and political subdivisions  represented 100.00% of the
investment portfolio.

The  following  table sets forth the  composition  of the carrying  value of our
investment portfolio at December 31, 2001 and 2000:


                                                             December 31,
                                                        --------------------
                                                        2001            2000
                                                        ----            ----
(In thousands) Held to maturity:
Obligations of U.S. Government
  agencies                                              $627           $1,066
                                                        ----           ------



Available for sale:
U.S. Treasury securities                                $523             $506
Obligations of U.S. Government
  agencies                                            21,425           20,536
Obligations of states and
  political subdivisions                               3,664            4,049
FHLB stock                                               355              332
                                                       -----            -----
                                                     $25,967          $25,423
                                                     =======          =======









                                      - 8 -

<PAGE>



The following table presents the maturity distribution of the amortized cost and
estimated market value of the Company's debt securities at December 31, 2001 and
2000. The weighted  average yields on these  instruments  are presented based on
final  maturity.  Yields  on states  and  political  subdivisions  have not been
adjusted to a fully-taxable equivalent basis.

<TABLE>
<CAPTION>

                                              December 31, 2001                     December 31, 2000
                                        ------------------------------         ----------------------------
                                                   Estimated   Weighted                 Estimated    Weighted
                                      Amortized     Market      Average     Amortized     Market     Average
                                        Cost         Value       Yield         Cost       Value       Yield
                                        ----         -----       -----         ----       -----       -----
<S>                                          <C>          <C>       <C>          <C>         <C>          <C>
(Dollars in thousands)
Held to maturity:
-----------------
  Obligations of U.S. Government
    agencies:
    Due after 1 year but within
      5 years                                $585         $583
    Due after 5 years but within
      10 years                                  8            9                   $1,009      $  986
    Due after 10 years                         34           35                       57          59
                                                                                     --          --
      Total                                  $627         $627      3.28%        $1,066      $1,045       6.39%
                                             ====         ====                   ======      ======

Available for sale:
-------------------
  U.S. Securities:
    Due after 1 year but within
      5 years                                $502         $523                     $503        $506
                                             ----         ----                     ----        ----
      Total                                   502          523      5.47%           503         506       5.49%
                                              ---          ---                      ---         ---
  Obligations of U.S. Government
    agencies:
    Due within 1 year                          36           36                      480         480
    Due after 1 year but within
      5 years                               4,605        4,556                    2,000       1,989
    Due after 5 years but within
      10 years                              8,895        8,952                   13,688      13,440
    Due after 10 years                      7,895        7,881                    4,781       4,627
                                            -----        -----                    -----       -----
       Total                               21,431       21,425      5.21%        20,949      20,536       6.36%
                                           ------       ------                   ------      ------
  Obligations of states and
      political subdivisions
    Due after 1 year but within
      5 years                               1,231        1,250                    1,373       1,370
      Due after 5 years but within
        10 years                            1,585        1,563                    2,335       2,313
    Due after 10 years                        887          851                      375         366
                                              ---          ---                      ---         ---
        Total                               3,703        3,664      4.30%         4,083       4,049       4.20%
                                            -----        -----                    -----       -----

Total                                     $25,636      $25,612      5.04%       $25,535     $25,091       6.22%
                                          =======      =======                  =======     =======
</TABLE>









                                      - 9 -

<PAGE>



INVESTMENT POLICY

The objective of our investment  policy is to invest funds not otherwise  needed
to meet the loan demand of its market area to earn the maximum return, yet still
maintain  sufficient  liquidity  to meet  fluctuations  in our loan  demand  and
deposit  structure.  In doing so, we balance the market and credit risks against
the potential  investment  return,  make investments  compatible with the pledge
requirements  of  our  deposits  of  public  funds,   maintain  compliance  with
regulatory investment requirements,  and assist the various public entities with
their  financing  needs.  H. Lyons  Price and Reed D. Matney are  authorized  to
execute  security  transactions  for  the  investment  portfolio  based  on  the
decisions of the investment committee. The investment committee,  which consists
of the President,  Chief Executive  Officer and Chairman of the Board,  has full
authority  over the  investment  portfolio and makes  decisions on purchases and
sales  of  securities.  All the  investment  transactions  occurring  since  the
previous  board of  directors'  meeting  are  reviewed  by the board at its next
monthly meeting,  and the entire  portfolio is reviewed on a semi-annual  basis.
The investment policy allows portfolio holdings to include short-term securities
purchased  to provide  Volunteer  needed  liquidity  and longer term  securities
purchased  to  generate  level  income  for us over  periods  of  interest  rate
fluctuations.

Our  investment  securities  portfolio  of  $26,593,781  at December  31,  2001,
consisted  of  $626,859 of  securities  held to  maturity,  which are carried at
amortized  cost and  $25,966,922  of  securities  available  for sale  which are
carried at market value. In addition,  unrealized gains on investment securities
available  for sale were  $142,971  and  unrealized  losses were  $166,745.  Our
investment  securities  portfolio of $26,489,217 at December 31, 2000, consisted
of  $1,066,548 of  securities  held to maturity,  which are carried at amortized
cost and  $25,422,669  of  securities  available  for sale which are  carried at
market value. In addition,  unrealized gains on investment  securities available
for sale were $20,642 and unrealized losses were $464,320.

As reflected in Note 2 to  Consolidated  Financial  Statements,  the  investment
securities held to maturity had unrealized gains of $1,597 and unrealized losses
of $1,867 at December 31, 2001,  compared to $3,243 unrealized gains and $24,599
unrealized losses at year end December 31, 2000.

LOAN PORTFOLIO

Total  loans of  $73,066,000  at  December  31,  2001,  reflected  a decrease of
$973,000  compared  to  total  loans  for the  year  ended  December  31,  2000.
Residential real estate loans,  which historically have had low loss experience,
increased  $1,243,000 or 4.46%.  Construction and land development  loans, loans
secured by farmland and commercial  real estate loans decreased by $2,974,000 or
14.56%.  Commercial and industrial  loans and  agricultural  loans  increased by
$42,000 or 0.37%.  These types of loans carry a higher level of risk in that the
borrowers'   ability  to  repay  may  be  affected  by  local  economic  trends.
Installment  and other consumer  loans  increased by $726,000,  or 4.98%.  These
loans,  generally  secured by automobiles  and other consumer  goods,  contain a
historically higher level of risk;  however,  this risk is mitigated by the fact
that these loans generally  consist of small  individual  balances.  As the loan
portfolio is concentrated in Hawkins and surrounding  counties,  there is a risk
that the  borrowers'  ability to repay the loans could be affected by changes in
local economic conditions.

The following  table sets forth the  composition of the Company's loan portfolio
as December 31, 2001 and 2000.



                                                              December 31,
                                                        ---------------------
(In thousands)                                          2001             2000
                                                        ----             ----
Real estate loans:
  Construction and land development                   $4,296           $6,752
  Secured by farmland and
improvements                                           1,491            1,692
  Secured by residential properties                   29,111           27,868
  Commercial real estate loans                        11,654           11,971
                                                      ------           ------
    Total real estate loans                           46,552           48,283
Loans to farmers                                       1,862            1,555
Commercial and industrial loans                        9,364            9,629
Installment loans                                     11,923           11,358
Other consumer loans                                   3,357            3,196
All other loans                                            8               18
                                                      ------           ------

    Total loans                                      $73,066          $74,039
                                                     =======          =======






                                     - 10 -

<PAGE>



The  following  table sets forth the  maturities  of the loan  portfolio and the
sensitivity  to interest  rate  changes of that  portion of the  Company's  loan
portfolio that matures after one year.

<TABLE>
<CAPTION>

                                                                       December 31, 2001
                                                    --------------------------------------------------------
                                                                         Maturity Range
                                                    --------------------------------------------------------
                                                   One Year       One Through          Over
                                                    or Less        Five Years       Five Years         Total
                                                    -------        ----------       ----------         -----
(In thousands)
<S>                                                  <C>                  <C>        <C>                <C>
Real estate construction loans                       $4,281               $15        $     --           $4,296
Real estate mortgage loans                           15,351            13,885          13,020           42,256
Commercial and industrial loans                       6,723             2,468             173            9,364
Agricultural loans                                    1,435               382              45            1,862
All other loans                                       5,400             9,555             333           15,288
                                                      -----             -----             ---           ------
  Total loans                                       $33,190           $26,305         $13,571          $73,066
                                                    =======           =======         =======          =======
</TABLE>



The  sensitivity  to interest  rate changes of that  portion of  Company's  loan
portfolio that matures after one year is set below:

Real estate, commercial and industrial and agricultural loans maturing after one
year as of December 31, 2001 (in thousands);



Fixed rate                                                 $21,989
Floating rate                                                7,999
                                                           -------
                                                           $29,988
                                                           =======

Other loans maturing after one year:

Fixed rate                                                  $9,888
Floating rate                                                   --
                                                           -------
                                                            $9,888

  Total loans maturing after one year                      $39,876
                                                           =======

LOAN POLICY

All of our lending  activities are under the direct  supervision  and control of
the senior loan committee, which consists of three directors. The loan committee
enforces loan  authorizations for each officer,  decides on loans exceeding such
limits,  services all requests for officer credits to the extent allowable under
current laws and regulations,  administers all problem  credits,  and determines
the allocation of funds for each lending division.  Our established maximum loan
volume to deposits is 85%. The loan portfolio consists primarily of real estate,
commercial,  farming and installment  loans.  Commercial loans consist of either
real estate loans or term loans.  Maturity of term loans is normally  limited to
five to seven years. Conventional real estate loans may be made up to 80% of the
appraised  value  or  purchase  cost  of the  real  estate  for no  more  than a
thirty-year  term.  Installment  loans are  based on the  earning  capacity  and
vocational stability of the borrower.

The board of directors at its regularly scheduled meetings reviews all new loans
in excess of $100,000 made the preceding month.  Loans which are 30 days or more
past due are reviewed monthly.

Management periodically reviews the loan portfolio,  particularly nonaccrual and
renegotiated  loans. The review may result in a determination that a loan should
be placed on a nonaccrual  status for income  recognition.  In addition,  to the
extent that management  identifies  potential  losses in the loan portfolio,  it
reduces the book value of such loans,  through  charge-offs,  to their estimated
collectible value. The Company's policy is to classify as nonaccrual any loan on
which  payment of principal or interest is 90 days or more past due except where
there is adequate  collateral to cover  principal  and accrued  interest and the
loan is in the  process of  collection.  Management  defines  "in the process of
collection"  as that  point  where the  customer  has  agreed to an  accelerated
repayment plan to bring the loan current, which definition is in accordance with
generally accepted accounting  principles ("GAAP") but is not in accordance with
such  definition as contained in Banking  Bulletin  91-19.  No  concessions  are
granted and late fees are collected.  In addition,  a loan will be classified as
nonaccrual if, in the opinion of the management,

                                     - 11 -





based  upon a review  of the  borrower's  or  guarantor's  financial  condition,
collateral value or other factors, payment is questionable, even though payments
are not 90 days or more past due.

When a loan is classified as nonaccrual, any unpaid interest is reversed against
current  income.  Interest is included in income  thereafter  only to the extent
received in cash.  The loan  remains in a nonaccrual  classification  until such
time  as the  loan  is  brought  current,  when it may be  returned  to  accrual
classification.  When  principal  or  interest on a  nonaccrual  loan is brought
current, if in management's  opinion future payments are questionable,  the loan
would remain  classified as nonaccrual.  After a nonaccrual or renegotiated loan
is charged  off, any  subsequent  payments of either  interest or principal  are
applied  first to any remaining  balance  outstanding,  then to  recoveries  and
lastly to income.

The large number of consumer  installment  loans and the relatively small dollar
amount of each makes an  individual  review  impracticable.  It is the Company's
policy to charge off any consumer  installment loan which is past due 90 days or
more.

In  addition,  mortgage  loans  secured by real estate are placed on  nonaccrual
status when the  mortgagor is in  bankruptcy,  or  foreclosure  proceedings  are
instituted.  Any  accrued  interest  receivable  remains  an  obligation  of the
borrower.

Our  underwriting  guidelines  are  applied to four major  categories  of loans,
commercial and industrial, consumer, agricultural and real estate which includes
residential,  construction  and development and certain other real estate loans.
We require our loan  officers  and loan  committee  to consider  the  borrower's
character,  the borrower's financial condition as reflected in current financial
statements,  the borrower's management  capability,  the borrower's industry and
the economic  environment in which the loan will be repaid.  Before  approving a
loan,  the loan  officer  or  committee  must  determine  that the  borrower  is
basically  honest and  creditworthy,  determine  that the  borrower is a capable
manager,  understand the specific purpose of the loan, understand the source and
plan of repayment,  determine that the purpose,  plan and source of repayment as
well as collateral are  acceptable,  reasonable  and practical  given the normal
framework within which the borrower operates.

CREDIT RISK MANAGEMENT AND RESERVE FOR LOAN LOSSES

Credit risk and  exposure to loss are  inherent  parts of the banking  business.
Management  seeks to  manage  and  minimize  these  risks  through  its loan and
investment  policies  and loan review  procedures.  Management  establishes  and
continually reviews lending and investment criteria and approval procedures that
it believes  reflect the risk  sensitive  nature of  Volunteer.  The loan review
procedures  are set to monitor  adherence  to the  established  criteria  and to
ensure that on a continuing basis such standards are enforced and maintained.

Management's  objective in establishing  lending and investment  standards is to
manage  the risk of loss and  provide  for  income  generation  through  pricing
policies.  To effectuate this policy, we make commercial real estate and farming
loans with one year or less fixed maturity.

The loan portfolio is regularly reviewed and management determines the amount of
loans to be  charged-off.  In addition,  such factors as the Company's  previous
loan loss experience,  prevailing and anticipated economic conditions,  industry
concentrations  and the overall  quality of the loan  portfolio are  considered.
While  management  uses available  information to recognize  losses on loans and
real estate owned,  future  additions to the allowance may be necessary based on
changes in economic conditions. In addition,  various regulatory agencies, as an
integral part of their examination  process,  periodically review the allowances
for losses on loans and real  estate  owned.  Such  agencies  may  require us to
recognize additions to the allowances based on their judgments about information
available at the time of their  examinations.  In addition,  any loan or portion
thereof which is classified as a "loss" by regulatory examiners is charged-off.

The reserve for loan losses is  increased  by  provisions  charged to  operating
expense.  The reserve is reduced by  charging  off loans or portions of loans at
the time they are deemed by management to be  uncollectible  and increased  when
loans  previously  charged off are  recovered.  The  resulting  reserve for loan
losses is viewed by management as a single,  unallocated  reserve  available for
all loans and, in  management's  opinion,  is adequate to provide for reasonably
foreseeable  potential loan losses.  Rules and formulas relative to the adequacy
of the reserve,  although  useful as guidelines to  management,  are not rigidly
applied.  The reserve for loan losses was $908,016 at year end 2001, or 1.24% of
loans outstanding, net of unearned income, compared to $985,784 or 1.33% at year
end 2000.







                                     - 12 -

<PAGE>



RESERVE FOR LOAN LOSSES

The following table presents the data related to the Company's  reserve for loan
losses for the years ended December 31, 2001 and 2000:

                                                           December 31,
                                                      --------------------
                                                      2001            2000
                                                      ----            ----
(In thousands)

Balance at beginning of period                         $986             $842
Charge offs:
  Commercial, financial and agricultural               (32)              (2)
  Real estate mortgage                                 (64)             (47)
  Installment loans to individuals                    (271)             (86)
                                                      -----             ----
                                                      (367)            (135)
                                                      -----            -----

Recoveries:
  Commercial, financial and agricultural                 --                4
  Real estate mortgage                                    4
  Installment loans to individuals                       20               35
                                                         --               --
                                                         24               39
                                                         --               --
Net charge offs                                       (343)             (96)
                                                      -----             ----
Additions charged to operations                         265              240
                                                        ---              ---
Balance at end of period                               $908             $986
                                                       ====             ====

Ratio of net charge offs during the period to
  average loans outstanding during the period.        0.46%            0.13%
                                                      ====             ====
Average allowance for loan losses to average
  total loans.                                        1.29%            1.30%
                                                      ====             ====

At December 31, 2001 and 2000,  the  allowance  for loan losses was allocated as
follows:
 (In thousands)
<TABLE>
<CAPTION>

                                                          December 31, 2001                       December 31, 2000
                                                    ------------------------------          ----------------------------------
                                                            Percent of loan in each                     Percent of loan in each
                                                    Amount  category to total loans         Amount      category to total loans
                                                    ------  ----------------------          ------      ----------------------
<S>                                                  <C>            <C>                       <C>              <C>
  Commercial, financial and agricultural             $62             15.36%                    $67              15.11%
  Real estate mortgage                               221             63.71%                    240              65.21%
  Installment loans to individuals                   625             20.93%                    678              19.68%
                                                     ---            ------                     ---             ------
                                                    $908            100.00%                   $986             100.00%
                                                    ====            ======                    ====             ======
</TABLE>

The  allocation of the allowance is presented  based in part on  evaluations  of
past history and  composition  of the loan  portfolio.  Since these  factors are
subject to change,  the current  allocation of the allowance is not  necessarily
indicative of the breakdown of future losses.




















                                     - 13 -

<PAGE>



The following table sets forth  information with respect to nonperforming  loans
of the Company on the dates indicated.  Accrual of interest is discontinued when
there is  reasonable  doubt as to the full,  timely  collections  of interest or
principal.  When a loan becomes  contractually  past due 90 days with respect to
interest or principal,  it is reviewed and a determination is made as to whether
it should be placed on  nonaccrual  status.  When a loan is placed on nonaccrual
status,  all interest  previously  accrued but not collected is reversed against
current period interest income.  Income on such loans is then recognized only to
the extent that cash is received and where the future collection of principal is
probable. Interest accruals are resumed on such loans only when they are brought
fully  current with respect to principal  and interest and when, in the judgment
of management,  the loans are estimated to be fully  collectible as to principal
and interest.  Restructured  loans are those loans on which concessions in terms
have been granted  because of a  borrower's  financial  difficulty.  Interest is
generally accrued on such loans in accordance with the new terms.
<TABLE>
<CAPTION>

Non-performing assets (In thousands)                                                    December 31
                                                                                   2001             2000
                                                                                   ----             ----
<S>                                                                                <C>              <C>
Nonaccrual loans                                                                   $619             $513
Restructured loans                                                                   --               --
Other loans past due 90 days or more to principal or interest payments           $1,640             $671
Non-performing loans as a percentage of net loans before allowance
  for loan losses                                                                  3.09%            1.60%
Allowance for loan losses as a percentage of nonperforming loans                  40.19%           83.28%
</TABLE>

CAPITAL RESOURCES/LIQUIDITY

Liquidity. Of primary importance to depositors,  creditors and regulators is the
ability to have  readily  available  funds  sufficient  to repay fully  maturing
liabilities.  Our liquidity,  represented by cash and cash due from banks,  is a
result of its operating,  investing and financing activities. In order to insure
funds are  available  at all times,  we devotes  resources  to  projecting  on a
monthly  basis  the  amount  of  funds  which  will be  required  and  maintains
relationships  with  a  diversified  customer  base  so  funds  are  accessible.
Liquidity  requirements  can also be met through  short-term  borrowings  or the
disposition  of short-term  assets which are generally  matched to correspond to
the maturity of liabilities.

Although we have no formal liquidity policy,  in the opinion of management,  its
liquidity  levels are  considered  adequate.  We are not subject to any specific
liquidity  requirements  imposed by  regulatory  orders.  The Bank is subject to
general  FDIC  guidelines  which do not  require a minimum  level of  liquidity.
Management  believes  its  liquidity  ratios  meet or exceed  these  guidelines.
Management does not know of any trends or demands which are reasonably likely to
result in liquidity increasing or decreasing in any material manner.

LIQUIDITY

The following table sets forth liquidity ratios for the periods indicated:



                                                        2001            2000
                                                        ----            ----
Average loans to average deposits                      70.07%          71.90%


Impact of Inflation and Changing Prices. The consolidated  financial  statements
and related  consolidated  financial data presented herein have been prepared in
accordance  with  generally  accepted  accounting  principles  which require the
measurement of financial  position and operating  results in terms of historical
dollars  without  considering  the changes in the relative  purchasing  power of
money over time and due to  inflation.  The impact of inflation on operations of
Volunteer  is reflected in increased  operating  costs.  Unlike most  industrial
companies,  virtually all of our assets and  liabilities are monetary in nature.
As a result,  interest rates have a more  significant  impact on our performance
than  the  effects  of  general  levels  of  inflation.  Interest  rates  do not
necessarily  move in the same direction or in the same magnitude as the price of
goods and services.

CAPITAL ADEQUACY

Capital adequacy refers to the level of capital required to sustain asset growth
over time and to absorb losses. The objective of our management is to maintain a
level of  capitalization  that is  sufficient  to take  advantage of  profitable
growth opportunities while meeting regulatory requirements.  This is achieved by
improving   profitability  through  effectively  allocating  resources  to  more
profitable businesses,  improving asset quality,  strengthening service quality,
and  streamlining  costs. The primary measures used by management to monitor the
results of these  efforts  are the ratios of average  equity to average  assets,
average tangible equity to average  tangible  assets,  and average equity to net
loans.

The  Federal  Reserve  Board  has  adopted  capital  guidelines   governing  the
activities of bank holding  companies.  These guidelines require the maintenance
of an amount of capital  based on  risk-adjusted  assets so that  categories  of
assets with  potentially  higher  credit risk will require more capital  backing
than assets with lower risk. In addition,

                                     - 14 -

<PAGE>



banks and bank holding companies are required to maintain capital to support, on
a  risk-adjusted  basis,  certain off-  balance  sheet  activities  such as loan
commitments.

The capital  guidelines  classify capital into two tiers,  referred to as Tier I
and Tier II. Under risk-based  capital  requirements,  total capital consists of
Tier I capital which is generally common  stockholders' equity less goodwill and
Tier II capital  which is primarily a portion of the  allowance  for loan losses
and certain  qualifying  debt  instruments.  In determining  risk-based  capital
requirements,  assets  are  assigned  risk-weights  of  0%  to  100%,  depending
primarily on the regulatory  assigned levels of credit risk associated with such
assets.   Off-balance   sheet  items  are  considered  in  the   calculation  of
risk-adjusted  assets through conversion factors  established by the regulators.
The framework for calculating risk-based capital requires banks and bank holding
companies to meet the regulatory  minimums of 4% Tier I and 8% total  risk-based
capital.  In  1990  regulators  added a  leveraged  computation  to the  capital
requirements, comparing Tier I capital to total average assets less goodwill.

The Company's  consolidated  capital ratios are set forth below.  See Note 12 to
Notes to Consolidated Financial Statements for Bank-only capital ratios.

Our consolidated capital ratios are set forth below. See Note 12 to the Notes to
Consolidated Financial Statements for Bank-only capital ratios.


                                                              December 31,
                                                        ----------------------
                                                        2001              2000
                                                        ----              ----
(Dollars in thousands)
Capital:
Tier I capital:
        Stockholders' common equity                     $6,132           $5,320
         Less unrealized (loss) gain in securities        (15)            (275)
        Less dissallowed intangibles                     (131)            (149)
                                                         -----            -----
              Total Tier I capital                       6,016            5,446

Tier II capital:
        Qualifying allowance for loan losses               907              921
                                                           ---              ---
                        Total capital                   $6,923           $6,367
                                                        ======           ======

Risk-adjusted assets                                   $72,575          $73,592
Quarterly average assets                              $114,282         $114,561

Ratios:
Tier I capital to risk-adjusted assets                   8.29%            7.40%
Tier II capital to risk-adjusted assets                  1.25%            1.25%
Total capital to risk-adjusted assets                    9.54%            8.65%
Leverage - Tier I capital to quarterly
  average assets less disallowed intangibles             5.26%            4.75%


The Federal  Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA")
established five capital  categories for banks and bank holding  companies.  The
bank regulators  adopted  regulations  defining these five capital categories in
September 1992.  Under these new regulations each bank is classified into one of
the five categories based on its level of risk-based capital as measured by Tier
I  capital,  total  risk-based  capital,  and  Tier I  leverage  ratios  and its
supervisory ratings.












                                     - 15 -

<PAGE>



The following table lists the five categories of capital and each of the minimum
requirements for the three risk- based capital ratios.
<TABLE>
<CAPTION>

                                                          Total Risk-Based      Tier I Risk-Based         Leverage
                                                            Capital Ratio         Capital Ratio             Ratio
                                                            -------------         -------------         ------------
<S>                                                       <C>                   <C>                     <C>
Well-capitalized......................................      10% or above           6% or above          5% or above
Adequately capitalized................................       8% or above           4% or above          4% or above
Undercapitalized......................................      Less than 8%          Less than 4%          Less than 4%
Significantly undercapitalized........................      Less than 6%          Less than 3%          Less than 3%
Critically undercapitalized...........................           --                    --                2% or less
</TABLE>

On December 31, 2001, the Bank and Volunteer  exceeded the  regulatory  minimums
and qualified  under the  regulations as a  well-capitalized  institution and an
adequately capitalized institution, respectively.

CERTAIN REGULATORY CONSIDERATIONS

As  a  bank  holding  company,  Volunteer  is  subject  to  the  regulation  and
supervision  of the  Board of  Governors  of the  Federal  Reserve  System  (the
"Federal  Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). Under the BHCA, bank holding companies may not in general directly
or  indirectly  acquire the  ownership  or control of more than 5% of the voting
shares or substantially all the assets of any company, including a bank, without
the prior  approval of the Federal  Reserve  Board.  The BHCA also restricts the
types of activities  in which a bank holding  company and its  subsidiaries  may
engage. Generally, activities are limited to banking and activities found by the
Federal  Reserve  Board to be so  closely  related  to banking as to be a proper
incident thereto.

In addition,  the BHCA  prohibits the Federal  Reserve  Board from  approving an
application  by a bank  holding  company  to  acquire  shares  of a bank or bank
holding  company  located  outside the acquiror's  principal state of operations
unless such an acquisition is specifically authorized by statute in the state in
which the bank or bank  holding  company  whose  shares  are to be  acquired  is
located. Tennessee has adopted legislation that authorizes nationwide interstate
bank  acquisitions,  subject  to  certain  state law  reciprocity  requirements,
including  the  filing of an  application  with and  approval  of the  Tennessee
Commissioner  of Financial  Institutions.  The Tennessee  Bank  Structure Act of
1974, as amended,  restricts the acquisition by bank holding  companies of banks
in Tennessee.  A bank holding  company is prohibited  from acquiring any bank in
Tennessee  as long as banks  that it  controls  retain  30% or more of the total
deposits in individual,  partnership and corporate demand and other  transaction
accounts and in savings  accounts  and time  deposits in all  federally  insured
financial  institutions  in  Tennessee,   subject  to  certain  limitations  and
exclusions.  Also,  under this act, no bank holding company may acquire any bank
in  operation  for less than five years or begin a denovo  bank in any county in
Tennessee  with a population,  in 1970,  of 200,000 or less,  subject to certain
exceptions.

Under Tennessee law, branch banking is permitted in any county of the state.

The Bank is a Tennessee  state-chartered  bank and is subject to the regulations
of and supervision by the Federal Deposit Insurance  Corporation (the "FDIC") as
well as the DFI,  Tennessee's state banking authority.  The Bank is also subject
to various  requirements and restrictions under federal and state law, including
requirements to maintain  reserves against  deposits,  restrictions on the types
and  amounts of loans that may be granted and the  interest  that may be charged
thereon and  limitations  on the types of  investments  that may be made and the
type of services that may be offered. Various consumer laws and regulations also
affect the  operations  of the Bank.  In addition  to the impact of  regulation,
commercial  banks are  affected  significantly  by the  actions  of the  Federal
Reserve Board as it attempts to control the money supply and credit availability
in order to influence the economy.

As a result  of  certain  findings  in the  Tennessee  Department  of  Financial
Institution's  Report of Examination  dated June 4, 2001, the Board of Directors
of Bank entered into a Memorandum of  Understanding  (Memorandum),  dated August
16,  2001,  with the  Commissioner  of the  Tennessee  Department  of  Financial
Institutions and the Memphis Regional  Director of the Federal Deposit Insurance
Corporation.  A Memorandum of Understanding is an informal  administrative  tool
for  institutions  that have some weaknesses that if not properly  addressed and
corrected  could lead to supervisory  concern  requiring  formal  administrative
action.  The areas addressed in the Memorandum cover capital adequacy,  laws and
regulations,  data  processing  audit and  review,  investment  policy  maturity
strategies, adequate documentation of each of the foregoing but primarily credit
administration.  As a  result,  the Board  has  revised  a number of the  Bank's
policies  and  procedures   including  its  loan  policy  and  has  incorporated
recommendations  designed to  strengthen  credit  quality and the Bank's  review
procedures  regarding loan loss reserve adequacy.  Management of the Company and
the Bank believe that the Bank is in substantial  compliance with the provisions
of the Memorandum.


PAYMENT OF DIVIDENDS

 Volunteer is a legal entity separate and distinct from its banking  subsidiary.
The  principal  source of cash  flow of  Volunteer,  including  cash flow to pay
dividends  on its stock or  principal  (premium,  if any) and  interest  on debt
securities,  is dividends  from the Bank.  There are  statutory  and  regulatory
limitations on the payment of dividends by the Bank to Volunteer,  as well as by
the Company to its shareholders.

The Bank is subject to the Tennessee  Banking Act, which provides that dividends
will be paid out of undivided profits.  Capital surplus,  however, must equal or
exceed 50% of capital stock, and in the event capital surplus falls below 50% of
capital stock, no dividends may be paid until net profits have been  transferred
to capital  surplus so that it equals 50% of capital stock.  Thereafter,  10% of
net profits must be transferred to capital surplus prior to payment of dividends
until capital  surplus  equals  capital  stock.  The Bank is also subject to the
minimum capital  requirements of the FDIC which impact the Bank's ability to pay
dividends.  If the Bank fails to meet these standards, it may not be able to pay
dividends or to accept additional deposits because of regulatory requirements.
See "Certain Regulatory Considerations."

Under  current  Tennessee  tax law, cash  dividends  paid by Tennessee  banks to
Tennessee  residents are exempt from state income tax.  Under federal income tax
law, dividends paid by the Bank would be considered taxable.

If, in the  opinion of the  applicable  federal  bank  regulatory  authority,  a
depository  institution or a holding company is engaged in or is about to engage
in an unsafe or unsound practice (which, depending on the financial condition of

                                     - 16 -

<PAGE>



the  depository  institution  or holding  company,  could include the payment of
dividends),  such authority may require that such institution or holding company
cease and desist from such practice. The federal banking agencies have indicated
that  paying  dividends  that  deplete a  depository  institution's  or  holding
company's  capital  base to an  inadequate  level  would be such an  unsafe  and
unsound banking practice.  Moreover,  the Federal Reserve Board, the Comptroller
of the Currency and the FDIC have issued  policy  statements  which provide that
bank holding companies and insured depository institutions generally should only
pay dividends out of current operating earnings.

The  payment of  dividends  by  Volunteer  and the Bank may also be  affected or
limited by other factors,  such as the requirement to maintain  adequate capital
above regulatory guidelines.

TRANSACTIONS WITH AFFILIATES

There are  various  legal  restrictions  on the extent to which we can borrow or
otherwise obtain credit from the Bank. There are also legal  restrictions on the
Bank's  purchases of or  investments in the securities of and purchase of assets
from  Volunteer,  a bank's  loans or  extensions  of  credit  to third  parties,
collateralized  by the securities or  obligations of Volunteer,  the issuance of
guaranties,  acceptances  and  letters  of credit on  behalf of  Volunteer,  and
certain bank transactions  with the Company,  or with respect to which Volunteer
acts as agent,  participates  or has a  financial  interest.  Subject to certain
limited exceptions,  the Bank may not extend credit to Volunteer or to any other
affiliate in an amount which exceeds 10% of the Bank's capital stock and surplus
and may not extend credit in the aggregate to such affiliates in an amount which
exceeds  20%  of its  capital  stock  and  surplus.  Further,  there  are  legal
requirements as to the type,  amount and quality of collateral which must secure
such extensions of credit by the Bank to Volunteer or to such other  affiliates.
Also, extensions of credit and other transactions between the Bank and Volunteer
or such other  affiliates  must be on terms and under  circumstances,  including
credit  standards,  that are  substantially the same or at least as favorable to
the  Bank as those  prevailing  at the time  for  comparable  transactions  with
non-affiliated  companies.  Also,  Volunteer and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.

HOLDING COMPANY STRUCTURE AND SUPPORT OF THE BANK

Because  Volunteer is a holding company,  its right to participate in the assets
of any  subsidiary  upon the  latter's  liquidation  or  reorganization  will be
subject to the prior claims of the subsidiary's  creditors (including depositors
in the case of bank subsidiaries) except to the extent that Volunteer may itself
be a creditor with recognized claims against the subsidiary.

Under Federal Reserve Board policy,  Volunteer is expected to act as a source of
financial  strength to, and commit resources to support,  the Bank. This support
may be  required  at times  when,  absent such  Federal  Reserve  Board  policy,
Volunteer may not be inclined to provide it. In addition, any capital loans by a
bank holding company to any of its subsidiary  banks are subordinate in right of
payment to deposits and to certain other  indebtedness of such subsidiary  bank.
In the event of a bank holding company's bankruptcy,  any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a
subsidiary  bank will be assumed by the  bankruptcy  trustee  and  entitled to a
priority of payment.

CROSS-GUARANTEE LIABILITY

Under the Federal Deposit Insurance Act (the "FDIA"),  a depository  institution
insured by the FDIC can be held liable for any loss  incurred by, or  reasonably
expected to be incurred by, the FDIC after August 9, 1989 in connection with (i)
the default of a commonly controlled FDIC-insured depository institution or (ii)
any  assistance  provided by the FDIC to any  commonly  controlled  FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the  appointment  of a  conservator  or  receiver  and "in danger of default" is
defined  generally as the  existence  of certain  conditions  indicating  that a
default is likely to occur in the absence of regulatory  assistance.  The FDIC's
claim  for  damages  is  superior  to  claims  of  shareholders  of the  insured
depository  institution  or its holding  company but is subordinate to claims of
depositors,  secured  creditors  and  holders of  subordinated  debt (other than
affiliates) of the commonly controlled insured depository institution.  The Bank
is subject to these cross-guarantee  provisions.  As a result, any loss suffered
by the FDIC in respect  of the Bank  would  likely  result in  assertion  of the
cross- guarantee provisions,  and a potential loss of Volunteer's  investment in
the Bank.

FDICIA

The Federal  Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA")
which was enacted on December 19,  1991,  substantially  revised the  depository
institution  regulatory and funding provisions of the FDIA and made revisions to
several other federal banking statutes.  Among other things, FDICIA requires the
federal  banking  regulators  to take "prompt  corrective  action" in respect of
FDIC-insured   depository   institutions   that  do  not  meet  minimum  capital
requirements.   FDICIA  establishes  five  capital  tiers:  "well  capitalized,"
"adequately capitalized,"  "undercapitalized,"  "significantly undercapitalized"
and "critically  undercapitalized." Under applicable regulations, a FDIC-insured
depository  institution  is defined to be well  capitalized  if it  maintains  a
Leverage  Ratio of at least 5%, a risk adjusted Tier 1 Capital Ratio of at least
6% and a Total  Capital Ratio of at least 10% and is not subject to a directive,
order or written  agreement to meet and maintain  specific  capital  levels.  An
insured  depository  institution  is defined to be adequately  capitalized if it
meets all of its minimum capital  requirements as described  above. In addition,
an insured  depository  institution  will be considered  undercapitalized  if it
fails to meet any minimum required measure, significantly undercapitalized if it
is significantly below such measure and critically  undercapitalized if it fails
to  maintain  a level of  tangible  equity  equal  to not less  than 2% of total
assets. An insured

                                     - 17 -

<PAGE>



depository institution may be deemed to be in a capitalization  category that is
lower than is  indicated  by its  actual  capital  position  if it  receives  an
unsatisfactory examination rating.

The  capital-based  prompt  corrective  action  provision  of  FDICIA  and their
implementing  regulations apply to FDIC-insured  depository institutions and are
not directly  applicable to holding  companies which control such  institutions.
However,  the Federal  Reserve  Board has indicated  that,  in  regulating  bank
holding companies,  it will take appropriate action at the holding company level
based on an assessment of the effectiveness of supervisory  actions imposed upon
subsidiary depository institutions pursuant to such provisions and regulations.

FDICIA generally  prohibits an FDIC-insured  depository  institution from making
any  capital  distribution  (including  payment  of  dividends)  or  paying  any
management  fee to its  holding  company  if the  depository  institution  would
thereafter be  undercapitalized.  Undercapitalized  depository  institutions are
subject to  restrictions  on  borrowing  from the  Federal  Reserve  System.  In
addition,   undercapitalized  depository  institutions  are  subject  to  growth
limitations and are required to submit capital  restoration  plans. A depository
institution's  holding  company must guarantee the capital plan, up to an amount
equal to the lesser of 5% of the depository  institution's assets at the time it
becomes  undercapitalized  or the  amount  of the  capital  deficiency  when the
institution  fails to comply with the plan. The federal banking agencies may not
accept a capital plan without determining,  among other things, that the plan is
based on  realistic  assumptions  and is  likely to  succeed  in  restoring  the
depository institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.

Significantly  undercapitalized  depository  institutions  may be  subject  to a
number of requirements  and  restrictions,  including  orders to sell sufficient
voting  stock to become  adequately  capitalized,  requirements  to reduce total
assets and cessation of receipt of deposits from correspondent banks. Critically
undercapitalized  depository  institutions  are  subject  to  appointment  of  a
receiver  or  conservator  generally  within  90 days of the date on which  they
became critically undercapitalized.

We believe that at December 31, 2001,  the Bank was well  capitalized  under the
criteria discussed above.

FDICIA contain numerous other  provisions,  including new accounting,  audit and
reporting  requirements,  beginning in 1995 termination of the "too big to fail"
doctrine except in special cases,  limitations on the FDIC's payment of deposits
at foreign  branches,  new regulatory  standards in such areas as asset quality,
earnings and  compensation  and revised  regulatory  standards  for, among other
things, powers of state banks, real estate lending and capital adequacy.  FDICIA
also requires that a depository  institution provide 90 days prior notice of the
closing of any branches.

Various other  legislation,  including  proposals to revise the bank  regulatory
system and to limit the investments that a depository  institution may make with
insured funds, is from time to time introduced in Congress.

INTERSTATE ACT

The  Riegle-Neal  Interstate  Banking  and  Branching  Efficiency  Act  of  1994
("Interstate  Act"), which was enacted on September 29, 1994, among other things
and subject to certain conditions and exceptions, permits on an interstate basis
(i) bank holding  company  acquisitions  commencing one year after  enactment of
banks (of a minimum age of up to five years as  established  by state law in any
state),  (ii)  mergers of national and state banks after May 31, 1997 unless the
home state of either bank has opted out of the interstate bank merger provision,
(iii)  branching  de novo by  national  and  state  banks if the host  state has
opted-in to this provision of the  Interstate  Act, and (iv) certain bank agency
activities  after one year after  enactment.  The  Interstate Act contains a 30%
intrastate  deposit  cap,  except  for the  initial  acquisition  in the  state,
restriction that applies to certain interstate  acquisitions  unless a different
intrastate  cap  has  been  adopted  by the  applicable  state  pursuant  to the
provisions of the  Interstate  Act and a 10% national  deposit cap  restriction.
Regulations  have not yet been issued under the Interstate  Act. A bill has been
enacted by the Tennessee  legislature  which  repeals the  Tennessee  Reciprocal
Banking  Act,  amends  the  Tennessee  Bank  Structure  Act of 1974,  and amends
Tennessee's  bank branching laws by opting in to the Interstate Act.  Management
cannot  predict the extent to which the business of the Company and the Bank may
be affected.



                                     - 18 -

<PAGE>



BROKERED DEPOSITS AND PASS-THROUGH INSURANCE

The FDIC has adopted  regulations under FDICIA governing the receipt of brokered
deposits  and pass-  through  insurance.  Under the  regulations,  a bank cannot
accept or rollover or renew brokered  deposits unless (i) it is well capitalized
or (ii) it is adequately  capitalized  and receives a waiver from the FDICIA.  A
bank that cannot  receive  brokered  deposits  also cannot offer  "pass-through"
insurance on certain employee benefit  accounts.  Whether or not it has obtained
such a waiver,  an adequately  capitalized  bank may not pay an interest rate on
any deposits in excess of 75 basis points over certain index  prevailing  market
rates specified by regulation.  There are no such restrictions on a bank that is
well  capitalized.  Because we believe that the Bank was well  capitalized as of
December 31, 2001,  we believe the brokered  deposits  regulation  will have not
material effect on the funding or liquidity of the Bank.

FDIC INSURANCE PREMIUMS

The Bank is required to pay semiannual FDIC deposit  insurance  assessments.  As
required  by  FDICIA,  the FDIC  adopted a  risk-based  premium  schedule  which
increased the assessment rates for most  FDIC-insured  depository  institutions.
Under the  schedule,  the premiums  initially  range from $.23 to $.31 for every
$100 of deposits. Each financial institution is assigned to one of three capital
groups -- well capitalized,  adequately  capitalized or  undercapitalized -- and
further  assigned to one of three subgroup  within a capital group, on the basis
of  supervisory  evaluations  by  the  institution's  primary  federal  and,  if
applicable,   state   supervisors   and  other   information   relevant  to  the
institution's  financial  condition  and the risk posed to the  applicable  FDIC
deposit  insurance  fund. The actual  assessment rate applicable to a particular
institution   will,   therefore,   depend  in  part  upon  the  risk  assessment
classification so assigned to the institution by the FDIC. Recently the FDIC has
passed a  resolution  to lower  premiums.  The Bank  currently  does not pay any
premium on the insurance for its deposits.

Under the FDIA,  insurance  of  deposits  may be  terminated  by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices,  is in
an unsafe or unsound  condition  to  continue  operations  or has  violated  any
applicable law,  regulation,  rule, order or condition imposed by a federal bank
regulatory agency.

DEPOSITOR PREFERENCE

The Omnibus Budget Reconciliation Act of 1993 provides that deposits and certain
claims for administrative  expenses and employee compensation against an insured
depositary institution would be afforded a priority over other general unsecured
claims  against  such an  institution,  including  federal  funds and letters of
credit,  in the "liquidation or other  resolution" of such an institution by any
receiver.

EFFECT OF GOVERNMENTAL POLICIES

The Bank is affected by the policies of  regulatory  authorities,  including the
Federal Reserve System.  An important  function of the Federal Reserve System is
to regulate the national money supply.  Among the instruments of monetary policy
used by the  Federal  Reserve  are:  purchases  and  sales  of  U.S.  Government
securities in the  marketplace;  changes in the discount rate, which is the rate
any  depository  institution  must pay to borrow from the Federal  Reserve;  and
changes  in  the  reserve   requirements  of  depository   institutions.   These
instruments are effective in influencing economic and monetary growth,  interest
rate levels and inflation.

The  monetary  policies of the  Federal  Reserve  System and other  governmental
policies  have had a significant  effect on the operating  results of commercial
banks in the past and are  expected to continue to do so in the future.  Because
of changing  conditions in the national economy and in the money market, as well
as the result of actions by monetary and fiscal authorities,  it is not possible
to predict with certainty future changes in interest rates, deposit levels, loan
demand or the  business  and earnings of the Company and the Bank or whether the
changing  economic  conditions  will  have a  positive  or  negative  effect  on
operations and earnings.

Bills are pending  before the United States  Congress and the Tennessee  General
Assembly  which could affect the business of the Company and the Bank, and there
are  indications  that other similar  bills may be introduced in the future.  It
cannot  be  predicted  whether  or in what form any of these  proposals  will be
adopted  or the  extent  to  which  the  business  of  Volunteer  and  the  Bank
subsidiaries may be affected thereby.

EMPLOYEES

At December  31, 2001,  the Company had a total of 54 employees  with 3 of those
employed on a part-time basis.

ITEM 2.  DESCRIPTION OF PROPERTY

The  Bank's  main  office is  located  at 210 East Main  Street in  Rogersville,
Tennessee. The property consists of a masonry building with approximately 10,000
square  feet,  7,500  square  feet of which is used by the Bank.  The Bank has a
branch in Sneedville,  Tennessee  which is a masonry  building of  approximately
7,000  square  feet,  which is  constructed  on a half acre of land owned by the
Bank.  The Bank  operates a third  location as a branch in Church  Hill.  During
2001,  the Bank  opened a fourth  limited  service  branch in  Rogersville.  All
facilities have improvements  including  drive-through  tellers,  vaults,  night
depository and certain facilities have safe deposit boxes.



                                     - 19 -

<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

There are no material  pending legal  proceedings to which Volunteer or the Bank
is a party or of which  any of  their  properties  are  subject;  nor are  there
material  proceedings  known  to us  to  be  contemplated  by  any  governmental
authority;   nor  are  there  material  proceedings  known  to  us,  pending  or
contemplated,  in which any  director,  officer or  affiliate  or any  principal
security  holder of Volunteer,  or any associate of any of the  foregoing,  is a
party or has an interest adverse to Volunteer or the Bank.

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

         None

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

We conducted a public offering of our Common Stock in 1997 at a price of $15 per
share (the  "Offering").  There is no established  public market for the shares.
Management  is aware that isolated  transactions  in the Common Stock occur from
time to time. To our best knowledge transactions in the Common Stock during 2001
were for the price of $15.00 per share.

There were 480 holders of record of the Common Stock as of March 15, 2002.

Payment of dividends is at the  discretion of the board of  directors.  While we
have paid dividends in recent years,  the board of directors cannot predict when
such dividends, if any, will be made. The payment of dividends, if any, shall at
all  times be  subject  to the  payment  of our  expenses,  the  maintenance  of
reasonable  working  capital  and  risk  reserves,  and  minimum  capitalization
requirements for state banks.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The  purpose of this  discussion  and  analysis  is to provide the reader with a
concise  description of our financial  condition and changes therein and results
of our operations and the Bank for the years ended December 31, 2001 and 2000.

This  discussion  and analysis is intended to complement  the audited  financial
statements  and  footnotes  and  the  supplemental  financial  data  and  charts
appearing elsewhere in this report, and should be read in conjunction therewith.
This discussion and analysis will focus on the following major areas: Results of
Operations,  Financial Position, Capital Resources, Asset Quality, and Liquidity
and Interest-Sensitivity.

RESULTS OF OPERATIONS

Net income for 2001 was $626,659 decreasing $103,418 compared with net income of
$730,077  for 2000.  Our return on average  assets was 0.53% for 2001 or 88% the
return  on  average  assets  of 0.66% for 2000.  Our  return on  average  equity
decreased to 11.19% for 2001 compared with 15.52% for 2000.

Our net income for 2001 and 2000 were impacted by the following:

         -- The yield on  average  interest  earnings  assets was 8.32% for 2001
         decreasing 59 basis points from 8.91% for 2000.

          Average earning assets  increased  $7,143,000 to $108,860,000 for 2001
         compared to $101,717,000 for 2000.

         Yield on average interest bearing liabilities decreased 59 basis points
         from 5.42% in 2000 to 4.83% for 2001.

         Average   interest   bearing   liabilities   increased   $6,045,000  to
         $99,030,000 for 2001 compared to $92,985,000 for 2000.

         Average  interest  earning  assets to average  total  assets  increased
         slightly from 92.55% for 2000 to 92.67% for 2001.

         Average interest bearing  liabilities to average total assets decreased
         from 84.60% for 2000 to 84.30% for 2001.

As a result of the  foregoing  net interest  income as a  percentage  of average
interest  earning  assets  decreased  from  3.96%  for 2000 to 3.92%  for  2001.
Accordingly,  net  interest  income  for 2001 of  $4,206,824  was only  $277,319
greater than net interest income of $3,929,505 for 2000.

Net interest  income for 2001 was positively  impacted by a decrease in interest
expense of $73,000 on parent  company only  borrowings.  Average  parent company
only borrowings  were $2,186,000 for 2001 or a decrease of $334,000  compared to
2000 of $2,520,000.  The decrease of $73,000 was  attributable  to a decrease in
the average rate on such outstanding

                                     - 20 -

<PAGE>



borrowings  from 8.41% for 2000 to 6.36% for 2001 and principal  reduction.  The
borrowing was incurred in order to increase the capital of our subsidiary  bank.
Without this borrowing, the Bank would not have had sufficient capital to permit
the Bank to open branches in Rogersville and Church Hill.



                                     - 21 -

<PAGE>



The following table indicates the average  balance,  interest income or expense,
average interest rates earned or paid, interest rate spread, and interest margin
for the years ended December 31, 2001 and 2000.

<TABLE>
<CAPTION>


                                                   2001                                           2000
                                      -----------------------------                  ----------------------------
(Fully taxable equivalent)                       Interest     Average                           Interest    Average
(Dollars in thousands except          Average     Income/     Yields/                Average    Income/     Yields/
for per share data)                   Balance     Expense      Rate                  Balance    Expense      Rate
                                      -------     -------      ----                  -------    -------      ----
Assets:

Interest-earning assets:

<S>                                      <C>         <C>          <C>                  <C>          <C>         <C>
Loans net of unearned income            $ 74,989    $ 7,137       9.52%               $ 71,927     $ 7,156      9.95%
U.S. Treasury and other U.S.
  government agencies                     24,585      1,468       5.97%                 22,237       1,427      6.42%
States and municipalities                  2,889        190       6.58%                  4,424         286      6.46%
FHLB stock                                   341         23       6.74%                    317          23      7.26%
Federal funds sold                         6,056        234       3.86%                  2,812         175      6.22%
                                           -----        ---                              -----         ---
    Total interest-earning
      assets/interest income             108,860      9,052       8.32%                101,717       9,067      8.91%
                                         -------      -----                            -------       -----
Cash and due from banks                    2,953                                         2,883
Other assets                               6,626                                         6,247
Allowance for loan losses                   (971)                                         (937)
                                            ----                                         -----
    Total                               $117,468                                      $109,910
                                        ========                                      ========

Liabilities and stockholders'
  equity:

Interest-bearing liabilities:

Demand deposits                         $ 21,541      $ 644       2.99%               $ 19,998       $ 852      4.26%
Savings                                    5,477        135       2.46%                  4,706         142      3.02%
Individual retirement accounts             8,829        471       5.33%                  8,813         504      5.72%
Time certificates                         59,843      3,331       5.57%                 55,609       3,255      5.85%
FHLB advances                                162          7       4.32%                    143           9      6.29%
Securities sold under
repurchase                                   992         53       5.34%                  1,196          68      5.69%
Note payable                               2,186        139       6.36%                  2,520         212      8.41%
                                           -----        ---                              -----         ---
  Total interest-bearing
    liabilities/interest expense          99,030      4,780       4.83%                 92,985       5,042      5.42%
                                          ------      -----                             ------       -----
Non-interest bearing demand
  deposits                                11,328                                        10,917
Other liabilities                          1,510                                         1,303
Stockholders' equity                       5,600                                         4,705
                                           -----                                         -----
  Total                                 $117,468                                      $109,910
                                        ========                                      ========
Net interest earnings                                $4,272                                         $4,025
                                                     ======                                         ======
Net interest on interest earning
  assets                                                          3.92%                                         3.96%
                                                                  ====                                          ====

Return on average assets                   0.53%                                         0.66%
Return on average equity                  11.19%                                        15.52%
Cash dividends declared                  $75,464                                       $64,683
Dividend payout ratio                     12.04%                                         8.86%
Net income                            $ 626,659                                     $ 730,077
</TABLE>





                                     - 22 -

<PAGE>



Non-interest  expense increased  $372,166 from $2,939,884 for 2000 to $3,312,050
for 2001.  Non-interest  expense as a percentage of average assets  increased by
0.15% from 2.67% in 2000 to 2.82% for 2001.

The following table presents non-interest expense for 2001 compared to 2000 as a
percentage of average assets and the changes therein (in thousands):

NONINTEREST EXPENSE


<TABLE>
<CAPTION>

                                                              % Average                        % Average
                                                  2001           Assets            2000           Assets
                                                  ----           ------            ----           ------
<S>                                             <C>              <C>             <C>              <C>
Salaries and employee benefits                  $1,743           1.48%           $1,603           1.46%
Occupancy, net                                     267           0.23%              227           0.21%
Furniture and equipment                            368           0.31%              333           0.30%
Directors fees                                      76           0.06%               80           0.07%
Advertising                                         30           0.03%               37           0.03%
FDIC insurance                                      17           0.01%               19           0.02%
Office supplies                                     87           0.07%               72           0.07%
Professional services                               75           0.06%               71           0.06%
Telephone                                           51           0.04%               48           0.04%
Postage and courier                                 60           0.05%               52           0.05%
Loss on other real estate owned                     89           0.08%               --             --
Other                                              449           0.38%              398           0.36%
                                                ------                           ------
                                                $3,312           2.82%           $2,940           2.67%
                                                ======           ====            ======           ====
</TABLE>


Non-interest  expenses  increased 12.65% in absolute terms from 2000 to 2001 and
increased as a percentage of average total assets.  The increase is attributable
to an expansion of our asset base with a corresponding  increase in non-interest
expenses. Occupancy expense increased in 2001 by 2.25% primarily attributable to
overall asset growth.  Non-interest expense as a percentage of average assets is
expected to decline as growth in Bank assets is expected to increase faster than
the growth in non-interest expense.

The  provision  for loan losses in 2001 was $265,000 and for 2000 was  $240,000.
The  provision  for loan  losses is the amount  management  deems  necessary  to
maintain a reserve for loan losses at a level  sufficient to meet risks inherent
in the  Bank's  loan  portfolio.  The  level of the  reserve  is  determined  by
management  after  considering  ongoing reviews of the loan portfolio as well as
considering  the  level  and  magnitude  of   non-performing   assets  and  loan
delinquencies,  general  economic  conditions  in the areas served by Volunteer,
historic  loan-loss  experience,  loan mix and the  level of loans  relative  to
reserves.

Non-interest  income decreased $16,422 from $356,306 in 2000 to $339,884 in 2001
primarily due to a decrease in service charges on deposit accounts.

Income tax expense decreased $32,851 from $375,850 in 2000 to $342,999 in 2001.

FINANCIAL POSITION

Our total assets decreased 1.62% or $1.89 million during 2001 to $114.25 million
at year end 2001  from  $116.14  million  at year end  2000.  This  decrease  is
primarily attributable to a decrease of $2.04 million in deposits and securities
sold under repurchase agreements during 2001 to $105.02 million at year end 2001
from $107.06 million at year end 2000.

Portfolio  securities  increased  $100,000 in 2001 to $26.59 million at year end
2001 from $26.49  million at year end 2000 while federal funds  decreased  $0.67
million during 2001.

Loans  decreased  $0.95 million  during 2001 to $73.07  million at year end 2001
compared  to $74.02  million  at year end 2000.  Of this  decrease  real  estate
mortgage  loans  decreased  $1.73 million in 2001 and consumer  loans  decreased
$0.73 million in 2001.  Real estate mortgage loans  represented  63.71% of gross
outstanding loans at year end 2001.  Consumer loans represented  20.91% of gross
outstanding loans at year end 2001.

Deposits and securities sold under repurchase agreements decreased $2.04 million
in 2001 from  $107.06  million at year end 2000 to  $105.02  million at year end
2001.



                                     - 23 -

<PAGE>



CAPITAL REQUIREMENTS

Our equity  capital was $6.13 million at year end 2001 compared to $5.32 million
at year end 2000. This increase of  approximately  $811,000  consists of our net
income for 2001 of $626,659,  an increase in the accumulated other comprehensive
income of $260,340 less dividends paid of $75,464.

The  Company  is a "small  one-bank  holding  company"  within  the  meaning  of
regulations promulgated by the Board of Governors of the Federal Reserve System.
Accordingly,   the  Company's  capital  compliance,  for  bank  holding  company
purposes,  will  be  measured  solely  with  respect  to the  Bank  and not on a
consolidated basis.

Management  believes,  as of  December  31,  2001,  that  we  meet  all  capital
requirements  to which we are  subject  and that we are in  compliance  with all
conditions  and  commitments  to banking  regulators  regarding the approval and
opening of branches in Rogersville and Church Hill, Tennessee.  However,  events
beyond our control,  such as a downturn in the local  economy,  could  adversely
affect  future  earnings  and,  consequently,  our ability of to meet our future
minimum capital requirements.

The Bank would be considered "well capitalized" within the applicable regulatory
capital guidelines at December 31, 2001.

LIQUIDITY RESOURCES

Liquidity  management  focuses  on the  need to  meet  both  short-term  funding
requirements  and long-term  growth  objectives.  Primary  sources for liquidity
include deposits,  loan repayments and security repayments or sales of available
for sale securities.

ASSET LIABILITY MANAGEMENT

Our long-term  profitability  depends on properly  priced products and services,
asset  quality  and  asset-liability  management.  Historically,  we have  had a
mismatch between the maturities of our assets and liabilities  because customers
have  traditionally  preferred  short-term  deposits and longer-term loans. This
mismatch  makes us  sensitive  to changes in  interest  rates and the  resulting
effect on interest  income and the market value of assets.  We attempt to manage
this  mismatch  and thus  reduce  its  effect  on  earnings  during  periods  of
significant changes in interest rates. Our strategies include the origination of
shorter-term  fixed  rate  loans and  adjustable  rate  loans or loans with call
provisions.  We also emphasize checking accounts and other transaction  accounts
which management believes are less rate sensitive than certificate accounts.

A traditional  measure of interest rate sensitivity and its impact upon the next
years  earnings is our one-year gap position  (total assets subject to repricing
less total liabilities  subject to repricing).  A negative one-year gap position
generally  exposes our  earnings to rising  short term rates over the period and
thus reduced net interest income because current liabilities reprice faster than
current  assets.  However,  this earnings  exposure can be mitigated  during the
period if total asset  growth is  sufficient  such that new assets are priced at
relatively higher rates and new deposit maturities are extended. At December 31,
2001 we had a  cumulative  one year  negative gap of (39.49%) or a net of $41.83
million in liabilities repricing faster than assets.

While the one-year-gap  measure helps provide some information about a financial
institution's  interest  sensitivity,  it does not  predict the trends of future
earnings.

ASSET QUALITY

Non-performing  and other loans past due 90 days or more were $2,258,495 at year
end 2001  compared to $1,184,087  at year end 2000  representing  an increase of
$1,074,408.  Non-performing  loans  as a  percentage  of net  loans  before  the
allowance for loan losses was 3.09% at year end 2001 and 1.59% at year end 2000.
The reserve for loan losses to non-performing  loans,  which is a measure of the
Bank's  ability to cover problem  assets with existing  reserves,  was 40.20% at
year end 2001 and 83.25% at year end 2000.  Other real  estate  owned  increased
$589,438 to  $1,144,770  at year end 2001 compared to $555,332 at year end 2000.
We had no material  restructured  loans in 2001 or 2000.  Our asset  quality has
deteriorated  as a result of a weakening  economy and a lapse in underwriting at
one of our branches.  Our loan policies and  procedures  have been tightened and
the problems have been addressed.  We intend to continue  aggressive  collection
efforts.

The  increase  in  non-accrual  loans  and  other  real  estate  owned is mainly
attributable  to real estate  development  loans.  Management  has adopted  more
stringent underwriting  guidelines to address this problem along with aggressive
collection  efforts.  In  addition,  the Bank hired,  in February  2002 a senior
experienced credit officer to oversee credit administration,  including policies
and procedures, underwriting and credit analysis.

EFFECTS OF INFLATION AND CHANGING PRICES

The  consolidated  financial  statements  and related  financial  data presented
herein have been  prepared in  accordance  with  generally  accepted  accounting
principles,  which require the  measurement of financial  position and operating
results in terms of historical dollars,  without considering changes in relative
purchasing power over time due to inflation.

Unlike most industrial companies, virtually all of the assets and liabilities of
a financial  institution  are monetary in nature.  As a result,  interest  rates
generally  have  a  more  significant   impact  on  a  financial   institution's
performance

                                     - 24 -





than does the effect of inflation. In the current interest rate environment, the
liquidity and maturity  structures of our assets and liabilities are critical to
maintenance of acceptable performance levels.


Item 7.  Financial Statements
<TABLE>
<CAPTION>

Index to Consolidated Financial Statements:                                                                    Page
                                                                                                               ----

<S>                                                                                                               <C>
         Independent Auditor's Report...........................................................................F-1

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

         Consolidated Statements of Earnings for the years ended December 31, 2001 and 2000.....................F-3

         Consolidated Statements of Changes in Stockholders' Equity for the years ended
                  December 31, 2001 and 2000....................................................................F-4

         Consolidated Statements of Cash Flows for the years ended December 31, 2001 and 2000...................F-5

         Notes to Consolidated Financial Statements.............................................................F-6
</TABLE>


Item 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

         None

Item 9. Directors, Executive Officers, Promoters and Control Persons

     Following  is certain  information  regarding  the  nominee  directors  and
executive officers of the Company.

     REED D. MATNEY  (52)  assumed the  position of Chief  Executive  Officer in
November  1996 and has served as the President  and a Director  since 1994.  Mr.
Matney was employed by First Union  National Bank of Tennessee  until April 1994
and he was employed by the Bank in May 1994.

     G.  DOUGLAS  PRICE (61) has served as a Director  since 1994.  Mr. Price is
retired and was the former Executive for Hawkins County, Tennessee.

     WILLIAM E.  PHILLIPS  (54) has served as  Chairman of the Board since 1994.
Mr.  Phillips  is an  attorney  with  the  law  firm  of  Phillips  and  Hale in
Rogersville, Tennessee.

     GARY E. VARNELL (55) has served as a Director  since 1994.  Mr.  Varnell is
the  owner  and  operator  of a retail  office  products  store in  Rogersville,
Tennessee.

     GEORGE L.  BROOKS  (72) has served as a Director  since  1994.  Mr.  Brooks
retired from Citizens Union Bank in 1993 and resides in Rogersville, Tennessee.

     SHIRLEY A. PRICE (67) has served as a Director  since 1994. Ms. Price is an
insurance agent in Rogersville, Tennessee.

     LEON GLADSON  (76) has served as a Director  since 1994.  Mr.  Gladson is a
retired businessman and resides in Rogersville, Tennessee.

     NEIL D. MILLER (82) has served as a Director  since 1994.  Mr.  Miller is a
farmer in Rogersville, Tennessee.

     M. CARLIN GREENE (59) has served as a Director  since 1994. Mr. Greene is a
real estate agent and farmer in Sneedville, Tennessee.

     SCOTT F. COLLINS (53) has served as a Director  since 1994.  Mr. Collins is
the Hancock County Clerk & Master in Sneedville, Tennessee.


                                     - 25 -

<PAGE>



     LAWRENCE  E. GRAY (57) has  served as a  Director  since 1994.

     No director of the  Company is a director or  executive  officer of another
bank holding company, bank, savings and loan association, or credit union.

     During  2001 the Board of  Directors  of the Company  held 2 meetings.  The
Directors  of the  Company  also serve as  directors  of the Bank.  The Board of
Directors of the Bank held 12 meetings in 2001.  No director  attended less than
75% of the meetings  held by the Company or the Bank during 2001.  The Directors
received no  compensation  as  directors  of the Company but as directors of the
Bank received $300 for each meeting attended.

     Messrs. Phillips, Miller and Matney serve as the Executive Committee of the
Board of Directors.  Messrs. Doug Price, Gladson,  Phillips and Collins serve as
members of the Audit Committee of the Board of Directors.  These persons receive
no compensation as members of such committees.


                                     - 26 -


<PAGE>



Item 10. Executive Compensation.

     The following table sets forth the aggregate cash  compensation paid by the
Company  to the chief  executive  officer  of the  Company.  No other  executive
officer  of the  Company  received  cash  compensation  in  excess  of  $100,000
(determined as of the end of 2001) for the years ended  December 31, 2001,  2000
and 1999.


                                                            Annual Compensation
Name and Position                               Year               Salary ($)
-----------------                               ----   ----------------------
Reed Matney                                     2001                 105,000
Chief Executive Officer and President           2000                 100,000
                                                1999                 86,000


Item 11.          Security Ownership of Certain Beneficial Owners and Management

     As of March 15, 2002,  the Company's  records  indicated that the following
number of shares were beneficially owned by (i) each person known by the Company
to  beneficially  own more than 5% of the Company's  shares;  (ii) directors and
persons nominated to become directors of the Company and executive officers; and
(iii) directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>

                                                                       Amount and Nature
                               Name of                              of Beneficial Ownership              Percent
                           Beneficial Owner                            (Number of Shares)                of Class(1)
<S>                                                                           <C>                      <C>
(i)       Ralph T. Hurley...................................                  85,500                   15.86%
          Rt. 2 Box 157
          Sneedville, TN  37869
(ii)      William E. Phillips(2)............................                  22,495                    4.17
          Lawrence E. Gray(3)...............................                  13,201                    2.44
          Shirley A. Price..................................                   7,937                    1.47
          Reed D. Matney....................................                   8,393                    1.56
          Leon Gladson......................................                   3,723                    *
          G. Douglas Price(4)...............................                  15,934                    2.96
          Gary E. Varnell(5)................................                  16,260                    3.02
          Scott F. Collins..................................                   1,647                    *
          George L. Brooks..................................                   6,165                    1.14
          M. Carlin Greene..................................                  15,000                    2.78
          Neil D. Miller....................................                  11,150                    2.07
(iii)     Directors and executive officers as a group (11                    121,905                   22.62%
          persons)..........................................

*        Less than 1%
</TABLE>
---------
(1)  Unless otherwise  indicated,  beneficial  ownership consists of sole voting
     and investing  power based on 539,027  shares issued and  outstanding as of
     March 15, 2002.
(2)  Includes  12,211  shares  owned by the Joe H. Wilson  Trust,  for which Mr.
     Phillips serves as co-trustee.
(3)  Includes  12,211  shares  owned  jointly  with  his  father,  for  which he
     disclaims voting and investment power.
(4)  Includes  6,105 shares owned by his spouse,  for which he disclaims  voting
     and investment power.
(5)  Includes 320 shares owned jointly with his two sons.

Item 12. Certain Relationships and Related Transactions

     The  Company  expects  to have in the  future  banking  and other  business
transactions  in the ordinary  course of its banking  business  with  directors,
officers,  and 10%  beneficial  owners  of the  Company  and  their  affiliates,
including  members of their families,  or corporations,  partnerships,  or other
organizations  in which such officers or directors have a controlling  interest,
on  substantially  the same  terms  (including  price,  or  interest  rates  and
collateral)  as those  prevailing at the time for comparable  transactions  with
unrelated parties.  Any such banking transactions will not involve more than the
normal risk of  collectibility  nor present  other  unfavorable  features to the
Company or the Bank.

Item 13. Exhibits and Reports on Form 8-K

(1) Exhibits

Exhibit Number    Description
--------------    -----------
  3.1             Articles of Incorporation of Volunteer  Bancorp, Inc.,
                  as amended*
  3.2             Bylaws of Volunteer Bancorp, Inc.*
 21.1             List of Subsidiaries
 23.1             Consent of Independent Public Accountants

*    Incorporated   by  reference  to  exhibits  filed  with  the   Registrant's
     Registration Statement on Form SB-1, Registration No. 33-94050.

(2) Reports on Form 8-K

     No reports on Form 8-K were filed  during the quarter  ended  December  31,
2001.

                                     - 27 -

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                             Rogersville, Tennessee

                        Consolidated Financial Statements

                           And Additional Information

                           December 31, 2001 and 2000


<PAGE>












                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


To the Board of Directors
Volunteer Bancorp, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets of  Volunteer
Bancorp,  Inc. and  subsidiary as of December 31, 2001 and 2000, and the related
consolidated statements of earnings, changes in stockholders' equity, cash flows
and comprehensive income for the years then ended. These consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Volunteer Bancorp,
Inc. and  subsidiary as of December 31, 2001 and 2000,  and the results of their
operations  and their cash flows for the years  then  ended in  conformity  with
generally accepted accounting principles.






February 14, 2002
Nashville, Tennessee

                                      F - 1

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 2001 and 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                    2001               2000
                                                                                   ------             -----
                                   ASSETS

<S>                                                                        <C>                          <C>
Cash and due from banks (note 11)                                            $         2,628,179  $       3,162,867
Federal funds sold                                                                     6,275,000          6,950,000
                                                                             --------------------------------------
   Cash and cash equivalents                                                           8,903,179         10,112,867
Investment securities available for sale (amortized
   cost of $25,990,696 and $25,866,347, respectively) (note 2)                        25,966,922         25,422,669
Investment securities held to maturity (estimated market
   value of $626,589 and $1,045,192, respectively) (note 2)                              626,859          1,066,548
Loans, less allowance for possible loan losses of $908,016 and
     $985,784 in 2001 and 2000, respectively (note 3)                                 72,158,156         73,038,920
Accrued interest receivable                                                            1,066,479          1,213,319
Premises and equipment, net (note 4)                                                   3,866,358          4,052,044
Other real estate                                                                      1,144,770            552,332
Deferred income taxes (note 9)                                                           114,935            321,358
Goodwill (note 1)                                                                        131,259            149,142
Other assets                                                                             268,822            210,192
                                                                             --------------------------------------
    Total assets                                                             $       114,247,739  $     116,139,391
                                                                             ======================================


                    LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits (notes 2 and 5)
   Non-interest bearing                                                      $        11,334,627  $      10,894,819
   Interest bearing                                                                   92,575,028         95,112,867
                                                                             --------------------------------------
     Total deposits                                                                  103,909,655        106,007,686
Accrued interest payable                                                                 894,347          1,140,033
Securities sold under repurchase agreements (note 17)                                  1,109,603          1,052,513
Other accrued taxes, expenses  and liabilities                                            32,466            124,026
Long-term debt (note 6)                                                                2,170,000          2,495,000
                                                                             --------------------------------------
     Total liabilities                                                               108,116,071        110,819,258
                                                                             --------------------------------------
Commitments and contingent liabilities (note 10)

Stockholders' equity:
   Common stock, $0.01 par value, 1,000,000 shares authorized,
          539,027 shares issued and outstanding                                            5,390              5,390
   Additional paid-in capital                                                          1,916,500          1,916,500
   Retained earnings                                                                   4,224,518          3,673,323
   Accumulated other comprehensive income (note 1)                                       (14,740)          (275,080)
                                                                             --------------------------------------
     Total stockholders' equity                                                        6,131,668          5,320,133
                                                                             --------------------------------------
        Total liabilities and stockholders' equity                           $       114,247,739  $     116,139,391
                                                                             ======================================
</TABLE>



           See accompanying notes to consolidated financial statements

                                      F - 2

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                       Consolidated Statements of Earnings

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                       2001                2000
                                                                                      ------              -----
Interest income:
<S>                                                                             <C>                   <C>
    Interest and fees on loans                                                  $         7,136,898   $       7,156,202
    Interest on federal funds                                                               233,982             175,342
    Interest on investment securities:
           Taxable                                                                        1,490,965           1,456,935
           Exempt from Federal income tax                                                   125,126             183,916
                                                                                ------------------- -------------------
              Total interest income                                                       8,986,971           8,972,395
                                                                                ------------------- -------------------

Interest expense:
    Interest on deposits                                                                  4,581,452           4,753,981
    Interest on other borrowed funds                                                        198,695             288,909
                                                                                ------------------- -------------------
              Total interest expense                                                      4,780,147           5,042,890
                                                                                ------------------- -------------------
Net interest income                                                                       4,206,824           3,929,505
Provisions for possible loan losses (note 3)                                                265,000             240,000
                                                                                ------------------- -------------------
Net interest income after provision for possible loan losses                              3,941,824           3,689,505
                                                                                ------------------- -------------------

Non-interest income:
    Service charges on deposit accounts                                                     164,833             228,132
    Other fees and commissions                                                              101,151             106,532
    Securities gains (losses) (note 2)                                                       25,260              (3,152)
    Other non-interest income                                                                48,640              24,794
                                                                                ------------------- -------------------
              Total non-interest income                                                     339,884             356,306
                                                                                ------------------- -------------------

Non-interest expense:
    Salaries and employee benefits (note 8)                                               1,742,511           1,602,785
    Occupancy expenses, net                                                                 266,854             227,341
    Furniture and equipment expense                                                         368,363             333,085
    Other non-interest expense (note 8)                                                     934,322             776,673
                                                                                ------------------- -------------------
              Total non-interest expense                                                  3,312,050           2,939,884
                                                                                ------------------- -------------------
              Net earnings before income taxes                                              969,658           1,105,927

Income tax expense (note 9)                                                                 342,999             375,850
                                                                                ------------------- -------------------
Net income                                                                      $           626,659 $           730,077
                                                                                =================== ===================
Income per common share                                                         $              1.16 $              1.35
                                                                                =================== ===================
Common shares outstanding                                                                   539,027             539,027
                                                                                =================== ===================
</TABLE>



           See accompanying notes to consolidated financial statements

                                      F - 3

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

           Consolidated Statements of Changes in Stockholders' Equity

                 For the Years Ended December 31, 2001 and 2000
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                                                                                  Accumulated
                                              Common                                                 Other
                                               Stock         Additional                             Compre-
                               Common         Stated          Paid-In           Retained            hensive
                               Shares          Value          Capital           Earnings            Income             Total
                              --------         -----         ---------          --------            ------             -----
<S>                               <C>      <C>            <C>              <C>                 <C>                <C>
Balance January 1,2000            539,027  $       5,390  $      1,916,500 $        3,007,929  $       (839,880)  $      4,089,939
Net  income                            --             --                --            730,077                --            730,077
Dividends declared                     --             --                --            (64,683)               --            (64,683)
Other
  comprehensive
  income (loss)                        --             --                --                 --           564,800            564,800
                            -------------  -------------  ---------------- ------------------  ----------------   ----------------
Balance December
   31, 2000                       539,027          5,390         1,916,500          3,673,323          (275,080)         5,320,133
Net income                             --             --                --            626,659                --            626,659
Dividends declared                     --             --                --            (75,464)               --            (75,464)
Other
  comprehensive
  income (loss)                        --             --                --                 --           260,340            260,340
                            -------------  -------------  ---------------- ------------------  ----------------   ----------------
Balance December
   31,2001                        539,027   $      5,390  $      1,916,500 $        4,224,518  $        (14,740)  $      6,131,668
                            =============  =============  ================ ==================  ================   ================
</TABLE>















           See accompanying notes to consolidated financial statements

                                      F - 4

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                   2001                2000
                                                                                                 ------               -----
Cash Flows from Operating Activities:
<S>                                                                                <C>                    <C>
   Net income                                                                      $            626,659   $         730,077
   Adjustments to reconcile net income to net cash
       provided by operating activities:
     Deferred income taxes                                                                       46,859             (59,665)
     Provision for loan losses                                                                  265,000             240,000
     Provision for depreciation and amortization                                                241,231             241,989
     Securities  (gain) loss                                                                    (25,260)              3,152
     FHLB stock dividends                                                                       (22,800)            (23,100)
     Decrease (increase) in interest receivable                                                 146,840            (184,959)
     (Increase) in other assets                                                                (651,068)           (297,830)
     (Decrease) increase in other liabilities                                                  (337,246)            319,403
                                                                                   -------------------- -------------------
  Net cash provided by operating activities                                                     290,215             969,067
                                                                                   -------------------- -------------------

Cash Flows from Investing Activities:
    Proceeds from calls and maturity of held to maturity securities                           1,730,177              31,081
    Purchase of held to maturity securities                                                  (1,290,488)                 --
    Purchase of investment securities available for sale                                    (33,025,682)         (1,141,013)
    Proceeds from calls and maturities of available for sale securities                      21,879,350             866,582
    Proceeds from sale of available for sale securities                                      11,070,043           1,473,818
    Net decrease (increase) in loans                                                            615,764          (6,546,492)
    Capital expenditures                                                                        (37,662)           (201,900)
                                                                                   -------------------- -------------------
  Net cash provided (used) in investing activities                                              941,502          (5,517,924)
                                                                                   -------------------- -------------------

Cash Flows from Financing Activities:
    Net (decrease) increase in demand deposits, NOW accounts,
      IRA and savings accounts                                                               (1,897,674)          5,800,426
    Net (decrease) increase in certificates of deposit                                         (200,357)          5,383,213
    Net increase (decrease) in securities sold under
       repurchase agreements                                                                     57,090            (268,577)
    FHLB advances                                                                             2,000,000                  --
    Repayment of FHLB advances                                                               (2,000,000)         (4,500,000)
    Dividends paid                                                                              (75,464)            (64,683)
    Repayment of long-term debt                                                                (325,000)           (295,000)
                                                                                   -------------------- -------------------
   Net cash (used) provided by financing activities                                          (2,441,405)          6,055,379
                                                                                   -------------------- -------------------
(Decrease) increase in cash and cash equivalents                                             (1,209,688)          1,506,522
Cash and cash equivalents beginning of year                                                  10,112,867           8,606,345
                                                                                   -------------------- -------------------
Cash and cash equivalents end of year (note 1)                                     $          8,903,179 $        10,112,867
                                                                                   ==================== ===================

Supplemental Disclosure of Cash Flow Information:
   Cash paid during the period for:
      Interest                                                                     $          5,025,833 $         4,754,251
                                                                                   ==================== ===================
      Income taxes                                                                 $            479,254 $           394,053
                                                                                   ==================== ===================
</TABLE>

           See accompanying notes to consolidated financial statements

                                      F - 5

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statements of Comprehensive Income

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                           2001          2000
                                                                           ----          ----
<S>                                                                  <C>           <C>
Net income                                                           $     626,659 $     730,077
                                                                     ------------- -------------
Other comprehensive income, before tax:
Unrealized gains on securities available
  for sale:
    Unrealized holding gains arising during the  period                    445,164       907,815
    Less: reclassification adjustment for gains (losses)
        included in income                                                  25,260        (3,152)
                                                                     ------------- -------------
Other comprehensive income                                                 419,904       910,967
    Income taxes related to other comprehensive
        income                                                            (159,564)     (346,167)
                                                                     ------------- -------------
  Other comprehensive income, net of income taxes                          260,340       564,800
                                                                     ------------- -------------
Total comprehensive income                                           $     886,999 $   1,294,877
                                                                     ============= =============
</TABLE>























           See accompanying notes to consolidated financial statements

                                      F - 6

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------



1.   Summary of Significant Accounting Policies

     The accounting policies of Volunteer Bancorp, Inc. (the Company) conform to
     generally  accepted  accounting  principles and to general practices within
     the  banking  industry.  The  following  is a  summary  of the  significant
     policies.

     a. Principles of Consolidation

          The  consolidated  financial  statements  include the  accounts of the
          Company  and its  subsidiary,  Citizens  Bank of East  Tennessee  (the
          "Bank"),  formerly known as Citizens Bank of Sneedville,  of which the
          Company owns 133,300  (100.0%) shares of the Bank's 133,300 issued and
          outstanding  shares of voting  common  stock at December  31, 2001 and
          2000. All material inter- company accounts and transactions  have been
          eliminated in consolidation.

     b. Investment Securities

          Statement  of   Financial   Accounting   Standards   (SFAS)  No.  115,
          "Accounting  for Certain  Investments  in Debt and Equity  Securities"
          requires   investments  in  equity  securities  that  have  a  readily
          determinable  fair  value and  investments  in debt  securities  to be
          classified into three  categories,  as follows:  held to maturity debt
          securities, trading securities, and securities available for sale.

          Classification  of a debt security as held to maturity is based on the
          Company's  positive  intent  and  ability  to hold  such  security  to
          maturity.  Securities held to maturity are stated at cost adjusted for
          amortization of premiums and accretion of discounts, unless there is a
          decline in value which is  considered to be other than  temporary,  in
          which case the cost basis of such  security is written  down to market
          and the amount of the write-down is included in earnings.

          Securities  that are bought and held  principally  for the  purpose of
          selling  them in the  near  term are  classified  as  trading  account
          securities,  which  are  valued at market  with  unrealized  gains and
          losses included in earnings.  Gains or losses on sales and adjustments
          to  market  value  of  trading  account  securities  are  included  in
          non-interest income in the income statements.

          Securities  classified  as  available  for sale are reported at market
          value with  unrealized  gains and losses  excluded  from  earnings and
          reported,  net of tax, in a separate component of stockholders' equity
          and  include  all  securities   not  classified  as  trading   account
          securities or securities  held to maturity.  These include  securities
          used as part of the Company's  asset/liability  strategy  which may be
          sold in response to changes in interest  rates,  prepayment  risk, the
          need or desire  to  increase  regulatory  capital,  and other  similar
          factors.  Gains or losses on sale of securities available for sale are
          recognized at the time of sale, based upon specific  identification of
          the  security  sold,  and are included in  non-interest  income in the
          income statements.




                                      F - 7

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

          Interest  income on  investments  is  computed on the par value of the
          outstanding  investment.  Amortization  of discounts  and accretion of
          premiums is recorded as an adjustment to interest income utilizing the
          effective yield method.

     c. Loans, Less Allowance for Possible Loan Losses

          Statement  of   Financial   Accounting   Standards   (SFAS)  No.  114,
          "Accounting By Creditors For Impairment Of A Loan," as amended by SFAS
          No. 118,  "Accounting  By Creditors For  Impairment Of A Loan - Income
          Recognition And Disclosures"  state that an impaired loan is generally
          any loan,  excluding certain homogeneous small balance credits such as
          credit card  indebtedness,  that is not performing in accordance  with
          its contractual terms. SFAS No. 114 requires that impairment on a loan
          be measured by the difference  between  carrying value and the present
          value of expected future cash flows discounted at the loan's effective
          interest rate, the loan's observable market price, or the collateral's
          value if the loan is  collateral  dependent.  The  amount  of a loan's
          impairment or changes therein  require  charges to earnings.  SFAS No.
          118 allows a creditor to use existing  methods for the  recognition of
          interest income on an impaired loan.

          SFAS No. 125,  "Accounting  for  Transfers  and Servicing of Financial
          Assets and the  Extinguishment  of  Liabilities,"  establishes,  among
          other  things,  new  criteria  for  determining  whether a transfer of
          financial assets for cash or other considerations  should be accounted
          for as a sale or as a pledge of  collateral  in a  secured  borrowing.
          There are  certain  criteria  that must be met for the  transfer to be
          recorded as a sale: The transferred assets have been isolated from the
          transferor - put presumptively  beyond the reach of the transferor and
          its  creditors,  even  in  bankruptcy  or  other  receivership.   Each
          transferee  obtains the right - free of conditions  that  constrain it
          from  taking  advantage  of that  right - to  pledge or  exchange  the
          transferred  assets.  If these criteria are not met, the transfer must
          be  recorded  as a  secured  borrowing.  SFAS No.  125 also  addresses
          repurchase  agreements  that might  allow the  transferor  to maintain
          control over the  transferred  asset. If such an agreement  exists,  a
          transfer  should be  accounted  for as a secured  borrowing if (a) the
          assets to be repurchased are  substantially  the same, (b) they can be
          repurchased on  substantially  the agreed terms,  (c) repurchase  will
          occur before maturity at a fixed and  determinable  price, and (d) the
          agreement was entered into concurrently with the transfer.

          Loans are  stated  at the  principal  amount  outstanding  reduced  by
          unearned interest and an allowance for loan losses.  Unearned interest
          on  loans,   which  relates   principally  to  installment  loans,  is
          recognized  by the sum of the months'  digits  method,  which,  in the
          current case,  approximates  the level yield  method.  Interest on all
          other loans is computed on the outstanding loan balance.

          The  allowance  method is used by the Company to provide for  possible
          loan losses. Accordingly, all loan losses are charged to the allowance
          for possible loan losses and all  recoveries are credited to it. Loans
          are charged against the allowance when management believes that the

                                      F - 8

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

          collection  of the  principal is unlikely.  The allowance is an amount
          that management believes will be adequate to absorb possible losses on
          existing  loans  that may  become  uncollectible.  The  provision  for
          possible  loan  losses  charged  to  operating  expense  is the amount
          management  considers  necessary to bring the allowance to an adequate
          level based on past loan loss  experience and other factors which,  in
          management's  judgment,  deserve  current  recognition  in  estimating
          possible  loan losses.  Such other  factors  considered  by management
          include growth and composition of the loan portfolio, the relationship
          of the  allowance for possible  loan losses to  outstanding  loans and
          current economic  conditions that may affect the borrower's ability to
          repay.

          Accrual  of  interest  is  discontinued  on  a  loan  when  management
          believes,  after  considering  economic  and business  conditions  and
          collection  efforts,  that the borrower's  financial condition is such
          that the collection of interest is doubtful.

     d. Loan Fees

          Loan fees are  credited  to  income  at the time of loan  origination.
          Direct  origination  costs for  loans are  charged  to  expenses  when
          incurred.  The results of using this  accounting  method do not differ
          materially from generally accepted accounting principles requiring the
          use of the level interest yield method.

     e. Premises and equipment

          Premises and  equipment are stated at cost.  Depreciation  is computed
          primarily by the straight line method over the estimated  useful lives
          of the  related  assets.  Gain or loss on items  retired or  otherwise
          disposed of is credited or charged to operations  and cost and related
          accumulated  depreciation  are removed from the asset and  accumulated
          depreciation accounts.

          Expenditures  for major  renewals  and  improvements  of premises  and
          equipment are  capitalized  and those for  maintenance and repairs are
          charged to earnings as incurred.

     f. Other Real Estate

          Real  estate  acquired  in  foreclosure  or in  settlement  of debt or
          repossessed  in  substance  is  carried  at the  lower of cost or fair
          market value less  estimated  costs to sell.  Fair market value at the
          time of  foreclosure  or  settlement  of debt is  based  on a  current
          appraisal of the  property.  Any  reduction in carrying  value to fair
          market value at the time the property is acquired is accounted  for as
          a loan loss.  Management evaluates the fair market value of individual
          properties  in  other  real  estate  periodically  and any  subsequent
          write-downs  of the carrying  value of the  properties  are charged to
          losses on other real  estate and  credited  directly  to the  carrying
          value of individual properties.

          If an individual  property is in condition for use or sale at the time
          of foreclosure, any subsequent

                                      F - 9

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

          holding  costs are included in expense as incurred.  If an  individual
          property  is  not in  condition  for  use  or  sale  at  the  time  of
          foreclosure,  completion and holding costs are  capitalized  until the
          property  is in  condition  for use or sale.  All legal fees and other
          direct costs incurred in foreclosure are expensed as incurred.

     g. Income Taxes

          The provision  for income taxes  relates  primarily to items of income
          and expenses after  elimination of tax exempt  interest on investments
          and loans.  Deferred  income  taxes are  provided  on all  significant
          timing  differences  between  income  determined for financial and tax
          reporting purposes  principally  related to the methods used to report
          depreciation, and the provision for possible loan losses.

          The  Company  and the  Bank  file  consolidated  income  tax  returns.
          Therefore,  the provision  arising from the  operations of the Bank is
          payable to the Company as the amounts are utilized in the consolidated
          income tax  returns.  The amount due the Company at December  31, 2001
          and 2000 was approximately $13,000 and $103,000, respectively.

     h. Goodwill

          The  Company's  acquisition  during 1995 and 1994 of 18,360  shares of
          subsidiary  Bank stock held by minority  shareholders  of the Bank was
          accounted for by the purchase method of accounting and resulted in the
          recording of goodwill in the amount of  $261,226.  Total costs for the
          18,360 shares  amounted to $559,306.  Goodwill  represents  the excess
          cost over the fair value of the assets  acquired of the subsidiary and
          is being amortized on the straight-line method over a 15 year life.

     i. Cash Flows

          For  purposes  of  reporting  cash  flows,  cash and cash  equivalents
          include cash on hand, amounts due from banks and federal funds sold.

     j. Advertising Cost

          All advertising  costs are expensed when incurred.  Other  advertising
          expense was $29,594 and $33,388 for the years ended  December 31, 2001
          and 2000, respectively. There was no direct-response advertising costs
          incurred for 2001 or 2000.

     k. Stock Based Compensation

          During 1997, the Company  adopted SFAS No. 123,  "Accounting for Stock
          Based  Compensation."  The Company  utilizes  the fair value method of
          determining  compensation  for stock based plans wherein  compensation
          cost is measured at the grant date at fair value and is

                                     F - 10

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

          recognized over the service period.


     l. Risk Factors

          The  Company's  operations  are  affected  by  various  risk  factors,
          including  interest-rate  risk,  credit risk, and risk from geographic
          concentrations of lending  activities.  Management  attempts to manage
          interest-rate   risk  through   various   asset/liability   management
          techniques  designed to match  maturities  of assets and  liabilities.
          Loan  policies and  administration  are designed to provide  assurance
          that loans will only be granted to credit-worthy  borrowers,  although
          credit losses are expected to occur because of subjective  factors and
          factors  beyond the control of the Company.  In addition,  most of the
          Company's  lending  activities are within the geographic area where it
          is  located.  As a  result,  the  Company  and  its  borrowers  may be
          vulnerable to the consequences of changes in the local economy.

     m. Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amount  of  assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses  during the reporting  period.  Actual results may differ
          from those estimates.

          The  determination  of the  allowance  for loan  losses is a  material
          estimate that is particularly  susceptible to material  change.  While
          management  uses available  information to recognize  losses on loans,
          further  reductions  in the carrying  amount of loans may be necessary
          based on changes in local economic conditions. In addition, regulatory
          agencies,   as  an  integral  part  of  their   examination   process,
          periodically  review the estimated losses on loans.  Such agencies may
          require  the  Bank to  recognize  additional  losses  based  on  their
          judgements  about  information  available to them at the time of their
          examination.

     n. Accumulated Other Comprehensive Income

          Comprehensive  income is the change in the  Company's  equity during a
          period from  transactions and other events except those resulting from
          investments  by  investors  and   distributions  to  those  investors.
          Comprehensive  income  includes net income and other changes in assets
          and  liabilities  that are not  reported  in net  income,  but instead
          reported as a separate component of stockholders' equity.

          Accumulated  other  comprehensive  income is the cumulative  amount of
          revenues, expenses,

                                     F - 11

<PAGE>

                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

          and  gains  and  losses  that  under  Generally  Accepted   Accounting
          Principles are included as a component of  stockholders'  equity,  but
          excluded  from  net  income.  The net  unrealized  gain on  investment
          securities  available for sale is the only item of other comprehensive
          income currently recognized by the Company.


     2. Investment Securities

          The carrying  value of investment  securities  classified as available
          for sale at December 31, are as follows:

<TABLE>
<CAPTION>
                                                           Available for Sale
                                                    --------------------------------
                                                            December 31, 2001
                                                            -----------------
                                                             Gross      Gross
                                                Amortized  Unrealized Unrealized   Carrying
                                                     Cost    Gains     Losses        Value
                                                     ----    -----     ------        -----
<S>                                           <C>         <C>       <C>        <C>
Securities of U.S. Treasury                   $   502,094 $ 21,346  $      --  $   523,440
Securities of U.S. Government
    agencies                                   21,431,334  101,069   (107,499)  21,424,904
Obligations of states and political
     subdivisions                               3,702,668   20,556    (59,246)   3,663,978
Restricted securities:
  Federal Home Loan Bank stock                    354,600       --         --      354,600
                                              ----------- --------  ---------  -----------
                                              $25,990,696 $142,971  $(166,745) $25,966,922
                                              =========== ========  =========  ===========


                                                           Available for Sale
                                                    --------------------------------
                                                            December 31, 2000
                                                            -----------------
                                                             Gross      Gross
                                                Amortized  Unrealized Unrealized   Carrying
                                                     Cost    Gains     Losses        Value
                                                     ----    -----     ------        -----
Securities of U.S. Treasury                   $   503,117 $ 2,663  $      --  $   505,780
Securities of U.S. Government
    agencies                                   20,948,591  12,245   (424,424)  20,536,412
Obligations of states and political
     subdivisions                               4,082,839   5,734    (39,896)   4,048,677
Restricted securities:
  Federal Home Loan Bank stock                    331,800      --         --      331,800
                                              ----------- -------  ---------  -----------
                                              $25,866,347 $20,642  $(464,320) $25,422,669
                                              =========== =======  =========  ===========
</TABLE>

                                     F - 12
<PAGE>

                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


     The Bank is a member of the  Federal  Home Loan Bank  (FHLB) and as such is
     required  to  maintain an  investment  in the capital  stock of the FHLB of
     Cincinnati. The FHLB stock is carried at cost which approximates the market
     value of the stock.  The amount of stock required to be held by the Bank is
     adjusted annually based on a determination made by the FHLB of Cincinnati.

     The amortized cost and  approximate  market value of investment  securities
     classified as held to maturity at December 31, follows:

<TABLE>
<CAPTION>

                                                                           Held to Maturity
                                                                  ---------------------------------
                                                                          December 31, 2001
                                                                          -----------------
                                                                          Gross            Gross           Estimated
                                                      Amortized         Unrealized      Unrealized          Market
                                                         Cost             Gains           Losses             Value
                                                         ----             -----           ------             -----
<S>                                               <C>                <C>              <C>              <C>
Securities of U.S. Government agencies            $          626,859 $          1,597 $        (1,867) $         626,589
                                                  ================== ================ ===============  =================
</TABLE>


<TABLE>
<CAPTION>

                                                                           Held to Maturity
                                                                 ----------------------------------
                                                                          December 31, 2000
                                                                          -----------------
                                                                          Gross            Gross           Estimated
                                                      Amortized         Unrealized      Unrealized          Market
                                                         Cost             Gains           Losses             Value
                                                         ----             -----           ------             -----
<S>                                               <C>                <C>              <C>              <C>
Securities of U.S. Government agencies            $        1,066,548 $          3,243 $       (24,599) $       1,045,192
                                                  ================== ================ ===============  =================
</TABLE>

     The components of the net unrealized  (loss) gain on investment  securities
     available for sale at December 31, recorded as a component of stockholders'
     equity are as follows:


                                                  2001              2000
                                                  ----              ----
Gross unrealized gains                  $         142,971  $         20,642
Gross unrealized losses                          (166,745)         (464,320)
                                        -----------------  ----------------
Gross unrealized (loss) gain, net                 (23,774)         (443,678)
Deferred tax effect                                 9,034           168,598
                                        -----------------  ----------------
Net unrealized (loss) gain              $         (14,740) $       (275,080)
                                        =================  ================


                                     F - 13

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


     The  amortized  cost  and  estimated  market  value of debt  securities  at
     December 31,  2001,  by  contractual  maturity,  are shown below.  Expected
     maturities will differ from contractual  maturities  because  borrowers may
     have the  right  to call or  prepay  obligations  with or  without  call or
     prepayment penalties.

<TABLE>
<CAPTION>
                                                  Available for Sale                    Held to maturity
                                                  ------------------                    ----------------
                                                                 Estimated                             Estimated
                                             Amortized            Market            Amortized           Market
                                               Cost                Value               Cost              Value
                                               ----                -----               ----              -----
<S>                                     <C>                 <C>                  <C>               <C>
Due in one year or less                 $            36,030 $            36,030  $            164  $             164
Due after one year and through
   five years                                     6,338,647           6,329,176           584,407            582,540
Due after five years and through
   ten years                                     10,479,110          10,514,871             8,122              8,870
Due after ten years                               8,782,309           8,732,245            34,166             35,015
                                        ------------------- -------------------  ----------------  -----------------
Total debt securities                            25,636,096          25,612,322           626,859            626,589
Equity securities with no
   stated maturity                                  354,600             354,600                --                 --
                                        ------------------- -------------------  ----------------  -----------------
Total investment securities             $        25,990,696 $        25,966,922  $        626,859  $         626,589
                                        =================== ===================  ================  =================
</TABLE>

     The  following  table  presents  the gross  realized  gains  and  losses on
     investment  securities  transactions  for the years ended December 31, 2001
     and 2000.

<TABLE>
<CAPTION>
                                                   Realized gains                        Realized Losses
                                          -------------------------------        ------------------------------
                                               2001               2000               2001               2000
                                               ----               ----               ----               ----
<S>                                      <C>                         <C>                <C>        <C>
Available for sale securities            $           25,260          $      --          $      --  $          (3,152)
Held to maturity securities                              --                 --                 --                 --
                                         ------------------ ------------------  -----------------  -----------------
                                         $           25,260          $      --          $      --  $          (3,152)
                                         ================== ==================  =================  =================
</TABLE>

     At  December  31,  2001 a net gain of $15,671  was  realized , or a gain of
     $25,260 net of a tax expense of $9,589. At December 31, 2000, a net loss of
     $1,956 was realized, or a loss of $3,152 net of a tax benefit of $1,196.

     Investment securities with amortized cost of approximately  $11,653,000 and
     market value of approximately $11,714,000 at December 31, 2001 were pledged
     to secure public  deposits and for other purposes  required or permitted by
     law. In 2000,  investment  securities with amortized cost of  approximately
     $18,508,000 and market value of approximately $18,146,000 were pledged.

                                     F - 14

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

3. Loans and Allowances for Possible Loan Losses

     The  Bank  makes  commercial,  consumer,  and  real  estate  loans  to  its
     customers,  located  principally  within the Bank's primary markets,  which
     consists of Hancock,  Hawkins and surrounding  counties.  Although the Bank
     has a diversified  loan  portfolio,  a substantial  portion of its debtors'
     ability to honor their  contracts is  dependent  upon  economic  conditions
     within its primary markets.

     Loans are either secured or unsecured based upon the financial condition of
     the  borrower.  The  loans  are  expected  to be  repaid  from cash flow or
     proceeds  from the sale of selected  assets of the borrower;  however,  the
     Bank is exposed to risk of loss on loans due to a borrower's  difficulties,
     which may arise from any number of factors  including  problems  within the
     respective  industry or economic  conditions,  including  those  within the
     Bank's primary market.

     Loans,  less  allowance  for  possible  loan  losses at  December  31,  are
     summarized as follows:

<TABLE>
<CAPTION>
                                                                2001                  2000
                                                                ----                  ----
<S>                                                     <C>                   <C>
Commercial, financial and agricultural                  $         11,226,026  $         11,184,002
Real estate - construction                                         4,296,010             6,752,002
Real estate - mortgage                                            42,256,099            41,531,010
Consumer                                                          15,280,036            14,554,003
Other                                                                  8,001                18,000
                                                        --------------------  --------------------
                                                                  73,066,172            74,039,017
Less unearned interest                                                    --                14,313
                                                        --------------------  --------------------
                                                                  73,066,172            74,024,704
Less allowance for possible loan losses                              908,016               985,784
                                                        --------------------  --------------------
                                                        $         72,158,156  $         73,038,920
                                                        ====================  ====================

</TABLE>
     Transactions  in the allowance for possible loan losses of the Bank for the
     years ended December 31, are summarized as follows:

<TABLE>
<CAPTION>
                                                              2001               2000
                                                              ----               ----
<S>                                                    <C>                <C>
Balance - beginning of year                            $          985,784 $          842,328
Provisions charged to operating expense                           265,000            240,000
Loans charged-off                                                (367,126)          (135,750)
Recoveries                                                         24,358             39,206
                                                       ------------------ ------------------
Balance - end of year                                  $          908,016 $          985,784
                                                       ================== ==================
</TABLE>


                                     F - 15

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

     Loans at December 31, 2001 are scheduled to mature as follows:

<TABLE>
<CAPTION>

                         Commercial,
                         Financial &       Real Estate       Real Estate
                        Agricultural      Construction        Mortgage          Consumer           Other
                        ------------      ------------        --------          --------           -----
<S>                   <C>               <C>                <C>                <C>              <C>
One year  or less     $       8,158,693 $       4,280,619  $      15,351,093  $     5,391,351  $          8,001
After one through
   five years                 2,849,641            15,391         13,885,349        9,554,551                --
After five years
  through ten
  years                         217,692                --          1,583,432          217,430                --
After ten years                      --                --         11,436,225          116,704                --
                      ----------------- -----------------------------------------------------------------------

Total                 $      11,226,026 $       4,296,010  $      42,256,099  $    15,280,036  $          8,001
                      ================= =======================================================================
</TABLE>

     At December 31, 2001, fixed and variable rate loans were as follows:


Fixed rate loans                      $        45,991,184
Variable rate loans                            27,074,988
                                      -------------------
                                      $        73,066,172
                                      ===================

     Non-performing assets at December 31, were as follows:


                                             2001               2000
                                             ----               ----
Loans past due over 90 days           $         1,639,927  $        670,597
Non-accrual loans                                 618,568           513,490
Other real estate owned                         1,144,770           555,332
                                      -------------------------------------
                                      $         3,403,265  $      1,739,419
                                      =====================================


     Foregone  interest  income on the above  non-accrual  loans was $75,143 and
     $69,805 at December 31, 2001 and 2000, respectively.


     At December 31, 2001, the Company's  recorded  investment in impaired loans
     were as follows:


                               Amount           Valuation
                               ------           ---------
Impaired Loans           $        2,258,495 $          174,748
                         ================== ==================


     Interest  payments  received  on  impaired  loans are  recorded as interest
     income  unless  collection of the  remaining  recorded  loan  investment is
     doubtful at which time  payments  received  are recorded as  reductions  of
     principal. The Company recognized interest income of approximately $105,000
     on  impaired  loans for the year  ended  December  31,  2001.  The  average
     recorded  investment in impaired loans approximates the recorded investment
     in impaired loans at December 31, 2001.

     The valuation  allowance above is included with and a part of the allowance
     for loan losses on the Company's balance sheet.

     As of December 31, 2000,  the  Company's  recorded  investment  in impaired
     loans and disclosures related thereto were not considered material.

     At  December  31,  2001  and  2000,  the Bank  had  loans to its  executive
     officers,   directors  and  their  affiliates  of  $450,255  and  $415,954,
     respectively.  At December 31, 2001 and 2000,  the Bank had  commitments to
     extend credit to its executive officers,  directors and their affiliates of
     $1,127,044 and  $1,196,292,  respectively.  All such loans and  commitments
     were made in the  ordinary  course of  business on  substantially  the same
     terms as those  prevailing  at the time for  comparable  transactions  with
     unrelated  parties.  An analysis of related  party loans from  January 1 to
     December 31 is as follows:


                                            2001               2000
                                            ----               ----
Balance January 1                    $          415,954 $        1,300,692
Payments received                              (187,028)          (311,366)
Resigned from board of directors                     --           (808,772)
Advances made                                   221,329            235,400
                                     ------------------ ------------------
Balance December 31                  $          450,255 $          415,954
                                     ================== ==================


                                     F - 16

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


4. Premises and Equipment, Net

     The detail of premises and equipment, net at December 31, is as follows:


                                                2001              2000
                                                ----              ----
Land                                      $         619,168  $         611,668
Buildings                                         3,252,099          3,248,849
Furniture and equipment                           1,365,272          1,339,990
                                          ------------------------------------
                                                  5,236,539          5,200,507
Less accumulated depreciation                     1,370,181          1,148,463
                                          ------------------------------------
                                          $       3,866,358  $       4,052,044
                                          ====================================


     Depreciation related to premises and equipment for the years ended December
     31, 2001 and 2000 was $223,348 and $224,106, respectively.

The Bank  leases a parcel of real  estate in  Rogersville.  The parcel is leased
through  September 1, 2009.  The Bank subleased this parcel on January 15, 2000,
to the town of Rogersville through January 1, 2006. The Bank leases a portion of
a building  in  Rogersville  used as a branch  location.  This lease  expires on
December 1, 2009. In addition,  certain  computer and other  equipment is leased
under various long term  operating  leases.  Total net rental  expense for these
leases was $154,168 and $117,166 for December 31, 2001 and 2000, respectively.

     Future net  minimum  rental  commitments  under  noncancellable  leases and
     subleases are as follows:


                               Gross                                      Net
      Year                     Rents               Sublease              Rents
      ----                     -----               --------              -----
      2002                   151,541              (12,000) $          139,541
      2003                    96,003              (12,000)             84,003
      2004                    96,003              (12,000)             84,003
      2005                    96,003              (12,000)             84,003
      2006                    85,021                   --              85,021
  Thereafter                 122,575                   --             122,575
               ---------------------  -------------------  ------------------
     Total     $             647,146  $           (48,000) $          599,146
               =====================  ===================  ==================


                                     F - 17

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

5.   Deposits

     Deposits at December 31, are summarized as follows:

<TABLE>
<CAPTION>

                                                                 2001               2000
                                                                 ----               ----

<S>                                                       <C>                 <C>
Demand deposits                                           $        11,334,627 $      10,894,819
NOW and money market accounts                                      18,455,488        22,530,226
Savings                                                             6,111,829         4,612,266
Individual retirement accounts                                      2,204,479         1,966,786
Certificates of deposits - under $100,000                          45,547,468        45,720,716
Certificates of deposits - over $100,000                           20,255,764        20,282,873
                                                          ------------------- -----------------
                                                          $       103,909,655 $     106,007,686
                                                          =================== =================
</TABLE>

     The amounts and scheduled  maturities of  certificate  accounts at December
31, are as follows:


                                                2001               2000
                                                ----               ----

  Within one year                         $      60,590,293  $      61,978,613
  After one but within two years                  3,992,953          3,430,979
  After two but within three years                1,187,986            473,997
  After three but within four years                  28,000             82,000
  After four but within five years                    4,000             38,000
                                          -----------------  -----------------
                                          $      65,803,232  $      66,003,589
                                          =================  =================

     Demand deposits reclassified as loans (overdrafts) aggregated approximately
     $38,000 and $48,000 at December 31, 2001 and 2000, respectively.

     Deposits of executive officers,  directors and their affiliates  aggregated
     approximately  $2,061,000  and  $2,546,000  at December  31, 2001 and 2000,
     respectively.

                                     F - 18

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

6. Long-term debt

     The  Company's  long-term  debt  consists of a single  note  payable in the
     amount of $2,170,000 due an  unaffiliated  national bank. The interest rate
     on the note  adjusts  quarterly  and is equal  to the  three-months  London
     Interbank  Offered  Rate (Three Month LIBOR) plus 1.95% per annum or at the
     option of the Company the rate on the note is equal to the  lender's  index
     rate as such  rate  changes  from  time to time.  The  Company  may  change
     interest rate options at any time with prior notice to the lender. Interest
     is payable quarterly.  At December 31, 2001 the rate on the note was 4.16 %
     per annum.  Principal is payable annually  commencing  January 31, 1996 and
     each January 31 thereafter as follows:

          January 31,              Principal Due
          -----------              -------------
             2002                           360,000
             2003                           395,000
             2004                           435,000
             2005                           470,000
     2006 (Final Maturity)                  510,000
                                 ------------------
                                 $        2,170,000
                                 ==================

     The loan is secured by all of the stock of Citizens Bank of East  Tennessee
owned by the Company.

7. FHLB Advances

     The Bank has an  agreement  with the Federal Home Loan Bank which allows it
     borrow up to an established  amount.  Any advances are secured by a blanket
     pledge of the Bank's qualifying 1-4 mortgage loans. The Bank is required to
     maintain  eligible  collateral  representing  150  percent  of the  current
     outstanding balance of all advances.  The Bank had no outstanding  advances
     at December 31, 2001 and 2000.

8. Other Non-Interest Expenses

     The major  components  of other  non-interest  expense at December  31, are
summarized as follows:


                                                2001               2000
                                                ----               ----
Directors fees                            $          76,500 $           80,500
Professional services                                74,802             71,430
Postage and courier                                  59,613             51,868
Stationary and printing                              87,085             72,132
Loss on other real estate owned                      88,813                 --
Other                                               547,509            500,743
                                          ----------------- ------------------
   Total other non-interest expense       $         934,322 $          776,673
                                          ================= ==================

     The  increase  in  salaries  and  employee  benefits,   occupancy  expense,
     furniture and equipment expenses and other non-interest expense for 2001 is
     due  primarily to the  increased  costs  associated  with the growth of the
     Bank.


                                     F - 19

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

9. Income Taxes

     The components of income tax expense are as follows:


                                                   2001            2000
                                                   ----            ----
Current                                      $        296,140$        435,515
Deferred                                               46,859         (59,665)
                                             --------------------------------
                                             $        342,999$        375,850
                                             ================================

     The  sources  of  deferred  income  taxes and the tax effect of each are as
follows:


                                                   2001            2000
                                                   ----            ----
Accrual to cash conversion                   $          2,148$          2,148
Provision for loan losses                              29,521         (65,616)
Accelerated depreciation                               (9,352)         (2,941)
FHLB stock dividends                                    8,655           9,652
Other, net                                             15,887          (2,908)
                                             --------------------------------
                                             $         46,859$        (59,665)
                                             ================================


     A  reconciliation  of the  provision  for  income  taxes  as  shown  in the
     statements  of earnings  with that which would be computed by applying  the
     statutory  Federal  income tax rate of 34 percent to income  before  income
     taxes is as follows:

<TABLE>
<CAPTION>

                                                                2001           2000
                                                                ----           ----
<S>                                                       <C>              <C>
Tax expense at statutory rate                             $        329,684 $      376,015
Increase (decrease) in taxes resulting from:
  Tax-exempt interest                                              (34,768)       (49,908)
  Amortization of goodwill                                           6,080          6,080
  State income taxes net of
     Federal income tax                                             38,860         44,559
  Other, net                                                         3,143           (896)
                                                          -------------------------------
                                                          $        342,999 $      375,850
                                                          ===============================
</TABLE>


                                     F - 20

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

     The  components of the net deferred tax  asset/liability  recognized by the
     Company at December 31, are as follows:

<TABLE>
<CAPTION>

                                                                2001           2000
                                                                ----           ----
Deferred tax liabilities:
<S>                                                       <C>               <C>
  FHLB stock dividends                                    $        (25,975) $     (17,320)
  Accumulated depreciation                                         (51,411)       (60,763)
  Other, net                                                        (7,725)            --
                                                          -------------------------------
       Total liabilities                                           (85,111)       (78,083)
                                                          -------------------------------
Deferred tax assets:
  Accrual to cash conversion                                         1,721          3,869
  Allowances for loan losses                                       189,291        218,812
 Unrealized loss on securities available for sale                    9,034        168,598
  Other, net                                                            --          8,162
                                                          -------------------------------
        Total assets                                               200,046        399,441
                                                          -------------------------------
Net deferred tax asset/liability                          $        114,935 $      321,358
                                                          ===============================
</TABLE>

10.  Commitments and Contingencies

     In the normal course of business, the Company makes various commitments and
     incurs  certain  contingent  liabilities  that  are  not  presented  in the
     accompanying balance sheet. The commitments and contingent  liabilities may
     include various guarantees,  commitments to extend credit,  standby letters
     of credit,  and  litigation.  The Company's  exposure to credit loss in the
     event of nonperformance by the other party to the financial  instrument for
     commitments  to extend credit and standby  letters of credit is represented
     by the contractual  notional amount of these instruments.  The Company uses
     the same credit policies in making commitments and conditional  obligations
     as it does for on-balance-sheet  instruments.  Unless noted otherwise,  the
     Company does not require  collateral or other security to support financial
     instruments with credit risk.

     Commitments  to extend credit are  agreements to lend to a customer as long
     as there is no  violation of any  condition  established  in the  contract.
     Since some commitments are expected to expire without being drawn upon, the
     total  commitment   amounts  do  not  necessarily   represent  future  cash
     requirements.  The Company evaluates each customer's credit worthiness on a
     case-by-case  basis. The amount of collateral  obtained if deemed necessary
     by the Company  upon  extension of credit is based on  management's  credit
     evaluation  of the  counter-party.  Collateral  held varies but may include
     accounts receivable, inventory, property, plant, and equipment.

     Standby letters of credit are conditional commitments issued by the Company
     to  guarantee  the  performance  of a  customer  to a  third  party.  Those
     guarantees  are primarily  issued to support  public and private  borrowing
     arrangements.  Most  guarantees  expire  within  one year with some  having
     automatic one year renewals  cancelable by the Company.  The credit risk in
     issuing  letters  of credit is  essentially  the same as that  involved  in
     extending loans to customers.

                                     F - 21

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

     The following  table  summaries the Company's  significant  commitments and
     contingent liabilities at December 31:

                                             2001               2000
                                             ----               ----
Commitments to extend credit           $       4,281,297 $        6,048,408
Standby letters of credit                        122,725            127,525
                                       ----------------- ------------------
                                       $       4,404,022 $        6,175,933
                                       ================= ==================


     In the opinion of management,  no material  adverse effect on the financial
     position of the Company and its  subsidiary is  anticipated  as a result of
     these items.

11.  Cash and Due From Banks

     The Bank is required to maintain a minimum  cash  reserve  with the Federal
     Reserve Bank and/or in vault cash. The minimum  requirement at December 31,
     2001 and 2000 was $483,000 and $568,000, respectively.

12.  Stockholder's Equity

     The Bank is subject to certain restrictions on the amount of dividends that
     it may declare without prior regulatory approval.

13.  Regulatory Matters

     The Bank is subject to various regulatory capital requirements administered
     by  the  federal  banking   agencies.   Failure  to  meet  minimum  capital
     requirements  can  initiate  certain  mandatory - and  possible  additional
     discretionary  - actions by regulators  that, if  undertaken,  could have a
     direct material effect on the Bank's financial statements.  The regulations
     require a bank to meet specific  capital  adequacy  guidelines that involve
     quantitative  measures  of the  Bank's  assets,  liabilities,  and  certain
     off-balance-sheet   items  as  calculated   under   regulatory   accounting
     practices. The Bank's capital classification is also subject to qualitative
     judgments by the  regulators  about  components,  risk  weights,  and other
     factors.

     Quantitative  measures established by regulation to ensure capital adequacy
     require the Bank to maintain  minimum  amounts and ratios (set forth in the
     table  below) of Tier I capital  as defined  in the  regulations)  to total
     average assets (as defined), and minimum ratios of Tier I and total capital
     (as  defined)  to  risk-weighted  assets  (as  defined).  To be  considered
     adequately  capitalized  (as defined)  under the  regulatory  framework for
     prompt corrective  action,  the Bank must maintain minimum Tier I leverage,
     Tier I risk-based,  and total risk-based  ratios as set forth in the table.
     The Bank's  actual  capital  amounts and ratios,  at December  31, are also
     presented in the tables below.

                                     F - 22

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                   December 31, 2001
                                                    ------------------------------------------------
                                            Capital Adequacy                           Prompt Corrective Action
                                            ----------------                           ------------------------

                                   Required                  Actual                Required                 Actual

(In Thousands)               Amount       Ratio       Amount        Ratio       Amount       Ratio      Amount       Ratio
                             ------       -----       ------        -----       ------       -----      ------       -----
<S>                             <C>       <C>            <C>        <C>            <C>       <C>           <C>       <C>
Tier I Capital (to
     average assets)            $4,571    4.00%          $8,122     7.10%          $4,571    4.00%         $8,122    7.10%
                                ======    =====          ======     =====          ======    =====         ======    =====
Tier I Capital (to risk-
      weighted assets)          $2,903    4.00%          $8,122     11.19%         $2,903    4.00%         $8,122    11.19%
                                ======    =====          ======     ======         ======    =====         ======    ======
Total Capital (to risk-
     weighted assets)           $5,806    8.00%          $9,030     12.44%         $5,806    8.00%         $9,030    12.44%
                                ======    =====          ======     ======         ======    =====         ======    ======
</TABLE>


<TABLE>
<CAPTION>

                                                                   December 31, 2001
                                                    ------------------------------------------------
                                            Capital Adequacy                           Prompt Corrective Action
                                            ----------------                           ------------------------
(In Thousands)               Amount       Ratio       Amount        Ratio       Amount       Ratio      Amount       Ratio
                             ------       -----       ------        -----       ------       -----      ------       -----
<S>                             <C>       <C>            <C>        <C>            <C>       <C>           <C>       <C>
Tier I Capital (to
     average assets)            $4,582    4.00%          $7,857     6.86%          $4,582    4.00%         $7,857    6.86%
                                ======    =====          ======     =====          ======    =====         ======    =====
Tier I Capital (to risk-
      weighted assets)          $2,943    4.00%          $7,857     10.68%         $2,943    4.00%         $7,857    10.68%
                                ======    =====          ======     ======         ======    =====         ======    ======
Total Capital (to risk-
     weighted assets)           $5,887    8.00%          $8,778     11.93%         $5,887    8.00%         $8,778    11.93%
                                ======    =====          ======     ======         ======    =====         ======    ======
</TABLE>

     Bases solely upon the foregoing  ratios the Bank would be considered  "well
     capitalized" within applicable Federal banking regulatory guidelines.

     The Company is a "small  one-bank  holding  company"  within the meaning of
     regulations  promulgated  by the Board of Governors of the Federal  Reserve
     System.  Accordingly,  the Company's capital  compliance,  for bank holding
     company purposes,  will be measured solely with respect to the Bank and not
     on a consolidated basis.

     Management  believes,  as of December 31,  2001,  that the Bank and Company
     meet all capital  requirements to which they are subject.  However,  events
     beyond the control of the Company, such as a downturn in the local economy,
     could adversely  affect future earnings and,  consequently,  the ability of
     the Company to meet its future minimum capital requirements.


                                     F - 23

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

     As a result of certain  findings in the  Tennessee  Department of Financial
     Institution's  Report  of  Examination  dated  June 4,  2001,  the Board of
     Directors of Bank entered into a Memorandum of Understanding  (Memorandum),
     dated August 16, 2001, with the Commissioner of the Tennessee Department of
     Financial  Institutions  and the Memphis  Regional  Director of the Federal
     Deposit Insurance Corporation. A Memorandum of Understanding is an informal
     administrative  tool for institutions that have some weaknesses that if not
     properly  addressed  and  corrected  could  lead  to  supervisory   concern
     requiring  formal  administrative   action.  The  areas  addressed  in  the
     Memorandum cover capital  adequacy,  laws and regulations,  data processing
     audit  and  review,   investment  policy  maturity   strategies,   adequate
     documentation of each of the foregoing but primarily credit administration.
     As a result,  the Board has  revised a number of the  Bank's  policies  and
     procedures  including its loan policy and has incorporated  recommendations
     designed to  strengthen  credit  quality and the Bank's  review  procedures
     regarding  loan loss reserve  adequacy.  Management  of the Company and the
     Bank believe that the Bank is in substantial compliance with the provisions
     of the Memorandum.

14.  Condensed Financial Information

     Following is condensed  financial  information of Volunteer  Bancorp,  Inc.
     (Parent Company Only):

                             Volunteer Bancorp, Inc.
                              (Parent Company Only)
                            Condensed Balance Sheets


                                                  December 31
                                                  -----------
                                             2001              2000
                                             ----              ----
Assets:
   Cash                               $           59,536 $          11,461
   Investment in subsidiary                    8,106,525         7,581,234
   Goodwill                                      131,259           149,142
   Deferred income taxes                           6,869             7,139
   Tax benefit receivable                         13,111           102,982
                                      ------------------ -----------------
                                      $        8,317,300 $       7,851,958
                                      ================== =================


Liabilities and stockholders' equity
   Long-term debt                     $        2,170,000 $       2,495,000
   Accrued interest payable                       15,632            36,825
   Stockholders' equity                        6,131,668         5,320,133
                                      ------------------ -----------------
                                      $        8,317,300 $       7,851,958
                                      ================== =================



                                     F - 24

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------






                             Volunteer Bancorp, Inc.
                              (Parent Company Only)
                        Condensed Statements of Earnings
<TABLE>
<CAPTION>
                                                                                Years Ended December 31
                                                                                 2001              2000
                                                                                 ----              ----
Income:
<S>                                                                       <C>                <C>
   Dividends from subsidiary                                              $          485,336 $         510,323
                                                                          ------------------ -----------------
Expenses:
   Interest                                                                          139,123           211,864
   Professional services                                                              40,212            39,924
   Other expenses                                                                     12,869            12,122
                                                                          ------------------ -----------------
      Total expense                                                                  192,204           263,910
                                                                          ------------------ -----------------
   Income (loss) before tax benefit and equity  in
    undistributed subsidiary income                                                  293,132           246,413
   Tax benefit                                                                        68,576            93,392
   Equity in undistributed subsidiary income                                         264,951           390,272
                                                                          ------------------ -----------------
      Net  income                                                         $          626,659 $         730,077
                                                                          ================== =================
</TABLE>

                             Volunteer Bancorp, Inc.
                              (Parent Company Only)
                       Condensed Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                Years Ended December 31
                                                                                 2001               2000
                                                                                 ----              -----
Operating Activities:
<S>                                                                       <C>                <C>
   Net income                                                             $          626,659 $         730,077
   Adjustment to reconcile net income to net cash
      provided by operating activities:
   Equity in undistributed subsidiary earnings                                      (264,951)         (390,272)
   Deferred income taxes                                                                 270             3,564
   Amortization                                                                       17,883            17,883
   Decrease (increase) decrease in other assets                                       89,871           (75,355)
   (Decrease) in other liabilities                                                   (21,193)           (3,461)
                                                                          ------------------ -----------------
   Net cash provided by operating activities                                         448,539           282,436
                                                                          ------------------ -----------------
Financing activities:
   Dividends paid                                                                    (75,464)          (64,683)
   Repayment of note payable                                                        (325,000)         (295,000)
                                                                          ------------------ -----------------
   Net cash(used) provided by financing activities                                  (400,464)         (359,683)
                                                                          ------------------ -----------------
Change in cash and equivalents                                                        48,075           (77,247)
Cash and equivalents - beginning                                                      11,461            88,708
                                                                          ------------------ -----------------
Cash and equivalents - ending                                             $           59,536 $          11,461
                                                                          ================== =================
</TABLE>



                                     F - 25

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                             Volunteer Bancorp, Inc.
                              (Parent company only)
                  Condensed Statements of Comprehensive Income
                  --------------------------------------------

                                                                                 Years Ended December 31
                                                                                 -----------------------
                                                                                 2001              2000
                                                                                 ----              ----
<S>                                                                       <C>                <C>
Net income                                                                $          626,659 $         730,077
                                                                          ------------------ -----------------
Other comprehensive income:
  Company's share of subsidiary's other comprehensive income
    (loss), net of tax                                                               260,340           564,800
                                                                          ------------------ -----------------

Total comprehensive (loss) income                                         $          886,999 $       1,294,877
                                                                          ================== =================
</TABLE>

     The  Company is a legal  entity  separate  and  distinct  from its  banking
     subsidiary.  The  principal  sources of cash flow for the  Company,  to pay
     dividends  and  service  Company  debt,  are  dividends  from  its  banking
     subsidiary.  There are statutory and regulatory  limitations on the payment
     of dividends from banking subsidiaries to their parent companies as well as
     statutory and  regulatory  restrictions  on the payment of dividends by the
     Company (note 12 and 13).















                                     F - 26

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


15.  Fair Value of Financial Instruments

     The fair value of financial instruments at December 31, are as follows:

<TABLE>
<CAPTION>
                                                        2001                                      2000
                                                        ----                                      ----
                                           Carrying               Fair               Carrying               Fair
                                            Value                Value                 Value                Value
                                            -----                -----                 -----                -----
Financial assets:
<S>                                  <C>                  <C>                   <C>                  <C>
    Cash and due from banks          $          2,628,179 $          2,628,179  $         3,162,867  $         3,162,867
    Federal funds sold                          6,275,000            6,275,000            6,950,000            6,950,000
    Investment securities:                     26,593,781           26,593,511           26,489,217           26,467,861
    Loans, net                                 72,158,156           75,955,019           73,038,920           72,496,572
                                     -------------------- --------------------  -------------------  -------------------
                                     $        107,655,116 $        111,451,709  $       109,641,004  $       109,077,300
                                     ==================== ====================  ===================  ===================
Financial liabilities:
    Deposits                         $        103,909,655 $        107,771,715  $       106,007,686  $       107,200,930
    Securities sold under
      repurchase agreements                     1,109,603            1,109,603            1,052,513            1,052,513
    Long-term debt                              2,170,000            2,170,000            2,495,000            2,495,000
                                     -------------------- --------------------  -------------------  -------------------
                                     $        107,189,258 $        111,051,318  $       109,555,199  $       110,748,443
                                     ==================== ====================  ===================  ===================
Unrecognized financial
     instruments:
    Commitments to extend
        credit                               $         --         $         --         $         --         $         --
    Standby letters of credit                $         --         $         --         $         --         $         --
                                     ==================== ====================  ===================  ===================
</TABLE>


                                     F - 27

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


     The following  methods and assumptions were used to estimate the fair value
     of each  class of  financial  instrument  for  which it is  practicable  to
     estimate that value:

          Cash and Federal funds sold:
               For  these  short-term  instruments,  the  carrying  value  is  a
               reasonable estimate of fair value.

          Investments:
               Fair value equals quoted market price, if available.  If a quoted
               market  price is not  available,  fair value is  estimated  using
               quoted market prices for similar securities.

          Loans, net
               The fair value of fixed rate loans is  estimated  by  discounting
               expected  future cash flows using  current rates at which similar
               fixed rate loans would be made to borrowers  with similar  credit
               ratings and for the same remaining maturities. The carrying value
               of variable rate loans is assumed to approximate fair value.

          Deposits:
               The fair value of demand deposits, IRAs, savings accounts and NOW
               and money market  accounts is the amount payable on demand at the
               reporting   date.   The   fair   value   of   fixed-rate-maturity
               certificates  of deposits is estimated  using the rates currently
               offered for  deposits  of similar  remaining  maturities  using a
               discounted cash flow method.

          Securities sold under repurchase agreements:
               The  fair  value  of  fixed-rate   term   securities  sold  under
               repurchase  agreements is estimated  using the rates currently in
               effect  offered for  repurchase  agreements of similar  remaining
               maturities using a discounted cash flow method.

          Long-term debt:
               Rates  currently  available  to the Company for debt with similar
               terms and  maturities are used to estimate fair value of existing
               debt using a discounted cash flow method.

          Commitments to extend credit and standby letters of credit:
               The fair value of  commitments  is estimated by  considering  the
               fees currently charged to enter into similar  agreements,  taking
               into  account  the  remaining  terms  of the  agreements  and the
               present  creditworthiness of the counter parties.  For fixed rate
               loan  commitments,  fair value also  considers  current  level of
               interest rates and the committed rates. The fair value of letters
               of  credit  is  based  on  fees  currently  charged  for  similar
               agreements.  For this caption,  the "carrying amount"  represents
               the accrual or deferred  income  (fees)  arising from the related
               unrecognized financial instruments.


                                     F - 28

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


16. Profit-Sharing Plan

     The  Company's  subsidiary,  The  Citizens  Bank of East  Tennessee,  has a
     profit-sharing  retirement  plan.  All  employees  who meet certain age and
     length of service  requirements  are eligible to participate on a voluntary
     basis.  Benefits,  which become 20% vested after two years, 40% after three
     years,  60% after  four  years,  80% after five  years,  and 100% after six
     years, are paid on death, disability or retirement.

     The Board of Directors  has  discretion in  establishing  the amount of the
     Bank's contributions to the plan, if any.  Participants may make voluntary,
     after-tax  contributions up to 20% of their  compensation up to $10,500 per
     year. The participants are fully vested in any voluntary contributions they
     make.  The Bank  contributed  $18,530 and $16,702 to the plan for the years
     ended December 31, 2001 and 2000, respectively.

17. Securities Sold Under Repurchase Agreements

     At December 31, 2001 and 2000, the carrying  value of the  securities  sold
     under repurchase agreements, including accrued interest, was $2,895,706 and
     $2,359,347,  respectively.  The maximum amount  outstanding during 2001 and
     2000 was  $1,109,603  and  $1,335,304,  respectively.  The daily average of
     outstanding  agreements  during 2001 and 2000 was $991,783 and  $1,196,534,
     respectively. The securities underlying the agreements are maintained under
     the Bank's control.

18.  Reclassification

     Certain reclassifications have been made to the December 31, 2000 financial
     statements  in order to conform with the  presentation  of the December 31,
     2000 financial statements.

19.  Impact of Recently Issued Accounting Standards

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
     Activities",  as amended by SFAS No. 137, is effective for fiscal  quarters
     beginning  after June 15,  2000  unless  adopted  earlier.  This  Statement
     establishes accounting and reporting standards for derivative  instruments,
     including  certain  derivative  instruments  embedded  in other  contracts,
     (collectively  referred to as derivatives) and for hedging  activities.  It
     requires  that an entity  recognize  all  derivatives  as either  assets or
     liabilities  in the  statement  of  financial  position  and measure  those
     instruments at fair value. If certain  conditions are met, a derivative may
     be specifically designated as (a) a hedge of the exposure to changes in the
     fair value of a  recognized  asset or  liability  or an  unrecognized  firm
     commitment,  (b) a hedge  of the  exposure  to  variable  cash  flows  of a
     forecasted transaction,  or (c) a hedge of the foreign currency exposure of
     a net investment in a foreign  operation,  an unrecognized firm commitment,
     an   available-for-sale   security,   or   a   foreign-currency-denominated
     forecasted  transaction.  Adoption by the Company did not have any material
     impact upon financial position or results of operations.


                                     F - 29

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


     SFAS No. 140,  "Accounting for Transfers and Servicing of Financial  Assets
     and  Extinguishment  of  Liabilities",   is  effective  for  transfers  and
     servicing of financial assets and  extinguishment of liabilities  occurring
     after March 31,  2001.  This  Statement is effective  for  recognition  and
     reclassification   of   collateral   and  for   disclosures   relating   to
     securitization  transactions  and  collateral for fiscal years ending after
     December 15, 2000.  This statement  replaces SFAS No. 125,  "Accounting for
     Transfers  and  Servicing  of  Financial  Assets  and   Extinguisments   of
     Liabilities".  It revises the standards for accounting for  securitizations
     and other transfers of financial assets and collateral and requires certain
     disclosures,  but it carries over most of SFAS No. 125's provisions without
     reconsideration. This Statement provides accounting and reporting standards
     for  transfers  and  servicing of financial  assets and  extinguishment  of
     liabilities.  Those  standards  are based on  consistent  application  of a
     financial-components  approach that focuses on control. Under the approach,
     after a transfer of financial  assets,  an entity  recognizes the financial
     and  servicing  assets it controls  and the  liabilities  it has  incurred,
     derecognizes  financial  assets  when  control  has been  surrendered,  and
     derecognizes   liabilities  when  extinguished.   This  Statement  provides
     consistent standards for distinguishing  transfers of financial assets that
     are sales from transfers that are secured  borrowings.  The adoption of the
     provisions  of this  Statement  did not have any  material  impact upon the
     financial position or results of operation of the Company.

     SFAS No. 142,  "Goodwill  and Other  Intangible  Assets",  is effective for
     fiscal years beginning  after December 15, 2001.  This statement  addresses
     financial   accounting  and  reporting  for  acquired  goodwill  and  other
     intangible assets and supercedes APB Opinion No. 17,  "Intangible  Assets".
     It addresses how intangible assets that are acquired individually or with a
     group of other  assets (but not those  acquired in a business  combination)
     should be accounted  for in financial  statements  upon their  acquisition.
     This  Statement  also  addresses how goodwill and other  intangible  assets
     should be accounted  for after they have been  initially  recognized in the
     financial statements. Under this Statement,  goodwill and intangible assets
     that have indefinite  useful lives will not be amortized but rather will be
     tested at least annually for impairment. Intangible assets that have finite
     useful lives will  continue to be amortized  over their useful  lives,  but
     without the constraint of an arbitrary  ceiling.  This  Statement  provides
     specific guidance for testing goodwill for impairment.  The adoption of the
     provisions  of this  Statement is not expected to have any material  impact
     upon the financial position or results of operation of the Company.


                                     F - 30

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


20.  Selected Quarterly Financial Data (Unaudited)
     ---------------------------------------------

     Summarized  below  are  selected   financial  data  regarding   results  of
     operations for the periods indicated.

<TABLE>
<CAPTION>
                                            First              Second             Third              Fourth
                                           Quarter            Quarter            Quarter            Quarter              Year

                                     ------------------- ------------------ ------------------ ------------------ ------------------
                                                                                  2001
                                     -----------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>                <C>                <C>                <C>
Total interest income                $         2,393,691 $        2,353,824 $        2,218,588 $        2,020,868 $        8,986,971
Net interest income                            1,021,976          1,059,909          1,053,609          1,071,330          4,206,824
Provision for loan losses                         75,000             85,000                 --            105,000            265,000
Non-interest income                               90,139             82,962             87,136             79,647            339,884
Non-interest expense                             802,684            815,878            803,221            890,267          3,312,050
Income before income taxes                       236,431            241,993            337,524            153,710            969,658
  (benefit) expense
Net income                           $           152,197 $          155,084 $          214,769 $          104,609 $          626,659
                                     =================== ================== ================== ================== ==================

Common shares outstanding                        539,027            539,027            539,027            539,027            539,027
                                     =================== ================== ================== ================== ==================
Net income per
  common share outstanding           $              0.28 $             0.29 $             0.40 $             0.19 $             1.16
                                     =================== ================== ================== ================== ==================
Total interest income                $         2,393,691 $        2,353,824 $        2,218,588 $        2,020,868 $        8,986,971
                                     =================== ================== ================== ================== ==================

</TABLE>


                                     F - 31

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                            First              Second             Third              Fourth
                                           Quarter            Quarter            Quarter            Quarter              Year


                                     ------------------- ------------------ ------------------ ------------------ ------------------
                                                                                  2000
                                     -----------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>                <C>                <C>                <C>
Total interest income                $         2,097,893 $        2,207,164 $        2,282,964 $        2,384,374 $        8,972,395
Net interest income                              958,065            990,410            996,607            984,423          3,929,505
Provision for loan losses                         60,000             60,000             60,000             60,000            240,000
Non-interest income                               86,288            100,949             89,909             79,160            356,306
Non-interest expense                             749,980            736,530            731,838            721,536          2,939,884
Income before income taxes                       234,373            294,829            294,678            282,047          1,105,927
  (benefit)
Net income                           $           158,306 $          194,773 $          193,639 $          183,359 $          730,077
                                     =================== ================== ================== ================== ==================

Common shares outstanding                        539,027            539,027            539,027            539,027            539,027
                                     =================== ================== ================== ================== ==================
Net income per
  common share outstanding           $              0.29 $             0.36 $             0.36 $             0.34 $             1.35
                                     =================== ================== ================== ================== ==================
</TABLE>







                                     F - 32

<PAGE>




                          INDEPENDENT AUDITOR'S REPORT




Our audit was made for the  purpose of  forming  an opinion of the  consolidated
financial statements taken as a whole. The consolidating information represented
on the following  pages is presented for purposes of additional  analysis and is
not a required part of the consolidated  financial statements.  Such information
has been  subjected  to the  auditing  procedures  applied  in the  audit of the
consolidated financial statements and, in our opinion, the information is fairly
stated in all  material  respects  in  relation  to the  consolidated  financial
statements taken as a whole.










February 14, 2002
Nashville, Tennessee
                                     F - 34

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY
                           Consolidating Balance Sheet
                                December 31, 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                               Volunteer         Citizens Bank                             Consolidated
                                               Bancorp,             of East                                 Volunteer
                                                 Inc.              Tennessee                               Bancorp, Inc
                 ASSETS                        (Parent)          (Subsidiary)         Eliminations        and Subsidiary
                 ------                        --------          ------------         ------------        --------------
<S>                                   <C>                <C>                  <C>                 <C>
Cash and due from banks               $          59,536  $         2,628,179  $         (59,536)  $          2,628,179
Federal funds sold                                   --            6,275,000                 --              6,275,000
Investment in subsidiary                      8,106,525                   --         (8,106,525)                    --
Investment securities                                --           26,593,781                 --             26,593,781
Loans, net                                           --           72,158,156                 --             72,158,156
Accrued interest receivable                          --            1,066,479                 --              1,066,479
Premises and equipment                               --            3,866,358                 --              3,866,358
Goodwill                                        131,259                   --                 --                131,259
Deferred income taxes                             6,869              108,066                 --                114,935
Other assets                                     13,111            1,400,481                 --              1,413,592
                                      -----------------  -------------------  ------------------  --------------------
     Total assets                     $       8,317,300  $       114,096,500  $      (8,166,061)  $        114,247,739
                                      =================  ===================  ==================  ====================


            LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                               $           --  $       103,969,191  $         (59,536)  $        103,909,655
  Long-term debt                              2,170,000                   --                 --              2,170,000
  Accrued interest payable                       15,632              878,715                 --                894,347
 Securities sold under
    repurchase agreements                            --            1,109,603                 --              1,109,603
  Other liabilities                                  --               32,466                 --                 32,466
                                      -----------------  -------------------  ------------------  --------------------
     Total liabilities                        2,185,632          105,989,975            (59,536)           108,116,071
                                      -----------------  -------------------  ------------------  --------------------
Stockholders' equity:
  Capital stock                                   5,390              666,500           (666,500)                 5,390
  Additional paid-in capital                  1,916,500            5,068,016         (5,068,016)             1,916,500
  Retained earnings                           4,224,518            2,386,749         (2,386,749)             4,224,518
 Accumulated other
    comprehensive income                       (14,740)             (14,740)              14,740              (14,740)
                                      -----------------  -------------------  ------------------  --------------------
     Total stockholders' equity               6,131,668            8,106,525         (8,106,525)             6,131,668
                                      -----------------  -------------------  ------------------  --------------------
     Total liabilities and
        stockholders' equity          $       8,317,300  $       114,096,500  $      (8,166,061)  $        114,247,739
                                      =================  ===================  ==================  ====================
</TABLE>


                                     F - 35

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY
                           Consolidating Balance Sheet
                                December 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                               Volunteer         Citizens Bank                             Consolidated
                                               Bancorp,             of East                                 Volunteer
                                                 Inc.              Tennessee                               Bancorp, Inc
                 ASSETS                        (Parent)          (Subsidiary)         Eliminations        and Subsidiary
                 ------                        --------          ------------         ------------        --------------
<S>                                        <C>                <C>                  <C>                 <C>
Cash and due from banks                    $          11,461  $         3,162,867  $         (11,461)  $          3,162,867
Federal funds sold                                        --            6,950,000                 --              6,950,000
Investment in subsidiary                           7,581,234                   --         (7,581,234)                    --
Investment securities                                     --           26,489,217                 --             26,489,217
Loans, net                                                --           73,038,920                 --             73,038,920
Accrued interest receivable                               --            1,213,319                 --              1,213,319
Premises and equipment                                    --            4,052,044                 --              4,052,044
Goodwill                                             149,142                   --                 --                149,142
Deferred income taxes                                  7,139              314,219                 --                321,358
Other assets                                         102,982              762,524           (102,982)               762,524
                                           -----------------  -------------------  ------------------  --------------------
     Total assets                          $       7,851,958  $       115,983,110  $      (7,695,677)  $        116,139,391
                                           =================  ===================  ==================  ====================


            LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Deposits                                    $           --          106,019,147            (11,461)  $       106,007,686
  Long-term debt                                   2,495,000                   --                 --             2,495,000
  Accrued interest payable                            36,825            1,103,208                 --             1,140,033
 Securities sold under
    repurchase agreements                                 --            1,052,513                 --             1,052,513
  Other liabilities                                       --              227,008           (102,982)              124,026
                                          ------------------   ------------------  ------------------  -------------------
     Total liabilities                             2,531,825          108,401,876           (114,443)          110,819,258
                                          ------------------   ------------------  ------------------  -------------------
Stockholders' equity:
  Capital stock                                        5,390              666,500           (666,500)                5,390
  Additional paid-in capital                       1,916,500            5,068,016         (5,068,016)            1,916,500
  Retained earnings                                3,673,323            2,121,798         (2,121,798)            3,673,323
 Accumulated other
    comprehensive income                           (275,080)             (275,080)           275,080              (275,080)
                                          ------------------   ------------------ ------------------   -------------------
     Total stockholders' equity                    5,320,133            7,581,234         (7,581,234)            5,320,133
                                          ------------------   ------------------ ------------------   -------------------
     Total liabilities and
        stockholders' equity              $        7,851,958   $      115,983,110 $       (7,695,677)  $       116,139,391
                                          ==================   ================== ==================   ===================
</TABLE>



                                     F - 36

<PAGE>


                             VOLUNTEER BANCORP, INC
                       Consolidating Statement of Earnings
                                December 31, 2001
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>

                                                                       Citizens                           Consolidated
                                                   Volunteer             Bank                               Volunteer
                                                    Bancorp,           of East                            Bancorp, Inc
                                                      Inc.            Tennessee                                and
                                                    (Parent)         (Subsidiary)      Eliminations        Subsidiary
                                                    --------         ------------      ------------        ----------
Interest income:
<S>                                                <C>            <C>                   <C>            <C>
  Interest and fees on loans                       $           -- $        7,136,898    $          --  $         7,136,898
  Interest on federal funds                                    --            233,982               --              233,982
  Interest and dividends on
     investments:
    Taxable                                                    --          1,490,965               --            1,490,965
    Exempt from federal income taxes                           --            125,126               --              125,126
                                               ------------------ ------------------ ----------------  -------------------
      Total interest income                                    --          8,986,971               --            8,986,971
                                               ------------------ ------------------ ----------------  -------------------
Interest expense:
  Interest on deposits                                         --          4,581,452               --            4,581,452
  Interest on other borrowed funds                        139,123             59,572               --              198,695
                                               ------------------ ------------------ ----------------  -------------------
    Total interest expense                                139,123          4,641,024               --            4,780,147
                                               ------------------ ------------------ ----------------  -------------------
Net interest income                                     (139,123)          4,345,947               --            4,206,824
Provision for possible loan losses                             --            265,000               --              265,000
                                               ------------------ ------------------ ----------------  -------------------
Net interest income after loan
  provision                                             (139,123)          4,080,947               --            3,941,824
                                               ------------------ ------------------ ----------------  -------------------
Non-interest income:
  Equity in earnings of subsidiary                        750,287                 --         (750,287)                  --
  Service charges                                              --            164,833               --              164,833
  Other income                                                 --            175,051               --              175,051
                                               ------------------ ------------------ ----------------  -------------------
  Interest on other borrowed funds                        139,123             59,572               --              198,695
                                               ------------------ ------------------ ----------------  -------------------
                                                          750,287            339,884         (750,287)             339,884
                                               ------------------ ------------------ ----------------  -------------------
Non-interest expense:
  Salaries and benefits                                        --          1,742,511               --            1,742,511
  Other                                                    53,081          1,516,458               --            1,569,539
                                               ------------------ ------------------ ----------------  -------------------
                                                           53,081          3,258,969               --            3,312,050
                                               ------------------ ------------------ ----------------  -------------------
Income before taxes                                       558,083          1,161,862         (750,287)             969,658
Income tax (benefit) expense                             (68,576)            411,575               --              342,999
                                               ------------------ ------------------ ----------------  -------------------
Net income                                     $          626,659 $          750,287 $       (750,287)  $          626,659
                                               ================== ================== ================  ===================
</TABLE>

                                     F - 37

<PAGE>


                             VOLUNTEER BANCORP, INC
                       Consolidating Statement of Earnings
                                December 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       Citizens                           Consolidated
                                                   Volunteer             Bank                               Volunteer
                                                    Bancorp,           of East                            Bancorp, Inc
                                                      Inc.            Tennessee                                and
                                                    (Parent)         (Subsidiary)      Eliminations        Subsidiary
                                                    --------         ------------      ------------        ----------
Interest income:
<S>                                                <C>            <C>                   <C>            <C>
  Interest and fees on loans                       $           -- $        7,156,202    $          --  $         7,156,202
  Interest on federal funds                                    --            175,342               --              175,342
  Interest and dividends on
    investments:
    Taxable                                                    --          1,456,935               --            1,456,935
    Exempt from federal income taxes                           --            183,916               --              183,916
                                               ------------------ ------------------ ----------------  -------------------
      Total interest income                                    --          8,972,395               --            8,972,395
                                               ------------------ ------------------ ----------------  -------------------
Interest expense:
  Interest on deposits                                         --          4,753,981               --            4,753,981
  Interest on other borrowed funds                        211,864             77,045               --              288,909
                                               ------------------ ------------------ ----------------  -------------------
    Total interest expense                                211,864          4,831,026               --            5,042,890
                                               ------------------ ------------------ ----------------  -------------------
Net interest income                                     (211,864)          4,141,369               --            3,929,505
Provision for possible loan losses                             --            240,000               --              240,000
                                               ------------------ ------------------ ----------------  -------------------
Net interest income after loan
   provision                                            (211,864)          3,901,369               --            3,689,505
                                               ------------------ ------------------ ----------------  -------------------
Non-interest income:
  Equity in earnings of subsidiary                        900,595                 --         (900,595)                  --
  Service charges                                              --            228,132               --              228,132
  Other income                                                 --            128,174               --              128,174
                                               ------------------ ------------------ ----------------  -------------------
                                                          900,595            356,306         (900,595)             356,306
                                               ------------------ ------------------ ----------------  -------------------
Non-interest expense:
    Total interest expense                                211,864          4,831,026               --            5,042,890
  Salaries and benefits                                        --          1,602,785               --            1,602,785
  Other                                                    52,046          1,285,053               --            1,337,099
                                               ------------------ ------------------ ----------------  -------------------
                                                           52,046          2,887,838               --            2,939,884
                                               ------------------ ------------------ ----------------  -------------------
Income before taxes                                       636,685          1,369,837         (900,595)           1,105,927
Income tax (benefit) expense                             (93,392)            469,242               --              375,850
                                               ------------------ ------------------ ----------------  -------------------
Net income                                     $          730,077 $          900,595 $       (900,595) $           730,077
                                               ================== ================== ================  ===================
</TABLE>


                                     F - 38

<PAGE>


                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY
                      Consolidating Statement of Cash Flows
                                December 31, 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       Citizens                           Consolidated
                                                   Volunteer             Bank                               Volunteer
                                                   Bancorp,            of East                            Bancorp, Inc
                                                     Inc.             Tennessee                                and
                                                   (Parent)          (Subsidiary)      Eliminations        Subsidiary
                                                   --------          ------------      ------------        ----------
Cash Flows From Operating
      Activities
<S>                                           <C>                 <C>                <C>               <C>
  Net income                                  $           626,659  $          750,287 $      (750,287)  $          626,659
  Adjustments to reconcile net
      income to net cash provided by
      operating activities:
    Subsidiary earnings undistributed                    (264,951)                --          264,951                   --
    Deferred income taxes                                     270             46,589               --               46,859
    Provision for loan losses                                  --            265,000               --              265,000
    Depreciation and amortization                          17,883            223,348               --              241,231
    Securities (gains)                                         --           (25,260)               --              (25,260)
    FHLB stock dividends                                       --           (22,800)               --              (22,800)
    Decrease (increase) in other
       assets                                              89,871          (491,117)         (102,982)            (504,228)
    (Decrease) in other liabilities                      (21,193)          (419,035)          102,982             (337,246)
                                              ------------------- ------------------ ----------------  -------------------
  Net cash provided by operating
      activities                                          448,539            327,012         (485,336)              290,215
                                              ------------------- ------------------ ----------------  -------------------
Cash Flows From Investing
      Activities:
    Decrease in investment securities                          --            363,400               --              363,400
    Decrease in loans                                          --            615,764               --              615,764
    Capital expenditures                                       --           (37,662)               --              (37,662)
                                              ------------------- ------------------ ----------------  -------------------
  Net cash provided by investing
      activities                                               --            941,502               --              941,502
                                              ------------------- ------------------ ----------------  -------------------
Cash Flows From Financing
      Activities:
    (Decrease) in deposits                                     --         (2,049,956)         (48,075)          (2,098,031)
    Increase in securities sold under
        repurchase agreements                                  --             57,090               --               57,090
    Dividends paid                                        (75,464)          (485,336)         485,336              (75,464)
    Repayment of long-term debt                          (325,000)                --               --             (325,000)
                                              ------------------- ------------------ ----------------  -------------------
  Net cash (used) by financing
       activities                                        (400,464)        (2,478,202)         437,261           (2,441,405)
                                              ------------------- ------------------ ----------------  -------------------
Change in cash and equivalents                             48,075         (1,209,688)         (48,075)          (1,209,688)
Cash and equivalents - beginning                           11,461         10,112,867          (11,461)          10,112,867
                                              ------------------- ------------------ ----------------  -------------------
Cash and equivalents - ending                 $            59,536 $        8,903,179 $        (59,536) $         8,903,179
                                              =================== ================== ================  ===================
</TABLE>



                                     F - 39

<PAGE>

                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY
                      Consolidating Statement of Cash Flows
                                December 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                       Citizens                           Consolidated
                                                   Volunteer             Bank                               Volunteer
                                                   Bancorp,            of East                            Bancorp, Inc
                                                     Inc.             Tennessee                                and
                                                   (Parent)          (Subsidiary)      Eliminations        Subsidiary
                                                   --------          ------------      ------------        ----------
Cash Flows From Operating
   Activities
<S>                                           <C>                 <C>                <C>               <C>
  Net income                                  $           730,077 $          900,595  $      (900,595)  $          730,077
  Adjustments to reconcile net
      income to net cash provided by
     operating activities:
    Subsidiary earnings undistributed                    (390,272)                --          390,272                   --
    Deferred income taxes                                   3,564            (63,229)              --              (59,665)
    Provision for loan losses                                  --            240,000               --              240,000
    Depreciation and amortization                          17,883            224,106               --              241,989
    Securities loss                                            --              3,152               --                3,152
    FHLB stock dividends                                       --            (23,100)              --              (23,100)
    (Increase) in other assets                            (75,355)          (482,789)          75,355             (482,789)
    Increase in other liabilities                          (3,461)           398,219          (75,355)             319,403
                                              ------------------- ------------------ ----------------  -------------------
  Net cash provided by operating
      activities                                          282,436          1,196,954         (510,323)             969,067
                                              ------------------- ------------------ ----------------  -------------------
Cash Flows From Investing
      Activities:
    Decrease in investment securities                          --          1,230,468               --            1,230,468
    (Increase) in loans                                        --         (6,546,492)              --           (6,546,492)
    Capital expenditures                                       --           (201,900)              --             (201,900)
                                              ------------------- ------------------ ----------------  -------------------
  Net cash (used) by investing
      activities                                               --         (5,517,924)              --           (5,517,924)
                                              ------------------- ------------------ ----------------  -------------------

Cash Flows From Financing
      Activities:
    Increase in deposits                                       --         11,106,392           77,247           11,183,639
    (Decrease) in securities sold under
           repurchase agreements                               --           (268,577)              --             (268,577)
    Net (decrease) in FHLB advances                                       (4,500,000)              --           (4,500,000)
    Dividends paid                                        (64,683)          (510,323)         510,323              (64,683)
    Repayment of long-term debt                          (295,000)                --               --             (295,000)
                                              ------------------- ------------------ ----------------  -------------------
  Net cash provided from financing
     activities                                          (359,683)         5,827,492          587,570            6,055,379
                                              ------------------- ------------------ ----------------  -------------------
Change in cash and equivalents                            (77,247)         1,506,522           77,247            1,506,522
Cash and equivalents - beginning                           88,708          8,606,345          (88,708)           8,606,345
                                              ------------------- ------------------ ----------------  -------------------
Cash and equivalents - ending                 $            11,461 $       10,112,867 $        (11,461)  $       10,112,867
                                              =================== ================== ================  ===================
</TABLE>

                                      F-40

<PAGE>



                     VOLUNTEER BANCORP, INC. AND SUBSIDIARY
                Consolidating Statements of Comprehensive Income
                           December 31, 2001 and 2000
--------------------------------------------------------------------------------

                                December 31, 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       Citizens                            Consolidated
                                                    Volunteer            Bank                               Volunteer
                                                     Bancorp,           of East                            Bancorp, Inc
                                                       Inc.            Tennessee                               and
                                                     (Parent)        (Subsidiary)       Eliminations        Subsidiary
<S>                                             <C>                <C>               <C>                <C>
Net income                                      $          626,659 $         750,287 $        (750,287) $          626,659
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income, before                                                                                       0
  tax:
Unrealized gain on securities available or sale:
Unrealized holding gains arising
   during the period                                            --           445,164                 --            445,164
Less: reclassification adjustments for
   gains included in net income                                 --            25,260                 --             25,260
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income                                      --           419,904                 --            419,904
Income taxes                                                    --          (159,564)                --           (159,564)
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income net of
  income taxes                                                  --           260,340                 --            260,340
Company's share of subsidiary's other
   comprehensive income, net of tax                        260,340                --           (260,340)                --
                                                ------------------ ----------------- ------------------ ------------------
Total comprehensive income                      $          886,999 $       1,010,627 $       (1,010,627) $         886,999
                                                ================== ================= ================== ==================



                                December 31, 2000
--------------------------------------------------------------------------------

Net income                                      $          730,077 $         900,595 $        (900,595) $          730,077
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income, before
  tax
Unrealized gains on securities available for sale:
Unrealized holding gains arising during                                                              --
   the period                                                   --           907,815                               907,815
Less: reclassification adjustments for
  (Losses) included in net income                               --            (3,152)                --             (3,152)
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income                                      --           910,967                 --            910,967
Income taxes                                                    --          (346,167)                --           (346,167)
                                                ------------------ ----------------- ------------------ ------------------
Other comprehensive income net of
 income taxes                                                   --           564,800                 --            564,800
Company's share of subsidiary's other
  comprehensive income, net of tax                         564,800                --           (564,800)                --
                                                ------------------ ----------------- ------------------ ------------------
Total comprehensive income                      $        1,294,877 $       1,465,395 $       (1,465,395) $       1,294,877
                                                ================== ================= ================== ==================
</TABLE>



                                     F - 41

<PAGE>



     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.

                                         VOLUNTEER BANCORP, INC.

                                         By: /s/ Reed D. Matney
                                             -------------------------
                                             Reed D. Matney, President

                                         Date: March 28, 2002

     In accordance  with the  requirements  of the Exchange Act, this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>

Signature                                   Capacity                                            Date
---------                                   --------                                            ----

<S>                                                                                                        <C>
 /s/ William E. Phillips                    Chairman of the Board and Director                  March 28, 2002
 -----------------------
 William E. Phillips

 /s/ G. Douglas Price                       Secretary/Treasurer and Director                    March 28, 2002
 --------------------                       (principal financial and accounting officer)
 G. Douglas Price

 /s/ Reed D. Matney                         President and Director                              March 28, 2002
 ------------------                         (principal executive officer)
 Reed D. Matney

 /s/ Carlin Greene                          Director                                            March 28, 2002
 -----------------
 Carlin Greene

 /s/ Gary Varnell                           Director                                            March 28, 2002
 ----------------
 Gary Varnell

 /s/ George Brooks                          Director                                            March 28, 2002
 -----------------
 George Brooks

 /s/ Shirley Price                          Director                                            March 28, 2002
 -----------------
 Shirley Price

 /s/ Neil Miller                            Director                                            March 28, 2002
 ---------------
 Neil Miller

 /s/ Lawrence Gray                          Director                                            March 28, 2002
 -----------------
 Lawrence Gray

 /s/ Scott Collins                          Director                                            March 28, 2002
 -----------------
 Scott Collins

 /s/ Leon Gladson                           Director                                            March 28, 2002
 ----------------
 Leon Gladson
</TABLE>




<PAGE>



                                                                    EXHIBIT 21.1

Subsidiary                                                State of Incorporation

The Citizens Bank of East Tennessee                                    Tennessee


<PAGE>


                                                                    EXHIBIT 23.1

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public  accountants,  we hereby consent to the use of our report,
dated February 14, 2002,  related to the  consolidated  financial  statements of
Volunteer Bancorp, Inc. in this Form 10-KSB.


Welch & Associates, Ltd.
Nashville, Tennessee
March 28, 2002