<page> 1


                                   FORM 10-QSB

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

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

                  FOR THE QUARTERLY PERIOD ENDED June 30, 2001

                                       OR

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

         FOR THE TRANSITION PERIOD FROM _____________ TO ______________.

                         COMMISSION FILE NUMBER: 0-26467


                        GREATER ATLANTIC FINANCIAL CORP.
                  ---------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

             DELAWARE                                       54-1873112
             --------                                       ----------
     (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                         Identification
                                                            No.)

                      10700 PARKRIDGE BOULEVARD, SUITE P50
                             RESTON, VIRGINIA 20191
                             ----------------------
                    (Address of Principal Executive Offices)
                                   (Zip Code)

                                  703-391-1300
                                  ------------
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No

   At August 13, 2001, there were 3,007,434 shares of the registrant's Common
                 Stock , par value $0.01 per share outstanding





<page> 2




                        GREATER ATLANTIC FINANCIAL CORP.
                         QUARTERLY REPORT ON FORM 10-QSB
                       FOR THE QUARTER ENDED JUNE 30, 2001

                                TABLE OF CONTENTS


PART I.  FINANCIAL INFORMATION                                          PAGE NO.
------------------------------                                          --------

Item 1. Financial Statements

      Consolidated Statements of Financial Condition
      June 30, 2001 (unaudited) and September 30, 2000 (audited)...............3

      Consolidated Statements of Operations (unaudited) Three and nine
      months ended June 30, 2001 and June 30, 2000.............................4

      Consolidated Statements of Comprehensive Income (unaudited) Nine
      months ended June 30, 2001 and June 30, 2000 ............................5

      Consolidated Statements of Changes in Stockholders' Equity
      (unaudited) Nine months ended June 30, 2001 and June 30, 2000............5

      Consolidated Statements of Cash Flows (unaudited) Nine months
      ended June 30, 2001 and June 30, 2000....................................6

      Notes to Consolidated Financial Statements...............................8

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations............................................11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk...........22

PART II.  OTHER INFORMATION
---------------------------

Item 4.  Submission of Matters to a Vote of Security Holders..................23

Item 6.  Exhibits and Reports on Form 8-K.....................................23


SIGNATURES....................................................................24
----------



                                       2

<page> 3
<table>
<caption>


                                   GREATER ATLANTIC FINANCIAL CORP.
                      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

                                                                           June 30,            September 30,
                                                                             2001                   2000
                                                                      -------------------     -----------------
                                                                         (Unaudited)
                                                                               (dollars in thousands)

                                                                          <c>                   <c>
Assets
Cash and cash equivalents                                                     $ 1,426               $ 2,312
Interest bearing deposits                                                       2,832                 3,405
Investment securities
   Available-for-sale                                                         150,501                86,580
   Held-to-maturity                                                            24,410                27,600
   Trading                                                                      1,403                22,766
Loans held for sale                                                            14,730                 5,599
Loans receivable, net                                                         156,054               132,698
Accrued interest and dividends receivable                                       3,055                 2,494
Deferred income taxes                                                           1,520                 1,520
Federal Home Loan Bank stock, at cost                                           3,655                 3,560
Foreclosed real estate                                                              -                   172
Premises and equipment, net                                                     6,285                 4,859
Goodwill                                                                        1,353                 1,378
Prepaid expenses and other assets                                               2,694                 1,353
                                                                      -------------------     -----------------
                  Total assets                                               $369,918              $296,296
                                                                      ===================    ==================
Liabilities and stockholders' equity
Liabilities
Deposits                                                                     $244,302              $188,387
Advance payments from borrowers for taxes and insurance                           375                   264
Accrued expenses and other liabilities                                          1,474                 3,942
Income taxes payable                                                               55                     -
Advances from the FHLB and other borrowings                                   102,701                82,836
                                                                      -------------------     -----------------
Total liabilities                                                             348,907               275,429
                                                                      -------------------     -----------------
Commitments and contingencies
Stockholders' Equity
   Preferred stock $.01 par value - 2,500,000 shares authorized,
       none outstanding                                                             -                     -
   Common stock, $.01 par value - 10,000,000
       shares authorized; 3,007,434 shares outstanding                             30                    30
   Additional paid-in capital                                                  25,132                25,132
   Accumulated deficit                                                         (3,533)               (2,928)
   Accumulated other comprehensive loss                                          (618)               (1,367)
                                                                      -------------------     -----------------
Total stockholders' equity                                                     21,011                20,867
                                                                      -------------------     -----------------
Total liabilities and stockholders' equity                                   $369,918              $296,296
                                                                      ===================     =================

</table>



                                                 3

<page> 4
<table>
<caption>


                                    GREATER ATLANTIC FINANCIAL CORP.
                          CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                                                                Three Months Ended                     Nine Months Ended
                                                                     June 30,                               June 30,
                                                        ------------------------------------   -----------------------------------
                                                              2001               2000               2001               2000
                                                        -----------------   ----------------   ----------------   ----------------
                                                                                  (dollars in thousands)

                                                          <c>                <c>                <c>                <c>
Interest income
  Loans                                                         $3,239             $2,238             $9,433             $5,936
  Investments                                                    2,899              2,513              8,472              6,597
                                                        -----------------   ----------------   ----------------   ----------------
Total interest income                                            6,138              4,751             17,905             12,533
                                                        -----------------   ----------------   ----------------   ----------------
Interest expense
  Deposits                                                       3,031              1,934              8,766              5,431
  Borrowed money                                                 1,380              1,681              4,431              3,626
                                                        -----------------   ----------------   ----------------   ----------------
Total interest expense                                           4,411              3,615             13,197              9,057
                                                        -----------------   ----------------   ----------------   ----------------
Net interest income                                              1,727              1,136              4,708              3,476
Provision for loan losses                                            8                  -                 54                  8
                                                        -----------------   ----------------   ----------------   ----------------
Net interest income after provision for loan losses              1,719              1,136              4,654              3,468
                                                        -----------------   ----------------   ----------------   ----------------
Noninterest income
  Fees and service charges                                         297                189                729                472
  Gain on sale of loans                                          1,363                759              2,901              1,672
  Gain (loss) on sale of investment securities                       6               (102)                21               (171)
  Gain on sale of real estate owned                                  1                  -                 46                  2
  Other operating income                                            (1)                (2)                 4                  4
                                                        -----------------   ----------------   ----------------   ----------------
Total noninterest income                                         1,666                844              3,701              1,979
                                                        -----------------   ----------------   ---------------    ----------------
Noninterest expense
  Compensation and employee benefits                             1,690              1,296              4,266              3,361
  Occupancy                                                        466                299              1,169                879
  Professional services                                            202                155                646                558
  Advertising                                                      127                170                376                432
  Deposit insurance premium                                          9                  8                 25                 37
  Furniture, fixtures and equipment                                179                123                475                333
  Data processing                                                  238                 72                635                286
  Provision for loss on real estate owned                           (3)                 -                  -                  -
  Other real estate owned expenses                                   3                  -                  3                 10
  Other operating expenses                                         521                397              1,365              1,078
                                                         -----------------   ----------------   ---------------   -----------------
Total noninterest expense                                        3,432              2,520              8,960              6,974
                                                         -----------------   ----------------   ---------------   -----------------
Loss before income tax benefit                                     (47)              (540)              (605)            (1,527)
                                                         -----------------   ----------------   ---------------   -----------------
Income tax benefit                                                   -               (213)                 -               (599)
                                                         -----------------   ----------------   ---------------   -----------------
Net loss                                                        $  (47)             $(327)            $ (605)            $ (928)
                                                         =================   ================   ===============   =================

Basic and diluted loss per share                                $(0.02)           $ (0.11)            $(0.20)            $(0.31)
Basic and diluted weighted average shares                    3,007,434          3,007,434          3,007,434          3,007,434

</table>


                                                  4

<page> 5



                        GREATER ATLANTIC FINANCIAL CORP.
       CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
--------------------------------------------------------------------------------
Nine months ended June 30,                               2001             2000
--------------------------------------------------------------------------------
                                                            (in thousands)
Net loss                                               $ (605)        $   (928)
--------------------------------------------------------------------------------
Other comprehensive income (loss), net of tax
   Unrealized gains (losses) on securities                749             (401)
--------------------------------------------------------------------------------
Other comprehensive income (loss)                         749             (401)
--------------------------------------------------------------------------------
Comprehensive loss                                     $  144         $ (1,329)
================================================================================

<table>
<caption>


                                       GREATER ATLANTIC FINANCIAL CORP.
                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

------------------------------------------------------------------------------------------------------------------------------
                                                                                             Accumulated
                                                                Additional   Accumulated         Other            Total
                                        Preferred     Common     Paid-in       Earnings      Comprehensive    Stockholders'
                                         Stock        Stock      Capital      (Deficit)      Income (Loss)        Equity
------------------------------------------------------------------------------------------------------------------------------
                                                                         (in thousands)

                                        <c>           <c>    <c>           <c>                <c>              <c>
Balance at September 30, 1999              $  -          $30    $ 25,132      $    710           $   (882)        $ 24,990

Other comprehensive income                    -            -           -             -               (401)            (401)

Net loss for the period                       -            -           -          (928)                 -             (928)
------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2000                   $  -          $30    $ 25,132      $   (218)          $ (1,283)        $ 23,661
==============================================================================================================================
Balance at September 30, 2000              $  -          $30    $ 25,132      $ (2,928)          $ (1,367)        $ 20,867

Other comprehensive income                    -            -           -             -                749              749

Net loss for the period                       -            -           -          (605)                               (605)
------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2001                   $  -          $30    $ 25,132      $ (3,533)          $   (618)        $ 21,011
==============================================================================================================================
</table>





                                                             5


<page> 6
<table>
<caption>


                        GREATER ATLANTIC FINANCIAL CORP.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


   --------------------------------------------------------------------------------------------------------------
   Nine months ended June 30,                                                           2001           2000
   --------------------------------------------------------------------------------------------------------------
                                                                                           (in thousands)
   
                                                                                <c>              <c>
   Cash flow from operating activities
   Net (loss) income                                                                   $  (605)        $  (928)
   Adjustments to reconcile net (loss) income to net cash
   provided by operating activities
     Provision for loan loss                                                                54               8
     Amortization of excess of purchase price over assets acquired                          24               -
     Amortization of deposit acquisition adjustment                                        143               -
     Amortization of loan acquisition adjustment                                           (20)              -
     Depreciation and amortization                                                         372             271
     Proceeds from sale of trading securities                                           20,077               -
     Proceeds from repayments of trading securities                                      1,263               -
     Amortization of trading security premiums                                              38               -
     Net gain on trading securities                                                        (15)
     Realized loss (gain) on sale of investments                                             -             171
     Realized (gain) loss on sale of mortgaged-backed securities                            (6)             23
     Amortization of investment security premiums                                        1,310             452
     Amortization of mortgage-backed securities premiums                                  (178)            166
     Amortization of deferred fees                                                        (162)            (82)
     Discount accretion net of premium amortization                                         51              41
     Loss on disposal of fixed asset                                                         2              12
     Gain on sale of foreclosed real estate                                                (45)             (2)
     Gain on sale of loans held for sale                                                (2,901)         (1,672)
   (Increase) decrease in assets
     Disbursements for origination of loans                                           (162,429)        (81,262)
     Proceeds from sales of loans                                                      156,200          82,877
     Accrued interest and dividend receivable                                             (561)           (871)
     Prepaid expenses and other assets                                                  (1,341)           (343)
     Deferred loan fees collected, net of deferred costs incurred                          161             (64)
   Increase (decrease) in liabilities
     Accrued expenses and other liabilities                                             (2,469)            215
     Income taxes payable                                                                   55               -
   --------------------------------------------------------------------------------------------------------------
   Net cash provided by (used in) operating activities                                 $ 9,018         $  (988)
   ==============================================================================================================
</table>




                                                        6


<page> 7
<table>
<caption>


                                                GREATER ATLANTIC FINANCIAL CORP.
                                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (CONTINUED)

          ------------------------------------------------------------------------------------------------------------
          Nine months ended June 30,                                                       2001             2000
          ------------------------------------------------------------------------------------------------------------
                                                                                               (in thousands)
          
                                                                            <c>             <c>
          Cash flow from investing activities
            Net increase in loans                                                        $(23,440)       $(44,830)
            Purchases of premises and equipment                                            (1,799)           (725)
            Proceeds from sales of foreclosed real estate                                     217             191
            Purchases of investment securities                                            (79,307)        (19,665)
            Proceeds from sale of investment securities                                     2,389           7,376
            Proceeds from repayments of investment securities                              11,136           5,335
            Purchases of mortgage-backed securities                                        (8,795)        (29,180)
            Proceeds from sale of mortgage-backed securities                                1,831           1,930
            Proceeds from repayments of mortgage-backed securities                         11,638           9,373
            Purchases of FHLB stock                                                        (1,395)         (3,925)
            Proceeds from sale of FHLB stock                                                1,300           2,158
          ------------------------------------------------------------------------------------------------------------
          Net cash used in investing activities                                           (86,225)        (71,962)
          ------------------------------------------------------------------------------------------------------------
          Cash flow from  financing activities
            Net increase in deposits                                                       55,772           4,572
            Net advances from FHLB                                                          6,950          37,950
            Net borrowings on reverse repurchase agreements                                12,915          29,626
            Increase in advance payments by borrowers for taxes and insurance                 111             (43)
          ------------------------------------------------------------------------------------------------------------
          Net cash provided by financing activities                                        75,748          72,105
          ------------------------------------------------------------------------------------------------------------
          (Decrease) increase in cash and cash equivalents                                 (1,459)           (845)
          ------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents, at beginning of period                                 5,717           1,703
          ------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents, at end of period                                    $  4,258        $    858
          ============================================================================================================

</table>


                                                            7

<page> 8


                        GREATER ATLANTIC FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 INFORMATION AS OF JUNE 30, 2001 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

(1) BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements, which
include the accounts of Greater Atlantic Financial Corp. ("the company") and its
wholly owned subsidiary, Greater Atlantic Bank ("the bank") and its wholly owned
subsidiary, Greater Atlantic Mortgage Corp. ("GAMC"), have been prepared in
accordance with the instructions for Form 10-QSB and do not include all of the
disclosures required by generally accepted accounting principles. All
adjustments which, in the opinion of management, are necessary to a fair
presentation of the results for the interim periods presented (consisting of
normal recurring adjustments) have been made. The results of operations for the
nine months ended June 30, 2001 are not necessarily indicative of the results of
operations that may be expected for the year ended September 30, 2001 or any
future periods.

(2) LOAN IMPAIRMENT AND LOAN LOSSES

         In accordance with guidance in the Statements of Financial Accounting
Standards Nos. 114 and 118, the company prepares a quarterly review to determine
the adequacy of the allowance for loan losses and to identify and value impaired
loans. No impaired loans were identified by the company at or during the nine
months ended June 30, 2001 and 2000. An analysis of the change in the allowance
for loan losses follows:

--------------------------------------------------------------------------------
At or for the Nine Months Ended June 30,                  2001             2000
--------------------------------------------------------------------------------
                                                         (dollars in thousands)

Balance at beginning of period                           $765              $590
Provisions                                                 54                 8
Transfer                                                  100                 -
--------------------------------------------------------------------------------
Total charge-offs                                        (112)              (28)
Total recoveries                                            3                 -
--------------------------------------------------------------------------------
Net charge-offs                                          (109)              (28)
--------------------------------------------------------------------------------
Balance at end of period                                 $810              $570
================================================================================
Ratio of net charge-offs during the period
   to average loans outstanding during the period        0.07%             0.03%
================================================================================
Allowance for loan losses to total non-performing
   loans at end of period                              369.86%           322.03%
================================================================================
Allowance for loan losses to total loans                 0.50%             0.54%
================================================================================

(3) REGULATORY MATTERS

         The bank qualifies as a Tier 1 institution and may make capital
distributions during a calendar year up to 100% of its net income to date plus
the amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year. Any distributions in excess of that amount
requires prior notice to the OTS, with the opportunity for the OTS to object to
the distribution. A Tier 1 institution is defined as an institution that has, on
a pro forma basis after the proposed distribution, capital equal to or greater
than the OTS fully phased-in capital requirement and has not been deemed by the
OTS to be "in need of more than normal supervision". The bank is currently
classified as a Tier 1 institution for these purposes. The Capital Distribution
Regulation requires that the institution provide the applicable OTS District
Director with a 30-day advance written notice of all proposed capital
distributions whether or not advance approval is required. The bank did not pay
any dividends during the periods ended September 30, 2000 or June 30, 2001.



                                       8

<page> 9


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 INFORMATION AS OF JUNE 30, 2001 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

                  Effective December 19, 1992, the President signed into law the
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). The
"Prompt Corrective Action" section of FDICIA created five categories of
financial institutions based on the adequacy of their regulatory capital level:
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized. Under FDICIA, a well
capitalized financial institution is one with Tier 1 leverage capital of 5%,
Tier 1 risk-based capital of 6% and total risk-based capital of 10%. At June 30,
2001 the bank was classified as a well capitalized financial institution. The
following presents the bank's capital position:
<table>
<caption>
---------------------------------------------------------------------------------------------------------------
                                                Required    Required       Actual      Actual
              At June 30, 2001                  Balance      Percent      Balance      Percent      Surplus
---------------------------------------------------------------------------------------------------------------
                                                                   (dollars in thousands)

                                              <c>           <c>        <c>           <c>           <c>
Leverage                                         $18,436       5.00%      $19,877        5.39%        $1,441
Tier 1 Risk-based                                $10,546       6.00%      $19,877       11.31%        $9,331
Total Risk-based                                 $17,576      10.00%      $20,733       11.80%        $3,157
===============================================================================================================
</table>

(4) SEGMENT REPORTING

         The company has two reportable segments, banking and mortgage banking.
The bank operates retail deposit branches throughout the greater Washington,
D.C./Baltimore metropolitan area. The banking segment provides retail consumer
and small businesses with deposit products such as demand, transaction, savings
accounts and certificates of deposit and lending products, such as residential
and commercial real estate, construction and development, consumer and
commercial business loans. Further, the banking segment invests in residential
real estate loans purchased from GAMC and others, and also invests in
mortgage-backed and other securities. The mortgage banking segment activities,
which are conducted principally through GAMC, include the origination of
residential real estate loans either for the bank's portfolio or for sale into
the secondary market with servicing released.

         The company evaluates performance based on net interest income,
noninterest income, and noninterest expense. The total of these three items is
the reportable segment's net contribution. The company's reportable segments are
strategic business units that offer different services in different geographic
areas. They are managed separately because each segment appeals to different
markets and, accordingly, requires different technology and marketing
strategies.

         Since the company derives a significant portion of its revenue from
interest income and interest expense, the segments are reported below using net
interest income. Because the company also evaluates performance based on
noninterest income and noninterest expense, these measures of segment profit and
loss are also presented.


                                       9


<page> 10
<table>
<caption>

                                    GREATER ATLANTIC FINANCIAL CORP.
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
             INFORMATION AS OF JUNE 30, 2001 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

--------------------------------------------------------------------------------------------------------------------
                                                                            Total                        Total
                                                             Mortgage     Reportable   Intersegment    Operating
For the Nine Months Ended June 30,              Banking       Banking      Segments    Eliminations    Earnings
--------------------------------------------------------------------------------------------------------------------

                                            <c>           <c>          <c>           <c>            <c>
Net interest income: (1)
2001                                           $  4,541      $   113      $  4,654      $      -       $  4,654
2000                                              3,289          179         3,468             -          3,468
Noninterest income:
2001                                           $    575      $ 3,199      $  3,774      $    (73)      $  3,701
2000                                                (14)       2,023         2,009           (30)         1,979
Noninterest expense:
2001                                           $  6,005      $ 3,028      $  9,033      $     73       $  8,960
2000                                              4,303        2,701         7,004            30          6,974
Net income:
2001                                           $   (889)     $   284      $   (605)     $      -       $   (605)
2000                                               (624)        (304)         (928)            -           (928)
Segment assets:
2001                                           $367,548      $34,866      $402,414      $(32,496)      $369,918
2000                                            267,683        7,842       275,525        (5,711)       269,814
(1) Segment net interest income reflects income after provisions for loan losses.
</table>

(5) RECENT ACCOUNTING STANDARDS

         In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and
Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase
method of accounting and prohibits the use of the pooling-of-interests method of
accounting for business combinations initiated after June 30, 2001. SFAS 141
also requires that the company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142, that the company reclassify the carrying
amounts of intangible assets and goodwill based on the criteria in SFAS 141.

         SFAS 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least annually.
In addition, SFAS 142 requires that the company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal years beginning after December 15, 2001 to all goodwill and other
intangible assets recognized at that date, regardless of when those assets were
initially recognized. SFAS 142 requires the company to complete a transitional
goodwill impairment test six months from the date of adoption. The company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS 142.

         The company's previous business combination was accounted for using the
purchase method. As of June 30, 2001, the net carrying amount of goodwill is
$1.4 million. Amortization expense during the nine month period ended June 30,
2001 was $25,000. Currently, the company is assessing but has not yet determined
how the adoption of SFAS 141 and SFAS 142 will impact its financial position and
results of operations.


                                       10


<page> 11



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

         The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements and Notes presented elsewhere in this
report.

         This report contains forward-looking statements. When used in this
10-QSB report and in future filings by the company with the Securities and
Exchange Commission (the "SEC"), in the company's press releases or other public
or shareholder communications, and in oral statements made with the approval of
an authorized executive officer, the words or phrases "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties, including, among
other things, changes in economic conditions in the company's market area,
changes in policies by regulatory agencies, fluctuations in interest rates,
demand for loans in the company's market area and competition, that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. The company wishes to advise readers that the factors
listed above could affect the company's financial performance and could cause
the company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.

         The company does not undertake and specifically declines any obligation
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.

GENERAL

         We are a savings and loan holding company, which was originally
organized in June 1997. We conduct substantially all of our business through our
wholly owned subsidiary, Greater Atlantic Bank, a federally chartered savings
bank, and its wholly owned subsidiary, Greater Atlantic Mortgage Corp. Greater
Atlantic Bank is a member of the Federal Home Loan Bank system and it's deposits
are insured up to applicable limits by the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation. We offer traditional banking services
to customers through nine Greater Atlantic Bank branches located throughout the
greater Washington, D.C./Baltimore metropolitan area. We also originate mortgage
loans for sale in the secondary market through Greater Atlantic Mortgage Corp.

         The profitability of the company, and more specifically, the
profitability of its primary subsidiary Greater Atlantic Bank, depends primarily
on its net interest income. Net interest income is the difference between the
interest income it earns on its loans and investment portfolio, and the interest
it pays on interest-bearing liabilities, which consists mainly of interest paid
on deposits and borrowings.

         The company's profitability is also affected by the level of its
non-interest income and operating expenses. Non-interest income consists
primarily of gains on sales of loans and available-for-sale investments, service
charge fees and commissions earned by non-bank subsidiaries. Operating expenses
consist primarily of salaries and employee benefits, occupancy-related expenses,
equipment and technology-related expenses and other general operating expenses.

         At June 30, 2001 the company's total assets were $369.9 million,
compared to $296.3 million held at September 30, 2000, representing an increase
of 24.85%. Both the bank's overall asset size and customer base increased during
the period and that growth is reflected in the consolidated statements of
financial condition and statements of operations. Net loans receivable at June
30, 2001 were $156.1 million, an increase of $23.4 million or 17.60% from the
$132.7 million held at September 30, 2000. The increase in loans consisted
primarily of real estate loans secured by first mortgages on residential
properties and consumer and commercial lines of credit secured by mortgages on
residential and commercial real estate. At June 30, 2001 investment securities
were $176.3 million, an increase of $39.4 million or 28.75% from the $136.9
million held at September 30, 2000.



                                       11

<page> 12



         COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
                         JUNE 30, 2001 AND JUNE 30, 2000

         NET INCOME. For the three months ended June 30, 2001, the company
incurred a net loss of $47,000 or $0.02 per share compared to a loss of $327,000
or $0.11 per share for the three months ended June 30, 2000. The $280,000
decrease in net loss over the comparable period one year ago resulted from
increases in net interest income, and noninterest income. Those increases
exceeded an increase in noninterest expense and a decrease in the bank's benefit
for income tax. Due to continuing operating losses, effective October 1, 2000,
the bank does not recognize an income tax benefit for current period operating
losses. A better measure of performance than net income would be the company's
pre-tax earnings which improved by $493,000 from a loss of $540,000 for the
three months ended June 30, 2000 to a loss of $47,000 for the current quarter.

         NET INTEREST INCOME. An important source of our earnings is net
interest income, which is the difference between income earned on
interest-earning assets, such as loans, investment securities and
mortgage-backed securities, and interest paid on interest-bearing liabilities
such as deposits and borrowings. The level of net interest income is determined
primarily by the relative average balances of interest-earning assets and
interest-bearing liabilities in combination with the yields earned and rates
paid upon them. The correlation between the repricing of interest rates on
assets and on liabilities also influences net interest income.

         The following table presents a comparison of the components of interest
income and expense and net interest income.

<table>
<caption>
                                                                             Difference
--------------------------------------------------------------------------------------------------
Three Months Ended June 30,          2001              2000           Amount             %
--------------------------------------------------------------------------------------------------
                                                        (dollars in thousands)

                                  <c>               <c>             <c>              <c>
Interest income:
   Loans                             $3,239            $2,238          $1,001           44.73%
   Investments                        2,899             2,513             386           15.36
--------------------------------------------------------------------------------------------------
Total                                 6,138             4,751           1,387           29.19
--------------------------------------------------------------------------------------------------

Interest expense:
   Deposits                           3,031             1,934           1,097           56.72
   Borrowings                         1,380             1,681            (301)         (17.91)
--------------------------------------------------------------------------------------------------
Total                                 4,411             3,615             796           22.02
--------------------------------------------------------------------------------------------------
Net interest income                  $1,727            $1,136           $ 591           52.02%
==================================================================================================
</table>

         Our growth in net interest income for the three months ended June 30,
2001 was due primarily to the increase in average interest-earning assets
resulting from our planned growth. Average interest-earning assets increased
$104.1 million or 40.72% over the comparable period one-year ago and was coupled
with a 14 basis point increase in net interest margin (net interest income
divided by average interest-earning assets). The increase in net interest margin
resulted from the significant increase in average interest earning assets
coupled with an increase in the yield associated with these assets.

         INTEREST INCOME. Interest income for the three months ended June 30,
2001 increased $1.4 million compared to the three months ended June 30, 2000,
primarily as a result of an increase in the average outstanding balances in
loans, and investment securities. The increase in interest income from the loan
portfolio and investment portfolio for the three months ended June 30, 2001
compared to interest income earned for the 2000 period resulted from an increase
of $127.4 million in the average balance of loans and investment securities
outstanding. That increase was partially offset by a 61 basis point decrease in
the average yield earned on interest earning assets.


                                       12

<page> 13



         INTEREST EXPENSE. The increase in interest expense for the three months
ended June 30, 2001 compared to the 2000 period was principally the result of a
$100.6 million increase in average deposits and borrowed funds but was partially
offset by an 85 basis point decline in the average cost of funds. The increase
in interest expense on deposits was primarily due to an increase in average
certificates of deposit and NOW and money market accounts. That increase of
$90.0 million, or 66.95%, from $134.5 million for the three months ended June
30, 2000 to $224.5 million for the three months ended June 30, 2001. That
increase was offset by a decline in the average rate paid from 5.73% for the
three months ended June 30, 2000 to 5.34% for the three months ended June 30,
2001. The average rate paid for deposits decreased from 5.69% for the three
months ended June 30, 2000 to 5.30% for the three months ended June 30, 2001.
That decrease in rate of 39 basis points was offset by an increase of $92.7
million in the average outstanding balance of deposits.

         The increase in interest expense on borrowings for the three months
ended June 30, 2001 compared to the 2000 period was principally the result of an
increase in average borrowed funds of $7.9 million and was offset by a decline
of 155 basis points in the cost of borrowed funds. Components accountable for
the increase of $796,000 in interest expense were a $1.4 million increase in
average volume partially offset by a $627,000 decrease in average cost.






                                       13

<page> 14



         COMPARATIVE AVERAGE BALANCES AND INTEREST INCOME ANALYSIS. The
following table presents the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, expressed both in dollars and
annualized rates. No tax-equivalent adjustments were made and all average
balances are average daily balances. Non-accruing loans have been included in
the tables as loans carrying a zero yield.
<table>
<caption>

                                                            FOR THE THREE MONTHS ENDED JUNE 30,
                                      --------------------------------------------------------------------------------
                                                       2001                                    2000
                                      --------------------------------------- ----------------------------------------
                                                      INTEREST                                INTEREST      AVERAGE
                                         AVERAGE      INCOME/      AVERAGE      AVERAGE       INCOME/       YIELD/
                                         BALANCE      EXPENSE    YIELD/ RATE    BALANCE       EXPENSE       RATE
                                      --------------------------------------- ----------------------------------------
                                                                    (DOLLARS IN THOUSANDS)
  
                                  <c>           <c>            <c>        <c>            <c>           <c>
  ASSETS:
  Interest-earning assets:
     Real estate loans                 $ 136,297     $ 2,420        7.10%      $ 89,744       $ 1,751        7.80%
     Consumer loans                       30,803         572        7.43         15,009           341        9.09
     Commercial business loans            10,697         247        9.24          5,837           146       10.01
                                      ------------  ----------- ------------ ------------- ------------- ------------
        Total loans                      177,797       3,239        7.29        110,590         2,238        8.09

  Investment securities                  136,298       2,175        6.38         76,109         1,358        7.14
  Mortgage-backed securities              45,714         724        6.34         68,999         1,155        6.70
                                      ------------  ----------- ------------ ------------- ------------- ------------
        Total interest-earning
  assets                                 359,809       6,138        6.82        255,698         4,751        7.43
                                                    ------------ ------------               ------------- ------------
  Non-earning assets                      14,533                                  8,774
                                      --------------                          -------------
    Total assets                       $ 374,342                               $264,472
                                      ==============                          =============

  LIABILITIES AND STOCKHOLDERS'
     EQUITY:
  Interest-bearing liabilities:
     Savings accounts                  $   4,226     $    34        3.22       $  1,545             7        1.81
     Now and money market accounts        66,440         705        4.24         36,868           470        5.10
     Certificates of deposit             158,039       2,292        5.80         97,590         1,457        5.97
                                      ------------  ----------- ------------ ------------- ------------- ------------
        Total deposits                   228,705       3,031        5.30        136,003         1,934        5.69

     FHLB advances                        60,388         802        5.31         66,087         1,071        6.48
     Other borrowings                     50,439         578        4.58         36,878           610        6.62
                                      ------------  ----------- ------------ ------------- ------------- ------------
    Total interest-bearing
  liabilities                            339,532       4,411        5.20        238,968         3,615        6.05
                                                    ------------ ------------               ------------- ------------

  Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits     11,668                                    514
  Other liabilities                        2,228                                  1,446
                                      --------------                          -------------
    Total liabilities                    353,428                                240,928
  Stockholders' equity                    20,914                                 23,544
                                      ==============                          =============
    Total liabilities and
  stockholders' equity                 $ 374,342                               $264,472
                                      ==============                          =============

  Net interest income                                $ 1,727                                  $ 1,136
                                                    ============                            =============
  Interest rate spread                                              1.62%                                    1.38%
                                                                 ============                             ============
  Net interest margin                                               1.92%                                    1.78%
                                                                 ============                             ============

</table>


                                                              14


<page> 15



         RATE/VOLUME ANALYSIS. The following table presents certain information
regarding changes in interest income and interest expense attributable to
changes in interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities for the periods indicated. The change in interest
attributable to both rate and volume has been allocated to the changes in rate
and volume on a pro rata basis.

<table>
<caption>
                                                        THREE MONTHS ENDED
                                                    JUNE 30, 2001 COMPARED TO
                                                          JUNE 30, 2000
                                          -----------------------------------------------
                                                      CHANGE ATTRIBUTABLE TO
                                          -----------------------------------------------
                                              VOLUME            RATE           TOTAL
                                          -----------------------------------------------
                                                          (IN THOUSANDS)

                                          <c>              <c>              <c>
Real estate loans                               $ 908         $  (239)         $   669
Consumer loans                                    359            (128)             231
Commercial business loans                         122             (21)             101
                                          ----------------  -------------- --------------
      Total loans                               1,389            (388)           1,001
Investments                                     1,074            (257)             817
Mortgage-backed securities                       (390)            (41)            (431)
                                          ----------------  -------------- --------------
Total interest-earning assets                 $ 2,073         $  (686)         $ 1,387
                                          ================  ============== ==============

Savings accounts                              $    12         $    15          $    27
Now and money market accounts                     377            (142)             235
Certificates of deposit                           902             (67)             835
                                          ----------------  -------------- --------------
  Total deposits                                1,291            (194)           1,097
FHLB advances                                     (92)           (177)            (269)
Other borrowings                                  224            (256)             (32)
                                          ----------------  -------------- --------------
Total interest-bearing liabilities              1,423            (627)             796
                                          ================  ============== ==============
Change in net interest income                 $   650         $   (59)         $   591
                                          ================  ============== ==============
</table>

         PROVISION FOR LOAN LOSSES. The allowance for loan losses, which is
established through provisions for losses charged to expense, is increased by
recoveries on loans previously charged off and is reduced by charge-offs on
loans. Determining the proper reserve level or allowance involves management's
judgment based upon a review of factors, including the company's internal review
process which segments the loan portfolio into groups based on various risk
factors including the types of loans and asset classifications. Each segment is
then assigned a reserve percentage based upon the perceived risk in that
segment. Although management utilizes its best judgment in providing for
probable losses, there can be no assurance that the company will not have to
increase its provisions for loan losses in the future as a result of an adverse
market for real estate and economic conditions generally in the company's
primary market area, future increases in non-performing assets or for other
reasons which would adversely affect the company's results of operations. The
provision for loan losses increased $8,000 during the three months ended June
30, 2001 as management took a more aggressive posture in assessing
collectibility of classified loans. Not withstanding an improvement in overall
credit quality, net charge-offs increased $48,000 during the three months ended
June 30, 2001.

                                       15

<page> 16



         NONINTEREST INCOME. Noninterest income increased $822,000 during the
three months ended June 30, 2001, over the comparable period one year ago,
primarily as a result of increases in gain on sale of loans, fees on loans,
service charges on deposits and an improvement of $108,000 in gains from sales
of investment securities. The level of gain on sale of loans during the three
months ended June 30, 2001 resulted from the company taking advantage of an
increase in loan origination volumes, sales, and margins being higher when
compared to the year ago period. The following table presents a comparison of
the components of noninterest income.

<table>
<caption>
                                                                                             Difference
------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30,                           2001             2000           Amount             %
------------------------------------------------------------------------------------------------------------------
                                                                           (dollars in thousands)

                                                    <c>               <c>             <c>           <c>
Noninterest income:
   Gain on sale of loans                               $1,363            $759            $604           79.58%
   Service fees on loans                                  166             147              19           12.93
   Service fees on deposits                               131              42              89          211.90
   Gain (loss) on sale of investment securities             6            (102)            108          105.88
   Gain on sale of real estate owned                        1               -               1               -
   Other operating income                                  (1)             (2)              1           50.00
------------------------------------------------------------------------------------------------------------------
      Total noninterest income                         $1,666            $844            $822           97.39%
==================================================================================================================
</table>

         NONINTEREST EXPENSE. Noninterest expense increased $912,000 from $2.5
million for the three months ended June 30, 2000 to $3.4 million for the
comparable period in the current year. That increase was primarily attributable
to a $605,000 increase in the bank's noninterest expense resulting from the cost
associated with operating the three branches obtained in the Dominion
acquisition and the operation of the bank's new South Riding, Virginia, branch
which opened in November 2000. Noninterest expense of the bank's mortgage
banking subsidiary increased $308,000 for the three months ended June 30, 2001
from the comparable period one year ago as a result of increased loan
origination and sales activity. The increase in the bank's noninterest expense
was primarily in compensation, professional services, data processing, occupancy
and furniture fixtures and equipment, as a result of the expansion and growth of
the bank. The increase at the mortgage company level was primarily in
compensation and other operating expense of $182,000 and $83,000, respectively.
The following table presents a comparison of the components of noninterest
expense.
<table>
<caption>


                                                                                                   Difference
------------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30,                                     2001           2000          Amount             %
------------------------------------------------------------------------------------------------------------------------
                                                                              (dollars in thousands)

                                                           <c>             <c>               <c>          <c>
Noninterest expense:
   Compensation and employee benefits                         $ 1,690         $ 1,296           $394          30.40%
   Occupancy                                                      466             299            167          55.85
   Professional services                                          202             155             47          30.32
   Advertising                                                    127             170            (43)        (25.29)
   Deposit insurance premium                                        9               8              1          12.50
   Furniture, fixtures and equipment                              179             123             56          45.53
   Data processing                                                238              72            166         230.56
   Provision for loss on real estate owned                         (3)              -             (3)             -
   Loss from foreclosed real estate                                 3               -              3              -
   Other operating expense                                        521             397            124          31.23
------------------------------------------------------------------------------------------------------------------------
Total noninterest expense                                     $ 3,432         $ 2,520           $912          36.19%
========================================================================================================================
</table>

         INCOME TAXES. The company files a consolidated federal income tax
return with its subsidiaries and computes its income tax provision or benefit on
a consolidated basis. Since the bank no longer recognizes a tax benefit for
current operating losses, there was no income tax benefit for the three months
ended June 30, 2001 compared to a benefit of $213,000 in 2000.




                                       16

<page> 17


             COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS
                      ENDED JUNE 30, 2001 AND JUNE 30, 2000

         NET INCOME. For the nine months ended June 30, 2001, the company
incurred a loss of $605,000 or $0.20 per share compared to a loss of $928,000 or
$0.31 per share for the nine months ended June 30, 2000. The $323,000 decrease
in net loss over the comparable period one year ago was primarily due to
increases in net interest income, and noninterest income. Those increases
exceeded an increase in noninterest expense and a decrease in the bank's income
tax benefit. The bank believes that due to continuing operating losses it is
more appropriate not to recognize an income tax benefit for current period
operating losses. Therefore, pre-tax earnings provide a better basis to compare
period to period operating losses. Viewed from that perspective, the bank's
pre-tax loss improved by $922,000 from a loss of $1.5 million for the nine
months ended June 30, 2000 to a loss of $605,000 for the current period.

         NET INTEREST INCOME. An important source of our earnings is net
interest income, which is the difference between income earned on
interest-earning assets, such as loans, investment securities and
mortgage-backed securities, and interest paid on interest-bearing liabilities
such as deposits and borrowings. The level of net interest income is determined
primarily by the relative average balances of interest-earning assets and
interest-bearing liabilities in combination with the yields earned and rates
paid upon them. The correlation between the repricing of interest rates on
assets and on liabilities also influences net interest income.

         The following table presents a comparison of the components of interest
income and expense and net interest income.

<table>
<caption>
                                                                            Difference
-----------------------------------------------------------------------------------------------
Nine Months Ended June 30,        2001              2000           Amount             %
-----------------------------------------------------------------------------------------------
                                                     (dollars in thousands)

                               <c>               <c>             <c>              <c>
Interest income:
   Loans                          $9,433            $5,936          $3,497           58.91%
   Investments                     8,472             6,597           1,875           28.42
-----------------------------------------------------------------------------------------------
Total                             17,905            12,533           5,372           42.86
-----------------------------------------------------------------------------------------------

Interest expense:
   Deposits                        8,766             5,431           3,335           61.41
   Borrowings                      4,431             3,626             805           22.20
-----------------------------------------------------------------------------------------------
Total                             13,197             9,057           4,140           45.71
-----------------------------------------------------------------------------------------------
Net interest income               $4,708            $3,476          $1,232           35.44%
===============================================================================================
</table>

         Our growth in net interest income for the nine months ended June 30,
2001 was due primarily to the increase in average interest-earning assets
resulting from our planned growth. Average interest-earning assets increased
$86.8 million or 37.43% over the comparable period one-year ago but was
partially offset by a 3 basis point decline in net interest margin (net interest
income divided by average interest-earning assets). The decrease in net interest
margin resulted from the increase in average interest bearing liabilities
exceeding the increase in average earning assets. That decrease was offset by
the increase in yields earned on interest earning assets exceeding rates paid on
interest bearing liabilities.

         INTEREST INCOME. Interest income for the nine months ended June 30,
2001 increased $5.4 million compared to the nine months ended June 30, 2000
primarily as a result of an increase in the average outstanding balances in
loans and investment securities. The increase in interest income from the loan
portfolio for the nine months ended June 30, 2001 compared to interest income
earned for the 2000 period resulted from an increase of $56.7 million in the
average balance of loans outstanding. That increase was coupled with an increase
of $30.2 million in the average outstanding balance in the investment and
mortgage-backed securities portfolios and was coupled with a 29 basis point
increase in the average yield earned on the loan and investment portfolios.

         INTEREST EXPENSE. The $4.1 million increase in interest expense on
deposits and borrowed funds for the nine months ended June 30, 2001 compared to
the 2000 period was principally the result of a significant increase in the
average outstanding balances in total deposits and borrowed funds, and a 13
basis point increase in the average cost of funds. The increase in interest
expense on deposits was primarily due to an increase in average certificates of
deposit and NOW and money market accounts of $64.8 million, or 49.32%, from
$131.4 million for the nine months ended June 30, 2000 to $196.2 million for the
nine months ended June 30, 2001. The average rate we paid for deposits increased
from 5.46% for the nine months ended June 30, 2000 to 5.84% for the nine months
ended June 30, 2001. That increase in rate was coupled with an increase of $67.6
million in the average outstanding balance of deposits.

                                       17


<page> 18



         COMPARATIVE AVERAGE BALANCES AND INTEREST INCOME ANALYSIS. The
following table presents the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, expressed both in dollars and
annualized rates. No tax-equivalent adjustments were made and all average
balances are average daily balances. Nonaccruing loans have been included in the
tables as loans carrying a zero yield.
<table>
<caption>

                                                             FOR THE NINE MONTHS ENDED JUNE 30,
                                      --------------------------------------------------------------------------------
                                                       2001                                    2000
                                      --------------------------------------- ----------------------------------------
                                                      INTEREST                                INTEREST       AVERAGE
                                         AVERAGE      INCOME/     AVERAGE       AVERAGE       INCOME/        YIELD/
                                         BALANCE      EXPENSE    YIELD/ RATE    BALANCE       EXPENSE        RATE
                                      --------------------------------------- ----------------------------------------
                                                                   (DOLLARS IN THOUSANDS)
  
                                   <c>          <c>            <c>       <c>             <c>            <c>
  ASSETS:
  Interest-earning assets:
     Real estate loans                  $120,602     $ 6,949        7.68%     $ 84,859        $ 4,845        7.61%
     Consumer loans                       27,057       1,712        8.44        12,281            784        8.51
     Commercial business loans            10,604         772        9.71         4,452            307        9.19
                                      ------------  ----------- ------------ ------------  ------------- ------------
        Total loans                      158,263       9,433        7.95       101,592          5,936        7.79

  Investment securities                  112,498       6,016        7.13        75,905          3,940        6.92
  Mortgage-backed securities              48,097       2,456        6.81        54,521          2,657        6.50
                                      ------------  ----------- ------------ ------------  ------------- ------------

        Total interest-earning assets    318,858      17,905        7.49       232,018         12,533        7.20
                                                    ------------ ------------               ------------- ------------
  Non-earning assets                      13,429                                 8,184
                                      --------------                          ------------
    Total assets                        $332,287                              $240,202
                                      ==============                          ============

  LIABILITIES AND STOCKHOLDERS'
     EQUITY:
  Interest-bearing liabilities:
     Savings accounts                   $  4,003         101        3.36      $  1,207             23        2.54
     Now and money market accounts        56,587       2,092        4.93        32,527          1,241        5.09
     Certificates of deposit             139,615       6,573        6.28        98,867          4,167        5.62
                                      ------------  ----------- ------------ ------------  ------------- ------------
        Total deposits                   200,205       8,766        5.84       132,601          5,431        5.46

     FHLB advances                        60,352       2,654        5.86        51,127          2,273        5.93
     Other borrowings                     42,182       1,777        5.62        28,705          1,353        6.28
                                      ------------  ----------- ------------ ------------  ------------- ------------
    Total interest-bearing
  liabilities                            302,739      13,197        5.81       212,433          9,057        5.68
                                                    ------------ ------------               ------------- ------------

  Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits      6,867                                 2,451
  Other liabilities                        1,635                                 1,084
                                      --------------                          ------------
    Total liabilities                    311,241                               215,968
  Stockholders' equity                    21,046                                24,234
                                      ==============                          ============
    Total liabilities and
  stockholders' equity                  $332,287                              $240,202
                                      ==============                          ============

  Net interest income                                $ 4,708                                  $ 3,476
                                                    ============                            =============
  Interest rate spread                                              1.67%                                    1.52%
                                                                 ============                             ============
  Net interest margin                                               1.97%                                    2.00%
                                                                 ============                             ============
</table>


                                                     18


<page> 19

         RATE/VOLUME ANALYSIS. The following table presents certain information
regarding changes in interest income and interest expense attributable to
changes in interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities for the periods indicated. The change in interest
attributable to both rate and volume has been allocated to the changes in rate
and volume on a pro rata basis.

                                                      NINE MONTHS ENDED
                                                 JUNE 30, 2001 COMPARED TO
                                                        JUNE 30, 2000
                                           -------------------------------------
                                                  CHANGE ATTRIBUTABLE TO
                                           -------------------------------------
                                              VOLUME        RATE         TOTAL
                                           -------------------------------------
                                                        (IN THOUSANDS)

Real estate loans                             $ 2,041      $    63      $ 2,104
Consumer loans                                    943          (15)         928
Commercial business loans                         424           41          465
                                              -------      -------      -------
      Total loans                               3,408           89        3,497
Investments                                     1,899          177        2,076
Mortgage-backed securities                       (313)         112         (201)
                                              -------      -------      -------
Total interest-earning assets                 $ 4,994      $   378      $ 5,372
                                              =======      =======      =======

Savings accounts                              $    53      $    25      $    78
Now and money market accounts                     918          (67)         851
Certificates of deposit                         1,717          689        2,406
                                              -------      -------      -------
  Total deposits                                2,688          647        3,335
FHLB advances                                     410          (29)         381
Other borrowings                                  635         (211)         424
                                              -------      -------      -------
Total interest-bearing liabilities            $ 3,733      $   407      $ 4,140
                                              =======      =======      =======
Change in net interest income                 $ 1,261      $   (29)     $ 1,232
                                              =======      =======      =======

         PROVISION FOR LOAN LOSSES. The provision for loan losses increased from
$8,000 during the nine months ended June 30, 2000 to $54,000 during the nine
months ended June 30, 2001 as management took a more aggressive posture in
assessing collectibility of classified loans. Notwithstanding an improvement in
overall credit quality, net charge-offs increased from $27,000 during the nine
months ended June 30, 2000 to a charge of $109,000 during the nine months ended
June 30, 2001.

         NONINTEREST INCOME. Noninterest income increased $1.7million during the
nine months ended June 30, 2001, over the comparable period one year ago,
primarily as a result of the increase in gain on sale of loans coupled with an
increase in service fees on loans, both of which relate to an increased volume
of loan originations and sales as a result of the company's mortgage banking
activities. The significant level of gains during the nine months ended June 30,
2001 resulted from the company taking advantage of loan origination volumes
coupled with home loan refinancing and a favorable interest rate environment
which enabled the company to sell loans through Greater Atlantic Mortgage at a
gain.

         The following table presents a comparison of the components of
noninterest income.
<table>
<caption>
                                                                                              Difference
---------------------------------------------------------------------------------------------------------------------
Nine Months Ended June 30,                            2001             2000           Amount               %
---------------------------------------------------------------------------------------------------------------------
                                                                       (dollars in thousands)

                                                    <c>             <c>             <c>             <c>
Noninterest income:
   Gain on sale of loans                               $2,901          $1,672          $1,229             73.50%
   Service fees on loans                                  390             358              32              8.94
   Service fees on deposits                               339             114             225            197.37
   Gain (loss) on sale of investment securities            21            (171)            192            112.28
   Gain on sale of real estate owned                       46               2              44          2,200.00
   Other operating income                                   4               4               -            (20.00)
---------------------------------------------------------------------------------------------------------------------
      Total noninterest income                         $3,701          $1,979          $1,722             87.01%
=====================================================================================================================
</table>


                                                          19

<page> 20


         During the nine months ended June 30, 2001, the mortgage company
originated $162.4 million in mortgage loans for sale compared to $81.3 million
originated in the comparable period one year ago. The $81.1 million increase in
loan originations was largely attributable to decreases in interest rates and
increases in home mortgage refinancings. During the period, substantially all
loans originated were sold in the secondary market, in most cases with servicing
released. Loan sales for the nine months ended June 30, 2001 amounted to $156.2
million compared to sales of $82.9 million during the comparable period one year
ago. Sales of loans resulted in gains of $2.9 million and $1.7 million for the
nine months ended June 30, 2001 and 2000, respectively.

         NONINTEREST EXPENSE. Noninterest expense for the nine months ended June
30, 2001, amounted to $9.0 million, an increase of $2.0 million or 28.48% from
the $7.0 million incurred in the nine months ended June 30, 2000. The increase
was primarily attributable to a $1.7 million increase in the bank's noninterest
expense. Noninterest expense of the bank's mortgage banking subsidiary increased
$292,000 during the nine months ended June 30, 2001 when compared to the year
ago period. The increase in the bank's noninterest expense was primarily in
compensation of $625,000, professional services of $232,000, data processing of
$359,000, occupancy of $285,000 and other operating expense of $156,000, which
were attributable to the continued expansion and growth of the bank. A portion
of the increase in professional services resulted from bringing the Dominion
branches into the bank's information systems. The increase in noninterest
expense at the mortgage company level was primarily in compensation and other
operating expenses.

         The following table presents a comparison of the components of
noninterest expense.
<table>
<caption>

                                                                                                Difference
---------------------------------------------------------------------------------------------------------------------
Nine Months Ended June 30,                                    2001          2000          Amount            %
---------------------------------------------------------------------------------------------------------------------
                                                                           (dollars in thousands)

                                                           <c>           <c>             <c>           <c>
Noninterest expense:
   Compensation and employee benefits                         $4,266        $3,361         $  905          26.93%
   Occupancy                                                   1,169           879            290          32.99
   Professional services                                         646           558             88          15.77
   Advertising                                                   376           432            (56)        (12.96)
   Deposit insurance premium                                      25            37            (12)        (32.43)
   Furniture, fixtures and equipment                             475           333            142          42.64
   Data processing                                               635           286            349         122.03
   Provision for loss on real estate owned                         -             -              -              -
   Loss from foreclosed real estate                                3            10             (7)        (70.00)
   Other operating expense                                     1,365         1,078            287          26.62
---------------------------------------------------------------------------------------------------------------------
Total noninterest expense                                     $8,960        $6,974         $1,986          28.48%
=====================================================================================================================
</table>

         INCOME TAXES. The company files a consolidated federal income tax
return with its subsidiaries and computes its income tax provision or benefit on
a consolidated basis. Since, as previously indicated, the bank no longer
recognizes a tax benefit for current operating losses there was no income tax
benefit for the nine months ended June 30, 2001 compared to a benefit of
$599,000 in 2000.

         LIQUIDITY AND CAPITAL RESOURCES. The bank's primary sources of funds
are deposits, principal and interest payments on loans, mortgage-backed and
investment securities and borrowings. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions and competition. The bank has continued to maintain the levels of
liquid assets as previously required by OTS regulations. The bank manages its
liquidity position and demands for funding primarily by investing excess funds
in short-term investments and utilizing FHLB advance and reverse repurchase
agreements in periods when the bank's demands for liquidity exceed funding from
deposit inflows.

         The bank's most liquid assets are cash and cash equivalents, securities
available-for-sale and trading securities. The levels of these assets are
dependent on the bank's operating, financing, lending and investing activities
during any given period. At June 30, 2001, cash and cash equivalents, interest
bearing deposits and securities available-for-sale and trading securities
totaled $180.6 million, or 48.81% of total assets.


                                       20


<page> 21


         The primary investing activities of the bank are the origination of
residential one- to four-family loans, commercial real estate loans, real estate
construction and development loans, commercial borrowing and consumer loans and
the purchase of United States Treasury and agency securities, mortgage-backed
and mortgage-related securities and other investment securities. During the nine
months ended June 30, 2001, the bank's loan originations totaled $70.9 million.
Purchases of United States Treasury and agency securities, mortgage-backed and
mortgage related securities and other investment securities totaled $88.1
million for the nine months ended June 30, 2001.

         The bank has other sources of liquidity if a need for additional funds
arises. At June 30, 2001, the bank had $53.1 million in advances outstanding
from the FHLB and had an additional overall borrowing capacity from the FHLB of
$57.8 million at that date. Depending on market conditions, the pricing of
deposit products and FHLB advances, the bank may continue to rely on FHLB
borrowings to fund asset growth.

         At June 30, 2001, the bank had commitments to fund loans and unused
outstanding lines of credit, unused standby letters of credit and undisbursed
proceeds of construction mortgages totaling $92.3 million. The bank anticipates
that it will have sufficient funds available to meet its current loan
origination commitments. Certificate accounts, including IRA and Keogh accounts,
which are scheduled to mature in less than one year from June 30, 2001, totaled
$124.4 million. Based upon experience, management believes the majority of
maturing certificates of deposit will remain with the bank. In addition,
management of the bank believes that it can adjust the rates offered on
certificates of deposit to retain deposits in changing interest rate
environments. In the event that a significant portion of these deposits are not
retained by the bank, the bank would be able to utilize FHLB advances and
reverse repurchase agreements to fund deposit withdrawals, which would result in
an increase in interest expense to the extent that the average rate paid on such
borrowings exceeds the average rate paid on deposits of similar duration.

         CHANGES IN LEVELS OF INTEREST RATES MAY ADVERSELY AFFECT US. In
general, market risk is the sensitivity of income to variations in interest
rates and other relevant market rates or prices. The company's market rate
sensitive instruments include interest-earning assets and interest-bearing
liabilities. The company enters into market rate sensitive instruments in
connection with its various business operations, particularly its mortgage
banking activities. Loans originated, and the related commitments to originate
loans that will be sold, represent market risk that is realized in a short
period of time, generally two or three months.

         The company's primary source of market risk exposure arises from
changes in United States interest rates and the effects thereof on mortgage
prepayment and closing behavior, as well as depositors' choices ("interest rate
risk"). Changes in these interest rates will result in changes in the company's
earnings and the market value of its assets and liabilities. We expect to
continue to realize income from the differential or "spread" between the
interest earned on loans, securities and other interest-earning assets, and the
interest paid on deposits, borrowings and other interest-bearing liabilities.
That spread is affected by the difference between the maturities and repricing
characteristics of interest-earnings assets and interest-bearing liabilities.
Loan volume and yields are affected by market interest rates on loans, and
rising interest rates generally are associated with fewer loan originations.
Management expects that a substantial portion of our assets will continue to be
indexed to changes in market interest rates and we intend to attract a greater
proportion of short-term liabilities which will help address our interest rate
risk. The lag in implementation of repricing terms on our adjustable-rate assets
may result in a decline in net interest income in a rising interest rate
environment. There can be no assurance that our interest rate risk will be
minimized or eliminated. Further, an increase in the general level of interest
rates may adversely affect the ability of certain borrowers to pay the interest
on and principal of their obligations. Accordingly, changes in levels of market
interest rates, (primarily increases in market interest rates), could materially
adversely affect our interest rate spread, asset quality, loan origination
volume and overall financial condition and results of operations.



                                       21

<page> 22


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk is the risk of loss from adverse changes in market prices
and rates. The company's market risk arises primarily from interest rate risk
inherent in its lending and deposit taking activities. The company has little or
no risk related to trading accounts, commodities or foreign exchange.

         Management actively monitors and manages its interest rate risk
exposure. The primary objective in managing interest-rate risk is to limit,
within established guidelines, the adverse impact of changes in interest rates
on the company's net interest income and capital, while adjusting the company's
asset-liability structure to obtain the maximum yield-cost spread on that
structure. Management relies primarily on its asset-liability structure to
control interest rate risk. However, a sudden and substantial increase in
interest rates could adversely impact the company's earnings, to the extent that
the interest rates borne by assets and liabilities do not change at the same
speed, to the same extent, or on the same basis. There has been no significant
change in the company's market risk exposure since September 30, 2000.



                                       22

<page> 23


GREATER ATLANTIC FINANCIAL CORP.


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
         Not Applicable

Item 2.  Changes in Securities
         Not Applicable

Item 3.  Defaults Upon Senior Securities
         Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders
         (a)   Greater Atlantic Financial Corp. annual Stockholder's Meeting was
               held on April 11, 2001.
         (b)   Omitted per instructions
         (c)   A brief description of each matter voted upon at the Annual
               Stockholder's Meeting held on April 11, 2001 and number of votes
               cast for, against or withheld

               1.  Election of Director.
<table>
<caption>
                   
                            <c>          <c>             <c>
                                                  Votes For    Votes Against   Votes Withheld
                                                  ---------    -------------   --------------
                   Jeffrey M. Gitelman, D.D.S.    2,425,870         0             52,125
</table>

         In addition to Doctor Gitelman the terms of office of Directors Charles
         W. Calomiris, Carroll E. Amos, Paul J. Cinquegrana, James B. Vito and
         Jeffrey W. Ochsman continued after the meeting.

               2.  Election of BDO Seidman, LLP as Independent Auditor.

                                     Votes For    Votes Against   Votes Withheld
                                     ---------    -------------   --------------
                                     2,471,895       2,000            4,100
         (d)      None


Item 5.  Other Information
         Not Applicable

Item 6   Exhibits and Reports on Form 8-K

         Reports on Form 8-K Form 8-K filed on April 11, 2001.





                                       23

<page> 24


                        GREATER ATLANTIC FINANCIAL CORP.

                                   SIGNATURES

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


                                                GREATER ATLANTIC FINANCIAL CORP.
                                                --------------------------------
                                                         (Registrant)


Date: August 13, 2001                           By: /s/ Carroll E. Amos
                                                -----------------------
                                                Carroll E. Amos
                                                President and Chief Executive
                                                Officer



Date: August 13, 2001                           By: /s/ David E. Ritter
                                                -----------------------
                                                David E. Ritter
                                                Senior Vice President and
                                                Chief Financial Officer




                                       24