<PAGE> 1


                                   FORM 10-QSB

                       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 March 31, 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 May 11, 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 MARCH 31, 2001

                                TABLE OF CONTENTS


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

Item 1. Financial Statements

      Consolidated Statements of Financial Condition
      March 31, 2001 (unaudited) and September 30, 2000 (audited)..............3

      Consolidated Statements of Operations (unaudited) Three and six
      months ended March 31, 2001 and March 31, 2000...........................4

      Consolidated Statements of Comprehensive Income (unaudited) Six months
      ended March 31, 2001 and March 31, 2000 .................................5

      Consolidated Statements of Changes in Stockholders' Equity
      (unaudited) Six months ended March 31, 2001 and March 31, 2000...........5

      Consolidated Statements of Cash Flows (unaudited) Six months ended
      March 31, 2001 and March 31, 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 1.  Legal Proceedings....................................................23

Item 5.  Other Information....................................................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)

                                                                          March 31,            September 30,
                                                                             2001                   2000
                                                                      -------------------     -----------------
                                                                         (Unaudited)
                                                                               (dollars in thousands)
<S>                                                                           <C>                   <C>
Assets
Cash and cash equivalents                                                     $ 1,094               $ 2,312
Interest bearing deposits                                                          88                 3,405
Investment securities
   Available-for-sale                                                         147,437                86,580
   Held-to-maturity                                                            25,300                27,600
   Trading                                                                      1,591                22,766
Loans held for sale                                                            25,895                 5,599
Loans receivable, net                                                         144,362               132,698
Accrued interest and dividends receivable                                       3,169                 2,494
Deferred income taxes                                                           1,520                 1,520
Federal Home Loan Bank stock, at cost                                           4,025                 3,560
Foreclosed real estate                                                              -                   172
Premises and equipment, net                                                     6,030                 4,859
Goodwill                                                                        1,353                 1,378
Prepaid expenses and other assets                                               1,576                 1,353
                                                                      -------------------     -----------------
                  Total assets                                               $363,440              $296,296
                                                                      ===================    ==================
Liabilities and stockholders' equity
Liabilities
Deposits                                                                     $236,738              $188,387
Advance payments from borrowers for taxes and insurance                           433                   264
Accrued expenses and other liabilities                                          2,111                 3,942
Income taxes payable                                                               55                     -
Advances from the FHLB and other borrowings                                   103,080                82,836
                                                                      -------------------     -----------------
Total liabilities                                                             342,417               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                                                         (3,486)               (2,928)
   Accumulated other comprehensive loss                                          (653)               (1,367)
                                                                      -------------------     -----------------
Total stockholders' equity                                                     21,023                20,867
                                                                      -------------------     -----------------
Total liabilities and stockholders' equity                                   $363,440              $296,296
                                                                      ===================     =================

</TABLE>

                                                      3

<PAGE> 4
<TABLE>
<CAPTION>

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

                                                                        Three Months Ended                  Six Months Ended
                                                                             March 31,                          March 31,
                                                                  -----------------------------       -----------------------------
                                                                      2001              2000             2001               2000
                                                                  -----------       -----------       -----------       -----------
                                                                                         (dollars in thousands)
<S>                                                               <C>               <C>               <C>               <C>
Interest income
  Loans                                                           $     3,231       $     2,083       $     6,195       $     3,698
  Investments                                                           2,995             2,141             5,573             4,084
                                                                  -----------       -----------       -----------       -----------
Total interest income                                                   6,226             4,224            11,768             7,782
                                                                  -----------       -----------       -----------       -----------
Interest expense
  Deposits                                                              2,918             1,777             5,736             3,497
  Borrowed money                                                        1,624             1,171             3,051             1,945
                                                                  -----------       -----------       -----------       -----------
Total interest expense                                                  4,542             2,948             8,787             5,442
                                                                  -----------       -----------       -----------       -----------
Net interest income                                                     1,684             1,276             2,981             2,340
Provision for loan losses                                                  46                 7                46                 7
                                                                  -----------       -----------       -----------       -----------
Net interest income after provision for loan losses                     1,638             1,269             2,935             2,333
                                                                  -----------       -----------       -----------       -----------
Noninterest income
  Fees and service charges                                                220               140               432               282
  Gain on sale of loans                                                   937               423             1,538               913
  Gain (loss) on sale of investment securities                             --               (62)               16               (68)
  Gain on sale of real estate owned                                         2                 3                45                 2
  Other operating income                                                    3                --                 4                 5
                                                                  -----------       -----------       -----------       -----------
Total noninterest income                                                1,162               504             2,035             1,134
                                                                  -----------       -----------       -----------       -----------
Noninterest expense
  Compensation and employee benefits                                    1,334             1,095             2,576             2,065
  Occupancy                                                               392               304               703               580
  Professional services                                                   223               117               444               403
  Advertising                                                             148               123               249               262
  Deposit insurance premium                                                 9                10                16                29
  Furniture, fixtures and equipment                                       157               100               295               209
  Data processing                                                         220               136               397               214
  Provision for loss on real estate owned                                   3                --                 3                --
  Other real estate owned expenses                                         --                 3                --                11
  Other operating expenses                                                454               327               845               681
                                                                  -----------       -----------       -----------       -----------
Total noninterest expense                                               2,940             2,215             5,528             4,454
                                                                  -----------       -----------       -----------       -----------
Loss before income tax benefit                                           (140)             (442)             (558)             (987)
                                                                  -----------       -----------       -----------       -----------
Income tax benefit                                                         --              (172)               --              (386)
                                                                  -----------       -----------       -----------       -----------
Net loss                                                          $      (140)      $      (270)      $      (558)      $      (601)
                                                                  ===========       ===========       ===========       ===========

Basic and diluted loss per share                                  $     (0.05)      $     (0.09)      $     (0.19)      $     (0.20)
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)
   ---------------------------------------------------------------------------
   Six months ended March 31,                           2001             2000
   ---------------------------------------------------------------------------
                                                           (in thousands)
   Net loss                                            $ (558)         $ (601)
   ---------------------------------------------------------------------------
   Other comprehensive income (loss), net of tax
     Unrealized gains (losses) on securities              714            (464)
   ---------------------------------------------------------------------------
   Other comprehensive income (loss)                      714            (464)
   ---------------------------------------------------------------------------
   Comprehensive loss                                   $ 156        $ (1,065)
   ===========================================================================

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

Other comprehensive income                    -           -            -             -              (464)            (464)

Net loss for the period                       -           -            -          (601)                -             (601)
----------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000                  $  -         $30     $ 25,132         $ 109          $ (1,346)        $ 23,925
============================================================================================================================
Balance at September 30, 2000              $  -         $30     $ 25,132      $ (2,928)         $ (1,367)        $ 20,867

Other comprehensive income                    -           -            -             -               714              714

Net loss for the period                       -           -            -          (558)                              (558)
----------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2001                  $  -         $30     $ 25,132      $ (3,486)           $ (653)        $ 21,023
============================================================================================================================

</TABLE>


                                                            5

<PAGE> 6
<TABLE>
<CAPTION>

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



   --------------------------------------------------------------------------------------------------------------
   Six months ended March 31,                                                           2001           2000
   --------------------------------------------------------------------------------------------------------------
                                                                                           (in thousands)
   <S>                                                                                <C>              <C>
   Cash flow from operating activities
   Net (loss) income                                                                  $   (558)        $  (601)
   Adjustments to reconcile net (loss) income to net cash
   provided by operating activities
     Provision for loan loss                                                                46               7
     Amortization of excess of purchase price over assets acquired                          24               -
     Amortization of deposit acquisition adjustment                                        117               -
     Amortization of loan acquisition adjustment                                            (7)              -
     Depreciation and amortization                                                         231             166
     Proceeds from sale of trading securities                                           20,093               -
     Proceeds from repayments of trading securities                                      1,076               -
     Realized loss (gain) on sale of investments                                             -              41
     Realized (gain) loss on sale of mortgaged-backed securities                           (16)             27
     Amortization of investment security premiums                                          605             241
     Amortization of mortgage-backed securities premiums                                   118              88
     Amortization of deferred fees                                                         (99)            (44)
     Discount accretion net of premium amortization                                         30              30
     Loss on disposal of fixed asset                                                         2               -
     Gain on sale of foreclosed real estate                                                (45)             (2)
     Gain on sale of loans held for sale                                                (1,538)           (913)
   (Increase) decrease in assets
     Disbursements for origination of loans                                            (96,874)        (48,681)
     Proceeds from sales of loans                                                       78,116          48,850
     Accrued interest and dividend receivable                                             (675)           (534)
     Prepaid expenses and other assets                                                    (225)            322
     Deferred loan fees collected, net of deferred costs incurred                           (7)             28
   Increase (decrease) in liabilities
     Accrued expenses and other liabilities                                             (1,830)           (256)
     Income taxes payable                                                                   55               -
   --------------------------------------------------------------------------------------------------------------
   Net cash provided by (used in) operating activities                                $ (1,361)        $(1,231)
   ==============================================================================================================

</TABLE>

                                                          6

<PAGE> 7
<TABLE>
<CAPTION>


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

          ------------------------------------------------------------------------------------------------------------
          Six months ended March 31,                                                       2001             2000
          ------------------------------------------------------------------------------------------------------------
                                                                                               (in thousands)
          <S>                                                                            <C>              <C>
          Cash flow from investing activities
            Net increase in loans                                                        $(11,627)        $(37,419)
            Purchases of premises and equipment                                            (1,403)            (317)
            Proceeds from sales of foreclosed real estate                                     218              190
            Purchases of investment securities                                            (65,847)         (13,183)
            Proceeds from sale of investment securities                                     2,410            1,009
            Proceeds from repayments of investment securities                               6,041            2,964
            Purchases of mortgage-backed securities                                        (8,795)         (23,450)
            Proceeds from sale of mortgage-backed securities                                  925              960
            Proceeds from repayments of mortgage-backed securities                          6,722            5,128
            Purchases of FHLB stock                                                        (1,090)          (3,290)
            Proceeds from sale of FHLB stock                                                  625            2,158
          ------------------------------------------------------------------------------------------------------------
          Net cash used in investing activities                                           (71,821)         (65,250)
          ------------------------------------------------------------------------------------------------------------
          Cash flow from  financing activities
            Net increase in deposits                                                       48,234            9,447
            Net advances from FHLB                                                          3,700           24,650
            Net borrowings on reverse repurchase agreements                                16,544           31,354
            Increase in advance payments by borrowers for taxes and insurance                 169               93
          ------------------------------------------------------------------------------------------------------------
          Net cash provided by financing activities                                        68,647           65,544
          ------------------------------------------------------------------------------------------------------------
          (Decrease) increase in cash and cash equivalents                                 (4,535)            (937)
          ------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents, at beginning of period                                 5,717            1,703
          ------------------------------------------------------------------------------------------------------------
          Cash and cash equivalents, at end of period                                    $  1,182         $    766
          ============================================================================================================
</TABLE>


                                                    7


<PAGE> 8


                        GREATER ATLANTIC FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 INFORMATION AS OF MARCH 31, 2001 AND FOR THE SIX 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
six months ended March 31, 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 six
months ended March 31, 2001 and 2000. An analysis of the change in the allowance
for loan losses follows:

--------------------------------------------------------------------------------
At or for the Six Months Ended March 31,                      2001       2000
--------------------------------------------------------------------------------
                                                          (dollars in thousands)
Balance at beginning of period                               $ 765       $ 590

Provisions                                                      46           7

Transfer                                                       100          --
--------------------------------------------------------------------------------
Total charge-offs                                              (61)        (27)

Total recoveries                                                --          --
--------------------------------------------------------------------------------
Net charge-offs                                                (61)        (27)
--------------------------------------------------------------------------------
Balance at end of period                                     $ 850       $ 570
================================================================================
Ratio of net charge-offs during the period
   to average loans outstanding during the period             0.04%       0.03%
================================================================================
Allowance for loan losses to total non-performing
   loans at end of period                                    230.35%     814.29%
================================================================================
Allowance for loan losses to total loans                      0.56%       0.49%
================================================================================

(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 March 31, 2001.


                                       8
<PAGE> 9


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 INFORMATION AS OF MARCH 31, 2001 AND FOR THE SIX 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 March
31, 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 March 31, 2001                 Balance      Percent      Balance      Percent      Surplus
-------------------------------------------------------------------------------------------------------------
                                                           (dollars in thousands)
<S>                                              <C>          <C>         <C>           <C>           <C>
Leverage                                         $18,115       5.00%      $19,910        5.50%        $1,795
Tier 1 Risk-based                                $10,030       6.00%      $19,910       11.91%        $9,880
Total Risk-based                                 $16,716      10.00%      $20,760       12.42%        $4,044
=============================================================================================================
</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.



                                       9


<PAGE> 10


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 INFORMATION AS OF MARCH 31, 2001 AND FOR THE SIX MONTHS THEN ENDED IS UNAUDITED

         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.
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                                                                            Total                       Total
                                                              Mortgage    Reportable   Intersegment    Operating
For the Six Months Ended March 31,              Banking       Banking      Segments    Eliminations    Earnings
------------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>          <C>           <C>            <C>
Net interest income: (1)
2001                                           $  2,877      $    58      $  2,935      $      -       $  2,935
2000                                              2,213          120         2,333             -          2,333
Noninterest income:
2001                                           $    424      $ 1,658      $  2,082      $    (47)      $  2,035
2000                                                 30        1,116         1,146           (12)         1,134
Noninterest expense:
2001                                           $  3,913      $ 1,662      $  5,575      $     47       $  5,528
2000                                              1,715        2,751         4,466            12          4,454
Net income:
2001                                           $   (613)     $    55      $   (558)     $      -       $   (558)
2000                                               (332)        (269)         (601)            -           (601)
Segment assets:
2001                                           $346,653      $26,935      $373,588      $(10,148)      $363,440
2000                                            259,240        8,550       267,790        (4,744)       263,046
(1) Segment net interest income reflects income after provisions for loan losses.
</TABLE>



                                                       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 Corporation.
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 Corporation.

         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 March 31, 2001 the company's total assets were $363.4 million,
compared to $296.3 million held at September 30, 2000, representing an increase
of 22.66%. 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 March
31, 2001 were $144.4 million, an increase of $11.7 million or 8.78% 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 March 31, 2001 investment securities
were $174.3 million, an increase of $37.4 million or 27.30% from the $136.9
million held at September 30, 2000.


                                       11

<PAGE> 12



         COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
                        MARCH 31, 2001 AND MARCH 31, 2000

         NET INCOME. For the three months ended March 31, 2001 the company
incurred a net loss of $140,000 or $0.05 per share compared to a loss of
$270,000 or $0.09 per share for the three months ended March 31, 2000. The
$130,000 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 would be the Company's pre-tax earnings
which improved by $302,000 from a loss of $442,000 for the three months ended
March 31, 2000 to a loss of $140,000 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.
<TABLE>
<CAPTION>

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

                                                                            Difference
-------------------------------------------------------------------------------------------------
Three Months Ended March 31,        2001              2000           Amount              %
-------------------------------------------------------------------------------------------------
                                                       (dollars in thousands)
<S>                                 <C>               <C>             <C>              <C>
Interest income:
   Loans                            $3,231            $2,083          $1,148           55.11%
   Investments                       2,995             2,141             854           39.89
-------------------------------------------------------------------------------------------------
Total                                6,226             4,224           2,002           47.40
-------------------------------------------------------------------------------------------------
Interest expense:
   Deposits                          2,918             1,777           1,141           64.21
   Borrowings                        1,624             1,171             453           38.68
-------------------------------------------------------------------------------------------------
Total                                4,542             2,948           1,594           54.07
-------------------------------------------------------------------------------------------------
Net interest income                 $1,684            $1,276          $  408           31.97%
=================================================================================================
</TABLE>

         Our growth in net interest income for the three months ended March 31,
2001 was due primarily to the increase in average interest-earning assets
resulting from our planned growth. Average interest-earning assets increased
$87.5 million or 37.45% over the comparable period one-year ago but was
partially offset by a 9 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 three months ended March 31,
2001 increased $2.0 million compared to the three months ended March 31, 2000,
primarily as a result of an increase in the average outstanding balances in
loans, investment securities and mortgage-backed securities. The increase in
interest income from the loan portfolio for the three months ended March 31,
2001 compared to interest income earned for the 2000 period resulted from an
increase of $49.5 million in the average balance of loans outstanding. That
increase was coupled with an increase in interest income from the investment and
mortgage-backed securities portfolios, due to an increase of $38.0 million in
the average outstanding balance, and a 51 basis point increase in the average
yield earned on the portfolio.


                                       12

<PAGE> 13



         INTEREST EXPENSE. The increase in interest expense for the three months
ended March 31, 2001 compared to the 2000 period was principally the result of a
significant increase in average deposits and borrowed funds and an increase of
36 basis points 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 $63.2 million, or 48.50%,
from $130.1 million for the three months ended March 31 2000 to $193.3 million
for the three months ended March 31, 2001, was coupled with an increase in the
average rate paid from 5.44% for the three months ended March 31, 2000 to 5.97%
for the three months ended March 31, 2001. The average rate paid for deposits
increased from 5.42% for the three months ended March 31, 2000 to 5.91% for the
three months ended March 31, 2001. That increase in rate was coupled with an
increase of $66.4 million in the average outstanding balance of deposits.

         The increase in interest expense on borrowings for the three months
ended March 31, 2001 compared to the 2000 period was principally the result of a
significant increase in average borrowed funds of $28.9 million and an increase
of 15 basis points in cost of funds. Components attributable to the increase of
$1.6 million in interest expense were $1.3 million from an increase in average
volume and $305,000 from an increase 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 MARCH 31,
                                      ------------------------------------------------------------------------------
                                                       2001                                    2000
                                      --------------------------------------- --------------------------------------
                                                       INTEREST                             INTEREST
                                           AVERAGE     INCOME/      AVERAGE      AVERAGE     INCOME/     AVERAGE
                                           BALANCE     EXPENSE    YIELD/RATE     BALANCE     EXPENSE    YIELD/RATE
                                      --------------------------------------- --------------------------------------
  ASSETS:                                                          (DOLLARS IN THOUSANDS)
<S>                                      <C>           <C>            <C>      <C>           <C>            <C>
  Interest-earning assets:
     Real estate loans                   $ 118,406     $ 2,367        8.00%    $  90,941     $ 1,731        7.61%
     Consumer loans                         26,854         579        8.62        12,440         256        8.23
     Commercial business loans              11,994         285        9.50         4,359          96        8.81
                                        ------------  ------------  --------  ------------  ------------  ----------

        Total loans                        157,254       3,231        8.22       107,740       2,083        7.73

  Investment securities                    116,916       2,201        7.53        75,082       1,324        7.05
  Mortgage-backed securities                46,892         794        6.77        50,769         817        6.44
                                        ------------  ------------  --------  ------------  ------------  ----------

        Total interest-earning assets      321,062       6,226        7.76       233,591       4,224        7.23
                                                      ------------  --------                ------------  ----------
  Non-earning assets                        13,728                                 7,497
                                        ------------                          ------------
    Total assets                         $ 334,790                             $ 241,088
                                        ============                          ============

  LIABILITIES AND STOCKHOLDERS'
     EQUITY:
  Interest-bearing liabilities:
     Savings accounts                    $   4,164     $    33        3.17     $    886            6        2.71
     Now and money market accounts          55,220         707        5.12       31,099          411        5.29
     Certificates of deposit               138,033       2,178        6.31       99,041        1,360        5.49
                                        ------------  ------------  --------  ------------  ------------  ----------
        Total deposits                     197,417       2,918        5.91      131,026        1,777        5.42

     FHLB advances                          67,375         988        5.87       49,855          687        5.51
     Other borrowings                       43,362         636        5.87       31,980          484        6.05
                                        ------------  ------------  --------  ------------  ------------  ----------
    Total interest-bearing
  liabilities                              308,154       4,542        5.90      212,861        2,948        5.54
                                                      ------------  --------                ------------  ----------
  Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits        4,571                                3,269
  Other liabilities                          1,380                                  805
                                        ------------                          ------------
    Total liabilities                      314,105                              216,935
  Stockholders' equity                      20,685                               24,153
                                        ============                          ============
    Total liabilities andstockholders'
     equity                              $ 334,790                             $241,088
                                        ============                          ============
  Net interest income                                  $ 1,684                               $ 1,276
                                                      ===========                           ============
  Interest rate spread                                                1.86%                                 1.69%
                                                                    =========                             ==========
  Net interest margin                                                 2.10%                                 2.19%
                                                                    =========                             ==========

</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.

                                                      THREE MONTHS ENDED
                                                   MARCH 31, 2001 COMPARED TO
                                                         MARCH 31, 2000
                                              ----------------------------------
                                                    CHANGE ATTRIBUTABLE TO
                                              ----------------------------------
                                                VOLUME        RATE        TOTAL
                                              ----------------------------------
                                                      (IN THOUSANDS)

Real estate loans                             $   523      $   113      $   636
Consumer loans                                    297           26          323
Commercial business loans                         168           21          189
                                              -------      -------      -------
      Total loans                                 988          160        1,148
Investments                                       738          139          877
Mortgage-backed securities                        (62)          39          (23)
                                              -------      -------      -------
Total interest-earning assets                 $ 1,664      $   338      $ 2,002
                                              =======      =======      =======

Savings accounts                              $    22      $     5      $    27
Now and money market accounts                     319          (23)         296
Certificates of deposit                           535          283          818
                                              -------      -------      -------
  Total deposits                                  876          265        1,141
FHLB advances                                     241           60          301
Other borrowings                                  172          (20)         152
                                              -------      -------      -------
Total interest-bearing liabilities              1,289          305        1,594
                                              =======      =======      =======
Change in net interest income                 $   375      $    33      $   408
                                              =======      =======      =======

         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 from $7,000 during the three months ended
March 31, 2000 to $46,000 during the three months ended March 31, 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 from $27,000 during the three months ended March 31, 2000
to a charge of $61,000 during the three months ended March 31, 2001.

                                       15

<PAGE> 16



         NONINTEREST INCOME. Noninterest income increased $658,000 during the
three months ended March 31, 2001, over the comparable period one year ago,
primarily as a result of increases in gain on sale of loans and fees on loans
service charges on deposits. The level of gain on sale of loans during the three
months ended March 31, 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 March 31,                          2001             2000           Amount             %
------------------------------------------------------------------------------------------------------------------
                                                                      (dollars in thousands)
<S>                                                   <C>              <C>             <C>           <C>
Noninterest income:
   Gain on sale of loans                              $  937           $423            $514          121.51%
   Service fees on loans                                 117            105              12           11.43
   Service fees on deposits                              103             35              68          194.29
   Gain (loss) on sale of investment securities            -            (62)             62          100.00
   Gain on sale of real estate owned                       2              3              (1)         (33.33)
   Other operating income                                  3              -               3               -
------------------------------------------------------------------------------------------------------------------
      Total noninterest income                        $1,162           $504            $658          130.56%
==================================================================================================================
</TABLE>

         NONINTEREST EXPENSE. Noninterest expense increased $725,000 from $2.2
million for the three months ended March 31, 2000 to $2.9 million for the
comparable period in the current year. That increase was primarily attributable
to a $558,000 increase in the Bank's noninterest expense resulting from the cost
associated with operating the three branches obtained in the Dominion
acquisition and a complete quarter of operations for the Bank's South Riding,
Virginia, branch which opened in November 2000. Noninterest expense of the
Bank's mortgage banking subsidiary increased $167,000 for the three months ended
March 31, 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 $98,000 and $54,000, respectively.
The following table presents a comparison of the components of noninterest
expense.

<TABLE>
<CAPTION>
                                                                                                   Difference
------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31,                                 2001           2000          Amount             %
------------------------------------------------------------------------------------------------------------------------
                                                                              (dollars in thousands)
<S>                                                            <C>            <C>               <C>         <C>
Noninterest expense:
   Compensation and employee benefits                          $ 1,334        $ 1,095           $239          21.83%
   Occupancy                                                       392            304             88          28.95
   Professional services                                           223            117            106          90.60
   Advertising                                                     148            123             25          20.33
   Deposit insurance premium                                         9             10             (1)        (10.00)
   Furniture, fixtures and equipment                               157            100             57          57.00
   Data processing                                                 220            136             84          61.76
   Provision for loss on real estate owned                           3              -              3              -
   Loss from foreclosed real estate                                  -              3             (3)       (100.00)
   Other operating expense                                         454            327            127          38.84
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Total noninterest expense                                      $ 2,940        $ 2,215           $725          32.73%
========================================================================================================================
</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 March 31, 2001 compared to a benefit of $172,000 in 2000.


                                       16


<PAGE> 17


             COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS
                     ENDED MARCH 31, 2001 AND MARCH 31, 2000

         NET INCOME. For the six months ended March 31, 2001, the Company
incurred a loss of $558,000 or $0.19 per share compared to a loss of $601,000 or
$0.20 per share for the six months ended March 31, 2000. The $43,000 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. As a result, the Bank's pre-tax loss improved by $429,000 from
a loss of $987,000 for the six months ended March 31, 2000 to a loss of $558,000
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
--------------------------------------------------------------------------------------------------
Six Months Ended March 31,           2001              2000           Amount             %
--------------------------------------------------------------------------------------------------
                                                      (dollars in thousands)
<S>                                 <C>                <C>             <C>              <C>
Interest income:
   Loans                            $ 6,195            $3,698          $2,497           67.52%
   Investments                        5,573             4,084           1,489           36.46
--------------------------------------------------------------------------------------------------
Total                                11,768             7,782           3,986           51.22
--------------------------------------------------------------------------------------------------

Interest expense:
   Deposits                           5,736             3,497           2,239           64.03
   Borrowings                         3,051             1,945           1,106           56.86
--------------------------------------------------------------------------------------------------
Total                                 8,787             5,442           3,345           61.47
--------------------------------------------------------------------------------------------------
Net interest income                 $ 2,981            $2,340          $  641           27.39%
==================================================================================================
</TABLE>

         Our growth in net interest income for the six months ended March 31,
2001 was due primarily to the increase in average interest-earning assets
resulting from our planned growth. Average interest-earning assets increased
$78.2 million or 35.52% over the comparable period one-year ago but was
partially offset by a 13 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 six months ended March 31,
2001 increased $4.0 million compared to the six months ended March 31, 2000
primarily as a result of an increase in the average outstanding balances in
loans, investment securities and mortgage-backed securities. The increase in
interest income from the loan portfolio for the six months ended March 31, 2001
compared to interest income earned for the 2000 period resulted from an increase
of $51.4 million in the average balance of loans outstanding. That increase was
coupled with an increase of $26.8 million in the average outstanding balance in
the investment and mortgage-backed securities portfolios and was coupled with a
82 basis point increase in the average yield earned on these portfolios.

         INTEREST EXPENSE. The increase in interest expense on deposits and
borrowed funds for the six months ended March 31, 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 an increase of 72
basis points 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 $52.2 million, or 40.20%, from $129.9 million
for the six months ended March 31, 2000 to $182.1 million for the six months
ended March 31, 2001. The average rate we paid for


                                       17


<PAGE> 18


deposits increased from 5.34% for the six months ended March 31, 2000 to 6.17%
for the six months ended March 31, 2001. That increase in rate was coupled with
an increase of $55.1 million in the average outstanding balance of deposits.

         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 SIX MONTHS ENDED MARCH 31,
                                      ------------------------------------------------------------------------------
                                                       2001                                    2000
                                      --------------------------------------- --------------------------------------
                                                       INTEREST                             INTEREST
                                           AVERAGE     INCOME/      AVERAGE      AVERAGE     INCOME/     AVERAGE
                                           BALANCE     EXPENSE    YIELD/RATE     BALANCE     EXPENSE    YIELD/RATE
                                      --------------------------------------- --------------------------------------
  ASSETS:                                                         (DOLLARS IN THOUSANDS)
  <S>                                     <C>          <C>            <C>       <C>           <C>           <C>
  Interest-earning assets:
     Real estate loans                    $112,754     $ 4,530        8.04%     $ 82,417      $3,094        7.51%
     Consumer loans                         25,185       1,140        9.05        10,917         443        8.12
     Commercial business loans              10,557         525        9.95         3,759         161        8.57
                                      -------------   -----------   ---------  ------------ ------------  ---------
        Total loans                        148,496       6,195        8.34        97,093       3,698        7.62

  Investment securities                    100,598       3,842        7.64        75,803       2,582        6.81
  Mortgage-backed securities                49,288       1,731        7.02        47,283       1,502        6.35
                                      -------------   -----------   ---------  ------------ ------------  ---------
        Total interest-earning assets      298,382      11,768        7.89       220,179       7,782        7.07
                                                      -----------   ---------               ------------  ---------

  Non-earning assets                        12,878                                 7,888
                                      -------------                            ------------
    Total assets                          $311,260                              $228,067
                                      =============                            ============

  LIABILITIES AND STOCKHOLDERS'
     EQUITY:
  Interest-bearing liabilities:
     Savings accounts                     $  3,891          68        3.50      $  1,038          16        3.08
     Now and money market accounts          51,661       1,387        5.37        30,357         771        5.08
     Certificates of deposit               130,403       4,281        6.57        99,506       2,710        5.45
                                      -------------   -----------   ---------  ------------ ------------  ---------
        Total deposits                     185,955       5,736        6.17       130,901       3,497        5.34

     FHLB advances                          60,334       1,853        6.14        43,647       1,202        5.51
     Other borrowings                       38,053       1,198        6.30        24,618         743        6.04
                                      -------------   -----------   ---------  ------------ ------------  ---------
    Total interest-bearing liabilities     284,342       8,787        6.18       199,166       5,442        5.46
                                                      -----------   ---------               ------------  ---------

  Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits        4,466                                 3,420
  Other liabilities                          1,382                                   922
                                      -------------                            ------------
    Total liabilities                      290,190                               203,508
  Stockholders' equity                      21,070                                24,559
                                      =============                            ============
    Total liabilities and
  stockholders' equity                    $311,260                              $228,067
                                      =============                            ============
  Net interest income                                  $ 2,981                                $2,340
                                                      ===========                           ============
  Interest rate spread                                                1.71%                                 1.61%
                                                                   ===========                            ==========
  Net interest margin                                                 2.00%                                 2.13%
                                                                   ===========                            ==========

</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.

                                                        SIX MONTHS ENDED
                                                    MARCH 31, 2001 COMPARED TO
                                                          MARCH 31, 2000
                                                 -------------------------------
                                                      CHANGE ATTRIBUTABLE TO
                                                 -------------------------------
                                                  VOLUME       RATE       TOTAL
                                                 -------------------------------
                                                          (IN THOUSANDS)

Real estate loans                                 $1,139      $  297      $1,436
Consumer loans                                       579         118         697
Commercial business loans                            291          73         364
                                                  ------      ------      ------
      Total loans                                  2,009         488       2,497
Investments                                          845         415       1,260
Mortgage-backed securities                            64         165         229
                                                  ------      ------      ------
Total interest-earning assets                     $2,918      $1,068      $3,986
                                                  ======      ======      ======

Savings accounts                                  $   44      $    8      $   52
Now and money market accounts                        541          75         616
Certificates of deposit                              842         729       1,571
                                                  ------      ------      ------
  Total deposits                                   1,427         812       2,239
FHLB advances                                        460         191         651
Other borrowings                                     405          50         455
                                                  ------      ------      ------
Total interest-bearing liabilities                $2,292      $1,053      $3,345
                                                  ======      ======      ======
Change in net interest income                     $  626      $   15      $  641
                                                  ======      ======      ======

         PROVISION FOR LOAN LOSSES. The provision for loan losses increased from
$7,000 during the six months ended March 31, 2000 to $46,000 during the six
months ended March 31, 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 from $27,000 during the six
months ended March 31, 2000 to a charge of $61,000 during the six months ended
March 31, 2001.

         NONINTEREST INCOME. Noninterest income increased $901,000 during the
six months ended March 31, 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 six months ended March 31,
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.

<TABLE>
<CAPTION>
         The following table presents a comparison of the components of noninterest income.
                                                                                              Difference
---------------------------------------------------------------------------------------------------------------------
Six Months Ended March 31,                            2001             2000           Amount               %
---------------------------------------------------------------------------------------------------------------------
                                                                       (dollars in thousands)
<S>                                                   <C>            <C>               <C>           <C>
Noninterest income:
   Gain on sale of loans                              $1,538         $  913            $625             68.46%
   Service fees on loans                                 224            211              13              6.16
   Service fees on deposits                              208             71             137            192.96
   Gain (loss) on sale of investment securities           16            (68)             84            123.53
   Gain on sale of real estate owned                      45              2              43          2,150.00
   Other operating income                                  4              5              (1)           (20.00)
---------------------------------------------------------------------------------------------------------------------
      Total noninterest income                        $2,035         $1,134            $901             79.45%
=====================================================================================================================
</TABLE>

                                       19

<PAGE> 20



         During the six months ended March 31, 2001, the mortgage company
originated $96.9 million in mortgage loans for sale compared to $48.7 million
originated in the comparable period one year ago. The $48.2 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 six months ended March 31, 2001 amounted to $78.1
million compared to sales of $48.9 million during the comparable period one year
ago. Sales of loans resulted in gains of $1.5 million and $913,000 for the six
months ended March 31, 2001 and 2000, respectively.

         NONINTEREST EXPENSE. Noninterest expense for the six months ended March
31, 2001, amounted to $5.5 million, an increase of $1.1 million or 24.11% from
the $4.4 million incurred in the six months ended March 31, 2000. The increase
was primarily attributable to a $1.1 million increase in the Bank's noninterest
expense. Noninterest expenses of the Bank's mortgage banking subsidiary did not
change materially from the comparable period one year ago. The increase in the
Bank's noninterest expense was primarily in compensation of $412,000,
professional services of $200,000, data processing of $192,000, occupancy of
$112,000 and other operating expense of $115,000, 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.
<TABLE>
<CAPTION>

         The following table presents a comparison of the components of noninterest expense.
                                                                                                Difference
---------------------------------------------------------------------------------------------------------------------
Six Months Ended December 31,                                 2001          2000          Amount            %
---------------------------------------------------------------------------------------------------------------------
                                                                           (dollars in thousands)
<S>                                                           <C>           <C>            <C>           <C>
Noninterest expense:
   Compensation and employee benefits                         $2,576        $2,065         $  511          24.75%
   Occupancy                                                     703           580            123          21.21
   Professional services                                         444           403             41          10.17
   Advertising                                                   249           262            (13)         (4.96)
   Deposit insurance premium                                      16            29            (13)        (44.83)
   Furniture, fixtures and equipment                             295           209             86          41.15
   Data processing                                               397           214            183          85.51
   Provision for loss on real estate owned                         3             -              3              -
   Loss from foreclosed real estate                                -            11            (11)       (100.00)
   Other operating expense                                       845           681            164          24.08
---------------------------------------------------------------------------------------------------------------------
Total noninterest expense                                     $5,528        $4,454         $1,074          24.11%
=====================================================================================================================
</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, as previously indicated, there was no income tax
benefit for the six months ended March 31, 2001 compared to a benefit of
$386,000 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. At March 31, 2001, the
Bank's actual liquidity ratio was 11.25%. 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 March 31, 2001, cash and cash equivalents, interest
bearing deposits and securities available-for-sale and trading securities
totaled $150.2 million, or 41.33% of total assets.

         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

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<PAGE> 21


securities and other investment securities. During the six months ended March
31, 2001, the Bank's loan originations totaled $37.5 million. Purchases of
United States Treasury and agency securities, mortgage-backed and mortgage
related securities and other investment securities totaled $74.6 million for the
six months ended March 31, 2001.

         The Bank has other sources of liquidity if a need for additional funds
arises. At March 31, 2001, the Bank had $49.8 million in advances outstanding
from the FHLB and had an additional overall borrowing capacity from the FHLB of
$59.1 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 March 31, 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 $67.7 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 March 31, 2001, totaled
$120.4 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.





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<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
         Not Applicable

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 October 27, 2000.

         Form 8-K filed on December 22, 2000.





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<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: May 11, 2001                         By: /s/ Carroll E. Amos
                                           -----------------------
                                           Carroll E. Amos
                                           President and Chief Executive Officer



Date: May 11, 2001                         By: /s/ David E. Ritter
                                           -----------------------
                                           David E. Ritter
                                           Senior Vice President and
                                           Chief Financial Officer





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