<PAGE> 1




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED June 30, 2003

                                       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                       703-391-1300
         RESTON, VIRGINIA 20191         Registrant's Telephone Number, Including
         ----------------------         ----------------------------------------
(Address of Principal Executive Offices)                    Area Code
            (Zip Code)

                      APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:


Common stock, par value $.01 per share              3,012,434 shares outstanding
--------------------------------------              ----------------------------
                                                    at August 11, 2003
                                                    ------------------

<PAGE> 2



                        GREATER ATLANTIC FINANCIAL CORP.
                         QUARTERLY REPORT ON FORM 10-QSB
                       FOR THE QUARTER ENDED JUNE 30, 2003

                                TABLE OF CONTENTS


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

Item 1. Financial Statements

      Consolidated Statements of Financial Condition
      June 30, 2003 (unaudited) and September 30, 2002 (audited)...............3

      Consolidated Statements of Operations (unaudited)
      Three and nine months ended June 30, 2003 and June 30, 2002..............4

      Consolidated Statements of Comprehensive Income (unaudited)
      Three and nine months ended June 30, 2003 and June 30, 2002 .............5

      Consolidated Statements of Changes in Stockholders' Equity (unaudited)
      Nine months ended June 30, 2003 and June 30, 2002........................5

      Consolidated Statements of Cash Flows (unaudited)
      Nine months ended June 30, 2003 and June 30, 2002........................6

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

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations........................................................14
Item 3.  Controls and Procedures..............................................26
Item 4.  Quantitative and Qualitative Disclosures about Market Risk...........27

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

Item 1.  Legal Proceedings....................................................27
Item 2.  Changes in Securities and Use of Proceeds............................27
Item 3.  Defaults Upon Senior Securities......................................27
Item 4.  Submission of Matters to a Vote of Security Holders..................28
Item 5.  Other Information....................................................28
Item 6.  Reports on Form 8-K..................................................28

SIGNATURES....................................................................29

CERTIFICATIONS................................................................31


                                      2

<PAGE> 3

<TABLE>
<CAPTION>

                        GREATER ATLANTIC FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                                   June 30,            September 30,
                                                                     2003                  2002
                                                                ---------------       ---------------
                                                                 (Unaudited)

 <S>                                                               <C>                   <C>
                                                                        (dollars in thousands)
 Assets
 Cash and cash equivalents                                         $  1,682              $  3,066
 Interest bearing deposits                                            5,377                 6,292
 Investment securities
    Available-for-sale                                              210,641               191,673
    Held-to-maturity                                                 14,078                17,686
 Loans held for sale                                                 22,121                14,553
 Loans receivable, net                                              251,450               248,081
 Accrued interest and dividends receivable                            2,487                 2,859
 Deferred income taxes                                                1,520                 1,520
 Federal Home Loan Bank stock, at cost                                6,208                 5,490
 Other real estate owned                                                 54                     -
 Premises and equipment, net                                          7,867                 7,790
 Goodwill                                                             1,284                 1,284
 Prepaid expenses and other assets                                    3,030                 2,384
                                                                 --------------        --------------
                   Total assets                                    $527,799              $502,678
                                                                 ==============        ==============
Liabilities and stockholders' equity
Liabilities
Deposits                                                           $283,973              $281,877
Advance payments from borrowers for taxes and insurance                 362                   280
Accrued expenses and other liabilities                                3,942                 3,261
Advances from the FHLB and other borrowings                         208,546               187,511
                                                                 --------------        --------------
Total liabilities                                                   496,823               472,929
                                                                 --------------        --------------

Commitments and contingencies                                    --------------        --------------

Guaranteed convertible preferred securities of subsidiary trust       9,346                 9,346
                                                                 --------------        --------------

Stockholders' Equity
   Preferred stock $.01 par value - 2,500,000 shares authorized,
       none outstanding                                                   -                     -
   Common stock, $.01 par value - 10,000,000
       shares authorized; 3,012,434 shares outstanding                   30                    30
   Additional paid-in capital                                        25,152                25,152
   Accumulated deficit                                               (1,305)               (2,520)
   Accumulated other comprehensive loss                              (2,247)               (2,259)
                                                                 --------------        --------------

Total stockholders' equity                                           21,630                20,403
                                                                 --------------        --------------

Total liabilities and stockholders' equity                         $527,799              $502,678
                                                                 ==============        ==============


</TABLE>

                                       3

<PAGE>  4


<TABLE>
<CAPTION>

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

                                                           Three Months Ended              Nine Months Ended
                                                                June 30,                       June 30,
                                                      ------------------------------  ----------------------------
                                                          2003             2002           2003           2002
                                                      -------------    -------------  -------------   ------------
<S>                                                    <C>              <C>            <C>            <C>

Interest income
  Loans                                                   $3,500           $3,519        $10,900        $10,209
  Investments                                              1,571            2,013          5,117          5,706
                                                      -------------    -------------  -------------   ------------
Total interest income                                      5,071            5,532         16,017         15,915
                                                      -------------    -------------  -------------   ------------
Interest expense
  Deposits                                                 1,557            1,975          5,140          6,463
  Borrowed money                                           1,612            1,618          4,753          3,588
                                                      -------------    -------------  -------------   ------------
Total interest expense                                     3,169            3,593          9,893         10,051
                                                      -------------    -------------  -------------   ------------
Net interest income                                        1,902            1,939          6,124          5,864
Provision for loan losses                                     66              110            779            539
                                                      -------------    -------------  -------------   ------------
Net interest income after provision for loan losses        1,836            1,829          5,345          5,325
                                                      -------------    -------------  -------------   ------------
Noninterest income
  Fees and service charges                                   333              234          1,118            704
  Gain on sale of loans                                    4,067            1,939         11,327          5,753
  Gain on sale of investment securities                       51               81             35            150
  Loss on sale of real estate owned                          (9)                -            (9)              -
  Other operating income                                     (1)                5             13              5
                                                      -------------    -------------  -------------   ------------
Total noninterest income                                   4,441            2,259         12,484          6,612
                                                      -------------    -------------  -------------   ------------
Noninterest expense
  Compensation and employee benefits                       3,264            1,843          9,405          5,575
  Occupancy                                                  494              436          1,467          1,318
  Professional services                                      370              211            846            526
  Advertising                                                405              250            786            637
  Deposit insurance premium                                   12               11             35             32
  Furniture, fixtures and equipment                          282              210            819            621
  Data processing                                            342              304            967            846
  Other real estate owned expenses                             2                               5
  Other operating expenses                                   808              654          2,285          1,874
                                                      -------------    -------------  -------------   ------------
Total noninterest expense                                  5,979            3,919         16,615         11,429
                                                      -------------    -------------  -------------   ------------
Income before income tax provision                           298              169          1,214            508
                                                      -------------    -------------  -------------   ------------
Income tax provision                                           -                -              -             12
                                                      -------------    -------------  -------------   ------------
Net income                                                 $ 298            $ 169        $ 1,214        $   496
                                                      =============    =============  =============   ============
Earnings per common share
  Basic                                                   $ 0.10           $ 0.06        $  0.40        $  0.16
  Diluted                                                 $ 0.09           $ 0.06        $  0.34        $  0.16
Weighted average common shares outstanding
  Basic                                                3,012,434        3,012,434      3,012,434      3,009,742
  Diluted                                              4,413,922        3,036,593      4,412,702      3,031,190


</TABLE>


                                      4
<PAGE> 5




                        GREATER ATLANTIC FINANCIAL CORP.
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

--------------------------------------------------------------------------------
Nine months ended June 30,                             2003              2002
--------------------------------------------------------------------------------
                                                            (in thousands)
Net earnings                                          $ 1,214            $ 496
--------------------------------------------------------------------------------
Other comprehensive (loss) income, net of tax
   Unrealized (loss) gain on securities                    85               92
   Unrealized loss on hedges                              (72)          (1,316)
--------------------------------------------------------------------------------
Other comprehensive (loss) income                          13           (1,224)
--------------------------------------------------------------------------------
Comprehensive income                                  $ 1,227            $(728)
================================================================================




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


<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                                                               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, 2001                $-         $ 30    $ 25,132       $ (3,450)           $ (532)        $ 21,180

Options Exercised                             -            -          20              -                 -               20

Other comprehensive income                    -            -           -              -            (1,224)          (1,224)

Net earnings for the period                   -            -           -            496                 -              496
------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2002                     $-         $ 30    $ 25,152       $ (2,954)         $ (1,756)        $ 20,472
==============================================================================================================================
Balance at September 30, 2002                $-         $ 30    $ 25,152       $ (2,520)         $ (2,259)        $ 20,403

Other comprehensive loss                      -            -           -              -                 13               13

Net earnings for the period                   -            -           -          1,214                              1,214
------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2003                     $-         $ 30    $ 25,152       $ (1,306)         $ (2,246)        $ 21,630
==============================================================================================================================

</TABLE>

                                       5

<PAGE> 6


<TABLE>
<CAPTION>


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

-------------------------------------------------------------------------------------------
Nine months ended June 30,                                           2003           2002
-------------------------------------------------------------------------------------------
                                                                     (in thousands)
<S>                                                               <C>            <C>
Cash flow from operating activities

Net income                                                        $  1,214       $    496
Adjustments to reconcile net income to net cash
provided by operating activities
  Provision for loan loss                                              779            539
  Amortization of deposit acquisition adjustment                        23             46
  Amortization of loan acquisition adjustment                          (16)           (20)
  Depreciation and amortization                                        666            508
  Proceeds from sale of trading securities                               -          1,129
  Proceeds from repayments of trading securities                         -            183
  Amortization of trading security premiums                              -              8
  Net gain on trading securities                                         -             (9)
  Realized gain on sale of investments                                 (35)           (92)
  Realized gain on sale of mortgaged-backed securities                   -            (49)
  Loss on sale of real estate owned                                      9              -
  Gain on disposal of fixed assets                                     (11)             -
  Amortization of investment security premiums                       1,475          2,224
  Amortization of mortgage-backed securities premiums                  430            325
  Amortization of deferred fees                                       (292)          (223)
  Discount accretion net of premium amortization                       468            139
  Gain on sale of loans held for sale                              (11,327)        (5,753)
(Increase) decrease in assets
  Disbursements for origination of loans                          (502,846)      (283,225)
  Proceeds from sales of loans                                     506,510        295,525
  Accrued interest and dividend receivable                             372           (227)
  Prepaid expenses and other assets                                   (718)        (1,345)
  Deferred loan fees collected, net of deferred costs incurred          43          1,086
Increase (decrease) in liabilities
  Accrued expenses and other liabilities                               681            528
  Income taxes payable                                                   -              -
-------------------------------------------------------------------------------------------
Net cash provided by operating activities                           (2,575)        11,793
-------------------------------------------------------------------------------------------

</TABLE>

                                       6

<PAGE> 7

<TABLE>
<CAPTION>


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

-------------------------------------------------------------------------------------------------------------
Nine months ended June 30,                                                       2003              2002
-------------------------------------------------------------------------------------------------------------
                                                                                     (in thousands)
<S>                                                                             <C>              <C>
Cash flow from investing activities
  Net increase in loans                                                          $(4,384)        $ (87,604)
  Purchases of premises and equipment                                               (732)           (1,968)
  Purchases of investment securities                                             (27,113)          (66,447)
  Proceeds from sale of investment securities                                      1,035            15,389
  Proceeds from repayments of investment securities                               29,556            14,831
  Purchases of mortgage-backed securities                                        (38,954)          (27,266)
  Proceeds from sale of mortgage-backed securities                                     -             3,935
  Proceeds from repayments of mortgage-backed securities                          18,331            12,316
  Proceeds from the sale of foreclosed assets                                         65                 -
  Purchases of FHLB stock                                                         (9,523)           (2,830)
  Proceeds from sale of FHLB stock                                                 8,805               600
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities                              (22,914)         (139,044)
-------------------------------------------------------------------------------------------------------------
Cash flow from  financing activities
  Net increase in deposits                                                         2,072            35,170
  Net advances from FHLB                                                          27,650            40,700
  Net borrowings on reverse repurchase agreements                                 (6,614)           41,343
  Increase in advance payments by borrowers for taxes and insurance                   83                69
  Issuance of convertible preferred securities                                        (1)            9,346
  Capital contributions                                                                -                20
-------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities                               23,190           126,648
-------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                                  (2,299)             (603)
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at beginning of period                                  9,358             3,418
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of period                                      $ 7,059           $ 2,815
=============================================================================================================

</TABLE>

                                       7


<PAGE> 8


                        GREATER ATLANTIC FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

(1) BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements, which
include the accounts of Greater Atlantic Financial Corp. ("the company") and its
wholly owned subsidiary, Greater Atlantic Bank ("the bank") and its wholly owned
subsidiary, Greater Atlantic Mortgage Corp. ("GAMC"), have been prepared in
accordance with the instructions for Form 10-QSB and do not include all of the
disclosures required by generally accepted accounting principles. All
adjustments which, in the opinion of management, are necessary to a fair
presentation of the results for the interim periods presented (consisting of
normal recurring adjustments) have been made. The results of operations for the
nine months ended June 30, 2003 are not necessarily indicative of the results of
operations that may be expected for the year ending September 30, 2003 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. The company at or during the nine months ended June 30, 2003 and 2002
identified impaired loans. An analysis of the change in the allowance for loan
losses follows:

--------------------------------------------------------------------------------
At or for the Nine Months Ended June 30,                 2003             2002
--------------------------------------------------------------------------------
                                                        (dollars in thousands)
Balance at beginning of period                              $1,699        $810
Provisions                                                     779         539
Total charge-offs                                             (745)        (27)
Total recoveries                                                16          13
--------------------------------------------------------------------------------
Net charge-offs                                               (715)        (14)
--------------------------------------------------------------------------------
Balance at end of period                                    $1,749      $1,335
================================================================================
Ratio of net charge-offs during the period
   to average loans outstanding during the period             0.26%       0.01%
================================================================================
Allowance for loan losses to total non-performing
   loans at end of period                                    98.15%     351.32%
================================================================================
Allowance for loan losses to total loans                      0.62%       0.52%
================================================================================

(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
require 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 year ended September 30, 2002 or the period ended June
30, 2003.

                                       8

<PAGE> 9


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

      The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
created five categories of financial institutions based on the adequacy of their
regulatory capital level: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. Under FDICIA, a well-capitalized financial institution is one
with Tier 1 leverage capital of 5%, Tier 1 risk-based capital of 6% and total
risk-based capital of 10%. At June 30, 2003 the bank was classified as a
well-capitalized financial institution. The following presents the bank's
capital position:

--------------------------------------------------------------------------------
                            Required   Required     Actual     Actual
     At June 30, 2003        Balance    Percent    Balance    Percent    Surplus
--------------------------------------------------------------------------------
                                     (dollars in thousands)
Leverage                   $26,339     5.00%      $31,466      5.97%     $ 5,127
Tier 1 Risk-based          $15,007     6.00%      $31,466     12.58%     $16,459
Total Risk-based           $25,012    10.00%      $33,102     13.23%     $ 8,090
================================================================================

(4) STOCK OPTIONS

      Effective November 14, 1998, the Company established the 1997 Stock Option
and Warrant Plan (the "Plan"). The Plan reserves options for 76,667 shares to
employees and warrants for 94,685 shares to stockholders. The Plan was amended
effective March 14, 2000, to increase the number of options available for grant
from 76,667 to 225,000 shares to employees and amended again effective March 15,
2002, to increase the number of options available for grant from 225,000 to
350,000 shares to employees and to limit its application to officers and
employees. The stock options and warrants vest immediately upon issuance and
carry a maximum term of 10 years. The exercise price for the stock options and
warrants is the fair market value at grant date. As of June 30, 2003, 94,685
warrants were issued.

     The following summary represents the activity under the Plan:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
                                                                         Number       Exercise    Expiration
                                                                       of Shares       Price         Date
------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>           <C>         <C>
Balance outstanding at September 30, 2000                                 75,834
Options granted                                                           63,166       $ 4.00      12-14-2010
-------------------------------------------------------------------------------------------------------------
Balance outstanding at September 30, 2001                                139,000
Options granted                                                           10,000       $ 5.31      12-14-2010
Options granted                                                           26,000       $ 7.00        1-1-2012
Options granted                                                           20,000       $ 9.00        1-1-2012
Options exercised                                                         (5,000)      $ 4.00
--------------------------------------------------------------------------------------------------------------
Balance outstanding and exercisable at September 30, 2002                190,000
Options granted                                                                -
--------------------------------------------------------------------------------------------------------------
Balance outstanding and exercisable at June 30, 2003                     190,000
==============================================================================================================
</TABLE>

      The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), but it continues to measure compensation cost for
the stock options using the intrinsic value method prescribed by APB Opinion No.
25. For the years ended September 30, 2002 and 2001, the fair value of stock
options has been estimated using the Black-Scholes option pricing model with the
following assumptions: Risk free interest rates of 4.95% and 5.25% for the years
ended September 30, 2002 and 2001, respectively, expected volatility of 45% and
61% for 2002 and 2001, respectively, dividend pay out rate of zero and an
expected option life of seven and ten years, respectively. Using these
assumptions, the average weighted fair value of the stock options granted are
$3.10 and $1.59 for 2002 and 2001, respectively.

                                       9

<PAGE> 10


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

      Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

      If the Company had elected to recognize compensation cost based on the
value at the grant dates with the method prescribed by SFAS 123, net income
would have been changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------
Nine months ended June 30,                                                   2003             2002
----------------------------------------------------------------------------------------------------
                                                                         (in thousands except per
                                                                                share data)
<S>                                                                         <C>             <C>
Net earnings                                                                $1,214          $  496
   Deduct: Total stock-based employee compensation expense                      -              165
----------------------------------------------------------------------------------------------------
Pro forma net earnings attributable to common stockholders                   1,214             331
====================================================================================================
Earnings per common share
   Basic                                                                    $ 0.40          $ 0.16
   Diluted                                                                  $ 0.34          $ 0.16
Earnings per common share, pro forma
   Basic                                                                    $ 0.40          $ 0.11
   Diluted                                                                  $ 0.34          $ 0.11

</TABLE>

(5) EARNINGS PER SHARE

      Earnings per share is based on the weighted average number of shares of
common stock and dilutive common stock equivalents outstanding. Basic earnings
per share includes no dilution and is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity. The following table
presents a reconciliation between the weighted average shares outstanding for
basic and diluted earnings per share for the nine months ended June 30, 2003 and
2002.

<TABLE>
<CAPTION>

                                                                    For the Nine Months Ended June 30,
                                                                ----------------------------------------
      (dollars in thousands except per share amounts)                2003                      2002
      -----------------------------------------------           --------------            --------------
<S>                                                                <C>                       <C>
Net earnings                                                         $ 1,214                      $496

Effect of conversion of preferred securities                             300                         -

Diluted earnings per share                                             1,514                       496

Weighted average common shares outstanding                         3,012,434                 3,009,742

Effect of conversion of preferred securities                       1,371,429                         -

Common stock equivalents due to dilutive effect of
stock options                                                         28,839                    21,204

Total weighted average common shares and common
share equivalents outstanding                                      4,412,702                 3,030,946

Basic earnings (loss) per common share                                 $0.40                     $0.16

Diluted earnings (loss) per common share                               $0.34                     $0.16


</TABLE>

                                       10
<PAGE> 11


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

(6) SEGMENT REPORTING

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

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

      Since the company derives a significant portion of its banking revenue
from interest income as offset by 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 Nine Months Ended June 30,              Banking       Banking      Segments     Eliminations    Earnings
--------------------------------------------------------------------------------------------------------------------
<S>                                            <C>           <C>           <C>           <C>           <C>
Net interest income: (1)
2003                                           $  4,863      $   482       $  5,345      $      -      $  5,345
2002                                              5,076          249          5,325             -         5,325
Noninterest income:
2003                                           $    649      $11,863       $ 12,512      $    (28)     $ 12,484
2002                                                676        5,975          6,651           (39)        6,612
Noninterest expense:
2003                                           $  7,466      $ 9,177       $ 16,643      $     28      $ 16,615
2002                                              6,665        4,803         11,468            39        11,429
Net income:
2003                                           $ (1,953)     $ 3,167       $  1,214      $      -      $  1,214
2002                                               (925)       1,421            496             -           496
Segment assets:
2003                                           $520,768      $24,033       $544,801      $(17,002)     $527,799
2002                                            494,195        9,303        503,498        (5,549)      497,949

</TABLE>

(1) Segment net interest income reflects income after provisions for loan
losses.

                                       11

<PAGE> 12


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

(7) RECENT ACCOUNTING STANDARDS

      Effective October 1, 2002, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 147,
"Acquisitions of Certain Financial Institutions," which amends both SFAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions" and SFAS
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets. It also
requires that those transactions be accounted for in accordance with SFAS No.
141, Business Combinations," and SFAS No. 142 "Goodwill and Other Intangible
Assets."

      Specifically, the requirement in paragraph 5 of SFAS 72 to recognize (and
subsequently amortize) any excess of the fair value of liabilities assumed over
the fair value of tangible and identifiable assets acquired as an unidentifiable
intangible asset no longer applies to business combinations within the scope of
SFAS No. 72. In addition, this Statement amends SFAS 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets, " to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor and borrower relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject to the same
undiscounted cash flow recoverability test and impairment loss recognition and
measurement provisions that SFAS No. 144 requires for other long-lived assets
that are held and used. Greater Atlantic believes that adoption of this
Statement will have no impact on its financial position or results of
operations.

      In December 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 148 "Accounting for
Stock-Based Compensation - Transaction and Disclosure." SFAS No. 148 amends SFAS
No. 123 "Accounting for Stock-Based Compensation." SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based compensation and requires disclosure to be
included in annual and interim reports and disclosure of the effect of the
method used. SFAS No. 148 is effective for annual reports of fiscal years
beginning after December 15, 2002 and interim reports for periods beginning
after December 15, 2002. The company plans to continue using intrinsic value
method of accounting for stock-based compensation and therefore the new rule
will have no effect on the company's financial condition or results of
operations. The company adopted the new standard related to disclosure in the
interim period beginning January 1, 2003.

(8) GUARANTEED CONVERTIBLE PREFERRED SECURITIES OF SUBSIDIARY TRUST

      On March 20, 2002, Greater Atlantic Capital Trust I (the, "Trust"), a
Delaware statutory business trust and a wholly owned Trust subsidiary of the
company issued $9.6 million aggregate liquidation amount (963,038 shares) of
6.50% cumulative preferred securities maturing on December 31, 2031, with an
option to call on or after December 31, 2003. Conversion of the preferred
securities into the company's common stock may occur at any time on or after 60
days after the closing of the offering. The company may redeem the preferred
securities, in whole or in part, at any time on or after December 31, 2003.
Distributions on the preferred securities are payable quarterly on March 31,
June 30, September 30 and December 31 of each year beginning on June 30, 2002.
The Trust also issued 29,762 common securities to the company for $297,620. The
company purchased all the shares of the common stock. The proceeds from the sale
of the preferred securities and the proceeds from the sale of the trust's common
securities were utilized to purchase from the company junior subordinated debt
securities of $9,928,000 bearing interest of 6.50% and maturing December 31,
2031. All intercompany interest and equity were eliminated in consolidation.

                                       12

<PAGE> 13


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
INFORMATION AS OF JUNE 30, 2003 AND FOR THE NINE MONTHS THEN ENDED IS UNAUDITED

      The Trust was formed for the sole purpose of investing the proceeds from
the sale of the convertible preferred securities in the corresponding
convertible debentures. The Company has fully and unconditionally guaranteed the
preferred securities along with all obligations of the trust related thereto.
The sale of the preferred securities yielded $9.2 million after deducting
offering expenses. The company currently retains approximately $1.5 million of
the proceeds for general corporate purposes, investing the retained funds in
short-term investments. The remaining $8.0 million of the proceeds was invested
in Greater Atlantic Bank to increase its capital position. Initially, these
funds were invested in investment securities. Subsequently, such proceeds were
used to fund new loans.

(9) INTEREST RATE EXCHANGE AGREEMENTS

      In fiscal 2002, the bank began to utilize derivative financial instruments
to hedge its interest rate risk. The bank does not hold or issue derivative
financial instruments for trading purposes. Beginning in 2002, the bank adopted
statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which requires that an entity
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. The bank bases the estimated fair values of these
agreements on the cost of interest-rate exchange agreements with similar terms
at available market prices, excluding accrued interest receivable and payable.
However, active markets do not exist for many types of financial instruments.
Consequently, fair values for these instruments must be estimated using
techniques such as discounted cash flow analysis and comparisons to similar
instruments. Estimates developed using these methods are highly subjective and
require judgements regarding significant matters such as the amount and timing
of future cash flows and the selection of discount rates that appropriately
reflect market and credit risks. Changes in these judgements often have a
material effect on the fair value estimates. Since those estimates are made as
of a specific time, they are susceptible to material near term changes.

      The bank entered into various interest-rate swaps that total $77 million
in notional principal. The swaps pay a fixed rate with the bank receiving
payments based upon one-to three-month floating rate LIBOR. The capped range is
between 1.31% - 4.53%, and expires between 2 and 7 years. The bank also entered
into various interest rate caps that total $30 million in notional principal
with terms between four and ten years that limit the float between a floor of
2.00%, and capped between 5.00% - 8.00%. The bank accounts for these derivatives
as cash flow hedges, under the guidelines of SFAS 133, whereby the fair value of
these contracts are reflected in other assets with the offset recorded as
accumulated other comprehensive income. At June 30, 2003, the fair value of
those contracts was a loss of $2.4 million.

      The following table categorizes interest-rate exchange agreements by the
Bank as of June 30, 2003.

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                                           Monthly        Gross         Gross
Total by class type of interest rate          Notional    Amortized     Unrealized    Unrealized    Estimated
exchange agreements                            Amount       Cost          Gains         (Losses)    Fair Value
--------------------------------------------------------------------------------------------------------------
                                                                  (dollars in thousands)
<S>                                          <C>            <C>          <C>         <C>            <C>
Interest rate swaps:
   Bank pays fixed, receives variable        $ 77,000       $ 166        $ 177       $ (2,653)      $ (2,476)
Interest rate caps:
   Interest rate caps purchased                30,000          16          315           (208)          107
--------------------------------------------------------------------------------------------------------------
Total                                        $107,000       $ 182        $ 492       $ (2,861)      $ (2,369)
==============================================================================================================

</TABLE>

                                       13

<PAGE> 14



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

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

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

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

GENERAL

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

      The profitability of the company, and more specifically, the profitability
of its primary subsidiary Greater Atlantic Bank, depends primarily on its
non-interest income and 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. 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

      The level of its operating expenses also affects the company's
profitability. Operating expenses consist primarily of salaries and employee
benefits, occupancy-related expenses, equipment and technology-related expenses
and other general operating expenses.

                                       14

<PAGE> 15


      At June 30, 2003 the company's total assets were $527.8 million, compared
to the $502.7 million held at September 30, 2002, representing an increase of
5.00%. Both the bank's overall asset size and customer base increased during the
period and that growth is reflected in the consolidated statements of financial
condition and statements of operations. Net loans receivable at June 30, 2003
were $251.5 million, an increase of $3.4 million or 1.36% from the $248.1
million held at September 30, 2002. The increase in loans consisted primarily of
real estate loans secured by first mortgages on residential properties and
consumer and commercial lines of credit secured by mortgages on residential and
commercial real estate. At June 30, 2003, investment securities were $224.8
million, an increase of $15.4 million or 7.34% from the $209.4 million held at
September 30, 2002. Deposits at June 30, 2003 were $284.0 million, an increase
of $2.1 million, which resulted primarily from increases in savings and
transaction accounts of $11.8 million, offset by a decrease in certificates of
deposit of $9.7 million. With the current interest rate environment and
marketing efforts by the bank, we anticipate that trend will continue.


CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

      The company's financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses as well as the disclosure of contingent liabilities. Management
continually evaluates its estimates and judgments including those related to the
allowance for loan losses and income taxes. Management bases its estimates and
judgments on historical experience and other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The company believes that,
of its significant accounting policies, the most critical accounting policies we
apply are those related to the valuation of the loan portfolio.

      A variety of factors impact the carrying value of the loan portfolio
including the calculation of the allowance for loan losses, valuation of
underlying collateral, the timing of loan charge-offs and the amount and
amortization of loan fees and deferred origination costs. The allowance for loan
losses is the most difficult and subjective judgment. The allowance is
established and maintained at a level that we believe is adequate to cover
losses resulting from the inability of borrowers to make required payments on
loans. Estimates for loan losses are arrived at by analyzing risks associated
with specific loans and the loan portfolio, current trends in delinquencies and
charge-offs, the views of our regulators, changes in the size and composition of
the loan portfolio and peer comparisons. The analysis also requires
consideration of the economic climate and direction, change in the interest rate
environment, which may impact a borrower's ability to pay, legislation impacting
the banking industry and economic conditions specific to our service area.
Because the calculation of the allowance for loan losses relies on estimates and
judgments relating to inherently uncertain events, results may differ from our
estimates.

                                       15

<PAGE> 16



         COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
                         JUNE 30, 2003 AND JUNE 30, 2002

      NET INCOME. For the three months ended June 30, 2003, the company had net
earnings of $298,000 or $0.09 per diluted share compared to earnings of $169,000
or $0.06 per diluted share for the three months ended June 30, 2002. The
$129,000 improvement in earnings over the comparable period one-year ago
resulted from an increase of $2.2 million in non-interest income and was coupled
with a decrease of $44,000 in the provision for loan losses. Those improvements
in income exceeded a $2.1 million increase in non-interest expense. The
decreased provision was due primarily to a decrease in the required provision
related to an impaired commercial business loan.

      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 re-pricing 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.

                                                               Difference
--------------------------------------------------------------------------------
Three Months Ended June 30,       2003          2002      Amount           %
--------------------------------------------------------------------------------
                                              (dollars in thousands)
Interest income:
   Loans                         $ 3,500     $ 3,519      $ (19)         (0.54)%
   Investments                     1,571       2,013       (442)        (21.96)
--------------------------------------------------------------------------------
Total                              5,071       5,532       (461)         (8.33)
--------------------------------------------------------------------------------

Interest expense:
   Deposits                        1,557       1,975       (418)        (21.16)
   Borrowings                      1,612       1,618         (6)         (0.37)
--------------------------------------------------------------------------------
Total                              3,169       3,593       (424)        (11.80)
--------------------------------------------------------------------------------
Net interest income              $ 1,902     $ 1,939      $ (37)         (1.91)%
================================================================================

      Net interest income during the quarter ended June 30, 2003, amounted to
$1.9 million, unchanged from the comparable period one year ago. While average
interest-earning assets increased $23.3 million or 5.06% over the comparable
period one-year ago, the income from that increase was partially offset by an 11
basis point decrease in net interest margin (net interest income divided by
average interest-earning assets). Contributing to the decline in the net
interest margin was a $497,000 charge resulting from payments made on certain
interest rate swap and cap agreements compared to a $304,000 charge in the
comparable period one year ago. The majority of the increase in interest-earning
assets was funded by interest-bearing sources, as average interest-bearing
liabilities for the quarter increased $29.9 over 2002.

      INTEREST INCOME. Interest income for the three months ended June 30, 2003
decreased $461,000 compared to the three months ended June 30, 2002, primarily
as a result of a decrease of 61 basis points in the average yield earned on
interest earning assets. That decrease was partially offset by an increase in
the average outstanding balances of loans and investment securities.

                                       16
<PAGE> 17


      INTEREST EXPENSE. The $424,000 decrease in interest expense for the three
months ended June 30, 2003 compared to the 2002 period was principally the
result of a 58 basis point decrease in the cost of funds on average deposits and
borrowed funds. The decrease of the cost of those funds was partially offset by
a $29.9 million increase in average deposits and borrowed funds. The decrease in
interest expense on deposits was primarily due to an 82 basis point decrease in
rates paid on certificates of deposit, savings and NOW and money market
accounts. That decrease was offset in part by an increase of $17.4 million, or
6.87%, in certificates, savings and NOW and money market accounts from $252.7
million for the three months ended June 30, 2002 to $270.1 million for the three
months ended June 30, 2003.

      The decrease in interest expense on borrowings for the three months ended
June 30, 2003 compared to the 2002 period was principally the result of a 24
basis point decrease in the cost of borrowed funds and was partially offset by a
$12.6 million increase in average borrowed funds. Components accountable for the
decrease of $6,000 in interest expense were a $97,000 increase in average volume
offset by a $103,000 decrease in average cost. The decrease in rates was
primarily due to lower rates paid on interest-bearing demand deposits and
savings accounts and lower pricing on new and renewed time deposits. The
decrease in rates resulted from the Federal Reserve lowering its benchmark
interest rate (overnight bank lending rate) thirteen times since January 3, 2001
by a total of 5.50% to a low of 1.00%.

                                       17

<PAGE> 18



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

<TABLE>
<CAPTION>

                                                           FOR THE THREE MONTHS ENDED JUNE 30,
                                     ------------------------------------------------------------------------------
                                                       2003                                    2002
                                     ---------------------------------------  -------------------------------------
                                                    INTEREST                                 INTEREST      AVERAGE
                                        AVERAGE     INCOME/     AVERAGE        AVERAGE       INCOME/      YIELD/
                                        BALANCE      EXPENSE    YIELD/RATE      BALANCE       EXPENSE       RATE
                                     ---------------------------------------  -------------------------------------
ASSETS:                                                          (DOLLARS IN THOUSANDS)
<S>                                   <C>           <C>            <C>        <C>            <C>            <C>
Interest-earning assets:
   Real estate loans                  $ 180,648     $ 2,447        5.42%      $166,711       $ 2,523        6.05%
   Consumer loans                        64,779         647        4.00         53,542           588        4.39
   Commercial business loans             32,121         406        5.06         27,414           408        5.95
                                      ---------     -------     ---------     --------       -------       ------
    Total loans                         277,548       3,500        5.04        247,667         3,519        5.68

Investment securities                   165,472       1,209        2.92        174,006         1,502        3.45
Mortgage-backed securities               41,377         362        3.50         39,388           511        5.19
                                      ---------     -------     ---------     --------       -------       ------
    Total interest-earning assets       484,397       5,071        4.19        461,061         5,532        4.80
                                                    -------     ---------                    -------       ------
Non-earning assets                       16,990                                 17,164
                                      ---------                               --------
    Total assets                      $ 501,387                               $478,225
                                      =========                               ========

LIABILITIES AND STOCKHOLDERS'
   EQUITY:
Interest-bearing liabilities:
   Savings accounts                   $  10,252          32        1.25       $  6,206            29        1.87
   Now and money market accounts         79,911         253        1.27         73,091           362        1.98
   Certificates of deposit              179,882       1,272        2.83        173,390         1,584        3.65
                                      ---------     -------     --------      ---------      -------       ------
      Total deposits                    270,045       1,557        2.31        252,687         1,975        3.13

   FHLB advances                        116,576         705        2.42        105,078           777        2.96
   Other borrowings                      76,610         907        4.74         75,532           841        4.45
                                      ---------     -------     --------      ---------      -------       ------
Total interest-bearing liabilities      463,231       3,169        2.74        433,297         3,593        3.32
                                                    -------     --------                     -------       ------

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits      13,079                                 11,718
Other liabilities                         4,114                                 11,542
                                      ---------                               ---------
  Total liabilities                     480,424                                456,557
Stockholders' equity                     20,963                                 21,668
                                      ---------                               ---------
  Total liabilities and
stockholders' Equity                  $ 501,387                               $478,225
                                      =========                               =========

Net interest income                                 $ 1,902                                  $ 1,939
                                                    ========                                 ========
Interest rate spread                                               1.45%                                    1.48%
                                                                ========                                   ======
Net interest margin                                                1.57%                                    1.68%
                                                                ========                                   ======

</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.

                                               THREE MONTHS ENDED
                                            JUNE 30, 2003 COMPARED TO
                                                  JUNE 30, 2002
                                 -----------------------------------------------
                                             CHANGE ATTRIBUTABLE TO
                                 -----------------------------------------------
                                      VOLUME          RATE           TOTAL
                                 -----------------------------------------------
                                                 (IN THOUSANDS)

Real estate loans                     $ 211          $ (287)        $  (76)
Consumer loans                          123             (64)            59
Commercial business loans                70             (72)            (2)
                                      ------        --------        -------
      Total loans                       404            (423)           (19)
Investments                             (74)           (219)          (293)
Mortgage-backed securities               26            (175)          (149)
                                      ------        --------        -------
Total interest-earning assets         $ 356          $ (817)        $ (461)
                                      ======        ========        =======

Savings accounts                      $  19          $  (16)        $    3
Now and money market accounts            34            (143)          (109)
Certificates of deposit                  59            (371)          (312)
                                      ------        --------        -------
  Total deposits                        112            (530)          (418)
FHLB advances                            85            (157)           (72)
Other borrowings                         12              54             66
                                      ------        --------        -------
Total interest-bearing liabilities      209            (633)          (424)
                                      ======        ========        =======
Change in net interest income         $ 147         $  (184)         $ (37)
                                      ======        ========        =======

      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 loan type.
Management then looks at its classified assets, which are loans 30 days or more
delinquent, and classifies those loans as special mention, substandard or
doubtful, based on the performance of the loans. Those classified loans are then
individually evaluated for impairment. Since the historical three-year loss
experience for the bank is new, those loans that are not classified are not
individually evaluated. Those loans are then segmented by type and assigned a
reserve percentage that reflects the industry loss experience. The loans
individually evaluated for impairment are measured by either the present value
of expected future cash flows, the loans observable market price, or the fair
value of the collateral. Although management utilizes its best judgment in
providing for probable losses, there can be no assurance that the bank will not
have to increase its provisions for loan losses in the future. An increase in
provision may result from 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.

      Non-performing assets were $1.8 million or 0.35% of total assets at June
30, 2003, compared to $380,000 or 0.08% at June 30, 2002, with $1.3 million
classified as substandard, $483,000 classified as doubtful and $54,000 as real
estate owned. While non-performing assets increased $1.5 million from the
comparable period one year ago, the provision for loan losses decreased $44,000.
The increase in non-performing assets from the year ago period was due to the
non-performing status of one of the bank's commercial business loans. The
decrease in provision was due primarily to a reduction in the required provision
for that loan since the bank is in the process of liquidating that loan from the
cash flow of the collateral securing the loan.

                                       19

<PAGE> 20


      NON-INTEREST INCOME. Non-interest income increased $2.2 million during the
three months ended June 30, 2003, over the comparable period one year ago. That
increase was primarily the result of an increase in gain on sale of loans
coupled with increases of $25,000 and $74,000 in service fees on loans and on
deposits, respectively. Those increases were offset by a decrease in gain on
sale of investment securities of $30,000 from the comparable period one year
ago. The level of gain on sale of loans during the three months ended June 30,
2003 resulted from the company taking advantage of an increase in loan
origination volume and sales, with margins being greater than those in the
year-ago period. The following table presents a comparison of the components of
non-interest income.

<TABLE>
<CAPTION>

                                                                                    Difference
----------------------------------------------------------------------------------------------------
Three Months Ended June 30,                      2003             2002           Amount        %
----------------------------------------------------------------------------------------------------
                                                                  (dollars in thousands)
Non-interest income:
   <S>                                         <C>            <C>            <C>            <C>

   Gain on sale of loans                       $ 4,067        $ 1,939        $ 2,128        109.75%
   Service fees on loans                           137            112             25         22.32
   Service fees on deposits                        196            122             74         60.66
   Gain on sale of investment securities            51             81            (30)       (37.04)
   Loss on sale of real estate owned                (9)             -             (9)            -
   Other operating income                           (1)             5             (6)        (1.20)
----------------------------------------------------------------------------------------------------
      Total non-interest income                $ 4,441        $ 2,259        $ 2,182         96.59%
====================================================================================================

</TABLE>

      NON-INTEREST EXPENSE. Non-interest expense increased $2.1 million from
$3.9 million for the three months ended June 30, 2002 to $6.0 million for the
comparable period in the current year. The increase was primarily attributable
to a $1.7 million increase in the mortgage company's non-interest expense from
the comparable period one year ago, as a result of increased loan origination
and sales. The increase in the bank's non-interest expense was a modest $374,000
distributed over various non-interest categories. The increase at the mortgage
company level was primarily in compensation, other operating expenses,
professional services, advertising, occupancy and furniture fixtures and
equipment of $1.3 million, $110,000, $110,000, $108,000, $25,000 and $27,000,
respectively. The following table presents a comparison of the components of
non-interest expense.

<TABLE>
<CAPTION>

                                                                             Difference
----------------------------------------------------------------------------------------------
Three Months Ended June 30,                     2003           2002        Amount       %
----------------------------------------------------------------------------------------------
                                                           (dollars in thousands)
Non-interest expense:
    <S>                                       <C>            <C>          <C>          <C>

    Compensation and employee benefits        $ 3,264        $ 1,843      $ 1,421      77.10%
    Occupancy                                     494            436           58      13.30
    Professional services                         370            211          159      75.36
    Advertising                                   405            250          155      62.00
    Deposit insurance premium                      12             11            1       9.09
    Furniture, fixtures and equipment             282            210           72      34.29
    Data processing                               342            304           38      12.50
    Other operating expense                       810            654          156      23.85
----------------------------------------------------------------------------------------------
Total non-interest expense                    $ 5,979        $ 3,919      $ 2,060      52.56%
==============================================================================================

</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. Based on recent tax legislation, the company expects to
offset all taxable income in fiscal 2003 with existing net operating losses
carried forward from prior years. The company believes that it will continue to
generate taxable income, for the foreseeable future, which will assure the use
of existing net operating losses.

                                       20

<PAGE> 21

<TABLE>
<CAPTION>

Contractual Commitments and Obligations

----------------------------------------------------------------------------------------------------------------
                                                        Less Than        Two -      Four - Five     After Five
                                         Total           One Year      Three Years      Years          Years
-----------------------------------------------------------------------------------------------------------------
                                                                              (in thousands)
<S>                                     <C>            <C>             <C>            <C>            <C>
FHLB Advances (1)                       $ 124,150      $  99,150       $      -       $     -        $ 25,000
Reverse repurchase agreements              84,396         84,396              -             -               -
Operating leases                            9,671          1,427          2,539         2,234           3,471
-----------------------------------------------------------------------------------------------------------------
  Total obligations                     $ 218,217      $ 184,973       $  2,539       $ 2,234        $ 28,471
=================================================================================================================
(1) The company expects to refinance these short and medium-term obligations
under substantially the same terms and conditions.

Other Commercial Commitments

-----------------------------------------------------------------------------------------------------------------
                                                        Less Than        Two -      Four - Five     After Five
                                         Total           One Year      Three Years      Years          Years
-----------------------------------------------------------------------------------------------------------------
                                                                              (in thousands)

Certificate of deposit maturities (1)   $ 179,229      $ 105,331       $ 56,375       $ 17,430       $     93
Loan originations                         153,866        153,866              -              -              -
Unfunded lines of credit                   90,486         90,486              -              -              -
Standby letters of credit                     377            377              -              -              -
-----------------------------------------------------------------------------------------------------------------
  Total                                 $ 423,958      $ 350,060       $ 56,375       $ 17,430       $     93
=================================================================================================================
</TABLE>

(1) The company expects to retain maturing deposits or replace amounts maturing
with comparable certificates of deposits based on current market interest rates.


             COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS
                      ENDED JUNE 30, 2003 AND JUNE 30, 2002

      NET INCOME. For the nine months ended June 30, 2003, the company had net
earnings of $1.2 million or $0.34 per diluted share, compared to net earnings of
$496,000 or $0.16 per diluted share for the nine months ended June 30, 2002. The
$718,000 increase in net earnings over the comparable period one-year ago was
primarily due to increases in net interest income, and non-interest income.
Those increases exceeded increases in the provision for loan losses and in
non-interest expense. The reduction in interest rates coupled with the continued
growth of the bank has led to an improvement in both net interest income and
non-interest income.

      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 re-pricing of interest rates on assets and on liabilities also
influences net interest income.

                                       21

<PAGE> 22


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

                                                                  Difference
--------------------------------------------------------------------------------
Nine Months Ended June 30,         2003             2002      Amount        %
--------------------------------------------------------------------------------
                                              (dollars in thousands)
Interest income:
   Loans                        $ 10,900       $ 10,209       $  691       6.77%
   Investments                     5,117          5,706         (589)    (10.32)
--------------------------------------------------------------------------------
Total                             16,017         15,915          102       0.64
--------------------------------------------------------------------------------

Interest expense:
   Deposits                        5,140          6,463       (1,323)    (20.47)
   Borrowings                      4,753          3,588        1,165      32.47
--------------------------------------------------------------------------------
Total                              9,893         10,051         (158)     (1.57)
--------------------------------------------------------------------------------
Net interest income             $ 6,124        $  5,864       $  260       4.43%
================================================================================

      Our growth in net interest income for the nine months ended June 30, 2003
was due primarily to a $79.1 million increase in the bank's average interest
earning assets, offset in part by a 24 basis point decrease in net interest
margin (net interest income divided by average interest-earning assets) from
1.91% for the nine months ended June 30, 2002 to 1.67% for the nine months ended
June 30, 2003. The decrease in net interest margin resulted from a charge of
$1.3 million representing payments made on certain interest rate swap and cap
agreements that took effect during the nine months ended June 30, 2003 compared
to a charge of $318,000 in the comparable period one year ago. That decrease was
offset by increases in average interest earning assets exceeding increases in
average interest bearing liabilities by $527,000 and was offset in part by the
yield earned on interest earning assets declining 18 basis points more than the
average cost of funds on interest bearing liabilities.

      INTEREST INCOME. Interest income for the nine months ended June 30, 2003
increased $102,000 compared to the nine months ended June 30, 2002 primarily as
a result of an increase in the average outstanding balances of loans and
investment securities. That increase was partially offset by a decrease of 81
basis points in the average yields earned on loans and investment securities.

      INTEREST EXPENSE. The $158,000 decrease in interest expense for the nine
months ended June 30, 2003 compared to the 2002 period was principally the
result of a 63 basis point decrease in the cost of funds on average deposits and
borrowed funds. That decrease in the cost of those funds was partially offset by
a $78.6 million increase in average deposits and borrowed funds. The decrease in
interest expense on deposits was primarily due to a 111 basis point decrease in
rates paid on certificates of deposit, savings and NOW and money market
accounts. That decrease was offset by an increase of $36.0 million of
certificates, savings and NOW and money market accounts, or 15.04%, from $239.2
million for the nine months ended June 30, 2002 to $275.2 million for the nine
months ended June 30, 2003.



                                       22

<PAGE> 23


      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 NINE MONTHS ENDED JUNE 30,
                                       --------------------------------------------------------------------------------
                                                          2003                                    2002
                                       --------------------------------------- ----------------------------------------
                                                       INTEREST                             INTEREST       AVERAGE
                                          AVERAGE      INCOME/      AVERAGE     AVERAGE     INCOME/        YIELD/
                                          BALANCE      EXPENSE     YIELD/RATE   BALANCE     EXPENSE         RATE
                                       --------------------------------------- ----------------------------------------
ASSETS:                                                            (DOLLARS IN THOUSANDS)
<S>                                      <C>          <C>            <C>       <C>          <C>             <C>
Interest-earning assets:
   Real estate loans                     $186,679     $ 7,787        5.56%     $156,829     $ 7,488         6.37%
   Consumer loans                          62,979       1,924        4.07        47,051       1,650         4.68
   Commercial business loans               31,978       1,189        4.96        21,479       1,071         6.65
                                       -----------    --------    ---------    ---------    --------       ------
      Total loans                         281,636      10,900        5.16       225,359      10,209         6.04

Investment securities                     162,769       3,793        3.11       150,177       4,340         3.85
Mortgage-backed securities                 44,858       1,324        3.94        34,644       1,366         5.26
                                       -----------    --------    ---------    ---------    --------       ------
      Total interest-earning assets       489,263      16,017        4.36       410,180      15,915         5.17
                                                      --------    ---------                 --------       ------
Non-earning assets                         16,565                                15,806
                                       -----------                             ---------
  Total assets                           $505,828                              $425,986
                                       ===========                             =========

LIABILITIES AND STOCKHOLDERS'
   EQUITY:
Interest-bearing liabilities:
  Savings accounts                       $  9,193          96        1.39      $  5,412          85         2.09
  Now and money market accounts            77,710         847        1.45        74,125       1,266         2.28
  Certificates of deposit                 188,271       4,197        2.97       159,671       5,112         4.27
                                       -----------    --------    ---------    ---------    --------       ------
     Total deposits                       275,174       5,140        2.49       239,208       6,463         3.60

  FHLB advances                           103,907       2,023        2.60        92,202       2,222         3.21
  Other borrowings                         85,125       2,730        4.28        54,240       1,366         3.36
                                       -----------    --------    ---------    ---------    --------       ------
  Total interest-bearing liabilities      464,206       9,893        2.84       385,650      10,051         3.47
                                                      --------    ---------                 --------       ------


Noninterest-bearing liabilities:
Noninterest-bearing demand deposits        17,359                                13,236
Other liabilities                           3,494                                 5,614
                                       -----------                             ---------
  Total liabilities                       485,059                               404,500
Stockholders' equity                       20,769                                21,486
                                       ===========                             =========
  Total liabilities and stockholders'
   equity                                $505,828                              $425,986
                                       ===========                             =========

Net interest income                                    $6,124                               $ 5,864
                                                      ========                              ========
Interest rate spread                                                  1.52%                                 1.70%
                                                                  =========                                ======
Net interest margin                                                   1.67%                                 1.91%
                                                                  =========                                ======


</TABLE>

                                       23
<PAGE> 24


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

<TABLE>
<CAPTION>


                                                             NINE MONTHS ENDED
                                                        JUNE 30, 2003 COMPARED TO
                                                               JUNE 30, 2002
                                             -----------------------------------------------
                                                           CHANGE ATTRIBUTABLE TO
                                             -----------------------------------------------
                                                 VOLUME             RATE           TOTAL
                                             -----------------------------------------------
                                                              (IN THOUSANDS)
<S>                                             <C>               <C>            <C>
Real estate loans                               $ 1,425           $(1,126)       $   299
Consumer loans                                      559              (285)           274
Commercial business loans                           523              (405)           118
                                             ---------------   --------------   ------------
      Total loans                                 2,507            (1,816)           691
Investments                                         364              (911)          (547)
Mortgage-backed securities                          403              (445)           (42)
                                             ---------------   --------------   ------------
Total interest-earning assets                   $ 3,274           $(3,172)          $102
                                             ===============   ==============   ============

Savings accounts                                $    59           $   (48)       $    11
Now and money market accounts                        61              (480)          (419)
Certificates of deposit                             916            (1,831)          (915)
                                             ---------------   --------------   ------------
  Total deposits                                  1,036            (2,359)        (1,323)
FHLB advances                                       282              (481)          (199)
Other borrowings                                    778               586          1,364
                                             ---------------   --------------   ------------
Total interest-bearing liabilities              $ 2,096           $(2,254)       $  (158)
                                             ===============   ==============   ============
Change in net interest income                   $ 1,178           $  (918)       $   260
                                             ===============   ==============   ============

</TABLE>

      PROVISION FOR LOAN LOSSES. The provision for loan losses increased from
$539,000 during the nine months ended June 30, 2002 to $779,000 during the nine
months ended June 30, 2003 as management took a more aggressive posture in
assessing collectibility of a commercial business loan with $443,000 being
classified as substandard and $483,000 classified as doubtful. With the
collectibility of the above mentioned loan in doubt, net charge-offs increased
from $14,000 during the nine months ended June 30, 2002 to $729,000 during the
nine months ended June 30, 2003.

      NON-INTEREST INCOME. Non-interest income increased $5.9 million during the
nine months ended June 30, 2003, over the comparable period one year ago. That
increase was primarily the result of the increase in gain on sale of loans and
service charges on deposits and loans, offset by an $115,000 decrease in gain on
sales of investment securities. The significant level of gains during the nine
months ended June 30, 2003 resulted from the company taking advantage of
increased loan origination volume coupled with home loan refinancing and a
favorable interest rate environment which enabled the company to sell loans
through Greater Atlantic Mortgage at a gain.

         The following table presents a comparison of the components of
non-interest income.

<TABLE>
<CAPTION>

                                                                                        Difference
-----------------------------------------------------------------------------------------------------------
Nine Months Ended June 30,                      2003             2002           Amount               %
-----------------------------------------------------------------------------------------------------------
                                                                       (dollars in thousands)
<S>                                            <C>              <C>             <C>                <C>
Non-interest income:
   Gain on sale of loans                       $ 11,327         $ 5,753         $ 5,574             96.89%
   Service fees on loans                            537             349             188             53.87
   Service fees on deposits                         581             355             226             63.66
   Gain on sale of investment securities             35             150            (115)           (76.67)
   Loss on sale of real estate owned                 (9)              -              (9)                -
   Other operating income                            13               5               8            160.00
-----------------------------------------------------------------------------------------------------------
      Total non-interest income                $ 12,484         $ 6,612         $ 5,872             88.81%
===========================================================================================================
</TABLE>

                                       24
<PAGE> 25

      During the nine months ended June 30, 2003, the mortgage company
originated $502.8 million in mortgage loans for sale compared to $283.2 million
originated in the comparable period one year ago. The $219.6 million increase in
loan originations was largely attributable to decreases in interest rates and
increases in home mortgage refinancings. During the period, substantially all
loans originated were sold in the secondary market, in most cases with servicing
released. Loan sales for the nine months ended June 30, 2003 amounted to $506.5
million compared to sales of $295.5 million during the comparable period one
year ago. Sales of loans resulted in gains of $11.3 million and $5.8 million for
the nine months ended June 30, 2003 and 2002, respectively.

      NON-INTEREST EXPENSE. Non-interest expense for the nine months ended June
30, 2003, amounted to $16.6 million, an increase of $5.2 million or 45.38% from
the $11.4 million incurred in the nine months ended June 30, 2002. The increase
was primarily attributable to a $4.4 million increase in the mortgage banking
subsidiary's non-interest expense. Non-interest expenses of the Bank increased
$803,000 from the comparable period one year ago. The increase in the mortgage
banking subsidiary's non-interest expense was primarily in compensation of $3.6
million, professional services of $195,000, occupancy of $66,000 advertising of
$134,000, furniture, fixtures and equipment of $51,000, data processing of
$28,000 and other operating expense of $289,000. The bank's increases were
primarily in compensation, occupancy, professional services, furniture fixtures
and equipment, data processing and other operating expense.

         The following table presents a comparison of the components of
non-interest expense.

<TABLE>
<CAPTION>

                                                                                Difference
--------------------------------------------------------------------------------------------------
Nine Months Ended June 30,                       2003         2002          Amount         %
--------------------------------------------------------------------------------------------------
                                                                            (dollars in thousands)
<S>                                           <C>           <C>             <C>           <C>
Noninterest expense:
   Compensation and employee benefits         $  9,405      $  5,575        $ 3,830       68.70%
   Occupancy                                     1,467         1,318            149       11.31
   Professional services                           846           526            320       60.84
   Advertising                                     786           637            149       23.39
   Deposit insurance premium                        35            32              3        9.38
   Furniture, fixtures and equipment               819           621            198       31.88
   Data processing                                 967           846            121       14.30
   Other operating expense                       2,290         1,874            416       22.20
--------------------------------------------------------------------------------------------------
Total noninterest expense                     $ 16,615      $ 11,429        $ 5,186       45.38%
==================================================================================================
</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. Based on recent tax legislation, the company expects to
offset all taxable income in fiscal 2003 with existing net operating losses
carried forward from prior years. The company believes that it will continue to
generate taxable income, for the foreseeable future, which will assure
utilization of the existing net operating losses.

      LIQUIDITY AND CAPITAL RESOURCES. The bank's primary sources of funds are
deposits, principal and interest payments on loans, mortgage-backed and
investment securities and borrowings. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions and competition. The bank has continued to maintain the levels of
liquid assets as previously required by OTS regulations. The bank manages its
liquidity position and demands for funding primarily by investing excess funds
in short-term investments and utilizing FHLB advances 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 and securities
available-for-sale. The levels of these assets are dependent on the bank's
operating, financing, lending and investing activities during any given period.
At June 30, 2003, cash and cash equivalents, interest bearing deposits and
securities available-for-sale totaled $217.7 million or 41.25% 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 securities and other investment securities. During the nine
months ended June 30, 2003, the bank's loan purchases

                                       25


<PAGE>  26

and originations totaled $135.2 million. Purchases of United States Treasury and
agency securities, mortgage-backed and mortgage related securities and other
investment securities totaled $66.1 million for the nine months ended June 30,
2003.

      The bank has other sources of liquidity if a need for additional funds
arises. At June 30, 2003, the bank had $124.2 million in advances outstanding
from the FHLB and had an additional overall borrowing capacity from the FHLB of
$87.1 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 June 30, 2003, 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 $244.7 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 June 30, 2003, totaled
$48.4 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 re-pricing 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 re-pricing 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.

ITEM 3.  CONTROLS AND PROCEDURES

      (a). Evaluation of disclosure controls and procedures.  The company
      ------------------------------------------------------
maintains controls and procedures designed to ensure that information required
to be disclosed in the reports that the company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission. Based upon their evaluation of those controls and
procedures at June 30, 2003, the Chief Executive and Chief Financial officers of
the company concluded that the company's disclosure controls and procedures were
adequate.

      (b). Changes in internal control.  The company made no significant changes
      ---------------------------------
in its internal controls or in other factors that could significantly affect
these controls subsequent to the date of the evaluation of those controls by the
Chief Executive and Chief Financial officers.

                                       26

<PAGE> 27


ITEM 4.  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.

      To mitigate the impact of changes in market interest rates on our
interest-earning assets and interest-bearing liabilities, we actively manage the
amounts and maturities of these assets and liabilities. A key component of this
strategy is the origination and retention of short-term and adjustable-rate
assets and the origination and sale of fixed-rate loans. We retain short-term
and adjustable-rate assets because they have re-pricing characteristics that
more closely match the re-pricing characteristics of our liabilities.

      To further mitigate the risk of timing differences in the re-pricing of
assets and liabilities, our interest-earning assets are matched with
interest-bearing liabilities that have similar re-pricing characteristics. For
example, the interest rate risk of holding fixed-rate loans is managed with
long-term deposits and borrowings, and the risk of holding ARMs is managed with
short-term deposits and borrowings. Periodically, mismatches are identified and
managed by adjusting the re-pricing characteristics of our interest-bearing
liabilities with derivatives, such as interest rate caps and interest rate
swaps.

      Through the use of these derivative instruments, management attempts to
reduce or offset increases in interest expense related to deposits and
borrowings. We use interest rate caps and pay-fixed interest rate swaps to
protect against rising interest rates.

      The interest rate caps and pay-fixed interest rate swaps are designed to
provide an additional layer of protection should interest rates on deposits and
borrowings rise, by effectively lengthening the re-pricing period. At June 30,
2003, we held an aggregate notional value of $107 million of caps and pay-fixed
interest rate swaps. None of the interest rate caps had strike rates that were
in effect at June 30, 2003, as current LIBOR rates were below the strike rates.

      We are also striving to increase the proportion of transaction deposits to
total deposits to diminish our exposure to adverse changes in interest rates. In
particular, non-interest-bearing checking accounts and custodial accounts are
less sensitive to interest rate fluctuations and provide a growing source of
non-interest income through depositor and other retail banking fees.

PART II.   OTHER INFORMATION
Item 1.    Legal Proceedings
Not applicable.

Item 2.    Changes in Securities and Use of Proceeds
Not applicable.

Item 3.    Defaults Upon Senior Securities
Not applicable.

                                       27

<PAGE> 28


Item 4.    Submission of Matters to a Vote of Security Holders
        (a)  Greater Atlantic Financial Corp. annual Stockholder's Meeting was
             held on April 9, 2003.
        (b)  Omitted per instructions
        (c)  A brief description of each matter voted upon at the Annual
             Stockholder's Meeting held on April 9, 2003 and number of votes
             cast for, against or withheld

             1. Election of Directors.
                                       Votes For   Votes Against  Votes Withheld
                                       ---------   -------------  --------------
                  Paul Cinquegrana     2,621,019         0             15,700
                  Jeffrey W. Ochsman   2,621,019         0             15,700

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

             2. Election of BDO Seidman, LLP as Independent Auditor.
                                       Votes For   Votes Against  Votes Withheld
                                       ---------   -------------  --------------
                                       2,630,619       400              5,700

Item 5.    Other Information
Not applicable.

Item 6.  Exhibits and Reports on Form 8-K
        (a) Exhibits
        11.0    Statement Regarding Computation of Per Share Earnings
        31.1    Certification of Chief Executive Officer pursuant to Section 302
                of Sarbanes-Oxley Act of 2002
        31.2    Certification of Chief Financial Officer pursuant to Section 302
                of Sarbanes-Oxley Act of 2002
        32.1    Certification of Chief Executive Officer pursuant to Section 906
                of Sarbanes-Oxley Act of 2002
        32.2    Certification of Chief Financial Officer pursuant to Section 906
                of Sarbanes-Oxley Act of 2002

        (b) Reports on Form 8-K
        On July 31, 2003 the Company filed a Form 8-K to disclose that the
        Company issued a press release to announce the company's third quarter
        earnings.

                                       28
<PAGE> 29


                        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)


                               By: /s/ Carroll E. Amos
                               -------------------------------------------------
                               Carroll E. Amos
                               President and Chief Executive Officer



                               By: /s/ David E. Ritter
                               -------------------------------------------------
                               David E. Ritter
                               Senior Vice President and Chief Financial Officer


                               Date: August 12, 2003



                                       29

<PAGE> 30


                                   EXHIBIT 11

       STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE - (UNAUDITED)
<TABLE>
<CAPTION>


                                               For the Three Months Ended         For the Nine Months Ended
                                                        June 30,                           June 30,
                                             -------------------------------    ------------------------------
(dollars in thousands except per                 2003             2002              2003             2002
          share amounts)
----------------------------------------     ------------      -------------    ------------      ------------
<S>                                            <C>               <C>              <C>               <C>
Net earnings                                       $ 299             $ 169          $ 1,214             $ 496
Effect of conversion of preferred                    100                 -              300                 -
securities
Diluted earnings per share                           399               169            1,514               496
Weighted average common shares
outstanding                                    3,012,434         3,012,434        3,012,434         3,009,742
Effect of conversion of preferred
securities                                     1,371,429                 -        1,371,429                 -
Common stock equivalents due to
dilutive effect of stock options                  30,059            24,159           28,839            21,204

Total weighted average common shares
and common share equivalents
outstanding                                    4,413,922         3,036,593        4,412,702         3,030,946
Basic earnings (loss) per common share             $0.10             $0.06            $0.40             $0.16
Diluted earnings (loss) per common
share                                              $0.09             $0.06            $0.34             $0.16

</TABLE>

                                       30

<PAGE> 31


                                  EXHIBIT 31.1
                                 CERTIFICATIONS

         I, Carroll E. Amos, Chief Executive Officer of Greater Atlantic
         Financial Corp., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Greater
         Atlantic Financial Corp.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3        Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officer and I am responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       Designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       Presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


                      By:/s/ Carroll E. Amos
                         -------------------------
                         Carroll E. Amos
                         President and Chief Executive Officer

                         Date:  August 12, 2003




                                       31
<PAGE> 32



                                  EXHIBIT 31.2
                                 CERTIFICATIONS

         I, David E. Ritter, Chief Financial Officer of Greater Atlantic
         Financial Corp., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Greater
         Atlantic Financial Corp.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3        Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

         a)       Designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

         c)       Presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

                      By:/s/ David E. Ritter
                         -------------------------
                         David E. Ritter
                         Senior Vice President and
                         Chief Financial Officer

                         Date:  August 12, 2003



                                       32
<PAGE> 33


                                  EXHIBIT 32.1
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                                   AS ADDED BY
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


      In connection with the Quarterly Report of Greater Atlantic Financial
Corp. (the "Company") on Form 10-QSB for the period ended June 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Carroll E. Amos, President and Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C.ss. 1350, as added by ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

A.   The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

B.   The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company
     as of and for the period covered by the Report.



                                      By:/s/ Carroll E. Amos
                                      ------------------------------------------
                                      Carroll E. Amos
                                      President and Chief Executive Officer

                                      Date:  August 12, 2003





                                       33


<PAGE> 34


                                  EXHIBIT 32.2
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                                   AS ADDED BY
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


      In connection with the Quarterly Report of Greater Atlantic Financial
Corp. (the "Company") on Form 10-QSB for the period ended June 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, David E. Ritter Senior Vice President and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C.ss. 1350, as added by ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

A.   The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

B.   The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company
     as of and for the period covered by the Report.





                                      By: /s/ David E. Ritter
                                      ------------------------------------------
                                      David E. Ritter
                                      Senior Vice President and
                                      Chief Financial Officer


                                      Date:  August 12, 2003



                                       34