FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       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 450
                             RESTON, VIRGINIA 20191
                             ----------------------
                    (Address of Principal Executive Offices)
                                   (Zip Code)

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

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

 At May 9, 2000, there were 3,007,434 shares of the registrant's Common Stock,
                     par value $0.01 per share outstanding

<PAGE>


                        GREATER ATLANTIC FINANCIAL CORP.
                         QUARTERLY REPORT ON FORM 10-QSB
                      FOR THE QUARTER ENDED MARCH 31, 2000

                                TABLE OF CONTENTS

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

Item 1.  Financial Statements

         Consolidated Balance Sheets March 31, 2000 (unaudited)
         and September 30, 1999 (audited)                                    2

         Consolidated Statements of Operations (unaudited)
         Three and six months ended March 31, 2000 and March 31, 1999        3

         Consolidated Statements of Comprehensive Income (unaudited)
         Six months ended March 31, 2000 and March 31, 1999                  4

         Consolidated Statements of Changes in Stockholder's
         Equity (unaudited)
         Six months ended March 31, 2000 and March 31, 1999                  5

         Consolidated Statements of Cash Flows (unaudited)
         Six months ended March 31, 2000 and March 31, 1999                  6

         Notes to Consolidated Financial Statements                          8

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk         21

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

Item 1.  Legal Proceedings                                                  22

Item 4.  Submission of Matters to a Vote of Security Holders                22

Item 6.  Exhibits and Reports on Form 8-K                                   22


SIGNATURES                                                                  23
----------

                                       1
<PAGE>


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

                                                       March 31,   September 30,
(DOLLARS IN THOUSANDS)                                   2000          1999
                                                       --------      --------
                                                             (Unaudited)
              ASSETS
Cash and cash equivalents                              $    766      $  1,064
Interest bearing deposits                                    --           639
Investment securities:
   Available-for-sale                                   103,111        75,458
   Held-to-maturity                                      30,361        32,766
Loans held for sale                                       8,188         7,436
Loans receivable, net                                   110,081        72,792
Accrued interest and dividends receivable                 1,982         1,449
Deferred income taxes                                     1,324         1,324
Federal Home Loan Bank stock, at cost                     3,145         2,013
Foreclosed real estate                                      109           187
Premises and equipment, net                               2,369         2,218
Prepaid expenses and other assets                         1,610         1,477
                                                       --------      --------
     Total Assets                                      $263,046      $198,823
                                                       ========      ========

          LIABILITIES  AND STOCKHOLDERS' EQUITY
Deposits                                               $138,453      $129,007
Advance payments from borrowers
   for taxes and insurance                                  358           264
Accrued expenses and other liabilities                      915         1,171
Advances from the FHLB and other borrowings              99,395        43,391
                                                       --------      --------
     Total Liabilities                                  239,121       173,833
                                                       --------      --------

Stockholders' Equity
  Preferred stock $.01 par value - 2,500,000 shares
     authorized, 0 shares outstanding at June 30, 1999       --            --
   Common stock, $.01 par value - 10,000,000
     shares authorized; 3,007,434 shares
       outstanding                                           30            30
   Additional paid-in capital                            25,132        25,132
   Retained earnings                                        109           710
   Accumulated other comprehensive loss                  (1,346)         (882)
                                                       --------      --------
   Total  Stockholders' Equity                           23,925        24,990
                                                       --------      --------
                                                       $263,046      $198,823
                                                       ========      ========

                                       2
<PAGE>


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

                                       Three Months Ended     Six Months Ended
                                            March 31,             March 31,
                                      -------------------   -------------------

(DOLLARS IN THOUSANDS)                   2000      1999        2000      1999
                                      ---------   -------   ---------   -------
Interest income
  Loans                               $   2,083   $   928   $   3,698   $ 1,868
  Investments                             2,141     1,072       4,084     1,922
                                      ---------   -------   ---------   -------
Total interest income                     4,224     2,000       7,782     3,790
                                      ---------   -------   ---------   -------
Interest expense
  Deposits                                1,777     1,348       3,497     2,423
  Borrowed money                          1,171       162       1,945       369
                                      ---------   -------   ---------   -------
Total interest expense                    2,948     1,510       5,442     2,792
                                      ---------   -------   ---------   -------
Net interest income                       1,276       490       2,340       998
Provision for loan losses                     7         1           7        23
                                      ---------   -------   ---------   -------
Net interest income after
  provision for loan losses               1,269       489       2,333       975
                                      ---------   -------   ---------   -------
Noninterest income
  Fees and service charges                  140        98         282       282
  Gain on sale of loans                     423     2,068         913     4,396
  Gain (Loss) on sale of
    investment securities                   (62)       12         (68)       10
  Gain (Loss) on sale of
    real estate owned                         3        (1)          2        (4)
  Other operating income                     --         1           5         8
                                      ---------   -------   ---------   -------
Total noninterest income                    504     2,178       1,134     4,692
                                      ---------   -------   ---------   -------
Noninterest expense
  Compensation and employee benefits      1,095     1,409       2,065     2,937
  Occupancy                                 304       205         580       450
  Professional services                     117        61         403       104
  Advertising                               123        89         262       247
  Deposit insurance premium                  10        14          29        31
  Furniture, fixtures and equipment         100       116         209       211
  Data processing                           136        41         214        62
  Provision for (recovery of)
    loss on real estate owned                --         5          --        (6)
  Other real estate owned expenses            3         2          11        11
  Other operating expenses                  327       504         681       940
                                      ---------   -------   ---------   -------
Total noninterest expense                 2,215     2,446       4,454     4,987
                                      ---------   -------   ---------   -------
Income (loss) before income
  tax provision                            (442)      221        (987)      680
                                      ---------   -------   ---------   -------

Income tax (benefit) provision             (172)       70        (386)      258
                                      ---------   -------   ---------   -------

Net income (loss)                     $    (270)  $   151   $    (601)  $   422
                                      =========   =======   =========   =======
Basic Earnings Per Share              $   (0.09)  $  0.18   $   (0.20)  $  0.52

Diluted Earnings Per Share            $   (0.09)  $  0.18   $   (0.20)  $  0.52

Basic Weighted Average Shares         3,007,434   821,140   3,007,434   817,264

Diluted Weighted Average Share        3,007,434   822,891   3,007,434   819,024

                                       3
<PAGE>


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

                                                              Six Months Ended
                                                                  March 31,
                                                             ------------------
(IN THOUSANDS)                                                 2000       1999
                                                             -------      -----
Net (loss) income                                            $  (601)     $ 422
                                                             -------      -----
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities                         (464)      (322)
                                                             -------      -----

Other comprehensive (loss) income                               (464)      (322)
                                                             -------      -----

Comprehensive (loss) income                                  $(1,065)     $ 100
                                                             =======      =====

4
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                                Additional                            other                Total
                               Preferred         Common          Paid-in-         Retained        Comprehensive        Stockholders'
(DOLLARS IN THOUSANDS)           Stock           Stock           Capital          Earnings           Income               Equity
                               ---------         ------         ----------        --------        -------------        -------------
<S>                               <C>             <C>            <C>              <C>               <C>                  <C>
Balance at
September 30, 1999                $  --           $30            $25,132          $   710           $  (882)             $ 24,990

Net loss
for the period                       --            --                 --             (601)               --                  (601)

Other comprehensive
loss, net of tax of $461             --            --                 --               --              (464)                 (464)
                                  -----           ---            -------          -------           -------              --------
Balance at
March 31, 2000                    $  --           $30            $25,132          $   109           $(1,346)             $ 23,925
                                  =====           ===            =======          =======           =======              ========

Balance at
September 30, 1998                $  --           $ 8            $ 6,093          $   609           $   107              $  6,817

Issuance of
8,961 common shares                  --            --                 75               --                --                    75

Net income for the period            --            --                 --              422                --                   422

Other comprehensive
income net of tax of $146            --            --                 --               --              (322)                 (322)
                                  -----           ---            -------          -------           -------              --------
Balance at
March 31, 1999                    $  --           $ 8            $ 6,168          $ 1,031           $  (215)             $  6,992
                                  =====           ===            =======          =======           =======              ========

</TABLE>

                                       5
<PAGE>


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

                                                            Six Months Ended
                                                                March 31,
                                                          -------------------
(IN THOUSANDS)                                              2000        1999
                                                          -------     -------

Cash flows from operating activities:

Net (loss) income                                         $  (601)    $   422
Adjustments to reconcile net (loss) income to net
  cash (used in) provided by operating activities:
Provision for loan losses                                       7          23
Provision for losses on foreclosed assets                      --          (6)
Depreciation and amortization                                 166         172
Deferred income taxes                                          --         318
Proceeds from sale of trading securities                       --         243
Unrealized loss (gain) on trading securities                   --          (6)
Loss (gain) on sale of investment securities                   41          --
Loss (gain) on sale of mortgage-backed securities              27          (2)
Amortization of investment security premiums                  241         285
Amortization of deferred fees                                 (44)         27
Amortization of mortgage-backed securities premiums            88          --
Discount accretion net of premium amortization                 30         (92)
(Gain) loss on sale of foreclosed real estate                  (2)          4
(Gain) on sale of loans held for sale                        (913)     (4,396)
Disbursements for origination of loans                    (48,681)    (186,528)
Proceeds from sales of loans                               48,850     214,879
Accrued interest and dividend receivable                     (534)       (120)
Prepaid expenses and other assets                             322        (500)
Deferred loan fees collected, net of
  deferred costs incurred                                      28         (19)
Accrued expenses and other liabilities                       (256)       (271)
Income taxes payable                                           --          48
                                                          -------     -------

Net cash (used in) provided by operating activities       $(1,231)    $24,481
                                                          -------     -------

                                       6
<PAGE>


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

                                                              Six Months Ended
                                                                  March 31,
                                                             ------------------
(IN THOUSANDS)                                                 2000       1999
                                                             -------    -------
Cash flow from investing activities:
     Net (decrease) in loans                                 $(37,419)  $(5,986)
     Purchases of premises and equipment                        (317)    (1,097)
     Proceeds from sale of foreclosed real estate                190         99
     Purchases of investment securities                      (13,183)   (23,853)
     Proceeds from sale of investment securities               1,009        250
     Proceeds from repayments of investment securities         2,964     10,168
     Purchases of mortgage-backed securities                 (23,450)   (19,884)
     Proceeds from sale of mortgage-backed securities            960      2,015
     Proceeds from repayments of mortgage-backed securities    5,128      4,536
     Purchases of FHLB stock                                  (3,290)    (2,566)
     Proceeds from sale of FHLB stock                          2,158      2,553
                                                             -------    -------
Net cash used in investing activities                        (65,250)   (33,765)
                                                             -------    -------
Cash flow from financing activities:
     Net increase in deposits                                  9,447     35,781
     Issuance of common stock                                     --         75
     Net advances (repayments) from FHLB                      24,650    (17,000)
     Net borrowings on reverse repurchase agreements          31,354         --
     Increase in advance payments by
       borrowers for taxes and insurance                          93         20
                                                             -------    -------

Net cash provided by financing activities                     65,544     18,876
                                                             -------    -------

(Decrease) increase in cash and cash equivalents                (937)     9,592
                                                             -------    -------

Cash and cash equivalents, at beginning of period              1,703        433
                                                             -------    -------

Cash and cash equivalents, at end of period                  $   766    $10,025
                                                             =======    =======

                                       7
<PAGE>


                        GREATER ATLANTIC FINANCIAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INFORMATION AS OF MARCH 31, 2000 AND FOR THE SIX MONTHS THEN ENDED IS UNAUDITED

(1)  BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements, which include
the accounts of Greater Atlantic Financial Corp. ("the Company") and its wholly
owned subsidiary, Greater Atlantic Bank ("the Bank"), have been prepared in
accordance with the instructions to 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
three and six months ended March 31, 2000 are not necessarily indicative of the
results of operations that may be expected for the year ended September 30, 2000
or any future periods.

(2)  LOAN IMPAIRMENT AND LOAN LOSSES

     In accordance with guidance in the Statements of Financial Accounting
Standards Nos. 114 and 118, the Company prepares a quarterly review to determine
the adequacy of the allowance for loan losses and to identify and value impaired
loans. No impaired loans were identified by the Company at or during the six
months ended March 31, 2000 or the year ended September 30, 1999.

      An analysis of the change in the allowance for loan losses follows:

                                   Six Months Ended             Year Ended
                                       March 31,               September 30,
                                ------------------------      ----------------
(IN THOUSANDS)                       2000           1999                  1999
                                ---------     ----------      ----------------
Balance, beginning                   $590           $578                  $578
Provision for loan losses               7             23                    26
Charge-offs                          (27)            (1)                   (24)
Recoveries                              -             10                    10
                                ---------     ----------      ----------------
Balance, ending                      $570           $610                  $590
                                =========     ==========      ================

(3)  REGULATORY MATTERS

     The Bank qualifies as a Tier 1 institution and may make capital
distributions during a calendar year up to 100% of its net income to date plus
the amount that would reduce by one-half its surplus capital ratio at the
beginning of the calendar year. Any distributions in excess of that amount
requires prior notice to the OTS, with the opportunity for the OTS to object to
the distribution. A Tier 1 institution is defined as an institution that has, on
a pro forma basis after the proposed distribution, capital equal to or greater
than the OTS fully phased-in capital requirement and has not been deemed by the
OTS to be "in need of more than normal supervision". The Bank is currently
classified as a Tier 1 institution for these purposes. The Capital Distribution
Regulation requires that the institution provide the applicable OTS District
Director with a 30-day advance written notice of all proposed capital
distributions whether or not advance approval is required. The Bank did not pay
any dividends during the periods ended September 30, 1999 or March 31, 2000.

                                       8
<PAGE>


                        GREATER ATLANTIC FINANCIAL CORP.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

                      INFORMATION AS OF MARCH 31, 2000 AND
                  FOR THE THREE MONTHS THEN ENDED IS UNAUDITED

     Effective December 19, 1992, the President signed into law the Federal
Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). The "Prompt
Corrective Action" section of FDICIA created five categories of financial
institutions based on the adequacy of their regulatory capital level: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized. Under FDICIA, a well
capitalized financial institution is one with Tier 1 leverage capital of 5%,
Tier 1 risk-based capital of 6% and total risk-based capital of 10%. At March
31, 2000 the Bank was classified as a well capitalized financial institution.

     The following presents the Bank's capital position at March 31, 2000:

                               Required   Required  Actual      Actual
(DOLLARS IN THOUSANDS)         Balance     Percent  Balance     Percent  Excess
                               --------   --------  -------     -------  -------

Leverage                       $13,176      5.00%   $25,605      9.72%   $12,429
Tier 1 Risk-based              $ 6,337      6.00%   $25,605     24.25%   $19,268
Total Risk-based               $10,561     10.00%   $26,175     24.78%   $15,614


(4)  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 three and six month periods ended
March 31, 2000 and 1999.

                                     THREE MONTHS ENDED       SIX MONTHS ENDED
                                          MARCH 31,              MARCH 31,
                                   ---------------------   ---------------------
(DOLLARS IN THOUSANDS EXCEPT
  PER SHARE AMOUNTS)                  2000         1999       2000         1999
                                   ----------    -------   ----------    -------
Net income (loss)                  $     (270)   $   151   $     (601)   $   422
Weighted average common
  shares outstanding                3,007,434    821,140    3,007,434    817,264
Common stock equivalents
  due to dilutive effect
  of stock options                         --      1,751           --      1,750
Total weighted average
  common shares and
  common share equivalents
  outstanding                       3,007,434    822,891    3,007,434    819,024
Basic (loss) earnings per
  common share and common
  share equivalents                $    (0.09)   $  0.18   $    (0.20)   $  0.52

Diluted (loss) earnings
  per common share                 $    (0.09)   $  0.18   $    (0.20)   $  0.52

                                       9
<PAGE>


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

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

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

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

GENERAL

     We are a savings and loan holding company which was originally organized in
June 1997. We conduct substantially all of our business through our wholly-owned
subsidiary, Greater Atlantic Bank, a federally-chartered savings bank, and its
wholly-owned subsidiary, Greater Atlantic Mortgage Corporation. Greater Atlantic
Bank is a member on 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 five Greater Atlantic Bank branches located throughout the
greater Washington, D.C./Baltimore metropolitan area. We also originate mortgage
loans for sale in the secondary market through Greater Atlantic Mortgage
Corporation.

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

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

     At March 31, 2000 the company's total assets were $263.0 million, compared
to $198.8 million held at September 30, 1999, representing an increase of
32.30%. Both the bank's overall asset size and customer base increased during
the period and that growth is reflected in the consolidated statements of
financial condition and statements of operations. Net loans receivable at March
31, 2000 were $110.1 million, an increase of $37.3 million or 51.23% from the
$72.8 million held at September 30, 1999. The increase in loans consisted
primarily of real estate loans secured by first mortgages on residential
properties and consumer and commercial lines of credit secured by mortgages on
residential and commercial real estate. At March 31, 2000 investment securities
were $133.5 million, an increase of $25.2 million or 23.33% from the $108.2
million held at September 30, 1999.

                                       10
<PAGE>


         COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
                        MARCH 31, 2000 AND MARCH 31, 1999

     NET INCOME. For the three months ended March 31, 2000 the company incurred
a loss of $270,000 or $0.09 per share compared to net income of $151,000 or
$0.18 per share for the three months ended March 31, 1999. The $421,000 decrease
in net income over the comparable period one year ago was primarily due to a
decrease in income from mortgage- banking activities.

     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 sources of funds such as deposits and
borrowings. The level of net interest income is determined primarily by the
relative average balances of interest-earning assets and interest-bearing
liabilities in combination with the yields earned and rates paid upon them. The
correlation between the repricing of interest rates on assets and on liabilities
also influences net interest income.

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

                                     THREE MONTHS ENDED
                                           MARCH 31,             DIFFERENCE
                                     ------------------      ------------------
(DOLLARS IN THOUSANDS)                2000        1999       AMOUNT         %
                                     ------      ------      ------      ------
Interest income:
  Loans                              $2,083      $  928      $1,155      124.46%
  Investments                         2,141       1,072       1,069       99.72
                                     ------      ------      ------      ------
     Total                            4,224       2,000       2,224      111.20
                                     ------      ------      ------      ------

Interest expense:
  Deposits                            1,777       1,348         429       31.82
  Borrowings                          1,171         162       1,009      622.84
     Total                            2,948       1,510       1,438       95.23
                                     ------      ------      ------      ------
Net interest income                  $1,276      $  490      $  786      160.41%
                                     ======      ======      ======      ======

     Our growth in net interest income for the three months ended March 31, 2000
was due primarily to the increase in average interest-earning assets resulting
from our planned growth. Average interest-earning assets increased $111.4
million or 91.11% over the comparable period one-year ago and was coupled with a
59 basis point increase in net interest margin (net interest income divided by
average interest-earning assets). The increase in net interest margin resulted
from the significant increase in average earning assets coupled with an increase
in the yield associated with these assets.

     Interest income for the three months ended March 31, 2000 increased $2.2
million compared to the three months ended March 31, 1999 primarily as a result
of an increase in the average outstanding balances in loans, investment
securities and mortgage-backed securities resulting in large measure from the
planned leveraging of our capital. The increase in interest income from the loan
portfolio for the three months ended March 31, 2000 compared to interest income
earned for the 1999 period resulted from an increase of $61.3 million in the
average balance of loans outstanding. That increase was coupled with an increase
in interest income from the investment and mortgage-backed securities
portfolios, due to an increase of $50.0 million in the average outstanding
balance, and a 114 basis point increase in the average yield earned on the
portfolio.

                                       11
<PAGE>


     The increase in interest expense for the three months ended March 31, 2000
compared to the 1999 period was principally the result of a significant increase
in average deposits and borrowed funds and an increase of 40 basis points in the
average cost of funds. The increase in interest expense on deposits was
primarily due to an increase in average certificates of deposit and Now and
money market accounts of $27.4 million, or 26.68%, from $102.7 million for the
three months ended March 31, 1999 to $130.1 million for the three months ended
March 31, 2000, with the average rate paid increasing from 5.22% for the three
months ended March 31, 1999 to 5.44% for the three months ended March 31, 2000.
The average rate we paid for deposits increased from 5.21% for the three months
ended March 31, 1999 to 5.42% for the three months ended March 31, 2000. That
increase in rate was coupled with an increase of $27.5 million in the average
outstanding balance of deposits.

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

     The provision for loan losses was increased from $1,000 during the three
months ended March 31, 1999 to $7,000 during the three months ended March 31,
2000. The increase in the provision was related to an increase in loan volume
coupled with an increase in non-performing loans.

     NONINTEREST INCOME. Noninterest income decreased during the three months
ended March 31, 2000, over the comparable period one year ago, primarily as a
result of the decrease in gains on sale of loans. Loan sales and margins
obtained by Greater Atlantic Mortgage, the Bank's wholly owned subsidiary, were
lower than the same period one year ago. The significant level of gains during
the three months ended March 31, 1999 resulted from the company taking advantage
of loan origination volumes coupled with home loan refinancing and a declining
interest rate environment which enabled the company to sell loans through
Greater Atlantic Mortgage at a gain.

                    The following table presents a comparison
                    of the components of noninterest income.

                                       THREE MONTHS ENDED
                                            MARCH 31,            DIFFERENCE
                                        ----------------    ------------------
(DOLLARS IN THOUSANDS)                   2000      1999      AMOUNT        %
                                        -----     ------    -------     ------
Noninterest income:
   Gain on sale of loans                $ 423     $2,068    $(1,645)    (79.55)%
   Service fees on loans                  105         86         19      22.09
   Service fees on deposits                35         12         23     191.67
   Other operating income                 (59)        12        (71)    (591.67)
                                        -----     ------    -------     ------
      Total noninterest income          $ 504     $2,178    $(1,674)    (76.86)%
                                        =====     ======    =======     ======

                                       12
<PAGE>


     NONINTEREST EXPENSE. Noninterest expense decreased to $2.2 million for the
three months ended March 31, 2000 from $2.4 million for the comparable period
one year ago. Compensation and employee benefits decreased from the comparable
period one year ago mainly because of a decrease in commissions to loan officers
resulting from a decline in loan production and the related employee benefit
cost associated with the decrease in compensation and was offset in part by
increased staffing in the branch network and the hiring of additional
administrative staff by the Bank.

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

                                              THREE MONTHS ENDED
                                                   MARCH 31,      DIFFERENCE
                                                --------------  --------------
(DOLLARS IN THOUSANDS)                           2000    1999   AMOUNT     %
                                                ------  ------  -----   ------
Noninterest expense:
   Compensation and employee benefits           $1,095  $1,409  $(314)  (22.29)%
   Occupancy                                       304     205     99    48.29
   Professional services                           117      61     56    91.80
   Advertising                                     123      89     34    38.20
   Deposit insurance premium                        10      14     (4)  (28.57)
   Furniture, fixtures and equipment               100     116    (16)  (13.79)
   Data processing                                 136      41     95   231.71
   Loss (recovery) from foreclosed real estate       3       7     (4)  (57.14)
   Other operating expense                         327     504   (177)  (35.12)
                                                ------  ------  -----   ------
     Total noninterest expense                  $2,215  $2,446  $(231)   (9.44)%
                                                ======  ======  =====   ======

     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. The income tax provision for the three months ended March
31, 2000 amounted to a benefit of $172,000 compared to a provision of $70,000
for the three months ended March 31, 1999. The reduction resulted from reduced
earnings.

                                       13
<PAGE>


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

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended March 31,
                                                   --------------------------------------------------------------------------------
                                                                   2000                                        1999
                                                   --------------------------------------       -----------------------------------
                                                                 Interest        Average                      Interest      Average
                                                    Average       Income/         Yield/         Average       Income/       Yield/
(DOLLARS IN THOUSANDS)                              Balance       Expense          Rate          Balance       Expense        Rate
                                                   --------       --------       --------       --------      --------     --------
<S>                                                <C>            <C>                <C>        <C>           <C>              <C>
Interest earning assets:
  Real estate loans                                $ 90,941       $  1,731           7.61%      $ 39,918      $    804         8.06%
  Consumer loans                                     12,440            256           8.23          3,243            60         7.40
  Commercial business loans                           4,359             96           8.81          3,244            64         7.89
                                                   --------       --------       --------       --------      --------     --------
    Total loans                                     107,740          2,083           7.73         46,405           928         8.00
Investment securities                                75,082          1,324           7.05         45,456           664         5.84
Mortgage-backed securities                           50,769            817           6.44         30,369           408         5.37
                                                   --------       --------       --------       --------      --------     --------
    Total interest-earning assets                   233,591          4,224           7.23        122,230         2,000         6.55
                                                                  --------       --------                     --------     --------
Non-earning assets                                    7,497                                        5,510
                                                   --------                                     --------
    Total assets                                   $241,088                                     $127,740
                                                   ========                                     ========
Interest-bearing liabilities:
  Savings accounts                                 $    886       $      6           2.71       $    842             7         3.33
  Now and money market                               31,099            411           5.29         15,995           186         4.65
  Certificates of deposit                            99,041          1,360           5.49         86,734         1,155         5.33
                                                   --------       --------       --------       --------      --------     --------
    Total deposits                                  131,026          1,777           5.42        103,571         1,348         5.21
  FHLB advances                                      49,855            687           5.51         13,918           162         4.66
  Other borrowings                                   31,980            484           6.05             --            --           --
                                                   --------       --------       --------       --------      --------     --------
    Total interest-bearing liabilities              212,861          2,948           5.54        117,489         1,510         5.14
                                                                  --------       --------                     --------     --------
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits                 3,269                                        1,507
  Other liabilities                                     805                                        1,788
                                                   --------                                     --------
    Total liabilities                               216,935                                      120,784
  Stockholders' equity                               24,153                                        6,956
                                                   --------                                     --------
    Total liabilities and stockholders' equity     $241,088                                     $127,740
                                                   ========                                     ========
Net interest income                                               $  1,276                                    $    490
                                                                  ========                                    ========
Interest rate spread                                                                 1.69%                                     1.41%
                                                                                 ========                                  ========
Net interest margin                                                                  2.19%                                     1.60%
                                                                                 ========                                  ========
</TABLE>

                                       14
<PAGE>


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

                                                        THREE MONTHS ENDED
                                                     MARCH 31, 2000 VS. 1999
                                                  -----------------------------
                                                      CHANGE ATTRIBUTABLE TO
                                                  -----------------------------
(IN THOUSANDS)                                    VOLUME      RATE       TOTAL
                                                  ------     -----      -------
Real estate loans                                 $1,028     $(101)     $   927
Consumer loans                                       170        26          196
Commercial business loans                             22        10           32
                                                  ------     -----      -------
      Total loans                                  1,220       (65)       1,155
Investments                                          433       227          660
Mortgage-backed securities                           274       135          409
                                                  ------     -----      -------
      Total interest-earning assets                1,927       297        2,224
                                                  ------     -----      -------

Savings accounts                                  $   --     $  (1)     $    (1)
Now and money market accounts                        176        49          225
Certificates of deposit                              164        41          205
                                                  ------     -----      -------
      Total deposits                                 340        89          429
FHLB advances                                        418       107          525
Other borrowings                                      --       484          484
                                                  ------     -----      -------
      Total interest-bearing liabilities             758       680        1,438
                                                  ------     -----      -------
Change in net interest income                     $1,169     $(383)     $   786
                                                  ======     =====      =======


             COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS
                     ENDED MARCH 31, 2000 AND MARCH 31, 1999

     NET INCOME. For the six months ended March 31, 2000, the Company incurred a
loss of $601,000 or $0.20 per share compared to net income of $422,000 or $0.52
per share for the six months ended March 31, 1999. The $1.0 million decrease in
net income over the comparable period one year ago was primarily due to the
decline in income from mortgage- banking activities.

     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 sources of funds such as deposits and
borrowings. The level of net interest income is determined primarily by the
relative average balances of interest-earning assets and interest-bearing
liabilities in combination with the yields earned and rates paid upon them. The
correlation between the repricing of interest rates on assets and on liabilities
also influences net interest income.

                                       15
<PAGE>


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

                                         SIX MONTHS ENDED
                                             MARCH 31,           DIFFERENCE
                                        -----------------     -----------------
(DOLLARS IN THOUSANDS                    2000       1999      AMOUNT        %
                                        ------     ------     ------     ------

Interest income:
   Loans                                $3,698     $1,868     $1,830      97.97%
   Investments                           4,084      1,922      2,162     112.49
                                        ------     ------     ------     ------
     Total                               7,782      3,790      3,992     105.33
                                        ------     ------     ------     ------

Interest expense:
   Deposits                              3,497      2,423      1,074      44.33
   Borrowings                            1,945        369      1,576     427.10
                                        ------     ------     ------     ------
     Total                               5,442      2,792      2,650      94.91
                                        ------     ------     ------     ------
Net interest income                     $2,340     $  998     $1,342     134.47%
                                        ======     ======     ======     ======


     Our growth in net interest income for the six months ended March 31, 2000
was due primarily to the increase in average interest-earning assets resulting
from our planned growth. Average interest-earning assets increased $109.3
million or 98.57% over the comparable period one-year ago and was coupled with a
23 basis point increase in net interest margin (net interest income divided by
average interest-earning assets). The increase in net interest margin resulted
from the significant increase in average earning assets coupled with an increase
in yield.

     Interest income for the six months ended March 31, 2000 increased $4.0
million compared to the six months ended March 31, 1999 primarily as a result of
an increase in the average outstanding balances in loans, investment securities
and mortgage-backed securities resulting in a large measure from the planned
leveraging of our capital. The increase in interest income from the loan
portfolio for the six months ended March 31, 2000 compared to interest income
earned for the 1999 period resulted from an increase of $52.6 million in the
average balance of loans outstanding. That increase was coupled with an increase
of $56.7 million in the average outstanding balance in the investment and
mortgage-backed securities portfolios and was coupled with a 85 basis point
increase in the average yield earned on these portfolios.

     The increase in interest expense on deposits and borrowed funds for the six
months ended March 31, 2000 compared to the 1999 period was principally the
result of a significant increase in the average outstanding balances in total
deposits and borrowed funds, and an increase of 20 basis points in the average
cost of funds. The increase in interest expense on deposits was primarily due to
an increase in average certificates of deposit and NOW and money market accounts
of $39.7 million, or 44.05%, from $90.1 million for the six months ended March
31, 1999 to $129.8 million for the six months ended March 31, 2000. The average
rate we paid for deposits increased from 5.33% for the six months ended March
31, 1999 to 5.34% for the six months ended March 31, 2000. That increase in rate
was coupled with an increase of $39.9 million in the average outstanding balance
of deposits.

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

                                       16
<PAGE>


<TABLE>
<CAPTION>
                                                                           For the Six months Ended March 30,
                                                   --------------------------------------------------------------------------------
                                                                 Interest        Average                      Interest      Average
                                                    Average       Income/         Yield/         Average       Income/       Yield/
(DOLLARS IN THOUSANDS)                              Balance       Expense          Rate          Balance       Expense        Rate
                                                   --------       --------       --------       --------      --------     --------
<S>                                                <C>            <C>              <C>          <C>             <C>           <C>
Interest earning assets:
  Real estate loans                                $ 82,417       $  3,094         7.51%        $ 39,597        $1,675        8.46%
  Consumer loans                                     10,917            443         8.12            2,179            84        7.71
  Commercial business loans                           3,759            161         8.57            2,708           109        8.05
                                                   --------       --------         ----         --------        ------        ----
     Total loans                                     97,093          3,698         7.62           44,484         1,868        8.40

Investment securities                                75,803          2,582         6.81           39,243         1,156        5.89
Mortgage-backed securities                           47,283          1,502         6.35           27,155           766        5.64
                                                   --------       --------         ----         --------        ------        ----
     Total interest-earning assets                  220,179          7,782         7.07          110,882         3,790        6.84
                                                                  --------         ----                         ------        ----
Non-earning assets                                    7,888                                        4,856
                                                   --------                                     --------
     Total assets                                  $228,067                                     $115,738
                                                   ========                                     ========
Interest-bearing liabilities:
  Savings accounts                                 $  1,038       $     16         3.08         $    804        $   13        3.23
  Now and money market                               30,357            771         5.08           12,569           293        4.66
  Certificates of deposit                            99,506          2,710         5.45           77,585         2,117        5.46
                                                   --------       --------         ----         --------        ------        ----
     Total deposits                                 130,901          3,497         5.34           90,958         2,423        5.33

  FHLB advances                                      43,647          1,202         5.51           13,665           325        4.76
  Other borrowings                                   24,618            743         6.04            1,549            44        5.68
                                                   --------       --------         ----         --------        ------        ----
     Total interest-bearing liabilities             199,166          5,442         5.46          106,172         2,792        5.26
                                                                  --------         ----                         ------        ----
Noninterest-bearing liabilities:
  Noninterest-bearing demand deposits                 3,420                                        1,409
  Other liabilities                                     922                                        1,237
                                                   --------                                     --------
     Total liabilities                              203,508                                      108,818
  Stockholders' equity                               24,559                                        6,920
                                                   --------                                     --------
     Total liabilities and stockholders' equity    $228,067                                     $115,738
                                                   ========                                     ========
Net interest income                                               $  2,340                                      $  998
                                                                  ========                                      ======
Interest rate spread                                                               1.61%                                      1.58%
                                                                                   ====                                       ====
Net interest margin                                                                2.13%                                      1.80%
                                                                                   ====                                       ====
</TABLE>

                                       17
<PAGE>


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

                                                        SIX MONTHS ENDED
                                                     MARCH 31, 2000 VS. 1999
                                                 -------------------------------
                                                     CHANGE ATTRIBUTABLE TO
                                                 -------------------------------
(DOLLARS IN THOUSANDS)                              VOLUME     RATE        TOTAL
                                                    ------     -----      ------
Real estate loans                                   $1,811     $(392)     $1,419
Consumer loans                                         337        22         359
Commercial business loans                               42        10          52
                                                    ------     -----      ------
      Total loans                                    2,190      (360)      1,830
Investments                                          1,077       349       1,426
Mortgage-backed securities                             568       168         736
                                                    ------     -----      ------
      Total interest-earning assets                  3,835       157       3,992
                                                    ------     -----      ------

Savings accounts                                    $    4     $  (1)     $    3
Now and money market accounts                          415        63         478
Certificates of deposit                                598        (5)        593
                                                    ------     -----      ------
      Total deposits                                 1,017        57       1,074
FHLB advances                                          713       164         877
Other borrowings                                       655        44         699
                                                    ------     -----      ------
      Total interest-bearing liabilities             2,385       265       2,650
                                                    ------     -----      ------
Change in net interest income                       $1,450     $(108)     $1,342
                                                    ======     =====      ======


     PROVISION FOR LOAN LOSSES. The provision for loan losses decreased from
$23,000 during the six months ended March 31, 1999 to $7,000 during the six
months ended March 31, 2000. The reduction in the provision was related to an
improvement in credit quality over that time period coupled with a decline in
non-performing loans. Not withstanding an improvement in overall credit quality,
net charge-offs increased from a recovery of $9,000 during the six months ended
March 31, 1999 to a charge of $27,000 during the six months ended March 31, 2000
as management took a more aggressive posture in assessing collectability of
classified loans.

     NONINTEREST INCOME. Noninterest income decreased during the six months
ended March 31, 2000, over the comparable period one year ago, primarily as a
result of the decrease in gain on sale of loans coupled with a decrease in
service fees on loans, both of which relate to a decreased volume of loan
originations and sales as a result of the company's mortgage banking activities.
The significant level of gains during the six months ended March 31, 1999
resulted from the company taking advantage of loan origination volumes coupled
with home loan refinancing and a favorable interest rate environment which
enabled the company to sell loans through Greater Atlantic Mortgage at a gain.

                    The following table presents a comparison
                    of the components of noninterest income.

                                    SIX MONTHS ENDED
                                          MARCH 31,             DIFFERENCE
                                   -------------------     --------------------
(DOLLARS IN THOUSANDS)               2000        1999       AMOUNT         %
                                   -------      ------     -------      ------
Noninterest income:
   Gain on sale of loans           $   913      $4,396     $(3,483)     (79.23)%
   Service fees on loans               211         260         (49)     (18.85)
   Service fees on deposits             71          22          49      222.73
   Other operating income              (61)         14         (75)     (535.71)
                                   -------      ------     -------      ------
      Total noninterest income     $ 1,134      $4,692     $(3,558)     (75.83)%
                                   =======      ======     =======      ======

                                       18
<PAGE>


     During the six months ended March 31, 2000, the mortgage company originated
$48.7 million in mortgage loans for sale compared to $186.5 million originated
in the comparable period one year ago. The $137.8 million decrease in loan
originations was largely attributable to increases in interest rates and
decreases in home mortgage refinancings. During the period, substantially all
loans originated were sold in the secondary market, in most cases with servicing
released. Loan sales for the six months ended March 31, 2000 amounted to $48.9
million compared to sales of $214.9 million during the comparable period one
year ago. Sales of loans resulted in gains of $913,000 and $4.4 million for the
six months ended March 31, 2000 and 1999, respectively.

     NONINTEREST EXPENSE. Compensation and employee benefits decreased from the
comparable period one year ago mainly because of a decrease in commissions to
loan officers due to a decline in loan production and the related employee
benefit cost associated with the decrease in compensation. Net occupancy
expenses increased from the 1999 six month period to the comparable 2000 period
due to the development of the branch network, as well as the acquisition of
additional administrative space to handle the current and planned growth of the
Bank. Professional services increased $299,000 from the 1999 six month period
when compared to the same period in 2000. That cost increase resulted from the
testing of the Bank's internal computer system for compliance with the Year 2000
date change and the litigation cost associated with the lawsuit filed against
the mortgage banking subsidiary, the Bank and the Company.

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

                                       SIX MONTHS ENDED
                                           MARCH 31,             DIFFERENCE
                                       -----------------     -----------------
(DOLLARS IN THOUSANDS)                  2000       1999      AMOUNT        %
                                       ------     ------     -----      ------
Noninterest expense:
  Compensation and employee benefits   $2,065     $2,937     $(872)     (29.69)%
  Occupancy                               580        450       130       28.89
  Professional services                   403        104       299      287.50
  Advertising                             262        247        15        6.07
  Deposit insurance premium                29         31        (2)      (6.45)
  Furniture, fixtures and equipment       209        211        (2)      (0.95)
  Data processing                         214         62       152      245.16
  Loss from foreclosed real estate         11          5         6      120.00
  Other operating expense                 681        940      (259)     (27.55)
                                       ------     ------     -----      ------
    Total noninterest expense          $4,454     $4,987     $(533)     (10.69)%
                                       ======     ======     =====      ======


     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. The income tax provision for the six months ended March 31,
2000 amounted to a benefit of $386,000 compared to a provision of $258,000 for
the six months ended March 31, 1999 resulting from reduced earnings.

     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 required
levels of liquid assets as defined by OTS regulations. This requirement of the
OTS, which may be changed at the direction of the OTS depending upon economic
conditions and deposit flows, is based upon a percentage of deposits and
short-term borrowings. The bank's currently required liquidity ratio is 4.00%.
At March 31, 2000, the bank's actual liquidity ratio was 10.28%. The bank
manages its liquidity position and demands for funding primarily by investing
excess funds in short-term investments and utilizing FHLB advance and reverse
repurchase agreements in periods when the bank's demands for liquidity exceed
funding from deposit inflows.

The bank's most liquid assets are cash and cash equivalents, securities
available-for-sale and trading securities. The levels of these assets are
dependent on the bank's operating, financing, lending and investing activities
during any given period. At March 31, 2000, cash and cash equivalents and
securities available-for-sale totaled $103.9 million, or 39.49% of total assets.

                                       19
<PAGE>


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 six
months ended March 31, 2000, the bank's loan originations totaled $107.6
million. Purchases of United States Treasury and agency securities,
mortgage-backed and mortgage related securities and other investment securities
totaled $36.3 million for the year ended March 31, 2000.

The bank has other sources of liquidity if a need for additional funds arises.
At March 31, 2000, the bank had $62.3 million in advances outstanding from the
FHLB and had an additional overall borrowing capacity from the FHLB of $5.2
million at that date. Depending on market conditions, the pricing of deposit
products and FHLB advances, the bank may continue to rely on FHLB borrowings to
fund asset growth.

At March 31, 2000, 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 $40.9 million. The bank anticipates that it will
have sufficient funds available to meet its current loan origination
commitments. Certificate accounts, including IRA and Keogh accounts, which are
scheduled to mature in less than one year from March 31, 2000, totaled $37.7
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. We expect to
continue to realize income from the differential or "spread" between the
interest earned on loans, securities and other interest-earning assets, and the
interest paid on deposits, borrowings and other interest-bearing liabilities.
That spread is affected by the difference between the maturities and repricing
characteristics of interest-earnings assets and interest-bearing liabilities.
Loan volume and yields are affected by market interest rates on loans, and
rising interest rates generally are associated with fewer loan originations.
Management expects that a substantial portion of our assets will continue to be
indexed to changes in market interest rates and we intend to attract a greater
proportion of short-term liabilities which will help address our interest rate
risk. The lag in implementation of repricing terms on our adjustable-rate assets
may result in a decline in net interest income in a rising interest rate
environment. There can be no assurance that our interest rate risk will be
minimized or eliminated. Further, an increase in the general level of interest
rates may adversely affect the ability of certain borrowers to pay the interest
on and principal of their obligations. Accordingly, changes in levels of market
interest rates could materially adversely affect our interest rate spread, asset
quality, loan origination volume and overall financial condition and results of
operations.

                                       20
<PAGE>


     ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

     Management actively monitors and manages its interest rate risk exposure.
The primary objective in managing interest-rate risk is to limit, within
established guidelines, the adverse impact of changes in interest rates on the
Company's net interest income and capital, while adjusting the Company's
asset-liability structure to obtain the maximum yield-cost spread on that
structure. Management relies primarily on its asset-liability structure to
control interest rate risk. However, a sudden and substantial increase in
interest rates could adversely impact the Company's earnings, to the extent that
the interest rates borne by assets and liabilities do not change at the same
speed, to the same extent, or on the same basis. There has been no significant
changes in the Company's market risk exposure since September 30, 1999

                                       21
<PAGE>


                        GREATER ATLANTIC FINANCIAL CORP.

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

On July 28, 1999, First Guaranty Mortgage Corporation filed a complaint against
us and our subsidiary, Greater Atlantic Bank ("GAB") and its subsidiary, Greater
Atlantic Mortgage Corporation ("GAMC") in Circuit Court of Arlington, Virginia.
This complaint alleges breach of contract and related claims against these three
companies and employees of GAMC who formerly were employed at First Guaranty.
First Guaranty alleges that GAMC, GAB and GAFC wrongfully interfered with the
business of First Guaranty's Frederick, Maryland office by hiring the employees
of that office. First Guaranty is seeking approximately $5,000,000 in
compensatory and $20,000,000 in punitive damages.

We believe that the allegations against GAMC, GAB and GAFC are without merit. We
are vigorously defending these claims. Although we can give no assurance, we
believe that the ultimate outcome of this matter will not materially adversely
affect our financial condition.

Item 2.   Changes in Securities
               Not Applicable

Item 3.   Defaults Upon Senior Securities
               Not Applicable

Item 4.   Submission of Matters To A Vote of Security Holders

          (a)  Greater Atlantic Financial Corp. annual Stockholder's Meeting was
               held on March 14, 2000.

          (b)  Omitted per instructions.

          (c)  A brief description of each matter voted upon at the Annual
               Stockholder's Meeting held on March 14, 2000 and number of votes
               cast for, against or withheld.

               1.   Election of Directors.

                                                        Votes
                                           Votes For   Against   Votes Withheld
                                           ---------   -------   --------------
                    Paul J. Cinquegrana    2,626,382      0          381,052
                    Jeffrey W. Ochsman     2,626,382      0          381,052

               2.   Admendment of the Greater Atlantic Financial Corp. 1997
                    Stock Option and Warrant Plan to increase the number of
                    shares of common stock with respect to which option may be
                    granted from 76,667 to 225,000.

                                                        Votes
                                           Votes For   Against   Votes Withheld
                                           ---------   -------   --------------
                                           2,559,362    51,540        43,550

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

                                                        Votes
                                           Votes For   Against   Votes Withheld
                                           ---------   -------   --------------
                                           2,640,652     3,300        10,500

          (d)  None

Item 5.   Other Information
               Not Applicable

Item 6.   Exhibits and Reports on Form 8-K
               Exhibits Required
               Exhibit 27: Financial Data Schedule

               Reports on Form 8-K

               No reports on Form 8-K were filed during the six months ended
               March 31, 2000.

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<PAGE>


                        GREATER ATLANTIC FINANCIAL CORP.

                                   SIGNATURES

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

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


Date: May 12, 2000             By: /s/ Carroll E. Amos
                               -----------------------
                               Carroll E. Amos
                               President and Chief Executive Officer

Date: May 12, 2000             By: /s/ David E. Ritter
                               -----------------------
                               David E. Ritter
                               Senior Vice President and Chief Financial Officer

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