SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]  Annual report pursuant to section 13 or 15 (d) of the Securities Exchange
     Act of 1934
     For the fiscal year ended December 31, 2001
                               -----------------

                                      -OR-

[ ]  Transition report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the transition period from             to              .
                                    -----------    -------------

                         Commission File Number: 0-32437
                                                 -------

                               BUCS Financial Corp
                               -------------------
                 (Name of Small Business Issuer in Its Charter)

           Maryland                                      52-2269586
-------------------------------            ------------------------------------
(State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
 Incorporation or Organization)

10455 Mill Run Circle, Owings Mills, Maryland             21117
---------------------------------------------          ---------
(Address of Principal Executive Offices)               (Zip Code)

Issuer's Telephone Number, Including Area Code:    (410) 998-5304
                                                   --------------

Securities registered under Section 12(b) of the Exchange Act:   None
                                                                 -----

Securities registered under Section
12(g) of the Exchange Act:               Common Stock, par value $0.10 per share
                                         ---------------------------------------
                                                     (Title of Class)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
YES  X    NO        .
   -----     -------

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

         State issuer's revenues for its most recent fiscal year: $7.1 million.

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant,  based on the average bid and asked price of the registrant's
Common Stock on March 15, 2002, was $6.1 million.

         As of March 15,  2002,  there were  405,085  outstanding  shares of the
registrant's Common Stock.

         Transitional Small Business Disclosure Format (check one): YES   NO  X
                                                                       ---   ---

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     December 31, 2001. (Part II)

2.   Portions  of  the  Proxy   Statement   for  the  2002  Annual   Meeting  of
     Stockholders. (Part III)


<PAGE>


                                     PART I

Forward-Looking Statements

         BUCS Financial Corp (the  "Company") may from time to time make written
or oral "forward  looking  statements",  including  statements  contained in the
Company's  filings with the Securities and Exchange  Commission  (including this
Annual  Report on Form  10-KSB  and the  exhibits  thereto),  in its  reports to
stockholders and in other communications by the Company,  which are made in good
faith by the Company  pursuant to the "safe  harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in,  monetary  and fiscal  policies and
laws,  including interest rate policies of the Board of Governors of the Federal
Reserve System, inflation, interest rates, market and monetary fluctuations; the
timely development of and acceptance of new products and services of the Company
and the  perceived  overall  value of these  products  and  services  by  users,
including the features, pricing and quality as compared to competitors' products
and services;  the impact of changes in financial services' laws and regulations
(including  laws   concerning   taxes,   banking,   securities  and  insurance);
technological  changes;  acquisitions;  changes in consumer  spending and saving
habits;  and the  success of the Company at managing  the risks  resulting  from
these factors.

         The Company  cautions that the listed  factors are not  exclusive.  The
Company does not  undertake  to update any  forward-looking  statement,  whether
written  or oral,  that may be made  from  time to time by or on  behalf  of the
Company.

Item 1.  Description of Business.

General

         The Company is a Maryland corporation  organized in October 2000 at the
direction of BUCS Federal Bank (the "Bank") to acquire all of the capital  stock
that  the  Bank  issued  in its  conversion  from the  mutual  to stock  form of
ownership  (the  "Conversion").  On  March  14,  2001,  the Bank  completed  the
Conversion and became a wholly owned subsidiary of the Company. The Company is a
unitary savings and loan holding company and conducts no significant business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and  investing the  Company's  portion of the net proceeds  obtained in the
Conversion.

         References  to the Company or  Registrant in this Annual Report on Form
10-KSB generally refer to the Company and the Bank, unless the context otherwise
indicates.

         The Bank is a federally  chartered stock savings bank  headquartered in
Owings Mills,  Maryland,  with one branch office located in Columbia,  Maryland.
The Bank is subject to examination and comprehensive regulation by the Office of
Thrift Supervision ("OTS") and its deposits are federally insured by the Savings
Association  Insurance Fund  ("SAIF").  The Bank is a member of and owns capital
stock in the FHLB of Atlanta,  which is one of the 12 regional banks in the FHLB
System.

                                        1

<PAGE>

         The Bank was originally  founded in 1970 as a federal credit union.  On
March 1,  1998,  the Bank  converted  its  charter to a federal  mutual  savings
association.  As a result, the Bank was able to begin serving the general public
in  addition  to  continuing   to  serve   employee   groups.   The  Bank  is  a
community-oriented  savings  organization,  providing traditional retail banking
services,  one- to four-family  residential  mortgage  loans,  and consumer loan
products,  including home equity, auto, and personal loans. Originally, the Bank
operated as a typical credit union, with an emphasis on consumer lending.  Since
1986,  however,  the Bank has also  originated a  substantial  amount of one- to
four-family  residential  mortgage loans. The Bank began in June 2000 to seek to
originate  small business  loans to complement the array of commercial  checking
and deposit services offered by the Bank. At December 31, 2001,  commercial real
estate loans totaled $912,000 and commercial business loans totaled $684,000.

         During the fiscal year ended  December 31, 2001,  the Company  acquired
two  separate   insurance   agencies   which  were  merged  into  the  Company's
wholly-owned  subsidiary,  Armor Insurance Group, Inc. Armor offers a full range
of  individual  and  commercial  property  and  casualty  products  primarily to
depositor customers of the Bank but also to the general public.

         At December  31,  2001,  the Company had total  assets,  deposits,  and
equity of $84.6 million, $61.4 million, and $9.7 million, respectively. The Bank
attracts  deposits from the general public and uses these deposits  primarily to
originate  loans  and  to  purchase   investment,   mortgage-backed   and  other
securities.  The principal sources of funds for the Bank's lending and investing
activities are deposits,  FHLB advances, the repayment and maturity of loans and
sale,  maturity,  and call of  securities.  The  principal  source  of income is
interest on loans and investment and mortgage-backed  securities.  The principal
expense is interest paid on deposits and FHLB advances.

Market Area and Competition

         The Bank operates from its main office in Owings Mills,  Maryland and a
full-service  branch  office in  Columbia,  Maryland.  Drive-up  facilities  are
available at the Columbia branch office. The Bank also maintains five remote ATM
locations, four of which offer 24-hour access. The Bank's primary market area is
Baltimore and Howard Counties,  Maryland. The Bank faces substantial competition
in its  attraction  of  deposits,  which  are its  primary  source  of funds for
lending, and in the origination of consumer,  real estate, and commercial loans.
The Bank's  competition for deposits and loans  historically has come from local
and regional commercial banks, thrift institutions, and credit unions located in
the Bank's  primary  market area.  The Bank also competes with mortgage  banking
companies for real estate loans, and commercial  banks and savings  institutions
for consumer  loans;  and faces  competition for investor funds from mutual fund
accounts, short-term money funds and corporate and government securities.

         During the quarter ended  September 30, 2001,  the Bank entered into an
agreement  to acquire  property in  Columbia,  Maryland to be developed as a new
branch  office  located in a new  shopping  center to be  anchored  by a 100,000
square  foot Home Depot Expo  store.  The  purchase  price of the  property  was
$975,000  and the  construction  expense  and  equipment  expense for the branch
building is expected to be approximately $1.3 million.  The anticipated  opening
of this new branch location is currently fall of 2002.

                                        2
<PAGE>

Lending Activities

         Loan   Portfolio   Composition.   The  following   table  analyzes  the
composition  of the  Bank's  loan  portfolio  by  loan  category  at  the  dates
indicated.


                                                      At December 31,
                               -------------------------------------------------
                                      2001                         2000
                               ---------------------        --------------------
                                   Amount    Percent           Amount    Percent
                                   ------    -------           ------    -------
                                              (Dollars in thousands)
Type of Loans:
-------------
Mortgage loans:
  Residential...................  $17,238     28.72%           $13,609    27.24%
  Land..........................        5      0.01                 -         -
  Commercial real estate........      912      1.52                950     1.90

Commercial loans..............        684      1.14                 -         -

Consumer loans:
  Home equity loans...........     19,045     31.73             13,440    26.90
  Auto loans..................     17,563     29.26             18,221    36.46
  Other.......................      4,577      7.62              3,745     7.50
                                   ------     -----             ------    -----
Total loans...................     60,024    100.00%            49,965   100.00%
                                             ======                      ======
Less:
  Allowance for loan losses...       (663)                        (600)
                                   ------                       ------
Total loans, net..............    $59,361                      $49,365
                                   ======                       ======

         Loan Maturity Schedule.  The following table sets forth the maturity or
repricing of Bank's loan  portfolio at December 31, 2001.  Demand  loans,  loans
having no stated maturity and overdrafts are shown as due in one year or less.

<TABLE>
<CAPTION>

                                                                             Auto and
                                      Commercial                   Home      Other
                   Residential  Land  Real Estate    Commercial   Equity    Consumer     Total
                   -----------  ----  -----------    ----------   ------    ----------   ------
                                                  (In thousands)
<S>                  <C>       <C>       <C>           <C>      <C>         <C>       <C>
Amounts Due:
Within 1 Year......   $   120   $   -     $330          $ 61      $    74     $ 4,434  $ 5,019
                        -----    ----      ---          ----       ------      ------   ------
After 1 year:
  1 to 3 years.....        31       -        -            12          509       5,836    6,388
  3 to 5 years.....        90       -        -           257        1,748      10,825   12,915
  5 to 10 years....       679       5      189           354        7,248         940    9,415
  10 to 15 years...     6,304       -        -             -        4,365          80   10,749
  Over 15 years....    10,014       -      393             -        5,105          25   15,537
                        -----    ----      ---          ----       ------      ------   ------
Total due after
   one year........    17,118       5      582           623       18,971      17,706   55,005
                        -----    ----      ---          ----       ------      ------   ------
Total amount due...   $17,238   $   5     $912          $684      $19,045     $22,140  $60,024
                       ======    ====      ===           ===       ======      ======   ======

</TABLE>

                                        3
<PAGE>


         The  following  table  sets  forth  the  dollar  amount of all loans at
December  31,  2001 due after  December  31,  2002,  which  have  pre-determined
interest rates and which have floating or adjustable interest rates.


                                                       Floating or
                                        Fixed Rates  Adjustable Rates   Total
                                        -----------  ----------------  -------
                                                      (In thousands)

Residential..........................      $12,676        $ 4,562      $17,238
Commercial Real Estate and Land......          329            588          917
Commercial...........................           53            631          684
Home equity loans....................        8,558         10,487       19,045
Auto and other consumer..............       18,305          3,835       22,140
                                           -------        -------      -------
  Total..............................      $39,921        $20,103      $60,024
                                           =======        =======      =======


         Consumer  Loans.  As of December 31, 2001,  consumer  loans amounted to
$41.2  million  or 68.62% of the  Bank's  total  loan  portfolio  and  consisted
primarily  of home equity  loans and auto loans.  To a lesser  extent,  the Bank
originates  personal  loans  (secured  and  unsecured),  savings  secured  loans
(deposit loans), and personal lines of credit.  Consumer loans are originated in
the  Bank's  market  area and  generally  have  maturities  of up to 5 years for
consumer loans and 15 years for home equity loans. For saving secured loans, the
Bank will generally lend up to 100% of the account balance.

         Residential  Lending.  The Bank's primary  residential lending activity
consists of the  origination  of one- to  four-family  mortgage loans secured by
property  located in the  Bank's  market  area.  The Bank  generally  originates
single-family  residential  mortgage loans in amounts up to 80% of the lesser of
the appraised value or selling price of the mortgaged property without requiring
private mortgage insurance. The Bank will originate a mortgage loan in an amount
up to 95% of the lesser of the  appraised  value or selling price of a mortgaged
property,  however,  private  mortgage  insurance is  generally  required on the
amount financed in excess of 80%.

         The Bank originates both fixed rate and adjustable rate mortgage loans.
The fixed rate  mortgage  loans have  terms of 15 to 30 years.  Adjustable  rate
mortgage loans are tied to the 1-year U.S. Treasury Security Index or the 3-year
Treasury Security Index.

         The Bank  generally  makes its fixed  rate  mortgage  loans to meet the
secondary   mortgage  market   standards  of  the  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC") but also makes non-conforming loans. While the Bank is an
approved FHLMC seller/servicer,  generally it has not sold mortgage loans in the
secondary mortgage market.  However,  the Bank may in the future sell fixed rate
mortgage loans in the secondary  market, as market conditions and the Bank's own
portfolio needs dictate.

         Substantially all of the Bank's  residential  mortgages include "due on
sale" clauses,  which are provisions giving the Bank the right to declare a loan
immediately  payable if the borrower sells or otherwise transfers an interest in
the property to a third party.

         Commercial Business Loans. Since late 2000, the Bank has been expanding
its commercial lending activity. Loans are generally made to small businesses in
the Bank's market area. Loans have been made for both commercial real estate and
other  commercial  purposes.  Approximately  one-half  of  the  commercial  loan
activity  to date has been in  conjunction  with the  guarantee  programs of the
Small Business  Administration  (SBA). In December 2001, the Bank hired a second
commercial  account  officer  in an effort to  further  expand  commercial  loan
business.

                                        4

<PAGE>

         Loans to One Borrower.  Under federal law, savings  institutions  have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the  institution's  unimpaired  capital and
surplus. As of December 31, 2001, the Bank's largest aggregation of loans to one
borrower  was  $482,000,  consisting  of one loan  secured by  residential  real
estate, two loans secured by investment  property and a guaranty of $75,000 on a
commercial loan, which was within the Bank's legal lending limit to one borrower
at that date. At December 31, 2001, the loans were current.

         Loan  Commitments.  The Bank gives written  commitments  to prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance  within 60 days of the date of the issuance.  The total amount of the
Bank's  commitments to extend credit for mortgage loans as of December 31, 2001,
was $1.1 million excluding commitments on lines of credit of $14.0 million.

Non-performing Loans and Problem Assets

         Loans are reviewed on a regular  basis and are placed on a  non-accrual
status  when  they are more  than 90 days  delinquent.  Loans may be placed on a
non-accrual status at any time if, in the opinion of management,  the collection
of additional  interest is doubtful.  Interest  accrued and unpaid at the time a
loan is placed  on  non-accrual  status  is  charged  against  interest  income.
Subsequent  payments are either applied to the outstanding  principal balance or
recorded  as  interest  income,  depending  on the  assessment  of the  ultimate
collectibility of the loan. At December 31, 2001, the Bank had $250,000 of loans
that were held on a non-accrual basis.

         Non-Performing   Assets.  The  following  table  provides   information
regarding the Bank's non-performing loans and other non-performing assets at the
dates indicated.  As of each of the dates  indicated,  the Bank did not have any
troubled  debt  restructurings  within the  meaning of  Statement  of  Financial
Accounting Standards No. 15.


                                        5

<PAGE>

<TABLE>
<CAPTION>
                                                                                  At December 31,
                                                                                -------------------
                                                                                2001           2000
                                                                                ----           ----
                                                                                   (In thousands)
<S>                                                                          <C>           <C>

Loans accounted for on a non-accrual basis:
Mortgage loans:
  Residential.........................................................          $116          $  -
Consumer loans:
  Home equity loans...................................................             -             -
  Other consumer......................................................           134            98
                                                                                ----          ----
Total.................................................................          $250          $ 98
                                                                                ====          ====
Accruing loans which are contractually past due 90 days or more:
Mortgage loans:
  Residential ........................................................          $  -          $  -
  All other mortgage loans............................................             -             -
Consumer loans:
  Home equity and second mortgages....................................             -             -
  Other consumer......................................................             -             -
                                                                                ----          ----
Total.................................................................          $  -          $  -
                                                                                ====          ====
Total non-performing loans............................................          $250          $ 98
                                                                                ====          ====
Other non-performing assets...........................................          $  -          $ 18
                                                                                ====          ====
Total non-performing assets...........................................          $250          $116
                                                                                ====          ====
Total non-performing loans to net loans...............................          0.42%         0.20%
                                                                                ====          ====
Total non-performing loans to total assets............................          0.30%         0.14%
                                                                                ====          ====
Total non-performing assets to total assets...........................          0.30%         0.16%
                                                                                ====          ====
</TABLE>


         For the year ended December 31, 2001, the amount of interest that would
have been recorded on loans accounted for on a non-accrual  basis if those loans
had been current  according to the original loan  agreements for the entire year
was $17,800.  This amount was not included in the Bank's interest income for the
year.

         Classified Assets.  Management, in compliance with OTS guidelines,  has
instituted an internal  loan review  program,  whereby  loans are  classified as
special  mention,  substandard,  doubtful or loss.  When a loan is classified as
substandard or doubtful, management is required to establish a valuation reserve
for loan losses in an amount considered  prudent by management.  When management
classifies a loan as a loss asset,  a reserve  equal to 100% of the loan balance
is required to be established or the loan is to be  charged-off.  This allowance
for loan losses is composed of an allowance for both  inherent  risk  associated
with lending activities and particular problem assets.

         An asset is considered "substandard" if it is inadequately protected by
the paying capacity and net worth of the obligor or the collateral  pledged,  if
any.  Substandard assets include those characterized by the distinct possibility
that the insured  institution will sustain some loss if the deficiencies are not
corrected.  Assets classified as "doubtful" have all of the weaknesses  inherent
in  those  classified  substandard,  with  the  added  characteristic  that  the
weaknesses  present make collection or liquidation in full, highly  questionable
and  improbable,  on the basis of  currently  existing  facts,  conditions,  and
values. Assets classified as "loss' are those considered uncollectible and of so
little value that their  continuance  as assets without the  establishment  of a
specific loss reserve is not warranted. Assets which do not currently expose the
insured institution to a sufficient degree of risk to warrant  classification in
one  of  the  aforementioned  categories  but  possess  credit  deficiencies  or
potential  weaknesses  are  required to be  designated  as "special  mention" by
management.

                                        6
<PAGE>


         Management's  evaluation  of  the  classification  of  assets  and  the
adequacy of the  allowance for loan losses is reviewed by the Board on a regular
basis and by the regulatory agencies as part of their examination  process.  The
following table discloses the Bank's classification of its assets as of December
31, 2001. At December 31, 2001, all of the classified assets were loans.



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

                 Substandard(1)..............             $296
                 Doubtful(2).................              246
                 Loss(3).....................               73
                                                          ----
                   Total.....................             $615
                                                          ====
-----------------
(1)      Consisting  of one  mortgage  loan of $63,000,  three home equity loans
         with an aggregate total of $37,000 and twenty-seven consumer loans with
         an aggregate total of $196,000.
(2)      Consisting of one mortgage loan of $116,000, two home equity loans with
         an  aggregate  total of $35,000 and  seventeen  consumer  loans with an
         aggregate total of $95,000.
(3)      All consumer loans.


         Allowance for Loan Losses.  The Bank  segregates the loan portfolio for
loan  losses into the  following  broad  categories:  residential  real  estate,
commercial  real  estate,  commercial  loans and consumer  loans.  The Bank also
separately  evaluates all non-performing  loans individually.  The Bank provides
for a general  allowance  for  losses  inherent  in the  portfolio  by the above
categories,  which  consists of two  components.  General loss  percentages  are
calculated  based upon  historical  analyses and other  factors.  A supplemental
portion of the allowance is calculated for inherent  losses which probably exist
as of the evaluation date even though they might not have been identified by the
more objective  processes used. This is due to the risk of error and/or inherent
imprecision  in the  process.  This  portion of the  allowance  is  particularly
subjective and requires judgments based on qualitative factors which do not lend
themselves to exact mathematical calculations such as:

o    trends in delinquencies and nonaccruals;
o    trends in volume, terms and portfolio mix;
o    new credit products;
o    changes in lending policies and procedures;
o    changes in the outlook for the local, regional and national economy; and
o    peer group comparisons.

         It is the Bank's  policy to review its loan  portfolio,  in  accordance
with  regulatory  classification  procedures,  on at  least a  quarterly  basis.
Additionally,  the Bank maintains a program of reviewing loan applications prior
to making the loan and immediately after loans are made in an effort to maintain
loan quality.

         The Bank's management  evaluates the need to establish reserves against
losses on loans and other assets based on estimated losses on specific loans and
on any real  estate  held for sale or  investment  when a finding is made that a
loss is estimable and probable.  This evaluation  includes a review of all loans
for which full collectibility may not be reasonably assured and considers, among
other matters: (1) the estimated

                                        7
<PAGE>


market  value of the  underlying  collateral  of problem  loans,  (2) prior loss
experience, (3) economic conditions and (4) overall portfolio quality.

         Provisions for losses are charged  against  earnings in the period they
are  established.  The Bank made $180,000 in provisions  for loan losses for the
year ended December 31, 2001.

         While the Bank believes it has established  its existing  allowance for
loan losses in accordance with GAAP,  there can be no assurance that regulators,
in  reviewing  the  Bank's  loan  portfolio,   will  not  request  the  Bank  to
significantly  increase its allowance for loan losses,  or that general economic
conditions,  a deteriorating real estate market, or other factors will not cause
the Bank to significantly  increase its allowance for loans losses,  which would
negatively affect the Bank's financial condition and earnings.

         In  making  loans,  the Bank  recognizes  that  credit  losses  will be
experienced  and that the risk of loss will vary with,  among other things,  the
type of loan being made, the  creditworthiness  of the borrower over the term of
the loan and, in the case of a secured loan, the quality of the security for the
loan.

         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates indicated:


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

Allowance balance (at beginning of period)...  $    600         $    560
                                                -------          -------
Provision for loan losses....................       180              180
                                                -------          -------
Charge-offs:
  Residential real estate....................        --               --
  Commercial real estate.....................        --               --
  Consumer...................................      (166)            (221)
Recoveries...................................        49               81
                                                -------          -------
Net (charge-offs) recoveries.................      (117)            (140)
                                                -------          -------
Allowance balance (at end of period).........   $   663          $   600
                                                -------          -------
Total loans outstanding......................   $60,024          $49,965
                                                =======          =======
Average loans outstanding....................   $53,114          $45,866
                                                =======          =======
Allowance for loan losses as
  a percent of total loans outstanding.......     1.11%            1.20%
                                                  ====             ====
Net loans charged off as a percent of
average loans outstanding....................     0.22%            0.31%
                                                  ====             ====


         Allocation of Allowance for Loan Losses. The following table sets forth
the  allocation of the Bank's  allowance  for loan losses by collateral  and the
percent of loans in each category to total loans  receivable,  net, at the dates
indicated.  The  portion  of the loan  loss  allowance  allocated  to each  loan
category  does not  represent  the total  available  for losses  which may occur
within the loan  category  since the total loan loss  allowance  is a  valuation
reserve applicable to the entire loan portfolio.

                                        8
<PAGE>



                                                    At December 31,

                                                 2001             2000
                                       -------------------   -------------------
                                               Percent of             Percent of
                                                Loans to               Loans to
                                       Amount  Total Loans   Amount  Total Loans
                                       ------  -----------   ------  -----------
                                                (Dollars in thousands)
At end of period allocated to:
Mortgage loans:
Residential:
  Permanent.......................       $285      28.73%     $199      27.24%
  Commercial real estate..........          -       1.52        -        1.90

  Commercial loans................          -       1.14        -           -

Consumer Loans:                                                             -
  Home equity loans...............         26      31.73       58       26.90
  Auto loans......................        198      29.26      175       36.46
  Other...........................        154       7.62      168        7.50
                                         ----     ------     ----      ------
Total allowance...................       $663     100.00%    $600      100.00%
                                         ====     ======     ====      ======

Investment Activities

         General. Federally chartered savings associations have the authority to
invest in various  types of liquid  assets,  including  United  States  Treasury
obligations,  securities of various government agencies and government-sponsored
entities   (including   securities   collateralized   by   mortgages),   certain
certificates  of deposits of insured banks and savings  institutions,  municipal
securities, corporate debt securities and loans to other banking institutions.

         Investment  Securities.  The Bank  maintains a portfolio of  investment
securities,  classified  as either  available  for sale or held to maturity.  At
December 31, 2001,  all of the Bank's  investment  securities  consisted of U.S.
government  agency and  government-sponsored  entity  obligations  with  varying
characteristics as to rate, maturity and call provisions.  Callable  securities,
representing 100% of the Bank's U.S. government agency and  government-sponsored
entity obligations,  totalling  approximately $1.0 million at December 31, 2001,
could reduce the Bank's investment yield if these securities are called prior to
maturity.  At December 31, 2001,  the Bank did not have any  investments  in the
obligations of state or local governments.

         Mortgage-backed  Securities.  The  mortgage-backed  securities  in  the
Bank's  portfolio  are  classified  as  either  available  for  sale  or held to
maturity.  The securities  are  participation  certificates  that are secured by
interest  in  pools  of  mortgages.   At  December  31,  2001,   the  Bank  held
mortgage-backed  securities  that were issued and  guaranteed by the  Government
National   Mortgage   Association   ("GNMA"),   the  Federal  National  Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").

         Mortgage-backed  securities  typically are issued with stated principal
amounts.  The  securities  are backed by pools of mortgages that have loans with
interest  rates that are  within a set range and have  varying  maturities.  The
underlying pool of mortgages can be composed of either  fixed-rate or adjustable
rate mortgage loans.  The interest rate risk  characteristics  of the underlying
pool of mortgages, including fixed- rate or adjustable-rate,  and the prepayment
risk, are passed on to the certificate holder. The life of a

                                       9
<PAGE>



mortgage-backed  pass-through  security  is equal to the life of the  underlying
mortgages.  Expected  maturities will differ from contractual  maturities due to
scheduled  repayments and because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.

         Collateralized  Mortgage Obligations ("CMOs"). The Bank also invests in
CMOs,  issued or  sponsored  by FNMA and  FHLMC.  The Bank's  investment  policy
classifies  CMO's  as  mortgage   derivative   products,   with  the  investment
restrictions  applicable to such category as described above. CMOs are a type of
debt security that aggregates pools of mortgages and mortgage-backed  securities
and creates  different  classes of CMO  securities  with varying  maturities and
amortization  schedules  as well as a residual  interest  with each class having
different risk  characteristics.  The cash flows from the underlying  collateral
are usually divided into "tranches" or classes whereby  tranches have descending
priorities with respect to the distribution of principal and interest  repayment
of the underlying  mortgages and  mortgage-backed  securities as opposed to pass
through mortgage-backed  securities where cash flows are distributed pro rata to
all security holders. Unlike mortgage-backed  securities from which cash flow is
received and prepayment risk is shared pro rata by all securities holders,  cash
flows from the mortgages and mortgage-backed securities underlying CMOs are paid
in  accordance  with a  predetermined  priority  to  investors  holding  various
tranches of the  securities or  obligations.  A particular  tranche or class may
carry  prepayment  risk  which  may be  different  from  that of the  underlying
collateral and other tranches.

         Other   Securities.   Other  securities  used  by  the  Bank,  but  not
necessarily included in the investment portfolio,  consist of equity securities,
interest-bearing  deposits and federal funds sold.  Equity  securities  owned at
December 31, 2001 consist of a $931  investment in FHLB of Atlanta  common stock
(this amount is not shown in the securities portfolio).  As a member of the FHLB
of  Atlanta,  ownership  of FHLB of  Atlanta  common  shares  is  required.  The
remaining  securities provide  diversification and complement the Bank's overall
investment strategy.

         The  following  table  sets  forth  the  carrying  value of the  Bank's
investment securities portfolio at the dates indicated.

<TABLE>
<CAPTION>
                                                                                       At
                                                                                    December 31,
                                                                                 -------------------
                                                                                   2001       2000
                                                                                 --------   --------
<S>                                                                          <C>        <C>

Securities Held to Maturity:
---------------------------
Collateralized mortgage obligations.........................................    $     723  $     958
                                                                                 --------   --------
 Total securities held to maturity...........................................         723        958
                                                                                 --------   --------

Securities available for sale (at fair value):
---------------------------------------------
 U.S. government agency and government-sponsored entity securities ..........         990      6,475
 Mortgage-backed securities..................................................      18,113      7,876
                                                                                 --------   --------
 Total securities available for sale.........................................      19,103     14,351
                                                                                 --------   --------
 Total.......................................................................    $ 19,826   $ 15,309
                                                                                 ========   ========
</TABLE>


                                       10
<PAGE>


         The  following  table  sets forth  certain  information  regarding  the
carrying values, weighted average yields and maturities of the Bank's investment
and mortgage- backed securities portfolio at December 31, 2001.


<TABLE>
<CAPTION>




                                                                     At December 31, 2001
                            -----------------------------------------------------------------------------------------------------
                            One Year or Less  One to Five Years Five to Ten Years More than Ten Years Total Investment Securities
                            ----------------  ----------------- ----------------- ------------------- ---------------------------

                            Amortized Average Amortized Average Amortized Average Amortized Average   Amortized Average Estimated
                              Cost     Yield    Cost     Yield    Cost     Yield    Cost     Yield      Cost     Yield Fair Value
                            --------- ------- --------- ------- --------- ------- --------- --------  --------- ------ ----------
                                                                        (Dollars in thousands)

<S>                       <C>               <C>      <C>      <C>              <C>                 <C>        <C>    <C>
U.S. government agency and
  government-sponsored
  entity securities......... $ -         -%    $1,000   4.10%    $    -     -%    $    -       -%     $ 1,000    4.10%  $   990
Collateralized mortgage
   obligations..............   -         -        347   6.23        376  5.45          -       -          723    5.81       730

Mortgage-backed securities
(1).........................   -         -      6,674   5.83      4,363  6.03      7,029    5.28       18,066    5.28    18,113
                             ---       ---     ------   ----     ------  ----     ------    ----      -------    ----   -------
  Total..................... $ -         -%    $8,021   5.63%    $4,739  5.98%    $7,029    5.28%     $19,789    5.60%  $19,833
                             ===       ===     ======   ====     ======  ====     ======    ====      =======    ====   =======

</TABLE>

-------------------
(1)      The totals include $7,029 of adjustable  rate  securities  that reprice
         annually.



                                       11
<PAGE>


Sources of Funds

         General.  Deposits are the major source of the Bank's funds for lending
and other investment purposes.  Borrowings  (principally from the FHLB) are used
to  supplement  the amount of funds for lending and  investment.  In addition to
deposits and  borrowings,  the Bank derives funds from loan and  mortgage-backed
securities principal repayments,  and proceeds from the maturity,  call and sale
of  mortgage-   backed   securities   and   investment   securities.   Loan  and
mortgage-backed  securities  payments are a relatively  stable  source of funds,
while deposit inflows are significantly influenced by general interest rates and
money market conditions.

         Deposits.  The following  table sets forth for the years ended December
31,  2000 and 2001 the average  amount of and  average  rate paid on each of the
following deposit categories: non-interest bearing demand deposits, money market
accounts, IRAs, savings deposits, and time deposits.

<TABLE>
<CAPTION>

                                                   Average Balance                        Average Balance
                                                 for the year ended                     for the year ended
                                                    December 31,          Average          December 31,           Average
Category                                                2001           Interest Rate           2000            Interest Rate
--------                                          ------------------   -------------    -------------------    -------------
                                                                           (Dollars in thousands)
<S>                                             <C>                                      <C>


Non-interest bearing demand deposits.........      $   7,499               -%               $ 6,315                -%
Money Market and floating rate
   IRA accounts..............................         10,701             2.52                 8,277              5.27
Statement savings deposits...................         21,458             2.00                20,493              3.00
Time deposits................................         18,671             5.57                12,649              6.49
                                                     -------                                -------
             Total...........................        $58,329                                $47,734
                                                     =======                                =======

</TABLE>

         The following table sets forth the time deposits in the Bank classified
by interest rate as of the dates indicated.


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

             Interest Rate
             -------------
             2.00-2.99%                    $     36    $      -
             3.00-3.99%                       2,846           -
             4.00-4.99%                       6,394         215
             5.00-5.99%                       3,069       3,083
             6.00-6.99%                       4,517       5,445
             7.00-7.99%                       4,791       6,885
                                           --------    --------
               Total                       $ 21,653    $ 15,628
                                           ========    ========


                                       12
<PAGE>


         The  following  table  sets forth the  amount  and  maturities  of time
deposits at December 31, 2001.


<TABLE>
<CAPTION>
                                                   Amount Due
                        ------------------------------------------------------------------------------
                                                                                  After
                        December 31,  December 31,  December 31,   December 31, December 31,
Unterest Rate              2002          2003          2004           2005          2006        Total
-------------           ------------  ------------  ------------   ------------ ------------  --------
                                                   (In thousands)

<S>                   <C>           <C>           <C>            <C>           <C>          <C>

2.00% - 2.99%.......     $    36       $     -       $     -        $     -       $     -      $    36
3.00% - 3.99%.......       2,579            74           188              -             5        2,846
4.00% - 4.99%.......       4,428           615           913              -           438        6,394
5.00% - 5.99%.......       1,514         1,068           355             56            76        3,069
6.00% - 6.99%.......       1,907         1,700           215            121           574        4,517
7.00% - 7.99%.......         989         1,611           394          1,558           239        4,791
                         -------       -------        ------         ------        ------      -------
  Total                  $11,453       $ 5,068        $2,065         $1,735        $1,332      $21,653
                         =======       =======        ======         ======        ======      =======

</TABLE>


         The  following  table  shows the amount of the Bank's  certificates  of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
2001.


                                                        Certificates
Maturity Period                                           of Deposit
---------------                                         -------------
                                                        (In thousands)
Within three months................................          $2,275
Three through six months...........................             651
Six through twelve months..........................             591
Over twelve months.................................           2,335
                                                             ------
                                                             $5,852
                                                             ======

         Borrowings.  The Bank, as the need arises or in order to take advantage
of funding opportunities, borrows funds in the form of advances from the FHLB to
supplement  its  supply of funds and to meet  deposit  withdrawal  requirements.
Advances from the FHLB are typically secured by the Bank's stock in the FHLB and
a portion of the Bank's  residential  mortgage loans and may be secured by other
assets,  mainly  securities  which are  obligations of or guaranteed by the U.S.
Government.  Short-term advances at December 31, 2001 totaled $12.5 million. See
Note 7 to Notes to Consolidated Financial Statements.


                                       13
<PAGE>


         The following  table sets forth certain  information  regarding  Bank's
borrowed funds.


                                                     Year Ended December 31,
                                                     -----------------------
                                                        2001         2000
                                                     ---------   -----------

FHLB Advances:
Average balance outstanding...........................$12,086     $16,808
Maximum amount outstanding
  at any month-end during the period.................. 15,000      16,500
Balance outstanding at end of period.................. 12,500      15,000
Weighted average interest rate during the period......  5.79%       6.26%
Weighted average interest rate at end of period.......  5.22%       6.59%


Subsidiary Activity

         The Bank is permitted to invest its assets in the capital  stock of, or
originate secured or unsecured loans to, subsidiary corporations. In addition to
the Bank, the Company has two other  subsidiaries,  Armor Insurance Group,  Inc.
("Armor") and C.U. Benefits, Inc.

         Armor is a service  corporation  organized  in early  2000 as a limited
liability  company  under  Maryland law for the purpose of engaging in insurance
and related  activities.  Armor offers a full range of individual and commercial
property and casualty  products  primarily to depositor  members of the Bank but
also to the general public.  During the fiscal year ended December 31, 2001, the
Company acquired two separate insurance agencies which were merged into Armor.

         C.U. Benefits, Inc. is a service corporation incorporated in 1988 under
Maryland  law for the  purpose of  performing  financial  planning  and  related
services to the members of the Bank through third party  providers.  For most of
the past five years,  the  corporation  was inactive.  In 2001, the Bank aligned
with a new provider,  AXA Advisors,  and since then the Bank has begun promoting
this activity again.  The Bank will continue strong  promotional  efforts in the
future but may abandon this activity if it is deemed unprofitable.

Personnel

         As of December 31, 2001, the Bank had twenty-five  full-time  employees
and one  part-time  employee  and Armor  had five  full-time  and one  part-time
employee. The employees are not represented by a collective bargaining unit. The
Bank believes its relationship with its employees to be satisfactory.

Regulation

         Set forth below is a brief  description  of certain laws that relate to
the regulation of the Bank and the Company after the Conversion. The description
does not purport to be complete and is qualified in its entirety by reference to
applicable  laws and  regulations.  The Bank and the Company operate in a highly
regulated  industry.  The U.S.  government could adopt regulations or enact laws
which  restrict  the  operations  of the  Bank  and/or  the  Company  or  impose
burdensome requirements upon one or both of them.


                                       14
<PAGE>



Financial Modernization Legislation

         On   November   12,   1999,   the   President   signed   into  law  the
Gramm-Leach-Bliley Financial Services Modernization Act of 1999 (the "GLB Act"),
which repealed the prohibitions  against bank  affiliations  with securities and
insurance  firms.  The GLB Act authorizes  qualifying bank holding  companies to
become financial  holding  companies and thereby affiliate with securities firms
and  insurance  companies and engage in other  activities  that are financial in
nature.   The  GLB  Act  defines  financial  in  nature  to  include  securities
underwriting,  dealing and market making; sponsoring mutual funds and investment
companies;  insurance underwriting and agency; merchant banking activities,  and
activities  that the Federal  Reserve Board has determined to be closely related
to banking. A qualifying  national bank also may engage,  subject to limitations
on investment,  in activities that are financial in nature, other than insurance
underwriting,  insurance company portfolio investment,  real estate development,
and real estate investment, through a financial subsidiary of the bank.

         The GLB Act  repeals the  "unitary  savings  and loan  holding  company
exemption"  from the  restrictions  imposed by the Home  Owners' Loan Act on the
business  activities  of savings and loan holding  companies.  As a result,  any
savings and loan holding  company formed after May 4, 1999, such as the Company,
is subject to statutory and regulatory  restrictions on its business activities.
See "-- Regulation of The Company -- Activities Restrictions."

         In addition,  the GLB Act imposes  significant  new  financial  privacy
obligations and reporting requirements on all financial institutions,  including
federal savings  associations.  Specifically,  the statute,  among other things,
will  require  financial  institutions  (a) to  establish  privacy  policies and
disclose them to customers both at the  commencement of a customer  relationship
and on an annual  basis and (b) to permit  customers  to opt out of a  financial
institution's   disclosure  of  financial  information  to  nonaffiliated  third
parties.  The federal  financial  regulators have promulgated  final regulations
implementing these provisions, which will become effective July 1, 2001.

         Furthermore, the GLB Act also enacts significant changes to the Federal
Home Loan Bank System.  The GLB Act expands the permissible uses of Federal Home
Loan Bank advances by community  financial  institutions  (under $500 million in
assets) to include  funding  loans to small  businesses,  small  farms and small
agri-businesses.  The GLB Act also makes  membership in a regional  Federal Home
Loan Bank voluntary for federal savings associations.

Regulation of the Company

         General.  The Company is a savings and loan holding  company within the
meaning of Section  10(o) of the Home  Owners'  Loan Act and is required to file
reports with the OTS and is subject to regulation and examination by the OTS. In
addition, the OTS has enforcement authority over the Company and any non-savings
institution  subsidiaries.   This  permits  the  OTS  to  restrict  or  prohibit
activities  that it determines to be a serious risk. This regulation is intended
primarily for the protection of the depositors and is not for the benefit of the
stockholders of the Company.

         Activities  Restrictions.  As a savings and loan holding company formed
after May 4, 1999, the Company is not a grand fathered  unitary savings and loan
holding company under the GLB Act. As a result,  the Company and its non-savings
institution  subsidiaries,  if any exist in the future,  is subject to statutory
and regulatory restrictions on their business activities. Under the Home Owners'
Loan Act, as amended by the GLB Act, the  nonbanking  activities  of the Company
are restricted to certain activities specified by OTS regulation,  which include
performing  services  and  holding  properties  used  by a  savings  institution
subsidiary,

                                       15
<PAGE>



activities  authorized  for savings and loan  holding  companies  as of March 5,
1987, and nonbanking activities  permissible for bank holding companies pursuant
to the Bank  Holding  Company  Act of 1956 (the  "BHC  Act") or  authorized  for
financial holding companies pursuant to the GLB Act. Furthermore, no company may
acquire  control of the  Company  unless  the  acquiring  company  was a unitary
savings and loan holding company on May 4, 1999 (or became a unitary savings and
loan holding company pursuant to an application  pending as of that date) or the
company is only engaged in activities  that are  permitted for multiple  savings
and loan holding  companies or for financial holding companies under the BHC Act
as amended by the GLB Act.

Regulation of The Bank

         General. As a federally  chartered,  SAIF-insured  savings association,
the Bank is subject to  extensive  regulation  by the OTS and the FDIC.  Lending
activities  and  other  investments  must  comply  with  federal  statutory  and
regulatory requirements. The Bank is also subject to reserve requirements of the
Federal  Reserve  System.  Federal  regulation  and  supervision  establishes  a
comprehensive  framework of activities in which an institution can engage and is
intended  primarily  for  the  protection  of  the  SAIF  and  depositors.  This
regulatory  structure gives the regulatory  authorities  extensive discretion in
connection with their  supervisory  and  enforcement  activities and examination
policies,  including  policies  regarding the  classification  of assets and the
establishment of adequate allowance for loan losses.

         The OTS regularly  examines the Bank and prepares reports to the Bank's
board of directors on deficiencies,  if any, found in its operations. The Bank's
relationship with its depositors and borrowers is also regulated by federal law,
especially in such matters as the ownership of savings accounts and the form and
content of the Bank's mortgage documents.

         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities and financial  condition,  and must obtain regulatory approvals prior
to entering into certain  transactions  such as mergers with or  acquisitions of
other financial institutions.  Any change in applicable statutory and regulatory
requirements,  whether by the OTS, the FDIC or the United States Congress, could
have  a  material  adverse  impact  on the  Company  and  the  Bank,  and  their
operations.

         Insurance  of  Deposit  Accounts.  The FDIC  administers  two  separate
deposit insurance funds. Generally,  the Bank Insurance Fund (the "BIF") insures
the deposits of commercial  banks and the SAIF ("SAIF")  insures the deposits of
savings  institutions.  The FDIC is  authorized  to increase  deposit  insurance
premiums if it  determines  such  increases  are  appropriate  to  maintain  the
reserves of either the SAIF or BIF or to fund the administration of the FDIC. In
addition,  the FDIC is authorized to levy emergency  special  assessments on BIF
and SAIF members.

         FDIC-insured  institutions  are required to pay assessments to the FDIC
at an annual rate of  approximately  .0212% of insured deposits to fund interest
payments on bonds issued by the Financing Corporation ("FICO"), an agency of the
Federal  government  established to  recapitalize  the  predecessor to the SAIF.
These assessments will continue until the FICO bonds mature in 2017.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total  adjusted  assets,  (2) "Tier 1" or "core"  capital equal to at
least 4% (3% if the institution  has received the highest  rating,  "composite 1
CAMELS," on its most  recent  examination)  of total  adjusted  assets,  and (3)
risk-based  capital equal to 8% of total  risk-weighted  assets. The Bank was in
compliance with these regulatory capital standards at December 31, 2001.

                                       16
<PAGE>



         Dividend and Other Capital  Distribution  Limitations.  The OTS imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends.

         A  savings  institution  that is a  subsidiary  of a  savings  and loan
holding company, such as the Bank, must file an application or a notice with the
OTS at least 30 days before making a capital distribution. A savings institution
must file an application for prior approval of a capital distribution if: (i) it
is not eligible for expedited treatment under the applications  processing rules
of the OTS;  (ii) the total amount of all capital  distributions,  including the
proposed capital distribution,  for the applicable calendar year would exceed an
amount  equal to the  savings  bank's  net income for that year to date plus the
institution's  retained net income for the preceding  two years;  (iii) it would
not  adequately  be  capitalized  after the  capital  distribution;  or (iv) the
distribution would violate an agreement with the OTS or applicable regulation.

         The  Bank  is  required  to  file  a  capital  distribution  notice  or
application  with the OTS before  paying any dividend to the  Company.  However,
capital distributions by the Company, as a savings and loan holding company, are
not subject to the OTS capital distribution rules.

         The OTS may  disapprove a notice or deny an  application  for a capital
distribution if: (i) the savings institution would be undercapitalized following
the capital  distribution;  (ii) the proposed capital distribution raises safety
and  soundness  concerns;  or (iii) the  capital  distribution  would  violate a
prohibition contained in any statute, regulation or agreement.

         In addition,  the Bank may not declare or pay a dividend on its capital
stock if the dividend would reduce the regulatory  capital of the Bank below the
amount required for the liquidation  account  established in connection with the
conversion from mutual to stock form. The liquidation account is maintained as a
separate  account at the Bank and was  established in an amount equal to its net
worth as of the latest  practicable date prior to conversion.  Depositors of the
Bank at the eligibility and supplemental  eligibility  record dates  established
for the conversion hold interests in the liquidation  account equal to their pro
rata  deposits in the Bank at such dates.  If the amount in any of these deposit
accounts on any annual  closing date of the Bank  (December 31) is less than the
amount in the liquidation account on the respective eligibility dates, then such
depositor's  interest  in  the  liquidation  account  is  reduced  by an  amount
proportionate  to the  reduction and the reduction in interest is reflected by a
corresponding  decrease in the balance of the liquidation  account.  However, an
individual's  interest  in and the  balance  of the  liquidation  account is not
increased  despite  any  increase  in  deposit  accounts  after  the  respective
eligibility dates.

         No merger,  consolidation,  purchase of bulk assets with assumptions of
savings accounts and other  liabilities,  or similar  transactions  with another
insured  institution  in which  the  Bank,  in its  converted  form,  is not the
surviving  institution,  shall be  considered a complete  liquidation.  In these
transactions,  the  liquidation  account  shall  be  assumed  by  the  surviving
institution.

         Qualified Thrift Lender Test. Federal savings  institutions must meet a
qualified  thrift  lender  ("QTL")  test or they become  subject to the business
activity  restrictions  and branching  rules  applicable to national  banks.  To
qualify as a QTL, a savings  institution  must  either (i) be deemed a "domestic
building and loan association" under the Internal Revenue Code by maintaining at
least 60% of its total  assets in  specified  types of assets,  including  cash,
certain  government  securities,  loans  secured by and other assets  related to
residential real property,  educational loans and investments in premises of the
institution or (ii) satisfy the statutory QTL test set forth in the Home Owners'
Loan Act by  maintaining  at least  65% of its  "portfolio  assets"  in  certain
"Qualified Thrift  Investments"  (defined to include  residential  mortgages and
related equity investments,  certain mortgage-related securities, small business
loans,  student  loans and  credit  card  loans,  and 50% of  certain  community
development loans). For purposes of the statutory QTL test,

                                       17
<PAGE>


portfolio assets are defined as total assets minus intangible  assets,  property
used by the  institution in conducting its business,  and liquid assets equal to
10% of total assets. A savings  institution must maintain its status as a QTL on
a monthly  basis in at least nine out of every 12  months.  The Bank met the QTL
test as of December  31, 2001 and in each of the last 12 months and,  therefore,
qualifies as a QTL.

         Transactions with Affiliates.  Generally,  federal banking law requires
that  transactions  between a savings  institution or its  subsidiaries  and its
affiliates  must  be on  terms  as  favorable  to  the  savings  institution  as
comparable transactions with non-affiliates. In addition, certain types of these
transactions   are  restricted  to  an  aggregate   percentage  of  the  savings
institution's capital.  Collateral in specified amounts must usually be provided
by  affiliates  in order to  receive  loans  from the  savings  institution.  In
addition,  a savings  institution may not extend credit to any affiliate engaged
in  activities  not  permissible  for a bank  holding  company  or  acquire  the
securities of any affiliate that is not a subsidiary. The OTS has the discretion
to treat  subsidiaries  of savings  institutions as affiliates on a case-by-case
basis.

         Liquidity  Requirements.  All federal savings institutions are required
to  maintain  an  average  daily  balance  of liquid  assets  equal to a certain
percentage of the sum of its average daily balance of net  withdrawable  deposit
accounts  and  borrowings  payable in one year or less.  Depending  on  economic
conditions and savings flows of all savings  institutions,  the OTS can vary the
liquidity  requirement from time to time between 4% and 10%. Monetary  penalties
may be imposed on institutions for liquidity requirement violations.

         Federal  Reserve  System.  The  Federal  Reserve  System  requires  all
depository institutions to maintain  non-interest-bearing  reserves at specified
levels against their checking accounts and non- personal  certificate  accounts.
The balances maintained to meet the reserve  requirements imposed by the Federal
Reserve System may be used to satisfy the OTS liquidity requirements.

         Savings  institutions have authority to borrow from the Federal Reserve
System "discount  window," but Federal Reserve System policy generally  requires
savings  institutions  to exhaust all other sources  before  borrowing  from the
Federal Reserve System.

Item 2.  Description of Property.

(a)      Properties.

         The  Bank's  main  office is located at 10455 Mill Run Circle in Owings
Mills,  Maryland.  The Bank also  conducts its business  through a  full-service
branch  office  located at 8801  Columbia 100 Parkway in Columbia,  Maryland and
through five remote ATM locations in Columbia,  Timonium and Baltimore,  four of
which  offer  24-hour  access.  The Bank's  main  office is  located  inside the
CareFirst  BlueCross  BlueShield  ("CareFirst")  headquarters  building  and  is
accessible  to the general  public.  The Bank  occupies  2500 square feet in the
headquarters  building  under a  Financial  Services  Agreement  with  CareFirst
whereby the Bank provides various financial services to CareFirst  employees and
customers  in return for office  space.  There are no rent  payments  under such
agreement. The agreement has a term ending in March 2002, at which time the Bank
expects to renew such agreement.  The agreement is subject to early termination,
with three months notice required,  in the event that CareFirst ceases to occupy
at least half of the building.

         During the quarter ended  September 30, 2001,  the  Registrant  entered
into an agreement to acquire property in Columbia, Maryland to be developed as a
new branch office  located in a new shopping  center to be anchored by a 100,000
square  foot Home Depot Expo  store.  The  purchase  price of the  property  was
$975,000  and the  construction  expense  and  equipment  expense for the branch
building is expected to be

                                       18
<PAGE>



approximately $1.0 million.  The anticipated opening of this new branch location
is currently late summer or early fall of 2002.

         The  following  table sets forth the location of the Bank's main office
and branch  office,  the year the offices  were opened and the net book value of
each office and its related equipment.

<TABLE>
<CAPTION>


                                             Year Facility      Lease      Net Book Value at
Office Location                                  Opened         or Own     December 31, 2001
---------------                              --------------    --------     -----------------
<S>                                            <C>          <C>               <C>

Main Office - Owings Mills                        1991         Leased            $521,199
Branch Office - Columbia                          1999         Leased(1)         $416,792
Branch Office - Columbia Crossings                2002         Owned(2)          $ 40,000

</TABLE>

________________
(1)      The  building  is owned  by the  Bank and the land is under an  assumed
         ground  lease  agreement,  expiring  on  July 1,  2009.  The  lease  is
         renewable for three five-year extensions at the Bank's option.
(2)      Down payment on land for new branch to open late in 2002.


(b)      Investment Policies.

         See "Item 1.  Description of Business" above for a general  description
of the Bank's  investment  policies and any  regulatory  or Board of  Directors'
percentage  of assets  limitations  regarding  certain  investments.  The Bank's
investments are primarily  acquired to produce  income,  and to a lesser extent,
possible capital gain.

         (1)  Investments in Real Estate or Interests in Real Estate.  See "Item
1.  Description  of Business - Lending  Activities and - Bank  Regulation,"  and
"Item 2. Description of Property."

         (2) Investments in Real Estate  Mortgages.  See "Item 1. Description of
Business - Lending Activities and - Bank Regulation."

         (3)  Investments  in  Securities  of or Interests in Persons  Primarily
Engaged  in Real  Estate  Activities.  See "Item 1.  Description  of  Business -
Lending Activities and -Bank Regulation."

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

Item 3.  Legal Proceedings

         There are various  claims and lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.

                                       19
<PAGE>


                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters

         The  information  contained  under the section  captioned  "Stock Price
Information" of the Company's  Annual Report to Stockholders for the fiscal year
ended  December  31,  2001  (the  "Annual  Report")  is  incorporated  herein by
reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation

         The  information  contained under the section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report is incorporated herein by reference.

Item  7.  Financial Statements

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.

Item 8.  Changes in and  Disagreements  with  Accountants  On Accounting  and
         Financial Disclosure.

         Not applicable.

                                    PART III

Item 9.  Directors,  Executive  Officers,  Promoters  and  Control  Persons:
         Compliance with Section 16(a) of the Exchange Act.

         The information  contained under the sections  captioned "Section 16(a)
Beneficial  Ownership  Reporting  Compliance"  and  "Proposal  I -  Election  of
Directors"  in  the  Company's   Proxy  Statement  for  the  Annual  Meeting  of
Stockholders for the Fiscal Year ended December 31, 2001 (the "Proxy Statement")
is incorporated herein by reference.

Item 10.  Executive Compensation

         The  information  contained under the section  captioned  "Director and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

(a)      Security Ownership of Certain Beneficial Owners

         Information  required by this item is incorporated  herein by reference
to the first chart in the section captioned "Proposal I - Election of Directors"
in the Proxy Statement.

(b)      Security Ownership of Management

         Information  required by this item is incorporated  herein by reference
to the first chart in the section captioned "Proposal I - Election of Directors"
in the Proxy Statement.

                                       20
<PAGE>



     (c)  Management of the Registrant knows of no  arrangements,  including any
          pledge by any person of securities of the Registrant, the operation of
          which may at a  subsequent  date  result in a change in control of the
          Registrant.

Item 12.  Certain Relationships and Related Transactions

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.

Item 13.  Exhibits, List, and Reports on Form 8-K

     (a)  Listed below are all financial  statements  and exhibits filed as part
          of this report.

     1.   The consolidated  balance sheets of BUCS Financial Corp as of December
          31, 2001 and 2000 and the related consolidated statements of earnings,
          stockholders' equity and comprehensive  income, and cash flows for the
          years then ended,  together with the related notes and the independent
          auditors' report.

     2.   Schedules omitted as they are not applicable.

     3.   The  following  exhibits are  included in this Report or  incorporated
          herein by reference:

          (a)  List of Exhibits:

          3(i) Articles of Incorporation of BUCS Financial Corp *
          3(ii) Bylaws of BUCS Financial Corp *
          10   Employment Agreement with Herbert J. Moltzan *
          13   Annual Report to Stockholders  for the fiscal year ended December
               31, 2001
          21   Subsidiaries  of the  Registrant  (See  "Item 1.  Description  of
               Business)


------------------------
*    Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2 (File No. 333-74279 filed with the SEC on October 6, 2000.

          (b)  Reports on Form 8-K:

               None.




                                       21
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
March 25, 2002.

                                           BUCS FINANCIAL CORP

                                       By: /s/Herbert J. Moltzan
                                           -------------------------------------
                                           Herbert J. Moltzan
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

         Pursuant to the requirement of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of March 25, 2002.



                                      /s/Joseph Pescrille
--------------------------------      ------------------------------------------
Allen Maier                           Joseph Pescrille
Chairman and Director                 Vice Chairman and Director



                                      /s/M. Robin Copeland
--------------------------------      ------------------------------------------
Brian Bowers                          M. Robin Copeland
Treasurer and Director                Secretary and Director



/s/Thomas Markel                      /s/A. Virginia Wampler
--------------------------------      ------------------------------------------
Thomas Markel                         A. Virginia Wampler
Director                              Director



--------------------------------      ------------------------------------------
Harry Fox                             Peg Ohrt
Director                              Director



/s/Dale Summers                       /s/Herbert J. Moltzan
--------------------------------      ------------------------------------------
Dale Summers                          Herbert J. Moltzan
Director                              President, Chief Executive Officer
                                      and Director (Principal Executive Officer
                                      and Principal Accounting and Financial
                                      Officer)



                                       22