UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

(Mark One)        
X
Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2004      
or         
Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 
For the transition period from _______ to _______      
Commission File No. 000-25851      
UNITY HOLDINGS, INC 
(Name of Small Business Issuer in Its Charter)      
Georgia  
     58-2350609      
(State or Other Jurisdiction of Incorporation or Organization)  
(I.R.S. Employer Identification No.)      
950 Joe Frank Harris Pkwy, S.E.  
30121 
Cartersville, Georgia  
(Zip Code)      
                  (770) 606-0555                    
Issuer's Telephone Number, Including Area Code      
Securities registered pursuant to Section 12(b) of the Act:  None.      
Securities registered pursuant to Section 12(g) of the Act:  Common Stock, $.01 par value     
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 past 90 days.

Yes    X                   No 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B 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 ]

The issuer's revenue for its most recent fiscal year was $12,039,276.  As of March 31, 2004, 1,013,510 shares of Common Stock were issued and outstanding.

The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the Company was $13,990,900.  This calculation is based upon an estimate of the fair market value of the Common Stock by the Company's Board of Directors of $22 per share on that date.  There is not an active trading market for the Common Stock and it is not possible to identify precisely the market value of the Common Stock.

Transitional Small Business Disclosure Format.  (Check one): Yes __   No X
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the information required by Part III of this Annual Report are incorporated by reference from the Registrant's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report.

UNITY HOLDINGS, INC.

ANNUAL REPORT ON FORM 10-KSB

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

 

Item 
Page
Number 
Number**PART I   
1.
Description of Business
3 
2.
Description of Property
13
3.
Legal Proceedings
13
4.
Submission of Matters to a Vote of Security Holders
13   **PART II   
5.
Market for Registrant's Common Stock and Related Security Holder Matters
13
6.
Management's Discussion and Analysis of Financial Condition and  
Results of Operations
14
7.
Consolidated Financial Report
14
8.
Changes in and Disagreements with Accountants on Accounting  
and Financial Disclosure
14
8A.
Controls and Procedures
15
8B.
Other Information
15   **PART III   
9.
Directors and Principal Officers of the Registrant
15
10.
Executive Compensation
15
11.
Security Ownership of Certain Beneficial Owners and Management
15
12.
Certain Relationships and Related Transactions
16   **PART IV   
13.
Exhibits 
16
14.
Principal Accountant Fees and Services
17
 

 
**Item 1.  Description of Business.
**General**
Unity Holdings, Inc. was incorporated in Georgia on October 8, 1997 as a bank holding company to own and control all of the capital stock of Unity National Bank.  Organizing activities for the Company began during the summer of 1997, consisting primarily of preparation and filing of a registration statement for sale of the Company's stock, preparation and filing of the Bank's charter application, acquisition of physical facilities, and hiring of staff.  On November 30, 1998, the Federal Deposit Insurance Corporation approved the Bank's application for deposit insurance, and on February 11, 1998, the Office of the Comptroller of the Currency approved the Bank's charter application.  The Board of Governors of the Federal Reserve approved the Company to be a bank holding company on November 30, 1998.  The Bank began operations as a national bank on November 30, 1998 at its main banking location in Cartersville, Georgia.  On January 4, 1999, the Bank opened a branch office in Adairsville, Georgia.  On October 9, 2001, the Bank opened another branch office in Rome, Georgia.
**Location and Service Area**
The Bank conducts a general commercial banking business in its service area, emphasizing the banking needs of small-to-medium sized businesses, professional concerns and individuals.  The Bank operates from a main office in Cartersville, Georgia located at the corner of Joe Frank Harris Parkway and Market Place Boulevard, S.E. in Cartersville, Georgia and branch offices located at 7450 Adairsville Highway, NW, Adairsville, Georgia and 42 Three Rivers Drive, Rome, Georgia.  See "Description of Property" below.  The Bank draws most of its customer deposits and conducts most of its lending transactions from within a primary service area of Bartow County and Floyd County, Georgia, with a secondary market which includes the neighboring counties of Cherokee, Chattooga, Gordon and Polk.

Bartow County is located in northwest Georgia, approximately 40 miles from the city of Atlanta.  Bartow County, which had an estimated population of 84,730 in 2003 and a median effective buying income per household of $43,660, includes the cities of Cartersville, Adairsville, Emerson, Kingston, Stilesboro, Taylorville and White.  Bartow County is generally rectangular in shape and the main office of the Bank is located in Cartersville, which is close to the southeast corner of the county.  To the east and south of Cartersville is Lake Allatoona, which is a natural barrier to the remainder of that part of the county and to a portion of adjacent counties.  The primary markets for the main office and the branch located in Bartow County include the cities of Cartersville and Adairsville, which are located in the northern and southern parts of Bartow County and provide access for residents of the entire county. 

Floyd County is also located in northwest Georgia and had an estimated population of 93,368 in 2003 and a median effective buying income per household of $35,615.  Our branch is located in Rome, Georgia, which is located in the center of Floyd County.  The primary market for the bank is the City of Rome, which draws from secondary markets which include Gordon, Polk, Cherokee and Chattooga Counties.  Neither the Company nor the Bank generates a material amount of revenue from foreign countries, nor does either have material long-lived assets, customer relationships, mortgages or servicing rights, deferred policy acquisition costs, or deferred tax assets in foreign countries.  Thus, the Company has no significant risks attributable to foreign operations.

According to data provided by the Georgia Department of Labor, which was compiled in 2002, there are 3,851 businesses in Bartow and Floyd Counties subject to unemployment insurance laws.  Bartow and Floyd Counties, like other similar communities, have many small businesses that are not subject to unemployment insurance laws and are not reflected in this data.  There are 245 manufacturing companies, 426 construction companies, and 2,906 service producing companies in Bartow and Floyd Counties.  Bartow and Floyd Counties together host a total of 4 college learning centers and two technical colleges.
** 

Marketing Focus

Most of the banks in the Bartow and Floyd Counties area are now local branches of large regional banks. Although size gives the larger banks certain advantages in competing for business from large corporations, including higher lending limits and the ability to offer services in other areas of Georgia and the Bartow and Floyd Counties area, the Company believes that there has been a void in the community banking market in the Bartow and Floyd Counties area and believes that the Bank successfully fills this void.  As a result, the Company generally does not attempt to compete for the banking relationships of large corporations, but concentrates its efforts on small- to medium-sized businesses and on individuals.  The Bank advertises to emphasize the Company's local ownership, community bank nature, and ability to provide more personalized service than its competition. 
**Deposits

The Bank offers a full range of deposit services that are typically available in most banks and savings and loan associations, including checking accounts, commercial accounts, NOW accounts, savings accounts, and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit.  The transaction accounts and time certificates are tailored to the Bank's principal market area at rates competitive to those offered in the Bartow County area.  In addition, the Bank offers certain retirement account services, such as Individual Retirement Accounts (IRAs).  The Bank solicits these accounts from individuals, businesses, associations and organizations, and governmental authorities. 
**Lending Activities
*General.  The Bank emphasizes a range of lending services, including real estate, commercial and consumer loans, to individuals and small-to-medium-sized businesses and professional concerns that are located in or conduct a substantial portion of their business in the Bank's market area. 
*Real Estate Loans.  One of the primary components of the Bank's loan portfolio is loans secured by first or second mortgages on real estate.  These loans generally consist of commercial real estate loans, construction and development loans, and residential real estate loans (but exclude home equity loans, which are classified as consumer loans).  Loan terms generally are limited to five years or less, although payments may be structured on a longer amortization basis.  Interest rates may be fixed or adjustable, and will more likely be fixed in the case of shorter term loans.  The Bank will generally charge an origination fee.  Management attempts to reduce credit risk in the commercial real estate portfolio by emphasizing loans on owner-occupied office and retail buildings where the loan-to-value ratio, established by independent appraisals, does not exceed 80%.  In addition, the Bank will typically require personal guarantees of the principal owners of the property backed with a review by the Bank of the personal financial statements of the principal owners.  The principal economic risk associated with each category of anticipated loans, including real estate loans, is the creditworthiness of the Bank's borrowers.  The risks associated with real estate loans vary with many economic factors, including employment levels and fluctuations in the value of real estate.  The Bank competes for real estate loans with a number of bank competitors which are well established in the Bartow and Floyd Counties area.  Most of these competitors have substantially greater resources and lending limits than the Bank.  As a result, the Bank may have to charge lower interest rates to attract borrowers.  See "Competition" below.  The Bank also originates and acts as a party in loan participations.   The Bank intends to limit interest rate risk and credit risk on these loans by locking the interest rate for each loan with the secondary investor and receiving the investor's underwriting approval prior to originating the loan. 
*Commercial Loans.  The Bank makes loans for commercial purposes in various lines of businesses.  Equipment loans are typically made for a term of five years or less at fixed or variable rates, with the loan fully amortized over the term and secured by the financed equipment and with a loan-to-value ratio of 80% or less.  Working capital loans typically have terms not exceeding one year and usually are secured by accounts receivable, inventory, or personal guarantees of the principals of the business.  For loans secured by accounts receivable or inventory, principal will typically be repaid as the assets securing the loan are converted into cash, and in other cases principal will typically be due at maturity.  The principal economic risk associated with each category of anticipated loans, including commercial loans, is the creditworthiness of the Bank's borrowers.  The risks associated with commercial loans vary with many economic factors, including the economy in the Bartow and Floyd Counties areas.  The well-established banks in the Bartow and Floyd Counties area will make proportionately more loans to medium- to large-sized businesses than the Bank.  Many of the Bank's anticipated commercial loans will likely be made to small- to medium-sized businesses which may be less able to withstand competitive, economic, and financial conditions than larger borrowers. Commercial loans are generally considered to have greater risk than first or second mortgages on real estate. 
*Consumer Loans.  The Bank makes a variety of loans to individuals for personal and household purposes, including secured and unsecured installment and term loans, home equity loans and lines of credit, and revolving lines of credit such as credit cards.  These loans typically carry balances of less than $25,000 and, in the case of non-revolving loans, are amortized over a period not exceeding 60 months or are ninety-day term loans, in each case bearing interest at a fixed rate. The revolving loans typically bear interest at a fixed rate and require monthly payments of interest and a portion of the principal balance.  The underwriting criteria for home equity loans and lines of credit generally is the same as applied by the Bank when making a first mortgage loan, as described above, and home equity lines of credit typically expire ten years or less after origination.  As with the other categories of loans, the principal economic risk associated with consumer loans is the creditworthiness of the Bank's borrowers, and the principal competitors for consumer loans are the established banks in the Bartow and Floyd Counties area.  Consumer loans are generally considered to have greater risk than first or second mortgages on real estate. 
*Loan Approval and Review.  The Bank's loan approval policies provide for various levels of officer lending authority.  When the amount of aggregate loans to a single borrower exceeds that individual officer's lending authority, the loan request is considered and approved by an officer with a higher lending limit or the loan committee.  The Bank will not make any loans to any director, officer, or employee of the Bank unless the loan is approved by the board of directors of the Bank and is made on terms not more favorable to such person than would be available to a person not affiliated with the Bank.  The Bank currently intends to adhere to Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation ("FHLMC") guidelines in its mortgage loan review process, but may choose to alter this policy in the future.  The Bank does not currently sell its mortgage loans on the secondary market, but may choose to do so in the future. 
*Lending Limits.  The Bank's lending activities are subject to a variety of lending limits imposed by federal law.  While differing limits apply in certain circumstances based on the type of loan or the nature of the borrower (including the borrower's relationship to the Bank), in general the Bank is subject to a loan-to-one-borrower limit.  These limits will increase or decrease as the Bank's capital increases or decreases.  Unless the Bank is able to sell participations in its loans to other financial institutions, the Bank will not be able to meet all of the lending needs of loan customers requiring aggregate extensions of credit above these limits. 
**Other Banking Services

Other bank services include cash management services, safe deposit boxes, travelers checks, direct deposit of payroll and social security checks, and automatic drafts for various accounts.  The Bank is associated with a shared network of automated teller machines that may be used by Bank customers throughout Georgia and other regions.  The Bank also offers MasterCard and VISA credit card services through a correspondent bank as an agent for the Bank.  The Bank does not plan to exercise trust powers during its initial years of operation. 
**Competition**
The banking business is highly competitive.  The Bank competes as a financial intermediary with other commercial banks, savings and loan associations, credit unions and money market mutual funds operating in Bartow County and elsewhere.  There are currently 13 banks operating 22 offices in Bartow County, holding approximately $892 million in deposits.  There are also four credit unions in the county.  There are currently 10 commercial banks operating 28 offices and five credit lenders operating in Floyd County, holding approximately $1.1 billion in deposits.  A number of these competitors are well established in the Bartow and Floyd Counties areas.  Most of them have substantially greater resources and lending limits and may have a lower cost of funds than the Bank.  These banks offer certain services, such as extensive and established branch networks and trust services, which the Bank does not currently provide.  As a result of these competitive factors, the Bank may have to pay higher rates of interest in order to attract deposits. 
**Employees**
As of December 31, 2004, the Bank had 44 full-time employees and 4 part-time employees.
**SUPERVISION AND REGULATION**
The Company and the Bank are subject to state and federal banking laws and regulations which impose specific requirements or restrictions on, and provide for general regulatory oversight with respect to, virtually all aspects of operations.  These laws and regulations are generally intended to protect depositors, not shareholders.  To the extent that the following summary describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions.  Any change in applicable laws or regulations may have a material effect on the business and prospects of the Company.  Beginning with the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and following with the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), numerous additional regulatory requirements have been placed on the banking industry in the past five years, and additional changes have been proposed.  The banking industry is also likely to change significantly as a result of the passage of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act").  The operations of the Company and the Bank may be affected by legislative changes and the policies of various regulatory authorities.  The Company is unable to predict the nature or the extent of the effect on its business and earnings that fiscal or monetary policies, economic control or new federal or state legislation may have in the future. 
**The Company**
Because it owns the outstanding common stock of the Bank, the Company is a bank holding company within the meaning of the federal Bank Holding Company Act of 1956 (the "BHCA"). Under the BHCA, the Company is subject to periodic examination by the Federal Reserve and is required to file periodic reports of its operations and such additional information as the Federal Reserve may require.  The Company's and the Bank's activities are limited to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries or engaging in any other activity that the Federal Reserve determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. 
*Investments, Control and Activities.  With certain limited exceptions, the BHCA requires every bank holding company to obtain the prior approval of the Federal Reserve before (i) acquiring substantially all the assets of any bank, (ii) acquiring direct or indirect ownership or control of any voting shares of any bank if after such acquisition it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares), or (iii) merging or consolidating with another bank holding company. 

In addition, and subject to certain exceptions, the BHCA and the Change in Bank Control Act, together with regulations thereunder, require Federal Reserve approval (or, depending on the circumstances, no notice of disapproval) prior to any person or company acquiring "control" of a bank holding company, such as the Company.  Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company.  Control is rebuttably presumed to exist if a person acquires 10% or more but less than 25% of any class of voting securities and either the Company has registered securities under Section 12 of the Exchange Act or no other person will own a greater percentage of that class of voting securities immediately after the transaction.  The regulations provide a procedure for challenge of the rebuttable control presumption. 

Under the BHCA, the Company is generally prohibited from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in, nonbanking activities, unless the Federal Reserve, by order or regulation, has found those activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.  Some of the activities that the Federal Reserve has determined by regulation to be proper incidents to the business of banking include making or servicing loans and certain types of leases, engaging in certain insurance and discount brokerage activities, performing certain data processing services, acting in certain circumstances as a fiduciary or investment or financial advisor, owning savings associations and making investments in certain corporations or projects designed primarily to promote community welfare. 
*Source of Strength; Cross-Guarantee.  In accordance with Federal Reserve policy, the Company is expected to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances in which the Company might not otherwise do so.  Under the BHCA, the Federal Reserve may require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve's determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company.  Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution's financial condition.  The Bank may be required to indemnify, or cross-guarantee, the FDIC against losses it incurs with respect to any other bank controlled by the Company, which in effect makes the Company's equity investments in healthy bank subsidiaries available to the FDIC to assist any failing or failed bank subsidiary of the Company. 

 
**The Bank
*General.  The Bank operates as a national banking association incorporated under the laws of the United States and is subject to examination by the Office of the Comptroller of the Currency (the "OCC").  Deposits in the Bank are insured by the Federal Deposit Insurance Corporation (the "FDIC") up to a maximum amount (generally $100,000 per depositor, subject to aggregation rules). The OCC and the FDIC regulate or monitor all areas of the Bank's operations, including security devices and procedures, adequacy of capitalization and loss reserves, loans, investments, borrowings, deposits, mergers, issuances of securities, payment of dividends, interest rates payable on deposits, interest rates or fees chargeable on loans, establishment of branches, corporate reorganizations, maintenance of books and records and adequacy of staff training to carry on safe lending and deposit gathering practices.  The OCC requires the Bank to maintain certain capital ratios and imposes limitations on the Bank's aggregate investment in real estate, bank premises and furniture and fixtures.  The Bank is currently required by the OCC to prepare quarterly reports on the Bank's financial condition and to conduct an annual audit of its financial affairs in compliance with minimum standards and procedures prescribed by the OCC. 

Under FDICIA, all insured institutions must undergo periodic on-site examination by their appropriate banking agency.  The cost of examinations of insured depository institutions and any affiliates may be assessed by the appropriate agency against each institution or affiliate as it deems necessary or appropriate.  Insured institutions are required to submit annual reports to the FDIC and the appropriate agency (and state supervisor when applicable).  FDICIA also directs the FDIC to develop with other appropriate agencies a method for insured depository institutions to provide supplemental disclosure of the estimated fair market value of assets and liabilities, to the extent feasible and practicable, in any balance sheet, financial statement, report of condition or other report of any insured depository institution.  FDICIA also requires the federal banking regulatory agencies to prescribe, by regulation, standards for all insured depository institutions and depository institution holding companies relating, among other things, to: (i) internal controls, information systems and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate risk exposure; and (v) asset quality. 
*Transactions with Affiliates and Insiders.  The Bank is subject to Section 23A of the Federal Reserve Act, which places limits on the amount of loans or extensions of credit to, or investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates.  In addition, most of these loans and certain other transactions must be secured in prescribed amounts.  The Bank is also subject to Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with non-affiliated companies.  The Bank is subject to certain restrictions on extensions of credit to executive officers, directors, certain principal shareholders and their related interests.  Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. 
*Community Reinvestment Act.  The Community Reinvestment Act requires that each insured depository institution shall be evaluated by its primary federal regulator with respect to its record in meeting the credit needs of its local community, including low and moderate income neighborhoods, consistent with the safe and sound operation of those institutions.  These factors are also considered in evaluating mergers, acquisitions and applications to open a branch or facility.
**The Gramm-Leach-Bliley Act of 1999**
The Gramm-Leach-Bliley Act (the "GLB Act") dramatically increases the ability of eligible banking organizations to affiliate with insurance, securities, and other financial firms and insured depository institutions.  The GLB Act permits eligible banking organizations to engage in activities and to affiliate with nonbank firms engaged in activities that are financial in nature or incidental to such financial activities, and also includes some additional activities that are complementary to such financial activities.  

The definition of activities that are financial in nature is handled by the GLB Act in two ways.  First, there is a laundry list of activities that are designated as financial in nature.  Second, the authorization of new activities as financial in nature or incidental to a financial activity requires a consultative process between the Federal Reserve Board and the Secretary of the Treasury with each having the authority to veto proposals of the other.  The Federal Reserve Board has the discretion to determine what activities are complementary to financial activities.

The precise scope of the authority to engage in these new financial activities, however, depends on the type of banking organization, whether it is a holding company, a subsidiary of a national bank, or a national bank's direct conduct.  The GLB Act repealed two sections of the Glass-Stegall Act, Sections 20 and 32, which restricted affiliations between securities firms and banks.  The GLB Act authorizes two types of banking organizations to engage in expanded securities activities.  The GLB Act authorizes a new type of bank holding company called a financial holding company to have a subsidiary company that engages in securities underwriting and dealing without limitation as to the types of securities involved.  The GLB Act also permits a national bank to control a financial subsidiary that can engage in many of the expanded securities activities permitted for financial holding companies.  However, additional restrictions apply to national bank financial subsidiaries.  

Since the Bank Holding Company Act of 1956, and its subsequent amendments, federal law has limited the types of activities that are permitted for a bank holding company, and it is has also limited the types of companies that a bank holding company can control.  The GLB Act retains the bank holding company regulatory framework, but adds a new provision that authorizes enlarged authority for the new financial holding company form of organization to engage in any activity of a financial nature or incidental thereto.  A new Section 4(k) of the Bank Holding Company Act provides that a financial holding company may engage in any activity, and may acquire and retain shares of any company engaged in any activity, that the Federal Reserve Board in coordination with the Secretary of the Treasury determines by regulation or order to be financial in nature or incidental to such financial activities, or is complementary to financial activities.  

The GLB Act also amends the Bank Holding Company Act to prescribe eligibility criteria for financial holding companies, defines the scope of activities permitted for bank holding companies that do not become financial holding companies, and establishes consequences for financial holding companies that cease to maintain the status needed to qualify as a financial holding company. 

There are three special criteria to qualify for the enlarged activities and affiliation.  First, all the depository institutions in the bank holding company organization must be well-capitalized.  Second, all of the depository institutions of the bank holding company must be well managed.  Third, the bank holding company must have filed a declaration of intent with the Federal Reserve Board stating that it intends to exercise the expanded authority under the GLB Act and certify to the Federal Reserve Board that the bank holding company's depository institutions meet the well-capitalized and well managed criteria.  The GLB Act also requires the bank to achieve a rating of satisfactory or better in meeting community credit needs at the most recent examination of such institution under the Community Reinvestment Act.

Once a bank holding company has filed a declaration of its intent to be a financial holding company, as long as there is no action by the Federal Reserve Board giving notice that it is not eligible, the company may proceed to engage in the activities and enter into the affiliations under the large authority conferred by the GLB Act's amendments to the Bank Holding Company Act.  The holding company does not need prior approval from the Federal Reserve Board to engage in activities that the GLB Act identifies as financial in nature or that the Federal Reserve Board has determined to be financial in nature or incidental thereto by order or regulation.  

The GLB Act retains the basic structure of the Bank Holding Company Act.  Thus, a bank holding company that is not eligible for the expanded powers of a financial holding company is now subject to the amended Section 4(c)(8) of the Bank Holding Company Act which freezes the activities that are authorized and defined as closely related to banking activities.  Under this Section, a bank holding company is not eligible for the expanded activities permitted under new Section 4(k) and is limited to those specific activities previously approved by the Federal Reserve Board.  

The GLB Act also addresses the consequences when a financial holding company that has exercised the expanded authority fails to maintain its eligibility to be a financial holding company.  The Federal Reserve Board may impose such limitations on the conduct or activities of a noncompliant financial holding company or any affiliate of that company as the Board determines to be appropriate under the circumstances and consistent with the purposes of the Act.  

The GLB Act is essentially a dramatic liberalization of the restrictions placed on banks, especially bank holding companies, regarding the areas of financial businesses in which they are allowed to compete.
*Other Regulations.  Interest and certain other charges collected or contracted for by the Bank are subject to state usury laws and certain federal laws concerning interest rates.  The Bank's loan operations are also subject to certain federal laws applicable to credit transactions, such as the federal Truth-In-Lending Act governing disclosures of credit terms to consumer borrowers, the Home Mortgage Disclosure Act of 1975 requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves, the Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit, the Fair Credit Reporting Act of 1978 governing the use and provision of information to credit reporting agencies, the Fair Debt Collection Act governing the manner in which consumer debts may be collected by collection agencies, and the rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.  The deposit operations of the Bank also are subject to the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records, and the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to implement that act, which governs automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services. 
**Deposit Insurance**
The deposits of the Bank are currently insured to a maximum of $100,000 per depositor, subject to certain aggregation rules.  The FDIC establishes rates for the payment of premiums by federally insured banks and thrifts for deposit insurance.  Separate insurance funds (BIF and SAIF) are maintained for commercial banks and thrifts, with insurance premiums from the industry used to offset losses from insurance payouts when banks and thrifts fail.  Due to the high rate of failures in the late 1980's and early 1990's, the fees that commercial banks and thrifts pay to BIF and SAIF increased.  Since 1993, insured depository institutions like the Bank have paid for deposit insurance under a risk-based premium system.  Under this system, until mid-1995 depository institutions paid to BIF or SAIF from $0.23 to $0.31 per $100 of insured deposits depending on its capital levels and risk profile, as determined by its primary federal regulator on a semi-annual basis.  Once the BIF reached its legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for well capitalized banks to $0.04 per $100.  Subsequently, the FDIC revised the range of premiums from $.00 to $0.31 per $100, subject to a statutory minimum assessment of $2,000 per year.  However, the Deposit Insurance Funds Act of 1996 eliminated the minimum assessment required by statute. It also separated, effective January 1, 1997, the Financial Corporation (FICO) assessment to service the interest on its bond obligations.  The amount assessed on individual institutions, including the Bank, by FICO will be in addition to the amount paid for deposit insurance according to the risk-related assessment rate schedule.  Initially, FICO semiannual assessment rates were set at 1.30 basis points annually for BIF deposits.  Increases in deposit insurance premiums or changes in risk classification will increase the Bank's cost of funds, and there can be no assurance that such cost can be passed on the Bank's customers. 
**Dividends

The principal source of the Company's cash revenues comes from dividends and interest income on its investments.  In addition, the Company may receive cash revenues from dividends paid by the Bank.  The amount of dividends that may be paid by the Bank to the Company depends on the Bank's earnings and capital position and is limited by federal and state law, regulations and policies.  In addition, the Board of Governors has stated that bank holding companies should refrain from or limit dividend increases or reduce or eliminate dividends under circumstances in which the bank holding company fails to meet minimum capital requirements or in which its earnings are impaired.

As a national bank, the Bank may not pay dividends from its paid-in-capital.  All dividends must be paid out of undivided profits then on hand, after deducting expenses, including reserves for losses and bad debts.  In addition, a national bank is prohibited from declaring a dividend on its shares of common stock until its surplus equals its stated capital, unless there has been transferred to surplus no less than one-tenth of the bank's net profits of the preceding two consecutive half-year periods (in the case of an annual dividend).  The approval of the OCC is required if the total of all dividends declared by a national bank in any calendar year exceeds the total of its net profits for that year combined with its retained net profits for the preceding two years, less any required transfers to surplus.  Under FDICIA, the Bank may not pay a dividend if, after paying the dividend, the Bank would be undercapitalized.  See "Capital Regulations" below. 

In addition to the availability of funds from the Bank, the future dividend policy of the Company is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, financial condition, cash needs and general business conditions. If dividends should be declared in the future, the amount of such dividends presently cannot be estimated and it cannot be known whether such dividends would continue for future periods.
**Capital Regulations

The federal bank regulatory authorities have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies, account for off-balance sheet exposure and minimize disincentives for holding liquid assets.  The resulting capital ratios represent qualifying capital as a percentage of total risk-weighted assets and off-balance sheet items.  The guidelines are minimums, and the federal regulators have noted that banks and bank holding companies contemplating significant expansion programs should not allow expansion to diminish their capital ratios and should maintain ratios well in excess of the minimums.  The current guidelines require all bank holding companies and federally-regulated banks to maintain a minimum risk-based total capital ratio equal to 8%, of which at least 4% must be Tier 1 capital.  Tier 1 capital includes common shareholders' equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, but excludes goodwill and most other intangibles and excludes the allowance for loan and lease losses.  Tier 2 capital includes the excess of any preferred stock not included in Tier 1 capital, mandatory convertible securities, hybrid capital instruments, subordinated debt and intermediate term-preferred stock and general reserves for loan and lease losses up to 1.25% of risk-weighted assets. 

Under the guidelines, banks' and bank holding companies' assets are given risk-weights of 0%, 20%, 50% and 100%.  In addition, certain off-balance sheet items are given credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. These computations result in the total risk-weighted assets.  Most loans are assigned to the 100% risk category, except for first mortgage loans fully secured by residential property and, under certain circumstances, residential construction loans, both of which carry a 50% rating.  Most investment securities are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% rating, and direct obligations of or obligations guaranteed by the United States Treasury or United States Government agencies, which have a 0% rating. 

The federal bank regulatory authorities have also implemented a leverage ratio, which is Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to the risk-based guidelines.  The principal objective of the leverage ratio is to place a constraint on the maximum degree to which a bank holding company may leverage its equity capital base.  The minimum required leverage ratio for top-rated institutions is 3%, but most institutions are required to maintain an additional cushion of at least 100 to 200 basis points. 

FDICIA established a new capital-based regulatory scheme designed to promote early intervention for troubled banks and requires the FDIC to choose the least expensive resolution of bank failures.  The new capital-based regulatory framework contains five categories of compliance with regulatory capital requirements, including "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized."  To qualify as a "well capitalized" institution, a bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total risk-based capital ratio of no less than 10%, and the bank must not be under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level.  The Company and the Bank are both currently qualified as "well capitalized."  As of December 31, 2004, the Company had Tier 1 and Total Risk-Based Capital Ratios of 10.52% and 11.77%, respectively.  For a more detailed analysis of the Company and Bank's regulatory requirements, see Note 14 to the Notes to Consolidated Financial Statements.

Under the FDICIA regulations, the applicable agency can treat an institution as if it were in the next lower category if the agency determines (after notice and an opportunity for hearing) that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice.  The degree of regulatory scrutiny of a financial institution will increase, and the permissible activities of the institution will decrease, as it moves downward through the capital categories.  Institutions that fall into one of the three undercapitalized categories may be required to (i) submit a capital restoration plan; (ii) raise additional capital; (iii) restrict their growth, deposit interest rates and other activities; (iv) improve their management; (v) eliminate management fees; or (vi) divest themselves of all or part of their operations.  Bank holding companies controlling financial institutions can be called upon to boost the institutions' capital and to partially guarantee the institutions' performance under their capital restoration plans. 

These capital guidelines can affect the Company in several ways.  If the Bank begins to grow at a rapid pace, a premature "squeeze" on capital could occur making a capital infusion necessary. The requirements could impact the Company's ability to pay dividends.  The Company's capital levels are currently more than adequate; however, rapid growth, poor loan portfolio performance or poor earnings performance or a combination of these factors could change the Bank's capital position in a relatively short period of time. 
**Interstate Banking And Branching Restrictions

On September 29, 1994, the federal government enacted the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "Interstate Banking Act").  This Act became effective on September 29, 1995, and permits eligible bank holding companies in any state, with regulatory approval, to acquire banking organizations in any other state.  Effective June 1, 1997, the Interstate Banking Act allows banks with different home states to merge, unless a particular state opts out of the statute.  Consistent with the Interstate Banking Act, Georgia adopted legislation in 1996 which has permitted interstate bank mergers since June 1, 1997. 

In addition, beginning June 1, 1997, the Interstate Banking Act has permitted national and state banks to establish de novo branches in another state if there is a law in that state which applies equally to all banks and expressly permits all out-of-state banks to establish de novo branches. However, in 1996, Georgia adopted legislation which opts out of this provision.  The Georgia legislation provides that, with the prior approval of the Department of Banking and Finance, after July 1, 1996, a bank may establish three new or additional de novo branch banks anywhere in Georgia and, beginning July 1, 1998, a bank may establish new or additional branch banks anywhere in the state with prior regulatory approval. 

 

 
**Anti-Terrorism Legislation

In the wake of the tragic events of September 11th, on October 26, 2001 , the President signed the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Ac t of 2001. Under the USA PATRIOT Act, financial institutions are subject to prohibitions against specified financial transactions and account relationships as well as enhanced due diligence and "know your customer" standards in their dealings with foreign financial institutions and foreign customers. For example, the enhanced due diligence policies, procedures, and controls generally require financial institutions to take reasonable steps:

-
to conduct enhanced scrutiny of account relationships to guard against money laundering and report any suspicious transaction;

-
to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, each account as need ed to guard against money laundering and report any suspicious transactions;

-
to ascertain for any foreign bank, the shares of which are not publicly traded, the identity of the owners of the foreign bank, and the nature and extent of the ownership interest of each such owner; and

-
to ascertain whether any foreign bank provides correspondent accounts to other foreign banks and, if so, the identity of those foreign banks and related due diligence information.
 

The USA PATRIOT Act requires financial institutions to establish anti-money laundering programs. The USA PATRIOT Act sets forth minimum standards for these programs, including:

-
the development of internal policies, procedures, and controls;

-
the designation of a compliance officer;

-
an ongoing employee training program; and 

-
an independent audit function to test the programs.
In addition, the USA PATRIOT Act authorizes the Secretary of the Treasury to adopt rules increasing the

cooperation and information sharing between financial institutions, regulators, and law enforcement authorities

regarding individuals, entities and organizations engaged in, or reasonably suspected based on credible evidence of

engaging in, terrorist acts or money laundering activities. Any financial institution complying with the se rules will

not be deemed to have violated the privacy provisions of the Gramm-Leach-Bliley Act, as discussed above.
**Recent Legislative Developments**
From time to time, various bills are introduced in the United States Congress and at the state legislative level with respect to the regulation of financial institutions.  Certain of these proposals, if adopted, could significantly change the regulation of banks and the financial services industry.  The Company cannot predict whether any of these proposals will be adopted or, if adopted, how these proposals would affect the Company. 

 

 
**Item 2.  Description of Property. 
*Cartersville Office.  The Bank's main office is located in Cartersville at 950 Joe Frank Harris Parkway, at the corner of Joe Frank Harris Parkway and Market Place Boulevard.  This permanent facility has 10,500 square feet in a two story brick facility.  This facility has a drive through station consisting of four teller lanes and one with a drive up automated teller service machine.
*Adairsville Office.  On January 4, 1999, the Bank also opened a temporary branch office in Adairsville at 7450 Adairsville Highway, NW (Highway 140), Adairsville, Georgia 30103. Construction of a permanent facility for this office began in the third quarter of 1999 and it opened in the second quarter of 2000.  This branch has approximately 3,500 square feet with three drive through lanes plus one drive through with an automated teller service machine.
*Rome Office.  On October 9, 2001, the Bank opened a temporary bank office at 42 Three Rivers Drive in Rome, Georgia.  The permanent facility was completed and opened in October 2004.  The Bank is approximately 4,200 square feet, three drive-through lanes plus one ATM lane.
*Operations Center.  The Bank purchased a partially finished building for use as an off-site Operations Center, which was completed and opened in September 2004.  The facility is approximately 9,600 square foot and is used as the technology, deposit operations, and accounting headquarters.  The facility does not perform any direct customer service functions.
*Henderson Drive Office.  In December 2004, the Bank purchased a lot at 601 Henderson Drive, Cartersville, Georgia. The Bank will construct a full service branch on part of the site, leaving a portion of the lot to be sold or developed at a later date.  The facility will be the same dimensions as the Rome Office.
**Item 3.  Legal Proceedings.

In the normal course of business, the Company is involved in various legal proceedings.  The Company is also involved in other non-recurring legal matters, the ultimate outcome of which has not been determined.  In the opinion of management, any liability resulting from such proceedings would not have a material effect on the Company's financial statements.
**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 covered by this report. 
**Item 5.  Market For Common Equity And Related Stockholder Matters.

(a)  The Company completed its initial public offering on October 22, 1998.  In the offering, the Company sold a total of 838,711 shares at $10.00 per share.  There has been virtually no market for the Company's common stock since completion of the offering, and the Company does not anticipate a market to develop in the near future.  As of December 31, 2004, there were approximately 1,142 shareholders of record. 

During 2002, the Company sold 170,299 additional shares of common stock at $16.00 per share through a private placement offering.  The shares sold pursuant to the private placement were claimed exempt from registration by the issuer pursuant to federal and state securities laws (Regulation D and O.C.G.A. Section 10-5-9(16), respectively).  The shares were sold by the executive officers and directors of the Company without commissions, remuneration, or any other compensation.  All purchasers executed a subscription agreement in which each represented that he or she met the requirements of an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933.  The sale generated additional capital of $2,724,784 during the year.

All outstanding shares of Common Stock of the Company are entitled to share equally in dividends as and if declared by the Board of Directors.  The Company does not plan to declare any dividends in the immediate future. 

(b)  The following table reflects the high and low trades of shares of the Company for each quarterly period during the last year based on such limited available information.

Year
High Selling Price
Low Selling Price   
2004  
First Quarter
18.75
18.00
Second Quarter
20.00
20.00
Third Quarter
22.00
20.00
Fourth Quarter
22.00
22.00
The Company has not paid dividends since its inception.  As discussed in Item 1 above, the Bank's ability to pay dividends is subject to numerous statutory conditions.  Thus, to the extent the source of dividends to be paid by the Company is dividends from the Bank, the Company may continue not to pay dividends in the near future.
**Item 6.  Management's Discussion and Analysis. 

The information required by this item is incorporated by reference to Exhibit 99.1 which contains the consolidated financial statement of the Registrant and its subsidiaries, contained with this Annual Report on Form 10-KSB.
**Item 7.  Financial Statements and Supplementary Data. 

The following consolidated financial statements of the Registrant and its subsidiaries are included on Exhibit 99.1 of this Annual Report on Form 10-KSB:
****
Consolidated Balance Sheets - December 31, 2004 and 2003

Consolidated Statements of Earnings - December 31, 2004 and 2003

Consolidated Statements of Comprehensive Income - December 31, 2004 and 2003

Consolidated Statements of Stockholders' Equity - December 31, 2004 and 2003

Consolidated Statements of Cash Flows - December 31, 2004 and 2003

Notes to Consolidated Financial Statements
**Management's Discussion and Analysis of Financial Condition and Results of Operations
**Item 8.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 

The principal independent accountant of the Company and of the Bank has not resigned, declined to stand for re-election, or been dismissed during the two most recent fiscal years or any later interim period.
 

 

**Item 8A.  Controls and Procedures.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and the Principal Financial and Accounting Officer, of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information that we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SEC's rules and forms.  Our Chief Executive Officer and Principal Financial and Accounting Officer also concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to our company required to be included in our periodic SEC filings.  In connection with the new rules, we are in the process of further reviewing and documenting our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes designed to enhance their effectiveness and to ensure that our system evolve with our business.

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of this evaluation and there have been no corrective actions with respect to significant deficiencies or material weaknesses.

**Item 8B.  Other Information.
The Company did not file a Form 8-K during the year ended December 31, 2004.
**Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.

**Code of Ethics
Upon written request, a copy of the Unity Holdings, Inc Code of Ethics shall be furnished to shareholders without charge.  Please direct your written request to:

Eli D. Mullis

Senior Vice President and Chief Financial Officer

Unity National Bank

P.O. Box 200308

Cartersville, GA 30120-9006

The remaining information required by this Item is incorporated by reference to the Company's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.
**Item 10.  Executive Compensation.

The information required by this Item is incorporated by reference to the Company's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.
**Item 11.  Security Ownership of Certain Beneficial Owners and Management

The information required by this Item is incorporated by reference to the Company's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.

 
**Item 12.  Certain Relationships and Related Transactions.

The information required by this Item is incorporated by reference to the Company's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.
**Item 13.  Exhibits

(a)   The following documents are filed as part of this report:    
3.1
Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form SB-2, File No. 333-45979).    
3.2
Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form SB-2, File No. 333-45979).    
4.1
See Exhibits 3.1 and 3.2 for provisions of the Company's Articles of Incorporation And Bylaws defining the rights of shareholders (incorporated by reference to Exhibit 4.1 of the Registration Statement on Form SB-2, File No. 333-45979).    
4.2
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.2 of the Registration Statement on Form SB-2, File No. 333-45979).    
5.1
Opinion of Nelson Mullins Riley & Scarborough, L.L.P. (incorporated by reference to Exhibit 5.1 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.1
Employment Agreement dated as of December 12, 1997 between the Company and Michael L. McPherson (incorporated by reference to Exhibit 10.1 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.2
Option to Purchase Property (incorporated by reference to Exhibit 10.2 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.3
Escrow Agreement between Company and First Tennessee Bank (incorporated by reference to Exhibit 10.3 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.4
Line of Credit Note (incorporated by reference to Exhibit 10.4 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.5
Subscription Agreement (incorporated by reference to Exhibit 10.5 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.6
Agency Agreement dated February 6, 1998 between the Company and Attkisson, Carter & Akers (incorporated by reference to Exhibit 10.6 of the Registration Statement on Form SB-2, File No. 333-45979).    
10.7
Unity Holdings, Inc. Stock Warrant Agreement between Unity Holdings, Inc. and Michael L. McPherson dated April 15, 1999, that is a sample of the Warrant Agreements issued to all directors (incorporated by reference to Exhibit 10.7 to the Registrant's Annual Report on Form 10-KSB filed with the Commission on March 29, 2000).    
10.8
Stock Option Agreement between Unity Holdings, Inc. and Eli D. Mullis dated December 21, 2004, as allowed under the 1999 Stock Incentive Plan adopted by the shareholders on May 19, 1999.     
11.1
Statement of Net Earnings Per Share (incorporated by reference to Exhibit 99.1 which contains the consolidated financial statements of the Registrant and its subsidiaries, contained with this Annual Report on Form 10-KSB).    
21.1
Subsidiaries of the Company (filed as Exhibit 21 to the Registrant's Annual Report on Form 10-KSB filed with the Commission on March 30, 1999, and incorporated herein by reference).    
23.1
Consent of Accountants (incorporated by reference to Exhibit 23.1 of the Registration Statement on Form SB-2, File No. 333-45979).    
23.2
Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed as part of Exhibit 5.1).    
24.1
Power of Attorney (part of signature page).    
31.1
Rule 13a-14(a)/15d-14(a) Certifications of the Registrant's Chief Executive Officer    
31.2
Rule 13a-14(a)/15d-14(a) Certifications of the Registrant's Chief Financial and Accounting Officer    
32.1
18 U.S.C. Section 1350 Certifications of the Registrant's Chief Executive Officer and Chief Financial and Accounting Officer    
99.1
Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.   ** 

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item is incorporated by reference to the Company's definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.**SIGNATURES**
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

UNITY HOLDINGS, INC. 

 

Date: March 25, 2005 

 

 

By: MICHAEL L. McPHERSON
        Michael L. McPherson 

        President and Chief Operating Officer 

 

 

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael L. McPherson, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on March 30, 2005.

**Signature**Title
KENNETH R. BISHOP

Kenneth R. Bishop
Director
JERRY W. BRADEN

Jerry W. Braden 
Director
MICHAEL L. MCPHERSON

Michael L. McPherson 
Director, President and Chief Executive Officer
DONALD D. GEORGE

Donald D. George 
Director
JOHN S. LEWIS

John S. Lewis
Director
SAM R. McCLESKEY

Sam R. McCleskey
Director
STEPHEN A. TAYLOR

Stephen A. Taylor
Director
B. DON TEMPLES

B. Don Temples 
Director
ELI D. MULLIS

Eli D. Mullis
Chief Financial and Principal Accounting Officer  

 

 
**INDEX TO EXHIBITS**
Exhibit Number
Description    
31.1
Rule 13a-14(a)/15d-14(a) Certifications of the Registrant's Chief Executive Officer    
31.2
Rule 13a-14(a)/15d-14(a) Certifications of the Registrant's Chief Financial and Accounting Officer    
32.1
18 U.S.C. Section 1350 Certifications of the Registrant's Chief Executive Officer and Chief Financial and Accounting Officer    
10.8
Stock Option Agreement between Unity Holdings, Inc. and Eli D. Mullis dated December 21, 2004, as allowed under the 1999 Stock Incentive Plan adopted by the shareholders on May 19, 1999.    
99.1
Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.   
 

 

 

**EXHIBIT 31.1**CERTIFICATIONS PURSUANT TO RULE 13a-14(a)/15d-14(a) UNDER THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED**
I, Michael L. McPherson, Chief Executive Officer, certify that:   
1.
I have reviewed this Form 10-KSB of Unity Holdings, Inc.
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-15(e)) for the registrant and have: 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; 
(b)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and 
(c )
Disclosed in this report any change in the registrant's internal controls that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls.
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 
(a)
All significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls
March 25, 2005

MICHAEL L. MCPHERSON

MICHAEL L. McPHERSON

Chief Executive Officer

 
**EXHIBIT 31.2****CERTIFICATIONS PURSUANT TO RULE 13a-14(a)/15d-14(a) UNDER THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED**
I, Eli D. Mullis, Chief Financial and Accounting Officer, certify that:   
1.
I have reviewed this Form 10-KSB of Unity Holdings, Inc.
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4.
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-15(e)) for the registrant and have: 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; 
(b)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and 
(c )
Disclosed in this report any change in the registrant's internal controls that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controls.
5.
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal controls, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 
(a)
All significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls   
March 25, 2005

ELI D. MULLIS

ELI D. MULLIS

Chief Financial and Accounting Officer

 

 

 

 

 

 
**Exhibit 32.1

 

CERTIFICATION OF CEO AND CFO PURSUANT TO

18 U.S.C. Section 1350,

AS ADOPTED PURSUANT TO 

Section 906 OF THE SARBANES-OXLEY ACT OF 2002**
In connection with the Form 10-KSB of Unity Holdings, Inc. (the "Company") for the year ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report)", Michael L. McPherson, Chief Executive Officer of the Company, and  Eli D. Mullis, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his/her knowledge that:

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

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

MICHAEL L. McPHERSON

MICHAEL L. McPHERSON

Chief Executive Officer

March 25, 2005

 

ELI D. MULLIS

ELI D. MULLIS

Chief Financial and Accounting Officer

March 25, 2005

 

 

This certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.*************************************************************************************