<PAGE>


                                  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, 2001 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                              (I.R.S. Employer
of Incorporation or Organization)                         Identification No.)

  950 Joe Frank Harris Pkwy, S.E.
         Cartersville, Georgia                               30121
----------------------------------------                  -----------
(Address of Principal Executive Offices)                  (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: None.

      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 net income for its most recent fiscal year was $576,996. As
of December 31, 2001, 839,211 shares of Common Stock were issued and
outstanding.

      The aggregate market value of the Common Stock held by non-affiliates of
the Company on December 31, 2001 was $11,505,158. This calculation is based upon
an estimate of the fair market value of the Common Stock by the Company's Board
of Directors of $17.00 per share. 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]

<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE
None.


                                      -2-

<PAGE>

      This Report contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
the Securities Exchange Act of 1934. These statements appear in a number of
places in this Report and include all statements regarding the intent, belief or
current expectations of the Company, its directors or its officers with respect
to, among other things: (i) the Company's financing plans; (ii) trends affecting
the Company's financial condition or results of operations; (iii) the Company's
growth strategy and operating strategy; and (iv) the declaration and payment of
dividends. Investors are cautioned that any such forward- looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the
forward-looking statements as a result of various factors discussed herein and
those factors discussed in detail in the Company's filings with the Securities
and Exchange Commission.


                                      -3-

<PAGE>

                              UNITY HOLDINGS, INC.

                          ANNUAL REPORT ON FORM 10-KSB
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

 Item                                                                     Page
Number                                                                   Number
------                                                                   ------

                                     PART I

1.   Description of Business...............................................  5
2.   Description of Property............................................... 17
3.   Legal Proceedings..................................................... 18
4.   Submission of Matters to a Vote of Security Holders................... 18

                                     PART II

5.   Market for Registrant's Common Stock and Related Security
     Holder Matters........................................................ 18
6.   Management's Discussion and Analysis of Financial Condition and
     Results of Operations................................................. 19
7.   Consolidated Financial Report......................................... 38
8.   Changes in and Disagreements with Accountants on Accounting
     and Financial Disclosure.............................................. 60

                                    PART III

9.   Directors and Principal Officers of the Registrant.................... 60
10.  Executive Compensation................................................ 63
11.  Security Ownership of Certain Beneficial Owners and Management........ 67
12.  Certain Relationships and Related Transactions........................ 68

                                     PART IV

13.  Exhibits and Reports on Form 8-K...................................... 68


                                      -4-

<PAGE>

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 a population of 76,019 in 2000 and
a median effective buying income per household of $33,828, 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 a population of
90,565 in 2000 and a median effective buying income per household of $33,585.
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.


                                      -5-

<PAGE>

      According to data provided by the Georgia Department of Labor, which was
compiled in 2000, there are 3,539 businesses in Bartow and Floyd Counties
subject to unemployment insurance laws. Bartow and Floyd Counties, like many
small communities, have many small businesses that are not subject to
unemployment insurance laws and are not reflected in this data. There are 236
manufacturing companies, 374 construction companies, 895 retail companies, 290
wholesale companies, 157 transportation and public utility companies and 1,063
service companies in Bartow and Floyd Counties. The largest employers in Bartow
County include Shaw Industries, Inc. (carpet manufacturer) 1,933; Bartow County
Board of Education, 1,400; First Brands Corporation (plastic extruding company),
630; Bartow County Government, 600; Goodyear Tire and Rubber Co. (tire
manufacturer), 569; Wal-Mart Stores (retail sales), 529; and nine other
businesses with between 110 employees and 493 employees in industries such as
beer manufacturing, steel manufacturing, medical facility, public utility, and
carpet manufacturing.

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


                                      -6-

<PAGE>

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 loans for sale into the secondary market. 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


                                      -7-

<PAGE>

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 officers' loan committee. The officers' loan committee has lending
limits, and any loan in excess of this lending limit is approved by the
directors' 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 thirteen commercial banks operating in
Bartow County, holding approximately $821 million in deposits. There are also
four credit unions in the county. There are currently nine commercial banks and
five credit lenders operating in Floyd County, holding approximately $1
billion in deposits. A number of these competitors are well established in the
Bartow and Floyd Counties areas. Most of them have


                                      -8-

<PAGE>

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, that the Bank either does not
expect to provide or 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, 2001, the Bank had 43 full-time employees and four
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


                                      -9-

<PAGE>

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


                                      -10-

<PAGE>

"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


                                      -11-

<PAGE>

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


                                      -12-

<PAGE>

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


                                      -13-

<PAGE>

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


                                      -14-

<PAGE>

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


                                      -15-

<PAGE>

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, 2001, the Company
had Tier 1 and Total Risk-Based Capital Ratios of 11.03% and 14.33%,
respectively. For a more detailed analysis of the Company and Bank's regulatory
requirements, see Note 11 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.


                                      -16-

<PAGE>

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.

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, 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. Construction on a permanent facility
will begin in the fall of 2002 and is estimated to be completed in the spring of
2003.


                                      -17-

<PAGE>

      The Company believes that the facilities will adequately serve the Bank's
needs its first several years of operation.

Item 3. Legal Proceedings.

      Neither the Company nor the Bank is a party to, nor is any of their
property the subject of, any material pending legal proceedings incidental to
the business of the Company or the Bank.

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, 2001, there were approximately
1,115 shareholders of record.

            All outstanding shares of Common Stock of the Company are entitled
to share equally in dividends from funds legally available therefor, when, 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
----                      ------------------                  -----------------
2001
First Quarter                     13.00                             13.00
Second Quarter                    15.00                             13.00
Third Quarter                     16.00                             15.00
Fourth Quarter                    16.00                             16.00

            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.


                                      -18-

<PAGE>

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following is a discussion of our financial condition and the financial
condition of our bank subsidiary, Unity National Bank, at December 31, 2001 and
2000 and the results of operations for the years then ended. The purpose of this
discussion is to focus on information about our financial condition and results
of operations that are not otherwise apparent from our audited consolidated
financial statements. Reference should be made to those statements and the
selected financial data presented elsewhere in this report for an understanding
of the following discussion and analysis.

Forward-Looking Statements

We may from time to time make written or oral forward-looking statements,
including statements contained in filings with the Securities and Exchange
Commission and our reports to stockholders. Statements made in this report,
other than those concerning historical information, should be considered
forward-looking and subject to various risks and uncertainties. Forward-looking
statements are made based upon management's belief as well as assumptions made
by, and information currently available to, management pursuant to "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Our actual
results may differ materially from the results anticipated in forward-looking
statements due to a variety of factors, including governmental monetary and
fiscal policies, deposit levels, loan demand, loan collateral values, securities
portfolio values, interest rate risk management, the effects of competition in
the banking business from other commercial banks, thrifts, mortgage banking
firms, consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market funds and other financial institutions
operating in our market area and elsewhere, including institutions operating
through the Internet, changes in governmental regulation relating to the banking
industry, including regulations relating to branching and acquisitions, failure
of assumptions underlying the establishment of reserves for loan losses,
including the value of collateral underlying delinquent loans and other factors.
We caution that these factors are not exclusive. We do not undertake to update
any forward-looking statement that may be made from time to time by us, or on
our behalf.

Overview

Our 2001 results were highlighted by reporting net income of $577,000 in our
third full year of operations and completely recouping operating losses incurred
through 2000. Despite a downturn in the national and state economy exacerbated
by the effects of the September 11, 2001 terrorist attacks, we continued to have
significant loan and deposit growth that should provide a base for continued
profitability. We also opened additional branch banking facilities in Rome,
Georgia in the third quarter of 2001.

                                       19

<PAGE>

Financial Condition at December 31, 2001 and 2000

The following is a summary of our balance sheets for the years indicated:

                                                               December 31,
                                                             2001           2000
                                                          (Dollars in Thousands)

Cash and due from banks                                  $  2,421        $ 2,104
Interest-bearing deposits in banks                             63            114
Federal funds sold                                          2,602          4,690
Securities                                                 12,487          8,412
Loans, net                                                 86,876         56,683
Premises and equipment                                      5,344          5,047
Other assets                                                1,879          1,327
                                                         --------        -------

                                                         $111,672        $78,377
                                                         ========        =======

Total deposits                                           $102,292        $69,895
Other liabilities                                           1,067            669
Stockholders' equity                                        8,313          7,813
                                                         --------        -------

                                                         $111,672        $78,377
                                                         ========        =======

Financial Condition at December 31, 2001 and 2000

As of December 31, 2001, we had total assets of $111.7 million, an increase of
42% over December 31, 2000. Total interest-earning assets were $103.2 million at
December 31, 2001 or 92% of total assets as compared to 90% of total assets at
December 31, 2000. Our primary interest-earning assets at December 31, 2001 were
loans, which made up 85% of total interest-earning assets as compared 81% at
December 31, 2000. Our loan to deposit ratio was 86% at December 31, 2001 as
compared to 82% at December 31, 2000. Deposit growth of $32.4 million has been
used primarily to fund loan growth of $30.5 million.

Our securities portfolio, consisting of U.S. Government and Agency,
mortgage-backed, municipal and restricted equity securities, amounted to $12.5
million at December 31, 2001. Unrealized losses on securities amounted to $9000
at December 31, 2001 as compared to $71,000 in unrealized gains at December 31,
2000. We have not specifically identified any securities for sale in future
periods that, if so designated, would require a charge to operations if the
market value would not be reasonably expected to recover prior to the time of
sale.

We have 81% of our loan portfolio collateralized by real estate located in our
primary market area of Bartow County, Georgia and surrounding counties. Our real
estate mortgage portfolio consists of loans collateralized by one- to
four-family residential properties (30%) and construction loans to build one- to
four-family residential properties (19%), and nonresidential properties
consisting primarily of small business commercial properties (51%). We generally
require that loans collateralized by real estate not exceed the collateral
values by the following percentages for each type of real estate loan as
follows:

                                       20

<PAGE>

One- to four-family residential properties                                   85%
Construction loans on one- to four-family residential properties             80%
Nonresidential property                                                      80%

The remaining 19% of the loan portfolio consists of commercial, consumer, and
other loans. We require collateral commensurate with the repayment ability and
creditworthiness of the borrower.

The specific economic and credit risks associated with our loan portfolio,
especially the real estate portfolio, include, but are not limited to, a general
downturn in the economy which could affect unemployment rates in our market
area, general real estate market deterioration, interest rate fluctuations,
deteriorated or non-existing collateral, title defects, inaccurate appraisals,
financial deterioration of borrowers, fraud, and any violation of banking
protection laws. Construction lending can also present other specific risks to
the lender such as whether developers can find builders to buy lots for home
construction, whether the builders can obtain financing for the construction,
whether the builders can sell the home to a buyer, and whether the buyer can
obtain permanent financing. Currently, real estate values and employment trends
in our market area are stable with no indications of a significant downturn in
the local economy.

We attempt to reduce these economic and credit risks not only by adhering to
loan to value guidelines, but also by investigating the creditworthiness of the
borrower and monitoring the borrower's financial position. Also, we establish
and periodically review our lending policies and procedures. National banking
regulations limit exposure by prohibiting loan relationships that exceed 15% of
the Bank's statutory capital.

Liquidity and Capital Resources

The purpose of liquidity management is to ensure that there are sufficient cash
flows to satisfy demands for credit, deposit withdrawals, and other needs.
Traditional sources of liquidity include asset maturities and growth in core
deposits. A company may achieve its desired liquidity objectives from the
management of assets and liabilities and through funds provided by operations.
Funds invested in short-term marketable instruments and the continuous maturing
of other earning assets are sources of liquidity from the asset perspective. The
liability base provides sources of liquidity through deposit growth, the
maturity structure of liabilities, and accessibility to market sources of funds.

As our loan demand has continued to increase, we have increased the use of
brokered deposits as a funding source. Total brokered deposits amounted to $24
million as of December 31, 2001. These deposits are readily obtainable at rates
not significantly different from rates that we pay on deposits in our local
market.

Scheduled loan payments are a relatively stable source of funds, but loan
payoffs and deposit flows fluctuate significantly, being influenced by interest
rates and general economic conditions and competition. We attempt to price our
deposits to meet our asset/liability objectives consistent with local market
conditions.

                                       21

<PAGE>

Our liquidity and capital resources are monitored on a periodic basis by
management and Federal regulatory authorities. As determined under guidelines
established by regulatory authorities and internal policy, our liquidity ratio
of 17% at December 31, 2001, which was slightly below our target ratio of 20% to
25%, was considered satisfactory.

At December 31, 2001, we had loan commitments outstanding of $11.7 million.
Because these commitments generally have fixed expiration dates and many will
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. If needed, we have the ability on a
short-term basis to borrow and purchase federal funds from other financial
institutions. At December 31, 2001, we had arrangements with two commercial
banks for short-term advances of $3.5 million. In addition, we also have a $10.3
million credit line established with the Federal Home Loan Bank.

At December 31, 2001, our capital ratios were considered adequate based on
regulatory minimum capital requirements. Our stockholders' equity increased due
to net income of $577,000 and decreased due to other comprehensive loss
associated with our securities available-for-sale of $77,000. For regulatory
purposes, the net unrealized losses on securities available-for-sale are
excluded in the computation of the capital ratios.

In the future, our primary source of funds available to Unity Holdings, Inc.
will be the payment of dividends by the Bank. Banking regulations limit the
amount of the dividends that may be paid without prior approval of the bank's
regulatory agency. Currently, the Bank can pay 331,000 of dividends without
regulatory approval.

The minimum capital requirements to be considered well capitalized under prompt
corrective action provisions and the actual capital ratios for us and the Bank
as of December 31, 2001 are as follows:

                                                        Actual
                                     -------------------------------------------
                                                                     Regulatory
                                     Consolidated        Bank       Requirements
                                     ------------        ----       ------------
Leverage capital ratio                   7.60%           7.55%          5.00%
Risk-based capital ratios:
   Core capital                          9.85            9.78           6.00
   Total capital                        11.10           11.03          10.00

These ratios may decline as asset growth continues, but are expected to exceed
the regulatory minimum requirements. Anticipated future earnings will assist in
keeping these ratios at satisfactory levels.

At December 31, 2001, we had no material commitments for capital expenditures.

We believe that our liquidity and capital resources are adequate and will meet
our foreseeable short and long-term needs. We anticipate that we will have
sufficient funds available to meet current loan commitments and to fund or
refinance, on a timely basis, our other material commitments and liabilities.

                                       22

<PAGE>

Management is not aware of any known trends, events or uncertainties, other than
those discussed above, that will have or that are reasonably likely to have a
material effect on our liquidity, capital resources or operations. Management is
also not aware of any current recommendations by the regulatory authorities
that, if they were implemented, would have such an effect.

Effects of Inflation

The impact of inflation on banks differs from its impact on non-financial
institutions. Banks, as financial intermediaries, have assets which are
primarily monetary in nature and that tend to fluctuate in concert with
inflation. A bank can reduce the impact of inflation if it can manage its rate
sensitivity gap. This gap represents the difference between rate sensitive
assets and rate sensitive liabilities. We, through our asset/liability
committee, attempt to structure the assets and liabilities and manage the rate
sensitivity gap, thereby seeking to minimize the potential effects of inflation.
For information on the management of our interest rate sensitive assets and
liabilities, see "Asset/Liability Management".

Results of Operations For The Years Ended December 31, 2001 and December 31,
2000

The following is a summary of our operations for the years indicated.

                                                      Years Ended December 31,
                                                       (Dollars in Thousands)
                                                       2001                2000

Interest income                                       $8,018              $5,982

Interest expense                                       4,290               2,983
                                                      ------              ------

Net interest income                                    3,728               2,999

Provision for loan losses                                412                 361

Other income                                             708                 422

Other expenses                                         3,369               2,573
                                                      ------              ------

Pretax income                                            655                 487

Income taxes                                              78                  --
                                                      ------              ------

Net income                                            $  577              $  487
                                                      ======              ======

                                       23

<PAGE>

Net Interest Income

Our results of operations are determined by our ability to manage interest
income and expense effectively, to minimize loan and investment losses, to
generate non-interest income, and to control operating expenses. Because
interest rates are determined by market forces and economic conditions beyond
our control, our ability to generate net interest income depends on our ability
to obtain an adequate net interest spread between the rate we pay on
interest-bearing liabilities and the rate we earn on interest-earning assets.

Our net yield on average interest-earning assets was 4.23% in 2001 as compared
to 5.13% in 2000. Average loans increased by $28.4 million, which accounted for
the majority of a $30.0 million increase in total average interest-earning
assets. Average interest-bearing liabilities increased by $29.3 million with
average interest-bearing demand and time deposits accounting for the vast
majority of this increase. The rate earned on average interest-earning assets
decreased to 9.10% in 2001 from 10.23% in 2000. The rate paid on average
interest-bearing liabilities decreased to 5.30% in 2001 from 5.78% in 2000. The
decrease in the net yield is due primarily to decreases in the rates earned on
our interest-earning assets, as the prime rate was lowered eleven times in 2001
to 4.75%. As our interest-bearing liabilities mature and reprice, we expect to
see our net yield increase.

Provision for Loan Losses

The provision for loan losses was $412,000 and $361,000 in 2001 and 2000,
respectively. The amounts provided were due primarily to the growth of the
portfolio and to our assessment of the inherent risk in the portfolio. Net
charge-offs for 2001 were $82,000 as compared to $15,000 for 2000. As of
December 31, 2001, we had nonperforming loans and assets of $69,000 as compared
to $35,000 at December 31, 2000. Through our third full year of operations, we
have incurred no significant loan losses. Based upon our evaluation of the loan
portfolio, we believe the allowance for loan losses to be adequate to absorb
losses on existing loans that may become uncollectible. Our evaluation considers
significant factors relative to the credit risk and loss exposure in the loan
portfolio, including past due and classified loans, historical experience,
underlying collateral values, and current economic conditions that may affect
the borrower's ability to repay. The allowance for loan losses is evaluated by
segmenting the loan portfolio into unclassified and classified loans. The
unclassified loans are further segmented by loan type with an allowance
percentage applied to each type in order to establish a general allowance for
loan losses. The allowance percentage determined is based upon our experience
specifically and the historical experience of the banking industry generally.
The classified loans, including impaired loans, are analyzed individually in
order to establish a specific allowance for loan losses. The allowance for loan
losses as a percentage of total loans was 1.36% at December 31, 2001 as compared
to 1.50% at December 31, 2000. The decrease in this percentage is primarily the
result of having more of our own historical experience on which to base our
evaluation of the adequacy of the allowance for loan losses.

                                       24

<PAGE>

Other Income

Other income consists of service charges on deposit accounts, mortgage loan
origination fees, and other miscellaneous revenues and fees. Other income was
$708,000 in 2001 as compared to $422,000 in 2000. The increase is due primarily
to increased service charges on deposit accounts of $72,000, increased mortgage
loan origination fees of $179,000, and a gain on sale of securities in the
amount of $16,000.

Other Expenses

Other expenses for 2001 consist of salaries and employee benefits ($1,800,000),
equipment and occupancy expenses ($520,000), and other operating expenses
($1,049,000). The increase in salaries and employee benefits of $465,000 is due
to an increase in the number of employees to 44 at December 31, 2001 from 30 at
December 31, 2000, and to other annual salary increases. The increase in the
number of employees is due primarily to the opening of the new branch in Rome,
Georgia. The increase in equipment and occupancy expenses of $119,000 is due to
increased costs associated with occupying the main office and Adairsville branch
facilities for a full year in 2001 as compared to nine months in 2000 as well as
the increased costs associated with the new Rome branch. The increase in other
operating expenses of $212,000 is due to increased data processing expense of
$54,000, increased postage expense of $17,000, increased advertising and
business promotion expense of $37,000 and increased other costs of $104,000. The
increase in other operating expenses is directly related to the overall growth
of the Bank.

Income Tax

Income tax expense was $78,000 in 2001, representing the first year that we were
required to record an income tax provision. The amount recorded has been reduced
by the recognition of deferred tax assets in the amount of $113,000 that were
previously accorded valuation allowances. There was no income tax expense in
2000 due to $343,000 of accumulated deficit incurred through December 31, 2000.

Asset/Liability Management

Our objective is to manage assets and liabilities to provide a satisfactory,
consistent level of profitability within the framework of established cash,
loan, investment, borrowing, and capital policies. Specific officers are charged
with the responsibility for monitoring policies and procedures designed to
ensure acceptable composition of the asset/liability mix. Management's overall
philosophy is to support asset growth primarily through growth of core deposits
of all categories made by local individuals, partnerships, and corporations.

Our asset/liability mix is monitored on a regular basis with a report reflecting
the interest rate-sensitive assets and interest rate-sensitive liabilities being
prepared and presented to the Bank's Board of Directors on a monthly basis. The
objective of this policy is to monitor interest rate-sensitive assets and
liabilities so as to minimize the impact of substantial movements in interest
rates on earnings. An asset or liability is considered to be interest
rate-sensitive if it will reprice or mature within the time period analyzed,
usually one year or less. The interest rate-sensitivity gap is the difference
between the interest-earning assets and interest-bearing liabilities scheduled
to mature or reprice within such time period. A gap is considered positive when
the amount of interest rate-sensitive assets exceeds the amount of interest
rate-sensitive liabilities. A gap is considered negative when the amount of
interest rate-sensitive liabilities exceeds the interest rate-sensitive assets.
During a period of rising interest rates, a

                                       25

<PAGE>

negative gap would tend to affect net interest income adversely, while a
positive gap would tend to result in an increase in net interest income.
Conversely, during a period of falling interest rates, a negative gap would tend
to result in an increase in net interest income, while a positive gap would tend
to affect net interest income adversely. If our assets and liabilities were
equally flexible and moved concurrently, the impact of any increase or decrease
in interest rates on net interest income would be minimal.

A simple interest rate "gap" analysis by itself may not be an accurate indicator
of how net interest income will be affected by changes in interest rates.
Accordingly, we also evaluate how the repayment of particular assets and
liabilities is impacted by changes in interest rates. Income associated with
interest-earning assets and costs associated with interest-bearing liabilities
may not be affected uniformly by changes in interest rates. In addition, the
magnitude and duration of changes in interest rates may have a significant
impact on net interest income. For example, although certain assets and
liabilities may have similar maturities or periods of repricing, they may react
in different degrees to changes in market interest rates. Interest rates on
certain types of assets and liabilities fluctuate in advance of changes in
general market rates, while interest rates on other types may lag behind changes
in general market rates. In addition, certain assets, such as adjustable rate
mortgage loans, have features (generally referred to as "interest rate caps and
floors") that limit changes in interest rates. Prepayment and early withdrawal
levels also could deviate significantly from those assumed in calculating the
interest rate gap. The ability of many borrowers to service their debts also may
decrease during periods of rising interest rates.

Changes in interest rates also affect our liquidity position. We currently price
deposits in response to market rates and it is management's intention to
continue this policy. If deposits are not priced in response to market rates, a
loss of deposits could occur that would negatively affect our liquidity
position.

At December 31, 2001, our cumulative one year interest rate-sensitivity gap
ratio was 79%. Our targeted ratio is 80% to 120% in this time horizon. This
indicates that our interest-bearing liabilities will reprice during this period
at a rate faster than our interest-earning assets. For internal reporting
purposes, we do not consider interest-bearing demand and savings accounts to be
interest rate sensitive. Adjusting for these deposits, our cumulative one year
interest rate-sensitivity gap ratio would be 113%. It is also noted that 56% of
our certificates of deposit greater than $100,000 mature within the one year
time horizon. We believe that as long as we pay the prevailing market rate on
these type deposits, our liquidity, while not assured, will not be negatively
affected.

The following table sets forth the distribution of the repricing of our
interest-earning assets and interest-bearing liabilities as of December 31,
2001, the interest rate-sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and the cumulative
interest rate-sensitivity gap ratio. The table also sets forth the time periods
in which interest-earning assets and interest-bearing liabilities will mature or
may reprice in accordance with their contractual terms. However, the table does
not necessarily indicate the impact of general interest rate movements on the
net interest margin as the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of our customers.
In addition, various assets and liabilities indicated as repricing within the
same period may in fact, reprice at different times within such period and at
different rates.

                                       26

<PAGE>

<TABLE>
<CAPTION>
                                                      After            After
                                                      Three             One
                                                      Months         Year but
                                       Within          but            Within          After
                                        Three         Within           Five           Five
                                       Months        One Year          Years          Years          Total
                                                           (Dollars in Thousands)
<S>                                   <C>            <C>              <C>            <C>             <C>
Interest-earning assets:
       Interest-bearing
             deposits in banks        $    63        $     --         $    --        $     --        $     63
       Federal funds sold               2,602              --              --              --           2,602
       Securities                       5,344             320           2,085           4,738          12,487
       Loans                           32,224          12,377          40,309           3,161          88,071
                                      -------        --------         -------        --------        --------
                                       40,233          12,697          42,394           7,899         103,223
                                      -------        --------         -------        --------        --------
Interest-bearing liabilities:
       Interest-bearing demand
             deposits                  18,838              --              --              --          18,838
       Savings                          1,331              --              --              --           1,331
       Certificates, less than
             $100,000                   4,673          19,025           9,923              --          33,621
       Certificates, $100,000
             and over                  10,098          12,952          18,107              --          41,157
                                      -------        --------         -------        --------        --------
                                       34,940          31,977          28,030              --          94,947
                                      -------        --------         -------        --------        --------
Interest rate sensitivity
       gap                            $ 5,293        $(19,280)        $14,364        $  7,899        $  8,276
                                      =======        ========         =======        ========        ========
Cumulative interest rate
       sensitivity gap                $ 5,293        $(13,987)        $   377        $  8,276
                                      =======        ========         =======        ========
Interest rate sensitivity
       gap ratio                         1.15            0.40            1.51              --
                                      =======        ========         =======        ========
Cumulative interest rate
       sensitivity gap ratio             1.15            0.79            1.00            1.09
                                      =======        ========         =======        ========
</TABLE>

                                       27

<PAGE>

               SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA

The tables and schedules on the following pages set forth certain significant
financial information and statistical data with respect to: the distribution of
assets, liabilities and stockholders' equity, the interest rates we experience;
our investment portfolio; our loan portfolio, including types of loans,
maturities, and sensitivities of loans to changes in interest rates and
information on nonperforming loans; summary of the loan loss experience and
allowance for loan losses; types of deposits and the return on equity and
assets.

                                       28

<PAGE>

                    DISTRIBUTION OF ASSETS, LIABILITIES, AND
                              STOCKHOLDERS' EQUITY:
                    INTEREST RATES AND INTEREST DIFFERENTIALS

Average Balances

The condensed average balance sheet for the period indicated is presented below.
(1)

                                                        Years Ended December 31,
                                                        2001             2000
                                                         (Dollars in Thousands)
                               ASSETS

Cash and due from banks                               $  2,354         $  1,947
Interest-bearing deposits in banks                          74              108
Taxable securities                                       8,060            8,044
Tax exempt securities                                      331               --
Securities valuation account                                62              (34)
Federal funds sold                                       5,692            4,717
Loans (2)                                               73,967           45,594
Allowance for loan losses                               (1,073)            (671)
Other assets                                             6,924            5,731
                                                      $ 96,391         $ 65,436
                                                      ========         ========
Total interest-earning assets                         $ 88,124         $ 58,463
                                                      ========         ========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
     Noninterest-bearing demand                       $  6,421         $  5,541
     Interest-bearing demand                            15,097           10,769
     Savings                                             1,045              625
     Time                                               64,823           40,250
                                                      --------         --------
              Total deposits                          $ 87,386         $ 57,185

     Federal funds purchased                                28               --
     Other liabilities                                     961              822
                                                      --------         --------
              Total liabilities                         88,375           58,007
     Stockholders' equity                                8,016            7,429
                                                      --------         --------
                                                      $ 96,391         $ 65,436
                                                      ========         ========

     Total interest-bearing liabilities               $ 80,993         $ 51,644
                                                      ========         ========

(1)   Average balances were determined using the daily average balances during
      the year for each category.

(2)   Nonaccrual loans included in average loans were $76,000 and $16,000 in
      2001 and 2000, respectively.

                                       29

<PAGE>

Interest Income and Interest Expense

The following tables set forth the amount of our interest income and interest
expense for each category of interest-earning assets and interest-bearing
liabilities and the average interest rate for total interest-earning assets and
total interest-bearing liabilities, net interest spread and net yield on average
interest-earning assets.

<TABLE>
<CAPTION>
                                                                         Years Ended December 31,
                                                                    2001                          2000
                                                                          Average                        Average
                                                          Interest         Rate            Interest       Rate
                                                                         (Dollars in Thousands)
<S>                             <C>                    <C>                 <C>        <C>                <C>
INTEREST INCOME:
     Interest and fees on loans (1)                    $   7,251           9.80%      $   5,117          11.22%
     Interest on taxable securities                          528           6.55             560           6.96
     Interest on tax exempt securities                        14           4.23              --             --
     Interest on federal funds sold                          222           3.90             298           6.32
     Interest on deposits in banks                             3           4.53               7           6.19
                                                       ---------                      ---------
     Total interest income                             $   8,018           9.10       $   5,982          10.23
                                                       ---------                      ---------

INTEREST EXPENSE:
     Interest on interest-bearing
       demand deposits                                 $     398           2.64       $     341           3.16
     Interest on savings deposits                             20           1.93              12           1.96
     Interest on time deposits                             3,871           5.97           2,630           6.54
     Interest on federal funds purchased                       1           2.67              --             --
                                                       ---------                      ---------
     Total interest expense                            $   4,290           5.30       $   2,983           5.78
                                                       ---------                      ---------

NET INTEREST INCOME                                    $   3,728                      $   2,999
                                                       =========                      =========

     Net interest spread                                                   3.80%                          4.45%
                                                                           ====                           ====
     Net yield on average interest-earning assets                          4.23%                          5.13%
                                                                           ====                           ====
</TABLE>

(1)   Interest and fees on loans includes $653,000 and $513,000 of loan fee
      income for the years ended December 31, 2001 and 2000, respectively.
      Interest income recognized on nonaccrual loans during 2001 and 2000 was
      insignificant.

                                       30

<PAGE>

Rate and Volume Analysis

The following table describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected our interest income and expense during the year indicated. For
each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (1) change in volume (change
in volume multiplied by old rate); (2) change in rate (change in rate multiplied
by old volume); and (3) a combination of change in rate and change in volume.
The changes in interest income and interest expense attributable to both volume
and rate have been allocated proportionately on a consistent basis to the change
due to volume and the change due to rate.

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                                             2001 vs. 2000
                                                            Changes Due To:
                                                     Rate        Volume         Net
                                                          (Dollars in Thousands)
<S>                                                  <C>         <C>           <C>
Increase (decrease) in:
     Income from interest-earning assets:
     Interest and fees on loans                      $(716)      $ 2,850       $ 2,134
     Interest on taxable securities                    (33)            1           (32)
     Interest on tax exempt securities                  --            14            14
     Interest on federal funds sold                   (129)           53           (76)
     Interest on deposits in banks                      (1)           (3)           (4)
                                                     -----       -------       -------
              Total interest income                   (879)        2,915         2,036
                                                     -----       -------       -------

     Expense from interest-bearing liabilities:
     Interest on interest-bearing
              demand deposits                          (63)          120            57
     Interest on savings deposits                       --             8             8
     Interest on time deposits                        (244)        1,485         1,241
     Interest on federal funds purchased                --             1             1
                                                     -----       -------       -------
              Total interest expense                  (307)        1,614         1,307
                                                     -----       -------       -------

              Net interest income                    $(572)      $ 1,301       $   729
                                                     =====       =======       =======
</TABLE>

                                       31

<PAGE>

                              INVESTMENT PORTFOLIO

Types of Investments

The carrying amounts of securities at the dates indicated, which are all
classified as available-for-sale, are summarized as follows:

                                                                December 31,
                                                           2001            2000
                                                          (Dollars in Thousands)
U.S. Government and agency securities                    $ 8,712          $7,500
Mortgage-backed securities                                 2,436             476
Municipal securities                                         841              --
                                                         -------          ------
                                                          11,989           7,976
Restricted equity securities                                 498             436
                                                         -------          ------
                                                         $12,487          $8,412

Maturities

The amounts of debt securities, including the weighted average yield in each
category as of December 31, 2001 are shown in the following table according to
contractual maturity classifications (1) one year or less, (2) after one through
five years, (3) after five through ten years and (4) after ten years. Restricted
equity securities are not included in the table because they have no contractual
maturity.

<TABLE>
<CAPTION>
                                                                          After one year             After five years
                                            One year or less           through five years          through ten years
                                           Amount       Yield (1)      Amount     Yield (1)       Amount      Yield (1)
<S>                                        <C>            <C>         <C>            <C>         <C>             <C>
U.S. Government and agency securities      $2,996         2.88%       $ 2,085        5.79%       $ 2,146         6.29%
Mortgage-backed securities                     --           --             --          --            305         7.00
Municipal securities                           --           --             --          --            219         3.83
                                           ------                     -------                    -------
                                           $2,996         2.88        $ 2,085        5.79        $ 2,670         6.17
                                           ======                     =======                    =======
</TABLE>

<TABLE>
<CAPTION>
                                              After ten years                        Total
                                            Amount      Yield (1)      Amount       Yield (1)

<S>                                        <C>            <C>         <C>             <C>
U.S. Government and agency securities      $1,485         2.43%       $ 8,712         3.35%
Mortgage-backed securities                  2,131         6.11          2,436         6.22
Municipal securities                          622         4.75            841         4.51
                                           ------                     -------
                                           $4,238         4.62        $11,989         4.74
                                           ======                     =======
</TABLE>

(1)   The weighted average yields were computed using coupon interest, adding
      discount accretion or subtracting premium amortization, as appropriate, on
      a ratable basis over the life of each security.

                                       32

<PAGE>

                                 LOAN PORTFOLIO

Types of Loans

The amounts of loans outstanding at the indicated dates are shown in the
following table according to the type of loan.

                                                             December 31,
                                                       (Dollars in Thousands)
                                                       ----------------------
                                                         2001             2000
Commercial                                            $  8,732         $  6,839
Real estate-construction                                13,425            8,741
Real estate-mortgage                                    58,145           34,028
Consumer installment loans and other                     7,769            7,941
                                                      --------         --------
                                                        88,071           57,549
Less allowance for loan losses                          (1,195)            (866)
                                                      --------         --------
              Net loans                               $ 86,876         $ 56,683
                                                      ========         ========

Maturities and Sensitivities of Loans to Changes in Interest Rates

Total loans as of December 31, 2001 are shown in the following table according
to contractual maturity classifications (1) one year or less, (2) after one
through five years, and (3) after five years.

                                                          (Dollars in Thousands)
Commercial
     One year or less                                             $ 5,815
     After one year through five years                              2,896
     After five years                                                  21
                                                                  -------
                                                                    8,732
                                                                  -------

Construction
     One year or less                                              13,399
     After one year through five years                                 26
     After five years                                                  --
                                                                  -------
                                                                   13,425
                                                                  -------
Other
     One year or less                                              23,298
     After one year through five years                             33,094
     After five years                                               9,522
                                                                  -------
                                                                   65,914
                                                                  -------

                                                                  $88,071
                                                                  =======

                                       33

<PAGE>

The following table summarizes loans at December 31, 2001 with due dates after
one year that have predetermined and floating or adjustable interest rates.

                                                          (Dollars in Thousands)

Predetermined interest rates                                     $13,333
Floating or adjustable interest rates                             32,226
                                                                 -------
                                                                 $45,559
                                                                 =======

Risk Elements

Information with respect to nonaccrual, past due, restructured and other problem
loans at December 31, 2001 and 2000 is as follows:

                                                               December 31,
                                                             2001       2000
                                                          (Dollars in Thousands)

Nonaccrual loans                                             $ 69        $35
Loans contractually past due ninety
     days or more as to interest or
     principal payments and still accruing                     37          0
Restructured loans                                              0          0
Potential problem loans                                       126          0
Interest income that would have been recorded
     on nonaccrual and restructured loans under
     original terms                                             2          1
Interest income that was recorded on
     nonaccrual and restructured loans                          1          0

Potential problem loans are defined as loans about which we have serious doubts
as to the ability of the borrower to comply with the present loan repayment
terms and which may cause the loan to be placed on nonaccrual status, to become
past due more than ninety days, or to be restructured.

It is our policy to discontinue the accrual of interest income when, in the
opinion of management, collection of interest becomes doubtful. This status is
accorded interest when (1) there is a significant deterioration in the financial
condition of the borrower and full repayment of principal and interest is not
expected and (2) the principal or interest is more than ninety days past due,
unless the loan is both well-secured and in the process of collection.

Loans that are classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been included in the table above
do not represent or result from trends or uncertainties that management
reasonably expects will materially impact future operating results, liquidity,
or capital resources. These classified loans do not represent material credits
about which management is aware of any information that causes management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.

                                       34

<PAGE>

                         SUMMARY OF LOAN LOSS EXPERIENCE

The following table summarizes average loan balances for the year determined
using the daily average balances during the year; changes in the allowance for
loan losses arising from loans charged off; recoveries on loans previously
charged off; additions to the allowance which have been charged to operating
expense; and the ratio of net charge-offs during the year to average loans.

                                                       Years Ended December 31,
                                                        (Dollars in Thousands)
                                                        2001            2000

Average amount of loans outstanding                    $73,967         $45,594
                                                       =======         =======

Balance of allowance for loan losses
     at beginning of period                            $   866         $   520
                                                       -------         -------

Loans charged off:
     Installment loans                                      64              10
     Real estate-mortgage                                   20               5
                                                       -------         -------
                                                            84              15
                                                       -------         -------

Loans recovered                                              1              --

Net charge-offs                                             83              15
                                                       -------         -------

Additions to allowance charged to operating
     expense during year                                   412             361
                                                       -------         -------

Balance of allowance for loan losses
     at end of year                                    $ 1,195         $   866
                                                       =======         =======

Ratio of net loans charged off during the
year to average loans outstanding                          .11%            .03%
                                                       =======         =======

Allowance for Loan Losses

The allowance for loan losses is maintained at a level that is deemed
appropriate by us to adequately cover all known and inherent risks in the loan
portfolio. Our evaluation of the loan portfolio includes a periodic review of
loan loss experience, current economic conditions that may affect the borrower's
ability to pay and the underlying collateral value of the loans.

                                       35

<PAGE>

As of December 31, 2001 and 2000, our allocations of the allowance for loan
losses do not specifically correspond to the categories of loans listed below.
Based on our best estimate, the allocation of the allowance for loan losses to
types of loans, as of the indicated dates, is as follows:

<TABLE>
<CAPTION>
                                  December 31, 2001                  December 31, 2000
                                      Percent of loans in                Percent of loans in
                                         each category                      each category
                              Amount     to total loans          Amount     to total loans
                                                   (Dollars in Thousands)

<S>                         <C>                <C>              <C>              <C>
Commercial                  $   239            9.92%            $  173           11.88%
Real estate- construction       179           15.24                260           15.19
Real estate- mortgage           657           66.02                346           59.13
Consumer installment
     loans and other            120            8.82                 87           13.80
                            -------          ------              -----          ------
                            $ 1,195          100.00%             $ 866          100.00%
                            =======          ======              =====          ======
</TABLE>

                                       36

<PAGE>

                                    DEPOSITS

Average amount of deposits and average rates paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand deposits, savings
deposits, and time deposits, for the year is presented below. (1)

<TABLE>
<CAPTION>
                                                                 Periods Ended December 31,
                                                        2001                                 2000
                                                Amount         Percent               Amount          Percent
                                                                   (Dollars in Thousands)
<S>                                            <C>              <C>                 <C>                 <C>
Noninterest-bearing demand deposits            $ 6,421            --%               $ 5,541               --%
Interest-bearing demand deposits                15,097          2.64                 10,769             3.16
Savings deposits                                 1,045          1.93                    625             1.96
Time deposits                                   64,823          5.97                 40,250             6.54
                                               -------                              -------
                                               $87,386                              $57,185
                                               =======                              =======
</TABLE>

(1)   Average balances were determined using the daily average balances during
      the year.

The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 2001 are shown below by category, which is based on time
remaining until maturity of (1) three months or less, (2) over three through six
months, (3) over six through twelve months, and (4) over twelve months.

                                                    (Dollars in Thousands)

     Three months or less                                 $     10,098
     Over three months through six months                        4,249
     Over six months through twelve months                       8,703
     Over twelve months                                         18,107
                                                          ------------
              Total                                       $     41,157
                                                          ============

                    RETURN ON ASSETS AND STOCKHOLDERS' EQUITY

The following rate of return information for the year indicated is presented
below.

                                         Years Ended December 31,
                                          2001             2000

Return on assets (1)                      .60%             .74%
Return on equity (2)                     7.20             6.56
Dividend payout ratio (3)                  --               --
Equity to assets ratio (4)               8.32            11.35

(1)   Net income divided by average total assets.
(2)   Net income divided by average equity.
(3)   Dividends declared per share of common stock divided by net income per
      share.
(4)   Average equity divided by average total assets.

                                       37

<PAGE>

Item 7. Financial Statements and Supplementary Data.

                              UNITY HOLDINGS, INC.
                                 AND SUBSIDIARY

                          CONSOLIDATED FINANCIAL REPORT
                                DECEMBER 31, 2001








                                       38

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Unity Holdings, Inc.
Cartersville, Georgia

            We have audited the accompanying consolidated balance sheets of
Unity Holdings, Inc. and subsidiary as of December 31, 2001 and 2000, and the
related consolidated statements of income, comprehensive income, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

            We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

            In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Unity
Holdings, Inc. and subsidiary as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.


                                            /s/ MAULDIN & JENKINS, LLC

Atlanta, Georgia
March 4, 2002

                                       39

<PAGE>

                              UNITY HOLDINGS, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
<TABLE>
<CAPTION>
                                Assets                         2001            2000
                                                         -------------    ------------
<S>                                                      <C>              <C>
Cash and due from banks                                  $   2,421,360    $  2,103,763
Interest-bearing deposits in banks                              63,083         114,424
Federal funds sold                                           2,602,000       4,690,000
Securities available-for-sale                               11,988,606       7,976,556
Restricted equity securities, at cost                          498,209         435,909

Loans                                                       88,071,433      57,548,596
Less allowance for loan losses                               1,195,775         865,663
                                                         -------------    ------------
          Loans, net                                        86,875,658      56,682,933

Premises and equipment                                       5,344,358       5,046,537
Other assets                                                 1,879,117       1,327,107
                                                         -------------    ------------

          Total assets                                   $ 111,672,391    $ 78,377,229
                                                         =============    ============

             Liabilities and Stockholders' Equity

Deposits
    Noninterest-bearing                                  $   7,345,052    $  6,494,041
    Interest-bearing                                        94,946,681      63,400,788
                                                         -------------    ------------
         Total deposits                                    102,291,733      69,894,829
    Other liabilities                                        1,067,690         669,206
                                                         -------------    ------------
         Total liabilities                                 103,359,423      70,564,035
                                                         -------------    ------------

Commitments and contingencies

Stockholders' equity
    Preferred stock, par value $.01; 10,000,000 shares
        authorized; none issued                                     --              --
    Common stock, par value $.01; 10,000,000 shares
        authorized; 839,211 issued and outstanding               8,392           8,392
    Capital surplus                                          8,076,469       8,076,469
    Retained earnings (deficit)                                234,062        (342,934)
    Accumulated other comprehensive income (loss)               (5,955)         71,267
                                                         -------------    ------------

          Total stockholders' equity                         8,312,968       7,813,194
                                                         -------------    ------------

          Total liabilities and stockholders' equity     $ 111,672,391    $ 78,377,229
                                                         =============    ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                       40

<PAGE>

                              UNITY HOLDINGS , INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                    2001         2000
                                                                ----------   ----------
<S>                                                             <C>          <C>
Interest income
    Loans                                                       $7,250,913   $5,117,517
    Taxable securities                                             527,740      559,943
    Nontaxable securities                                           13,998           --
    Federal funds sold                                             222,235      298,052
    Interest-bearing deposits in banks                               3,371        6,709
                                                                ----------   ----------
          Total interest income                                  8,018,257    5,982,221

Interest expense on deposits                                     4,289,856    2,983,169
                                                                ----------   ----------

          Net interest income                                    3,728,401    2,999,052
Provision for loan losses                                          412,485      360,854
                                                                ----------   ----------
          Net interest income after provision for loan losses    3,315,916    2,638,198
                                                                ----------   ----------

Other income
    Service charges on deposit accounts                            293,707      221,517
    Gain on sale of securities available-for-sale                   16,292           --
    Other operating income                                         398,178      200,692
                                                                ----------   ----------
          Total other income                                       708,177      422,209
                                                                ----------   ----------

Other expenses
    Salaries and employee benefits                               1,799,908    1,334,720
    Equipment and occupancy expenses                               519,947      401,011
    Other operating expenses                                     1,049,620      837,527
                                                                ----------   ----------
          Total other expenses                                   3,369,475    2,573,258
                                                                ----------   ----------

          Income before income taxes                               654,618      487,149

Income tax expense                                                  77,622           --
                                                                ----------   ----------

                    Net income                                  $  576,996   $  487,149
                                                                ==========   ==========

Basic earnings per share                                        $     0.69   $     0.58
                                                                ==========   ==========

Diluted earnings per share                                      $     0.65   $     0.56
                                                                ==========   ==========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       41

<PAGE>

                              UNITY HOLDINGS, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                              2001           2000
                                                                                           ---------       ---------
<S>                                                                                        <C>             <C>
Net income                                                                                 $ 576,996       $ 487,149
                                                                                           ---------       ---------

Other comprehensive income (loss):
    Unrealized holding gains (losses) on securities available-for-sale:

        Unrealized holding gains (losses) on securities arising during period, net of
            tax benefit of $2,471 and $0, respectively                                       (66,469)         87,857

        Reclassification adjustment for gains realized in net income, net of
            tax  of $5,539 and $0, respectively                                              (10,753)             --
                                                                                           ---------       ---------

Other comprehensive income (loss)                                                            (77,222)         87,857
                                                                                           ---------       ---------

Comprehensive income                                                                       $ 499,774       $ 575,006
                                                                                           =========       =========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       42

<PAGE>

                         UNITY HOLDINGS, INC.
                            AND SUBSIDIARY

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                             Common Stock                               Retained         Other            Total
                                    ----------------------------        Capital         Earnings     Comprehensive    Stockholders'
                                      Shares         Par Value          Surplus         (Deficit)     Income (Loss)      Equity
                                    -----------      -----------      -----------      -----------     -----------     -----------
<S>                                 <C>             <C>              <C>              <C>             <C>             <C>
Balance, December 31, 1999              839,211      $     8,392      $ 8,076,469      $  (830,083)    $   (16,590)    $ 7,238,188
    Net income                               --               --               --          487,149              --         487,149
    Other comprehensive income               --               --               --               --          87,857          87,857
                                    -----------      -----------      -----------      -----------     -----------     -----------
Balance, December 31, 2000              839,211            8,392        8,076,469         (342,934)         71,267       7,813,194
    Net income                               --               --               --          576,996              --         576,996
    Other comprehensive loss                 --               --               --               --         (77,222)        (77,222)
                                    -----------      -----------      -----------      -----------     -----------     -----------
Balance, December 31, 2001              839,211      $     8,392      $ 8,076,469      $   234,062     $    (5,955)    $ 8,312,968
                                    ===========      ===========      ===========      ===========     ===========     ===========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       43

<PAGE>

                              UNITY HOLDINGS, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                            2001               2000
                                                                       ------------       ------------
<S>                                                                    <C>                <C>
OPERATING ACTIVITIES
    Net income                                                         $    576,996       $    487,149
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                        289,701            245,169
        Deferred taxes                                                     (218,625)          (220,994)
        Provision for loan losses                                           412,485            360,854
        Gain on sale of securities available-for-sale                       (16,292)                --
        Increase in interest receivable                                     (21,958)          (275,007)
        Increase in interest payable                                         94,909            140,404
        Net other operating activities                                       (4,784)           (20,347)
                                                                       ------------       ------------

              Net cash provided by operating activities                   1,112,432            717,228
                                                                       ------------       ------------

INVESTING ACTIVITIES
    Net (increase) decrease in interest-bearing deposits in banks            51,341            (12,580)
    Purchases of securities available-for-sale                          (16,728,932)        (2,932,030)
    Proceeds from maturities of securities available-for-sale            11,426,629          1,020,905
    Proceeds from sales of securities available-for-sale                  1,226,255                 --
    Purchases of restricted equity securities                               (62,300)                --
    Net (increase) decrease in federal funds sold                         2,088,000           (250,000)
    Net increase in loans                                               (30,605,210)       (22,985,284)
    Purchase of premises and equipment                                     (587,522)        (2,037,359)
    Purchase of life insurance policies                                          --           (125,800)
                                                                       ------------       ------------

            Net cash used in investing activities                       (33,191,739)       (27,322,148)
                                                                       ------------       ------------

FINANCING ACTIVITIES
    Net increase in deposits                                             32,396,904         25,582,959
                                                                       ------------       ------------

            Net cash provided by financing activities                    32,396,904         25,582,959
                                                                       ------------       ------------

Net increase (decrease) in cash and due from banks                          317,597         (1,021,961)

Cash and due from banks at beginning of year                              2,103,763          3,125,724
                                                                       ------------       ------------

Cash and due from banks at end of year                                 $  2,421,360       $  2,103,763
                                                                       ============       ============

SUPPLEMENTAL DISCLOSURE
  Cash paid for:
        Interest                                                       $  4,194,947       $  2,842,765

        Income taxes                                                   $    245,057       $    202,994
</TABLE>

See Notes to Consolidated Financial Statements.


                                       44

<PAGE>

                              UNITY HOLDINGS, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Nature of Business

            Unity Holdings, Inc. (the "Company") is a bank holding company whose
            business is conducted by its wholly-owned subsidiary, Unity National
            Bank (the "Bank"). The Bank is a commercial bank located in
            Cartersville, Bartow County, Georgia with branches in Adairsville,
            Bartow County, Georgia and Rome, Floyd County, Georgia and a
            mortgage loan production office in Calhoun, Gordon County, Georgia.
            The Bank provides a full range of banking services in its primary
            market area of Bartow County and the surrounding counties.

      Basis of Presentation

            The consolidated financial statements include the accounts of the
            Company and its subsidiary. Significant intercompany transactions
            and balances are eliminated in consolidation.

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect the reported amounts of assets and
            liabilities as of the balance sheet date and the reported amounts of
            revenues and expenses during the reporting period. Actual results
            could differ from those estimates. Material estimates that are
            particularly susceptible to significant change in the near term
            relate to the determination of the allowance for loan losses, the
            valuation of foreclosed real estate and deferred taxes.

      Cash, Due From Banks and Cash Flows

            For purposes of reporting cash flows, cash and due from banks
            includes cash on hand, cash items in process of collection and
            amounts due from banks. Cash flows from loans, federal funds sold,
            interest-bearing deposits in banks and deposits are reported net.

            The Company maintains amounts due from banks which, at times, may
            exceed federally insured limits. The Company has not experienced any
            losses in such accounts.

      Securities

            Debt securities that management has the positive intent and ability
            to hold to maturity are classified as held-to-maturity and recorded
            at amortized cost. Debt securities not classified as
            held-to-maturity are classified as available-for-sale and recorded
            at fair value with unrealized gains and losses excluded from
            earnings and reported in other comprehensive income. Equity
            securities, including restricted stock, without a readily
            determinable fair value are recorded at cost.

            Interest and dividends, amortization of premiums and accretion of
            discounts are recognized in interest income. Gains and losses on the
            sale of securities are determined using the specific identification
            method. Declines in the fair value of held-to-maturity and
            available-for-sale securities below their cost that are deemed to be
            other than temporary are reflected in earnings as realized losses.

                                       45

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Loans

            Loans are reported at their outstanding unpaid principal balances
            less unearned income and the allowance for loan losses. Interest
            income is accrued on the unpaid balance.

            Nonrefundable loan fees and certain direct loan origination costs
            are deferred and recognized in income over the life of the loans.

            The accrual of interest on loans is discontinued when, in
            management's opinion, the borrower may be unable to meet payments as
            they become due, unless the loan is well-secured. All interest
            accrued but not collected for loans that are placed on nonaccrual or
            charged off is reversed against interest income. Interest income on
            nonaccrual loans is subsequently recognized only to the extent cash
            payments are received until the loan is returned to accrual status.

            The allowance for loan losses is established through a provision for
            loan losses charged to expense. Loan losses are charged against the
            allowance when management believes the collectibility of the
            principal is unlikely. Subsequent recoveries are credited to the
            allowance.

            The allowance is an amount that management believes will be adequate
            to absorb estimated losses in the loan portfolio. The allowance for
            loan losses is evaluated on a regular basis by management and is
            based upon management's periodic review of the collectibility of the
            loans in light of historical experience, the nature and volume of
            the loan portfolio, adverse situations that may affect the
            borrower's ability to repay, estimated value of any underlying
            collateral and prevailing economic conditions. This evaluation is
            inherently subjective as it requires estimates that are susceptible
            to significant revision as more information becomes available. In
            addition, regulatory agencies, as an integral part of their
            examination process, periodically review the Company's allowance for
            loan losses, and may require the Company to make additions to the
            allowance based on their judgment about information available to
            them at the time of their examinations.

            A loan is considered impaired when it is probable the Company will
            be unable to collect all principal and interest payments due in
            accordance with the contractual terms of the loan agreement.
            Impaired loans are measured by either the present value of expected
            future cash flows discounted at the loan's effective interest rate,
            the loan's obtainable market price, or the fair value of the
            collateral if the loan is collateral dependent. The amount of
            impairment, if any, and any subsequent changes are included in the
            allowance for loan losses.

      Premises and Equipment

            Land is carried at cost. Premises and equipment are carried at cost
            less accumulated depreciation. Depreciation is computed principally
            by the straight-line method over the estimated useful lives of the
            assets.

      Other Real Estate Owned

            Other real estate owned represents properties acquired through
            foreclosure. Other real estate owned is held for sale and is carried
            at the lower of cost or fair value less estimated costs of disposal.
            Any write-down to fair value at the time of transfer to other real
            estate owned is charged to the allowance for loan losses. Revenue
            and expenses from operations and changes in the valuation allowance
            are included in net expenses from foreclosed assets. The Company had
            no other real estate owned at December 31, 2001 or 2000.

                                       46

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Transfers of Financial Assets

            Transfers of financial assets are accounted for as sales, when
            control over the assets has been surrendered. Control over
            transferred assets is deemed to be surrendered when (1) the assets
            have been isolated from the Company, (2) the transferee obtains the
            right (free of conditions that constrain it from taking advantage of
            that right) to pledge or exchange the transferred assets, and (3)
            the Company does not maintain effective control over the transferred
            assets through an agreement to repurchase them before their
            maturity.

      Income Taxes

            Deferred income tax assets and liabilities are determined using the
            balance sheet method. Under this method, the net deferred tax asset
            or liability is determined based on the tax effects of the temporary
            differences between the book and tax bases of the various balance
            sheet assets and liabilities and gives current recognition to
            changes in tax rates and laws.

      Stock Compensation Plans

            Statement of Financial Accounting Standards ("SFAS") No. 123,
            Accounting for Stock-Based Compensation, encourages all entities to
            adopt a fair value based method of accounting for employee stock
            compensation plans, whereby compensation cost is measured at the
            grant date based on the value of the award and is recognized over
            the service period, which is usually the vesting period. However, it
            also allows an entity to continue to measure compensation cost for
            those plans using the intrinsic value based method of accounting
            prescribed by Accounting Principles Board Opinion No. 25, Accounting
            for Stock Issued to Employees, whereby compensation cost is the
            excess, if any, of the quoted market price of the stock at the grant
            date (or other measurement date) over the amount an employee must
            pay to acquire the stock. Stock options issued under the Company's
            stock option plan have no intrinsic value at the grant date, and
            under Opinion No. 25 no compensation cost is recognized for them.
            The Company has elected to continue with the accounting methodology
            in Opinion No. 25 and, as a result, has provided pro forma
            disclosures of net income and earnings per share and other
            disclosures, as if the fair value based method of accounting had
            been applied.

      Earnings Per Share

            Basic earnings per share are computed by dividing net income by the
            weighted average number of shares of common stock outstanding.
            Diluted earnings per share are computed by dividing net income by
            the sum of the weighted average number of shares of common stock
            outstanding and potential common shares. Potential common shares
            consist of stock options.

      Comprehensive Income

            Accounting principles generally require that recognized revenue,
            expenses, gains and losses be included in net income. Although
            certain changes in assets and liabilities, such as unrealized gains
            and losses on available-for-sale securities, are reported as a
            separate component of the equity section of the balance sheet, such
            items, along with net income, are components of comprehensive
            income.

                                       47

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. SECURITIES AVAILABLE-FOR-SALE

      The amortized cost and fair value of securities are summarized as follows:

<TABLE>
<CAPTION>
                                                           Gross            Gross
                                        Amortized        Unrealized       Unrealized         Fair
                                           Cost            Gains            Losses           Value
                                      ---------------   -------------    -------------   --------------
<S>                                 <C>               <C>              <C>             <C>
Securities Available-for-Sale
   December 31, 2001:
   U. S. Government and
      agency securities             $    8,706,653    $     39,544     $   (34,360)    $     8,711,837
   Municipal securities                    873,536             -           (32,302)            841,234
   Mortgage-backed securities            2,417,440          18,856            (761)          2,435,535
                                    ---------------   -------------    -------------   ----------------
                                    $   11,997,629    $     58,400     $   (67,423)    $    11,988,606
                                    ===============   =============    =============   ================

   December 31, 2000:
   U. S. Government and
      agency securities             $   7,431,911     $    70,184      $   (1,875)     $     7,500,220
   Mortgage-backed securities             473,378           2,958              -               476,336
                                    ---------------   -------------    -------------   ----------------
                                    $   7,905,289     $    73,142      $   (1,875)     $     7,976,556
                                    ===============   =============    =============   ================
</TABLE>

      There were no pledged securities at December 31, 2001 or 2000. Gross gains
      of $16,292 were realized on sales of securities available-for-sale for the
      year ended December 31, 2001. There were no sales of securities in 2000.

      The amortized cost and fair value of debt securities as of December 31,
      2001 by contractual maturity are shown below. Maturities may differ from
      contractual maturities of mortgage-backed securities because the mortgages
      underlying the securities may be called or repaid without penalty.
      Therefore, these securities are not included in the maturity categories in
      the following summary.

                                               Securities Available-for-Sale
                                             ---------------------------------
                                               Amortized            Fair
                                                  Cost             Value
                                             ---------------   ---------------

Due in one year or less                      $    2,998,800    $    2,996,400
Due from one to five years                        2,063,289         2,085,111
Due from five to ten years                        2,381,357         2,365,065
Due after ten years                               2,136,743         2,106,495
Mortgage-backed securities                        2,417,440         2,435,535
                                             ---------------   ---------------
                                             $   11,997,629    $   11,988,606
                                             ===============   ===============

                                       48

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. LOANS

      The composition of loans is summarized as follows:

                                                         December 31,
                                                 ----------------------------
                                                     2001            2000
                                                 ------------    ------------
Commercial, financial and agricultural           $  8,732,000    $  6,839,000
Real estate - construction                         13,425,000       8,741,000
Real estate - mortgage                             58,354,000      34,150,000
Consumer, installment and other                     7,769,290       7,941,366
                                                 ------------    ------------
                                                   88,280,290      57,671,366
 Unearned income                                     (208,857)       (122,770)
 Allowance for loan losses                         (1,195,775)       (865,663)
                                                 ------------    ------------
 Loans, net                                      $ 86,875,658    $ 56,682,933
                                                 ============    ============

      Changes in the allowance for loan losses are as follows:

                                                   Years Ended December 31,
                                                 ----------------------------
                                                     2001            2000
                                                 ------------    ------------

 Balance, beginning of year                      $    865,663    $    519,766
    Provision for loan losses                         412,485         360,854
    Loans charged off                                 (84,221)        (14,957)
    Recoveries of loans previously charged off          1,848              --
                                                 ------------    ------------
 Balance, end of year                            $  1,195,775    $    865,663
                                                 ============    ============

      The total recorded investment in impaired loans was $69,134 and $46,500 at
      December 31, 2001 and 2000, respectively. There were no impaired loans
      that had related allowances for loan losses determined in accordance with
      SFAS No. 114, Accounting by Creditors for Impairment of a Loan, at
      December 31, 2001 and 2000. The average recorded investment in impaired
      loans for 2001 and 2000 was $76,019 and $16,146, respectively. Interest
      income recognized on impaired loans for cash payments received was not
      material for the years ended December 31, 2001 and 2000.

      In the ordinary course of business, the Company has granted loans to
      certain related parties including directors, executive officers, and their
      affiliates. The interest rates on these loans were substantially the same
      as rates prevailing at the time of the transaction and repayment terms are
      customary for the type of loan. Changes in related party loans for the
      year ended December 31, 2001 are as follows:

Balance, beginning of year                                          $   256,582
   Advances                                                           1,453,803
   Repayments                                                          (279,278)
                                                                    -----------
Balance, end of year                                                $ 1,431,107
                                                                    ===========


                                       49

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. PREMISES AND EQUIPMENT

      Premises and equipment are summarized as follows:

                                                         December 31,
                                                -------------------------------
                                                    2001                2000
                                                -----------         -----------
Land                                            $ 1,542,269         $ 1,139,676
Buildings                                         2,976,644           3,054,837
Leasehold improvements                               60,920                  --
Equipment                                         1,331,386           1,129,184
                                                -----------         -----------
                                                  5,911,219           5,323,697
Accumulated depreciation                           (566,861)           (277,160)
                                                -----------         -----------
                                                $ 5,344,358         $ 5,046,537
                                                ===========         ===========

      Through March of 2000, the Company operated out of leased modular
      facilities for its Adairsville branch and main office locations on a
      month-to-month basis. The Company is currently operating out of leased
      modular facilities for its Rome branch on a month-to-month basis. Total
      rental expense incurred for the lease of these facilities for the years
      ended December 31, 2001 and 2000 was $19,080 and $32,669, respectively.

NOTE 5. DEPOSITS

      The aggregate amount of time deposits in denominations of $100,000 or more
      at December 31, 2001 and 2000 was $41,157,087 and $24,760,697,
      respectively. The Company had brokered certificates of deposit at December
      31, 2001 and 2000 of $24,001,797 and $7,873,000, respectively. The
      scheduled maturities of time deposits at December 31, 2001 are as follows:

2002                                                                 $46,747,674
2003                                                                  14,220,664
2004                                                                  11,091,113
2005                                                                   2,338,830
2006                                                                     379,703
                                                                     -----------
                                                                     $74,777,984
                                                                     ===========

NOTE 6.  STOCK COMPENSATION PLANS

      The Company has an incentive stock option plan and has reserved 150,000
      shares of common stock for issuance to key employees and directors.
      Options are granted at the fair value of the Company's common stock on the
      date of grant and expire ten years from the effective date of the grant.
      The options vest at a rate of 20% per year.

                                       50

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. STOCK COMPENSATION PLANS (Continued)

      Other pertinent information related to the options is as follows:

<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                          ------------------------------------------------
                                                  2001                     2000
                                          ------      ---------       ------     ---------
                                                      Weighted-                   Weighted-
                                                       Average                    Average
                                                       Exercise                   Exercise
                                          Number       Price         Number         Price
                                          ------      ---------       ------      --------
<S>                                       <C>           <C>           <C>           <C>
                                          51,960        $10.08        51,960        $10.08
   Granted                                 9,000         13.44            --            --
   Exercised                                  --            --            --            --
   Terminated                                 --            --            --            --
                                          ------                      ------
Under option, end of year                 60,960         10.57        51,960         10.08
                                          ======                      ======

Exercisable, end of year                  30,376         10.05        19,984         10.04
                                          ======                      ======

Weighted-average fair value of
   options granted during the year          5.70                      $   --
                                            ====                      ======
</TABLE>

      Information pertaining to options outstanding at December 31, 2001 is as
      follows:

<TABLE>
<CAPTION>
                                         Options Outstanding                     Options Exercisable
                            ----------------------------------------------  -------------------------------
                                              Weighted-
                                               Average        Weighted-                       Weighted-
                                              Remaining        Average                         Average
    Range of                   Number        Contractual       Exercise        Number          Exercise
Exercise Prices              Outstanding         Life           Price        Exercisable        Price
--------------------------- --------------  ---------------  -------------  --------------  ---------------
<S>                             <C>           <C>             <C>              <C>           <C>
    $10 - $15                   60,960        7 years         $     10.57      30,376        $       10.05
</TABLE>

      In 1998, the Company granted 140,000 common stock warrants to its initial
      directors. The warrants are exercisable at a price of $10 per share and
      are fully vested. The warrants expire ten years from date of grant and
      have a weighted average remaining contractual life of seven years.

      The Company applies Opinion 25 and related Interpretations in accounting
      for stock options and warrants. Accordingly, no compensation cost has been
      recognized. Had compensation cost for stock options and warrants been
      determined based on the fair value at the grant dates for awards under the
      plan consistent with the method prescribed by SFAS No. 123, net income and
      earnings per share would have been adjusted to the pro forma amounts
      indicated below.

                                       51

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6.  STOCK COMPENSATION PLANS (Continued)

                                             Years Ended December 31,
                                         --------------------------------
                                              2001              2000
                                         --------------   ---------------

 Net income            As reported       $     576,996    $      487,149
                       Pro forma         $     545,746    $      436,956

 Earnings per share    As reported       $        0.69    $         0.58
                       Pro forma         $        0.65    $         0.52

 Earnings per share -  As reported       $        0.65    $         0.56
   assuming dilution   Pro forma         $        0.61    $         0.50

      The fair value of each option grant is estimated on the date of grant
      using the Black-Scholes option-pricing model with the following
      weighted-average assumptions:

                                         Years Ended December 31,
                                        ------------------------------
                                           2001               2000
                                        ------------       -----------
Dividend yield                                   0%               N/A
Expected life                              10 years               N/A
Expected volatility                              0%               N/A
Risk-free interest rate                       5.59%               N/A

NOTE 7.  INCOME TAXES

      Income tax expense consists of the following:

                                              Years Ended December 31,
                                         -----------------------------------
                                                2001               2000
                                         ----------------    ---------------

Current                                  $      296,247      $     220,994
Deferred                                       (105,393)           (51,936)
Change in valuation allowance                  (113,232)          (169,058)
                                         ----------------    ---------------
               Income tax expense        $       77,622      $          -
                                         ================    ===============

      The Company's income tax expense differs from the amounts computed by
      applying the federal income tax statutory rates to income before income
      taxes. A reconciliation of the differences is as follows:

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                   --------------------------------------------------------------
                                               2001                             2000
                                   -----------------------------     ----------------------------
                                       Amount          Percent           Amount         Percent
                                   ---------------    ----------     ---------------   ----------
<S>                                <C>                   <C>         <C>
Income taxes at statutory rate     $     222,570         34  %       $     165,631        34  %
   Tax-free interest                      (3,741)        (1)                 3,427         1
   State tax benefit                     (34,836)        (5)                    --        --
   Change in valuation allowance        (113,232)       (17)              (169,058)      (35)
   Other items                             6,861          1                     --        --
                                   ---------------    ----------     ---------------   ----------
Income tax expense                 $      77,622         12  %       $          --        --  %
                                   ===============    ==========     ===============   ==========
</TABLE>

                                       52

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7.  INCOME TAXES (Continued)

      The components of deferred income taxes are as follows:

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

Deferred tax assets:
  Loan loss reserves                            $ 344,034        $ 210,149
  Preopening and organizational expenses           76,536          104,939
  Loan fees                                        78,702           39,933
  Securities available-for-sale                     3,068               --
                                                ---------        ---------
                                                  502,340          355,021
Valuation allowance                                    --          (89,001)
                                                ---------        ---------
                                                  502,340          266,020
                                                ---------        ---------
Deferred tax liabilities:
  Depreciation                                     56,659           17,801
  Securities available-for-sale                        --           24,231
                                                ---------        ---------
                                                   56,659           42,032
                                                ---------        ---------

Net deferred tax assets                         $ 445,681        $ 223,988
                                                =========        =========

NOTE 8. EARNINGS PER SHARE

      Presented below is a summary of the components used to calculate basic and
      diluted earnings per common share.

                                                        Years Ended December 31,
                                                        -----------------------
                                                            2001         2000
                                                        ----------     --------
Basic Earnings Per Share:
   Weighted average common shares outstanding              839,211      839,211
                                                        ==========     ========

   Net income                                           $  576,996     $487,149
                                                        ==========     ========

   Basic earnings  per share                            $     0.69     $   0.58
                                                        ==========     ========

Diluted Earnings Per Share:
   Weighted average common shares outstanding              839,211      839,211
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year              54,872       31,660
                                                        ----------     --------
   Total weighted average common shares and
      common stock equivalents outstanding                 894,083      870,871
                                                        ==========     ========

   Net income                                           $  576,996     $487,149
                                                        ==========     ========

   Diluted earnings per share                           $     0.65     $   0.56
                                                        ==========     ========

                                       53

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9. COMMITMENTS AND CONTINGENCIES

      The Company is a party to financial instruments with off-balance sheet
      risk in the normal course of business to meet the financing needs of its
      customers. These financial instruments include commitments to extend
      credit and standby letters of credit. Such commitments involve, to varying
      degrees, elements of credit risk and interest rate risk in excess of the
      amount recognized in the balance sheets.

      The Company's exposure to credit loss in the event of nonperformance by
      the other party to the financial instrument for commitments to extend
      credit and standby letters of credit is represented by the contractual
      amount of those instruments. The Company uses the same credit policies in
      making commitments and conditional obligations as it does for on-balance
      sheet instruments. A summary of the Company's commitments is as follows:

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

Commitments to extend credit                    $11,677,000          $ 6,002,000
Letters of credit                                   232,000              320,000
                                                -----------          -----------
                                                $11,909,000          $ 6,322,000
                                                ===========          ===========

      Commitments to extend credit are agreements to lend to a customer as long
      as there is no violation of any condition established in the contract.
      Since many of the commitments are expected to expire without being drawn
      upon, the total commitment amounts do not necessarily represent future
      cash requirements. The amount of collateral obtained, if deemed necessary
      by the Company upon extension of credit, is based on management's credit
      evaluation of the customer.

      Standby letters of credit are conditional commitments issued by the
      Company to guarantee the performance of a customer to a third party. Those
      letters of credit are primarily issued to support public and private
      borrowing arrangements. The credit risk involved in issuing letters of
      credit is essentially the same as that involved in extending loans to
      customers. Collateral is required in instances which the Company deems
      necessary.

      In the normal course of business, the Company is involved in various legal
      proceedings. In the opinion of management, any liability resulting from
      such proceedings would not have a material effect on the Company's
      financial statements.

NOTE 10. CONCENTRATIONS OF CREDIT

      The Company originates primarily commercial, residential, and consumer
      loans to customers in Bartow County and surrounding counties. The ability
      of the majority of the Company's customers to honor their contractual loan
      obligations is dependent on the economy in these areas.

      Eighty-one percent of the Company's loan portfolio is concentrated in
      loans secured by real estate, of which a substantial portion is secured by
      real estate in the Company's primary market area. Accordingly, the
      ultimate collectibility of the loan portfolio is susceptible to changes in
      market conditions in the Company's primary market area. The other
      significant concentrations of credit by type of loan are set forth in Note
      3.

                                       54

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. CONCENTRATIONS OF CREDIT (Continued)

      The Company, as a matter of policy, does not generally extend credit to
      any single borrower or group of related borrowers in excess of 15% of the
      Bank's capital and surplus as defined by the Office of the Comptroller of
      the Currency, or approximately $1,418,000.

NOTE 11. REGULATORY MATTERS

      The Bank is subject to certain restrictions on the amount of dividends
      that may be declared without prior regulatory approval. At December 31,
      2001, dividends of $331,000 could be declared without regulatory approval.

      The Company and the Bank are subject to various regulatory capital
      requirements administered by the federal banking agencies. Failure to meet
      minimum capital requirements can initiate certain mandatory, and possibly
      additional discretionary actions by regulators that, if undertaken, could
      have a direct material effect on the financial statements. Under capital
      adequacy guidelines and the regulatory framework for prompt corrective
      action, the Company and Bank must meet specific capital guidelines that
      involve quantitative measures of the assets, liabilities, and certain
      off-balance sheet items as calculated under regulatory accounting
      practices. The capital amounts and classification are also subject to
      qualitative judgments by the regulators about components, risk weightings,
      and other factors. Prompt corrective provisions are not applicable to bank
      holding companies.

      Quantitative measures established by regulation to ensure capital adequacy
      require the Company and Bank to maintain minimum amounts and ratios of
      Total and Tier I capital to risk-weighted assets and of Tier I capital to
      average assets. Management believes, as of December 31, 2001 and 2000, the
      Company and the Bank met all capital adequacy requirements to which they
      are subject.

      As of December 31, 2001, the most recent notification from the Federal
      Deposit Insurance Corporation categorized the Bank as well capitalized
      under the regulatory framework for prompt corrective action. To be
      categorized as well capitalized, the Bank must maintain minimum Total
      risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in
      the following table. There are no conditions or events since that
      notification that management believes have changed the Bank's category.

      The Company and Bank's actual capital amounts and ratios are presented in
      the following table:

<TABLE>
<CAPTION>
                                                                                                   To Be Well
                                                                          For Capital          Capitalized Under
                                                                            Adequacy           Prompt Corrective
                                                    Actual                  Purposes           Action Provisions
                                            -----------------------   ---------------------   ---------------------
                                              Amount       Ratio       Amount       Ratio       Amount      Ratio
                                            -----------   ---------   ----------   --------   -----------  --------
                                                                    (Dollars in Thousands)
                                            -----------------------------------------------------------------------
<S>                                         <C>             <C>       <C>               <C>   <C>             <C>
December 31, 2001:
Total Capital to Risk Weighted Assets:
   Consolidated                             $    9,376      11.10%    $   6,758         8%    $      N/A       N/A
   Bank                                     $    9,319      11.03%    $   6,756         8%    $    8,445       10%
Tier I Capital to Risk Weighted Assets:
   Consolidated                             $    8,319       9.85%    $   3,379         4%    $      N/A       N/A
   Bank                                     $    8,262       9.78%    $   3,378         4%    $    5,067        6%
Tier I Capital to Average Assets:
   Consolidated                             $    8,319       7.60%    $   4,378         4%    $      N/A       N/A
   Bank                                     $    8,262       7.55%    $   4,377         4%    $    5,471        5%
</TABLE>

                                       55

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11. REGULATORY MATTERS (Continued)

<TABLE>
<CAPTION>
                                                                                                   To Be Well
                                                                          For Capital          Capitalized Under
                                                                            Adequacy           Prompt Corrective
                                                    Actual                  Purposes           Action Provisions
                                            -----------------------   ---------------------   ---------------------
                                              Amount       Ratio       Amount       Ratio       Amount      Ratio
                                            -----------   ---------   ----------   --------   -----------  --------
                                                                    (Dollars in Thousands)
                                            -----------------------------------------------------------------------
<S>                                         <C>             <C>       <C>               <C>   <C>              <C>
December 31, 2000:
Total Capital to Risk Weighted Assets:
   Consolidated                             $    8,483      14.34%    $   4,733         8%    $      N/A       N/A
   Bank                                     $    8,463      14.31%    $   4,733         8%    $    5,916       10%
Tier I Capital to Risk Weighted Assets:
   Consolidated                             $    7,742      13.09%    $   2,367         4%    $      N/A       N/A
   Bank                                     $    7,722      13.05%    $   2,367         4%    $    3,550        6%
Tier I Capital to Average Assets:
   Consolidated                             $    7,742      10.21%    $   3,032         4%    $      N/A       N/A
   Bank                                     $    7,722      10.19%    $   3,032         4%    $    3,790        5%
</TABLE>

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS

      The fair value of a financial instrument is the current amount that would
      be exchanged between willing parties, other than in a forced liquidation.
      Fair value is best determined based upon quoted market prices. However, in
      many instances, there are no quoted market prices for the Company's
      various financial instruments. In cases where quoted market prices are not
      available, fair values are based on estimates using present value or other
      valuation techniques. Those techniques are significantly affected by the
      assumptions used, including the discount rate and estimates of future cash
      flows. Accordingly, the fair value estimates may not be realized in an
      immediate settlement of the instrument. SFAS No. 107, Disclosures about
      Fair Values of Financial Instruments, excludes certain financial
      instruments and all nonfinancial instruments from its disclosure
      requirements. Accordingly, the aggregate fair value amounts presented may
      not necessarily represent the underlying fair value of the Company.

      Cash, Due From Banks, Interest-bearing Deposits in Banks and Federal Funds
      Sold:

            The carrying amounts of cash, due from banks, interest-bearing
            deposits in banks and federal funds sold approximate fair values.

      Securities:

            Fair values for securities are based on available quoted market
            prices. The carrying values of equity securities with no readily
            determinable fair value approximate fair values.

                                       56

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

      Loans:

            For variable-rate loans that reprice frequently and have no
            significant change in credit risk, fair values are based on carrying
            values. For other loans, the fair values are estimated using
            discounted cash flow analyses, using interest rates currently being
            offered for loans with similar terms to borrowers with similar
            credit quality. Fair values for impaired loans are estimated using
            discounted cash flow analyses or underlying collateral values, where
            applicable.

      Deposits:

            The carrying amounts of demand deposits, savings deposits, and
            variable-rate certificates of deposit approximate their fair values.
            Fair values for fixed-rate certificates of deposit are estimated
            using a discounted cash flow calculation that applies interest rates
            currently being offered on certificates to a schedule of aggregated
            expected monthly maturities on time deposits.

      Accrued Interest:

            The carrying amounts of accrued interest approximate their fair
            values.

      Off-Balance Sheet Instruments:

            Fair values of the Company's off-balance sheet financial instruments
            are based on fees currently charged to enter into similar
            agreements. Since the majority of the Company's off-balance sheet
            instruments consist of nonfee-producing, variable-rate commitments,
            the Company has determined they do not have a distinguishable fair
            value.

            The carrying amounts and estimated fair values of the Company's
            financial instruments were as follows:

<TABLE>
<CAPTION>
                                         December 31, 2001                     December 31, 2000
                                 -----------------------------------   ----------------------------------
                                    Carrying             Fair             Carrying            Fair
                                     Amount              Value             Amount             Value
                                 ----------------   ----------------   ---------------   ----------------
<S>                              <C>                <C>                <C>               <C>
 Financial assets:
    Cash, due from banks,
      interest-bearing deposits
      in banks, and federal
      funds sold                 $     5,086,443    $     5,086,443    $    6,908,187    $     6,908,187

 Securities available-for-sale        11,988,606         11,988,606         7,976,556          7,976,556
    Restricted equity securities         498,209            498,209           435,909            435,909
    Loans                             86,875,658         88,780,728        56,682,933         56,834,729
    Accrued interest receivable          582,213            582,213           560,255            560,255

 Financial liabilities:
    Deposits                         102,291,733        103,933,523        69,894,829         70,763,525
    Accrued interest payable             649,234            649,234           554,325            554,325
</TABLE>

                                       57

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13. SUPPLEMENTAL FINANCIAL DATA

      Components of other operating income and expenses in excess of 1% of total
      revenue are as follows:

                                                      Years Ended December 31,
                                                    ----------------------------
                                                      2001                2000
                                                    --------            --------

Other operating income:
  Mortgage fee income                               $344,517            $165,862
Other operating expenses:
  Data processing                                    196,467             142,789
  Office supplies                                     91,510              72,720
  Telephone                                           50,657              68,199
  Legal and professional                              63,542              54,818
  Advertising                                        126,854              90,152

NOTE 14. PARENT COMPANY FINANCIAL INFORMATION

      The following information presents the condensed balance sheets,
      statements of income, and cash flows of Unity Holdings, Inc. as of and for
      the years ended December 31, 2001 and 2000:

                            CONDENSED BALANCE SHEETS

                                                   2001                   2000
                                                ----------            ----------

Assets
  Cash                                          $   27,529            $   20,190
  Investment in subsidiary                       8,256,027             7,793,004
  Other assets                                      29,412                    --
                                                ----------            ----------

      Total assets                              $8,312,968            $7,813,194
                                                ==========            ==========

Total stockholders' equity                      $8,312,968            $7,813,194
                                                ==========            ==========

                                       58

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14. PARENT COMPANY FINANCIAL INFORMATION (Continued)

                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                        2001              2000
                                                                     ---------         ---------
<S>                                                                  <C>               <C>
 Expenses, other                                                     $   8,034         $   5,820
                                                                     ---------         ---------

        Loss before income tax benefits and equity in
           undistributed income of subsidiary                           (8,034)           (5,820)

        Income tax benefits                                            (44,785)               --
                                                                     ---------         ---------

        Income (loss) before equity in
           undistributed income of subsidiary                           36,751            (5,820)

 Equity in undistributed income of subsidiary                          540,245           492,969
                                                                     ---------         ---------

         Net income                                                  $ 576,996         $ 487,149
                                                                     =========         =========
</TABLE>

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        2001              2000
                                                                     ---------         ---------
<S>                                                                  <C>               <C>
OPERATING ACTIVITIES
  Net income                                                         $ 576,996         $ 487,149
  Adjustments to reconcile net income  to net cash
    provided by (used in) operating activities:
   Equity in undistributed income of subsidiary                       (540,245)         (492,969)
   Net other operating activities                                      (29,412)               --
                                                                     ---------         ---------

          Net cash provided by (used in) operating activities            7,339            (5,820)
                                                                     ---------         ---------

Net increase (decrease) in cash                                          7,339            (5,820)
                                                                     ---------         ---------

Cash at beginning of year                                               20,190            26,010
                                                                     ---------         ---------

Cash at end of year                                                  $  27,529         $  20,190
                                                                     =========         =========
</TABLE>

                                       59

<PAGE>

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

None.

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

      The Company's Bylaws provide that the Board of Directors shall be divided
into three classes with each class to be as nearly equal in number as possible.
The Bylaws also provide that the three classes of directors are to have
staggered terms, so that the terms of only approximately one-third of the Board
members will expire at each annual meeting of shareholders. The current Class I
directors are Donald D. George, John S. Lewis and Michael L. McPherson. The
current Class II directors are Sam R. McCleskey, Stephen A. Taylor and B. Don
Temples. The current Class III directors are Kenneth R. Bishop and Jerry W.
Braden. The Class I directors' terms will expire at the 2002 Annual Meeting.
Each of the three current Class I directors has been nominated for reelection
and will stand for election at the 2002 Annual Meeting for a three year term.
The terms of the Class II directors will expire at the 2003 Annual Shareholders
Meeting, and the terms of the Class III directors will expire at the 2004 Annual
Shareholders Meeting.

      Set forth below is also information about each of the company's directors
and each of its executive officers. Each of the following directors has been a
director of the company since the company's formation in 1997. Each director is
also a director of Unity National Bank.

      Donald D. George, 62, was born in Wardtown, Virginia. He attended several
colleges including Virginia State University, ICBO Business School of Manhattan,
and St. Francis of Xavier College of Labor Relations. Mr. George has been in the
transportation industry for over 30. He owns and is the president of Universal
Transportation Corporation, established in October 1997, which provides Medicaid
and Medicare transportation. In 1990, Mr. George formed his own company, Free
Enterprise of Atlanta, Inc. d/b/a George's Motor Coach, which provides trip and
shuttle services through the Atlanta area as well as out-of-state charter trips.
He was also President of the 223rd Street Block Association and Scout master of
Boy Scout Troop 676. Mr. George is a member of the Cobb County Chamber of
Commerce, the City of Atlanta Chamber of Commerce, the Atlanta Business League,
the City of Conyers Chamber of Commerce, and the Board of Directors of National
Key Women of America.

      John S. Lewis, 58, was born in Cartersville, Georgia. He received a
Bachelor of Business Administration from the University of Georgia. He received
a LLB in Law from Mercer University. Mr. Lewis is in the property management
business and manages jointly and independently owned income-producing real
estate and farm land. He has been in the real estate sales and management
business since 1986. He was a practicing attorney in Cartersville from 1970 to
1985.

      Michael L. McPherson, 52, was born in Cartersville, Georgia. He received a
Bachelors Degree in Business Administration, cum laude, from Brenau College,
Gainesville, Georgia. He graduated from several American Bankers association
schools on credit and lending. He received


                                      60

<PAGE>

the professional designation of Certified Lender-Business Banking (CLBB) from
the Institute of Certified Bankers. He graduated from the Georgia Bankers School
at the University of Georgia. Mr. McPherson has been a banker since 1977, when
he began his career at Bartow County Bank, Cartersville, Georgia. He worked in
all phases of banking from bookkeeping to senior vice president in charge of
lending. He was employed by Bartow County Bank from 1977 to 1990. In 1990, Mr.
McPherson moved to First Community Bank & Trust, Cartersville, Georgia as
executive vice president and chief lending officer. He remained with First
Community Bank & Trust until September 1997, at which time he resigned to lead
the formation of Unity National Bank. Mr. McPherson is a past director of the
Alumni Board of Governors of Reinhardt College; a past director of the Georgia
Chapter of Bank Administration 25 26 Institute; past president of the Young
Bankers Section of Community Bankers Association; a past member of the Board of
Directors of Bartow County Advocates for Children; a member of Center Baptist
Church, Cartersville; and active in various local charitable and civic
organizations.

      Kenneth R. Bishop, 38, was born in Jacksonville, Florida. He received a
Bachelors Degree in Business Administration - Marketing from the University of
Georgia. Mr. Bishop is the previous owner of Daddy Pam's Coffeehouse which he
opened in March 1997. Mr. Bishop is currently employed as a vice president of
Southern Color & Chemical Co., Inc. He has been an active member and supporter
of the Sam Jones Methodist Church for many years. In addition, he has been
active in a number of local charities, both financially and in service.

      Jerry W. Braden, 57, was born in Rome, Georgia. He received a Bachelor of
Science Degree and a Masters Degree in Agricultural Economics from the
University of Georgia. He is owner of a real estate management and development
company styled The Braden Group. The Braden Group is a trade name used to
develop real estate, to sell real estate, and to own and manage apartment
complexes. He has owned and operated The Braden Group since 1981. Mr. Braden has
been actively involved in many civic endeavors in Bartow County, including past
chairman of the Market Analysis Research Committee for the Washington-based
Council for Affordable and Rural Housing; member of the Board of Directors of
the Bartow County Habitat for Humanity; member of the Board of Directors Bartow
County Home Builders Association; member of the Board of Trustees of the Sam
Jones Historic Home and Museum; member of Board of Directors of the
Cartersville-Bartow County Opera; and chairman of the Finance Committee of
Trinity United Methodist Church.

      Sam R. McCleskey, 61, was born in Woodstock, Georgia. Since 1979, Mr.
McCleskey has been a supervisor in the tool and die area of Lockheed Martin
Corporation and also the owner of McCleskey Builders, Inc., a residential home
builder.

      Stephen A. Taylor, 46, was born in Fairmount, Georgia. Mr. Taylor is the
owner of Taylor Farm Supply, which has served Cartersville, Georgia for nearly
50 years. Mr. Taylor has attended Reinhardt College and Floyd College and is a
supporter of both these institutions. He is a past member of the Purina
Corporation Advisory Board. Mr. Taylor also coached several years in the Bartow
County Recreation Department.

      B. Don Temples, 50, was born in Cartersville, Georgia. Mr. Temples
received an Associate of Arts degree from Reinhardt College and a Bachelor of
Business Administration degree from the


                                      61

<PAGE>

University of Georgia. He is a licensed real estate broker and co-owner of
Temple's Construction, a residential real estate development and construction
company.

      None of the directors hold directorships in any reporting company other
than the Company. There are no family relationships among directors, executive
officers, or persons nominated or chosen by the Company to become directors or
executive officers of the Company.

      During the previous five years, no director or executive officer was the
subject of a legal proceeding (as defined below) that is material to an
evaluation of the ability or integrity of any director or executive officer. A
"legal proceeding" includes: (a) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive prior to that
time; (b) any conviction in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (c)
any order, judgment, or decree of any court of competent jurisdiction, or any
Federal or State authority permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of commodities
business, securities or banking activities; and (d) any finding by a court of
competent jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodity Futures Trading Commission of a violation of a
federal or state securities or commodities law (such finding having not been
reversed, suspended or vacated).

Compliance with Section 16(a) of the Securities Exchange Act of 1934

      Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company under Rule 16a-3(d) during 2001 and Form 5 and
amendments thereto furnished to the Company during 2001, no person who, at any
time during 2001, was a director, officer or beneficial owner of more than 10%
of any class of equity securities of the Company failed to file on a timely
basis any reports required by Section 16(a) during the 2001 fiscal year or
previously.


                                       62

<PAGE>

Item 10. Executive Compensation.

      The following table shows the cash compensation paid by the Company or
Unity National Bank to its Chief Executive Officer and President for the years
ended December 31, 1999, 2000 and 2001. No other executive officers of the
Company or Unity National Bank earned total annual compensation, including
salary and bonus, in excess of $100,000 in 2001.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Name and      Year   Salary     Bonus    Other Annual       Restricted   Securities          LTIP      All Other
Position                                 Compensation(2)    Stock        Underlying          Payouts   Compensation
                                                            Awards       Options/SARS(#)
<S>           <C>    <C>        <C>             <C>             <C>             <C>             <C>          <C>
-------------------------------------------------------------------------------------------------------------------
Michael L.    2001   127,050    43,685          -----           -----         32,176           -----        -----
McPherson     -----------------------------------------------------------------------------------------------------
President     2000   123,792    18,150          -----           -----         27,284           -----        -----
& CEO         -----------------------------------------------------------------------------------------------------
              1999   110,000    24,383          -----           -----         17,500           -----        -----
-------------------------------------------------------------------------------------------------------------------
</TABLE>

      (1) Executive officers of the Company also received indirect compensation
in the form of certain perquisites and other personal benefits. The amount of
such benefits received in the fiscal year by each named executive officer did
not exceed 10% of the executive's annual salary and bonus.

      (2) In recognition for the financial risks they undertook in connection
with the formation of the Bank, each organizer of the Bank, who are also the
initial directors, received warrants to purchase 17,500 additional shares of
common stock, or an aggregate of 140,000 shares. Mr. McPherson, President and
Chief Executive Officer of the Bank and also Director of the Company, received
warrants to purchase 17,500 additional shares of common stock exercisable at
$10.00 per share, expiring on November 30, 2008. In addition, Mr. McPherson was
granted options to purchase 24,460 shares of common stock on March 16, 1999 of
which one-fifth vest on each anniversary of the opening of the Bank, November
30, 1998.


                                      63

<PAGE>

<TABLE>
<CAPTION>
                         OPTION/SAR GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------
Name     # of Securities      % of Total Options/SARs    Exercise or      Expiration Date
           Underlying          Granted to Employees      Base Price
           Option/ SAR            in Fiscal Year           $/Share
             Grants
-----------------------------------------------------------------------------------------
<S>            <C>                      <C>                  <C>                <C>
None           N/A                      N/A                  N/A                N/A
-----------------------------------------------------------------------------------------
</TABLE>


                                      64

<PAGE>

<TABLE>
<CAPTION>

                                  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                         AND FISCAL YEAR-END OPTION/SAR VALUES
-------------------------------------------------------------------------------------------------------------------
Name                  Shares Acquired    Value Realized        Number of Securities          Value of Unexercised
                      on Exercise (#)          (#)            Underlying Unexercised             in-the-money
                                                              Options/SARS at FY-End        options/SARs at FY-End
                                                           (Exercisable Unexercisable)   (Exercisable/Unexercisable)
                                                                Base Price $/Share
-------------------------------------------------------------------------------------------------------------------
<S>                         <C>               <C>                    <C>                         <C>
CEO-Michael L.              --                --                     32,176/0                    $225,232/0(1)
McPherson
-------------------------------------------------------------------------------------------------------------------
</TABLE>

No stock options were exercised by the listed individuals and there were no
outstanding SARs during fiscal year 2001.

The Company does not have any Long Term Incentive Plans in effect.

(1) Dollar values have been calculated by determining the difference between the
estimated fair market value of the Company's common stock on March 22, 2002
($17.00) and the exercise prices of the options ($10.00).


                                      65

<PAGE>

Employment Agreements

      The Company has entered into an employment agreement with Mr. McPherson
for a five year term pursuant to which Mr. McPherson serves as the President and
Chief Executive Officer of the Company and Unity National Bank. Mr. McPherson
receives an annual salary of $127,050, plus his yearly medical insurance
premium. Mr. McPherson is also eligible to participate in any management
incentive program of the bank or any long-term equity incentive program and is
eligible for grants of stock options and other awards thereunder. Additionally,
Mr. McPherson participates in the Bank's retirement, welfare and other benefit
programs and is entitled to a life insurance policy and an accident liability
policy and reimbursement for automobile expenses, club dues, and travel and
business expenses. Following termination of his employment with the Bank and for
a period of twelve months thereafter, Mr. McPherson may not (i) be employed in
the banking business as a director, officer at the vice-president level or
higher, or organizer or promoter of, or provide executive management services
to, any financial institution within a ten-mile radius of the Bank's offices,
(ii) solicit major customers of the Bank for the purpose of providing financial
services, or (iii) solicit employees of the Bank for employment.

Director Compensation

Neither the Company nor Unity National Bank paid directors' fees in 2001.


                                      -66

<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

General

      The following table shows how much common stock in the Company is owned by
the directors, certain executive officers, and owners of more than 5% of the
outstanding common stock, as of December 31, 2001. The information as to
beneficial ownership was furnished to the Company by or on behalf of the persons
named. Unless otherwise indicated, each of the shareholders has sole voting and
vestment power with respect to the shares beneficially owned. Percentage
ownership is calculated based on its outstanding shares.

                                    Number of Shares    Percentage of Beneficial
Name                                     Owned (1)             Ownership*
----                                ----------------    ------------------------
Kenneth R. Bishop                        35,000(2)               3.57%
Jerry W. Braden                          46,000(2)               4.70%
Donald D. George                         35,200(2)               3.59%
John S. Lewis                            35,000(2)               3.57%
Sam R. McCleskey                         35,300(2)               3.61%
Michael L. McPherson                     50,713(2)               5.18%
Stephen A. Taylor                        41,400(2)               4.24%
B. Don Temples                           38,500(2)               3.93%

Executive officers and directors        317,113                 32.39%
as a group (8 persons)

----------
* Information relating to beneficial ownership of Common Stock is based upon
"beneficial ownership" concepts set forth in rules of the SEC under Section
13(d) of the Act. Under such rule, a person is deemed to be a "beneficial owner"
of a security if that person has or shares "voting power," which includes the
power to vote or direct the voting of such security, or "investment power,"
which includes the power to dispose of, or to direct the disposition of, such
security. A person is also deemed to be a beneficial owner of any security of
which that person has the right to acquire beneficial ownership within sixty
(60) days. Under the rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he has no beneficial interest. For
instance, beneficial ownership includes spouses, minor children and other
relatives residing in the same household, and trusts, partnerships, corporations
or deferred compensation plans which are affiliated with the principal.

(1) Includes shares for which the named person:
      1.    has sole voting and investment power,
      2.    has shared voting and investment power with a spouse, or
      3.    holds in an IRA or other retirement plan program, unless otherwise
            indicated in these footnotes.


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<PAGE>

(2)   Included in the above listed number of shares, each Director of the
      Company owns warrants to purchase 17,500 shares of common stock
      exercisable at $10.00 per share and have a term of 10 years. These
      warrants became exercisable on November 30, 1999.

Item 12. Certain Relationships and Related Transactions.

The Company and Unity National Bank have banking and other transactions in the
ordinary course of business with directors and officers of the Company and Unity
National Bank and their affiliates. It is the Company's policy that these
transactions be on substantially the same terms (including price, or interest
rates and collateral) as those prevailing at the time for comparable
transactions with unrelated parties. The Company does not expect these
transactions to involve more than the normal risk of collectibility nor present
other unfavorable features to the Company or Unity National Bank. Loans to
individual directors and officers must also comply with Unity National Bank's
lending policies and statutory lending limits, and directors with a personal
interest in any loan application are excluded from the consideration of the loan
application. The Company intends for all of its transactions with its affiliates
to be on terms no less favorable to the Company than could be obtained from an
unaffiliated third party and to be approved by a majority of disinterested
directors.

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

(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 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).


                                      68

<PAGE>

      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).

      21.   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).

(b)   Reports on Form 8-K

No reports on Form 8-K were filed during the fourth quarter of the year ended
December 31, 2001.


                                      69

<PAGE>

                                   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 28, 2002                By: /s/ Michael L. McPherson
---------------------                   ----------------------------------------
                                        Michael L. McPherson
                                        President and Chief Operating Officer


                                      70

<PAGE>

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
28, 2002.

Signature                               Title
---------                               -----


/s/ Kenneth R. Bishop                 Director
-------------------------------
Kenneth R. Bishop


/s/ Jerry W. Braden                   Director
-------------------------------
Jerry W. Braden


/s/ Michael L. McPherson              Director, President and
-------------------------------       Chief Executive Officer
Michael L. McPherson


/s/ Donald D. George                  Director
-------------------------------
Donald D. George


/s/ John S. Lewis                     Director
-------------------------------
John S. Lewis


/s/ Sam R. McCleskey                  Director
-------------------------------
Sam R. McCleskey


/s/ Stephen A. Taylor                 Director
-------------------------------
Stephen A. Taylor


/s/ B. Don Temples                    Director
-------------------------------
B. Don Temples


/s/ James D. Timmons                  Chief Financial Officer
-------------------------------
James D. Timmons


                                      71

<PAGE>

INDEX TO EXHIBITS

Exhibit                                                              Sequential
Number                              Description                      Page Number
------                              -----------                      -----------

None


                                      72