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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



(Mark One)

|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
|- |  | -------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | For the quarterly period ended March 31, 2003
| |  | ---------------------------------------------



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|- |  | --------------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------



| |  | For the transition period from  to
.
| |  | ------------------------------------



Commission File Number 1-5735



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UNION FINANCIAL BANCSHARES, INC.

(Exact name of small business issuer as specified in its charter)



|Delaware                                       |  | 57-1001177                          
|---------------------------------------------- |  | ------------------------------------
|(State or other Jurisdiction of Incorporation) |  | (I.R.S. Employer Identification No.)



|203 West Main Street, Union, South Carolina |  | 29379     
|------------------------------------------- |  | ----------
|(Address of Principal Executive Offices)    |  | (Zip Code)



(864)
429-1864

Registrants telephone number, including area code:



The Corporation had 1,965,438 shares, $0.01 par value, common
stock issued and outstanding as of April 23, 2003.



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UNION FINANCIAL BANCSHARES, INC.



INDEX



|         |  |                                                                                                  |  | Page 
|-------- |  | ------------------------------------------------------------------------------------------------ |  | -----
|        
|Part I.  |  | Financial Information                                                                            |  |      
|        
|         |  | Item 1. Consolidated Financial Statements (unaudited)                                            |  |      
|        
|         |  | Consolidated Balance Sheets as of March 31, 2003 and September 30, 2002                          |  | 3    
|        
|         |  | Consolidated Statements of Income for the three and six months ended March 31, 2003 and 2002     |  | 4    
|        
|         |  | Consolidated Statements of Cash Flows for the six months ended March 31, 2003 and 2002           |  | 5    
|        
|         |  | Consolidated Statements of Shareholders Equity for the six months ended March 31, 2003 and 2002 |  | 6    
|        
|         |  | Notes to Consolidated Financial Statements                                                       |  | 7-10 
|        
|         |  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 11-16
|        
|         |  | Item 3. Controls and Procedures                                                                  |  | 17   
|        
|Part II. |  | Other Information                                                                                |  |      
|        
|         |  | Item 1. Legal Proceedings                                                                        |  | 18   
|        
|         |  | Item 2. Changes in Securities                                                                    |  | 18   
|        
|         |  | Item 3. Defaults Upon Senior Securities                                                          |  | 18   
|        
|         |  | Item 4. Submission of Matters to a Vote of Security Holders                                      |  | 18   
|        
|         |  | Item 5. Other Information                                                                        |  | 19   
|        
|         |  | Item 6. Exhibits and Reports on Form 8-K                                                         |  | 19   
|        
|         |  | Signatures                                                                                       |  | 20   
|        
|         |  | Certifications                                                                                   |  |      



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##### Table of Contents



Item 1. Financial
Statements

UNION FINANCIAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

March 31, 2003 and September 30, 2002 (unaudited)



|                                                                                                                                       |  | March 31, 2003         |         | Sepember 30, 2002
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | -----------------
|                                                                                                                                       |  | (DOLLARS IN THOUSANDS)
|ASSETS                                                                                                                                 |  |                        |         |                  
|Cash                                                                                                                                   |  | $                      | 1,630   |                  
|Short term interest-bearing deposits                                                                                                   |  |                        | 5,743   |                  
|                                                                                                                                       |  |                        |         |                  
|Total cash and cash equivalents                                                                                                        |  |                        | 7,373   |                  
|Investment and mortgage-backed securities                                                                                              |  |                        | 157,748 |                  
|Loans, net                                                                                                                             |  |                        | 154,222 |                  
|Office properties and equipment, net                                                                                                   |  |                        | 6,393   |                  
|Federal Home Loan Bank Stock, at cost                                                                                                  |  |                        | 3,835   |                  
|Accrued interest receivable                                                                                                            |  |                        | 1,866   |                  
|Intangible assets                                                                                                                      |  |                        | 5,325   |                  
|Cash surrender value of life insurance                                                                                                 |  |                        | 4,848   |                  
|Other assets                                                                                                                           |  |                        | 3,152   |                  
|                                                                                                                                       |  |                        |         |                  
|TOTAL ASSETS                                                                                                                           |  | $                      | 344,762 |                  
|                                                                                                                                       |  |                        |         |                  
|LIABILITIES                                                                                                                            |  |                        |         |                  
|Deposit accounts                                                                                                                       |  | $                      | 213,067 |                  
|Advances from the Federal Home Loan Bank and other borrowings                                                                          |  |                        | 75,725  |                  
|Securities sold under agreements to repurchase                                                                                         |  |                        | 17,000  |                  
|Corporate obligated floating rate capital securities                                                                                   |  |                        | 8,000   |                  
|Accrued interest on deposits                                                                                                           |  |                        | 439     |                  
|Advances from borrowers for taxes and insurance                                                                                        |  |                        | 154     |                  
|Other liabilities                                                                                                                      |  |                        | 2,438   |                  
|                                                                                                                                       |  |                        |         |                  
|TOTAL LIABILITIES                                                                                                                      |  |                        | 316,823 |                  
|                                                                                                                                       |  |                        |         |                  
|SHAREHOLDERS EQUITY                                                                                                                   |  |                        |         |                  
|Serial preferred stock, no par value, authorized500,000 shares, issued and
outstandingNone                                           |  |                        |         |                  
|Common stock$0.01 par value, authorized2,500,000 shares, issued and
outstanding1,965,438 shares at 3/31/03 and 1,958,069 at 9/30/02 |  |                        | 20      |                  
|Additional paid-in capital                                                                                                             |  |                        | 11,650  |                  
|Accumulated other comprehensive gain                                                                                                   |  |                        | 1,529   |                  
|Retained earnings, substantially restricted                                                                                            |  |                        | 14,740  |                  
|                                                                                                                                       |  |                        |         |                  
|TOTAL SHAREHOLDERS EQUITY                                                                                                             |  |                        | 27,939  |                  
|                                                                                                                                       |  |                        |         |                  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                             |  | $                      | 344,762 |                  
|                                                                                                                                       |  |                        |         |                  



See notes
to consolidated financial statements.



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UNION FINANCIAL BANCSHARES,
INC.

CONSOLIDATED STATEMENTS OF INCOME

Three and Six Months Ended March 31, 2003 and 2002 (unaudited)



|                                                     |  | Three Months Ended     |           |   | Six Months Ended       |  
|---------------------------------------------------- |  | ---------------------- | --------- | - | ---------------------- | -
|                                                     |  | March 31, 2003         |           |   | March 31, 2002         |  
|                                                     |  |                        |          
|                                                     |  | (DOLLARS IN THOUSANDS) |           |   | (DOLLARS IN THOUSANDS) |  
|Interest Income:                                     |  |                        |           |   |                        |  
|Loans                                                |  | $                      | 2,765     |   |                        | $
|Deposits and federal funds sold                      |  |                        | 2         |   |                        |  
|Mortgage-backed securities                           |  |                        | 836       |   |                        |  
|Interest and dividends on investment securities      |  |                        | 694       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Total Interest Income                                |  |                        | 4,297     |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Interest Expense:                                    |  |                        |           |   |                        |  
|Deposit accounts                                     |  |                        | 1,161     |   |                        |  
|Trust preferred corporate obligation                 |  |                        | 103       |   |                        |  
|Advances from the FHLB and other borrowings          |  |                        | 905       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Total Interest Expense                               |  |                        | 2,169     |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Net Interest Income                                  |  |                        | 2,128     |   |                        |  
|Provision for Loan Losses                            |  |                        | 235       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Net Interest Income After Provision for Loan Losses  |  |                        | 1,893     |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Non Interest Income:                                 |  |                        |           |   |                        |  
|Fees for financial services                          |  |                        | 420       |   |                        |  
|Loan servicing costs                                 |  |                        | (43       | ) |                        |  
|Net gain (loss) on sale of investments               |  |                        | 182       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Total Non Interest Income                            |  |                        | 559       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Non Interest Expense:                                |  |                        |           |   |                        |  
|Compensation and employee benefits                   |  |                        | 806       |   |                        |  
|Occupancy and equipment                              |  |                        | 439       |   |                        |  
|Deposit insurance premiums                           |  |                        | 8         |   |                        |  
|Professional services                                |  |                        | 117       |   |                        |  
|Advertising/Public relations                         |  |                        | 29        |   |                        |  
|Real estate operations                               |  |                        | 18        |   |                        |  
|Deposit premium intangible                           |  |                        | 159       |   |                        |  
|Goodwill amortization                                |  |                        |          |   |                        |  
|Other                                                |  |                        | 214       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Total Non Interest Expense                           |  |                        | 1,790     |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Income Before Income Taxes                           |  |                        | 662       |   |                        |  
|Income tax expense                                   |  |                        | 165       |   |                        |  
|                                                     |  |                        |           |   |                        |  
|Net Income                                           |  | $                      | 497       |   |                        | $
|                                                     |  |                        |           |   |                        |  
|Basic Net Income Per Common Share                    |  | $                      | 0.25      |   |                        | $
|                                                     |  |                        |           |   |                        |  
|Diluted Net Income Per Common Share                  |  | $                      | 0.24      |   |                        | $
|                                                     |  |                        |           |   |                        |  
|Weighted Average Number of Common Shares Outstanding |  |                        |           |   |                        |  
|Basic                                                |  |                        | 1,964,496 |   |                        |  
|Diluted                                              |  |                        | 2,061,586 |   |                        |  



See notes
to consolidated financial statements.



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UNION FINANCIAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended March 31, 2003 and 2002 (unaudited)



|                                                                                  |  | Six Months Ended |        
|--------------------------------------------------------------------------------- |  | ---------------- | -------
|                                                                                  |  | March 31, 2003   |        
|                                                                                  | 
|                                                                                  |  | (IN THOUSANDS)   |        
|OPERATING ACTIVITIES:                                                             |  |                  |        
|Net income                                                                        |  | $                | 950    
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                  |        
|Provision for loan losses                                                         |  |                  | 415    
|Amortization of intangibles                                                       |  |                  | 318    
|Depreciation expense                                                              |  |                  | 588    
|Recognition of deferred income, net of costs                                      |  |                  | (110   
|Deferral of fee income, net of costs                                              |  |                  | 109    
|Changes in operating assets and liabilities:                                      |  |                  |        
|Increase in accrued interest receivable                                           |  |                  | (138   
|Increase in other assets                                                          |  |                  | (1,766 
|Increase (decrease) in other liabilities                                          |  |                  | 1,552  
|Increase in accrued interest payable                                              |  |                  | 12     
|                                                                                  |  |                  |        
|Net cash provided by (used by) operating activities                               |  |                  | 1,930  
|                                                                                  |  |                  |        
|INVESTING ACTIVITIES:                                                             |  |                  |        
|Purchase of investment and mortgage-backed securities:                            |  |                  |        
|Held to maturity                                                                  |  |                  |       
|Available for sale                                                                |  |                  | (75,586
|Proceeds from sale of investment and mortgage-backed securities                   |  |                  | 15,585 
|Proceeds from maturity of investment and mortgage-backed securities:              |  |                  |        
|Available for sale                                                                |  |                  | 120    
|Principal repayments on mortgage-backed securities:                               |  |                  |        
|Held to maturity                                                                  |  |                  |       
|Available for sale                                                                |  |                  | 19,460 
|Net (increase) decrease in loans                                                  |  |                  | 7,354  
|Purchase of FHLB stock                                                            |  |                  | (935   
|Redemption of FHLB stock                                                          |  |                  |       
|Purchase of office properties and equipment                                       |  |                  | (458   
|                                                                                  |  |                  |        
|Net cash used by investing activities                                             |  | $                | (34,460
|                                                                                  |  |                  |        
|FINANCING ACTIVITIES:                                                             |  |                  |        
|Proceeds from the dividend reinvestment plan                                      |  |                  | 56     
|Dividends paid in cash ($0.20 per share2003 and $0.20 per
share2002)            |  |                  | (394   
|Proceeds from the exercise of stock options                                       |  |                  | 21     
|Proceeds from term borrowings                                                     |  |                  | 18,725 
|Proceeds from issuance of trust preferred corporate obligations                   |  |                  |       
|Increase in deposit accounts                                                      |  |                  | 12,764 
|                                                                                  |  |                  |        
|Net cash provided by financing activities                                         |  |                  | 31,172 
|                                                                                  |  |                  |        
|NET (DECREASE) \ INCREASE IN CASH AND CASH EQUIVALENTS                            |  |                  | (1,358 
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  |  |                  | 8,731  
|                                                                                  |  |                  |        
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        |  | $                | 7,373  
|                                                                                  |  |                  |        
|SUPPLEMENTAL DISCLOSURES:                                                         |  |                  |        
|Cash paid for:                                                                    |  |                  |        
|Income taxes                                                                      |  | $                | 122    
|Interest                                                                          |  |                  | 4,453  
|Non-cash transactions:                                                            |  |                  |        
|Loans foreclosed                                                                  |  | $                | 173    



See notes
to consolidated financial statements.



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UNION
FINANCIAL BANCSHARES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

SIX MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)



|                                                |  | Common Stock                      |  | Additional Paid-in Capital |    | Retained Earnings Substantially Restricted |   |        | Accumulated Other Comprehensive Income |   |        | Total Shareholders Equity | 
|----------------------------------------------- |  | --------------------------------- |  | -------------------------- | -- | ------------------------------------------ | - | ------ | -------------------------------------- | - | ------ | -------------------------- | 
|                                                |  | Shares                            |  | Amount                     |    |                                            |   |       
|                                                |  | (In Thousands, Except Share Data) | 
|BALANCE AT SEPTEMBER 30, 2001                   |  | 1,924,478                         |  | $                          | 20 |                                            | $ | 11,321 |                                        | $ | 13,217 |                            | 
|Net income                                      |  |                                   |  |                            |    |                                            |   |        |                                        |   | 900    |                            | 
|Other comprehensive income                      |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Unrealized losses on securities:                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Unrealized holding losses arising during period |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Comprehensive income                            |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Options exercised                               |  | 23,605                            |  |                            |    |                                            |   | 142    |                                        |   |        |                            | 
|Dividend reinvestment plan contributions        |  | 5,688                             |  |                            |    |                                            |   | 56     |                                        |   |        |                            | 
|Cash dividend ($.20 per share)                  |  |                                   |  |                            |    |                                            |   |        |                                        |   | (387   | )                          | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|BALANCE AT MARCH 31, 2002                       |  | 1,953,771                         |  | $                          | 20 |                                            | $ | 11,519 |                                        | $ | 13,730 |                            | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|BALANCE AT SEPTEMBER 30, 2002                   |  | 1,958,069                         |  |                            | 20 |                                            |   | 11,573 |                                        |   | 14,184 |                            | 
|Net income                                      |  |                                   |  |                            |    |                                            |   |        |                                        |   | 950    |                            | 
|Other comprehensive income                      |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Unrealized gains on securities:                 |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Unrealized holding gains arising during period  |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Comprehensive income                            |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|Options exercised                               |  | 3,300                             |  |                            |    |                                            |   | 21     |                                        |   |        |                            | 
|Dividend reinvestment plan contributions        |  | 4,069                             |  |                            |    |                                            |   | 56     |                                        |   |        |                            | 
|Cash dividend ($.20 per share)                  |  |                                   |  |                            |    |                                            |   |        |                                        |   | (394   | )                          | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 
|BALANCE AT MARCH 31, 2003                       |  | 1,965,438                         |  | $                          | 20 |                                            | $ | 11,650 |                                        | $ | 14,740 |                            | 
|                                                |  |                                   |  |                            |    |                                            |   |        |                                        |   |        |                            | 



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UNION FINANCIAL BANCSHARES, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)



1. Presentation of Consolidated Financial Statements



The accompanying unaudited consolidated financial statements
of Union Financial Bancshares, Inc. (the Corporation or Union Financial) were prepared in accordance with instructions for Form 10-QSB and, therefore, do not include all disclosures necessary for a complete presentation of
consolidated financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles. However, all adjustments which are, in the opinion of management, necessary for the fair presentation of the interim
consolidated financial statements have been included. All such adjustments are of a normal and recurring nature. The consolidated financial statements include the Corporations wholly owned subsidiaries, Provident Community Bank (the
Bank), a federally charted stock savings bank, and Union Financial Statutory Trust I (the Trust), a statutory trust created under the laws of the state of Connecticut. The results of operations for the six months ended March
31, 2003 are not necessarily indicative of the results which may be expected for the entire fiscal year. The consolidated balance sheet as of September 30, 2002 has been derived from the Corporations audited financial statements presented in
the annual report to shareholders. Certain amounts in the prior years financial statements have been reclassified to conform with current year classifications.



Recently Issued Accounting Standards



In December 2002, the FASB issued SFAS No. 148 Accounting for Stock-Based CompensationTransition and
Disclosurean amendment of FASB Statement No. 123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method used on reported results. The Corporation adopted this standard effective December 31, 2002. SFAS No. 148 had no impact upon adoption as the Corporation has not elected
the fair value treatment of stock-based compensation.



Additional accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.



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2. Income Per Share



Basic income per share amounts for the six
months ended March 31, 2003 and 2002 were computed based on the weighted average number of common shares outstanding during the period. Diluted income per share adjusts for the dilutive effect of outstanding common stock options during the periods.



3. Assets Pledged



Approximately $67,003,000 and $24,063,000 of debt securities
at March 31, 2003 and September 30, 2002, respectively, were pledged by the Bank as collateral to secure deposits of the State of South Carolina, and Union and Laurens Counties. The Bank pledges as collateral for Federal Home Loan Bank advances the
Bank=s Federal Home Loan Bank stock and has entered into a blanket collateral agreement with the Federal Home Loan Bank whereby the Bank maintains, free of other encumbrances, qualifying mortgages (as defined) with unpaid principal balances equal
to, when discounted at 75% of the unpaid principal balances, 100% of total advances. The Bank will also pledge securities to cover additional advances from the Federal Home Loan Bank that exceed the qualifying mortgages balance along with security
repurchase lines with various brokerage houses.



4.
Contingencies and Loan Commitments



The
Bank 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 instruments expose the Bank to credit risk in excess of the amount recognized on the balance
sheet.



The Banks exposure to credit loss
in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet instruments. Total credit exposure at March 31, 2003 related to these items is summarized below:



|                                              |  | Contract Amount
|--------------------------------------------- |  | ---------------
|Loan Commitments:                             |  |                
|Approved loan commitments                     |  | $              
|Unadvanced portions of loans and credit lines |  |                
|                                              |  |                
|Total loan commitments                        |  | $              
|                                              |  |                

Loan 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. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Bank evaluates each customers creditworthiness on a
case-by-case basis. The amount of collateral obtained upon extension of credit is based on managements credit evaluation of the counter party. Collateral held is primarily residential and commercial property.



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Commitments
outstanding at March 31, 2003 consist of fixed and adjustable rate loans provided above at rates ranging from 5.0% to 6.5%. Commitments to originate loans generally expire within 30 to 60 days.



Commitments to fund credit lines (principally variable rate,
consumer lines secured by real estate and overdraft protection) totaled approximately $40,087,000 at March 31, 2003. Of these lines, the outstanding loan balances totaled approximately $24,879,000. The Bank also has commitments to fund warehouse
lines of credit for various mortgage banking companies totaling $3,000,000, which had an outstanding balance at March 31, 2003 of $0.



5. Corporation Obligated Floating Rate Capital Securities



On November 14, 2001, the Corporation sponsored the creation of the Trust. The Corporation is the owner of all of the common securities of
the Trust. On December 18, 2001, the Trust issued $8,000,000 in the form of floating rate capital securities through a pooled trust preferred securities offering. The proceeds from this issuance, along with the Corporations $248,000 capital
contribution for the Trusts common securities, were used to acquire $8,248,000 aggregate principal amount of the Corporations floating rate junior subordinated deferrable interest debentures due December 18, 2031 (the
Debentures), which constitute the sole asset of the Trust. The interest rate on the Debentures and the capital securities is variable and adjustable quarterly at 3.60% over the three-month LIBOR, with an initial rate of 5.60%. A rate cap
of 12.50% is effective through December 18, 2006. The Corporation has, through the Trust agreement establishing the Trust, the Guarantee Agreement, the notes and the related Debenture, taken together, fully irrevocably and unconditionally guaranteed
all of the Trusts obligations under the capital securities.



A summary of the Trust securities issued and outstanding follows:



|                                  |  | Amount Outstanding at March 31, |           |      |   |           | Prepayment Option Date |      | Maturity |  | Distribution Payment Frequency
|--------------------------------- |  | ------------------------------- | --------- | ---- | - | --------- | ---------------------- | ---- | -------- |  | ------------------------------
|Name                              |  | 2003                            |           | 2002 |   | Rate      |                        |      |          | 
|Union Financial Statutory Trust I |  | $                               | 8,000,000 |      | $ | 8,000,000 |                        | 4.88 | %        |  | December 18, 2006             



The
stated maturity of the Debentures is December 18, 2031. In addition, the Debentures are subject to redemption at par at the option of the Corporation, subject to prior regulatory approval, in whole or in part on any interest payment date after
December 18, 2006. The Debentures are also subject to redemption prior to December 18, 2006 at 107.5% of par after the occurrence of certain events that would either have a negative tax effect on the Trust or the Corporation or would result in the
Trust being treated as an investment company that is required to be registered under the Investment Company Act of 1940. Upon repayment of the Debentures at their stated maturity or following their redemption, the Trust will use the proceeds of such
repayment to redeem an equivalent amount of outstanding trust preferred



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securities and trust common securities.



The Corporation has the right, at one or more times, to defer
interest payments on the Debentures for up to twenty consecutive quarterly periods. All deferrals will end on an interest payment date and will not extend beyond December 18, 2031, the stated maturity date of the Debentures. If the Corporation
defers interest payments on the Debentures, the Trust will also defer distributions on the capital securities. During any deferral period, each installment of interest that would otherwise have been due and payable will bear additional interest (to
the extent payment of such interest would be legally enforceable) at the applicable distribution rate, compounded quarterly.



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



Forward Looking Statements



Managements discussion and analysis of financial condition and results of operations and other portions of this Form 10-Q contain
certain forward-looking statements concerning the future operations of the Corporation and the Bank. These forward-looking statements are generally identified by the use of the words believe, expect,
intend, anticipate, estimate, project, or similar expressions. Management intends to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is
including this statement for the express purpose of availing the Corporation of the protections of such safe harbor with respect to all forward-looking statements contained in this report to describe future plans and strategies. Managements
ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could effect actual results include interest rate trends, the general economic climate in the Corporations and the Banks market
area and the country as a whole, the ability of the Corporation and the Bank to control costs and expenses, competitive products and pricing, loan delinquency rates, and changes in federal and state regulation. These factors should be considered in
evaluating the forward-looking statements, and undue reliance should not be placed on such statements.



Financial Condition



Assets



Total assets of the Corporation increased $33,794,000, or 10.87%, to $344,762,000 at March 31, 2003 from $310,968,000 at September 30,
2002. Investments and mortgage-backed securities increased approximately $40,115,000, or 34.10%, from September 30, 2002 to March 31, 2002, due to the purchase of mortgage backed securities and municipal securities that was funded primarily with
additional borrowings. The securities purchases offset lower loan demand and provided additional balance sheet growth.



Loans decreased $7,354,000, or 4.55%, to $154,222,000 at March 31, 2003. The Corporation continues to focus on consumer and commercial
lending with reduced emphasis on residential mortgage loans. Consumer and commercial loans outstanding during this period increased $9,041,000, or 14.62%, while outstanding residential mortgage loans decreased $17,430,000 or 20.34%. Other assets
increased $1,642,000, or 108.74%, to $3,152,000 at March 31, 2003 from $1,510,000 at September 30, 2002, due to an increase in outstanding receivables as a result of a special purpose financing program that was started in the fourth quarter of
fiscal year 2002.



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Liabilities



Total
liabilities increased $33,053,000, or 11.65%, to $316,823,000 at March 31, 2003 from $283,770,000 at September 30, 2002. Deposits increased $12,764,000, or 6.37%, to $213,067,000 at March 31, 2003 from $200,303,000 at September 30, 2002. The
increase was due primarily to growth in certificates of deposits as a result of ongoing promotions for longer term products. In addition, during the quarter ending March 31, 2003, the Corporation received $5,000,000 from the State of South Carolina
deposit bid program for a term of six months at a cost of approximately 1.68%.



Borrowings from the Federal Home Loan Bank (FHLB) increased $18,725,000, or 32.85%, to $75,725,000 at March 31, 2003 from $57,000,000 at September 30, 2002. The increase in borrowings from the FHLB
were utilized to fund additional growth for the Corporation. Other liabilities increased $1,812,000, or 289.46%, to $2,438,000 at March 31, 2003 from $626,000 at September 30, 2002, due to an increase in loan suspense as a result of a change in loan
funding procedures.



Shareholders
Equity



Shareholders equity increased
$741,000, or 2.72%, to $27,939,000 at March 31, 2003 from $27,198,000 at September 30, 2002 due to net income year to date, along with an increase in unrealized gains in securities available for sale, offset by the payment of $0.20 per share
quarterly dividends.



Liquidity



Liquidity is the ability to meet demand for loan
disbursements, deposit withdrawals, repayment of debt, payment of interest on deposits and other operating expenses. The primary sources of liquidity are savings deposits, loan repayments, borrowings, maturity of securities and interest payments.



While maturities and scheduled amortization of
loans and securities are predictable sources of funds, deposit outflows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. The primary investing activities of the Corporation are the
origination of commercial and consumer loans, and the purchase of investment and mortgage-backed securities. These activities are funded primarily by principal and interest payments on loans and investment securities, deposit growth, securities sold
under agreements to repurchase and the utilization of FHLB advances.



During the six months ended March 31, 2003, the Corporations loan originations totaled $32,584,000. At March 31, 2003, the Corporations investment in investment and mortgage backed securities totaled
$157,748,000. Additionally, outstanding loan commitments (including commitments to fund credit lines) totaled $15,800,000 at March 31, 2003.



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Management of the Corporation anticipates that it will have sufficient funds available to
meet its current loan commitments.



During the
six months ended March 31, 2003, total deposits increased $12,764,000. The Corporation closely monitors its liquidity position on a daily basis. Certificates of deposit, which are scheduled to mature in one year or less from March 31, 2003, totaled
$60,400,000. The Corporation relies primarily on competitive rates, customer service, and long-standing relationships with customers to retain deposits. From time to time, the Corporation will also offer competitive special products to its customers
to increase retention and to attract new deposits. Based upon the Corporations experience with deposit retention and current retention strategies, management believes that, although it is not possible to predict future terms and conditions
upon renewal, a significant portion of such deposits will remain with the Corporation. If the Corporation requires funds beyond its ability to generate them internally, additional sources of funds are available through FHLB advances and securities
sold under agreements to repurchase. At March 31, 2003, the Corporation had $75,725,000 of FHLB borrowings and $17,000,000 of securities sold under agreements to repurchase.



Capital Resources



The capital requirement of the Bank consists of three components: (1) tangible capital, (2) core capital and
(3) risk based capital. Tangible capital must equal or exceed 1.5% of adjusted total assets. Core capital must be a minimum of 4% of adjusted total assets and risk based capital must be a minimum of 8% of risk weighted assets.



As of March 31, 2003, the Banks capital position, as
calculated under regulatory guidelines, exceeds these minimum requirements as follows (dollars in thousands):



|                                           |  | Requirement |        |   | Actual |   |        | Excess | 
|------------------------------------------ |  | ----------- | ------ | - | ------ | - | ------ | ------ | 
|Tangible capital                           |  | $           | 5,061  |   |        | $ | 27,229 |        | 
|Tangible capital to adjusted total assets  |  |             | 1.50   | % |        |   | 8.07   | %      | 
|Core capital                               |  | $           | 13,591 |   |        | $ | 27,229 |        | 
|Core capital to adjusted total assets      |  |             | 4.00   | % |        |   | 8.07   | %      | 
|Risk based capital                         |  | $           | 12,982 |   |        | $ | 28,858 |        | 
|Risk based capital to risk weighted assets |  |             | 8.00   | % |        |   | 17.78  | %      | 



Results of operations for the six months ended March 31, 2003 and 2002



General



Net income increased $50,000, or 5.56%, to $950,000 for the six months ended March 31, 2003 as compared to the same period in 2002. An
increase in non-interest income was partially



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offset by a decrease in net interest income and increase in the provision for loan losses
and increases in non-interest expense.



Interest Income



Interest
income decreased $670,000, or 7.21%, for the six months ended March 31, 2003 as compared to the same period in 2002. Interest income on loans decreased by 10.31%, or $652,000, to $5,673,000 for the six months ended March 31, 2003 from $6,325,000 for
the six months ended March 31, 2002, due primarily to declining market interest rates along with a smaller average balance of loans. Interest and dividends on investment and mortgage-backed securities decreased $18,000, or 0.61%, for the six months
ended March 31, 2003 to $2,952,000 from $2,970,000 during the same period in 2002. The decrease was due primarily to lower investment yields offset by increased investments in mortgage-backed securities and municipal securities.



Interest Expense



Interest expense decreased $558,000, or 11.14%, for the six
months ended March 31, 2003 as compared to the six months ended March 31, 2002, due primarily to lower deposit rates from a declining market interest rate environment. Interest expense on deposit accounts decreased $851,000, or 26.25%, to $2,391,000
for the six months ended March 31, 2003 from $3,242,000 during the same period in 2002. Interest expense on borrowings increased $210,000, or 12.84%, for the six months ended March 31, 2003 as compared to the same period in the previous year due to
a higher level of borrowings offset by lower market interest rates during the period. The Corporation also extended borrowing terms during this period to improve interest rate risk exposure. The Corporation also recorded $216,000 for the six months
ended March 31, 2003 compared to $133,000 for the six months ended March 31, 2003 for interest expense on the trust preferred securities that were issued on December 18, 2001.



Provision for Loan Loss



During the six months ended March 31, 2003, the provision for loan losses was $415,000 as compared to
$340,000 for the same period in the previous year. The increase in the provision reflects the implementation of a risk weighted loan loss reserve methodology that is intended to more closely track the level of risk of different types of loans.
During this same period, non-accrual loans increased $149,000 from $1,866,000 at September 30, 2002 to $2,015,000 at March 31, 2003. The increased provision also reflects the Corporations continued movement from longer term, fixed rate
residential mortgage loans to shorter term, floating rate consumer and commercial loans. Consumer and commercial loans carry higher risk weighted rates in the reserve calculation as compared to residential mortgage loans. Management believes the
Corporations loan loss allowance is adequate to absorb future loan losses inherent in the portfolio. The Corporations loan loss allowance at March 31, 2003 was approximately 1.04%



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of the Corporations outstanding loan portfolio and 80.84% of non-performing loans
compared to .83% of the Corporations outstanding loan portfolio and 162.46% of non-performing loans at March 31, 2002.



The provision for loan loss calculation includes a segmentation of loan categories subdivided by residential mortgage, commercial and
consumer loans. Each category is rated for all loans including performing groups. The weights assigned to each performing group is developed from previous loan loss experience and as the loss experience changes, the category weight is adjusted
accordingly. In addition, as the loan categories increase and decrease in balance, the provision for loan loss calculation will adjust accordingly.



The changes in the allowance for loan losses consisted of the following (in thousands):



|Balance at beginning of fiscal year |  | $ | 1,371 |  
|----------------------------------- |  | - | ----- | -
|Provision for loan losses           |  |   | 415   |  
|(Charge-offs) recoveries, net       |  |   | (157  | )
|                                    |  |   |       |  
|Balance at end of quarter           |  | $ | 1,629 |  
|                                    |  |   |       |  



The
following table sets forth information with respect to the Banks non-performing assets at the dates indicated (dollars in thousands):



|                                                                                   |  | March 31, 2003 |       |   | September 30, 2002 |  
|---------------------------------------------------------------------------------- |  | -------------- | ----- | - | ------------------ | -
|Non-accruing loans which are contractually past due 90 days or more:               |  |                |       |   |                    |  
|Real Estate                                                                        |  | $              | 718   |   |                    | $
|Commercial                                                                         |  |                | 1,170 |   |                    |  
|Consumer                                                                           |  |                | 127   |   |                    |  
|                                                                                   |  |                |       |   |                    |  
|Total                                                                              |  | $              | 2,015 |   |                    | $
|                                                                                   |  |                |       |   |                    |  
|Percentage of loans receivable, net                                                |  |                | 1.24  | % |                    |  
|                                                                                   |  |                |       |   |                    |  
|Percentage of allowance for loan losses to total loans outstanding                 |  |                | 1.04  | % |                    |  
|                                                                                   |  |                |       |   |                    |  
|Allowance for loan losses                                                          |  | $              | 1,629 |   |                    | $
|                                                                                   |  |                |       |   |                    |  
|Real estate acquired through foreclosure and repossessed assets, net of
allowances |  | $              | 330   |   |                    | $
|                                                                                   |  |                |       |   |                    |  



Non-accrual loans increased $149,000 to $2,015,000 for the period ending March 31, 2003



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from $1,866,000 at September 30, 2002. The increase in commercial loans was the result of
the classification of two local loans that are well supported by commercial real estate and business equipment. These loans are supported by mortgages, equipment, and automobiles that should reduce the risk of loss for the Corporation.



Non-Interest Income



Total non-interest income increased $429,000, or 75.26%, to
$999,000 for the six months ended March 31, 2003 from $570,000 for the same period in the previous year. Fees from financial services increased $167,000, or 23.86%, to $867,000 for the six months ended March 31, 2003 from $700,000 for the same
period in the previous year. The increase was due primarily to the development of new fee income programs that were implemented during the first quarter of the 2003 fiscal year. Gain on the sale of investments was $243,000 for the six months ended
March 31, 2003 as the Corporation sold investments with higher price volatility.



Non-Interest Expense



For the six months ended March 31, 2003, total non-interest expense increased $171,000, or 5.16%, to $3,485,000 from $3,314,000 for the same period in 2002. Compensation and employee benefits increased
$156,000, or 11.14%, to $1,556,000 for the six month period ended March 31, 2003 from $1,400,000 for the same period in 2002, due primarily to staff additions resulting from a new branch opening that is scheduled for completion in the third quarter
of the current fiscal year. Occupancy and equipment expense increased $77,000, or 10.01%, to $846,000 for the six months ended March 31, 2003 from $769,000 for the same period in 2002, due to higher depreciation and equipment expense. Professional
services expense increased $70,000, or 44.59%, to $227,000 for the six months ended March 31, 2003 from $157,000 for the same period in 2002 due to higher legal and audit expenses as a result of costs incurred from the Corporations pending
charter change to a national bank charter. Real estate operations expense increased $7,000, or 21.88%, to $39,000 for the six months ended March 31, 2003 from $32,000 for the same period in 2002, due to higher disposition costs for loan foreclosures
and asset repossessions. Other expense decreased $113,000, or 21.61%, to $410,000 for the six months ended March 31, 2003 from $523,000 for the same period in 2002, due primarily to lower telephone expense that resulted from reductions in long
distance usage and lower customer statement processing expense that resulted from the Corporations conversion to statement imaging in the previous fiscal year.



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Item 3. Controls and Procedures



(a) Evaluation of disclosure controls and procedures. The Corporation maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Corporation files or submits under
the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures
performed within 90 days of the filing date of this report, the chief executive officer and the chief financial officer of the Corporation concluded that the Corporations disclosure controls and procedures were adequate.



(b) Changes in internal controls. The Corporation made no significant
changes in its internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer.



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##### Table of Contents



PART II - OTHER INFORMATION



Item 1.Legal Proceedings



The Corporation is involved in various claims and legal actions arising in the normal course of business. Management believes that these proceedings are immaterial to the Corporations financial condition and results of
operations.



Item 2.Changes in Securities



The Corporation has the right, at one or more times, unless an event of default exists under the floating rate junior subordinated deferrable interest debentures due December 18, 2031 (the Debentures), to defer
interest payments on the Debentures for up to 20 consecutive quarterly periods. During this time, the Corporation will be prohibited from declaring or paying cash dividends on its common stock.



Item 3.Defaults upon Senior Securities



Not applicable.



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



The Annual Meeting of the Stockholders of the Corporation was held on January 29, 2003. The results of the vote on the matters presented
at the meeting is as follows:



| | 1) |  | The following individuals were elected as directors, each for a three-year term by the following vote:
| | -- |  | ------------------------------------------------------------------------------------------------------



|                 |  | Votes For |  | Votes Withheld
|---------------- |  | --------- |  | --------------
|Louis M. Jordan  |  | 1,407,308 |  | 95,981        
|Dwight V. Neese  |  | 1,310,067 |  | 193,222       
|John S. McMeekin |  | 1,399,092 |  | 104,197       



| | 2) |  | The appointment of Elliott Davis, LLC, as auditors for the Corporation for the fiscal year ending September 30, 2003 was ratified by the shareholders by the
following vote:
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|For 1,414,477 |  | Against 64,507 |  | Abstain 24,305
|------------- |  | -------------- |  | --------------



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Item 5.Other Information



None



Item 6.Exhibits and Reports on Form 8-K



Exhibits10(a)

Employment Agreement with Dwight V. Neese.10(b)

Employment Agreement with Richard H. Flake.99(a)

Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200299(b)

Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




Reports on Form 8-K



On January 29, 2003, the Corporation filed a Form 8-K in which it announced under Item 5 that the Board of Directors had approved a stock repurchased program authorizing the Corporation to repurchase up to 98,000 shares of the
Corporations common stock. The press release announcing the Corporations stock repurchase was attached by exhibit.



On March 7, 2003, the Corporation filed a Form 8-K in which it announced under Item 5 that it has submitted an application to the Office
of the Comptroller of the Currency to convert the charter of its banking subsidiary, Provident Community Bank, from a federal savings bank to a national bank. The press release announcing the Corporations submission of the conversion
application to the Office of the Comptroller of the Currency was attached by exhibit.



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SIGNATURES



In accordance with the
requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|      |  |        |  | UNION FINANCIAL BANCSHARES,
INC.
|----- |  | ------ |  | --------------------------------
|      |  |        |  |                                 
|     
|Date: |  | 5/2/03 |  |                                 
|      |  |        |  |                                 
|     
|Date: |  | 5/2/03 |  |                                 
|      |  |        |  |                                 



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CERTIFICATION



I, Dwight V. Neese,
certify that:



| | 1. |  | I have reviewed this report on Form 10-QSB of Union Financial Bancshares, Inc.;
| | -- |  | -------------------------------------------------------------------------------



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



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



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



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



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                   |  |  |  | 
|------------------ |  |  |  | 
|                  
|Date:  May 2, 2003 |  |  |  | 
|                   |  |  |  | 



---

##### Table of Contents



CERTIFICATION



I, Richard H. Flake,
certify that:



| | 1. |  | I have reviewed this report on Form 10-QSB of Union Financial Bancshares, Inc.;
| | -- |  | -------------------------------------------------------------------------------



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



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



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



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



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                   |  |  |  | 
|------------------ |  |  |  | 
|                  
|Date:  May 2, 2003 |  |  |  | 
|                   |  |  |  |