<PAGE>
                           FIRST SHARES BANCORP, INC.







                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002.

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___ TO ___.

Commission file number 0-29837

                           FIRST SHARES BANCORP, INC.
        (Exact name of small business issuer as specified in its charter)

          INDIANA                                                35-1948962
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

996 South State Road 135, Greenwood, IN                             46143
(Address of principal executive offices)                          (Zip Code)

                                 (317) 882-4790
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1994 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes ( X ) No ( )

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Class                                                Outstanding at May 11, 2002
Common Stock, with $.01 par                                1,052,779 shares


Transitional Small Business Format (Check one):  Yes (    )      No ( X )


<PAGE>

                           FIRST SHARES BANCORP, INC.



                                     INDEX

<TABLE>
<S>      <C>
PART I.  FINANCIAL INFORMATION

Item 1.

         Consolidated Balance Sheets - March 31, 2002 and December 31, 2001

         Consolidated Statements of Operations and Comprehensive Income/Loss --
                  Three Months Ended March 31, 2002 and 2001

         Consolidated Statements of Cash Flows - Three Months Ended March 31, 2002 and 2001

         Notes to Consolidated Financial Statements - March 31, 2002

Item 2.

         Management's Discussion and Analysis of Financial Condition and Results of Operations



PART II. OTHER INFORMATION

Item 6.

         Exhibits and Reports on Form 8-K



SIGNATURES
</TABLE>


<PAGE>
                           FIRST SHARES BANCORP, INC.
                           CONSOLIDATED BALANCE SHEETS
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    (unaudited)
                                                                     March 31,     December 31,
                                                                       2002            2001
                                                                       ----            ----
<S>                                                                  <C>            <C>
ASSETS
Cash and cash equivalents                                            $   4,849      $   6,308
Securities available for sale                                           26,436         22,881
Securities held to maturity (fair values of
  $116 and $277)                                                           115            275
FHLB stock, at cost                                                        670            670
Loans held for sale                                                      2,040          2,759
Loans, net of allowance ($1,178 and $1,148)                             90,803         89,808
Premises and equipment, net                                              2,058          2,072
Intangible assets, net                                                     108            119
Cash surrender value of life insurance                                   2,326          2,293
Accrued interest receivable and other assets                             1,040            928
                                                                     ---------      ---------
                                                                     $ 130,445      $ 128,113
                                                                     =========      =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Noninterest-bearing deposits                                    $  12,201      $  11,253
     Interest-bearing deposits                                         100,799        100,122
                                                                     ---------      ---------
         Total deposits                                                113,000        111,375
     Federal Home Loan Bank advances                                     3,000          3,000
       Repurchase agreements                                             4,748          4,211
     Note Payable                                                        1,870          1,780
     Accrued interest payable and other liabilities                        413            484
                                                                     ---------      ---------
                                                                       123,031        120,850
Shareholders' equity
     Common stock, $.01 par value: 10,000,000 shares authorized,
      1,052,779 shares issued and outstanding                               11             11
     Additional paid in capital                                          4,674          4,674
     Retained Earnings                                                   2,867          2,583
     Accumulated other comprehensive loss                                 (138)            (5)
                                                                     ---------      ---------
                                                                         7,414          7,263
                                                                     ---------      ---------
                                                                     $ 130,445      $ 128,113
                                                                     =========      =========
</TABLE>

--------------------------------------------------------------------------------
                             See accompanying notes.


                                                                               3
<PAGE>
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                     COMPREHENSIVE INCOME Three months ended
                             March 31, 2002 and 2001
                                   (Unaudited)
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------

                                                              2002       2001
                                                              ----       ----
Interest income
    Loans, including related fees                           $ 1,778     $ 1,922
    Taxable securities                                          363         292
    Nontaxable securities                                         8          11
    Other                                                         8           7
                                                            -------     -------
       Total Interest Income                                  2,157       2,232

Interest expense
    Deposits                                                    830       1,174
    Other                                                        68          99
                                                            -------     -------
       Total Interest Expense                                   898       1,273
                                                            -------     -------
NET INTEREST INCOME                                           1,258         959

Provision for loan losses                                        50          78
                                                            -------     -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES           1,208         881

Noninterest income
    Service charges on deposit accounts                          83          60
     Mortgage banking activity                                  118          79
    Increase in cash surrender value of life insurance           33          26
    Security Losses                                               -          (1)
    Other                                                        55          54
                                                            -------     -------
       Total Noninterest Income                                 289         218

Noninterest expenses
    Salaries and employee benefits                              729         631
    Occupancy                                                   110          97
    Equipment and data processing                               114         102
    Legal/Accounting/Professional Services                       15          25
    Advertising/Marketing                                        21          20
    Insurance                                                    28          16
    Telephone                                                    27          34
    Other                                                       169         158
                                                            -------     -------
       Total Noninterest Expense                              1,213       1,083
                                                            -------     -------
INCOME BEFORE INCOME TAXES                                      284          16

Income tax expense                                                -           -
                                                            -------     -------
NET INCOME                                                  $   284     $    16
                                                            =======     =======
Comprehensive Income                                        $   151     $   111
                                                            =======     =======
Per share data
    Earnings per share                                      $   .27     $   .02
Earnings per share, assuming dilution                           .27         .02




--------------------------------------------------------------------------------
                             See accompanying notes.

                                                                               4
<PAGE>

                           FIRST SHARES BANCORP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three months ended March 31, 2002 and 2001
                                   (Unaudited)
                          (Dollar amounts in thousands)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                             2002        2001
                                                                             ----        ----
<S>                                                                        <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                                      $   284      $    16
    Adjustments to reconcile net income (loss)
      to net cash from operating activities:
       Depreciation and amortization                                            89           70
       Provision for loan losses                                                50           78
       Discount (accretion) and premium amortization                            10          (17)
       Loss on sale of securities                                                -            1
       Amortization of intangible asset                                         11           11
       Changes in assets and liabilities:
          Loans held for sale                                                  719       (1,088)
          Interest receivable and other assets                                (112)          54
          Interest payable and other liabilities                                16           33
                                                                           -------      -------
       Net cash from operating activities                                    1,067         (842)

CASH FLOWS FROM INVESTING ACTIVITIES
    Proceeds from sales, maturities, calls and pay downs of securities
      available for sale                                                     1,423        6,166
    Proceeds from maturities of securities held to maturity                    160            -
    Purchases of securities available for sale                              (5,208)      (8,951)
    Loans made to customers net of payments received                        (1,045)      (2,550)
    Premises and equipment purchases                                           (75)         (39)
    Increase in cash surrender value of life insurance                         (33)         (26)
                                                                           -------      -------
       Net cash from investing activities                                   (4,778)      (5,400)

CASH FLOWS FROM FINANCING ACTIVITIES
    Change in deposit accounts                                               1,625        9,573
    Change in repurchase agreements                                            537            -
    Proceeds from Federal Home Loan Bank advances                                -        2,000
    Payments on Federal Home Loan Bank advances                                  -       (2,500)
    Change in Federal Funds Purchase                                             -       (1,376)
    Draw on note payable                                                        90            -
                                                                           -------      -------
              Net cash from financing activities                             2,252        7,697
                                                                           -------      -------

Net change in cash and cash equivalents                                     (1,459)       1,455

Cash and cash equivalents at beginning of period                             6,308        3,394
                                                                           -------      -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $ 4,849      $ 4,849
                                                                           =======      =======
</TABLE>


--------------------------------------------------------------------------------
                             See accompanying notes.


                                                                               5

<PAGE>
                           FIRST SHARES BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2002
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------


NOTE 1 - BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of First
Shares Bancorp, Inc. (the Company) and its wholly owned subsidiary, First Bank
(the Bank). The significant accounting policies followed for interim financial
reporting are consistent with the policies followed for annual reporting. The
consolidated interim financial statements have been prepared according to
accounting principles generally accepted in the United States of America and in
accordance with the instructions for Form 10-QSB. The interim statements do not
include all information and footnotes normally included in the annual financial
statements. It is the opinion of management that all adjustments necessary for a
fair presentation of the results for the reporting period have been included in
the accompanying consolidated financial statements and all adjustments are of a
normal recurring nature. Certain prior period information may be reclassified to
conform to the 2002 presentation.


NOTE 2 - SECURITIES

The fair values of available for sale securities and related gains and losses
recognized in accumulated other comprehensive income (loss) were as follows:

<TABLE>
<CAPTION>
                                                                  Gross         Gross
                                                      Fair     Unrealized    Unrealized
                                                      Value       Gains        Losses
                                                      -----       -----        ------
<S>                                                  <C>         <C>          <C>
MARCH 31, 2002
U.S. Treasury and government agency securities       $14,503     $   122      $  (147)
Obligations of states and political subdivisions         614           -          (13)
Other securities                                       4,101           8         (139)
Mortgage backed securities                             7,218          25          (84)
                                                     -------     -------      -------

                                                     $26,436     $   155      $  (384)
                                                     =======     =======      =======

DECEMBER 31, 2001
U.S. Treasury and government agency securities       $12,547     $   156      $  (112)
Obligations of states and political subdivisions         616           -          (11)
Other securities                                       1,792           6          (14)
Mortgage backed securities                             7,926          37          (72)
                                                     -------     -------      -------

                                                     $22,881     $   199      $  (209)
                                                     =======     =======      =======
</TABLE>


The carrying amount, unrecognized gains and losses and fair value of securities
held to maturity were as follows:



                                                                               6
<PAGE>
                           FIRST SHARES BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2002
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                               Gross            Gross
                                             Carrying        Unrealized       Unrealized        Fair
                                               Value           Gains            Losses          Value
                                               -----           -----            ------          -----
<S>                                        <C>              <C>             <C>              <C>
MARCH 31, 2002
--------------
Obligations of states and
  political subdivisions                   $        115     $          1    $          -     $        116
                                           ============     ============    ============     ============


DECEMBER 31, 2001
-----------------
Obligations of states and
  political subdivisions                   $        275     $          2    $          -     $        277
                                           ============     ============    ============     ============
</TABLE>


NOTE 3 - LOANS

Total loans are comprised of the following:

<TABLE>
<CAPTION>
                                                                  March 31,     December 31,
                                                                    2002             2001
                                                                    ----             ----
     <S>                                                        <C>             <C>
     Commercial                                                 $     21,060    $     19,606
     Commercial Real Estate                                           12,442          12,725
     Residential Real Estate                                          24,491          24,537
     Construction                                                      9,319          10,292
     Consumer                                                         24,669          23,796
                                                                ------------    ------------

                                                                $     91,981    $     90,956
                                                                ============    ============
</TABLE>


NOTE 4 - ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses follows:

<TABLE>
<CAPTION>
                                                                  March 31,         March 31,
                                                                    2002             2001
                                                                    ----             ----
     <S>                                                        <C>             <C>
     Balance, January 1                                         $      1,148    $        910
     Provision charged to operations                                      50              78
     Loans charged off                                                   (28)            (40)
     Recoveries                                                            8               7
                                                                ------------    ------------

     Balance, March 31                                          $      1,178    $        955
                                                                ============    ============
</TABLE>



                                                                               7
<PAGE>
                           FIRST SHARES BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2002
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------


NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consists of the following:

                                                     March 31,    December 31,
                                                       2002          2001
                                                       ----          ----

     Land                                           $       26    $       26
     Buildings and improvements                            770           770
     Leasehold improvements                                595           581
     Furniture and equipment                             1,964         1,914
     Vehicles                                               10             -
                                                    ----------    ----------
         Total                                           3,366         3,291
     Accumulated depreciation                           (1,307)       (1,219)
                                                    ----------    ----------
                                                    $    2,058    $    2,072
                                                    ==========    ==========


NOTE 6 - BORROWINGS

The Bank has advances from the Federal Home Loan Bank. Advances at March 31,
2002 and December 31, 2001 were as follows:

Maturity Date           Interest Rate     March 31, 2002     December 31, 2001
--------------------------------------------------------------------------------
January 23, 2006        4.73%                    1,000               1,000
March 7, 2007           4.75%                    1,000               1,000
December 27, 2011       5.30%                    1,000               1,000
                                              --------             -------
                                              $  3,000             $ 3,000
                                              ========             =======

The advances are collateralized by eligible securities and first mortgage loans
under a blanket lien arrangement.

The Company maintains a line of credit with a financial institution. The Company
has $2,000 available under the line, with an outstanding balance of $1,870 at
quarter end. The line has a maturity date of July 31, 2002 and a variable
interest rate at LIBOR plus 1.75%, which was 3.65125% at quarter end.




                                                                               8
<PAGE>
                           FIRST SHARES BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2002
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------


NOTE 7 - EARNINGS (LOSS) PER SHARE


Basic earnings per share is computed by dividing net income by the weighted
average shares outstanding during the period. A reconciliation of the numerators
and denominators used to compute earnings per share is presented below:

<TABLE>
<CAPTION>
                                                                                    March 31,       March 31,
                                                                                      2002            2001
                                                                                      ----            ----
     <S>                                                                          <C>             <C>
     EARNINGS PER SHARE
          Net income                                                              $        284    $         16
                                                                                  ============    ============
     Weighted average shares outstanding                                             1,052,779       1,052,779
                                                                                  ============    ============
     EARNINGS PER SHARE                                                           $        .27    $        .02
                                                                                  ============    ============

     EARNINGS PER SHARE ASSUMING DILUTION
          Net income                                                              $        284    $         16
                                                                                  ============    ============
          Weighted average shares outstanding                                        1,052,779       1,052,779
          Add: effect of assumed stock options exercised, if dilutive                   16,245             566
                                                                                  ------------    ------------
          Weighted average and dilutive potential shares outstanding                 1,069,024       1,053,345
                                                                                  ============    ============
     EARNINGS PER SHARE ASSUMING DILUTION                                         $        .27    $        .02
                                                                                  ============    ============
</TABLE>



NOTE 8 - PUBLIC OFFERING

During the first quarter of 2002, the Company initiated a public offering of
Debentures and Stock Purchase Contracts. The Company is seeking to raise a
minimum of $2,500 (and a maximum of $5,000) through the sale of securities. The
Debentures are unsecured and subordinated, have a term of approximately 9 years,
and accrue interest at 8% per annum payable quarterly in arrears. The Debentures
mature on July 1, 2011, but are redeemable by the Company at any time prior to
their maturity. The Stock Purchase Contracts require a purchaser to buy common
shares of the Company at $10 per share on January 1, 2011. A purchaser may elect
to purchase the common shares of the Company at any time prior to that date at
the same price per share. The Stock Purchase Contracts will be cancelled in the
event the Debentures are redeemed. The offering is being made on a "best
efforts" basis.

The Company received proceeds from this offering with closings held during the
second quarter. Proceeds of $4,405, net of commissions, have been received
through May 10, 2002. Proceeds of $3,000 have been contributed to the bank to
support growth. The offering is scheduled to terminate June 28, 2002.



                                                                              10
<PAGE>
                           FIRST SHARES BANCORP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2002
              (Dollar amounts in thousands, except per share data)

--------------------------------------------------------------------------------


NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS

A new accounting standard requires all business combinations to be recorded
using the purchase method of accounting. Under the purchase method, all
identifiable tangible and intangible assets and liabilities of the acquired
company must be recorded at fair value at date of acquisition, and the excess
cost over fair value of net assets acquired is recorded as goodwill.
Identifiable intangible assets with finite useful lives will continue to
amortize under the new standard, whereas goodwill ceased being amortized
starting in 2002. Annual impairment testing will be required for goodwill with
impairment being recorded if the carrying amount of goodwill exceeds its implied
fair value. Amounts previously recorded as goodwill from depository institution
branch acquisitions are not presently considered to be goodwill under the new
standard and these amounts will continue to be amortized.

Intangible assets recorded on the Company's balance sheet consist of core
deposit intangibles acquired from a 1995 branch acquisition. The gross amount of
the asset is $396 and the accumulated amortization is $288. This intangible
asset is subject to amortization, and amortization expense was $11 for the first
quarter of 2002 and 2001. Estimated amortization expense thereafter is as
follows: 2002 $44, 2003 $44, and 2004 $31.

Effective January 1, 2002, the Company adopted a new accounting standard on
impairment and disposal of long-lived assets. The effect of this new standard is
not expected to be material to the financial statements.

A new accounting standard regarding asset retirement obligations will apply for
2003. Management does not believe this standard will have a material effect on
the Company's financial statements.





                                       30
<PAGE>
                           FIRST SHARES BANCORP, INC.


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

Certain statements in this section constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of First Shares to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements.

Such risks could include: increases in competitive pressure from other financial
institutions in our markets, unexpected increases in loan losses, changes in
market interest rates, unanticipated changes in our level of growth or our
ability to manage the growth, changes in economic conditions in our markets, or
legislation or regulatory changes.


RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2002 AND 2001

Net Income

During 2001, we focused on increasing earnings, continued growth in loans and
deposits, and increasing market share. For 2002, our focus will continue on
earnings and growth. Net income for the three months ended March 31, 2002 was
$284,000 or $.27 per share compared to $16,000 or $.02 per share for the same
three months in 2001. Return on average assets (ROA) for 2002 was .88% compared
to .06% for 2001 on an annualized basis, while return on average equity (ROE)
was 15.25% compared to .98% for the same period last year, also on an annualized
basis.


Net Interest Income

Net interest income is the difference between interest and fees realized on
interest earning assets and interest paid on interest bearing liabilities. The
net interest margin is this difference expressed as a percentage of average
earning assets.

For the three months ended March 31, 2002, net interest income totaled $1.3
million, representing a $299,000 or 31.2% increase over the same period for
2001. This increase in net interest income was primarily rate driven due to the
declining rates paid on interest bearing liabilities.

Interest income through March 31, 2002 declined $75,000 compared to 2001. Most
of the decline in interest income is attributed to the declining rate
environment of 2001 as volume continued to grow. Average investments, including
securities and federal funds sold, were $27.1 million in 2002, up by $8.9
million from 2001's $18.2 million level, an increase of 49.1%. The average loan
balance showed solid growth, increasing from $83.7 million in 2001 to $94.1
million in 2002, an increase of $10.4 million or 12.5%. While the increased
volume of earning assets helped to contribute to growth in interest income,
average yield, on a fully tax equivalent basis, decreased to 7.13% in 2002 from
8.79% in 2001 having a greater impact on the slight decline in interest income.



                                                                              11
<PAGE>
                           FIRST SHARES BANCORP, INC.


Interest expense, year to date, in 2002 decreased $375,000, or 29.5%, compared
to 2001. The decrease is rate driven as average deposits increased by a total of
$14.9 million, or 17.4%, compared to March 31, 2001. Time deposits comprised
most of the increase, with the average balance rising by $9.9 million or 17.5%
over March 31, 2001. Average other borrowings increased from $6.2 million for
the first quarter 2001 to $9.5 million for 2002. These borrowings consist
primarily of repurchase agreements and Federal Home Loan Bank advances and bore
an average cost of 1.04% and 4.73%, respectively in 2002. The average cost of
all interest bearing liabilities was 3.27% in 2002 compared to 5.55% in 2001.
The decline in the cost of interest bearing liabilities was primarily the result
of repricing deposit products.

The effect of a decrease in the cost of funds offset by a slight decrease in the
yields on earning assets was improvement of the net interest margin. Through
March 31, 2002, the net interest margin was 4.17%, compared to 3.79% for 2001.


Provision for Loan Losses and Asset Quality

The provision for loan losses represents charges made to earnings to maintain an
adequate allowance for loan losses. The allowance is maintained at an amount
that we believe to be sufficient to absorb probable incurred losses in the loan
portfolio. Monitoring loan quality and maintaining an adequate allowance is an
ongoing process overseen by our senior management. On at least a quarterly
basis, a formal analysis of the adequacy of the allowance is prepared and
reviewed by management and the board of directors. This analysis serves as a
point in time assessment of the level of the allowance and serves as a basis for
provisions for loan losses.

The provision for loan losses was $50,000 for the first three months of 2002
compared to $78,000 in 2001 and the allowance totaled $1.2 million at March 31,
2002 compared to $1.1 million at December 31, 2001. The 2002 decrease in
provision and consistency in the level of the allowance reflect the stability of
asset quality in the portfolio. Net charge offs through the first three months
of 2002 were $28,000, representing .03% of the total loan portfolio. The
allowance for loan losses at the end of March 2002 was $1.2 million, or 1.25% of
total loans, compared to $955,000, or 1.12% of total loans at March 31, 2001.

Nonperforming loans have decreased $25,000, to $287,000 since year-end. The
amount of nonperforming loans remains modest (.31% at March 31, 2002 compared to
..33% at year end 2001).

We designate certain loans for internal monitoring purposes on a watch list.
Loans may be placed on the watch list as a result of delinquent status, concern
about the borrower's financial condition or the value of the collateral securing
the loan, substandard classification during regulatory examinations, or simply
as a result of our desire to monitor more closely a borrower's financial
condition and performance.

Watch category loans may include loans with loss potential that are still
performing and accruing interest and may be current under the terms of the loan
agreement. However, we may have a significant degree of concern about the
borrower's ability to continue performing according to the terms of the loan.
Loss exposure on these loans is typically evaluated based primarily upon the
estimated liquidation value of the collateral securing the loan. Also, watch



                                                                              12
<PAGE>

                           FIRST SHARES BANCORP, INC.



list loans may include credits which, although adequately secured and
performing, reflect a past delinquency problem or unfavorable financial trends
exhibited by the borrower.


Noninterest Income and Expense

Noninterest income increased $71,000, or 32.6% to $289,000 for 2002 compared to
$218,000 in 2001. A portion of the increase is attributed to the larger number
of deposit accounts and a change in fee structure on those accounts, which
increased service charge income by 38.3%. The majority of the increase can be
attributed to mortgage banking activity which rose 49.4% as declining interest
rates spurred activity in this area. Earnings on the cash surrender value of
life insurance rose 26.9% to $33,000 compared to $26,000 for the same period in
2001.

Noninterest expense rose slightly with an increase of $130,000 or 12.0%,
reaching $1.2 million for the first three months of 2002 as compared to $1.1
million for the same period in 2001. The primary factor contributing to the
increase in noninterest expense is a $98,000 increase in salaries and employee
benefits driven by employee health insurance and annual salary increases.


Income Taxes

No tax benefit has been recorded in 2002. We have a net operating loss
carryforward of approximately $599,000.



FINANCIAL CONDITION

Total assets were $130.4 million at March 31, 2002 compared to $128.1 million at
year-end 2001, an increase of $2.3 million or 1.8%. Increased loan totals were
funded primarily by increased deposits.


Securities

Securities are designated as either available for sale or as held to maturity.
To provide more flexibility and better support for our current strategy, held to
maturity securities have been allowed to mature and pay-off, with all security
purchases since March 1999 classified as available for sale. With the influx of
deposits, investments in securities increased nearly $3.4 million, with the
growth occurring in mortgage backed securities. The portfolio remains largely
comprised of government agency securities.


Loans

Total loans, excluding loans held for sale, increased $1.0 million or 1.1% from
year-end 2001 to March 31, 2002. Loan growth occurred primarily in the consumer
and commercial areas.



                                                                              13
<PAGE>
                           FIRST SHARES BANCORP, INC.



Consumer loan growth remains strong, comprising the largest single segment of
the portfolio. Consumer loans totaled $24.7 million at March 31, 2002,
increasing $873,000 or 3.7% from year-end. The indirect loan market remains
robust, with relationships maintained with local auto and recreational vehicle
dealers, providing this segment with strong growth opportunities. Underwriting
standards for indirect loans are consistent with the standards applied to direct
loans in an effort to maintain strong asset quality.

Commercial and commercial real estate loans grew by 3.6% or $1.2 million from
December 31, 2001 to March 31, 2002, combined, and comprised 35.6% of our
portfolio at the period end. Growth in this segment was attributed to the
continued strong local economy, primarily in the Greenwood area, and further
penetration in our market areas.

Residential mortgages, excluding loans held for sale, comprise the second
single segment of our loan portfolio. From year-end 2001 to March 31, 2002,
residential mortgages decreased $765,000 or (2.8)% to $26.5 million. The decline
is due to a reduction in loans held for sale. At period end 2002, loans held for
sale, which are carried at the lower of cost or fair value, totaled $2.0
million, declining from the year-end total of $2.8 million as mortgage banking
activity slowed in the first quarter. All loans are sold servicing released.
Mortgage banking provides our customers with a wider array of mortgage loan
products.


Deposits and Other Borrowings

Total deposits increased $1.6 million or 1.5%, from year-end 2001 to March 31,
2002. Noninterest-bearing deposits increased to $12.2 million from $11.2
million. At March 31, 2002, $31.6 million or 47.2% of our time deposits had
balances greater than $100,000. The average balance of time deposits issued in
amounts greater than $100,000 totaled $30.7 million for the first quarter of
2002, compared to $22.5 million for the first quarter 2001, representing 46.0%
and 39.6% of total average time deposits in each period.

While deposits have funded a significant portion of our growth, we have also
obtained funding from the Federal Home Loan Bank (FHLB). The advances from the
FHLB have variable interest rates, which range from 4.73% to 5.30% at March 31,
2002 and mature between January 23, 2006 and March 7, 2011. See footnote 6 for
detail. Additionally, we have a line of credit established at the holding
company level, with a significant portion of these proceeds contributed to First
Bank to support continued growth.


Capital

We are subject to various regulatory capital guidelines as required by federal
banking agencies. These guidelines define the various components of core capital
and assign risk weights to various categories of assets.

Tier 1 capital consists of shareholders' equity net of intangible assets and
excluding unrealized gains and losses on securities available for sale, as
defined by bank regulators. The definition of Tier 2 capital includes the amount
of allowance for loan losses which does not exceed 1.25% of gross risk weighted
assets. Total capital is the sum of Tier 1 and Tier 2 capital.



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                           FIRST SHARES BANCORP, INC.



The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
requires federal regulatory agencies to define capital tiers. These are: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized. Under these regulations, a
"well-capitalized" institution must achieve a Tier 1 risk-based capital ratio of
at least 6.00%, and a total capital ratio of at least 10.00%, and a leverage
ratio of at least 5.00% and not be under a capital directive order. Failure to
meet capital requirements can result in regulatory action that could have a
direct material effect on our financial statements. If only adequately
capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions, asset growth, and expansion are
limited, in addition to the institution being required to submit a capital
restoration plan.

At March 31, 2002, our Tier 1 risked based capital, total risk-based capital and
leverage ratios for the Bank were 8.98%, 10.13% and 7.12%, levels which meet the
regulatory guidelines of "well capitalized."

At December 31, 2001 our Tier 1 risked based capital, total risk-based capital
and leverage ratios for the Bank were 9.02%, 10.18% and 6.95%, levels which meet
the regulatory guidelines of "well capitalized." The decrease in capital ratios
since year-end resulted from higher average assets.


Liquidity and Rate Sensitivity

Liquidity refers to the availability of funds to meet deposit withdrawals and
borrowing repayments, fund loan commitments and pay expenses. We have many
sources of liquid funds, including cash and cash equivalents, payments and
maturities of loans and securities, and growth in deposits. In addition, we have
the ability to sell securities available for sale, and may borrow from the
Federal Reserve and the Federal Home Loan Bank.

We believe we have sufficient liquidity to meet reasonable borrower, depositor,
and creditor needs in the present economic environment. We have not received any
recommendations from regulatory authorities which would materially affect
liquidity or operations.

Our interest rate sensitivity position is influenced by the timing of the
maturity or repricing of interest earning assets and interest-bearing
liabilities. One method of gauging sensitivity is by a static gap analysis.

Rate sensitivity gap is defined as the difference between the repricing of
interest earning assets and the repricing of interest bearing liabilities within
certain defined time frames. Rising interest rates are likely to increase net
interest income in a positive gap position, while declining rates are likely to
be beneficial in a negative gap position.

At March 31, 2002, we had a negative one-year interest rate gap of 27.1% of
interest earning assets. This compares to a negative 25.5% gap at December 31,
2001. The widening of the gap is a result of more interest bearing liabilities
repricing during the one-year time frame at March 31, 2002 than at year-end
2001.



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                           FIRST SHARES BANCORP, INC.



Part II.  OTHER INFORMATION

     Item 6.  Exhibits and Reports on Form 8-K

     a.) Exhibits

               3.1  Amended and Restated Articles of Incorporation of First
                    Shares Bancorp, Inc., incorporated by reference to Exhibit
                    3.1 to the registration statement on Form SB-2 of First
                    Shares Bancorp, Inc. (file no. 333-31520), as amended (the
                    "2000 Registration Statement").

               3.2  Amended and Restated By-Laws of First Shares Bancorp, Inc.,
                    incorporated by reference to Exhibit 3.2 to the 2000
                    Registration Statement.

               10.1 Lease Agreement dated January 23, 2002 between R & A
                    Enterprises, Inc. and First Bank, incorporated by reference
                    from Exhibit 10.10 to the registration statement on Form
                    SB-2 of First Shares Bancorp, Inc. (file no. 333-83640), as
                    amended (the "2002 Registration Statement").

               10.2 Commercial Lease Agreement dated February 20, 2002 between
                    Commercial 100, L.L.C. and First Bank, incorporated by
                    reference from Exhibit 10.11 to the 2002 Registration
                    Statement.


     b.) Reports on 8-K - No Reports were filed.



SIGNATURES

                                           FIRST SHARES BANCORP, INC.
Date:  May 15, 2002                   By:  /s/ Jerry R. Engle
                                           -------------------------------------
                                                  Jerry R. Engle
                                                  President and Chief Executive
                                                  Officer

Date:  May 15, 2002                   By:  /s/ Kimberly B. Kling
                                           ------------------------------
                                                  Kimberly B. Kling
                                                  Secretary, Treasurer and
                                                  Chief Financial Officer
                                                  (Principal Financial and
                                                  Accounting Officer)







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