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

                                   FORM 10-QSB

     [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


COMMISSION FILE NUMBER:     0-24675
                           ---------


                       STATE OF FRANKLIN BANCSHARES, INC.
--------------------------------------------------------------------------------
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)

          TENNESSEE                                       62-1607709
---------------------------------               --------------------------------
    (STATE OF INCORPORATION)                           (I.R.S.  EMPLOYER
                                                        IDENTIFICATION NO.)


              1907 NORTH ROAN STREET, JOHNSON CITY, TENNESSEE 37601
              -----------------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                 (423) 926-3300
                ------------------------------------------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)


                                      NONE
      --------------------------------------------------------------------
      (FORMER NAME, ADDRESS AND FISCAL YEAR, IF CHANGED SINCE LAST REPORT)


CHECK WHETHER THE ISSUER:  (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15 OF THE  SECURITIES  EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE  REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                                YES   X        NO
                                     ---           ---

                                    1,465,512
                   ------------------------------------------
       (OUTSTANDING SHARES OF THE ISSUER'S COMMON STOCK AS OF MAY 9, 2003)


           TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

                                YES            NO   X
                                     ---           ---


<PAGE>



                        STATE OF FRANKLIN BANCSHARES, INC

                                      INDEX
                                      -----
<TABLE>
<CAPTION>
PART I.        FINANCIAL INFORMATION

         ITEM 1.   FINANCIAL STATEMENTS                                                     PAGE
                                                                                         -------
<S>                                                                                           <C>
                  CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                               3
                     MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002 (AUDITED)

                  CONSOLIDATED STATEMENTS OF INCOME                                            4
                     THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED) AND 2002 (UNAUDITED)

                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                   5
                     THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
                     AND YEAR ENDED DECEMBER 31, 2002 (AUDITED)

                  CONSOLIDATED STATEMENTS OF CASH FLOWS                                        6
                     THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED) AND 2002 (UNAUDITED)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                       7


         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS                                                14

         ITEM 3.  CONTROLS AND PROCEDURES                                                     17



PART II.   OTHER INFORMATION

         ITEM 1.   LEGAL PROCEEDINGS                                                          18

         ITEM 2.   CHANGES IN SECURITIES                                                      18

         ITEM 3.   DEFAULT UPON SENIOR SECURITIES                                             18

         ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                        18

         ITEM 5.   OTHER INFORMATION                                                          18

         ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                           18

SIGNATURES                                                                                    19

CERTIFICATIONS                                                                                20
</TABLE>












                                        2















<PAGE>

PART I -  FINANCIAL INFORMATION

         ITEM 1.   FINANCIAL STATEMENTS
         -------   --------------------
<TABLE>
<CAPTION>
                             STATE OF FRANKLIN BANCSHARES, INC.

                        CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                  MARCH 31,         DECEMBER 31,
                             ASSETS                           2003 - UNAUDITED     2002 - AUDITED
-------------------------------------------------------------------------------------------------
<S>                                                              <C>                <C>
Cash and Due from Banks                                          $   7,142,906      $   5,751,547
Federal Funds Sold                                                  21,295,000         12,705,000
Short-Term Interest Bearing Deposits                                 1,031,095          1,365,722
Investments - HTM
   (Estimated Market 2003 - $10,301,290 and 2002 - $15,736,381)     10,004,965         15,738,303
Investments - AFS                                                   64,564,593         62,028,662
Loans Held for Sale                                                  3,892,760          2,447,752
Loans and Leases Receivable                                        156,852,900        157,905,134
   Less: Allowance for Loan and Lease Losses                        (1,740,957)        (1,563,320)
-------------------------------------------------------------------------------------------------
   Loans and Leases Receivable, Net                                155,111,943        156,341,814
-------------------------------------------------------------------------------------------------
Accrued Interest Receivable, Net                                     1,489,392          1,502,448
Land, Buildings & Equip at Cost Less Accum Depr
   of $1,730,135 in 2003 and $1,673,028 in 2002                      5,965,369          5,760,767
Prepaid Expense and Accounts Receivable                                 64,657            200,598
Deferred Tax Assets                                                    196,220            416,903
FHLB Stock                                                           2,285,400          2,263,100
Other Real Estate Owned                                              1,147,276          1,321,575
Other Assets                                                           176,000            188,000
-------------------------------------------------------------------------------------------------
  TOTAL ASSETS                                                   $ 274,367,576      $ 268,032,191
=================================================================================================
             LIABILITIES AND STOCKHOLDERS' EQUITY
=================================================================================================
LIABILITIES:
Interest-Free Deposits                                           $  12,986,374      $  11,354,070
Interest-Bearing Deposits                                          190,941,692        187,485,817
Advances by Borrowers for Taxes and Insurance                          202,115            115,191
Accrued Interest on Deposits                                           189,093            184,365
Accounts Payable and Accrued Expenses                                  602,084            838,163
Repurchase Agreements                                                1,118,734          1,049,781
FHLB Long-Term Advances                                             36,231,620         36,238,709
Deferred Credits on REO                                                115,983            144,338
-------------------------------------------------------------------------------------------------
       TOTAL LIABILITIES                                         $ 242,387,695      $ 237,410,434
-------------------------------------------------------------------------------------------------

Guaranteed Preferred Beneficial Interest in
   Subordinated Debentures                                           8,000,000          8,000,000

STOCKHOLDERS' EQUITY:
Common Stock, $1.00 Par Value                                        1,465,512          1,465,512
Paid-in Capital                                                     14,251,461         14,251,461
Accumulated Other Comprehensive Income                                 692,325            252,107
Retained Earnings                                                    8,542,370          7,711,127
  Less: Employee Stock Ownership                                   (   971,787)       ( 1,058,450)
-------------------------------------------------------------------------------------------------
       TOTAL STOCKHOLDERS' EQUITY                                $  23,979,881      $  22,621,757
-------------------------------------------------------------------------------------------------
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 274,367,576      $ 268,032,191
=================================================================================================
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                        3





<PAGE>
<TABLE>
<CAPTION>
                       STATE OF FRANKLIN BANCSHARES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME

                                                         THREE MONTHS ENDED MARCH 31,
                                                      ----------------------------------
INTEREST INCOME:                                      2003 - UNAUDITED  2002 - UNAUDITED
                                                      ----------------  ----------------
<S>                                                    <C>               <C>
Interest and Fees on Loans                             $     2,816,728   $     2,722,711
Other Interest Income                                          931,224         1,254,219
----------------------------------------------------------------------------------------
       TOTAL INTEREST INCOME                                 3,747,952         3,976,930
----------------------------------------------------------------------------------------

INTEREST EXPENSE:
Interest on Deposits                                         1,099,008         1,440,906
Interest on Repurchase Agreements                                3,851                 -
Interest on Short-Term Debt                                         21                 1
Interest on Long-Term Debt                                     433,293           368,767
Interest on Subordinated Debentures                            108,394           124,208
----------------------------------------------------------------------------------------
       TOTAL INTEREST EXPENSE                                1,644,567         1,933,882
----------------------------------------------------------------------------------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSS           2,103,385         2,043,048
PROVISION FOR LOAN LOSSES                                     (177,637)         (147,500)
----------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSS            1,925,748         1,895,548
----------------------------------------------------------------------------------------

OTHER INCOME:
Other Fees and Service Charges                                 124,341           113,399
Net Gain on Loans Sold                                         174,220            91,692
Realized Gain on Securities                                        231                 -
Real Estate Sales Commission Income                             69,389                 -
Insurance Commission Income                                     19,875            18,958
Rental Income, Net                                              15,515            23,385
----------------------------------------------------------------------------------------
       TOTAL OTHER INCOME                                      403,571           247,434
----------------------------------------------------------------------------------------

OTHER EXPENSES:
Compensation and Related Benefits                              660,474           596,826
Occupancy Expenses                                              91,668            86,706
Furniture and Equipment Expense                                 56,089           111,536
Advertising                                                     33,758            30,968
Data Processing Expense                                        109,273           126,445
Other                                                          253,167           391,702
----------------------------------------------------------------------------------------
       TOTAL OTHER EXPENSES                                  1,204,429         1,344,183
----------------------------------------------------------------------------------------
       INCOME BEFORE INCOME TAX                              1,124,890           798,799
PROVISION FOR INCOME TAXES                                    (293,648)         (149,271)
----------------------------------------------------------------------------------------
       NET INCOME                                       $      831,242   $       649,528
========================================================================================
EARNINGS PER SHARE:
  BASIC                                                 $         0.60   $          0.47
  DILUTED                                                         0.56              0.44
========================================================================================
WEIGHTED AVERAGE SHARES OUTSTANDING:
  BASIC                                                      1,382,339         1,378,208
  DILUTED                                                    1,476,464         1,469,566
========================================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                        4


<PAGE>
<TABLE>
<CAPTION>


                                    STATE OF FRANKLIN BANCSHARES, INC.
                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         FOR THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2002 (AUDITED)


                                                                     Accumulated
                                                                  Other                 Employee
                                     Common        Paid-In    Comprehensive  Retained    Stock
                                     Stock         Capital        Income     Earnings   Ownership       Total
                                  --------------  ----------  ------------  ---------  -----------   ------------
<S>                                    <C>        <C>            <C>        <C>         <C>            <C>
Balance at December 31, 2001           1,465,512  14,251,461     (368,029)  4,526,987   (1,090,094)    18,785,837

ESOP Shares Allocated                         --          --           --          --       31,644         31,644

Comprehensive Income
  Other Comprehensive Income,
    Net of Tax:
    Unrealized Gains on Securities
      Available-For-Sale:
      Unrealized Holding Gains
        Arising During the Period
          (Net of $321,852 Income Tax)        --          --       527,249         --           --        527,249
      Less: Reclassification Adjustment
          (Net of $57,659 Income Tax)         --          --        92,886         --           --         92,886
                                                                                                      -----------
                                                                                                          620,135

  Net Income                                  --          --           --   3,184,141           --      3,184,141
                                                                                                      -----------
        Total Comprehensive Income            --          --           --          --           --      3,804,276
                                    ------------  ----------     ---------  ---------   ----------    -----------
Balance at December 31, 2002           1,465,512  14,251,461       252,106  7,711,128   (1,058,450)    22,621,757

ESOP Shares Allocated                         --          --            --         --       86,663         86,663

Comprehensive Income
  Other Comprehensive Income,
    Net of Tax:
    Unrealized Gains on Securities
      Available-For-Sale:
      Unrealized Holding Losses
        Arising During the Period
          (Net of $273,891 Income Tax)        --          --       450,058         --          --        450,058
      Less: Reclassification Adjustment
          (Net of $6,107 Tax Benefit)         --          --        (9,839)        --          --         (9,839)
                                                                                                    ------------
                                                                                                         440,219

  Net Income                                  --          --           --     831,242          --        831,242
                                                                                                    ------------
        Total Comprehensive Income            --          --           --          --          --      1,271,461
                                    ------------  ----------     ---------  ---------  -----------  ------------
Balance at March 31, 2003              1,465,512  14,251,461       692,325  8,542,370     (971,787)   23,979,881
                                    ============  ==========     =========  =========   ==========  ============

</TABLE>

        The accompanying notes are an integral part of the consolidated
financial statements.



                                        5




<PAGE>

                       STATE OF FRANKLIN BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                  THREE MONTHS ENDED MARCH 31,
                                                                               ----------------------------------
                                                                               2003 - UNAUDITED  2002 - UNAUDITED
                                                                               ----------------  ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>                <C>
  Net Income                                                                      $     831,242      $    649,528
  Items Not Affecting Cash:
    Depreciation                                                                         57,107          120,664
    (Increase) Decrease in Accrued Interest                                              13,056         (627,534)
    Deferred Income Taxes (Benefit)                                                     (52,450)          (4,635)
    Provision for Loan and Lease Losses                                                 177,637          147,500
    Decrease in Prepaid Expenses and Accounts Receivable                                135,941           40,544
    Increase in Interest Payable                                                          4,728            6,482
    Increase (Decrease) in Accounts Payable and Accrued Expenses                       (236,079)         220,650
    Increase in Deferred Loan Fees, Net                                                  28,943           41,716
    Realized (Gain) on Securities                                                          (231)               -
    Discount Accretion                                                                  (59,073)        (142,918)
    Amortization                                                                        120,055           14,928
    Earned ESOP Shares                                                                   86,663           60,054
    FHLB Stock Dividends                                                                (22,300)         (23,900)
    Net (Increase) Decrease in Loans Held for Sale                                   (1,445,008)      (1,091,891)
-----------------------------------------------------------------------------------------------------------------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                                        (359,769)       1,594,970
-----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of Held-to-Maturity Investments                                                    -       (8,911,815)
  Purchase of Available-for-Sale Investments                                         (4,625,899)      (3,989,834)
  Proceeds from Maturities of Held-to-Maturity Investments                            2,495,000          350,865
  Proceeds from Maturities of Available-for-Sale Investments                          2,274,532                -
  Proceeds from Sale of Available-for-Sale Investments                                        -                -
  Principal Payments on Mortgage-backed Securities - AFS                              3,718,375                -
  (Increase) Decrease in Federal Funds Sold                                          (8,590,000)      17,990,000
  (Increase) Decrease in Short-Term Interest Bearing Deposits                           334,627         (243,829)
  (Increase) in Loans Receivable, Net                                                 1,169,235       (6,463,698)
  Purchases of Premises and Equipment                                                  (261,709)        (252,940)
-----------------------------------------------------------------------------------------------------------------
    NET CASH (USED) BY INVESTING ACTIVITIES                                          (3,485,839)      (1,521,251)
-----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net Increase (Decrease) in Deposits                                                 5,088,179       (1,937,180)
  Net Increase in Advances by Borrowers for Taxes and Insurance                          86,924           74,223
  Net Increase in Repurchase Agreements                                                  68,953                -
  Repayment of FHLB Advances                                                             (7,089)               -
  Proceeds from FHLB Advances                                                                 -          253,466
-----------------------------------------------------------------------------------------------------------------
    NET CASH PROVIDED BY FINANCING ACTIVITIES                                         5,236,967       (1,609,491)
-----------------------------------------------------------------------------------------------------------------
      NET INCREASE IN CASH                                                            1,391,359       (1,535,772
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD                                        5,751,547        5,252,689
-----------------------------------------------------------------------------------------------------------------
      CASH AND DUE FROM BANKS AT END OF PERIOD                                    $   7,142,906      $ 3,716,917
=================================================================================================================

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Increase (Decrease) in Unrealized Gain (Loss) on Securities Available-For-Sale,
  Net of Deferred Tax Liability                                                   $     440,218      $   146,343
Acquisition of Real Estate Property through Foreclosure of Related Loans          $   1,147,276      $   870,910
=================================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash Paid During the Period for:
    Income Taxes                                                                  $     725,300      $   714,077
    Interest                                                                      $   1,639,839      $ 1,927,400
=================================================================================================================
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                        6



<PAGE>
                       STATE OF FRANKLIN BANCSHARES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

NOTE 1  INCORPORATION AND OPERATIONS
------ ------------------------------

     State of Franklin  Bancshares,  Inc.  (Company) was incorporated  under the
     laws of the State of  Tennessee  for the  purpose of  becoming  the holding
     company of State of franklin  Savings Bank (Savings Bank). The stockholders
     of the Savings Bank  exchanged  their shares for the shares of the Company,
     whereby the Savings Bank became a wholly owned  subsidiary  of the Company.
     State of Franklin Leasing Corporation (Leasing Corp) was incorporated under
     the laws of the State of  Tennessee  for the  purpose  of lease  financing.
     State of Franklin Real Estate,  Inc. (Real Estate Company) was incorporated
     for the purpose of selling  real estate.  The Real Estate  Company and John
     Sevier Title services,  Inc. (Title Company) are wholly owned  subsidiaries
     of the Savings Bank.  The leasing Corp is a wholly owned  subsidiary of the
     Company.


NOTE 2   BASIS OF PREPARATION
------  ----------------------

     The accompanying  consolidated financial statements include the accounts of
     the Company and its subsidiaries. All significant intercompany accounts and
     transactions have been eliminated. These financial statements were prepared
     in accordance  with generally  accepted  accounting  principles for interim
     financial  information  and in accordance  with the  instructions  for Form
     10-QSB.  Accordingly,  they do not include all disclosures  necessary for a
     complete   presentation  of  the   consolidated   statements  of  financial
     condition,  income,  cash  flows,  and changes in  stockholders'  equity 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  financial  statements have been included.  All
     such adjustments are of a normal recurring nature.  The statement of income
     for the three months ended March 31, 2003 is not necessarily  indicative of
     the results which may be expected for the entire year.

     These consolidated  financial statements should be read in conjunction with
     the audited  consolidated  financial  statements  and notes thereto for the
     Company for the year ended December 31, 2002.


NOTE 3  RECLASSIFICATIONS
------  -----------------

     In instances where required,  amounts reported in prior period's  financial
     statements  included  herein  have  been  reclassified  to  put  them  on a
     comparable basis to the amounts reported in the March 31, 2003 consolidated
     financial statements.


NOTE 4  LAND BUILDINGS AND EQUIPMENT
-----  -----------------------------

     Fixed assets at March 31, 2003,  and  December 31, 2002 are  summarized  as
     follows:

<TABLE>
<CAPTION>
                                                                2003          2002
                                                            -----------   -----------
<S>                                                          <C>           <C>
     Land                                                    $1,580,000    $1,580,000
     Buildings and Leasehold Improvements                     3,608,404     3,457,883
     Furniture, Fixtures and Equipment                        2,507,100     2,395,912
                                                            -----------   -----------
                                                              7,695,504     7,433,795
     Less:  Accumulated Depreciation                          1,730,135     1,673,028
                                                            -----------   -----------
                                                             $5,965,369    $5,760,767
                                                            ===========   ===========
</TABLE>


                                        7



<PAGE>
NOTE  5     LOANS  RECEIVABLE
-------    ------------------

     Loans  receivable  at March 31, 2003 and December 31, 2002,  consist of the
     following:

<TABLE>
<CAPTION>
                                                   2003             2002
                                              --------------   --------------
<S>                                            <C>              <C>
  First Mortgage Loans                         $ 58,928,978     $ 57,183,220
  Construction Loans                             29,609,057       29,225,436
  Consumer Loans                                 14,709,091       13,679,529
  Participation Loans, Net                          475,598          481,399
  Commercial Loans                               65,201,169       66,392,958
  Credit Line Advances                              509,239          519,020
  Lease Finance                                   1,552,974        1,459,185
                                             ---------------  ---------------

    Gross Loans and Leases Receivable          $167,986,106     $168,940,747
                                             ---------------  ---------------

  Less:
    Undisbursed Portion of Loans in Process    ( 10,857,817)    ( 10,789,166)
    Net Deferred Loan Origination Fees         (    275,389)    (    246,447)
    Accumulated General Loan Loss Allowance    (  1,740,957)    (  1,563,320)
                                             ---------------  ---------------
                                               ( 12,874,163)    ( 12,598,933)
                                             ---------------  ---------------

  Loans and Leases Receivable, Net             $155,111,943     $156,341,814
                                             ===============  ===============

</TABLE>
     An analysis of the  allowance  for loan and lease  losses at March 31, 2003
     and December 31, 2002 is as follows:

<TABLE>
<CAPTION>
                                                   2003              2002
                                              --------------   --------------
<S>                                              <C>             <C>
    Balance - Beginning of Period                $1,563,320      $ 1,473,855
    Provision for Loan and Lease Losses             177,637          578,979
    Loans and Leases Charged-Off                          -       (  489,857)
    Charged-Off Loan and Lease Recoveries                 -              343
                                              --------------   --------------

    Balance - End of Period                      $1,740,957      $ 1,563,320
                                              ==============   ==============
</TABLE>


     The gross  amount of  participation  loans  serviced  by State of  Franklin
     Savings  Bank was  $950,771 at March 31, 2003 and  $962,371 at December 31,
     2002.

     At March 31, 2003 the Company had  nonaccrual  loans  totaling $1.4 million
     which included  $112,000 in impaired loans. A loan is impaired when,  based
     on current  information and events, it is probable that the Company will be
     unable to collect all amounts due according to the  contractual  agreement.
     The  Company  had no loans or  leases  90 days or more  past due and  still
     accruing  and no  restructured  loans at March 31,  2003.  The  Company had
     non-accrual loans totaling $1.1 million at December 31, 2002.






                                        8



<PAGE>
NOTE  6     FEDERAL  REGULATION
-------     -------------------

     The capital ratios for State of Franklin Savings Bank are as follows:

<TABLE>
<CAPTION>
                                                            For Capital
                                                             Adequacy
                                                             Purposes
                                                          And To Be Well
                                                         Capitalized Under
                                                         Prompt Corrective
                                         Actual          Action Provision
                                     ----------------    ----------------
In Thousands                         Amount    Ratio     Amount    Ratio
---------------------------          ----------------    ----------------
<S>                                  <C>       <C>       <C>        <C>
As of March 31, 2003:
  Total Risk-Based Capital
    (to Risk-Weighted Assets)        23,138    12.34%    >=18,745   10.0%

  Tier 1 Capital
    (to Risk-Weighted Assets)        21,488    11.46%    >=11,247    6.0%

  Tier 1 Capital
    (to Adjusted Total Assets)       21,488     8.12%    >=13,239    5.0%

As of December 31, 2002:
  Total Risk-Based Capital
    (to Risk-Weighted Assets)        21,928    11.49%    >=19,085   10.0%

  Tier 1 Capital
    (to Risk-Weighted Assets)        20,441    10.71%    >=11,451    6.0%

  Tier 1 Capital
    (to Adjusted Total Assets)       20,441     7.74%    >=13,213    5.0%


</TABLE>

     The capital ratios for State of Franklin Bancshares, Inc. are as follows:

<TABLE>
<CAPTION>
                                                           For Capital
                                                            Adequacy
                                                            Purposes
                                                         And To Be Well
                                                        Capitalized Under
                                                        Prompt Corrective
                                          Actual        Action Provision
                                     -----------------  -----------------
In Thousands                         Amount    Ratio    Amount    Ratio
---------------------------          -----------------  -----------------
<S>                                  <C>        <C>      <C>         <C>
As of March 31, 2003:
  Total Risk-Based Capital
    (to Risk-Weighted Assets)        32,896     17.49%   >=18,811    10.0%

  Tier 1 Capital
    (to Risk-Weighted Assets)        30,874     16.41%   >=11,287     6.0%

  Tier 1 Capital
    (to Adjusted Total Assets)       30,874     11.59%   >=13,314     5.0%

As of December 31, 2002:
  Total Risk-Based Capital
    (to Risk-Weighted Assets)        31,594     16.51%   >=19,136    10.0%

  Tier 1 Capital
    (to Risk-Weighted Assets)        29,437     15.38%   >=11,482     6.0%

  Tier 1 Capital
    (to Adjusted Total Assets)       29,437     11.08%   >=13,283     5.0%

</TABLE>


                                        9

<PAGE>
NOTE 7     EMPLOYEE AND DIRECTOR BENEFIT PLANS
------    ------------------------------------

     EMPLOYEE STOCK OWNERSHIP PLAN

     The Company has an employee stock ownership plan (ESOP) for those employees
     who meet the eligibility requirements of the plan. The ESOP was established
     and funded for 1997. On February 28, 1998, 5,236 shares of the Savings Bank
     with a fair value of $57,600  were  issued for the 1997  contribution.  The
     Savings Bank stock was exchanged for Company stock.

     During  the third  quarter of 1998,  the ESOP  borrowed  $700,000  from the
     Company and used the funds to purchase 63,636 shares of common stock of the
     Company at $11 per share. Note payments were $8,218 per month for ten years
     with a fixed  interest  rate of 7.25%.  The note  balances  outstanding  at
     December 31, 2000 and 1999 were  $571,637  and  $626,615,  respectively.  A
     related  loan was  granted for the  purpose of  leveraging  the ESOP in the
     amount of $700,000 with similar terms and collaterized with stock. The note
     balances  outstanding  at  December  31,  2000 and 1999 were  $571,637  and
     $626,615, respectively.

     On June 30, 2000, the ESOP borrowed an additional $599,994 from the Company
     and used the funds to purchase 44,444  additional shares of common stock of
     the Company at $13.50 per share.  Note  payments  were $7,280 per month for
     ten years with a fixed interest rate of 8.00%. The note balance outstanding
     at December 31, 2000 was $579,985.  In November  2001,  the ESOP loans were
     consolidated  into a seven year term loan from the Company in the amount of
     $1,071,093  with a fixed interest rate of 6.00%.  Note payments are $15,218
     per month for 83 months plus a final principal payment of $24,092. The note
     balance outstanding at March 31, 2003 was $886,587. Also, in November 2001,
     the Company  granted a $300,000 line of credit to the ESOP for the purchase
     of additional shares of stock in the Company as it becomes  available.  The
     interest rate for balances  outstanding  on the line of credit is 6% with a
     five year term.  Interest is paid monthly with  principal  payments made as
     funds are  available.  At March  31,  2003,  there  was a  $85,200  balance
     outstanding on the line of credit.

     Shares owned by the ESOP at March 31, 2003 totaled 168,148. ESOP shares are
     maintained  in  a  suspense   account  until   released  and  allocated  to
     participants'  accounts. The release of shares from the suspense account is
     based on the  principal  paid in the  year in  proportion  to the  total of
     current year and remaining  outstanding debt. Allocation of released shares
     to  participants'  accounts is done as of December 31. Shares allocated and
     remaining in suspense were as follows:

                                                        March 31,   December 31,
                                                           2003          2002
                                                    -------------  -------------
      Number of Shares
        Released and Allocated since Inception             67,480         62,665
        Suspense                                           81,188         86,003

      Fair Value
        Released and Allocated since Inception          1,214,640      1,127,970
        Suspense                                        1,461,384      1,548,054

     The expense  recorded by the  Company is based on cash  contributed  to the
     ESOP during the year in amounts determined by the Board of Directors,  plus
     the excess of fair value of shares  released and allocated  over the ESOP's
     cost of  those  shares.  The  Company's  contributions  to the  ESOP are as
     follows:

                                                        March 31,   December 31,
                                                            2003           2002
                                                    -------------  -------------
      Compensation Expense                              $ 102,000      $ 330,000
      Contributions                                       102,000        330,000

     No dividends  have been declared on the Company's  stock.  If dividends are
     paid, the ESOP administrators will determine whether dividends on allocated
     and  unallocated  shares  will be used  for  debt  service.  Any  allocated
     dividends  used will be replaced with common stock of equal value.  For the
     purpose of computing  earnings per share,  all ESOP shares  committed to be
     released are considered outstanding.

     The released  Company  stock will be allocated to employees  based on their
     salaries.  Generally,  all employees who work over 1,000 hours are eligible
     for the plan  after one year of  service.  Employees  will be vested  after
     seven years of service.  This plan includes a 401(k)  feature that began in
     1998,  which  allows  employees  to defer up to 15% of their  salary and is
     matched  by the  Company  up to 6%. In  addition,  the  Company  may make a
     discretionary contribution to the ESOP.

                                       10


<PAGE>
     STOCK OPTION PLANS
<TABLE>
<CAPTION>
                                                                                            Weighted
                                                                                            Average
                                                                      Awarded               Exercise
                                                                        And                  Price
                                                                    Unexercised   Vested      Per
                                                                      Options     Options    Share
                                                 --------------------------------------------------
<S>                                              <C>                   <C>       <C>         <C>
     Options Granted - Outside Directors         January 1, 2003        83,014    66,918     $12.00
                                                 During 2003                 -         -          -
     Options Granted - Management                January 1, 2003       217,385   146,344      12.50
                                                 During 2003             5,721        --      18.00
                                                                       -------   -------
     Options Outstanding - March 31, 2003                              306,120   213,262     $12.47
                                                                       =======   =======
</TABLE>

NOTE 8     DEPOSITS
-------   ----------

     Deposit balances are summarized as follows:

<TABLE>
<CAPTION>
                                            March 31, 2003              December 31, 2002
                                    -----------------------------  -----------------------------
                                       Rate      Amount   Percent     Rate      Amount   Percent
                                    ------- -----------  --------  ------- -----------  --------
<S>                                  <C>   <C>             <C>      <C>   <C>            <C>
     Passbook                        2.04% $ 69,137,398     33.90%  2.04% $ 63,942,676    32.16%
     Interest-Free Checking            --    12,986,374      6.37     --    11,354,070     5.71
     NOW                             1.50    13,835,784      6.79   1.50    13,425,042     6.75
     Money Market Deposit            1.70    32,017,839     15.70   1.71    35,372,704    17.79
                                            -----------  --------          ----------- --------
                                           $127,977,395     62.76         $124,094,492    62.41
                                            -----------  --------          ----------- --------
     Fixed Term Certificate Accounts
      Balances $100,000 or greater   3.18    19,670,223      9.64   3.31    19,388,917     9.75
      Balances less than $100,000    3.02    56,280,448     27.60   3.08    55,356,478    27.84
                                            -----------  --------          ----------- --------
                                             75,950,671     37.24           74,745,395    37.59
                                            -----------  --------          ----------- --------
                                           $203,928,066    100.00%        $198,839,887   100.00%
                                            ===========  ========          =========== ========
</TABLE>
     The contractual maturity of certificate accounts at March 31, 2003 and
     December 31, 2002, is as follows:

           Period Ending March 31, 2003            Year Ending December 31, 2002
         --------------------------------          -----------------------------
            2003            $41,819,322               2003         $49,359,359
            2004             16,264,894               2004          11,390,081
            2005             11,299,815               2005          11,253,040
            2006              3,701,985               2006             737,993
            2007 and After    2,864,655               2007 and After 2,004,922
                             ----------                             ----------
                            $75,950,671                            $74,745,395
                             ==========                             ==========

NOTE 9     FEDERAL HOME LOAN BANK ADVANCES
-------    -------------------------------

     Advances  from FHLB are  summarized  as follows for the periods ended March
     31, 2003 and December 31, 2002:

         Contractual Maturity                            2003            2002
         --------------------                        -----------     -----------

         Convertible Fixed Rate (Within 10 Years)   $35,000,000      $35,000,000
         Matched-Funding (30-Year Amortizing)         1,231,618        1,238,709

         Weighted Average Rate                            4.85%            4.85%

     The convertible  fixed rate advances have an original  maturity of 10 years
     with an option  held by FHLB to convert to a variable  rate tied to 3-month
     LIBOR  beginning 1 to 3 years from the original issue date. If converted to
     a variable  rate the bank  maintains  the option to pay off the  advance or
     continue at the variable rate over the original contractual maturity of the
     advance.

                                       11
<PAGE>
NOTE 10     INVESTMENT SECURITIES
-------     ---------------------

     The amortized cost and fair value of investment securities held-to-maturity
     and  available-for-sale  at March 31, 2003, by  contractual  maturity,  are
     shown below.  Expected  maturities will differ from contractual  maturities
     because  issuers may have the right to call or prepay  obligations  without
     call or prepayment penalties.

     March 31, 2003:
<TABLE>
<CAPTION>
                                                             Gross       Gross     Estimated
                                             Amortized    Unrealized  Unrealized     Market
                                                Cost         Gains       Losses      Value
                                             ----------     -------    ----------  -----------
<S>                                          <C>         <C>           <C>         <C>
     Available-for-Sale:
          United States Government
            Agency Securities Maturing:
               Within one year              $ 2,534,091  $    1,808           --   $ 2,535,899
               After one year
                 but within five years        3,910,940       6,584    $  41,246     3,876,278
               After ten years
                 but within fifteen years       999,762      21,296           --     1,021,058
               After 20 years                   620,534       1,498           --       622,032

          Collateralized Mortgage Obligations:
               After five years
                 but within ten years           291,699      26,516           --       318,215

              Municipal Securities Maturing:
               Within one year                  130,000       4,091           --       134,091
               After one year
                 but within five years          575,000      50,496           --       625,496
               After five years
                 but within ten years         3,928,050     227,255           --     4,155,305
               After ten years
                 but within fifteen years    10,755,795     592,592           --    11,348,387
               After fifteen years
                 but within twenty years      3,677,978     201,065           --     3,879,043
               After 20 years                 2,168,043      30,973       24,591     2,174,425

         Corporate Securities Maturing:
               After one year
                 but within five years        1,396,402      24,899           --     1,421,301
               After five years
                 but within ten years         4,431,896       4,153       93,132     4,342,917
               After ten years
                 but within fifteen years     2,100,000          --      106,987     1,993,013
               After twenty years             1,729,880      93,004           --     1,822,884

          Equity Securities
                Callable within one year     17,935,761      64,239      546,000    17,454,000
                Callable after one year
                  but within five years       4,426,790     254,000       12,640     4,668,150
                Callable after five years
                  but within ten years        1,000,000      90,000           --     1,090,000

          Other
               After 20 years                   830,084     252,015           --     1,082,099
                                             ----------   ---------    ---------   -----------
                  Total Available-for-Sale  $63,442,705  $1,946,484    $ 824,596   $64,564,593
                                             ==========   =========    =========   ===========
     Held-to-Maturity:
          United States Government
            Agency Securities Maturing:
               Within one year                1,007,024  $      616           --   $ 1,007,640
               After 20 years                 1,700,319      30,428           --     1,730,747

          Collateralized Mortgage Obligations:
               After five years
                 but within ten years           502,021       3,697           --       505,718
               After ten years
                 but within fifteen years       793,241         194    $     624       792,811
               After 20 years                 2,301,851       4,048        3,666     1,302,233

          Corporate Securities Maturing:
               After one year
                 but within five years        1,035,355      48,888           --     1,084,243
               After five years
                 but within ten years           500,476          --       49,808       450,668
               After twenty years             3,164,678     262,552           --     3,427,230
                                             ----------     -------    ---------   -----------
                  Total Held-to-Maturity    $10,004,965  $  350,423    $  54,098   $10,301,290
                                             ==========     =======    =========   ===========
                                       12
<PAGE>
</TABLE>
NOTE 11     EARNINGS PER SHARE
-------     ------------------

     Earnings per share for three months ended March 31, 2003, compared with the
     same period in 2002, are as follows:

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                         March 31,
                                                      2003        2002
                                                   ---------   ---------
<S>                                               <C>         <C>
Net Income                                        $  831,242  $  649,528

Average Basic Shares Outstanding                   1,382,339   1,378,208

Basic Earnings Per Share                                0.60        0.47
                                                   =========   =========

Net Income                                        $  831,242  $  649,528

Average Basic Shares Outstanding                   1,382,339   1,378,208
Dilutive Effect Due to Stock Options                  94,125      91,358
                                                   ---------   ---------
Average Shares Outstanding, as Adjusted            1,476,464   1,469,566

Diluted Earnings Per Share                        $     0.56  $     0.44
                                                   =========   =========
</TABLE>





                                       13
<PAGE>

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

     The   following   discussion   and   analysis  is  intended  to  assist  in
     understanding  the  financial  condition  and the results of  operations of
     State of Franklin  Bancshares,  Inc. (the  "Company") and State of Franklin
     Leasing  Corporation (the "Leasing Corp") represents  virtually all of the
     assets of the  Company.  The Company  places an  emphasis on an  integrated
     approach  to  its  balance  sheet  management.  Significant  balance  sheet
     components of investment securities, loans and sources of funds are managed
     in an  integrated  manner  with  the  management  of  interest  rate  risk,
     liquidity, and capital. These components are examined below.


     BALANCE SHEET REVIEW
     --------------------

     At March 31, 2003, assets of the Company totaled $274.4 million  reflecting
     an increase of $6.3 million or 2% since  December  31, 2002.  The growth in
     assets has been funded primarily by a $5.1 million increase in deposits.


     LOANS
     -----

     Loans  outstanding  totaled  $160.7 million at March 31, 2003 compared with
     $160.4 million at December 31, 2002.  Consumer and real estate construction
     lending  increased  slightly   offsetting  small  declines  in  residential
     mortgage and  commercial  loans.  The loan  portfolio mix at March 31, 2003
     consists of 33%  residential  mortgages,  40%  commercial,  18% real estate
     construction, and 9% consumer loans.


     INVESTMENT SECURITIES
     ---------------------

     Investment  securities  totaled  $74.6  million  at  March  31,  2003.  The
     investment  portfolio  at quarter end  consisted  of $13.7  million in debt
     securities  issued  by the U. S.  Government  or  Federal  Agencies,  $22.3
     million in securities  issued by state,  county, or  municipalities,  $14.3
     million in corporate securities, $23.2 million in preferred stock issued by
     Federal Agencies, and $1.1 million in other equity securities.

     At March 31, 2003,  securities  categorized as  available-for-sale  totaled
     $64.6 million  while the  held-to-maturity  securities  totaled $10 million
     compared  to  $62  million  in  available-for-sale  and  $15.7  million  in
     held-to-maturity   at  December   31,  2002.   At  March  31,   2003,   the
     available-for-sale  portfolio had net unrealized  gains of $1,121,888 while
     our held-to-maturity securities had $296,325 in net unrealized gains.

     NON-PERFORMING ASSETS
     ---------------------

     At March 31, 2003 the Company had  nonaccrual  loans  totaling $1.4 million
     compared  with $1.1 million at December 31, 2002.  The reserve for loan and
     lease losses was $1,740,957 at March 31, 2003, or 1.11% of loans and leases
     outstanding,  net of unearned  income and loans held for sale,  compared to
     $1,563,320 or 0.99% at December 31, 2002. Management believes the allowance
     for loan losses is adequate to provide for potential loan losses.

                                       14
<PAGE>


     DEPOSITS
     --------

     Total deposits at March 31, 2003 of $203.9  million,  reflected an increase
     of $5.1 million or a 3% increase from $198.8  million at December 31, 2002.
     Non-interest bearing demand deposits totaled $13 million at March 31, 2003,
     an increase of $1.6  million  from  December  31,  2002.  Interest  bearing
     deposits increased $3.5 million to $190.9 million at March 31, 2003.


     CAPITAL
     -------

     Tier 1 capital for the Savings Bank at March 31, 2003 was $21.5 million. At
     March 31,  2003,  all  capital  ratios  were in  excess  of the  regulatory
     minimums,  with the Savings Bank's Tier 1, total  risk-based,  and leverage
     ratios of 11.46%, 12.34% and 8.12%, respectively.

     Tier 1 capital for the Company at March 301 2003,  was $30.9  million  with
     Tier 1,  total  risk-based,  and  leverage  ratios of 16.41%,  17.49%,  and
     11.59%, respectively.


     LIQUIDITY
     ---------

     The purpose of liquidity  management  is to ensure that there is sufficient
     cash flow to satisfy  demands for credit,  deposit  withdrawals,  and other
     corporate needs.  Traditional sources of liquidity include asset maturities
     and growth in core deposits. Other sources of funds such as securities sold
     under  agreements to  repurchase,  negotiable  certificates  of deposit and
     other  liabilities  are  sources  of  liquidity  that the  Company  has not
     significantly used. The Company had unused sources of liquidity in the form
     of unused  federal  funds lines of credit and an unused line of credit with
     the Federal Home Loan Bank of Cincinnati  totaling $62 million at March 31,
     2003.


     EARNINGS REVIEW
     ----------------

     The Company had net income of $831,242  for the three  months  ending March
     31, 2003,  compared with $649,528 for the same period last year,  resulting
     in an increase of 28%.  For the three  months  ended  March 31,  2003,  net
     income per diluted share was $0.56  compared to earnings per share of $0.44
     for the three  months ended March 31,  2002.  Return on average  assets was
     1.27% and the  return on average  equity  was  14.77% for the three  months
     ended March 31, 2003, compared with 1.04% and 14.07%, respectively, for the
     same period in 2002.

     Noninterest  income  increased  $156,137,  or 63%,  during the three months
     ended  March 31,  2003,  compared  the same period last year as a result of
     increases in other fees and service charges,  gains on loans sold, realized
     gains  on  securities,   real  estate  sales   commission,   and  insurance
     commissions.  Partially  offsetting  the  increases was a decline in rental
     income.  Areas  contributing  significantly  to the increase in noninterest
     income  included  the  increase  in real  estate  sales  commission  income
     generated  as a result of the  creation  of State of  Franklin  Real Estate
     during the first  quarter of 2002 and the  increase in gains on loans sold.
     Gains on loans sold increased over the same period last year as a result of
     both  refinancing of existing  homes and increased  activity in the housing
     market.

                                       15

<PAGE>

     Noninterest  expense was  $1,204,429  for the three months ending March 31,
     2003, a decrease  $139,754,  or 10% under the 2002 period,  resulting  from
     declines in furniture and equipment  expense,  data  processing,  and other
     operating  expenses.  The  decline was  partially  offset by  increases  in
     compensation and related benefits, occupancy expense, and advertising.

     NET INTEREST INCOME
     -------------------

     Interest income and interest  expense both decreased from 2002 to 2003 as a
     result  of  declining  interest  rates;  however,  net  interest  income of
     $2,103,385  for the three months ended March 31, 2003  reflects an increase
     of  $60,337 or 3% over the same  period  last  year.  For the three  months
     ending March 31, 2003, average earning assets increased $12.9 million or 5%
     while average interest bearing  liabilities  increased $10.8 million,  also
     5%, compared with the same period in 2002. The taxable  equivalent yield on
     earning assets declined 77 basis points to 6.21% for the first three months
     of 2003  compared  with the same  period in 2002 while the cost on interest
     bearing liabilities  declined 67 basis points to 2.86%.  Consequently,  the
     taxable  equivalent  net interest  margin based on average  earning  assets
     decreased to 3.48% for the three months ending March 31, 2003 compared with
     3.63% for the same period in 2002.

     PROVISION FOR LOAN LOSSES
     -------------------------

     During the three months ended March 31, 2003,  the  provision  for possible
     loan losses was $177,637  compared  with  $147,500 for the same period last
     year.  There were no loan or lease  charge-offs  for the three months ended
     March 31, 2003,  compared with $278,000 during the same period in 2002. The
     allowance for possible loan losses represented 1.11% of total loans, net of
     mortgage loans held-for-sale, at March 31, 2003, compared to 0.93% at March
     31, 2002. Management considers the allowance for loan losses to be adequate
     to cover losses inherent in the loan portfolio.

     PROVISION FOR INCOME TAXES
     --------------------------

     For the three months ended March 31, 2003,  the  provision  for federal and
     state income taxes was  $293,648,  an increase of $144,377  from 2002.  The
     increase is due to a higher level of taxable income over the same period in
     2002.

     NONINTEREST INCOME
     ------------------

     The Company's noninterest income was $403,571 during the three months ended
     March 31,  2003,  an increase of $156,137 or 63% from the  comparable  2002
     period.  During  2003,  other fees and service  charges,  net gain on loans
     sold,  realized  gain on  securities,  real estate sales  commissions,  and
     insurance commission income increased $10,942,  $82,528, $231, $69,389, and
     $917,  respectively.  Partially  offsetting  the  increases in  noninterest
     income was a $7,870 decline in rental income.

     NONINTEREST EXPENSE
     --------------------

     Noninterest  expense  totaled  $1,204,429 for the three month period ending
     March 31,  2003,  a decrease of $139,754 or 10%.  The  decrease was the net
     result of a $55,447 decrease in furniture and equipment  expense, a $17,172
     decrease  in data  processing  expense,  and a $138,535  decrease  in other
     operating  expenses  combined with increases in compensation  and benefits,
     occupancy expense, and advertising expense of $63,648,  $4,962, and $2,790,
     respectively.

                                       16
<PAGE>


ITEM 3.  CONTROLS AND PROCEDURES
-------  -----------------------

     (a) Evaluation of Disclosure Controls and Procedures.
     The Company's  President and its Chief Executive Officer have evaluated the
     effectiveness  of the  design and  operation  of the  Company's  disclosure
     controls and procedures (as defined in Exchange Act Rule 13a-14(c)) as of a
     date within 90 days of the filing date of this quarterly  report.  Based on
     that  evaluation,  the  President  and the  Chief  Executive  Officer  have
     concluded  that  the  Company's  disclosure  controls  and  procedures  are
     effective to ensure that material  information  relating to the Company and
     the Company's  consolidated  subsidiaries is made known to such officers by
     others within these entities, particularly during the period this quarterly
     report was prepared,  in order to allow timely decisions regarding required
     disclosure.

     (b) Changes in Internal Controls.
     There  have not been any  significant  changes  in the  Company's  internal
     controls or in other factors that could significantly affect these controls
     subsequent to the date of their evaluation.

                                       17


<PAGE>
PART II  -  OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS

     None


ITEM 2.    CHANGES IN SECURITIES

     None


ITEM 3.    DEFAULT UPON SENIOR SECURITIES

     None


ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      None


ITEM 5.    OTHER INFORMATION

     None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

         99.1* Certification  Pursuant  to 18 U.S.C.  Section  1350,  as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed
               by Randal R. Greene,  President of State of Franklin  Bancshares,
               Inc. on May 13, 2003.

         99.2* Certification  Pursuant  to 18 U.S.C.  Section  1350,  as Adopted
               Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed
               by Charles E.  Allen,  Jr.,  the  Chairman of the Board and Chief
               Executive Officer (Principal Executive,  Financial and Accounting
               Officer) of State of Franklin Bancshares, Inc. on May 13, 2003.

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

 *   A signed  original of this  written  statement  required by Section 906 has
     been  provided  to the  Company  and will be  retained  by the  Company and
     furnished  to the  Securities  and  Exchange  Commission  or its staff upon
     request.

          (b)  The  Company  did not file any  reports  on Form 8-K  during  the
               quarter ended March 31, 2003.





                                       18





<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





                                     STATE OF FRANKLIN BANCSHARES, INC.
                                     ----------------------------------
                                                 (Registrant)





      May 13, 2003                   /s/  Randal R. Greene
---------------------------          ----------------------------------
         (Date)                           Randal R. Greene, President





      May 13, 2003                   /s/  Charles E. Allen, Jr.
---------------------------          ----------------------------------
         (Date)                           Charles E. Allen, Jr.,
                                          Chairman of the Board
                                          and Chief Executive Officer
                                          (Principal Executive, Financial
                                          and Accounting Officer)






































                                       19
<PAGE>


                          Certification of President
                         Pursuant to Section 302 of the
                           Sarbanes-Oxley Act of 2002

I, Randal R. Greene, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-QSB of State of
          Franklin Bancshares, Inc. ("State of Franklin");

     2.   Based on my  knowledge,  this  quarterly  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; and

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

     4.   The registrant's  other  certifying  officer 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 we 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 officer 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 officer 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 13, 2003                               /s/  Randal R. Greene
                                                  ------------------------------
                                                  Randal R. Greene
                                                  President


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                    Certification of Chief Executive Officer
                         Pursuant to Section 302 of the
                           Sarbanes-Oxley Act of 2002

I, Charles E. Allen, Jr., certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-QSB of State of
          Franklin Bancshares, Inc. ("State of Franklin");

     2.   Based on my  knowledge,  this  quarterly  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; and

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

     4.   The registrant's  other  certifying  officer 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 we 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 officer 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 officer 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 13, 2003                          /s/ Charles E. Allen, Jr.
                                             -----------------------------------
                                             Charles E. Allen, Jr.
                                             Chief Executive Officer (principal
                                             executive, accounting and financial
                                             officer)




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