FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


           (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                  JUNE 30, 2003
                               -----------------------------------------------



Commission file number                          0-22629
                       -------------------------------------------------------


                        UNIFIED FINANCIAL SERVICES, INC.
------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               DELAWARE                                 35-1797759
------------------------------------      ------------------------------------
   (State or other jurisdiction           (I.R.S. Employer Identification No.)
        of incorporation or
            organization)

                              2424 HARRODSBURG ROAD
                            LEXINGTON, KENTUCKY 40503
------------------------------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (859) 296-2016
------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  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.                   |X| Yes      |_| No


     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).                 |_| Yes      |X| No


                                                     Number of shares
             Title of class                 outstanding as of August 4, 2003
--------------------------------------    ------------------------------------
     Common stock, $0.01 par value                      2,829,117



<PAGE>


                        UNIFIED FINANCIAL SERVICES, INC.
                                    FORM 10-Q

                                      INDEX
                                                                            Page
                                                                            ----

PART I.   FINANCIAL INFORMATION

     Item 1. Financial Statements

             Consolidated Statements of Financial Condition - June 30, 2003
             (Unaudited) and December 31, 2002.................................1

             Consolidated Statements of Operations (Unaudited) - Six and Three
             Months Ended June 30, 2003 and 2002...............................3

             Consolidated Statements of Comprehensive Income (Unaudited) - Six
             and Three Months Ended June 30, 2003 and 2002.....................4

             Consolidated Statements of Cash Flow (Unaudited) - Six Months
             Ended June 30, 2003 and 2002......................................5

             Notes to Consolidated Financial Statements........................6

     Item 2. Management's  Discussion  and Analysis of Financial  Condition and
             Results of Operations............................................16

             Cautionary Statement Regarding Forward-Looking Statements........16

             General..........................................................16

             Comparison of Results for the Six Months Ended June 30, 2003
             and 2002.........................................................17

             Comparison of Results for the Three Months Ended June 30, 2003
             and 2002.........................................................19

             Liquidity and Capital Resources..................................23

     Item 3. Quantitative and Qualitative Disclosure About Market Risk........24

     Item 4. Controls and Procedures..........................................28

PART II.  OTHER INFORMATION

     Item 6. Exhibits and Reports on Form 8-K.................................29

SIGNATURES....................................................................30

CERTIFICATION.................................................................31

EXHIBIT INDEX.................................................................35



                                      -i-

<PAGE>



PART I.           FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<S>                 <C>              <C>               <C>               <C>            <C>               <C>
                                                       ASSETS
                                                       ------

                                                                              JUNE 30,              DECEMBER 31,
                                                                                2003                    2002
                                                                          --------------          ----------------
Current Assets
     Cash and cash equivalents (see note 12)...........................   $    5,598,217          $   4,564,949
     Due from banks....................................................        1,734,835              1,656,549
     Federal funds sold................................................        5,977,000              1,479,000
     Bond investments (see note 12)....................................       10,239,945             15,685,987
     Investment in securities and non-affiliated mutual funds..........          727,250                709,687
     Note receivable...................................................               --                800,000
     Loans (net of allowance for loan losses of $622,864
       for 2003 and $550,216 for 2002).................................       55,790,324             57,579,002
     Accounts receivable (net of allowance for doubtful accounts
       of $72,781 for 2003 and $68,715 for 2002).......................        2,388,984              2,607,547
     Receivables from premium financings...............................        3,499,011              2,960,344
     Prepaid and deposits..............................................          366,057                830,512
     Deferred income tax benefit.......................................          338,350                     --
                                                                          --------------         --------------

         Total current assets..........................................       86,659,973             88,873,577
                                                                          --------------         --------------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated depreciation
       of $2,564,723 for 2003 and $2,308,646 for 2002).................        1,809,822              2,028,716
                                                                          --------------         --------------

         Total fixed assets............................................        1,809,822              2,028,716
                                                                          --------------         --------------

Non-Current Assets
     Investment in affiliate (see note 10).............................            1,010                  1,010
     Goodwill (net of accumulated amortization of
       $347,734 for 2003 and 2002) ....................................        1,006,061              1,006,061
     Other non-current assets..........................................          112,060                120,534
                                                                          --------------         --------------

         Total non-current assets......................................        1,119,131              1,127,605
                                                                          --------------         --------------

              TOTAL ASSETS.............................................   $   89,588,926          $  92,029,898
                                                                          ==============          =============

(Continued on next page)

See accompanying notes.
</TABLE>

                                      -1-
<PAGE>



UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


<TABLE>
<S>                <C>               <C>               <C>               <C>              <C>              <C>
                                        LIABILITIES AND STOCKHOLDERS' EQUITY
                                        ------------------------------------

                                                                                JUNE 30,            DECEMBER 31,
                                                                                  2003                  2002
                                                                            ----------------      ----------------

Current Liabilities:
     Borrowed funds.....................................................     $   3,872,233         $   4,742,783
     Deposits (see note 12).............................................        67,309,323            67,277,222
     Accounts payable and accrued expenses..............................         1,343,387             1,766,741
     Accrued compensation and benefits..................................           406,526               491,334
     Payable to broker-dealers..........................................            42,727                79,962
     Income taxes payable...............................................            88,924               144,204
     Other liabilities..................................................         1,438,551             1,975,261
                                                                             -------------         -------------

         Total current liabilities......................................        74,501,671            76,477,507
                                                                             -------------         -------------

Long-Term Liabilities
     Other long-term liabilities........................................            70,501                57,570
                                                                             -------------         -------------
         Total long-term liabilities....................................            70,501                57,570
                                                                             -------------         -------------

              Total liabilities.........................................        74,572,172            76,535,077
                                                                             -------------         -------------

Commitments and Contingencies...........................................                --                    --
                                                                             -------------         -------------

Stockholders' Equity
     Common stock, par value $.01 per share (authorized shares - 20,000,000;
       issued and outstanding shares - 2,829,117 for
       2003 and 2,844,246 for 2002).....................................            32,791                32,943
     Additional paid-in capital.........................................        15,703,815            16,004,747
     Retained earnings..................................................        (1,107,327)           (1,114,514)
     Accumulated other comprehensive income.............................           387,475               571,645
                                                                             -------------         -------------
              Total stockholders' equity................................        15,016,754            15,494,821
                                                                             -------------         -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..............................     $  89,588,926         $  92,029,898
                                                                             =============         =============


See accompanying notes.
</TABLE>

                                      -2-
<PAGE>



UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<S>                 <C>              <C>               <C>                 <C>              <C>             <C>
                                                      SIX MONTHS ENDED                  THREE MONTHS ENDED
                                                          JUNE 30,                           JUNE 30,
                                              -------------------------------     ------------------------------
                                                   2003              2002             2003              2002
                                              --------------    -------------     -------------    -------------
REVENUE:
   Gross revenue (see note 9)...............   $   7,036,025    $   7,755,145     $   3,399,274    $    3,882,241
                                               -------------    -------------     -------------    --------------
     Total gross revenue....................       7,036,025        7,755,145         3,399,274         3,882,241
                                               -------------    -------------     -------------    --------------
COST OF SALES:
   Cost of sales (see note 9)...............       1,073,163        1,805,741           479,961           982,068
                                               -------------    -------------     -------------    --------------
     Total cost of sales....................       1,073,163        1,805,741           479,961           982,068
                                               -------------    -------------     -------------    --------------
GROSS PROFIT (see note 9)...................       5,962,862        5,949,404         2,919,313         2,900,173
                                               -------------    -------------     -------------    --------------

EXPENSES:
   Employee compensation....................       3,392,909        3,887,554         1,720,139         1,892,514
   Employee insurance and benefits..........         588,808          651,200           291,246           295,696
   Data processing..........................         404,007          286,284           214,532           156,917
   Mail and courier.........................          52,301           65,124            27,038            35,200
   Telephone................................          88,027          127,425            43,872            61,552
   Equipment rental and maintenance.........         186,041          211,258           103,522            82,203
   Occupancy................................         416,708          402,194           216,601           209,783
   Provision for depreciation and
     amortization (see note 2)..............         182,648          144,454            88,511            97,290
   Professional fees........................         256,572          282,846           193,725           245,822
   Travel and entertainment.................          83,587           78,431            18,664            77,045
   Interest.................................           1,396           (7,697)              698               522
   Errors expense...........................         (75,466)        (137,245)         (100,823)           31,768
   Provision for bad debt...................         113,385           31,407            68,045             3,198
   Business development costs...............              --           11,250           (12,000)          (25,400)
   Insurance................................         194,984          101,916            81,197            57,240
   Other operating expenses (see note 10)...         275,525          150,840           161,699            92,507
                                               -------------    -------------     -------------    --------------
     Total expenses.........................       6,161,432        6,287,241         3,116,666         3,313,857
                                               -------------    -------------     -------------    --------------

   Loss from continuing operations..........        (198,570)        (337,837)         (197,353)         (413,684)
   Other income (loss)......................           5,991          (24,202)           10,519           (18,107)
   Income tax benefit (expense).............          43,930            3,177            53,930            (1,935)
                                               -------------    -------------     -------------    --------------

Net loss from continuing operations.........        (148,649)        (358,862)         (132,904)         (433,726)
Gain on sale of operations (net of income
   taxes of  $63,930, $0, $63,930 and
   $0, respectively)........................          93,534               --            93,534               --
Income (loss) from discontinued operations
   (net of income taxes of $0, $8,177,
   $0 and $(1,935), respectively)...........          62,301         (512,101)           36,905          (430,189)
                                               -------------    -------------     -------------    --------------
Net income (loss)...........................   $       7,186    $    (870,963)    $      (2,465)   $     (863,915)
                                               =============    =============     =============    ==============

Per share income (loss)
   Basic common shares outstanding..........       2,829,117        2,858,972         2,829,117         2,858,972
   Net income (loss) - basic................   $          --    $       (0.30)    $          --    $       (0.30)

   Fully diluted common shares outstanding
      (see note 11).........................       2,829,117        2,858,972         2,829,117         2,858,972
   Net income (loss) - fully diluted........   $          --    $       (0.30)    $          --    $       (0.30)

   See accompanying notes.
</TABLE>

                                      -3-
<PAGE>



UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


<TABLE>
<S>                 <C>              <C>              <C>               <C>                 <C>                 <C>

                                                      SIX MONTHS ENDED                  THREE MONTHS ENDED
                                                          JUNE 30,                           JUNE 30,
                                              -------------------------------     ------------------------------
                                                   2003              2002             2003              2002
                                              --------------    -------------     -------------    -------------

Net income (loss)...........................   $       7,186    $    (870,963)    $      (2,465)   $     (863,915)
Other comprehensive income (loss), net of tax
   Unrealized loss on securities, net of
     reclassification adjustment............        (184,170)         151,134          (111,832)          210,252
                                               -------------    -------------     -------------    --------------

Comprehensive loss..........................   $    (176,984)   $    (719,829)    $    (114,297)   $     (653,663)
                                               =============    =============     =============    ==============

See accompanying notes.
</TABLE>




















                                      -4-
<PAGE>



UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

<TABLE>
<S>               <C>               <C>            <C>              <C>             <C>                <C>
                                                                                 SIX MONTHS ENDED
                                                                                     JUNE 30,
                                                                        -----------------------------------
                                                                            2003                 2002
                                                                        --------------       --------------
CASH FLOW FROM OPERATING ACTIVITIES
    Net income (loss)..............................................     $       7,186        $    (870,963)
    Adjustments to reconcile net income (loss) to cash
    provided by (used in) operating activities:
       Income tax payable, net of deferred tax.....................          (298,755)               4,671
       Provision for depreciation and amortization (see note 2)....           256,829              221,523
       Provision for loan losses...................................            72,000              544,403
       Provision for bad debt......................................           112,385               33,352
       Bond accretion..............................................           (14,044)             (13,315)
       Unrealized (gain)/loss on securities........................            (6,102)              10,603
       Loss on disposal of fixed assets............................               111               13,599
       (Increase) decrease in operating assets:
          Receivables..............................................           106,180             (340,949)
          Receivables from premium financings......................          (538,667)            (647,618)
          Loan receivables, net of repayments......................         1,716,678          (13,834,058)
          Prepaid and sundry assets................................           485,859              172,523
          Notes receivable.........................................           800,000                   --
       Increase (decrease) in operating liabilities:
          Deposits.................................................            32,101           10,074,008
          Accounts payable and accrued expenses....................          (460,589)          (1,192,327)
          Accrued compensation and benefits........................           (84,808)            (216,760)
          Other liabilities........................................          (536,708)            (305,440)
                                                                        -------------        -------------
              Net cash provide by (used in) operating activities...         1,649,656           (6,346,748)
                                                                        -------------        -------------

CASH FLOW FROM INVESTING ACTIVITIES
    Purchase of equipment..........................................           (38,047)            (132,233)
    Due from banks.................................................           (78,287)             (62,442)
    Bond investments...............................................         5,181,041           (4,438,789)
    Federal funds sold/(purchased).................................        (4,498,000)           3,592,000
    Securities sold/purchased under agreement to repurchase........                --              163,500
    Borrowed funds.................................................          (870,550)           4,888,763
    Proceeds from sale of securities...............................                --              234,556
    Investment in securities and mutual funds......................           (11,461)            (303,910)
                                                                        -------------        -------------
              Net cash provided by (used in) investing activities..          (315,304)           3,941,445
                                                                        -------------        -------------

CASH FLOW FROM FINANCING ACTIVITIES
    Retirement of common stock.....................................          (301,084)              (7,920)
    Borrowings on line of credit...................................                --              795,220
    Repayment of borrowings........................................                --             (443,154)
    Repayment of capital lease obligations.........................                --                 (285)
                                                                        -------------        -------------
              Net cash provided by (used in) financing activities..          (301,084)             343,861
                                                                        -------------        -------------
Net increase (decrease) in cash and cash equivalents...............         1,033,268           (2,061,442)
Cash and cash equivalents - beginning of year......................         4,564,949            8,844,482
                                                                        -------------        -------------
Cash and cash equivalents - end of period..........................     $   5,598,217        $   6,783,040
                                                                        =============        =============

See accompanying notes.
</TABLE>

                                      -5-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 1 -      NATURE OF OPERATIONS

              Unified Financial Services, Inc., a Delaware holding company for
              various financial services companies, was organized on December 7,
              1989. We distribute our services via the traditional industry
              channels of our subsidiaries and via the Internet. Through our
              subsidiaries, all of which are wholly owned, we provide services
              primarily in three lines of business: trust and retirement
              services; mutual fund administration services; and investment
              advisory services.

Note 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              Basis of Presentation
              ---------------------
              The consolidated financial statements include the accounts of
              Unified Financial Services, Inc. and our subsidiaries after
              elimination of all material intercompany accounts and
              transactions.

              The accompanying unaudited consolidated financial statements have
              been prepared in accordance with generally accepted accounting
              principles for interim financial information and with the
              instructions to Form 10-Q and Article 10 of Regulation S-X.
              Accordingly, they do not include all of the information and
              footnotes required by generally accepted accounting principles for
              complete financial statements. In the opinion of management, all
              adjustments (consisting of normal recurring accruals) considered
              necessary for a fair presentation have been included. Operating
              results for the six- and three-month periods ended June 30, 2003
              are not necessarily indicative of the results that may be expected
              for the year ending December 31, 2003.

              The balance sheet at December 31, 2002 has been derived from the
              audited financial statements at that date but does not include all
              of the information and footnotes required by generally accepted
              accounting principles for complete financial statements.

              For further information refer to the consolidated financial
              statements and footnotes thereto included in our Annual Report on
              Form 10-K for the year ended December 31, 2002.

              Financial Statement Presentation
              --------------------------------
              Certain amounts in the 2002 financial statements have been
              reclassified to conform to the 2003 presentation. For segment
              report purposes, Unified Financial Securities (our brokerage
              subsidiary) has been included in mutual fund administration
              services based upon management's decision to exit the clearing,
              discount and full services brokerage operations and concentrate on
              mutual fund distribution. Commonwealth Premium Finance Corporation
              has been included in the corporate segment due to Unified Banking
              Company being reflected as a discontinued operation based upon the
              Company's agreement to sell Unified Banking Company.

                                      -6-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

              The provision for depreciation and amortization expense on our
              Consolidated Statements of Cash Flow includes depreciation and
              amortization from continuing and discontinued operations for the
              six months ended June 30, 2003 and 2002. On our Consolidated
              Statements of Operations for the six and three months ended June
              30, 2003 and 2002, the provision for amortization and depreciation
              is for our continuing operations, and does not include a provision
              for discontinued operations.

              Use of Estimates
              ----------------
              During 2002, we experienced operational issues with respect to our
              mutual fund administrative services affiliate, which issues
              primarily are related to problems associated with our
              reconciliation of various accounts. In connection therewith, we
              established an $854,000 reserve, $454,000 of which is related to
              possible reconciliation losses and $400,000 of which is related to
              estimated costs to ascertain the extent and nature of such losses
              and to design control procedures and system enhancements to ensure
              that such reconciliation issues do not recur. During the six and
              three months ended June 30, 2003, we expended $251,179 and
              $206,618, respectively, of the $400,000 reserve.

Note 3 -      DISCONTINUED OPERATIONS

              Sale of Unified Banking Company
              -------------------------------
              On June 9, 2003, we entered into a Stock Purchase Agreement with
              Blue River Bancshares, Inc., an Indiana corporation. Pursuant to
              such agreement, Blue River Bancshares would acquire all of the
              outstanding shares of capital stock of our wholly owned banking
              subsidiary, Unified Banking Company, for $8.2 million in cash. The
              consummation of the transaction is contingent upon various
              contingencies and conditions, including approval of the Stock
              Purchase Agreement by our stockholders, regulatory approvals and
              completion by Blue River Bancshares of certain financing
              arrangements for the transaction. The transaction is expected to
              close in the fourth quarter of 2003.

              Unified Banking Company commenced operations on November 1, 1999.
              Included in our consolidated financial statements at June 30, 2003
              and 2002 were the bank's total assets of $79,118,270 and
              $81,861,987 respectively, and total liabilities of $73,465,742 and
              $76,410,959, respectively. As of such dates, certain components of
              Unified Banking Company's unconsolidated assets and liabilities
              were as follows:



                                      -7-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 3 -      DISCONTINUED OPERATIONS (continued)

<TABLE>
<S>                                                                                           <C>
                                                                                         JUNE 30,
                                                                                ---------------------------
                                                                                   2003            2002
                                                                                ----------      -----------

              Due from banks..............................................      $1,734,835      $ 1,419,925
              Federal funds sold..........................................       5,977,000          441,000
              Investments in securities:
                US agency securities (includes $1,854,461 for 2003 and
                   $4,943,491 for 2002, see note 12)......................      12,094,406       20,999,118
                FHLB stock................................................         518,900          497,300
              Loans:
                Real estate loans.........................................      34,927,666       36,883,451
                Commercial loans (includes a $1,900,000 loan to our premium
                   finance company, see note 12)..........................      18,680,106       12,990,171
                Installment loans.........................................       4,697,303        7,962,549
                Other loans...............................................           8,113          104,061
                Allowance for loan losses.................................         622,864          490,000
              Bank deposits:
                Demand deposits (includes $1,854,461 for 2003 and
                   $4,943,491 for 2002, see note 12)......................       7,350,303       11,104,796
                Official checks...........................................         368,365           93,126
                NOW accounts..............................................       3,826,619        3,697,056
                Money market accounts.....................................      10,192,859       11,030,744
                Savings accounts..........................................          92,101           71,438
                Time deposits.............................................      41,408,329       39,753,253
                Other interest-bearing deposits...........................       5,925,208        5,172,627
              Federal and borrowed funds..................................       3,872,233        5,052,263
</TABLE>

              Sale of Insurance Operations
              ----------------------------
              On December 17, 2001, we sold substantially all of the assets and
              assigned substantially all of the liabilities of our insurance
              subsidiaries, Equity Insurance Managers, Inc., Equity Insurance
              Administrators, Inc. and 21st Century Claims Service, Inc., to
              Arthur J. Gallagher & Co. In connection with the sale, $800,000 in
              cash was deposited into an escrow account and was subject to
              possible indemnification claims of Arthur J. Gallagher & Co.
              pursuant to the sale agreement. As of December 31, 2001, we
              established a liability of $800,000 related to the escrow. As of
              June 30, 2003, we believed there was a current potential for
              approximately $250,000 in claims against the escrow, which amount
              is $170,000 less than our December 31, 2002 estimate. Based
              thereupon, we recorded $175,000 of the escrow as gain on sale of
              operations during the quarter ended June 30, 2002 (such amount is
              in addition to the $280,000 we recorded as income related to the
              sale during the year ended December 31, 2002). As of June 30,
              2003, we had recorded to income $455,000 of the $800,000, with
              $345,000 remaining for claims against the escrow ($250,000
              reserved for submitted claims and $95,000 reserved for possible
              future claims).

                                      -8-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------
Note 4 -      OPTIONS

              Under the terms of our stock incentive plan, employees, directors,
              advisers and consultants of our company and its subsidiaries are
              eligible to receive the following: (a) incentive stock options;
              (b) nonqualified stock options; (c) stock appreciation rights; (d)
              restricted stock; (e) restricted stock units; and (f) performance
              awards.

              Options granted under our plan may be nonqualified or incentive
              stock options and typically are granted at a price equal to the
              quoted market price (or valuation made by independent valuation
              experts) on our common stock on the trading day immediately prior
              to the date of grant. Generally, options granted will have a term
              of ten years from the date of the grant, and will vest in
              increments of 33% per year over a three-year period or be 100%
              vested on the date of grant.

              As of June 30, 2003 and 2002, options to acquire 104,986 and
              126,621 shares, respectively, of our common stock were outstanding
              and issued to certain of our employees, directors and advisers
              pursuant to our stock incentive plan. In addition, as of such
              dates, our board had granted options to acquire 50,000 and 54,545
              shares, respectively, of our common stock outside of such plan
              (see note 10).

              A summary of our outstanding stock options as of June 30, 2003 and
              2002 is as follows:

<TABLE>
<S>                                                                                     <C>
                                                                                   JUNE 30,
                                                               ------------------------------------------------
                                                                        2003                      2002
                                                               ---------------------     ----------------------
                                                                            WEIGHTED                  WEIGHTED
                                                                             AVERAGE                   AVERAGE
                                                                            EXERCISE                  EXERCISE
                                                               SHARES         PRICE       SHARES        PRICE
                                                               ------         -----       ------        -----

              Options outstanding at beginning of year......  161,986       $38.24       149,396       $41.94
              Granted.......................................       --           --        38,050        16.50
              Option to acquire 60,000 shares at $50.00 per
                share converted to option to acquire 54,545
                shares at $55.00 per share..................       --           --        (5,455)         n/a
              Option to acquire 54,545 shares at $55.00 per
                share converted to option to acquire 50,000
                shares at $60.00 per share..................   (4,545)         n/a            --           --
              Forfeitures...................................   (2,455)       17.02          (825)       37.37
              Options outstanding at end of period..........  154,986        39.69       181,166        37.88
              Options exercisable at end of period..........  154,653        39.69       166,301        37.82
              Options available for future grants...........  145,014          n/a       123,379          n/a
</TABLE>

              As of June 30, 2003, 82,681 of such options were intended to
              qualify as incentive stock options pursuant to Section 422 of the
              Internal Revenue Code of 1986, as amended.

              We apply Accounting Principles Board Opinion No. 25, "Accounting
              for Stock Issued to Employees," in accounting for stock-based
              employee compensation arrangements whereby compensation costs
              related to stock options generally are not recognized in
              determining net income. Had we computed compensation costs for our
              stock options pursuant to Financial Accounting Standard Board
              Statement of Financial Accounting Standards No. 123,

                                      -9-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 4 -      OPTIONS (continued)

              "Accounting for Stock-Based Compensation," the effect would have
              been immaterial for the three and six months ended June 30, 2003
              and 2002 (based upon the Black-Scholes option pricing model).

Note 5 -      RENTAL AND LEASE INFORMATION

              We lease certain office facilities and equipment. Continuing
              operations' rental expense for the six months ended June 30, 2003
              and 2002 was $416,708 and $402,194, respectively. Our discontinued
              operation's rental expense for the six months ended June 30, 2003
              and 2002 was $67,428 and $67,428, respectively.

              At June 30, 2003, we were committed to minimal rental payments
              under certain noncancellable operating leases. As of June 30,
              2003, the minimum future rental commitments for each of the
              succeeding five years subsequent to June 30, 2003 were as follows:

                     2004.....................................   $    654,964
                     2005.....................................        644,977
                     2006.....................................        626,984
                     2007.....................................        613,241
                     2008.....................................        378,895
                     Thereafter...............................        484,950
                                                                   ------------
                          Total...............................   $  3,404,011
                                                                   ============

Note 6 -      COMMITMENTS AND CONTINGENCIES

              We are a party to various lawsuits, claims and other legal actions
              arising in the ordinary course of business. In the opinion of
              management, after consultation with legal counsel, all such
              matters are without merit or are of such kind, or involve such
              amounts, that unfavorable disposition would not have a material
              adverse effect on our consolidated financial position or results
              of operations.

Note 7 -      REGULATORY REQUIREMENTS

              Unified Financial Securities is subject to the Securities and
              Exchange Commission's Uniform Net Capital Rule, which requires the
              maintenance of minimum net capital, as defined, of the greater of
              (i) 6-2/3% of aggregate indebtedness or (ii) $50,000, and a ratio
              of aggregate indebtedness to net capital of not more than 15 to 1.
              At June 30, 2003, the net capital and ratio of aggregate
              indebtedness for Unified Financial Securities were $143,085 and
              0.5 to 1, respectively.

              Unified Financial Securities is a fully disclosed broker-dealer.
              As a result, pursuant to Rule 15c3-3 as promulgated by the
              Securities and Exchange Commission, Unified Financial Securities
              is not required to segregate cash and/or securities for the
              benefit of its customers.

              Under the Office of Thrift Supervision's regulatory capital
              requirements, savings associations must maintain "tangible"
              capital equal to 1.5% of adjusted total assets, "core" capital
              equal to at least 4.0% of adjusted total assets and "total"
              capital (a combination of "core" and "supplementary" capital)
              equal to 8.0% of risk-weighted assets. In addition, the Office of


                                      -10-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 7 -      REGULATORY REQUIREMENTS (continued)

              Thrift Supervision has adopted regulations that impose certain
              restrictions on savings associations that have a total risk-based
              capital ratio that is less than 8.0%, a ratio of Tier 1 capital to
              risk-weighted assets of less than 4.0% or a ratio of Tier 1
              capital to adjusted total assets of less than 4.0%. As of June 30,
              2003, Unified Banking Company had a total risk-based capital ratio
              of 11.1%, a ratio of Tier 1 capital to risk-weighted assets of
              10.1% and a ratio of Tier 1 capital to adjusted total assets of
              8.3%.

              Unified Trust Company, National Association, a limited purpose
              national trust company, is chartered, regulated and examined by
              the Office of the Comptroller of the Currency. Unified Trust
              Company, NA also is a member of the Federal Reserve System. As a
              national trust company, the activities of Unified Trust Company,
              NA must comply with various statutory and regulatory requirements,
              including, among other things, the maintenance of adequate capital
              and the exercise of fiduciary powers. Currently, Unified Trust
              Company, NA is required to maintain a minimum of $2.0 million in
              capital, and may be required to maintain additional minimum
              capital as assets under management at the trust company increase.
              As of June 30, 2003, Unified Trust Company, NA had $2,245,007 in
              capital.

Note 8 -      FAIR VALUE OF FINANCIAL INSTRUMENTS

              The following table presents the carrying amounts and estimated
              fair value of our financial instruments at June 30, 2003 and 2002.
              Financial Accounting Standards Board Statement No. 107,
              "Disclosures About Fair Value of Financial Instruments," defines
              the fair value of a financial instrument as the amount at which
              the instrument could be exchanged in a current transaction between
              willing parties.
<TABLE>
<S>                <C>              <C>            <C>               <C>            <C>            <C>

                                                                                  JUNE 30,
                                                          -------------------------------------------------------
                                                                      2003                         2002
                                                          --------------------------     ------------------------
                                                            CARRYING         FAIR         CARRYING         FAIR
                                                             AMOUNT          VALUE         AMOUNT          VALUE
                                                             ------          -----         ------          -----
              (IN THOUSANDS)
              Financial assets:
                 Cash and cash equivalents............     $ 5,598        $  5,598       $  6,783       $ 6,783
                 Due from banks.......................       1,735           1,735          1,420         1,420
              Federal funds sold......................       5,977           5,977            441           441
                 Bond investments.....................      10,240          10,240         16,056        16,056
                 Securities and mutual funds..........         727             727            600           600
                 Notes receivable.....................          --              --            800           800
                 Loans, net of allowance..............      55,790          55,790         56,995        56,995
                 Receivable from premium financings...       3,499           3,499          2,864         2,864
                 Receivables (trade), net of allowance       2,389           2,389          3,571         3,571
                 Prepaid and deposits.................         366             366            253           253
              Financial liabilities:
                 Current liabilities..................      74,502           74,502        76,472        76,472
</TABLE>


                                      -11-
<PAGE>


                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------


Note 9 -      DISCLOSURES ABOUT REPORTING SEGMENTS

              We have three reportable operating segments: trust and retirement
              services; mutual fund administration services; and investment
              advisory services. In addition, we also report corporate as a
              separate segment, which includes our premium finance company.

              The accounting policies of the segments are the same as those
              described in the summary of significant accounting policies. We
              evaluate performance based on profit or loss from operations
              before income taxes, not including non-recurring gains and losses.

              Our reportable segments are strategic business units that offer
              different products and services. They are managed separately
              because each business requires different technology and marketing
              strategies. Most of the businesses were acquired as a unit and the
              management at the time of the acquisition was retained. Reportable
              segment revenue, gross profit, total assets, depreciation and
              amortization and capital expenditures were as follows as of or for
              the three or six months ended June 30, 2003 and 2002:














                                      -12-
<PAGE>


                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------


Note 9 -      DISCLOSURES ABOUT REPORTING SEGMENTS (continued)

<TABLE>
<S>             <C>               <C>                 <C>                   <C>               <C>            <C>
                                                       AS AND FOR THE                         FOR THE
                                                      SIX MONTHS ENDED                  THREE MONTHS ENDED
                                                          JUNE 30,                           JUNE 30,
                                              -------------------------------     ------------------------------
                                                   2003              2002             2003              2002
                                              --------------    -------------     -------------    -------------

Revenue:
--------
   Trust and retirement.....................   $   2,484,204    $   2,665,403     $   1,229,770    $    1,336,981
   Mutual fund administration...............       3,447,970        3,994,863         1,641,558         2,002,972
   Investment advisory......................         708,205          803,630           337,079           387,700
   Corporate................................         395,646          291,249           190,867           154,588
                                               -------------    -------------     -------------    --------------
        Total...............................   $   7,036,025    $   7,755,145     $   3,399,274    $    3,882,241
                                               =============    =============     =============    ==============

Gross profit:
-------------
   Trust and retirement.....................   $   2,054,022    $   2,171,023     $     1,017,085  $    1,064,446
   Mutual fund administration...............       2,920,763        2,814,314           1,423,481       1,360,754
   Investment advisory......................         592,431          672,818             287,880         320,385
   Corporate................................         395,646          291,249             190,867         154,588
                                               -------------    -------------     ---------------  --------------
        Total...............................   $   5,962,862    $   5,949,404     $     2,919,313  $    2,900,173
                                               =============    =============     ===============  ==============

Total assets:
-------------
   Trust and retirement.....................   $   2,567,274    $   2,926,323
   Mutual fund administration...............       2,460,476        2,490,872
   Investment advisory......................       1,328,400        1,512,745
   Corporate................................       4,114,506        4,409,374
   Unified Banking Company..................      79,118,270       81,861,987
                                               -------------    -------------
        Total...............................   $  89,588,926    $  93,201,301
                                               =============    =============

Depreciation and amortization:
------------------------------
   Trust and retirement.....................   $      65,406    $      59,285
   Mutual fund administration...............          89,710           64,691
   Investment advisory......................           4,833            9,988
   Corporate................................          22,699           10,490
                                               -------------    -------------
        Total...............................   $     182,648    $     144,454
                                               =============    =============

Capital expenditures:
---------------------
   Trust and retirement.....................   $          --    $      28,995
   Mutual fund administration...............          24,810           87,990
   Investment advisory......................              --            1,204
   Corporate................................           3,240            8,244
   Unified Banking Company..................           9,997            5,800
                                               -------------    -------------
        Total...............................   $      38,047    $     132,233
                                               =============    =============
</TABLE>

                                      -13-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 10 -     INVESTMENT IN AFFILIATE

              On May 23, 2000, we subscribed for 10 shares of VSX Holdings, LLC,
              a Delaware limited liability company, in exchange for $10 and
              certain intangible property rights. We currently own approximately
              0.5% of the outstanding shares of VSX Holdings, but have the right
              to purchase up to an additional 1,990 (19.9%) shares at a price of
              $1 per share, upon the occurrence of certain specified events. Our
              investment in VSX Holdings is accounted for on the cost method of
              accounting.

              VSX Holdings is involved in the development of an alternative
              trading system to be known as VSX.com, which, upon and subject to
              organization and regulatory approval, will serve as a virtual,
              real-time private financial market place. In connection with the
              organization of VSX Holdings, a third-party investor made a $3.0
              million loan to VSX Holdings, which loan is evidenced by a
              debenture issued by VSX Holdings to such investor. The debenture
              is secured by 85,000 shares of our common stock pledged by certain
              executive officers of our company. In addition, concurrent with
              the issuance of such debenture, we issued an option to the
              third-party investor to acquire shares of our common stock, which
              option has a five-year term. The investor may elect to foreclose
              on the pledged collateral or exercise the option. Pursuant to such
              option, the holder of the option and the debenture is entitled to
              surrender the debenture to us in payment of the exercise price of
              the option. During the years ending May 23, 2004 and 2005, the
              exercise price per share of our common stock subject to the option
              will be $60 and $65, respectively. Should the investor foreclose
              on the pledged collateral, the executive officers would succeed to
              the option and/or the claim against VSX Holdings. Should the
              option be exercised prior to May 23, 2004 by the holder of the
              note (whether the investor, the executive officers or any other
              holder): (a) we would issue 50,000 shares of stock (46,153 after
              May 23, 2004) to the investor, the executive officers or any other
              holder, as the case may be, and (b) we would succeed to the $3.0
              million claim against VSX Holdings.

              We also have entered into a management arrangement with VSX
              Holdings whereby we provide consulting and development services to
              VSX Holdings. For the six months ended June 30, 2003 and 2002, and
              the three months ended June 30, 2003 and 2002, we received
              payments totaling $55,621 and $219,455, respectively, and $29,771
              and $99,889, respectively, from VSX Holdings for such consulting
              and development services, which amounts are recorded as a
              reduction of "Other operating expenses" on our Consolidated
              Statements of Operations.


                                      -14-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             JUNE 30, 2003 AND 2002
                             ----------------------

Note 11 -     INCOME (LOSS) PER SHARE OF STOCK

              Income (loss) per share of stock is computed using the number of
              common shares outstanding during the applicable period. Diluted
              income (loss) per share of stock is computed using the number of
              common shares outstanding and dilutive potential common shares
              (outstanding stock options).

              Dilutive potential common shares included in the diluted income
              (loss) per share calculation were determined using the treasury
              stock method. Under the treasury stock method, outstanding stock
              options are dilutive when the average "market price" of our common
              stock exceeds the option price during a period. In addition,
              proceeds from the assumed exercise of dilutive options along with
              the related tax benefit are assumed to be used to repurchase
              common shares at the average market price of such stock during the
              period. For the six and three months ended June 30, 2003 and 2002,
              all potential common shares were considered to be anti-dilutive
              and were excluded from the calculation of diluted earnings/loss
              per share.

Note 12 -     RELATED PARTY TRANSACTION

              As of June 30, 2003, December 31, 2002 and June 30, 2002,
              $1,854,461, $1,799,220 and $4,943,491, respectively, were
              eliminated from both bond investments and deposits on our
              Consolidated Statements of Financial Condition, which amounts
              represented cash on deposit at our bank from various subsidiaries
              of our company. We also have eliminated in consolidation
              $1,900,000 outstanding as of June 30, 2003 under a line of credit
              from Unified Banking Company to Commonwealth Premium Finance
              Corporation.



                                      -15-
<PAGE>




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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Quarterly Report on Form 10-Q are
or may constitute forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Such forward-looking
statements are based on current expectations, estimates and projections about
Unified Financial Services' industries, management's beliefs and assumptions
made by management. For example, a downturn in economic conditions generally and
in particular those affecting bond and securities markets could lead to an exit
of investors from mutual funds. Similarly, an increase in Federal and state
regulations of the mutual fund, securities or banking industries or the
imposition of regulatory penalties could have an effect on our operating
results. In addition, by accepting deposits at fixed rates, at different times
and for different terms, and lending funds at fixed rates for fixed periods, a
bank accepts the risk that the cost of funds may rise and interest on loans and
investment securities may be at a fixed rate. Similarly, the cost of funds may
fall, but a bank may have committed by virtue of the term of a deposit to pay
what becomes an above-market rate. Investments may decline in value in a rising
interest rate environment. Loans have the risk that the borrower will not repay
all funds due in a timely manner as well as the risk of total loss. Collateral
may or may not have the value attributed to it. Although we believe our
allowance for loan losses and our allowance for doubtful accounts are adequate,
they may prove inadequate if one or more large borrowers or clients, or numerous
smaller borrowers or clients, or a combination of both, experience financial
difficulty for individual, national or international reasons. Because the
financial services industry is highly regulated, decisions of governmental
authorities can have a major effect on operating results. These uncertainties,
as well as others, are present in the financial services industry and we caution
stockholders that management's view of the future on which we price and
distribute our products and estimate costs of operations and regulations may
prove to be other than as anticipated. In addition, our current expectations
with respect to our three business lines, our ability to enhance stockholder
value and aggressively and profitably grow assets under management and under
service, our ability to provide a high level of service satisfaction and manage
costs, our ability to expand profit margins, our ability to achieve future
growth and the development of VSX Holdings as an alternative trading system may
prove to be other than expected. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements. Such risks
and uncertainties include those listed under "Risk Factors" in our Annual Report
on Form 10-K for the year ended December 31, 2002. Unless required by law, we
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.

GENERAL

         Unified Financial Services, Inc., a Delaware holding company that was
organized on December 7, 1989, provides financial products and services,
principally through three principal businesses:

     o    The provision of complete back-office and shareholder services for the
          assets of third-party mutual fund families,  as well as our affiliated
          series funds;

     o    Management  and  administration  of 401(k)  and  other  ERISA-directed
          assets; and

     o    Management of wealth for individuals  through a suite of family-office
          services.

                                      -16-
<PAGE>

         Our fundamental objective is to enhance stockholder value by
aggressively and profitably growing assets under management and under service.
Our ability to provide a high level of service satisfaction, with an emphasis on
managing costs, combined with a dedication to maintaining a highly trained and
motivated workforce should lead to expanding profit margins.

         Our principal executive offices are located at 2424 Harrodsburg Road,
Lexington, Kentucky 40503, telephone number (859) 296-2016. We and our
subsidiaries also maintain offices at 431 North Pennsylvania Street,
Indianapolis, Indiana, telephone number (317) 917-7001; 2353 Alexandria Drive,
Lexington, Kentucky 40504, telephone number (859) 296-4407; 1400 Civic Place,
Southlake, Texas 76092, telephone number (817) 431-2197; 36 West 44th Street,
The Bar Association Building, Suite 1310, New York, New York 10036, telephone
number (212) 852-8852; and One US Bank Plaza, Suite 2100, St. Louis, Missouri
63101, telephone number (314) 552-6440.

         The following presents management's discussion and analysis of our
consolidated financial condition and results of operations as of the dates and
for the periods indicated. This discussion should be read in conjunction with
the other information set forth in this Quarterly Report on Form 10-Q, including
our consolidated financial statements and the accompanying notes thereto.

COMPARISON OF RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002

         Revenue for the six months ended June 30, 2003 compared to the same
period of 2002 declined $719,120, or 9.3%, from $7,755,145 to $7,036,025. For
such periods, gross profit increased by $13,458, or 0.2%, from $5,949,404 to
$5,962,862.

         For the first six months of 2003 compared to the same period of 2002,
trust and retirement services revenue and gross profit declined by $181,199, or
6.8%, and $117,001, or 5.4%, respectively, primarily due to a decline in the
average level of assets under management. For the six months ended June 30,
2003, our trust and retirement services operation experienced an increase in
assets under management, but such increase occurred in the later part of such
six-month period, which resulted in a decline in average assets during such
period. During the six months ended June 30, 2003, our trust and retirement
services operation added 54 new accounts, representing approximately $69.7
million in assets under management, but also lost 28 accounts representing
approximately $18.2 million in assets under management. As of June 30, 2003, our
trust and retirement services operation had approximately $582.0 million in
assets under management compared to $525.1 million as of June 30, 2002, an
increase of approximately 10.8%. While trust and retirement services assets
under management increased, the financial markets, in general, declined, as
was reflected by a 1.5% decline in the S&P 500 from June 30, 2002 to June 30,
2003.

         For such periods, mutual fund administration services revenue, which
now includes Unified Financial Securities, our broker-dealer subsidiary,
declined $546,893, or 13.7%, and gross profit increased $106,449, or 3.8%, each
primarily due to the inclusion of Unified Financial Securities in the results of
our mutual fund administration services operation. As previously disclosed,
management made the decision to exit the retail and discount brokerage business
and focus the efforts of our brokerage subsidiary on the distribution of mutual
funds. For such periods, transfer agency revenue and gross profit increased
$437,562, or 46.3%, and $477,192, or 61.0%, respectively, due to the addition of
the Huntington Funds in June 2002, which added approximately $3.0 billion in
assets for the entire period of 2003. Fund accounting revenue and gross profit
decreased $43,389, or 5.4%, and $66,606, or 9.5%, respectively. Administration
revenue and gross profit decreased $114,214, or 15.7%, as more fund clients
discontinued operations due to continuing poor market conditions. Trail income
declined by $122,800, due to a decrease in basis points received from
one of our mutual fund providers. Investment management fee income and gross


                                      -17-
<PAGE>

profit declined $173,525 due to Unified Investment Advisers, Inc. ceasing to
serve as the investment advisor to the Liquid Green Money Market Fund. As of
June 30, 2003, we provided mutual fund administrative services to 29 mutual fund
families consisting of approximately 168 portfolios and approximately $11.5
billion in assets under service, compared to 30 mutual fund families consisting
of approximately 192 portfolios and approximately $8.9 billion in mutual fund
assets under service as of June 30, 2002. For the six months ended June 30, 2003
compared to the same period of 2002, Unified Financial Securities' gross revenue
declined $533,014, or 56.8%, and gross profit declined $9,995, or 4.7%. The
decline in revenue primarily was attributable to a decline of $337,548 in
clearing revenue due to our termination of most of our clearing relationships,
with the remainder anticipated to occur during the third quarter of 2003.
Commission revenue from our full service and CPA business, which ceased at June
30, 2003, decreased $44,858. Trail commission revenue declined $108,101, or
40.5%, as a result of lower asset levels attributable to the terminated
relationships discussed above and a reduction in the basis points received from
one of our mutual fund relationships.

         For the six months ended June 30, 2003 compared to the same period of
2002, investment advisory revenue and gross profit declined $95,425, or 11.9%,
and $80,387, or 11.9%, respectively. Such declines primarily were due to the
lower market values of assets under management at such operation. Assets under
management at our investment advisory operation declined $54.4 million, or
18.9%, from $287.8 million at June 30, 2002 to $233.4 million at June 30, 2003.
Of such decline, approximately $37.9 million, or 13.2%, was attributable to the
transfer of assets in the Liquid Green Money Market Fund to the Huntington
Funds.

         For such periods, corporate revenue and gross profit increased
$104,397, or 35.8%, from $291,249 to $395,646, primarily due to a $80,432, or
27.8%, increase in revenues at our premium finance company. Revenues at such
company increased primarily as the result of an increased volume of loans
outstanding and an increased interest spread due to a reduction in the cost of
borrowed funds.

         Total expenses declined $125,809, or 2.0%, for the six months ended
June 30, 2003 compared to the same period of 2002. Employee compensation expense
declined by $494,645, or 12.7%. This decline primarily was attributable to
salary reductions taken by certain officers of our company during March and
April of 2002, which reductions ranged from 20% to 40% of such officers'
annualized salary, and a reduced employee workforce. Employee insurance and
benefits expense declined $62,392, or 9.6%, primarily due to reduced staffing,
partially offset by an increase in insurance premiums. Data processing expense
increased $117,723, or 41.1%, primarily due to a $104,000 increase at our trust
and retirement services operation due to its expanded usage of vendor products.
Telephone costs declined $39,398, or 30.9%, primarily due to the elimination of
our wide area network. Equipment rental and maintenance expense declined by
$25,217, or 11.9%. During the first half of 2002, our mutual fund administration
services operation and our trust and retirement services operation upgraded
various software products, without any corresponding expenses for the first half
of 2003. Also contributing to the decline was the termination of a clearing
relationship. For such periods, depreciation and amortization expense increased
$38,194, or 26.4%. The depreciation and amortization expense recorded for the
first half of 2003 is typical of our normal, recurring expense. The expense
recorded for the first half of 2002 included a reversal of an accrual made
during a previous year, which resulted in a reduction of amortization and
depreciation expense for the first half of 2002 compared to the same period of
2003. Insurance expense increased $93,068, or 91.3%, primarily due to our
purchase of expanded insurance coverage and due to increased insurance premiums
charged for coverage due to a hardening of the insurance markets. For such


                                      -18-
<PAGE>

periods, errors expense increased $61,779 to a credit of $75,466 for the first
half of 2003 from a credit of $137,245 for the same period of 2002, primarily
due to a $140,000 net recovery during 2002 from an insurance carrier with
respect to a previously recorded loss at our mutual fund administration services
operation versus a $100,000 recovery in 2003. Our provision for bad debt
increased $81,978, or 261.0%, due to management's assessment of the
collectibility of certain receivables at our mutual fund administration services
operation. For such periods, other operating expenses increased $124,685, or
82.7%, primarily due to a $163,834 net decrease in the benefit received from VSX
Holdings during the first half of 2003 compared to the same period of 2002.
Removing the effect of the VSX Holdings expense reimbursement, we experienced a
$39,149 decline in other operating expenses.

         For the six months ended June 30, 2003, we recorded income of $175,000
from the escrow established for possible indemnification claims of Arthur J.
Gallagher & Co. pursuant to the sale agreement dated December 17, 2001. Expenses
related to the pending sale of Unified Banking Company were deducted from such
amount. For the six months ended June 30, 2003, we recorded a $93,534 gain on
sale of operations, net of income taxes, compared to $0 for the same period of
the prior year.

         Income from discontinued operations for the first six months of 2003
was $62,301 compared to a loss of $512,101 for the same period of 2002. Income
for the six months ended June 30, 2003 at Unified Banking Company was $63,101
compared to a loss of $525,466 for the same period of 2002. During June 2002,
Unified Banking Company charged-off a $455,000 loan, which charge-off accounted
for most of the 2002 loss.

         Net income increased $878,149 from a loss of $870,963 for the six
months ended June 30, 2002 to a profit of $7,186 for the same period of 2003.
Income from discontinued operations improved $574,402 with Unified Banking
Company accounting for $588,567 of the improvement (as previously discussed,
$455,000 of the $588,567 was related to one loan that was written off in 2002).
In addition, we recorded a net gain on the sale of operations of $93,534 without
a corresponding charge in the prior year. The loss from continuing operations
reflected an improvement of $139,267 from a loss of $337,837 in 2002 to a loss
of $198,570 for the six months ended June 30, 2003. Expenses declined $125,809
and gross profit increased $13,458. Also contributing to the improve was an
unrealized gain on securities of $5,991 for the six months ended June 30, 2003
compared to a loss of $24,202 for the same period of 2002, and continuing
operations received an income tax benefit of $43,930 during 2003 compared to a
$3,177 tax benefit recorded during 2002.

COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002

         Revenue for the quarter ended June 30, 2003 compared to the same
quarter of 2002 declined $482,967, or 12.4%, from $3,882,241 to $3,399,274. For
such quarters, gross profit increased by $19,140, or 0.7%.

         For the quarter ended June 30, 2003 compared to the same quarter of
2002, trust and retirement services revenue declined $107,211, or 8.0%, and
gross profit declined $47,361, or 4.4%, primarily for the reasons previously
discussed.

         For such quarters, mutual fund administration services revenue declined
$361,414, or 18.0%, and gross profit increased $62,727, or 4.6%, primarily due
to the inclusion of the results of Unified Financial Securities in mutual fund
administration services operation. Unified Fund Services' gross revenue for the
quarter ended June 30, 2003 declined $62,353, or 4.0%, and gross profit
increased $42,424, or 3.3%. For such quarters, transfer agency revenue and gross
profit increased $181,738, or 35.5%, and $221,852, or 54.8%, respectively, due
to the addition of the Huntington Funds in June 2002. Fund accounting revenue
and gross profit declined $42,176, and $42,330,


                                      -19-
<PAGE>

respectively. Administration revenue and gross profit declined $62,015, or
16.7%. Investment management income and gross profit declined $85,710, due to
Unified Investment Advisers ceasing to serve as the advisor to the Liquid Green
Money Market Fund. For the second quarter of 2003 gross revenue attributable to
our brokerage subsidiary declined $299,061, or 54.1%, and gross profit
increased $20,303, or 32.4%. The decline in revenue was, in large part,
attributable to a decline of $216,241 in clearing revenue due to our termination
of most of our clearing relationships. For such quarters, trail commission
revenue decreased $39,396 and gross profit increased $33,308. Commission revenue
from our full service and CPA business, which ceased at June 30, 2003, decreased
$32,818.

         For the quarter ended June 30, 2003 compared to the same quarter of
2002, investment advisory revenue and gross profit declined $50,621, or 13.1%,
and $32,505, or 10.1%, respectively. Such declines primarily were due to the
lower market values of assets under management at such operation.

         For such quarters, corporate revenue and gross profit increased
$36,279, or 23.5%, primarily due to a $37,808, or 24.7%, increase in revenues at
our premium finance company. Revenues increased primarily as the result of an
increased volume of loans outstanding and an increased interest spread due to a
reduction in the cost of borrowed funds.

         Total expenses declined $197,191, or 6.0%, for the quarter ended June
30, 2003 compared to the same quarter of 2002. Employee compensation expense
declined by $172,375, or 9.1%. This decline primarily was attributable to a
reduced employee workforce. Data processing expense increased $57,615, or 36.7%,
primarily due to a $61,000 increase at our trust and retirement services
operation due to its expanded usage of vendor products. Telephone costs declined
$17,680, or 28.7%, primarily due to the elimination of our wide area network.
Equipment rental and maintenance expense for our mutual fund administrative
services operation increased by $21,319, or 25.9%, primarily due to an increase
in phone service maintenance in the second quarter and a maintenance agreement
on an imaging scanner. Also contributing to the increase was a $15,500 accrual
in June 2003 for a new cash management system for our mutual fund administrative
services operation. For such quarters, professional fees declined $52,097, or
21.2%, primarily due to a $30,000 reimbursement received from a third party with
respect to legal fees previously paid by our brokerage subsidiary. Travel and
entertainment costs decreased $58,381, or 75.8%, primarily due to the reversal
of a $35,720 accrual taken in the first quarter of 2002. Also contributing was
less travel at the corporate and mutual fund administration services segments.
Insurance expense increased $23,957, or 41.9%, primarily due to our purchase of
expanded insurance coverage and due to increased insurance premiums charged for
coverage due to a hardening of the insurance markets. For such quarters, errors
expense decreased $132,591, to a credit of $100,823 for the second quarter of
2003 from an expense of $31,768 for the same period of 2002, primarily due to a
$100,000 recovery in 2003. Our provision for bad debt increased $64,847 due to
management's assessment of the collectibility of certain receivables at our
mutual fund administrative services operation. For such quarters, other
operating expenses increased $69,192, or 74.8%, primarily due to a $70,118 net
decrease in the benefit received from VSX Holdings during the second quarter of
2003 compared to the same period of 2002.

         Income from discontinued operations for the second quarter of 2003
increased $467,094 compared to the same quarter of 2002. For the quarter ended
June 30, 2003, Unified Banking Company recorded income of $37,406 compared to a
loss of $427,027 for the same quarter 2002. As previously discussed, the
increase from 2002 to 2003 primarily was attributable to the $455,000 loan that
Unified Banking Company charged-off in June 2002.

         For such quarters, our net loss declined $861,450, from a loss of
$863,915 in the second quarter of 2002 to a loss of $2,465 for the same quarter
of 2003, primarily due to income from discontinued operations of $36,905 in 2003
compared to a loss from discontinued operations of $430,189 in 2002, and the
$93,534 income recorded (net of income taxes) during 2003, which principally was


                                      -20-
<PAGE>

related to the gain on sale of operations. Also, contributing to the improvement
was a decrease in the net loss from continuing operations of $300,822, primarily
due to a reduction in expenses of $197,191.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         GENERAL. Management's Discussion and Analysis of Financial Condition
and Results of Operations is based on the consolidated financial statements and
accompanying notes that have been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"). Our significant
accounting policies are described in note 2 to the consolidated financial
statements contained in this report and in note 2 to the audited, consolidated
financial statements contained in our Annual Report on Form 10-K for the year
ended December 31, 2002. The preparation of financial statements in accordance
with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and disclosure
of contingent assets and liabilities. Actual results could differ from those
estimates. Management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carry values of assets and liabilities that are not readily apparent from
other sources. Certain policies inherently have a greater reliance on the use of
estimates, assumptions and judgments and as such, have a greater possibility of
producing results that could be materially different than originally reported.
However, we are not currently aware of any reasonable likely events or
circumstances that would result in materially different results. Senior
management has discussed the development, selection and disclosure of these
policies and estimates with our company's independent auditor and the members of
the audit, nominating and compensation committee of our board of directors.
Management believes the following critical accounting policies reflect its more
significant estimates and assumptions used in the preparation of the
consolidated financial statements. This discussion should be read in conjunction
with the audited, consolidated financial statements and the related notes
contained in our Annual Report on Form 10-K for the year ended December 31,
2002.

         VALUATION OF LONG-LIVED ASSETS, INCLUDING GOODWILL. We review
intangible assets and our operating assets, including goodwill, for impairment
when events or changes in circumstances indicate the carrying value of an asset
may not be recoverable. Our asset impairment review assesses the fair value of
assets based on the future cash flows the assets are expected to generate. An
impairment loss is recognized when estimated discounted future cash flows
expected to result from the use of the asset plus net proceeds expected from
disposition of the asset (if any) are less than the carrying value of the asset.
This approach uses our estimates of future market growth, forecasted revenue and
costs, expected periods the assets will be utilized and the appropriate discount
methods. Such evaluations of impairment of long-lived assets, including
goodwill, are an integral part of, but not limited to, our strategic reviews of
our business and operations performed in conjunction with restructuring actions.
When an impairment is identified, the carrying value of the asset is reduced to
its estimated fair value. Deterioration of our business in a geographic region
or within a business segment in the future could also lead to impairment
adjustments as such issues are identified.

         Critical estimates in valuing goodwill include, but are not limited to,
those discussed above. Management's estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results may differ from estimates.
Effective January 1, 2002, we adopted Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets," at which time goodwill amortization
ceased. Goodwill was tested for impairment by comparing implied value to its


                                      -21-
<PAGE>

carry value. Based upon a third-party valuation as of December 31, 2002, we have
determined that our recorded goodwill was not impaired during the quarter ended
June 30, 2003. Impairment adjustments after adoption of the accounting rule, if
any, are required to be recognized as operating expense when determined.

         ACCRUED LIABILITY FOR OPERATIONAL ISSUES. During 2002, we experienced
operational issues at our mutual fund administration services affiliate,
primarily relating to reconciliation issues. In connection therewith, we
established an $854,000 reserve, $454,000 of which is related to possible
reconciliation losses, which may or may not be recoverable, and $400,000 of
which is related to estimated costs for professional fees, related travel and
administration expenses to ascertain the nature and extent of such losses and to
redesign control procedures and make other system enhancements to ensure that
such reconciliation issues do not recur. Management's estimates are based upon
assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results may differ from estimates. During
the six and three months ended June 30, 2003, we expended $251,179 and $206,618,
respectively, of the $400,000 reserve.

         Management is acutely aware of opportunities for enhanced controls at
our mutual fund services administration operation. In fact, three initiatives
are underway that should have a dramatic positive impact on quality. They are
introduction of new systems, more front-end editing and personnel reorganization
at such operation that will allow for additional management oversight in all
operating areas.

         REVENUE RECOGNITION. Our trust and retirement services operation's
revenue reflects a revenue sharing arrangement, as well as investment adviser
fees earned by third party advisers, which are recorded on the accrual basis.
The fees earned by the operation and paid to sub-advisers are based on
established fee schedules and contracts. Generally, fees paid to our trust and
retirement services operation by the various mutual funds in which client assets
are invested are used to offset the fees due from the client. In the event such
fees do not cover all fees due to our operation, the remainder is collected from
the client. In the event such fees exceed the fees due, a credit is given to the
client. Revenue is recorded as it is earned each month based upon assets under
management times a stated fee schedule. Historically, we have experienced very
low levels of deviation from recorded estimates, and we assume the estimates are
reasonable.

         INVESTMENT SECURITIES AVAILABLE-FOR-SALE AT UNIFIED BANKING COMPANY.
Securities expected to be held for an indefinite period of time are classified
as available-for-sale and carried at fair value. Unrealized gains and losses are
reported as a separate component of stockholders' equity, net of estimated
income taxes. Substantially all of our securities have readily determinable
market prices that are derived from third party pricing services. Decisions to
purchase or sell these securities are based on economic conditions, including
changes in interest rates, liquidity and asset/liability management strategies.
At June 30, 2003, we reported accumulative other comprehensive income of
$387,475. The net change during the six months ended June 30, 2003 from December
31, 2002 was a decline of $184,170.

         ALLOWANCES FOR DOUBTFUL ACCOUNTS AND LOAN LOSSES. We evaluate the
collectibility of our trade and financing receivables based on a combination of
factors. We regularly analyze our customer accounts and, in the event we become
aware of a specific customer's inability to meet its financial obligations to us
(such as in the case of bankruptcy filings or deterioration in the client's
financial position or operating results), we record a reserve for bad debt or
loan loss to reduce the related receivable to an amount we reasonably believe is
collectible. We also record reserves for loan losses for clients based on
requirements of the Office of Trust Supervision, which requires an allowance
based upon a specific percentage of loans outstanding. If circumstances related
to specific customers change, our estimates of the recoverability of receivables
could be further adjusted.

                                      -22-
<PAGE>

         TAXES ON EARNINGS. Our effective tax rate is low because of our federal
income tax net operating loss carryforwards. We record the tax benefit of the
net operating loss when realized.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY. Our primary sources of liquidity historically have been and
continue to be cash flow from operating activities, as well as cash generated
through our private placements in 1998 and 1999. We also received $800,000 and
$8.4 million in cash for the six months ended June 30, 2003 and the year ended
December 31, 2001, respectively, in connection with the sale of the assets of
our insurance subsidiaries in 2001.

         The net increase in cash and cash equivalents at June 30, 2003 from
December 31, 2002 was $1,033,268. Of the inflow, we received $800,000 in cash
from the note receivable recorded in connection with the sale of the assets of
our insurance subsidiaries in 2001. Operating assets such as loans to customers,
premium financing loans, trade receivables, due from banks, federal funds sold
and bond investments accounted for $2,363,343 in sources of cash, and operating
liabilities such as accounts payable and other liabilities accounted for
$2,219,309 in uses of cash. Cash provided from operating activities, including
depreciation and amortization, provisions for loan loss and bad debt, generated
cash in the amount of $428,365. Additionally, retirement of common stock
resulted in a usage of cash of $301,084, as did capital expenditures of $38,047.
We also received $55,621 from VSX Holdings, LLC during the six-month period
ended June 30, 2003 in connection with services we provided relating to the
construction and development of the VSX marketplace and its corresponding
products.

         Short-term liquidity needs arise from continuous fluctuations in the
flow of funds on both sides of the balance sheet resulting from growth and
seasonal and cyclical customer demands. The securities portfolio provides stable
long-term earnings as well as serving as a primary source of liquidity. The
designation of securities as available-for-sale or held-to-maturity does not
impact the portfolio as a source of liquidity due to the ability to enter into
repurchase agreements using those securities. We anticipate continued loan
demand in our market area. We have utilized, and expect to continue to utilize,
Federal Home Loan Bank borrowings to fund a portion of future loan growth. We
continue to emphasize growth in stable core deposits while utilizing the Federal
Home Loan Bank and Federal funds purchased as necessary to balance liquidity and
cost effectiveness. We closely monitor our level of liquidity to meet expected
future needs.

         In February 2002, Unified Banking Company borrowed approximately $5.0
million in ten- to 15-year fixed rate amortizing advances from the Federal Home
Loan Bank, which proceeds were invested in 15- to 20-year FNMA mortgage backed
securities. The interest spread between these assets and liabilities is
approximately 1.25%.

         CAPITAL RESOURCES. Total stockholders' equity was $15,016,754 at June
30, 2003 compared to $15,494,821 at December 31, 2002. The decline in total
equity was due to the retirement of common stock and our comprehensive loss,
partially offset by our net income. We had no material commitments for capital
expenditures as of June 30, 2003.

                                      -23-
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The business activities of our company expose it to a variety of risks.
Management of these risks is necessary for the long-term profitability of our
company. We manage these risks through the establishment of numerous policies,
procedures and controls. The most significant risks that affect us are market
risk and credit risk. We also are subject to regulatory risk.

         Market risk is the risk of loss to us resulting from changes in
interest rates, equity prices or both. We are exposed to market risk since we,
through our subsidiaries, maintain positions in fixed-income and equity
securities. We primarily manage our risk through the establishment of trading
policies and guidelines and through the implementation of control and review
procedures.

         Our asset/liability strategy is to minimize the sensitivity of earnings
to changes in interest rates while maintaining an acceptable net interest
margin. Unified Banking Company's asset/liability committee monitors the
interest rate sensitivity of the bank's balance sheet on a quarterly basis. The
committee reviews asset and liability repricing in the context of current and
future interest rate scenarios affecting the economic climate in our market
areas.

         Our pricing policy is that all earning assets and interest bearing
liabilities be either based on floating rates or have a fixed rate not exceeding
five years. Real estate mortgage loans held by us, while having long final
maturities, are comprised of one-, two- or three-year adjustable rate loans. The
adjustable basis of these loans significantly reduces interest rate risk.











                                      -24-
<PAGE>




         The following table illustrates Unified Banking Company's estimated
static gap with prepayments calculated as of June 30, 2003:

<TABLE>
<S>                <C>                  <C>                   <C>                 <C>            <C>             <C>
                                                                TIME TO MATURITY OR REPRICING
                                          0 TO 1  1 TO 2   2 TO 3  3 TO 6  6 TO 9   9 TO 12 12 TO 48 48 TO 51    >51
(DOLLARS IN THOUSANDS)         IMMEDIATE  MONTHS  MONTHS   MONTHS  MONTHS  MONTHS   MONTHS   MONTHS   MONTHS   MONTHS   TOTALS
                               ---------  ------  ------   ------  ------  ------   ------   ------   ------   ------   ------

RATE SENSITIVE ASSETS
   Federal Funds sold......... $  5,977  $     -  $    -   $   -  $    -  $     -  $     -  $      -  $    -  $     -  $  5,977
   Securities.................
     U.S. agencies............        -      629     596     556   1,444    1,145      900     5,143     270      824    11,507
     FHLB stock...............      519        -       -       -       -        -        -         -       -        -       519
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Total securities.......      519      629     596     556   1,444    1,145      900     5,143     270      824    12,206
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Loans
     Commercial
       Fixed..................        -       86      56      67     221      173      183     3,157     164       41     4,148
       Variable...............   14,532        -       -       -       -        -        -         -       -        -    14,532
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total commercial.....   14,532       86      56      67     221      173      183     3,157     164       41    18,680
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Real Estate
       Commercial
         Fixed................        -      418      41      42   1,131      578      363     4,977       -        -     7,550
         Variable.............    3,063        -       -       -       -        -        -         -       -        -     3,063
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total commercial...    3,063      418      41      42   1,131      578      363     4,977       -        -    10,613
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Residential
         Fixed................        -      510      99      98     287      727      383     4,684     495      217     7,500
         Variable.............    3,976        -       -       -       -        -        -         -       -        -     3,976
         Other................        -        6       6       6     478       18       18       682      11       30     1,255
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total residential..    3,976      516     105     104     765      745      401     5,366     506      247    12,731
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
              Total real estate   7,039      934     146     146   1,896    1,323      764    10,343     506      247    23,344
                                -------  ------   -----  ------  -------  -------  -------- --------  ------- -------  --------
     Construction
       Fixed..................        -        1       1       1       3        3       97        38       7      178       328
       Variable...............    2,199        -       -       -       -        -        -         -       -        -     2,199
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total construction...    2,199        1       1       1       3        3       97        38       7      178     2,527
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Personal
       Home equity loans......    9,098        -       -       -       -        -        -         -       -        -     9,098
       Installment loans......        -      876     337     303     296      148      519     1,009      19        9     3,517
       Cash reserve loan......        2        -       -       -       -        -        -         -       -        -         2
       Personal open end
         letters of credit....    1,148        -       -       -       -        -        -         -       -        -     1,148
       Loans secured by
         deposits.............        -       10       -       -       1       14        2         4       -        -        33
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total personal.......   10,248      886     338     304     297      162      521     1,103      19        9    13,798
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Total loans................   34,018    1,907     540     517   2,417    1,661    1,565    14,551     696      475    58,349
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     TOTAL RATE
       SENSITIVE ASSETS....... $ 40,514  $ 2,535  $1,137   $1,073 $3,861  $ 2,807  $ 2,465  $ 19,694  $  966  $ 1,299  $ 76,352
                               ========  =======  ======   ====== ======  =======  =======  ========  ======  =======  ========
</TABLE>


                                      -25-
<PAGE>


<TABLE>
<S>               <C>              <C>                    <C>                 <C>             <C>            <C>

                                                                TIME TO MATURITY OR REPRICING
                                          0 TO 1  1 TO 2  2 TO 3   3 TO 6  6 TO 9   9 TO 12 12 TO 48 48 TO 51    >51
(DOLLARS IN THOUSANDS)         IMMEDIATE  MONTHS  MONTHS  MONTHS   MONTHS  MONTHS   MONTHS   MONTHS   MONTHS   MONTHS   TOTALS
                               ---------  ------  ------  ------   ------  ------   ------   ------   ------   ------   ------

RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts............. $  3,830  $     -  $    -  $     -  $     -  $     -  $     -  $    -  $     -  $     -   $3,830
     Money market accounts
       Market rate accounts...    4,131        -       -        -        -        -        -       -        -        -    4,131
       Business market rate
         accounts.............      350        -       -        -        -        -        -       -        -        -      350
       Special personal
         MMDA.................    1,069        -       -        -        -        -        -       -        -        -    1,069
       Special business
         MMDA.................    4,643        -       -        -        -        -        -       -        -        -    4,643
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total money market
           accounts...........   10,193        -       -        -        -        -        -       -        -        -   10,193
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Savings accounts.........       92        -       -        -        -        -        -       -        -        -       92
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Time deposits
       CD's > 100K............        -    1,302     502      404    2,421    2,853    3,755   5,561        -      115   16,915
       CD's < 100K............        -    1,049     735      564    3,397    5,106    3,030  10,456       52      105   24,493
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total time deposits..        -    2,351   1,237      968    5,818    7,959    6,785  16,017       52      220   41,408
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Individual retirement
         accounts.............        -        -     132       68       96      281      271   5,015        4       58    5,925
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total interest
           bearing deposits...   14,115    2,351   1,369    1,036    5,914    8,240    7,056  21,032       56      278   61,448
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Borrowed funds
       Repurchase agreements..        -        9       -        -        -        -        -       -        -        -        9
       FHLB borrowings........        -       27      25       25       75      594       66   1,667       90    1,294    3,863
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total borrowed funds.        -       36      25       25       75      594       66   1,667       90    1,294    3,872
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
   TOTAL RATE
       SENSITIVE LIABILITIES.. $ 14,115 $  2,387 $ 1,394 $  1,062 $  5,989 $  8,834 $  7,123 $22,699  $   145 $  1,573 $ 65,320
                               ======== ======== ======= ======== ======== ======== ======== =======  ======= ======== ========

INCREMENTAL GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 40,514 $  2,535 $ 1,137 $  1,073 $  3,861 $  2,807 $  2,465 $19,694  $   966 $  1,299
   Total rate sensitive
     liabilities..............   14,115    2,387   1,394    1,062    5,989    8,834   7,123   22,699      145    1,573
   Gap........................   26,399      148    (257)      11   (2,128)  (6,027) (4,658)  (3,005)     821     (274)
   RSA/RSL....................     2.87x    1.06x   0.82x    1.01x    0.64x    0.32x   0.35x    0.87x    6.66x    0.83x
   RSA/assets.................     0.51     0.03    0.01     0.01     0.05     0.04    0.03     0.25     0.01     0.02
   RSL/assets.................     0.18     0.03    0.02     0.01     0.08     0.11    0.09     0.29     0.00     0.02
   Gap/assets.................    33.37%    0.19%  -0.32%    0.01%   -2.69%   -7.62%  -5.89%   -3.80%    1.04%   -0.35%
   Gap/RSA....................    65.16     5.84  -22.60     1.03   -55.12  -214.71 -188.97   -15.26    84.99   -21.09

CUMULATIVE GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 40,514 $ 43,049 $44,186  $45,259 $ 49,120 $ 51,927 $ 54,392 $74,086 $ 75,052 $ 76,351
   Total rate sensitive
      liabilities.............   14,115   16,502  17,896   18,958   24,947   33,781   40,904  63,603   63,748   65,321
   Gap........................   26,399   26,547  26,290   26,301   24,173   18,146   13,488  10,483   11,304   11,030
   RSA/RSL....................     2.87x    2.61x   2.47x    2.39x    1.97x    1.54x    1.33x   1.16x    1.18x    1.17x
   RSA/assets.................     0.51     0.54    0.56     0.57     0.62     0.66     0.69    0.94     0.95     0.97
   RSL/assets.................     0.18     0.21    0.23     0.24     0.32     0.43     0.52    0.80     0.81     0.83
   Gap/assets.................    33.37%   33.55%  33.23%   33.24%   30.55%   22.94%   17.05%  13.25%   14.29%   13.94%
   Gap/RSA....................    65.16    61.67   59.50    58.11    49.21    34.95    24.80   14.15    15.06    14.45
</TABLE>

         We measure the impact of interest rate changes on our income statement
through the use of gap analysis. The gap represents the net position of assets
and liabilities subject to repricing in specified time periods. During any given
time period, if the amount of rate-sensitive liabilities exceeds the amount of
rate-sensitive assets, a company would generally be considered negatively gapped
and would benefit from falling rates over that period of time. Conversely, a
positively gapped company would generally benefit from rising rates.

                                      -26-
<PAGE>


         Interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously. There are other factors that are
difficult to measure and predict that would influence the effect of interest
rate fluctuations on our income statement. For example, a rapid drop in interest
rates might cause our borrowers to repay their loans at a more rapid pace and
certain mortgage-related investments to be prepaid more quickly than projected.
This could mitigate some of the benefits of falling rates as are expected when
negatively gapped. Conversely, a rapid rise in rates could give us an
opportunity to increase our margins and stifle the rate of repayment on our
mortgage-related loans, which would increase our returns.

         The following table shows the "rate shock" results of a simulation
model that attempts to measure the effect of rising and falling interest rates
over a two-year horizon in a rapidly changing rate environment.

<TABLE>
<S>              <C>                 <C>                 <C>                 <C>             <C>           <C>
                                                                   PERCENTAGE CHANGE IN
                 BASIS POINT                    --------------------------------------------------------------
                  CHANGE IN                      NET INTEREST INCOME         MARKET VALUE OF PORTFOLIO EQUITY
               INTEREST RATES                     PROJECTED CHANGE                   PROJECTED CHANGE
               --------------                   --------------------------------------------------------------

                    -200                              -14.96                              -10.28
                    -100                               -7.43                               -6.55
                       0                                0.00                                0.00
                     100                                7.18                                3.36
                     200                               14.36                                4.23
</TABLE>

         We use a sensitivity model that simulated these interest rate changes
on our earning assets and interest-bearing liabilities. This process allows us
to explore the complex relationships among the financial instruments in various
interest rate environments.

         The preceding sensitivity analysis is based on numerous assumptions
including: the nature and timing of interest rate levels, including the shape of
the yield curve; prepayments on loans and securities; changes in deposit levels;
pricing decisions on loans and deposits; reinvestment/replacement of asset and
liability cash flows; and others. While assumptions are developed based upon
current economic and local market conditions, we cannot make any assurances as
to the predictive nature of these assumptions including how client preferences
or competitor influences might change.

         Interest rate exposure is measured by the potential impact on our
income statement of changes in interest rates. We use information from our gap
analysis and rate shock calculations as input to help manage our exposure to
changing interest rates. We use our rate shock information to tell us how much
exposure we have to rapidly changing rates.

                                      -27-
<PAGE>



ITEM 4. CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our company's
and our subsidiaries' management, including our company's president and chief
executive officer along with our chief financial officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 13a-14. This evaluation included a review of revised
procedures put in place at our mutual fund services administration operation
following the discovery in the fourth quarter of 2002 of potential
reconciliation losses at such operation. Based upon that evaluation, our
president and chief executive officer along with our chief financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to our company (including our
consolidated subsidiaries) required to be included in our periodic SEC filings.
         There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out this evaluation.
















                                      -28-
<PAGE>



         PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits:

             See Exhibit Index attached hereto.

         (b) Reports on Form 8-K.

             On June 10, 2003, we filed a Current Report on Form 8-K, dated
             June 9, 2003, to report under Item 5 our execution of a Stock
             Purchase Agreement, dated June 9, 2003, whereby we will sell
             our wholly owned banking subsidiary, Unified Banking Company,
             to Blue River Bancshares, Inc.
















                                      -29-
<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.

                                  UNIFIED FINANCIAL SERVICES, INC.
                                  (Registrant)



Dated:  August 4, 2003             By:  /s/ John S. Penn
                                   -----------------------------------------
                                   John S. Penn, President and
                                   Chief Executive Officer



Dated:  August 4, 2003             By:  /s/ Thomas G. Napurano
                                   -----------------------------------------
                                   Thomas G. Napurano, Executive Vice President
                                   and Chief Financial Officer













                                      -30-
<PAGE>



                                  CERTIFICATION

I, John S. Penn, certify that:

         (1)      I have reviewed this quarterly report on Form 10-Q of Unified
                  Financial Services, Inc.;

         (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;

         (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 the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         (4)      The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and 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 for which this
                           quarterly report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

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

         (5)      The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of the
                  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
              -31- role in the registrant's internal controls; and

                                      -31-
<PAGE>

         (6)      The registrant's other certifying officers and I have
                  indicated in this quarterly report whether 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.




August 4, 2003                    /s/ John S. Penn
                                  --------------------------------------------
                                  John S. Penn
                                  President and Chief Executive Officer












                                      -32-
<PAGE>



                                  CERTIFICATION

I, Thomas G. Napurano, certify that:

         (1)      I have reviewed this quarterly report on Form 10-Q of Unified
                  Financial Services, Inc.;

         (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;

         (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 the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         (4)      The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and 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 for which this
                           quarterly report is being prepared;

                  (b)      evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

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

         (5)      The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of the
                  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

                                      -33-
<PAGE>

         (6)      The registrant's other certifying officers and I have
                  indicated in this quarterly report whether 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.




August 4, 2003                 /s/ Thomas G. Napurano
                               -----------------------------------------------
                               Thomas G. Napurano
                               Chief Financial Officer











                                      -34-
<PAGE>



                                  EXHIBIT INDEX

 Ex. No.                           Description
 -------                           -----------

   99.1       Certification of Chief Executive Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002, is filed herewith.

   99.2       Certification of Chief Financial Officer pursuant to Section 906
              of the Sarbanes-Oxley Act of 2002, is filed herewith



















                                      -35-