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                                                   UNITED STATES
                                         SECURITIES AND EXCHANGE COMMISSION
                                                WASHINGTON, DC 20549

                                                     FORM 10-Q


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

For the quarterly period ended                                   SEPTEMBER 30, 2002
                               ------------------------------------------------------------------------------------



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


                                                                                  Number of shares
               Title of class                                            outstanding as of November 1, 2002
--------------------------------------------                         -------------------------------------------
     Common stock, $0.01 par value                                                    2,858,972



<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
                                    FORM 10-Q

                                      INDEX

PART I.           FINANCIAL INFORMATION

     Item 1.      Financial Statements

                  Consolidated Statements of Financial Condition - September 30, 2002
                  (Unaudited) and December 31, 2001...............................................................1

                  Consolidated Statements of Operations (Unaudited) - Nine and Three Months
                  Ended September 30, 2002 and 2001...............................................................3

                  Consolidated Statements of Comprehensive Income (Unaudited) - Nine and
                  Three Months Ended September 30, 2002 and 2001..................................................4

                  Consolidated Statements of Cash Flow (Unaudited) - Nine Months Ended
                  September 30, 2002 and 2001.....................................................................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 Nine Months Ended September 30, 2002 and 2001....................17

                  Comparison of Results for the Three Months Ended September 30, 2002 and 2001...................20

                  Liquidity and Capital Resources................................................................21

     Item 3.      Quantitative and Qualitative Disclosure About Market Risk......................................23

     Item 4.      Controls and Procedures........................................................................27

PART II.          OTHER INFORMATION

     Item 6.      Exhibits and Reports on Form 8-K...............................................................28

SIGNATURES.......................................................................................................29

CERTIFICATION....................................................................................................30

EXHIBIT INDEX....................................................................................................34



<PAGE>


PART I.           FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                       ASSETS
                                                       ------

                                                                            SEPTEMBER 30,           DECEMBER 31,
                                                                                2002                    2001
                                                                          --------------          ----------------
Current Assets
     Cash and cash equivalents (see note 14)...........................   $    6,637,890         $    8,844,482
     Due from banks....................................................        2,581,559              1,357,483
     Federal funds sold................................................               --              4,033,000
     Bond investments (see note 14)....................................       16,338,105             11,374,531
     Investment in securities and non-affiliated
       mutual funds....................................................          599,937                555,013
     Note receivable...................................................          800,000                800,000
     Loans (net of allowance for loan losses of $520,216
       for 2002 and $430,000 for 2001).................................       60,635,321             43,705,576
     Accounts receivable (net of allowance for
       doubtful accounts of $81,940 for 2002 and
       $260,299 for 2001)..............................................        5,683,832              5,480,214
     Prepaid assets and deposits.......................................          376,608                425,061
     Deferred tax asset................................................          289,676                287,435
                                                                          --------------         --------------

         Total current assets..........................................       93,942,928             76,862,795
                                                                          --------------         --------------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated
       depreciation of $2,517,104 for 2002 and
       $2,330,472 for 2001)............................................        2,114,049              2,277,430
                                                                          --------------         --------------

         Total fixed assets............................................        2,114,049              2,277,430
                                                                          --------------         --------------

Non-Current Assets
     Investment in affiliate (see note 12).............................            1,010                  1,010
     Goodwill (net of accumulated amortization of
       $347,734 for 2002 and 2001) (see note 3)........................        1,006,061              1,006,061
     Other non-current assets..........................................           62,830                 43,696
                                                                          --------------         --------------

         Total non-current assets......................................        1,069,901              1,050,767
                                                                          --------------         --------------

              TOTAL ASSETS.............................................   $   97,126,878         $   80,190,992
                                                                          ==============         ==============

(CONTINUED ON NEXT PAGE)

See accompanying notes.




                                      -1-

<PAGE>


UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                        LIABILITIES AND STOCKHOLDERS' EQUITY
                                        ------------------------------------

                                                                              SEPTEMBER 30,         DECEMBER 31,
                                                                                  2002                  2001
                                                                            ----------------      ----------------

Current Liabilities:
     Current portion of capital lease obligations.......................     $          --         $         595
     Current portion of bank borrowings.................................                --                 3,153
     Borrowed funds.....................................................         4,828,246                    --
     Bank line-of-credit................................................         1,270,000             1,104,780
     Deposits (see note 14).............................................        70,702,009            55,905,541
     Accounts payable and accrued expenses..............................           695,262             2,448,177
     Accrued compensation and benefits..................................           562,383               570,883
     Payable to broker-dealers..........................................            93,698               142,985
     Income taxes payable...............................................           233,461               215,027
     Deferred income taxes..............................................           193,781                55,608
     Other liabilities..................................................         1,822,060             1,382,025
                                                                             -------------         -------------

         Total current liabilities......................................        80,400,900            61,828,774
                                                                             -------------         -------------

Long-Term Liabilities
     Long-term portion of capital lease obligations.....................                --                   454
     Deferred income taxes..............................................            25,680                12,853
     Other long-term liabilities........................................           807,475             1,600,000
                                                                             -------------         -------------
         Total long-term liabilities....................................           833,155             1,613,307
                                                                             -------------         -------------

              Total liabilities.........................................        81,234,055            63,442,081
                                                                             -------------         -------------

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

Stockholders' Equity
     Common stock, par value $.01 per share.............................            33,090                33,277
     Additional paid-in capital.........................................        16,078,230            16,187,294
     Retained earnings..................................................          (772,223)              231,300
     Accumulated other comprehensive income.............................           553,726               297,040
                                                                             -------------         -------------
              Total stockholders' equity................................        15,892,823            16,748,911
                                                                             -------------         -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..............................     $  97,126,878           $80,190,992
                                                                             =============        ==============


See accompanying notes.




                                      -2-
<PAGE>


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

                                                          NINE MONTHS ENDED                THREE MONTHS ENDED
                                                            SEPTEMBER 30,                     SEPTEMBER 30,
                                                   -------------------------------    -----------------------------
                                                        2002             2001             2002            2001
                                                   -------------     -------------    ------------     ------------
REVENUE:
     Gross revenue (see note 10).................  $  13,339,936     $  12,997,782    $  4,546,030     $  4,403,936
                                                   -------------     -------------    ------------     ------------
         Total gross revenue.....................     13,339,936        12,997,782       4,546,030        4,403,936
                                                   -------------     -------------    ------------     ------------
COST OF SALES:
     Cost of sales (see note 10).................      2,710,700         2,522,673         904,959          939,771
                                                   -------------     -------------    ------------     ------------
         Total cost of sales.....................      2,710,700         2,522,673         904,959          939,771
                                                   -------------     -------------    ------------     ------------
GROSS PROFIT (see note 10).......................     10,629,236        10,475,109       3,641,071        3,464,165
                                                   -------------     -------------    ------------     ------------

EXPENSES:
     Employee compensation.......................      6,397,473         7,127,167       2,094,317        2,367,491
     Employee insurance and benefits.............      1,029,568         1,023,444         292,942          331,464
     Mail and courier............................        112,336           122,327          36,126           26,391
     Telephone...................................        191,492           304,150          49,571           90,291
     Equipment rental and maintenance............        361,171           357,892         118,921          108,629
     Occupancy...................................        712,727           676,965         243,105          227,689
     Depreciation and amortization...............        281,954           602,480          53,894          218,522
     Professional fees...........................        498,283           517,681         197,848          188,701
     Interest....................................         (7,489)           67,648             208            8,778
     Program administration fees.................         20,855           157,445          67,400           62,635
     Provision for bad debt......................         96,739           255,543          65,332           31,004
     Provision for loan losses...................        589,186            90,000          44,783           35,000
     Business development costs..................         41,332            39,207          27,892           19,218
     Insurance...................................        167,294           125,055          53,456           80,071
     Other operating expenses (see note 12)......      1,117,788         1,021,954         413,446          580,503
                                                   -------------     -------------    ------------     ------------
         Total expenses..........................     11,610,709        12,488,958       3,759,241        4,376,387
                                                   -------------     -------------    ------------     ------------

     Loss from continuing operations.............       (981,473)       (2,013,849)       (118,170)        (912,222)
     Other loss..................................        (28,338)          (51,851)         (4,136)         (43,566)
     Income tax benefit (expense)................         (6,919)          635,872         (10,096)         237,633
                                                   -------------     -------------    ------------     ------------

     Net loss from continuing
         operations..............................     (1,016,730)       (1,429,828)       (132,402)        (718,155)

Income (loss) from discontinued operations
     (net of income taxes of $8,081,
     $660,872, $(96) and
     $237,633, respectively) ....................         13,207         1,039,012            (158)         364,971
                                                   -------------     -------------    ------------     ------------
Net loss ........................................  $  (1,003,523)    $    (390,816)   $   (132,560)    $   (353,184)
                                                   =============     =============    ============     ============

Per share loss
     Basic common shares outstanding.............      2,858,972         2,880,028       2,858,972        2,880,028
     Net loss - basic............................  $       (0.35)    $       (0.14)   $      (0.05)    $      (0.12)

     Fully diluted common shares outstanding
          (see note 13)..........................      2,858,972         2,905,564       2,858,972        2,905,564
     Net loss - fully diluted....................  $       (0.35)    $       (0.13)   $      (0.05)    $      (0.12)

See accompanying notes.




                                      -3-
<PAGE>


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



                                                          NINE MONTHS ENDED                THREE MONTHS ENDED
                                                            SEPTEMBER 30,                     SEPTEMBER 30,
                                                   -------------------------------    -----------------------------
                                                        2002             2001             2002            2001
                                                   -------------     -------------    ------------     ------------

Net loss ........................................  $  (1,003,523)    $    (390,816)   $   (132,560)    $   (353,184)
Other comprehensive income (loss), net of tax
     Unrealized gain on securities, net of
         reclassification adjustment.............        256,686           269,038         105,552          190,109
                                                   -------------     -------------    ------------     ------------

Comprehensive loss...............................  $    (746,837)    $    (121,778)   $    (27,008)    $   (163,075)
                                                   =============     =============    ============     ============

See accompanying notes.




                                      -4-
<PAGE>


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

                                                                                 NINE MONTHS ENDED
                                                                                   SEPTEMBER 30,
                                                                        -----------------------------------
                                                                            2002                 2001
CASH FLOW FROM OPERATING ACTIVITIES                                     --------------       --------------
    Net loss.......................................................     $  (1,003,523)       $    (390,816)
    Adjustments to reconcile net loss to cash
    provided by (used in) operating activities:
       Income tax payable..........................................            18,434                   --
       Deferred income taxes.......................................           148,759              (48,871)
       Provision for depreciation and amortization.................           275,417              836,937
       Provision for loan losses...................................           589,186               90,000
       Provision for bad debt......................................           375,276              261,943
       Write off of bad debt.......................................          (276,593)                  --
       Recovery of bad debt........................................                --               18,980
       Amortization of bond discount...............................           (20,116)             (18,502)
       Change in market value of securities........................          (373,187)             449,014
       Comprehensive income........................................           256,686              269,039
       Loss on disposal of fixed assets............................              (992)             (61,868)
       Loss on sale/disposal of securities.........................            13,599               10,469
       (Increase) decrease in operating assets:
          Receivables..............................................          (302,301)           1,221,647
          Loan receivables.........................................       (17,518,931)         (17,182,385)
          Prepaid and sundry assets................................            48,453              (85,759)
          Other non-current assets.................................           (19,134)             292,185
       Increase (decrease) in operating liabilities:
          Deposits.................................................        14,796,468           19,111,337
          Accounts payable and accrued expenses....................        (1,802,202)          (1,782,763)
          Accrued compensation and benefits........................            (8,500)              (1,669)
          Other liabilities........................................          (352,489)              89,968
                                                                        -------------        -------------
       Net cash provided by (used in) operating activities.........        (5,155,690)           3,078,886
                                                                        -------------        -------------

CASH FLOW FROM INVESTING ACTIVITIES
    Purchase of equipment..........................................          (214,983)            (598,302)
    Due from banks.................................................        (1,224,076)            (220,704)
    Federal funds sold/purchased...................................         4,033,000            9,203,000
    Bond investments...............................................        (4,554,540)         (10,523,427)
    Securities sold/purchased under agreement to repurchase........            24,000           (1,143,000)
    Borrowed funds.................................................         4,804,246                   --
    Proceeds from sale of securities...............................           234,556               65,964
    Proceeds from sale of fixed assets.............................           103,939              300,000
    Investment in affiliated mutual fund...........................                --                 (100)
    Investment in affiliate........................................                --               (1,000)
    Investment in securities and mutual funds......................          (308,810)             (93,161)
                                                                        -------------        -------------
       Net cash provided by (used in) investing activities.........         2,897,332           (3,010,730)
                                                                        -------------        -------------

CASH FLOW FROM FINANCING ACTIVITIES
    Repayment of borrowings........................................          (633,154)          (2,431,021)
    Retirement of common stock.....................................          (109,251)                  --
    Borrowings on line of credit...................................           795,220            1,125,000
    Repayment of capital lease obligations.........................            (1,049)              (7,750)
                                                                        -------------        -------------
       Net cash provided by (used in) financing activities.........            51,766           (1,313,771)
                                                                        -------------        -------------
Net decrease in cash and cash equivalents..........................        (2,206,592)          (1,245,615)
Cash and cash equivalents - beginning of year......................         8,844,482            5,582,098
                                                                        -------------        -------------
Cash and cash equivalents - end of period..........................     $   6,637,890        $   4,336,483
                                                                        =============        =============

See accompanying notes.




                                      -5-

<PAGE>


                         UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2002 AND 2001
                           ---------------------------


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 five lines of
              business: trust and retirement services; mutual fund administration services; banking;
              brokerage; 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 nine- and three-month periods ended September 30,
              2002 are not necessarily indicative of the results that may be expected for the year ending
              December 31, 2002.

              On May 31, 2002, we disposed of Fully Armed Productions, Inc., which we acquired on
              June 1, 1999 in exchange for 18,182 shares of our common stock. In connection with such
              disposition, and in exchange for all of the outstanding capital stock of Fully Armed
              Productions, Inc., we received 18,182 shares of our common stock and $37,569 in cash. The
              results of Fully Armed Productions, Inc. are shown as a non-cash flow transaction in our
              Consolidated Statements of Cash Flow. Due to the immateriality of the results of Fully
              Armed Productions, Inc. to the consolidated results of Unified Financial Services, the
              consolidated financial statements contained herein and in our Annual Report on Form 10-K
              for the year ended December 31, 2001 have not been restated for the disposition.

              The balance sheet at December 31, 2001 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, 2001.

              Financial Statement Presentation
              --------------------------------
              Certain amounts in the 2001 financial statements have been reclassified to conform to the
              2002 presentation.




                                      -6-
<PAGE>
                         UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------


Note 3 -      NEW ACCOUNTING STANDARDS

              Statement of Financial Accounting Standards ("SFAS") No. 144,"ACCOUNTING FOR THE
              IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS," is effective for fiscal years beginning after
              December 15, 2001, and interim periods within those fiscal years, with early application
              encouraged. SFAS 144 supersedes Statement of Financial Accounting Standards No. 121,
              "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
              DISPOSED OF" and amends Accounting Principles Board Opinion No. 30, "REPORTING RESULTS
              OF OPERATIONS - REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS." This
              statement develops one accounting model (based on the model in SFAS 121) for long-lived
              assets to be disposed of, expands the scope of discontinued operations and modifies the
              accounting for discontinued operations. This standard did not have a material impact on our
              consolidated financial position, results of operations or cash flows for the nine- of three-
              month periods ended September 30, 2002.

              Statement of Financial Accounting Standards No. 143, "ACCOUNTING FOR ASSET RETIREMENT
              OBLIGATIONS," addresses financial accounting and reporting for obligations associated with the
              retirement of tangible long-lived assets and the associated asset retirement cost. This
              statement is effective for fiscal years beginning after June 15, 2002. We have adopted this
              statement, which did not have a material impact on our consolidated financial position, results
              of operations or cash flows for the nine- or three-month periods ended September 30, 2002.

              Statement of Financial Accounting Standards No. 142, "GOODWILL AND OTHER INTANGIBLE
              ASSETS," addresses the financial accounting and reporting for acquired goodwill and other
              intangible assets. Amortization of goodwill, including goodwill recorded in past business
              combinations, will cease upon adoption of this statement.  This statement is effective for
              fiscal years beginning after December 15, 2001. Effective January 1, 2002, we adopted
              SFAS 142 and ceased the amortization of goodwill (for the nine months ended September 30,
              2002, goodwill amortization would have been approximately $78,000 and would be
              approximately $104,000 for the year ending December 31, 2002). Other provisions of this
              statement require that goodwill be measured periodically for impairment. We are currently in
              the process of fair valuing our reporting unit with goodwill in order to determine potential
              goodwill impairment, but have not yet determined the impact for 2002.

              Statement of Financial Accounting Standards No. 141, "BUSINESS COMBINATIONS," requires all
              business combinations initiated after September 30, 2001 to be accounted for under the
              purchase method of accounting. SFAS No. 141 also sets forth guidelines for applying the
              purchase method of accounting in the determination of intangible assets, including goodwill
              acquired in a business combination, and expands financial disclosures concerning business
              combinations consummated after June 1, 2001. Management does not believe that this
              statement will have a material effect on our consolidated financial statements.




                                      -7-
<PAGE>

                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------


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. Effective as of December 31, 2001, in conjunction with the sale of our
              insurance operations, our board of directors extended to December 31, 2006 the exercise
              period of 13,255 options held by employees of our former insurance operations, irrespective
              of the date of termination of such employees. All other terms of such options, including the
              vesting schedules, were unchanged.

              As of September 30, 2002 and 2001, options to acquire 107,441 and 102,836 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 54,545 and 60,000 shares, respectively, of our common
              stock outside of such plan (see note 12).

              A summary of our outstanding stock options as of September 30,2002 and 2001 is as
              follows:

                                                                                 SEPTEMBER 30,
                                                               ------------------------------------------------
                                                                        2002                      2001
                                                               ---------------------     ----------------------
                                                                            WEIGHTED                  WEIGHTED
                                                                             AVERAGE                   AVERAGE
                                                                            EXERCISE                  EXERCISE
                                                               SHARES         PRICE       SHARES        PRICE
                                                               ------         -----       ------        -----

              Options outstanding at beginning of year......   149,396       $41.94       170,752      $41.94
              Granted.......................................    38,150        16.50            --          --
              Option to acquire 66,666 shares at $45.00
                per share converted into option to acquire
                60,000 shares at $50.00 per share...........        --           --        (6,666)      45.00
              Option to acquire 60,000 shares at $50.00
                per share converted into option to acquire
                54,545 shares at $55.00 per share...........    (5,455)       50.00            --          --
              Forfeitures...................................   (20,105)       34.92        (1,250)      40.00
              Options outstanding at end of period..........   161,986        38.24       162,836       41.62
              Options exercisable at end of period..........   161,644        38.23       157,458       41.68
              Options available for future grants...........   142,559          n/a       147,164         n/a

              As of September 30, 2002, 85,136 of such options were intended to qualify as incentive stock
              options pursuant to Section 422 of the Internal Revenue Code of 1986, as amended.




                                      -8-

<PAGE>
                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------


Note 4 -      OPTIONS (Continued)

              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,
              "ACCOUNTING FOR STOCK-BASED COMPENSATION," the effect would have been immaterial for the
              nine- and three-month periods ended September 30, 2002 (based upon the Black-Scholes
              option pricing model) and,in fact, would have been anti-dilutive for such periods.

Note 5 -      BANK LINE OF CREDIT

              Bank line of credit at September 30, 2002 consisted of the following:

                                                                    MAXIMUM LINE      LINE OF CREDIT AT
                                                                      OF CREDIT      SEPTEMBER 30, 2002
                                                                    ------------     ------------------
              Secured by assignment of receivables,
                 bears interest at prime......................       $2,500,000          $1,270,000

              Effective July 22, 2002, the bank line of credit was renewed. The line of credit bears interest
              at prime, which is payable monthly, and all amounts outstanding under the line of credit are
              due June 30, 2003. The line of credit is secured by contracts receivable and guaranteed by
              Unified Financial Services, Inc.

Note 6 -      RENTAL AND LEASE INFORMATION

              We lease certain office facilities and equipment. Rental expense for the nine months ended
              September 30, 2002 and 2001 were $712,727 and $676,965, respectively.

              At September 30, 2002, we were committed to minimal rental payments under certain
              noncancellable operating leases. As of September 30, 2002, the minimum future rental
              commitments for each of the succeeding five years subsequent to September 30, 2002 were as
              follows:

                               2003 ......................................$     575,333
                               2004 .......................................     506,406
                               2005 .......................................     464,147
                               2006 .......................................     405,513
                               2007 .......................................     425,325
                               Thereafter..................................     688,271
                                                                             ----------
                                    Total..................................  $3,064,995
                                                                             ==========

              As of September 30, 2002, the leases with respect to the property occupied by our trust and
              retirement services operation had expired. We currently are negotiating a new lease with the
              landlord, which we anticipate will be executed during November 2002. It currently is
              anticipated that the term of such lease will be five years and annual lease payments of
              approximately $207,720 will be due with respect to such new lease.




                                      -9-
<PAGE>
                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------


Note 7 -      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 8 -      CASH SEGREGATED UNDER FEDERAL REGULATION AND NET CAPITAL 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 September 30, 2002, the net capital
              and ratio of aggregate indebtedness for Unified Financial Securities were $126,474 and 3.34
              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.

Note 9 -      FAIR VALUE OF FINANCIAL INSTRUMENTS

              The following table presents the carrying amounts and estimated fair value of our financial
              instruments at September 30, 2002 and 2001. 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.

                                                                                SEPTEMBER 30,
                                                          -------------------------------------------------------
                                                                      2002                         2001
                                                          --------------------------     ------------------------
                                                            CARRYING         FAIR         CARRYING         FAIR
                                                             AMOUNT          VALUE         AMOUNT          VALUE
                                                            --------        ------        --------        -------
              (IN THOUSANDS)
              Financial assets:
                 Cash and cash equivalents............     $ 6,637.9      $  6,637.9     $  4,336.5     $ 4,336.5
                 Due from banks.......................       2,581.6         2,581.6        1,383.3       1,383.3
                 Bond investments.....................      16,338.1        16,338.1       20,975.7      20,975.7
                 Securities and mutual funds..........         599.9           599.9          548.7         548.7
                 Loans, net of allowance..............      60,635.3        60,635.3       37,927.1      37,927.1
                 Receivables (trade), net of allowance       5,683.8         5,683.8       11,583.5      11,583.5
                 Prepaid and sundry...................         376.6           376.6          383.0         383.0
              Financial liabilities:
                 Current liabilities..................      80,400.9        80,400.9       66,522.3      66,522.3
                 Capital lease obligation.............          --               --             1.2           1.2
                 Term debt............................          --               --         1,604.7       1,604.7




                                      -10-


<PAGE>

                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------

Note 10 -     DISCLOSURES ABOUT REPORTING SEGMENTS

              We have five reportable operating segments: trust and retirement services; mutual fund
              administration services; banking; brokerage; and investment advisory services. In addition,
              we also report corporate as a separate segment.

              Our banking segment, which includes Unified Banking Company and Commonwealth
              Premium Finance Company, reports revenue partially in accordance with the AICPA Audit
              and Accounting Guide for Banks and Savings Institutions, which requires that banking
              revenue be reported net of interest expense, and partially in accordance with the AICPA
              Audit and Accounting Guide for Financial Institutions(other than banks and insurance
              companies), which treats the provision for loan losses as an operating expense. Pursuant to
              the AICPA guide for banks, banking revenue is presented net of the provision for loan
              losses. As a result, we report our provision for loan losses as an operating expense on our
              Statements of Operations. For the nine months and three months ended September 30, 2002
              and 2001, our banking operation recorded interest expense of $2,263,119 and $2,691,129,
              respectively, and $815,730 and $843,781, respectively. Our banking operation's provision
              for loan losses was $589,186 and $90,000 for the nine months ended September 30, 2002 and
              2001, respectively, and $44,783 and $35,000 for the three months ended September 30, 2002
              and 2001, respectively. Additionally, pursuant to the AICPA guide for banks,banks typically do not
              report gross profit. However, for comparability among our operating segments, we have
              reported banking gross profit, which amount is equal to banking revenue for any given
              period.

              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 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
              nine or three months ended September 30, 2002 and 2001:




                                      -11-



<PAGE>

                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------

                                                          AS OF OR FOR THE                      FOR THE
                                                          NINE MONTHS ENDED               THREE MONTHS ENDED
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
                                                   -------------------------------    -----------------------------
                                                        2002             2001             2002            2001
                                                   -------------     -------------    ------------     ------------
Revenue:
-------
     Trust and retirement........................  $   3,885,920     $   3,696,935    $  1,220,518     $  1,293,164
     Mutual fund administration..................      4,391,201         4,011,885       1,655,321        1,344,586
     Banking.....................................      2,067,516         1,509,233         739,341          587,589
     Brokerage...................................      1,810,285         2,134,780         697,713          686,617
     Investment advisory.........................      1,176,585         1,492,696         372,955          486,604
     Corporate...................................          8,429           152,253        (139,818)           5,376
                                                   -------------     -------------    ------------     ------------
          Total..................................  $  13,339,936     $  12,997,782    $  4,546,030     $  4,403,936
                                                   =============     =============    ============     ============

Gross profit:
-------------
     Trust and retirement........................  $   3,173,721     $   3,132,380    $  1,002,698     $    949,997
     Mutual fund administration..................      3,801,128         3,501,397       1,460,490        1,213,106
     Banking.....................................      2,067,516         1,509,233         739,341          587,589
     Brokerage...................................        607,221           823,397         139,990          267,207
     Investment advisory.........................        971,667         1,356,449         298,850          440,890
     Corporate...................................          7,983           152,253            (298)           5,376
                                                   -------------     -------------    ------------     ------------
          Total..................................  $  10,629,236     $  10,475,109    $  3,641,071     $  3,464,165
                                                   =============     =============    ============     ============

Total assets:
-------------
     Trust and retirement........................  $   3,061,531     $   3,199,981
     Mutual fund administration..................      2,579,270         1,917,680
     Banking.....................................     84,301,793        64,316,514
     Brokerage...................................        689,409           750,970
     Investment advisory.........................      1,350,491         1,401,080
     Corporate...................................      5,144,384         1,264,341
     Discontinued................................             --         9,144,380
                                                   -------------     -------------
          Total..................................  $  97,126,878     $  81,994,946
                                                   =============     =============

Depreciation and amortization:
-----------------------------
     Trust and retirement........................  $     101,171     $      99,879
     Mutual fund administration..................         94,658            78,634
     Banking.....................................        132,708           118,236
     Brokerage...................................          3,698            16,781
     Investment advisory.........................         14,215            98,937
     Corporate...................................        (64,496)          190,013
                                                   -------------     -------------
          Total..................................  $     281,954     $     602,480
                                                   =============     =============

Capital expenditures:
--------------------
     Trust and retirement........................  $      39,670     $     137,930
     Mutual fund administration..................        157,793            24,625
     Banking.....................................          5,800            72,190
     Brokerage...................................             --             8,216
     Investment advisory.........................          3,890             9,742
     Corporate...................................          7,830            79,335
     Discontinued................................             --           266,264
                                                   -------------     -------------
          Total..................................  $     214,983     $     598,302
                                                   =============     =============




                                      -12-


<PAGE>
                         UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------

Note 11 -     UNIFIED BANKING COMPANY STATEMENTS OF FINANCIAL CONDITION AND OPERATIONS

              Unified Banking Company commenced operations on November 1, 1999.  Included in our
              consolidated financial statements at September 30,2002 and 2001 were the bank's total
              assets of $85,367,049 and $61,868,681, respectively, and total liabilities of $79,499,532 and
              $55,694,800, respectively. As of such dates, certain components of such assets and liabilities
              were as follows:

                                                                                       SEPTEMBER 30,
                                                                                ---------------------------
                                                                                   2002            2001
                                                                                ----------      -----------

              Due from banks..............................................      $2,581,559      $ 1,384,679
              Investments in securities:
                US agency securities......................................      18,921,084       20,975,732
                FHLB stock................................................         502,200          189,600
              Loans:
                Real estate loans.........................................      39,189,704       22,914,763
                Commercial loans..........................................      16,669,424        9,795,098
                Installment loans.........................................       5,260,243        5,701,533
                Other loans...............................................          36,167              159
                Allowance for loan losses.................................         520,216          395,000
              Bank deposits:
                Demand deposits...........................................       9,899,790        6,718,278
                Official checks...........................................         272,666          220,312
                NOW accounts..............................................       2,306,868        1,186,852
                Money market accounts.....................................      12,237,436        7,241,353
                Savings accounts..........................................          52,396           63,056
                Time deposits.............................................      43,711,080       33,513,324
                Other interest-bearing deposits...........................       5,675,935        4,788,500
              Federal and borrowed funds..................................       4,828,246        1,536,000

              As discussed in Note 10, we report our results of operations in accordance with the AICPA
              guide for financial institutions (other than banks and insurance companies). If we reported
              our results of operations in accordance with the AICPA guide for banks, the results of
              operations for Unified Banking Company for the nine-and three-month periods ended
              September 30, 2002 at 2001 would have been as follows:

                                                          NINE MONTHS ENDED               THREE MONTHS ENDED
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
                                                   -------------------------------    -----------------------------
                                                        2002             2001             2002            2001
                                                   -------------     -------------    ------------     ------------

              Interest and dividend income.......  $   3,385,041     $   3,343,574    $  1,228,919     $  1,074,723
              Loan fees..........................        236,935           173,466          87,340           77,721
              Other income.......................        226,785           145,697          75,079          101,267
                                                   -------------     -------------    ------------     ------------
                   Total revenue.................      3,848,761         3,662,737       1,391,338        1,253,711

              Interest expense...................      2,217,091         2,590,748         798,429          813,294
                                                   -------------     -------------    ------------     ------------
                 Subtotal........................      1,631,670         1,071,989         592,909          440,417

              Provision for loan losses..........       (589,186)          (90,000)        (44,783)         (35,000)
                                                   -------------     -------------    ------------     ------------
                   Net revenue...................      1,042,484           981,989         548,126          405,417

              Operating expenses.................      1,593,013         1,586,666         531,189          536,863
                                                   -------------     -------------    ------------     ------------
              Profit (loss) before income taxes    $    (550,529)   $    (604,677)    $     16,937     $   (131,446)
                                                   =============     =============    ============     ============




                                      -13-
<PAGE>
                           UNIFIED FINANCIAL SERVICES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------

Note 11 -     UNIFIED BANKING COMPANY STATEMENTS OF FINANCIAL CONDITION AND
              OPERATIONS (Continued)

              The revenue amounts in Note 10 for our banking operation include the "Subtotal" amounts
              reflected above for Unified Banking Company plus the revenues of Commonwealth Premium
              Finance Corporation.

Note 12 -     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, 2003, 2004 and 2005, the exercise price per share of our common stock subject to
              the option will be $55, $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, 2003 by the holder of the
              note (whether the investor, the executive officers or any other holder): (a) we would issue
              54,545 shares of stock (50,000 after May 23, 2003) 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 nine months ended
              September 30, 2002 and 2001 and the three months ended September 30, 2002 and 2001, we
              received payments totaling $258,756 and $819,977, respectively,and $39,301 and $0,
              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)
                             SEPTEMBER 30, 2002 AND 2001
                             ---------------------------

Note 13 -     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 nine- and
              three-month periods ended September 30, 2002, all potential common shares were considered
              to be anti-dilutive and were excluded from the calculation of diluted loss per share. For the
              nine- and three-month periods ended September 30, 2001, 137,300 potential common shares
              were considered to be anti-dilutive and were excluded from the calculation of diluted loss per
              share.

Note 14 -     RELATED PARTY TRANSACTION

              As of September 30, 2002, $3,454,164 was eliminated from both bond investments and
              deposits on our Consolidated Statement of Financial Condition, which amount represented
              cash on deposit at our bank from various subsidiaries of our company.

Note 15 -     SALE OF INSURANCE OPERATIONS

              On December 17, 2001, we sold substantially all 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 is subject to possible indemnification claims of Arthur J. Gallagher & Co.pursuant to the
              sale agreement. Any funds remaining in the escrow account after June 16, 2003 (and which
              are not subject to a claim made by Arthur J. Gallagher & Co. before such date) will be
              released to us. As of December 31, 2001, we established a long-term liability of $800,000
              related to the escrow. As of September 30, 2002, we believed there was a current potential
              for approximately $300,000 in claims against the escrow. In addition,in connection with the
              sale, we received an interest-bearing note receivable of $800,000, which is subject to possible
              reduction in the event Arthur J. Gallagher does not achieve certain revenue or income targets
              for the year ending December 31, 2002 with respect to the business that it acquired from our
              insurance subsidiaries.  As of December 31, 2001, we established a liability of $800,000
              related to the revenue and income targets. As of September 30, 2002, we were not able to
              determine whether Arthur J. Gallagher & Co. would achieve such targets and, as a result, we
              did not adjust the liability as of such date. In accordance with generally accepted accounting
              principles, we will adjust the liability when definitive information is available with respect to
              such targets.




                                      -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 loan loss reserve 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 five 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, 2001. 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




                                      -16-
<PAGE>

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

         The integration of our three principal businesses (mutual fund administration services, trust and
retirement services and investment advisory services) with our banking and brokerage operations allows
for the capture of additional profitable revenues. Further, this integration provides much greater control
of the quality of our component services.

         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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

         Revenue for the nine months ended September 30, 2002 compared to the same period of 2001
increased $342,154, or 2.6%, from $12,997,782 to $13,339,936. For such periods, gross profit increased
$154,127, or 1.5%.

         For the first nine months of 2002 compared to the same period of 2001, trust and retirement
services revenue increased $188,984, or 5.1%, primarily due to a small increase in assets under
management. For such periods, trust and retirement services gross profit increased $41,341 after fees
paid to advisor partners increased slightly year over year, increasing 2.9% from $3.056 million in 2001 to
$3.144 million in 2002, and lower interest income and other income of $46,988 period over period. As of
September 30, 2002, our trust and retirement services operation had approximately $485.8 million in
assets under management compared to $482.7 million as of September 30, 2001. Our trust and retirement
services assets under management remained relatively constant due to the addition of new client assets
during such periods despite declines in the DJIA, S&P 500 and Nasdaq of approximately 24.2%, 28.9%
and 39.9%, respectively, from September 30, 2001 to September 30, 2002.

         For such periods, mutual fund administration services revenue increased $379,316, or 9.5%, and
mutual fund administration services gross profit increased $299,732, or 8.6%. As of September 30, 2002,
we provided mutual fund administrative services to 31 mutual fund families consisting of approximately
194 portfolios and approximately $9.7 billion in assets under service, compared to 30 mutual fund
families consisting of 145 portfolios and approximately $5.8 billion in mutual fund assets under service as
of September 30, 2001.  Approximately $2.8 billion of the increase in assets under service was added
during the month of June 2002 with our commencement of services for the Huntington Funds. During the
past 12 months, our mutual fund services operation added several new large clients, but also saw several




                                      -17-
<PAGE>

small clients discontinue operations due to market conditions. While our assets under service increased
period to period, the mix of services (transfer agency, fund accounting and administrative services) that
we provided to certain of our mutual fund clients changed. We recognize higher margins on
administrative services and, to a lesser extent, fund accounting services compared to transfer agency
services. Our pricing, in certain instances, also is dependent upon the number of shareholder accounts
serviced. An omnibus account may represent a significant amount of assets under service, but would not
generate as much in fees as an account with hundreds of shareholders but less assets under service.
Period over period, transfer agency and fund accounting revenues increased $425,432 and $123,423,
respectively, while administration services revenues declined $152,172.

         Banking revenue and gross profit (please see note 10) increased $558,283, or 37.0%, for the nine
months ended September 30, 2002 compared to the same period of 2001, primarily due to an increase in
net interest income of $424,000 and a $120,000 increase in secondary market loan revenue. Net loans as
of September 30, 2002 increased to $61.2 million from $44.1 million as of September 30, 2001. Our
banking operation's net interest margin increased from 1.56% for the nine months ended September 30,
2001 to 2.04% for the nine months ended September 30, 2002. During the first nine months of 2002, our
net interest margin rose 48 basis points from the same period of 2001. We also experienced a$20,424,000
million, or 38.0%, increase in deposits from September 30, 2001 to September 30, 2002. Such deposits
primarily were used to fund our banking operation's loan growth.

         During the nine months ended September 30, 2002, our banking operation charged-off $500,229
in loans that management previously had classified as doubtful, of which $455,000 represented one credit.
We are working aggressively to collect these loans, and will continue to do so, but management believed it
necessary to charge-off these loans at this time.

         As of September 30, 2002, our banking operation's ratio of non-performing loans to total loans
was 0.21%, compared to 0% at September 30, 2001, after the charge-off of loans of $500,229. At
September 30, 2002, our non-performing loans totaled $130,000. We are working aggressively to collect
all non-performing loans, but may be required to increase our provision for loan losses in future quarters
if we are unsuccessful in collecting these loans, which could have a material effect on our results of
operations.

         For the nine months ended September 30, 2002 compared to the same period of 2001, brokerage
 revenue and gross profit declined $324,495, or 15.2%, and $216,177, or 26.3%, respectively. These
declines primarily were attributable to a $99,098 decline in commission revenue collected from
introducing firm clients and a $129,824 decline in commission revenue due to the loss of certain full
service brokerage accounts following the death of the former President of Commonwealth Investment
Services. Also contributing to such decline was a $73,011 decline in investment management fees
resulting from lower trading volume.

         For such periods, investment advisory revenue and gross profit declined $316,109, or 21.2%, and
$384,780, or 28.4%, respectively. Such declines primarily were due to the lower market value of assets
under management at such operation. Assets under management at our investment advisory operation
declined $133.3 million, or 37.6%, from $354.7 million at September 30, 2001 to $221.4 million at
September 30, 2002. From September 30, 2001 to September 30, 2002, assets under management at our
investment advisory operation declined approximately 15.2% due to the decline in the financial markets
during such period (which decline was less than the overall decline in the financial markets). Such
operation also experienced a loss of approximately $65.0 million in assets under management due to
the transfer of the assets of the Liquid Green Money Market Fund to the Huntington Funds and the
termination of such operation's relationship with one portfolio manager.




                                      -18-
<PAGE>


         Corporate revenue and gross profit declined $143,826, or 94.5% and $144,272, or 94.8%,
respectively, primarily due to our receipt in 2001 of $135,000 in settlement of a trademark dispute.

         Total expenses declined $878,249, or 7.0%, for the nine months ended September 30, 2002
compared to the nine months ended September 30, 2001. During the second half of 2001, management
implemented certain expense cuts in an effort to improve the profitability of our company, which cuts
were partially offset by a $589,186 increase in the provision for loan losses during 2002, primarily due to
the write-off of one delinquent loan as discussed above. For such periods, employee compensation
declined $729,694, or 10.2%. This decline primarily was attributable to salary reductions taken by certain
officers of our company during the first quarter of 2002, which reductions ranged from 20% to 40% of
such officers' annualized salary, and a reduced employee workforce.   Telephone expense declined
$112,658, or 37.0%, for the nine months ended September 30, 2002 compared to the same period of 2001
due to a change in our company's long distance provider and the termination of our wide area network.
For such periods, depreciation and amortization expense declined $320,526 or 53.2%, primarily due to the
effect of a reversal of a previous depreciation accrual and our adoption of Statement of Financial
Accounting Standards No. 142, which required us to cease amortizing goodwill. Under recently adopted
accounting rules, we will be required to periodically evaluate the carrying value of our goodwill balances
to determine whether the value has been impaired.  If we determine there has been an impairment, we will
recognize a charge to our earnings in the quarter we determine the value has been impaired, which could
be material. For such periods, interest expense declined $75,137, or 111.1%, due to our repayment of our
outstanding term loan during December 2001. Program administration fees declined $136,590, or 86.8%,
primarily due to a $190,000 insurance recovery in the first quarter of 2002 related to a loss recorded
during 2001 at our mutual fund services operation. This recovery was partially offset by a $49,270 unrecoverable loss
during the nine months ended September 30, 2002. Our provision for bad debt decreased
$158,804 due to the write-off of certain uncollected receivables at our mutual fund operations during
2001. Our provision for loan losses increased $499,186, or 554.7%, for the nine months ended September
30, 2002 compared to the same period of 2001, primarily due to the expense associated with the $455,000
loan charged-off in June 2002. Unified Banking Company is required by Federal law to maintain a
reserve for possible loan losses based upon the size of and risks associated with the loan portfolio.
Insurance costs increased $42,239, or 33.8%, during such periods, primarily due to increased premiums
associated with our insurance coverage. For such periods, other operating expense increased $95,834, or
9.4%, primarily due to a $819,977 benefit received by us during the nine months ended September 30,
2001 in connection with the construction and development of the VSX marketplace and its corresponding
products, compared to a $258,756 benefit received by us during the nine months ended September 30,
2002. Removing the effect of the benefit received from VSX Holdings during 2001, other expenses
declined $465,385, or 25.2%, primarily due to a $91,093, $57,354 and $267,270 decrease in travel and
entertainment, advertising and other operating expenses, respectively, at our trust and retirement services
operation. During 2001, our trust and retirement services operation incurred expenses related to the
development of new client products and in connection with its conversion to a new data processing system.
Such expenses were recorded as other operating expenses.

         For the nine months ended September 30, 2002, we recorded a $1,016,730 loss from continuing
operations compared to a $1,429,828 loss for the same period of 2001. The $448,099 decline in loss
during such periods was a result of the expense reductions discussed above as well as the revenue
increase that we experienced in 2002. The results for the nine months ended September 30, 2002 also
included a $6,919 income tax expense while the same period of 2001 included a $635,872 income tax
benefit.




                                      -19-
<PAGE>

         For the nine months ended September 30, 2002, we recorded $13,207 net income from
discontinued operations compared to $1,039,012 in net income from discontinued operations for the same
period of 2001. Discontinued operations for the nine months ended September 30, 2001 included the
operating results of our insurance operations, which were sold in December 2001.

         We recorded a net loss of $1,003,523, or a basic and fully diluted loss per share of $0.35, for the
nine months ended September 30, 2002 compared to a net loss of $390,816, or a basic and fully diluted
loss per share of $0.14 and $0.13, respectively, for the same period of 2001.

COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

         Revenue for the third quarter of 2002 compared to the third quarter of 2001 increased $142,094,
or 3.2%, from $4,403,936 to $4,546,030. For such periods, gross profit increased $176,906, or 5.1%.

         For the second quarter of 2002 compared to the same quarter of 2001, trust and retirement
services revenue decreased $72,647, or 5.6%, and gross profit increased $52,701, or 5.5%. During the
third quarter of 2001, our trust and retirement services operation incurred substantial start-up costs
associated with a new program. Such costs reduced our gross profit for such quarter, which contributed
to the increase in gross profits for the third quarter of 2002 compared to the same quarter of 2001.

         For such quarters, mutual fund administration services revenue increased $310,735, or 23.1%,
and gross profit increased $247,384, or 20.4%. As discussed above, as of September 30, 2002, we
provided mutual fund administrative services to 31 mutual fund families consisting of approximately 194
portfolios and $9.7 billion in assets under services, compared to 30 mutual fund families consisting of 145
portfolios and $5.8 billion in assets under service as of September 30, 2001.

         Banking revenue and gross profit (please see note 10) increased $151,752, or 25.8%, for third
quarter of 2002 compared to the same quarter of 2001, primarily due to an increase in net interest income
of $175,000 and a $10,000 increase in secondary market loan revenue. Net loans as of September 30,
2002 increased $17.1 million from $44.1 million as of September 30, 2001.

         For the quarter ended September 30, 2002 compared to the same quarter of 2001, brokerage
revenue decreased $128,871, or 18.8%, and gross profit declined $127,217, or 47.6%. These declines
primarily were attributable to a $22,289 decline in commission revenue collected from introducing firm
clients and a $19,088 decline in commission revenue due to the loss of certain full service brokerage
accounts following the death of the former President of Commonwealth Investment Services. Also
contributing to such decline was a $19,330 decline in trail commission income due to a decrease in asset
levels of mutual funds for which our brokerage operation serves as distributor and a $24,270 decline in
investment management fees.

         For such quarters, investment advisory revenue and gross profit declined $113,648, or 23.4%, and
$142,039, or 32.2%, respectively. As discussed above, such declines primarily were due to the lower market value of assets
under management resulting from the overall declines in the financial markets.

         Total expenses declined $617,146, or 14.1%, for the third quarter of 2002 compared to the same
quarter of 2001. As discussed above, during the second half of 2001, management implemented certain
expense cuts in an effort to improve the profitability of our company, which cuts were partially offset by a
$589,186 increase in the provision for loan losses during 2002, primarily due to the write-off of one
delinquent loan as discussed above. For such quarters, employee compensation declined $273,174, or
11.5%, primarily due to salary reductions taken by certain officers of our company during the first quarter



                                      -20-
<PAGE>

of 2002 and a reduced employee workforce. Employee insurance and benefits declined $38,522, or
11.6%, primarily due to a reduced employee workforce, partially offset by increased health insurance
costs in 2002. Mail and courier expense increased $9,735, or 36.9%, primarily due to increased mailing
costs associated with marketing efforts at our trust and retirement services operation. Telephone expense
declined $40,720, or 45.1%, for the reasons discussed above. For such quarters, depreciation and
amortization expense declined $164,628, or 75.3%, primarily due to the effect of a reversal of a previous
depreciation accrual and our adoption of Statement of Financial Accounting Standards No. 142, which
required us to cease amortizing goodwill. Under recently adopted accounting rules, we will be required to
periodically evaluate the carrying value of our goodwill balances to determine whether the value has been
impaired. If we determine there has been an impairment, we will recognize a charge to our earnings in
the quarter we determine the value has been impaired, which could be material. For such quarters,
interest expense declined $8,570, or 97.6%, due to our repayment of our outstanding term loan during
December 2001. Our provision for bad debt increased $34,328, or 110.7%, due to reserves taken at our
mutual fund services operation. Our provision for loan losses increased $9,783, or 28.0%, primarily due
to an increase in the size of our banking operation's loan portfolio and our write-off of approximately
$45,000 of non-performing loans.  For such quarters, insurance expense declined $26,615, or 33.2%. The
third quarter of 2001 included a $20,000 additional charge for worker's compensation premiums based
upon an audit of our worker's compensation account for 2000 and a $20,000 additional insurance expense
at our trust and retirement services operation. These additional charges in 2001 resulted in the decline in
insurance costs for the third quarter of 2002 compared to the same quarter of 2001.  Increased premiums
associated with our insurance coverages for 2002 partially offset such declines. For such quarters, other
operating expense declined $167,057, or 28.8%, primarily due to a $119,596 decline in expenses at our trust
and retirement services operation, which expenses were described above. In addition, we received a
$39,303 benefit during the third quarter of 2002 (compared to $0 during the same quarter of 2001) in
connection with the construction and development of the VSX marketplace and its corresponding
products.

         For the quarter ended September 30, 2002, we recorded a $132,402 loss from continuing
operations compared to a $718,155 loss for the same quarter of 2001. The $585,753 decline in loss for
such quarters was a result of the expense reductions described above and the increase in revenues we
experienced during the third quarter of 2002.

         For the quarter ended September 30, 2002, we recorded $158 net loss from discontinued
operations compared to $364,971 in net income from discontinued operations for the same quarter of
2001. Discontinued operations for the quarter ended September 30, 2001 included the operating results of
our insurance operations, which were sold in December 2001.

         We recorded a net loss of $132,560, or a basic and fully diluted loss per share of $0.05, for the
quarter ended September 30, 2002 compared to a net loss of $353,184, or a basic and fully diluted loss per
share of $0.12, for the same quarter of 2001.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY. Our primary sources of liquidity historically have been and continue to be cash on
hand, cash flow from operating activities, available borrowing capacity from capitalized leases and a loan
from a regional bank. The net decrease in cash and cash equivalents at September 30, 2002 from
December 31, 2001 was $2,206,592. The net decrease primarily was due to an increase in loans
receivable, partially offset by increased customer deposits.




                                      -21-
<PAGE>


         With respect to our banking operation, long-term liquidity is a function of the core deposit base
and an adequate capital base. Our banking operation is committed to growth of its core deposit base and maintenance of
its capital base. The growth of the deposit base is internally generated through product pricing and
product development. During its first three years of operations, Unified Banking Company is required to
maintain a consolidated Tier 1 capital to total assets ratio of at least 8.0%. As of September 30, 2002,
Unified Banking Company had a consolidated ratio of Tier 1 capital to total assets of 8.96%.

         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 and 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.

         Unified Banking Company experienced net growth in assets of 22.3% during the first nine
months of 2002, while deposits increased 16.6% during the same period. 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 $15,892,823 at September 30, 2002 compared
to $16,748,911 at year-end 2001. The decrease in total stockholders' equity was due to our net loss for
the nine months ended September 30, 2002, partially offset by $256,686 in unrealized gains on securities
for such period.

         The growth of Unified Banking Company will have an effect on our working capital. It currently
is anticipated that as Unified Banking Company grows, our working capital ratio will become more in
line with ratios traditionally associated with bank holding companies.

         We believe that our existing capital resources should be adequate for the working capital
requirements of our core businesses over the next twelve months. In the event that our plans or
assumptions change, or if our resources available to meet unanticipated changes in business conditions
prove to be insufficient to fund operations, we could be required to seek additional financing prior to that
time.




                                      -22-
<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 monthly 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.




                                      -23-


<PAGE>



         The following table illustrates Unified Banking Company's estimated
static gap with prepayments calculated as of September 30, 2002:

                                                                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
   Securities.................
     U.S. agencies............ $     --  $   634  $  611   $ 590  $1,654  $ 1,487  $ 1,341  $  8,742  $  352  $ 3,543  $ 18,954
     FHLB stock...............      502       --      --      --      --       --       --        --      --       --       502
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Total securities.......      502      634     611     590   1,654    1,487    1,341     8,742     352    3,543    19,456
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Loans
     Commercial
       Fixed..................       --      113      40      41     123      326      128     1,919     616      846     4,152
       Variable...............   12,518       --      --      --      --       --       --        --      --       --    12,518
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total commercial.....   12,518      113      40      41     123      326      128     1,919     616      846    16,670
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Real Estate
       Commercial
         Fixed................       --       44     304     203   1,325      280      788     5,117     138       --     8,199
         Variable.............    4,209       --      --      --      --       --       --        --      --       --     4,209
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total commercial...    4,209       44     304     203   1,325      280      788     5,117     138       --    12,408
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Residential
         Fixed................       --      244     388      98     287      388      264     3,697   1,612    2,556     9,484
         Variable.............    4,245       --      --      --      --       --       --        --      --       --     4,245
         Other................       --        7       7       7      20      443       21       354      23      783     1,664
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total residential..    4,245      251     395     105     307      781      285     4,051   1,635    3,339    15,393
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Total real estate            8,454      295     699     308   1,632    1,061    1,073     9,168   1,773    3,339    27,801
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------

     Construction
       Fixed..................       --        6      --      --      --       --       --        --      --       --         6
       Variable...............    2,881       --      --      --      --       --       --        --      --       --     2,881
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total construction...    2,881        6      --      --      --       --       --        --      --       --     2,887
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Personal
       Home equity loans......    8,552       --      --      --      --       --       --        --      --       --     8,552
       Installment loans......       --      227     287     169     753      370      516       941     102       18     3,383
       Cash reserve loan......       28       --      --      --      --       --       --        --      --       --        28
       Personal open end
         letters of credit....    1,836       --      --      --      --       --       --        --      --       --     1,836
       Loans secured by
         deposits.............       --       --      --      --       1        1       11        27      --       --        41
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total personal.......   10,416      227     288     169     754      371      327       968     102       18    13,840
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Total loans................   34,269      641   1,026     518   2,509    1,758    1,728    12,055   2,491    4,203    61,198
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     TOTAL RATE
       SENSITIVE ASSETS....... $ 34,771  $ 1,274  $1,638   $1,107 $4,163  $ 3,245  $ 3,069  $ 20,797  $2,843  $ 7,746  $ 80,654
                               ========  =======  ======   ====== ======  =======  =======  ========  ======  =======  ========




                                      -24-
<PAGE>


                                                                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............. $  2,038 $     -- $    -- $     -- $     -- $     -- $     -- $    --  $    -- $     -- $  2,308
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Money market accounts
       Market rate accounts...    4,704       --      --       --       --       --       --      --       --       --    4,704
       Business market rate
         accounts.............    2,066       --      --       --       --       --       --      --       --       --    2,066
       Special personal
         MMDA.................    1,090       --      --       --       --       --       --      --       --       --    1,090
       Special business
         MMDA.................    4,378       --      --       --       --       --       --      --       --       --    4,378
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total money market
           accounts...........   12,238       --      --       --       --       --       --      --       --       --   12,238
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Savings accounts.........       52       --      --       --       --       --       --      --       --       --       52
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Time deposits
       CD's > 100K............       --      718     898    1,315    4,670    2,000    1,570   6,361      100       --   17,633
       CD's < 100K............       --      849   1,291    2,967    9,215    1,658    1,403   8,652       41        1   26,078
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total time deposits..       --    1,567   2,189    4,282   13,885    3,658    2,973  15,013      141        1   43,711
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Individual retirement
         accounts.............       --       63     128       85      452       88        2   4,821       32        4    5,676
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total interest
           bearing deposits...   14,598    1,630   2,317    4,367   14,337    3,746    2,975  19,834      173        5   63,985
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Borrowed funds
       Repurchased agreements.       --       24      --       --       --       --       --      --       --       --       24
       FHLB borrowings........       --       28      28      728       72       72       72   2,019      297    1,488    4,804
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total borrowed funds.       --       52      28      728       72       72       72   2,019      297    1,488    4,828
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
   TOTAL RATE
       SENSITIVE LIABILITIES.. $ 14,598 $  1,683 $ 2,346 $  5,095 $ 14,410 $  3,817 $  3,048 $21,853  $   471 $  1,493 $ 68,813
                               ======== ======== ======= ======== ======== ======== ======== =======  ======= ======== ========

INCREMENTAL GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 34,771 $  1,274 $ 1,638 $  1,107 $  4,163 $  3,245 $  3,069 $20,797  $ 2,843 $  7,746
   Total rate sensitive
     liabilities..............   14,598    1,683   2,346    5,095   14,410    3,817    3,048  21,853      471    1,493
   Gap........................   20,173     (409)   (708)  (3,988) (10,246)    (572)      21  (1,056)   2,373    6,253
   RSA/RSL....................     2.38x    0.76x   0.70x    0.22x    0.29x    0.85x    1.01x   0.95x    6.04x    5.19x
   RSA/assets.................     0.41     0.01    0.02     0.01     0.05     0.04     0.04    0.24     0.03     0.09
   RSL/assets.................     0.17     0.02    0.03     0.06     0.17     0.04     0.04    0.26     0.01     0.02
   Gap/assets.................    23.63%   -0.48%  -0.83%   -4.67%  -12.00%   -0.67%    0.03%  -1.24%    2.78%    7.32%
   Gap/RSA....................    58.02   -32.09  -43.21  -360.12  -246.13   -17.64     0.70   -5.08    83.44    80.73
CUMULATIVE GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 34,771 $ 36,045 $37,683  $38,790 $ 42,953 $ 46,198 $ 49,267 $70,065 $ 72,908 $ 80,654
   Total rate sensitive
     liabilities..............   14,598   16,281  18,626   23,722   38,131   41,948   44,996  66,849   67,320   68,813
   Gap........................   20,173   19,764  19,057   15,068    4,822    4,250    4,271   3,216    5,588   11,841
   RSA/RSL....................     2.38x    2.21x   2.02x    1.64x    1.13x    1.10x    1.09x   1.05x    1.08x    1.17x
   RSA/assets.................     0.41     0.42    0.44     0.45     0.50     0.54     0.58    0.82     0.85     0.94
   RSL/assets.................     0.17     0.19    0.22     0.28     0.45     0.49     0.53    0.78     0.79     0.81
   Gap/assets.................    23.63%   23.15%  22.32%   17.65%    5.65%    4.98%    5.00%   3.77%    6.55%   13.87%
   Gap/RSA....................    58.02    54.83   50.57    38.85    11.23     9.20     8.67    4.59     7.66    14.68

         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.




                                      -25-
<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.

                 BASIS POINT                                       PERCENTAGE CHANGE IN
                  CHANGE IN                      NET INTEREST INCOME         MARKET VALUE OF PORTFOLIO EQUITY
               INTEREST RATES                     PROJECTED CHANGE                   PROJECTED CHANGE
               --------------                   -------------------          -------------------------------
                    -300                              -14.19                               -3.13
                    -200                               -8.78                               -4.46
                    -100                               -4.10                                0.19
                       0                                 --                                    --
                     100                                4.26                               -6.83
                     200                                8.30                              -16.22
                     300                               12.41                              -25.98


         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
inancial 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.




                                      -26-
<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.
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.




                                      -27-


<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.

         We did not file any Current Reports on Form 8-K during the quarter ended September 30, 2002.




                                      -28-

<PAGE>


                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                                     UNIFIED FINANCIAL SERVICES, INC.
                                                     (Registrant)



Dated:  November 8, 2002                             By:   /s/ John S. Penn
                                                          ---------------------------------------------------------
                                                          John S. Penn, President and Chief Executive Officer



Dated:  November 8, 2002                             By:   /s/ Thomas G. Napurano
                                                          ---------------------------------------------------------
                                                          Thomas G. Napurano, Executive Vice President and Chief Financial Officer




                                      -29-

<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 in order 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 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 Effective
                           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




                                      -30-
<PAGE>


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

November 8, 2002                                               /s/ John S. Penn
                                                              --------------------------------------------
                                                                John S. Penn
                                                                President and Chief Executive Officer




                                      -31-
<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 in order 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 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 Effective
                           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




                                      -32-
<PAGE>


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

November 8, 2002                                               /s/ Thomas G. Napurano
                                                              --------------------------------------------
                                                                Thomas G. Napurano
                                                                Chief Financial Officer




                                      -33-
<PAGE>


                                  EXHIBIT INDEX

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

   10.1       Tri-Party Agreement, dated June 18, 2002, among Health Financial, Inc.,
              Unified Trust Company, National Association and Dr. Gregory W. Kasten, is
              filed herewith.*

   10.2       Waiver of Provisions of Employment Agreement, dated May 15, 2002,
              between Unified Financial Services, Inc. and Charles H. Binger, is filed
              herewith.*

   10.3       Waiver of Provisions of Employment Agreement, dated May 15, 2002,
              between Unified Financial Services, Inc. and David F. Morris, is filed
              herewith.*

   10.4       Line of Credit Note, dated July 22, 2002, by Commonwealth Premium
              Finance Corporation in favor of Bank One, Kentucky, NA, is filed herewith.

   10.5       Continuing Guaranty, dated July 22, 2002, by Unified Financial Services, Inc.
              in favor of Bank One, Kentucky, NA, is filed herewith.

   11.1       Computations of Earnings per Share, is filed herewith.

   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.


* Management or compensatory arrangement.

                                      -34-


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