<PAGE>

                                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                 JUNE 30, 2001
                               -------------------------------------------------



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 August 8, 2001
--------------------------------------      ------------------------------------
    Common stock, $0.01 par value                        2,880,028




<PAGE>
<PAGE>

                                          UNIFIED FINANCIAL SERVICES, INC.
                                                     FORM 10-Q

<TABLE>
                                                       INDEX
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                              <C>
PART I.           FINANCIAL INFORMATION

     Item 1.      Financial Statements

                  Consolidated Statements of Financial Condition - June 30, 2001 (Unaudited) and
                  December 31, 2000...............................................................................1

                  Consolidated Statements of Operations (Unaudited) - Six and Three Months Ended
                  June 30, 2001 and 2000..........................................................................3

                  Consolidated Statements of Comprehensive Income (Unaudited) - Six and Three Months
                  Ended June 30, 2001 and 2000....................................................................4

                  Consolidated Statements of Cash Flow (Unaudited) - Six Months Ended June 30, 2001 and
                  2000............................................................................................5

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

     Item 2.      Management's Discussion and Analysis of Financial Condition and Results of
                  Operations.....................................................................................13

                  Cautionary Statement Regarding Forward-Looking Statements......................................13

                  General........................................................................................13

                  Comparison of Results for the Six Months Ended June 30, 2001 and 2000..........................14

                  Comparison of Results for the Three Months Ended June 30, 2001 and 2000........................16

                  Liquidity and Capital Resources................................................................18

                  Risk Factors...................................................................................19

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

PART II.          OTHER INFORMATION

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

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

EXHIBIT INDEX....................................................................................................30
</TABLE>


                                   - i -

<PAGE>
<PAGE>

PART I.           FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

<TABLE>
UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<CAPTION>
                                           ASSETS
                                           ------
                                                                JUNE 30,        DECEMBER 31,
                                                                  2001              2000
                                                              -----------       ------------
                                                              (UNAUDITED)
<S>                                                           <C>               <C>
Current Assets
     Cash and cash equivalents ........................       $ 4,337,444       $ 5,582,098
     Due from banks ...................................           803,885         1,162,639
     Federal funds sold ...............................         1,217,000         7,667,000
     Bond investments .................................        29,024,536        10,841,435
     Investments in affiliated mutual funds ...........               104                --
     Investments in securities and non-affiliated
       mutual funds ...................................           591,344           573,272
     Loans (net of allowance for loan losses of
       $360,000 for 2001 and $305,000 for 2000) .......        33,221,368        20,834,674
     Accounts receivable (net of allowance for
       doubtful accounts of $695,817 for 2001 and
       $500,042 for 2000) .............................        14,106,384        13,086,031
     Prepaid assets and deposits ......................           290,336           297,270
     Deferred tax asset ...............................                --            80,037
                                                              -----------       -----------

         Total current assets .........................        83,592,401        60,124,456
                                                              -----------       -----------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated
       depreciation of $4,648,556 for 2001 and
       $4,250,692 for 2000) ...........................         3,551,129         3,500,020
                                                              -----------       -----------
         Total fixed assets ...........................         3,551,129         3,500,020
                                                              -----------       -----------
Non-Current Assets
     Investment in affiliates .........................             1,010                10
     Organization cost (net of accumulated amortization
       of $230,609 for 2001 and $164,227 for 2000) ....           442,543           508,925
     Goodwill (net of accumulated amortization of
       $295,573 for 2001 and  $243,414 for 2000) ......         1,058,221         1,110,380
     Other non-current assets .........................           510,131           391,136
                                                              -----------       -----------
         Total non-current assets .....................         2,011,905         2,010,451
                                                              -----------       -----------
              TOTAL ASSETS ............................       $89,155,435       $65,634,927
                                                              ===========       ===========

<CAPTION>
(Continued on next page)

See accompanying notes.



                                   - 1 -

<PAGE>
<PAGE>

UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


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

                                                            JUNE 30,        DECEMBER 31,
                                                              2001              2000
                                                          -----------       ------------
                                                          (UNAUDITED)
<S>                                                       <C>               <C>
Current Liabilities:
     Current portion of capital lease obligations .       $     1,622       $     7,884
     Current portion of bank borrowings ...........         1,719,270         1,944,662
     Borrowed funds ...............................             2,000         1,143,000
     Bank line of credit ..........................         1,164,912         1,668,626
     Deposits .....................................        59,449,456        34,620,338
     Accounts payable and accrued expenses ........         1,477,235         2,508,776
     Accrued compensation and benefits ............           393,428           440,472
     Payable to insurance companies ...............         9,224,430         8,016,752
     Payable to broker-dealers ....................           249,996           172,374
     Income taxes payable, current ................            95,935                --
     Deferred income taxes ........................                --            14,308
     Other liabilities ............................         1,110,046           827,328
                                                          -----------       -----------
         Total current liabilities ................        74,888,330        51,364,520
                                                          -----------       -----------

Long-Term Liabilities
     Long-term portion of capital lease obligations               813             1,049
     Long-term portion of borrowings ..............           330,331           342,339
     Other long-term liabilities ..................           126,579            92,553
                                                          -----------       -----------
         Total long-term liabilities ..............           457,723           435,941
                                                          -----------       -----------
              Total liabilities ...................        75,346,053        51,800,461
                                                          -----------       -----------

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

Stockholders' Equity
     Common stock, par value $.01 per share .......            33,300            33,300
     Additional paid-in capital ...................        16,259,091        16,259,091
     Retained deficit .............................        (2,732,262)       (2,628,248)
     Accumulated other comprehensive income .......           249,253           170,323
                                                          -----------       -----------
              Total stockholders' equity ..........        13,809,382        13,834,466
                                                          -----------       -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........       $89,155,435       $65,634,927
                                                          ===========       ===========


See accompanying notes.
</TABLE>



                                    - 2 -

<PAGE>
<PAGE>

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

<CAPTION>
                                                          SIX MONTHS ENDED                THREE MONTHS ENDED
                                                              JUNE 30,                         JUNE 30,
                                                   ------------------------------     --------------------------
                                                        2001             2000             2001           2000
                                                   ------------      ------------     -----------    -----------
<S>                                                <C>               <C>             <C>             <C>
REVENUE:
     Gross revenue (see note 12).................  $ 16,198,044      $ 13,868,557    $  8,043,201    $ 7,092,406
                                                   ------------      ------------    ------------    -----------
           Total gross revenue...................    16,198,044        13,868,557       8,043,201      7,092,406
                                                   ------------      ------------    ------------    -----------

COST OF SALES:
     Cost of sales (see note 12).................     4,193,054         4,104,785       2,070,934      1,989,564
                                                   ------------      ------------    ------------    -----------
           Total cost of sales...................     4,193,054         4,104,785       2,070,934      1,989,564
                                                   ------------      ------------    ------------    -----------
           Gross profit (see note 12)............    12,004,990         9,763,772       5,972,267      5,102,842
                                                   ------------      ------------    ------------    -----------

EXPENSES:
     Employee compensation and benefits..........     7,539,712         5,919,254       4,056,185      2,861,607
     Mail and courier............................       243,607           291,794         126,155        137,122
     Telephone...................................       346,372           292,354         154,934        154,889
     Equipment rental and maintenance............       340,951           282,014         183,805        152,119
     Occupancy...................................       620,720           462,003         311,573        225,492
     Depreciation and amortization...............       572,891           471,093         292,566        241,653
     Professional fees...........................       669,270           800,342         260,534        208,140
     Interest....................................       152,144           230,382          77,071        102,818
     Provision for bad debt......................       224,539           381,899         117,805        357,008
     Provision for loan losses...................        55,000           127,000          15,000         65,000
     Business development costs..................        50,669            28,132          40,237         13,896
     Other operating expenses (see note 14)......     1,275,808         1,399,317         671,233        534,598
                                                   ------------      ------------    ------------    -----------
           Total expenses........................    12,091,683        10,685,584       6,307,098      5,054,342
                                                   ------------      ------------    ------------    -----------
Income (loss) from operations....................       (86,693)         (921,812)       (334,831)        48,500
                                                   ------------      ------------    ------------    -----------

OTHER INCOME (LOSS)
     Unrealized gain (loss) on securities........         2,184           (10,231)         34,708        (15,191)
     Realized gain (loss) on securities..........       (10,470)           10,491         (10,447)        (4,347)
     Gain on sale/disposal of fixed assets.......        15,965             2,316          15,965          2,752
                                                   ------------      ------------    ------------    -----------
           Total other income (loss).............         7,679             2,576          40,226        (16,786)
                                                   ------------      ------------    ------------    -----------
Income (loss) before discontinued operations.....       (79,014)         (924,388)       (294,605)        31,714
Loss from discontinued operations................            --          (415,821)             --       (162,835)
Income taxes.....................................       (25,000)          (24,525)        (12,065)       (11,915)
                                                   ------------      ------------    ------------    -----------
Net loss.........................................  $   (104,014)     $ (1,364,734)   $   (306,670)   $  (143,036)
                                                   ============      ============    ============    ===========

Per share earnings
     Basic common shares outstanding.............     2,880,028         2,879,712       2,880,028      2,879,712
     Net income (loss) before
         discontinued operations - basic.........  $      (0.04)     $      (0.32)   $      (0.11)   $      0.01
     Net loss - basic............................         (0.04)            (0.47)          (0.11)         (0.05)
     Fully diluted common shares outstanding.....     3,042,864         3,049,559       3,042,864      3,049,559
     Net income (loss) before
         discontinued operations - fully diluted.  $      (0.03)     $      (0.30)   $      (0.10)   $      0.01
     Net loss - fully diluted....................         (0.03)            (0.45)          (0.10)         (0.05)

See accompanying notes.
</TABLE>



                                   - 3 -

<PAGE>
<PAGE>

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


<CAPTION>
                                                         SIX MONTHS ENDED                 THREE MONTHS ENDED
                                                             JUNE 30,                          JUNE 30,
                                                  ------------------------------      ---------------------------
                                                      2001              2000              2001            2000
                                                  ------------       -----------      -----------    ------------
<S>                                               <C>              <C>               <C>               <C>
Net loss........................................  $  (104,014)     $  (1,364,734)    $  (306,670)      $  (143,036)
Other comprehensive income, net of tax
     Unrealized gain on securities, net of
         reclassification adjustment............       78,929             31,625          23,793            80,822
                                                  -----------      -------------     -----------       -----------

Comprehensive loss..............................  $   (25,085)     $  (1,333,109)    $  (282,877)      $   (62,214)
                                                  ===========      =============     ===========       ===========

See accompanying notes.
</TABLE>





                                   - 4 -

<PAGE>
<PAGE>

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

<CAPTION>
                                                                            SIX MONTHS ENDED
                                                                                JUNE 30,
                                                                   --------------------------------
                                                                       2001                2000
                                                                   ------------        ------------
<S>                                                                <C>                 <C>
CASH FLOW FROM OPERATING ACTIVITIES
   Net loss ................................................       $   (104,014)       $ (1,364,734)
   Adjustments to reconcile net income to cash
     provided by operating activities:
        Income taxes payable ...............................             95,935            (121,555)
        Deferred income taxes ..............................             65,729             (57,521)
        Provision for depreciation and amortization ........            572,891             482,716
        Provision for loan losses ..........................             55,000             127,000
        Provision for bad debt .............................            224,539             410,324
        Write-off of bad debt ..............................            (28,764)                 --
        Amortization of bond discount ......................            (11,910)                 --
        Change in market value of securities ...............            117,404             (10,231)
        Comprehensive income ...............................             78,930                  --
        Loss on disposal of fixed assets ...................             15,965              99,100
        Loss on sale of securities .........................             10,470               9,791
        (Increase) decrease in operating assets
           Receivables .....................................         (1,216,128)           (914,400)
           Loans made to customers, net of repayments ......        (12,441,694)         (9,969,056)
           Prepaid and sundry assets .......................              6,934              39,563
           Other non-current assets ........................           (118,995)            120,987
        Increase (decrease) in operating liabilities
           Deposits ........................................         24,829,118          13,819,614
           Accounts payable and accrued expenses ...........            253,759              18,889
           Accrued compensation and benefits ...............            (47,044)           (117,289)
           Other liabilities ...............................            316,745             425,719
                                                                   ------------        ------------
     Net cash provided by operating activities .............         12,674,870           2,998,917
                                                                   ------------        ------------

CASH FLOW FROM INVESTING ACTIVITIES
   Purchase of equipment ...................................           (521,424)           (411,483)
   Due from banks ..........................................            358,754            (296,199)
   Federal funds sold/purchased ............................          6,450,000           2,947,000
   Bond investments ........................................        (18,290,780)          5,515,156
   Borrowed funds sold under agreement to repurchase .......         (1,141,000)                 --
   Proceeds from sale of fixed assets ......................                 --                  80
   Proceeds from sale of debt securities ...................             65,862             181,066
   Investment in affiliated mutual funds ...................               (100)           (112,137)
   Investment in affiliate .................................             (1,000)                (10)
   Investments in securities and non-affiliated mutual funds            (92,224)        (11,665,093)
                                                                   ------------        ------------
     Net cash used in investing activities .................        (13,171,912)         (3,841,620)
                                                                   ------------        ------------

CASH FLOW FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock ..................                 --               6,400
   Proceeds from issuance of treasury stock ................                 --             362,099
   Proceeds from borrowings ................................                 --             239,525
   Proceeds from bank line of credit .......................            905,000             322,970
   Repayment of borrowings .................................         (1,646,113)           (485,314)
   Repayment of capital lease obligations ..................             (6,499)            (23,863)
                                                                   ------------        ------------
     Net cash provided by (used in) financing activities ...           (747,612)            421,817
                                                                   ------------        ------------

Net decrease in cash and cash equivalents ..................         (1,244,654)           (420,866)
Cash and cash equivalents - beginning of year ..............          5,582,098           5,709,082
                                                                   ------------        ------------
Cash and cash equivalents - end of period ..................       $  4,337,444        $  5,288,216
                                                                   ============        ============

See accompanying notes.
</TABLE>



                                   - 5 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

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 a vertically integrated
              financial services platform 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 six lines of business: trust and
              retirement services; mutual fund administration services;
              banking; insurance; 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
              six-month and three-month periods ended June 30, 2001 are not
              necessarily indicative of the results that may be expected for
              the year ending December 31, 2001.

              The balance sheet at December 31, 2000 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, 2000.

              The consolidated financial statements give retroactive effect
              to our pooling-of-interest transactions. As a result, the
              consolidated statements of financial condition, statements of
              operations and statements of cash flows are consolidated for
              all periods presented. As required by generally accepted
              accounting principles, the consolidated financial statements
              become our historical consolidated financial statements upon
              issuance of the financial statements for the periods that
              include the date of the transaction.

              Financial Statement Presentation
              --------------------------------
              Certain amounts in the 2000 financial statements have been
              reclassified to conform to the 2001 presentation.




                                   - 6 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

Note 3 -      UNIFIED TRUST COMPANY, NATIONAL ASSOCIATION

              On June 26, 2000, First Lexington Trust Company, a subsidiary
              of our company, converted to a limited purpose national
              banking association with the corporate name "Unified Trust
              Company, National Association." On April 30, 2001, all of the
              outstanding capital stock of Health Financial, Inc., a
              subsidiary of our company, was contributed to Unified Trust
              Company. Unified Trust Company, National Association is
              required by the Office of the Comptroller of the Currency to
              maintain minimum capital of $2.0 million. As of June 30, 2001,
              Unified Trust Company, National Association reported, on a
              consolidated basis, approximately $2.7 million of total
              capital.


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.

              As of June 30, 2001, options to acquire 102,836 shares 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 date, our board had
              granted options to acquire 60,000 shares of our common stock
              outside of such plan. Such options have exercise prices as
              follows:

                        6,350 shares at $25.00 per share
                       19,186 shares at $27.50 per share
                          500 shares at $30.25 per share
                       75,800 shares at $40.00 per share
                        1,000 shares at $44.00 per share
                       60,000 shares at $50.00 per share

              As of June 30, 2001, 84,536 of such options were intended to
              qualify as incentive stock options pursuant to Section 422 of
              the Internal Revenue Code of 1986, as amended.

<TABLE>
<S>                                                                                      <C>
                      Options outstanding at December 31, 2000                            170,752
                      Options issued during period                                             --
                      Options exercised during period                                          --
                      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)
                      Forfeitures at $40.00 per share                                      (1,250)
                                                                                         --------
                      Options outstanding at June 30, 2001                                162,836
                                                                                         ========
</TABLE>



                                   - 7 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

Note 5 -      BANK BORROWINGS

              Bank borrowings at June 30, 2001 consisted of the following:

<TABLE>
              <S>                                                                          <C>
              Payable in quarterly principal installments of $100,000,
              beginning July 1, 2001, with final payment due April 30, 2002,
              secured by assignment of receivables,
              interest paid monthly at prime bank rate                                     $1,700,000

              Payable in monthly installments including interest at
              8.25%, final payment due March 31, 2014, collateralized
              by equipment                                                                    343,439

              Payable in monthly installments including interest at
              10.4%, final payment due April 26, 2002, collateralized
              by equipment                                                                      6,162
                                                                                           ----------

              Total                                                                         2,049,601
                                                                                           ----------

              Less current maturities                                                       1,719,270
                                                                                           ----------

              Long-term portion                                                            $  330,331
                                                                                           ==========
</TABLE>

              The $1,700,000 bank borrowing listed above represents our
              refinancing of existing bank indebtedness in February 2001,
              and was treated as a non-cash transaction. Consequently, the
              refinancing is not reflected in our Consolidated Statements of
              Cash Flow.

              The maturities of bank borrowings for each of the succeeding
              five years subsequent to June 30, 2001, were as follows:

<TABLE>
                          <S>                                    <C>
                          2002                                   $1,722,455
                          2003                                       17,669
                          2004                                       19,162
                          2005                                       20,781
                          2006                                       22,536
                          Thereafter                                246,998
                                                                 ----------
                              Total                              $2,049,601
                                                                 ==========
</TABLE>

Note 6 -      BANK LINE OF CREDIT

              Bank line of credit at June 30, 2001 consisted of the
              following:

<TABLE>
<CAPTION>
                                                                 MAXIMUM LINE       LINE OF CREDIT AT
                                                                   OF CREDIT          JUNE 30, 2001
                                                                 ------------       -----------------
              <S>                                                <C>                  <C>
              Secured by assignment of receivables,
                 bears interest at prime                         $  2,000,000         $   1,120,000
              Secured by other collateralized assets                   50,000                44,912
                                                                 ------------         -------------

                                    Total                        $  2,050,000         $   1,164,912
                                                                 ============         =============
</TABLE>


                                   - 8 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

Note 7 -      CAPITAL LEASE OBLIGATIONS

              We lease both computer and office equipment under two capital
              leases. The first lease is due to be paid off during July 2001
              and the second lease has a remaining term of approximately 24
              months. The following is a summary of future minimum lease
              payments under capitalized lease obligations as of June 30,
              2001:

<TABLE>
<CAPTION>
                       YEAR ENDING JUNE 30,                                       AMOUNT
                       --------------------                                       ------
                               <S>                                                <C>
                               2002                                               $ 1,805
                               2003                                                   864
                                                                                  -------
                                                                                    2,669
                               Less:  amount representing interest                   (234)
                                                                                  -------
                                      Total                                       $ 2,435
                                                                                  =======
</TABLE>

Note 8 -      RENTAL AND LEASE INFORMATION

              We lease certain office facilities and equipment. Rental
              expense for the six months ended June 30, 2001 and 2000 were
              $620,720 and $462,003, respectively.

              At June 30, 2001, we were committed to minimal rental payments
              under certain noncancellable operating leases. As of June 30,
              2001, the minimum future rental commitments for each of the
              succeeding five years subsequent to June 30, 2001 were as
              follows:

<TABLE>
                               <S>                                              <C>
                               2002                                             $1,223,923
                               2003                                                556,806
                               2004                                                482,855
                               2005                                                430,043
                               2006                                                418,721
                               Thereafter                                        1,171,433
                                                                                ----------
                                    Total                                       $4,283,781
                                                                                ==========
</TABLE>

Note 9 -      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 financial position or
              results of operations.

Note 10 -     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 June 30, 2001, the net capital
              and ratio of aggregate indebtedness for Unified Financial
              Securities were $151,983 and 1.76 to 1, respectively.


                                   - 9 -

<PAGE>
<PAGE>
                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

Note 10 -     CASH SEGREGATED UNDER FEDERAL REGULATION AND NET CAPITAL
              REQUIREMENTS (continued)

              Pursuant to Rule 15c3-3 as promulgated by the Securities and
              Exchange Commission, Unified Financial Securities calculates
              its reserve requirement and segregates cash and/or securities
              for the exclusive benefit of its customers on a periodic
              basis. The reserve requirement for Unified Financial
              Securities was $0 at June 30, 2001. Balances segregated in
              excess of reserve requirements are not restricted.

Note 11 -     FAIR VALUE OF FINANCIAL INSTRUMENTS

              The following table presents the carrying amounts and
              estimated fair value of our financial instruments at June 30,
              2001 and 2000. Financial Accounting Standards Board Statement
              No. 107, "Disclosures About Fair Value of Financial
              Instruments," defines the fair value of a financial instrument
              as the amount at which the instrument could be exchanged in a
              current transaction between willing parties.

<TABLE>
<CAPTION>
                                                                            JUNE 30,
                                                   -------------------------------------------------------
                                                              2001                            2000
                                                   -------------------------       -----------------------
                                                    CARRYING         FAIR           CARRYING        FAIR
                                                     AMOUNT          VALUE           AMOUNT         VALUE
                                                     ------          -----           ------         -----
              <S>                                  <C>             <C>             <C>           <C>
              (IN THOUSANDS)
              Financial assets:
                 Cash and cash equivalents         $  4,337        $ 4,337         $  5,288      $  5,288
                 Due from banks                         804            804              611           611
                 Federal funds sold                   1,217          1,217            1,975         1,975
                 Bond investments                    29,025         29,025               --            --
                 Securities and mutual funds            591            591           12,506        12,506
                 Loans                               33,221         33,221           12,653        12,653
                 Receivables (trade)                 14,106         14,106           10,109        10,109
                 Prepaid and sundry                     290            290              860           860
              Financial liabilities:
                 Current liabilities                 73,167         73,167           33,732        33,732
                 Capital lease obligation                 2              2               15            15
                 Long-term debt                       2,049          2,049            2,373         2,373
</TABLE>

Note 12 -     DISCLOSURES ABOUT REPORTING SEGMENTS

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

              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 six or three months ended
              June 30, 2001 and 2000:


                                   - 10 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------



Note 12 -    DISCLOSURES ABOUT REPORTING SEGMENTS (continued)

<TABLE>
<CAPTION>
                                                               AS OF OR FOR THE                   FOR THE
                                                               SIX MONTHS ENDED             THREE MONTHS ENDED
                                                                   JUNE 30,                      JUNE 30,
                                                          --------------------------    --------------------------
                                                             2001           2000            2001          2000
                                                          -----------    -----------    -----------    -----------
<S>                                                       <C>            <C>            <C>            <C>
     Revenue:
         Trust and retirement..........................   $ 2,403,771    $ 2,213,911    $ 1,299,058    $ 1,120,347
         Mutual fund administration....................     2,667,299      2,161,353      1,260,875      1,098,878
         Banking.......................................       921,645        699,379        488,002        394,670
         Insurance.....................................     7,417,373      5,667,788      3,616,829      3,092,513
         Brokerage.....................................     1,448,162      1,913,626        722,114        797,500
         Investment advisory...........................     1,006,091        950,654        538,158        494,236
         Corporate.....................................       333,703        261,846        118,165         94,262
                                                          -----------    -----------    -----------    -----------
              Total....................................   $16,198,044    $13,868,557    $ 8,043,201    $ 7,092,406
                                                          ===========    ===========    ===========    ===========

     Gross profit:
         Trust and retirement..........................   $ 2,402,721    $ 2,068,343    $ 1,298,008    $ 1,052,805
         Mutual fund administration....................     2,189,890      1,748,642      1,036,667        892,132
         Banking.......................................       921,645        699,379        488,002        394,670
         Insurance.....................................     4,713,748      3,242,645      2,282,326      1,803,820
         Brokerage.....................................       559,780        816,073        289,745        377,360
         Investment advisory...........................       915,559        928,257        474,044        473,566
         Corporate.....................................       301,647        260,433        103,475        108,489
                                                          -----------    -----------    -----------    -----------
              Total....................................   $12,004,990    $ 9,763,772    $ 5,972,267    $ 5,102,842
                                                          ===========    ===========    ===========    ===========

     Total assets:
         Trust and retirement..........................   $ 3,315,092    $ 3,956,408
         Mutual fund administration....................     1,960,115      2,049,077
         Banking.......................................    68,429,844     30,501,032
         Insurance.....................................    11,147,150      7,589,525
         Brokerage.....................................       642,818      1,615,309
         Investment advisory...........................     1,651,364      1,947,723
         Corporate.....................................     2,009,052      2,089,673
                                                          -----------    -----------
              Total....................................   $89,155,435    $49,748,747
                                                          ===========    ===========

     Depreciation and amortization:
         Trust and retirement..........................   $    66,831    $    37,452
         Mutual fund administration....................        49,007         38,405
         Banking.......................................        75,020         83,458
         Insurance.....................................       112,373         66,694
         Brokerage.....................................        15,381         17,059
         Investment advisory...........................        68,036         69,749
         Corporate.....................................       186,243        158,276
                                                          -----------    -----------
              Total....................................   $   572,891    $   471,093
                                                          ===========    ===========

     Capital expenditures:
         Trust and retirement..........................   $   131,329    $    79,637
         Mutual fund administration....................        14,562         22,132
         Banking.......................................        51,481         99,938
         Insurance.....................................       191,395         62,135
         Brokerage.....................................         8,216          3,165
         Investment advisory...........................         2,710             --
         Corporate.....................................       121,731        144,476
                                                          -----------    -----------
              Total....................................   $   521,424    $   411,483
                                                          ===========    ===========
</TABLE>




                                   - 11 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           JUNE 30, 2001 AND 2000
                           ----------------------

Note 13 -     UNIFIED BANKING COMPANY ASSETS AND LIABILITIES

              Unified Banking Company commenced operations on November 1,
              1999. Included in our consolidated financial statements at
              June 30, 2001 and 2000 were the bank's total assets of
              $65,896,893 and $28,061,299, respectively, and total
              liabilities of $59,781,675 and $21,368,430, respectively. As
              of such dates, certain components of such assets and
              liabilities were as follows:

<TABLE>
<CAPTION>
                                                                                         JUNE 30,
                                                                               ----------------------------
                                                                                  2001             2000
                                                                               -----------      -----------
              <S>                                                              <C>              <C>
              Due from banks                                                   $   803,885      $   611,014
              Investments in securities:
                US agency securities                                            29,024,536       11,552,054
                FHLB stock                                                         189,600          100,000
              Loans:
                Real estate loans                                               20,410,356        8,256,693
                Commercial loans                                                 8,019,113        2,841,773
                Installment loans                                                5,184,654        1,760,660
                Other loans                                                         62,742            3,807
                Allowance for loan losses                                          360,000          160,000
              Bank deposits:
                Demand deposits                                                  6,557,078        2,239,355
                Official checks                                                    141,183          103,192
                NOW accounts                                                     1,005,774          340,643
                Money market accounts                                            7,930,178       11,819,920
                Savings accounts                                                    43,838           57,143
                Time deposits                                                   39,056,370        6,152,620
                Other interest-bearing deposits                                  4,715,035          438,594
              Federal and borrowed funds                                             2,000          239,525
</TABLE>

Note 14 -     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
              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 equity 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 marketplace. In
              connection with the organization of VSX Holdings, a third
              party investor made a $3.0 million loan to VSX Holdings. We
              also have entered into a management agreement with VSX
              Holdings whereby we provide consulting and development
              services to VSX Holdings. For the six months ended June 30,
              2001 and 2000 and the three months ended June 30, 2001 and
              2000, we received payments totaling $819,977 and $640,000,
              respectively, and $433,333 and $640,000, respectively from VSX
              Holdings for such consulting and development services, which
              amount is recorded as a reduction of "Other operating
              expenses" on our Consolidated Statements of Operations for the
              six- and three-month periods ended June 30, 2001 and 2000.



                                   - 12 -

<PAGE>
<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, insurance 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 is adequate, it may prove inadequate if one or more large
borrowers, or numerous smaller borrowers, 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 six
business lines, our mission with respect to market leading positions of our
trust and retirement services and mutual fund administration services
business lines, our ability to generate supplemental revenue for our other
business lines, our ability to provide superior returns to our stockholders
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 set forth herein
under "Risk Factors." 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, is a vertically integrated provider of
financial products and services, distributing these through six lines of
business: trust and retirement services; mutual fund administration
services; banking; insurance; brokerage; and investment advisory services.
Unified bases its foundation upon two of its lines of business which seek to
be market leaders in their respective fields - trust and retirement services
and mutual fund administration services.

         It is the mission of our company to capture market leading
positions in these two business lines, generate supplemental revenue for
each line to the others and, by our ability to distribute our
products/services through electronic delivery channels with strategic
third-party relationships, to provide superior returns to our stockholders.


                                   - 13 -

<PAGE>
<PAGE>

         Going forward, the vertically integrated platform will be refined
and managed with these two businesses forming the foundation and being the
main drivers of our income. While we expect the other core lines to be
profitable in their own discipline, each should be significantly enhanced by
the supplemental income each should receive through its affiliation with the
two main driver businesses.

         Additionally, we intend to develop the VSX project, a virtual
real-time private financial marketplace. It will be funded by independent
investment and we will retain an equity position and management contract for
services rendered.

         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; 100
Browenton Place, Louisville, Kentucky 40222, (502) 326-5016; 220 Lexington
Green Circle, Suite 600, Lexington, Kentucky 40512, telephone number (859)
245-2500; 1725 Southlake Boulevard, 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
Firstar Plaza, Suite 2605, St. Louis, Missouri 63101, telephone number (314)
552-6440.

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

COMPARISON OF RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000

         Revenue for the six months ended June 30, 2001 compared to the six
months ended June 30, 2000 increased $2,329,000, or 16.8%, from $13,869,000
to $16,198,000. For such periods, trust and retirement services revenue
increased $190,000, or 8.6%, due to an increase in trustee fees earned.
Mutual fund administration services revenue increased $506,000, or 23.4%,
due to an increase in assets under service. As of June 30, 2001, we provided
fund administrative services to 26 mutual fund families consisting of 118
portfolios and approximately $4.2 billion in mutual fund assets as compared
to 27 mutual fund families consisting of 126 portfolios and approximately
$3.8 billion in mutual fund assets as of June 30, 2000. During the six
months ended June 30, 2001, our mutual fund administration services
operation added several new clients; however, as a result of the recent
decline in the financial markets, several clients discontinued operations,
one client moved its operations in-house and others closed a total of 12
unprofitable portfolios. Banking revenue increased $222,000, or 31.8%, for
the six months ended June 30, 2001 compared to the same period of 2000,
primarily due to a $178,000 increase in net interest income as a result of a
$20,614,000, or 162.3%, increase in loans outstanding. Also contributing to
the increase in banking revenue was a $37,000 gain recorded in connection
with the sale of mortgage loans into the secondary market. For the six
months ended June 30, 2001 compared to the same period of 2000, insurance
revenue increased $1,750,000, or 30.9%, primarily due to a $5,493,000, or
25.7%, increase in total insurance premiums written. The increase in total
insurance premiums written reflected a continued hardening of the insurance
market whereby the overall volume of specialty lines business has increased
due to price increases imposed by specialty insurance carriers and
additional business flowing into the specialty lines from standard line
carriers. Additionally, insurance revenue for the six months ended June 30,
2001 included a $235,000 revenue sharing payment received by our insurance
operation based upon lower than anticipated claims losses, compared to
$37,000 received during the first half of 2000. For such periods, brokerage
revenue declined $465,000, or 24.3%, primarily due to a $400,000 decline in
trading revenue due to the loss of two introducing broker relationships and
a decline in business from the


                                   - 14 -

<PAGE>
<PAGE>

remaining introducing firms. Additionally, brokerage revenue declined due to
the termination of our Internet brokerage trading web site at the end of
2000. Management believes that the decline in brokerage revenues from our
introducing firms was attributable to the overall decline in the financial
markets, which resulted in fewer customer trades. Trading volume for such
periods declined approximately 34.5%. Brokerage revenue for the six months
ended June 30, 2000 also included $20,500 that we received in connection
with our recently completed private placement, without any corresponding
amount in 2001. For such periods, investment advisory revenue increased
$55,000, or 5.8%, due to several new client relationships and a shifting of
existing investment advisory clients to bundled fee relationships, which
include other wealth management services and typically yield higher fees.
This increase in fees was partially offset by a decline in fees received
based upon asset values due to the recent decline in the market value of
many investment portfolios. Assets under management at our investment
advisory operation declined by $69,890,000, or 15.6%, from June 30, 2000 to
June 30, 2001. For such periods, corporate revenue increased $72,000, or
27.4%, primarily due to a $135,000 payment that we received in connection
with the settlement of a trademark dispute, partially offset by a $58,000
decline in interest income received on the proceeds of our recently
completed private placement. Additionally, corporate revenue for the six
months ended June 30, 2000 included $46,000 of gross revenue related to
discontinued operations, without any corresponding amount for 2001.

         Gross profit for the six months ended June 30, 2001 compared to the
same period of 2000 increased $2,241,000, or 23.0%, from $9,764,000 to
$12,005,000. For such periods, gross profit as a percentage of revenue
increased to 74.1% from 70.4%. Trust and retirement services gross profit
increased $334,000, or 16.2%, for the six months ended June 30, 2001
compared to the corresponding period of 2000 due to an increase in trustee
fees earned. For such periods, mutual fund administration services gross
profit increased $441,000, or 25.2%, primarily due to the increase in the
amount of assets under service. However, as discussed above, the closing of
several funds offset some of the gain. Banking gross profit increased
$222,000, or 31.8%, for the six months ended June 30, 2001 compared to the
first half of 2000. For the six months ended June 30, 2001 compared to the
same period of 2000, insurance gross profit increased $1,471,000, or 45.4%,
due to the increase in total insurance premiums written and our receipt of
revenue sharing payments based upon claims experience. For the six months
ended June 30, 2001, we experienced increases in both our personal and
commercial business lines. For such periods, brokerage gross profit declined
$256,000, or 31.4%, principally due to a $214,000 decline in trading gross
profit due to the loss of two introducing broker client relationships.
Additionally, gross profit declined due to decreased trading activity due to
overall market conditions and due to the termination of our Internet
brokerage trading web site at the end of 2000. Investment advisory gross
profit declined $13,000, or 1.4%, primarily due to a reclassification of
certain expenses to cost of sales and increased labor expenses. For such
periods, corporate gross profit increased $41,000, or 15.8%, due to the
reasons previously discussed.

         Total expenses for the six months ended June 30, 2001 were
$12,092,000, or 74.7% of total revenue, compared to $10,686,000, or 77.0% of
total revenues, for the first half of 2000. Employee compensation and
benefits expense increased $1,620,000, or 27.4%, for the six months ended
June 30, 2001 compared to the first half of 2000 due to: (i) new personnel
hired in connection with the expansion of and merit increases for existing
personnel at our mutual fund administration services and trust and
retirement services operations, which accounted for $433,000 and $435,000,
respectively, of such increase; (ii) additional staffing due to increased
volume of business in and merit increases for existing personnel at our
banking, insurance and investment advisory operations, which accounted for
$115,000, $466,000 and $149,000, respectively, of such increase; and (iii)
the hiring of additional information technology services personnel, which
accounted for $373,000 of such increase. Partially, offsetting these
increases was a $115,000 decline in employee compensation and benefit
expense at our brokerage operation. Telephone expense increased $54,000, or
18.5%, for the six months ended June 30, 2001 compared to the first half of
2000 primarily due to the roll-out of our wide-area network in March 2000,

                                   - 15 -

<PAGE>
<PAGE>

which accounted for $25,000 of the increase. Additionally, for such periods,
telephone expense at our trust operation increased $24,000. Equipment rental
and maintenance expense increased by $59,000, or 20.9%, due to expenses
associated with furnishing new office space and an increase in personnel.
For such periods, occupancy expense increased $159,000, or 34.4%, primarily
due to additional space leased by our trust and retirement services
operation, office space leased for our executive offices in Lexington,
Kentucky and the relocation of our mutual fund administration offices in
Texas. Depreciation and amortization expense increased $102,000, or 21.6%,
for the first half of 2001 compared to the first half of 2000 due to the
expansion of our trust and retirement services operation into new office
space as well as equipment purchased for new personnel at our insurance and
mutual fund administration services operations. For such periods,
professional fees declined $131,000, or 16.4%, due to a $311,000 decline in
legal fees partially offset by a $211,000 increase in outside adjuster and
appraiser fees at our insurance operations and a $113,000 and $77,000 system
consulting fee paid by our insurance and trust and retirement services
operations, respectively, during the first six months of 2001. Additionally,
during the six months ended June 30, 2000, we recorded a $165,000 consulting
fee without any comparable expense in 2001. For such periods, our provision
for bad debt declined $157,000, or 40.3%, due to a larger reserve taken in
2000 for doubtful receivables generated by our mutual fund administration
services operation. Our provision for loan losses declined by $72,000 for
the six months ended June 30, 2001 compared to the corresponding period of
2000 due to management's estimation of the quality of our bank's loan
portfolio. For such periods, interest expense declined by $78,000, or 34.0%,
due to our reduction of certain indebtedness.

         We recorded a net loss of $104,000 for the six months ended June
30, 2001 compared to a net loss of $1,365,000 for the first half of 2000.
For such periods, gross revenue increased by $2,329,000 with a corresponding
increase in gross profit of $2,241,000. Partially offsetting improved
profits were increased expenses of $1,406,000, resulting primarily from
higher employee compensation and benefits expense of $1,620,000. A $131,000
decline in professional fees partially offset such increase. The first six
months of 2000 also included a $416,000 loss from discontinued operations.
Net loss for the first six months of 2001 was a basic and fully diluted loss
per share of $0.04 and $0.03, respectively. This compares to a basic and
fully diluted loss per share of $0.47 and $0.45, respectively, for the six
months ended June 30, 2000.

COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000

         Revenue for the quarter ended June 30, 2001 compared to the quarter
ended June 30, 2000 increased $951,000, or 13.4%, from $7,092,000 to
$8,043,000. For such periods, trust and retirement services revenue
increased $179,000, or 16.0%, primarily due to an increase in trustee fees
earned. Mutual fund administration services revenue increased $162,000, or
14.7%, due primarily to an increase in assets under service, partially
offset by the closing or relocation of several funds. As discussed above, as
of June 30, 2001, we provided mutual fund administrative services to 26
mutual fund families consisting of 118 portfolios and approximately $4.2
billion in mutual fund assets as compared to 27 mutual fund families
consisting of 126 portfolios and approximately $3.8 billion in mutual fund
assets as of June 30, 2000. Banking revenue increased $93,000, or 23.6%, for
the quarter ended June 30, 2001 compared to the corresponding quarter of
2000, primarily due to a $72,000 increase in net interest income as a result
of increased loan volume. Also contributing to the increase in banking
revenues was a $23,000 gain realized on the sale of mortgage loans into the
secondary market. For the quarter ended June 30, 2001 compared to the same
quarter of 2000, insurance revenue increased $524,000, or 17.0%, primarily
due to a $1,969,000, or 17.4%, increase in total insurance premiums written.
For such quarters, brokerage revenue declined $75,000, or 9.5%, primarily
due to a decline in the number of trades processed. The second quarter of
2000 also included $21,000 in private placement commissions received by us
in connection with our recently completed private placement, without any
corresponding commissions in 2001. For the second quarter of 2001 compared
to the same quarter of 2000, investment advisory revenue


                                   - 16 -

<PAGE>
<PAGE>

increased $44,000, or 8.9%, due to several new client relationships and a
shifting of existing investment advisory clients to bundled fee
relationships, which include other wealth management services and typically
yield higher fees. This increase in fees was partially offset by a decline
in fees received based upon asset values due to the recent decline in the
market value of many investment portfolios. For such quarters, corporate
revenue increased $24,000, or 25.4%.

         Gross profit for the quarter ended June 30, 2001 compared to the
corresponding quarter of 2000 increased $869,000, or 17.0%, from $5,103,000
to $5,972,000. For such quarters, gross profit as a percentage of revenue
increased to 74.3% from 71.9%. Trust and retirement services gross profit
increased $245,000, or 23.3%, for the quarter ended June 30, 2001 compared
to the corresponding quarter of 2000 due to an increase in trustee fees
earned. For such quarters, mutual fund administration services gross profit
increased $145,000, or 16.2%, primarily due to the increase in assets under
service. Banking gross profit increased $93,000, or 23.6%, for the quarter
ended June 30, 2001 compared to the second quarter of 2000 as a result of a
162.3% in outstanding loans. For the quarter ended June 30, 2001 compared to
the same quarter of 2000, insurance gross profit increased $479,000, or
26.5%, due to the increase in total insurance premiums written and revenue
sharing payments. We experienced increases in both our personal and
commercial business lines. For such quarters, brokerage gross profit
declined $88,000, or 23.2%, primarily due to overall market conditions which
resulted in less trading volume and due to the absence of private placement
commissions in 2001. Investment advisory gross profit and corporate gross
profit were relatively flat between the quarter ended June 30, 2001 and the
second quarter of 2000.

         Total expenses for the quarter ended June 30, 2001 were $6,307,000,
compared to $5,054,000 for the quarter ended June 30, 2000. Employee
compensation and benefits expense increased $1,195,000, or 41.7%, for the
quarter ended June 30, 2001 compared to the same quarter of 2000 due to: (i)
new personnel hired in connection with the expansion of and merit increases
for existing personnel at our mutual fund administration services and trust
and retirement services operations, which accounted for $209,000 and
$400,000, respectively, of such increase; (ii) additional staffing due to
increased volume of business in and merit increases for existing personnel
at our banking, insurance and investment advisory operations, which
accounted for $250,000, $357,000 and $100,000, respectively, of such
increase; and (iii) the hiring of additional information technology services
personnel, which accounted for $137,000 of such increase. Such increases
were partially offset by a $67,000 decrease in compensation and benefit
expense at our brokerage operation. Equipment rental and maintenance expense
increased by $31,700, or 20.8%, due to expenses associated with furnishing
new office space and an increase in personnel. For such quarters, occupancy
expense increased $86,000, or 38.2%, primarily due to additional space
leased by our trust and retirement services and insurance operations, the
relocation of our banking operation and office space leased for our
executive offices in Lexington, Kentucky. Depreciation and amortization
expense increased $51,000, or 21.1%, for the second quarter of 2001 compared
to the second quarter of 2000 due to the expansion of our trust and
retirement services operation into new office space as well as equipment
purchased for new personnel at our insurance and mutual fund administration
services operations. For such quarters, professional fees increased by
$52,000, or 25.2%, primarily due to a $155,000 increase in appraiser and
consulting fees at our insurance operation due to its increased volume of
business, partially offset by a $145,000 reduction in legal fees paid during
the second quarter of 2001 compared to the second quarter of 2000. For the
quarter ended June 30, 2001 compared to the second quarter of 2000, interest
expense declined by $26,000 due to the pay off a loan in February 2001, and
our provision for bad debt declined by $239,000, or 67.0%, due to a
reduction in the amount of reserve taken in 2001 for doubtful receivables
generated by our mutual fund administration operation. For such quarters,
other operating expense increased by $137,000, primarily due to a decrease
in the amount of expense reimbursement we received from VSX Holdings for
management and consulting services during the second quarter of 2001
compared to the second quarter 2000, which declined from $640,000 to
$433,000.


                                   - 17 -

<PAGE>
<PAGE>

         Other income increased by $57,000 for the second quarter of 2001
compared to the second quarter of 2000, primarily due to $35,000 of
unrealized gains on investments, compared to unrealized losses of $15,000 in
the second quarter of 2000. Net loss for the quarter ended June 30, 2001 was
$307,000 compared with a net loss of $143,000 for the same quarter of 2000.
Gross revenue increased in the second quarter of 2001 by $951,000 with a
corresponding increase in gross profit of $869,000 compared to the second
quarter of 2000. Offsetting improved profits were increased expenses of
$1,253,000, resulting primarily from higher employee compensation and
benefits expense of $1,195,000. The second quarter of 2000 also included a
$163,000 loss from discontinued operations, without any corresponding amount
in 2001. Net loss for the second quarter six months of 2001 was a basic and
fully diluted loss per share of $0.11 and $0.10, respectively. This compares
to a basic and fully diluted loss per share of $0.05 for the quarter ended
June 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY. Our primary sources of liquidity historically have been
and continue to be cash flow from operating activities, available borrowing
capacity from capitalized leases and a loan from a regional bank to finance
capital equipment. The net decrease in cash and cash equivalents at June 30,
2001 from December 31, 2000 was $1,245,000. The net decrease reflected a
repayment of borrowings, an increase in receivables and an increase in loans
receivable. We received $820,000 from VSX Holdings, LLC during the six
months ended June 30, 2001 in connection with services we provided relating
to the construction and development of the VSX marketplace and its
corresponding products.

         With respect to our banking operations, long-term liquidity is a
function of the core deposit base and an adequate capital base. We are
committed to growth of our core deposit base and maintenance of our 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 Tier 1 capital to total
assets ratio of at least 8.0%. As of June 30, 2001, Unified Banking Company
had a ratio of Tier 1 capital to total assets equal to 8.9%.

         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 being 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 55.4%
during the six months of 2001, while deposits increased 37.1% 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.

         CAPITAL RESOURCES. Total stockholders' equity was $13,809,000 at
June 30, 2001 compared to $13,834,000 at year-end 2000. The decrease in
total stockholders' equity was due to our loss from operations for the six
months ended June 30, 2001, partially offset by $79,000 in unrealized gains
on securities.


                                   - 18 -

<PAGE>
<PAGE>

         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 anticipated revenue from operations should be
adequate for the working capital requirements of our existing 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.

RISK FACTORS

         You should carefully consider the risks described below before
making an investment decision. The risks and uncertainties described below
are not the only ones facing our company. Additional risks not presently
known to us or that we currently believe are immaterial also may impair our
business operations. Our business could be harmed by any of these risks. If
any of the following risks actually occur, our business, financial condition
or results of future operations could be materially adversely affected. In
such case, the price of our common stock could decline, and you may lose all
or part of your investment. In assessing these risks, you should refer to
the other information contained in this report, including our consolidated
financial statements and related notes.

         NEED FOR ADDITIONAL CAPITAL; RISK RELATING TO ACQUISITIONS. Our
pending and proposed projects have required and will continue to require
substantial capital for investments in and development of such projects.
There can be no assurance that we will be able to raise the capital
necessary to fund our projects. The failure to raise or generate such funds
may require us to delay or abandon some of our planned future expansion or
expenditures, which could have a material adverse effect on our growth.

         To expand our markets and take advantage of the consolidation trend
in the financial services industry, our business strategy includes growth
through acquisitions. Although we believe that the operations of the
companies we have acquired since June 1, 1997 are being successfully
integrated with our operations, there can be no assurance that such
integration will continue to be successful, that future acquisitions can be
consummated on acceptable terms or that any acquired companies can be
successfully integrated into our operations. We also are continually
investigating opportunities for acquisitions. In connection with future
acquisitions, we may incur additional indebtedness or may issue additional
equity. Our ability to make future acquisitions may be constrained by our
ability to obtain such additional financing. To the extent we use equity to
finance future acquisitions, there is a risk of dilution to holders of our
common stock.

         In addition, acquisitions may involve a number of special risks,
including: initial reductions in our reported operating results; diversion
of management's attention; unanticipated problems or legal liabilities; and
a possible reduction in reported earnings due to amortization of acquired
intangible assets in the event that such acquisitions are made at levels
that exceed the fair market value of net tangible assets. Some or all of
these items could have a material adverse effect on us. There can be no
assurance that businesses acquired in the future will achieve sales and
profitability that justify the investment therein. In addition, to the
extent that consolidation becomes more prevalent in the industry, the prices
for attractive acquisition candidates may increase to unacceptable levels.

         NO ASSURANCE OF FUTURE GROWTH. There can be no assurance that we
will continue to achieve growth in assets or earnings. Our ability to
achieve such growth will be dependent upon numerous factors including, but
not limited to, general economic conditions, our ability to recruit
qualified personnel, our ability to promptly and successfully integrate
acquired businesses with our existing operations and our


                                   - 19 -

<PAGE>
<PAGE>

ability to execute our business plan. We also have completed various
acquisitions in the past few years that have significantly enhanced our rate
of growth. We cannot provide you assurances that we will continue to sustain
this rate of growth or grow at all.

         CHANGES IN THE LOCAL ECONOMIC CONDITIONS COULD ADVERSELY AFFECT
UNIFIED BANKING COMPANY'S LOAN PORTFOLIO. Unified Banking Company's success
depends to a great extent upon the general economic conditions of Fayette
County, Kentucky. Unlike larger banks that are more geographically
diversified, we primarily provide banking and financial services to
customers in Fayette County, Kentucky. Our commercial, real estate and
construction loans, the ability of the borrowers to repay these loans and
the value of the collateral securing these loans are impacted by our local
economic conditions. We cannot assure you that favorable economic conditions
will exist in our market.

         ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN
LOSSES. As a lender, Unified Banking Company is exposed to the risk that its
customers may be unable to repay their loans according to their terms and
that any collateral securing the payment of their loans may not be
sufficient to assure repayment. Credit losses are inherent in the lending
business and could have a material adverse effect on our consolidated
operating results. Unified Banking Company's credit risk with respect to its
real estate and construction loan portfolio relates principally to the
general creditworthiness of individuals and the value of real estate serving
as security for the repayment of loans. Our credit risk with respect to
Unified Banking Company's commercial and consumer installment loan portfolio
relates principally to the general creditworthiness of businesses and
individuals within its local market.

         We make various assumptions and judgments about the collectibility
of Unified Banking Company's loan portfolio and provide an allowance for
potential losses based on a number of factors. If our assumptions are wrong,
the allowance for loan losses may not be sufficient to cover loan losses. We
may have to increase the allowance in the future. Additions to our allowance
for loan losses would decrease our net income.

         UNIFIED BANKING COMPANY MAY BE UNABLE TO MANAGE INTEREST RATE RISKS
THAT COULD REDUCE OUR NET INTEREST INCOME. Like other financial
institutions, Unified Banking Company's results of operations are affected
principally by net interest income, which is the difference between interest
earned on loans and investments and interest expense paid on deposits and
other borrowings. We cannot predict or control changes in interest rates.
Regional and local economic conditions and the policies of regulatory
authorities, including monetary policies of the Board of Governors of the
Federal Reserve System, affect interest income and interest expense. While
Unified Banking Company continually takes measures intended to manage the
risks from changes in market interest rates, changes in interest rates can
still have a material adverse effect on our profitability.

         In addition, certain assets and liabilities may react in different
degrees to changes in market interest rates. For example, interest rates on
some types of assets and liabilities may fluctuate prior to changes in
broader market interest rates, while rates on other types may lag behind.
Further, some of Unified Banking Company's assets, such as adjustable rate
mortgages, have features, including rate caps, which restrict changes in
their interest rates.

         Factors such as inflation, recession, unemployment, money supply,
international disorders, instability in domestic and foreign financial
markets, and other factors beyond our control may affect interest rates.
Changes in market interest rates also will affect the level of voluntary
prepayments on loans and the receipt of payments on mortgage-backed
securities resulting in the receipt of proceeds that may be reinvested at a
lower rate than the loan or mortgage-backed security being prepaid. Although
Unified Banking Company pursues an asset-liability management strategy
designed to control our risk


                                   - 20 -

<PAGE>
<PAGE>

from changes in market interest rates, changes in interest rates can still
have a material adverse effect on our profitability.

         INSIDERS MAY CONTROL OUR FUTURE OPERATIONS AS A RESULT OF THE
CONCENTRATION OF CONTROL OF OUR COMMON STOCK. Our executive officers and
directors beneficially own approximately 35.1% of our outstanding common
stock. As a result, these insiders may be able to control the election of
our board of directors and thus our direction and future operations, and our
stockholders may lack an effective vote with respect to such matters.

         WE ARE SUBJECT TO EXTENSIVE REGULATION. The banking, trust and
securities industries are heavily regulated under both Federal and state
law. These regulations are primarily intended to protect depositors and the
Federal Deposit Insurance Corporation, with respect to banks, and customers,
with respect to trust companies, broker-dealers and investment advisors, not
our creditors or stockholders. We and our subsidiaries also are subject to
the supervision of the Securities and Exchange Commission, the Office of
Thrift Supervision and the Office of the Comptroller of the Currency, in
addition to other regulatory and self-regulatory organizations. Regulations
affecting banks, trust companies and other financial services companies
undergo continuous change, and the ultimate effect of such changes cannot be
predicted. Regulations and laws may be modified at any time, and new
legislation may be enacted that affects us and our subsidiaries. We cannot
assure you that such modifications or new laws will not adversely affect us
or our subsidiaries.

         RISKS ASSOCIATED WITH RAPID GROWTH. We have experienced rapid
growth in net revenue and expansion of our operations and anticipate that
further significant expansion will be required to address potential growth
in our customer base and market opportunities. Such growth has placed, and,
if sustained, will continue to place, strain on our management, information
systems, operation and resources. Our ability to manage any future growth
will continue to depend upon the successful expansion of our sales,
marketing, customer support, administrative infrastructure and the ongoing
implementation and improvement of a variety of internal management systems,
procedures and controls. Continued growth also will require us to hire more
personnel, and expand management information systems. Recruiting qualified
personnel is an intensely competitive and time-consuming process. There can
be no assurance that we will be able to attract and retain the necessary
personnel to accomplish our growth strategies or that we will not experience
constraints that will adversely affect our ability to support satisfactorily
our clients and operations. There can be no assurance that we will be able
to attract, manage and retain additional personnel to support any future
growth, if any, or will not experience significant problems with respect to
any infrastructure expansion or the attempted implementation of systems,
procedures and controls. If our management is unable to manage growth
effectively, our business, financial condition and results of operations
could be materially adversely affected.

         DEPENDENCE UPON TECHNOLOGY; PROPRIETARY RIGHTS. Our success and
ability to compete is dependent in part upon our technology, although we
believe that our success is more dependent upon our technical expertise than
our proprietary rights. We principally rely upon a combination of copyright,
trademark and trade secret laws and contractual restrictions to protect our
proprietary technology. It may be possible for a third party to copy or
otherwise obtain and use our products or technology without authorization or
to develop similar technology independently, and there can be no assurance
that such measures have been, or will be, adequate to protect our
proprietary technology or that our competitors will not independently
develop technologies that are substantially equivalent or superior to our
technology. We propose to operate a substantial portion of our business over
the Internet, which is subject to a variety of risks. Such risks include,
but are not limited to, the substantial uncertainties that exist regarding
the system for assigning domain names and the status of private rules for
resolution of disputes regarding rights to domain names. There can be no
assurance that we will continue to be able to


                                   - 21 -

<PAGE>
<PAGE>

employ our current domain names in the future or that the loss of rights to
one or more domain names will not have a material adverse effect on our
business and results of operations.

         Although we do not believe that we infringe the proprietary rights
of any third parties, there can be no assurance that third parties will not
assert such claims against us in the future or that such claims will not be
successful. We could incur substantial costs and diversion of management
resources with respect to the defense of any claims relating to proprietary
rights, which could have a material adverse effect on our business,
financial condition and results of operations. In addition, we may become
obligated under certain agreements to indemnify another party in connection
with infringement by us of the proprietary rights of third parties. In the
event we are required to indemnify parties under these agreements, it could
have a material adverse effect on our business, financial condition and
results of operations. In the event a claim relating to proprietary
technology or information is asserted against us, we may seek licenses to
such intellectual property. There can be no assurance, however, that
licenses could be obtained on commercially reasonable terms, if at all, or
that the terms of any offered licenses would be acceptable to us. The
failure to obtain the necessary licenses or other rights could have a
material adverse effect on our business, financial condition and results of
operations.

         RISKS TO PHYSICAL NETWORK; RISKS TO INTEGRITY OF DATA ON NETWORK.
Our operations are partially dependent upon our ability to protect our
network infrastructure against damage from fire, earthquakes, severe
flooding, mudslides, power loss, telecommunications failures and similar
events or to construct networks that are not vulnerable to the effects of
these events. The occurrence of a natural disaster or other unanticipated
problems at our network in the future could cause additional major
interruptions in the services provided by us.

         In addition, some networks may experience interruptions in service
as a result of the accidental or intentional actions of Internet users,
current and former employees or others. Unauthorized use of our network
could jeopardize the security of confidential information stored in our
computer systems, which may result in liability to our customers or deter
potential customers.

         Our failure to adequately manage service disruptions resulting from
physical damage to our network or breaches of the network's integrity, could
have a material adverse effect on our business, financial condition and
results of operations.

         SECURITY RISKS. Despite the implementation of network security
measures by us, such as limiting physical and network access to our routers,
our Internet access systems and information services are vulnerable to
computer viruses, break-ins and similar disruptive problems caused by our
customers or other Internet users. Such problems caused by third parties
could lead to interruption, delays or cessation in service to our customers.
Furthermore, such inappropriate use of the Internet by third parties also
could potentially jeopardize the security of confidential information stored
in the computer systems of our customers and other parties connected to the
Internet, which may deter potential subscribers. Persistent security
problems continue to plague public and private data networks. Recent
break-ins reported in the press and otherwise have reached computers
connected to the Internet at major corporations and Internet access
providers and have involved the theft of information, including incidents in
which hackers bypassed firewalls by posing as trusted computers. Alleviating
problems caused by computer viruses, break-ins or other problems caused by
third parties may require significant expenditures of capital and resources
by us, which could have a material adverse effect on us. Until more
comprehensive security technologies are developed, the security and privacy
concerns of existing and potential customers may inhibit the growth of the
Internet service industry in general and our customer base and revenues in
particular. Moreover, if we experience a breach of network security or
privacy, there can be no assurance that our customers will not assert or
threaten claims against us based on or arising out of such breach, or


                                   - 22 -

<PAGE>
<PAGE>

that any such claims will not be upheld, which could have a material adverse
effect on our business, financial condition and results of operation.

         THERE IS INTENSE COMPETITION FOR INTERNET PRODUCTS AND SERVICES,
ADVERTISING AND SALES OF GOODS AND SERVICES. Competition for Internet
products and services, advertising and electronic commerce is intense. We
expect that competition will continue to intensify. Barriers to entry are
minimal, and competitors can launch new Web sites at a relatively low cost.
Our competitors may develop Internet products and services that are superior
to, or have greater market acceptance than, our solutions. If we are unable
to compete successfully against our competitors, our business, financial
condition and operating results will be adversely affected. Many of our
competitors have greater brand recognition and greater financial, marketing
and other resources than us. This may place us at a disadvantage in
responding to our competitors' pricing strategies, technological advances,
advertising campaigns, strategic partnerships and other initiatives.

         COMPETITION. We encounter substantial competition in the businesses
in which we compete. Our principal competitors include mutual funds,
investment advisers, investment counsel firms and financial institutions
such as banks, savings and loan institutions and credit unions. Many of the
institutions with which we compete are larger and have substantially greater
financial resources than us.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The business activities of our company expose us 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.

         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>
<PAGE>

         The following table illustrates Unified Banking Company's estimated
static gap with prepayments calculated as of June 30, 2001:

<TABLE>
<CAPTION>
                                                            TIME TO MATURITY OR REPRICING
                                                                   0 TO 1        1 TO 2        2 TO 3
(DOLLARS IN THOUSANDS)                             IMMEDIATE       MONTHS        MONTHS        MONTHS
                                                   ---------       ------        ------        ------
<S>                                                 <C>            <C>           <C>           <C>
RATE SENSITIVE ASSETS
   Federal funds sold ......................        $ 1,217        $   --        $   --        $   --
                                                    -------        ------        ------        ------
   Securities
     U. S. agencies ........................             --           579           568         8,388
     FHLB stock ............................            190            --            --            --
                                                    -------        ------        ------        ------
       Total securities ....................            190           579           568         8,388
                                                    -------        ------        ------        ------
   Loans
     Commercial
       Fixed ...............................             --            10            10            10
       Variable ............................          7,080            --            --            --
       Secured by deposits .................             30            --            --            --
                                                    -------        ------        ------        ------
         Total commercial ..................          7,110            10            10            10
                                                    -------        ------        ------        ------
     Real Estate
       Commercial ..........................             --            67         1,123            13
                                                    -------        ------        ------        ------
       Residential
         Fixed .............................             --           324            33            32
         Variable ..........................          2,002            --            --            --
                                                    -------        ------        ------        ------
           Total residential ...............          2,002           324            33            32
                                                    -------        ------        ------        ------
              Total real estate ............          2,002           391         1,156            45
                                                    -------        ------        ------        ------
     Construction
       Fixed ...............................             --            --            --            --
       Variable ............................          1,086            --            --            --
                                                    -------        ------        ------        ------
           Total construction ..............          1,086            --            --            --
                                                    -------        ------        ------        ------
     Personal
       Home equity loans ...................          5,360            --            --            --
       Installment loans ...................             --           296            20            11
       Personal open end letters of credit .          3,853            --            --            --
       Loans secured by deposits ...........             --            --            --             9
                                                    -------        ------        ------        ------
         Total personal ....................          9,213           296            20            20
                                                    -------        ------        ------        ------
   Total loans .............................         19,411           697         1,186            75
                                                    -------        ------        ------        ------
     TOTAL RATE SENSITIVE ASSETS ...........        $20,818        $1,275        $1,753        $8,463
                                                    =======        ======        ======        ======
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts ..........................        $ 1,016        $   --        $   --        $   --
                                                    -------        ------        ------        ------
     Money market accounts
       Market rate accounts ................          4,127            --            --            --
       Business market rate accounts .......          2,461            --            --            --
       Special personal MMDA ...............            925            --            --            --
       Special business MMDA ...............            418            --            --            --
                                                    -------        ------        ------        ------
         Total money market accounts .......          7,931            --            --            --
                                                    -------        ------        ------        ------
     Savings ...............................             44            --            --            --
                                                    -------        ------        ------        ------
     Time deposits
       CD's > 100K .........................             --           100           369         5,000
       CD's < 100K .........................             --           293           150           178
                                                    -------        ------        ------        ------
         Total time deposits ...............             --           393           519         5,178
                                                    -------        ------        ------        ------
       Individual retirement accounts ......             --            --            --            --
                                                    -------        ------        ------        ------
         Total interest bearing deposits ...          8,991           393           519         5,178
                                                    -------        ------        ------        ------
   Borrowed funds (repurchase agreements) ..             --             2            --            --
                                                    -------        ------        ------        ------
     TOTAL RATE SENSITIVE LIABILITIES ......        $ 8,991        $  395        $  519        $5,178
                                                    =======        ======        ======        ======

<PAGE>
<CAPTION>
                                                               TIME TO MATURITY OR REPRICING
                                                    3 TO 6        6 TO 9        9 TO 12       12 TO 48
(DOLLARS IN THOUSANDS)                              MONTHS        MONTHS        MONTHS         MONTHS
                                                    ------        ------        -------       --------
<S>                                                 <C>           <C>           <C>           <C>
RATE SENSITIVE ASSETS
   Federal funds sold ......................        $   --        $   --        $   --        $    --
                                                    ------        ------        ------        -------
   Securities
     U. S. agencies ........................         1,450         1,369         1,289         10,770
     FHLB stock ............................            --            --            --             --
                                                    ------        ------        ------        -------
       Total securities ....................         1,450         1,369         1,289         10,770
                                                    ------        ------        ------        -------
   Loans
     Commercial
       Fixed ...............................            30            30           230            412
       Variable ............................            --            --            --             --
       Secured by deposits .................            --            --            --             --
                                                    ------        ------        ------        -------
         Total commercial ..................            30            30           230            412
                                                    ------        ------        ------        -------
     Real Estate
       Commercial ..........................           339            42         1,429          2,690
                                                    ------        ------        ------        -------
       Residential
         Fixed .............................            95            93            90          1,328
         Variable ..........................            --            --            --             --
                                                    ------        ------        ------        -------
           Total residential ...............            95            93            90          1,328
                                                    ------        ------        ------        -------
              Total real estate ............           434           135         1,519          4,018
                                                    ------        ------        ------        -------
     Construction
       Fixed ...............................            --            --           238             --
       Variable ............................            --            --            --             --
                                                    ------        ------        ------        -------
           Total construction ..............            --            --           238             --
                                                    ------        ------        ------        -------
     Personal
       Home equity loans ...................            --            --            --             --
       Installment loans ...................            73            72           324            489
       Personal open end letters of credit .            --            --            --             --
       Loans secured by deposits ...........            --            11            --             16
                                                    ------        ------        ------        -------
         Total personal ....................            73            83           324            505
                                                    ------        ------        ------        -------
   Total loans .............................           537           248         2,311          4,935
                                                    ------        ------        ------        -------
     TOTAL RATE SENSITIVE ASSETS ...........        $1,987        $1,616        $3,599        $15,706
                                                    ======        ======        ======        =======
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts ..........................        $   --        $   --        $   --        $    --
                                                    ------        ------        ------        -------
     Money market accounts
       Market rate accounts ................            --            --            --             --
       Business market rate accounts .......            --            --            --             --
       Special personal MMDA ...............            --            --            --             --
       Special business MMDA ...............            --            --            --             --
                                                    ------        ------        ------        -------
         Total money market accounts .......            --            --            --             --
                                                    ------        ------        ------        -------
     Savings ...............................            --            --            --             --
                                                    ------        ------        ------        -------
     Time deposits
       CD's > 100K .........................           670         3,328           808          4,780
       CD's < 100K .........................         2,092         3,718         1,063         11,087
                                                    ------        ------        ------        -------
         Total time deposits ...............         2,762         7,046         1,871         15,867
                                                    ------        ------        ------        -------
       Individual retirement accounts ......            30            66           123          1,099
                                                    ------        ------        ------        -------
         Total interest bearing deposits ...         2,792         7,112         1,994         16,966
                                                    ------        ------        ------        -------
   Borrowed funds (repurchase agreements) ..            --            --            --             --
                                                    ------        ------        ------        -------
     TOTAL RATE SENSITIVE LIABILITIES ......        $2,792        $7,112        $1,994        $16,966
                                                    ======        ======        ======        =======



<PAGE>
<CAPTION>
                                                       TIME TO MATURITY OR REPRICING
                                                   48 TO 54        > 54
(DOLLARS IN THOUSANDS)                              MONTHS        MONTHS        TOTALS
                                                   --------       ------        ------
<S>                                                 <C>           <C>           <C>
RATE SENSITIVE ASSETS
   Federal funds sold ......................        $   --        $   --        $ 1,217
                                                    ------        ------        -------
   Securities
     U. S. agencies ........................         1,164         3,069         28,646
     FHLB stock ............................            --            --            190
                                                    ------        ------        -------
       Total securities ....................         1,164         3,069         28,836
                                                    ------        ------        -------
   Loans
     Commercial
       Fixed ...............................           145            33            909
       Variable ............................            --            --          7,080
       Secured by deposits .................            --            --             30
                                                    ------        ------        -------
         Total commercial ..................           145            33          8,019
                                                    ------        ------        -------
     Real Estate
       Commercial ..........................         1,100         1,415          8,217
                                                    ------        ------        -------
       Residential
         Fixed .............................           657           878          3,530
         Variable ..........................            --            --          2,002
                                                    ------        ------        -------
           Total residential ...............           657           878          5,532
                                                    ------        ------        -------
              Total real estate ............         1,757         2,293         13,749
                                                    ------        ------        -------
     Construction
       Fixed ...............................            --            --            238
       Variable ............................            --            --          1,086
                                                    ------        ------        -------
           Total construction ..............            --            --          1,324
                                                    ------        ------        -------
     Personal
       Home equity loans ...................            --            --          5,360
       Installment loans ...................             9             3          1,297
       Personal open end letters of credit .            --            --          3,853
       Loans secured by deposits ...........            --            --             35
                                                    ------        ------        -------
         Total personal ....................             9             3         10,545
                                                    ------        ------        -------
   Total loans .............................         1,911         2,329         33,637
                                                    ------        ------        -------
     TOTAL RATE SENSITIVE ASSETS ...........        $3,074        $5,397        $63,689
                                                    ======        ======        =======
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts ..........................        $   --        $   --        $ 1,016
                                                    ------        ------        -------
     Money market accounts
       Market rate accounts ................            --            --          4,127
       Business market rate accounts .......            --            --          2,461
       Special personal MMDA ...............            --            --            925
       Special business MMDA ...............            --            --            418
                                                    ------        ------        -------
         Total money market accounts .......            --            --          7,931
                                                    ------        ------        -------
     Savings ...............................            --            --             44
                                                    ------        ------        -------
     Time deposits
       CD's > 100K .........................           646         1,500         17,202
       CD's < 100K .........................           900         2,373         21,855
                                                    ------        ------        -------
         Total time deposits ...............         1,546         3,873         39,057
                                                    ------        ------        -------
       Individual retirement accounts ......           575         2,822          4,715
                                                    ------        ------        -------
         Total interest bearing deposits ...         2,121         6,695         52,763
                                                    ------        ------        -------
   Borrowed funds (repurchase agreements) ..            --            --              2
                                                    ------        ------        -------
     TOTAL RATE SENSITIVE LIABILITIES ......        $2,121        $6,695        $52,764
                                                    ======        ======        =======




                                   - 24 -

<PAGE>
<PAGE>

<CAPTION>
                                                                    TIME TO MATURITY OR REPRICING
                                                                        0 TO 1             1 TO 2             2 TO 3
(DOLLARS IN THOUSANDS)                              IMMEDIATE           MONTHS             MONTHS             MONTHS
                                                    ---------           ------             ------             ------
<S>                                                  <C>                <C>                <C>                <C>
INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $20,818            $ 1,275            $ 1,753            $ 8,463
   Total rate sensitive liabilities ......             8,991                395                519              5,178
   Gap ...................................            11,827                880              1,234              3,285
   RSA/RSL ...............................              2.32x              3.22x              3.38x              1.63x
   RSA/assets ............................              0.32               0.02               0.03               0.13
   RSL/assets ............................              0.14               0.01               0.01               0.08
   Gap/assets ............................             17.95%              1.33%              1.87%              4.98%
   Gap/RSA ...............................             56.81              68.99              70.42              38.81



CUMULATIVE GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $20,818            $22,093            $23,846            $32,309
   Total rate sensitive liabilities ......             8,991              9,386              9,905             15,083
   Gap ...................................            11,827             12,707             13,941             17,226
   RSA/RSL ...............................              2.32x              2.35x              2.41x              2.14x
   RSA/assets ............................              0.32               0.34               0.36               0.49
   RSL/assets ............................              0.14               0.14               0.15               0.23
   Gap/assets ............................             17.95%             19.28%             21.15%             26.14%
   Gap/RSA ...............................             56.81              57.51              58.46              53.32


<CAPTION>
                                                                      TIME TO MATURITY OR REPRICING
                                                     3 TO 6              6 TO 9            9 TO 12            12 TO 48
(DOLLARS IN THOUSANDS)                               MONTHS              MONTHS             MONTHS             MONTHS
                                                     ------              ------            -------            --------
<S>                                                  <C>                <C>                <C>                <C>
INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $ 1,987            $ 1,616            $ 3,599            $15,706
   Total rate sensitive liabilities ......             2,792              7,112              1,994             16,966
   Gap ...................................              (805)            (5,496)             1,605             (1,261)
   RSA/RSL ...............................              0.71x              0.23x              1.80x              0.93x
   RSA/assets ............................              0.03               0.02               0.05               0.24
   RSL/assets ............................              0.04               0.11               0.03               0.26
   Gap/assets ............................             -1.22%             -8.34%              2.44%             -1.91%
   Gap/RSA ...............................            -40.53            -340.06              44.59              -8.03



CUMULATIVE GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $34,296            $35,912            $39,512            $55,218
   Total rate sensitive liabilities ......            17,875             24,988             26,982             43,948
   Gap ...................................            16,421             10,925             12,530             11,269
   RSA/RSL ...............................              1.92x              1.44x              1.46x              1.26x
   RSA/assets ............................              0.52               0.54               0.60               0.84
   RSL/assets ............................              0.27               0.38               0.41               0.67
   Gap/assets ............................             24.92%             16.58%             19.01%             17.10%
   Gap/RSA ...............................             47.88              30.42              31.71              20.41



<CAPTION>
                                                   TIME TO MATURITY OR REPRICING
                                                     48 TO 54            > 54
(DOLLARS IN THOUSANDS)                                MONTHS            MONTHS
                                                     --------           ------
<S>                                                  <C>                <C>
INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $ 3,074            $ 5,397
   Total rate sensitive liabilities ......             2,121              6,695
   Gap ...................................               953             (1,297)
   RSA/RSL ...............................              1.45x              0.81x
   RSA/assets ............................              0.05               0.08
   RSL/assets ............................              0.03               0.10
   Gap/assets ............................              1.45%             -1.97%
   Gap/RSA ...............................             31.01             -24.04



CUMULATIVE GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets ...........           $58,292            $63,689
   Total rate sensitive liabilities ......            46,069             52,764
   Gap ...................................            12,223             10,925
   RSA/RSL ...............................              1.27x              1.21x
   RSA/assets ............................              0.88               0.97
   RSL/assets ............................              0.70               0.80
   Gap/assets ............................             18.55%             16.58%
   Gap/RSA ...............................             20.97              17.15
</TABLE>




                                   - 25 -

<PAGE>
<PAGE>

         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.

         We have structured our assets and liabilities to mitigate the risk
of either a rising or falling interest rate environment. Depending upon our
assessment of economic factors such as the magnitude and direction of
projected interest rates over the short and long term, we generally operate
within guidelines set by our asset/liability policy and attempt to maximize
our returns within an acceptable degree of risk.

         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, as of June 30, 2001, the "rate shock"
results of a simulation model that attempts to measure the effect of rising
and falling interest rates over a two-year horizon in a rapidly changing
rate environment.

<TABLE>
<CAPTION>
                                                                   PERCENTAGE CHANGE IN
                 BASIS POINT                     ------------------------------------------------------------
                  CHANGE IN                      NET INTEREST INCOME         MARKET VALUE OF PORTFOLIO EQUITY
               INTEREST RATES                     PROJECTED CHANGE                   PROJECTED CHANGE
               --------------                    -------------------         --------------------------------
                    <S>                               <C>                                    <C>
                    -400                              -16.02%                                -50.88%
                    -300                              -11.79                                 -31.00
                    -200                               -7.64                                 -13.40
                    -100                               -3.79                                  -3.66
                       0                                0.00                                   0.00
                     100                                3.01                                   1.29
                     200                                6.60                                   2.14
                     300                               10.12                                   2.13
                     400                               13.32                                   2.62
</TABLE>

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

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

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


                                   - 26 -

<PAGE>
<PAGE>

         We use our rate shock information to tell us how much exposure we
have to rapidly changing rates. Based on historical information and our
assessment of future interest rate trends, we do not believe it is likely
that rapidly rising rates would have a significant positive impact on our
results of operations. Conversely, we also believe there is minimal
likelihood that rapidly falling rates would have a significant negative
impact on our results of operations.

         We believe that more likely scenarios include gradual changes in
interest rate levels. We continue to monitor our gap and rate shock analyses
to detect changes to our exposure to fluctuating rates. We have the ability
to shorten or lengthen maturities on newly acquired assets, sell investment
securities, or seek funding sources with different maturities in order to
change our asset and liability structure for the purpose of mitigating the
effect of interest rate risk.





                                   - 27 -

<PAGE>
<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 June 30, 2001.





                                   - 28 -

<PAGE>
<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:  August 8, 2001           By: /s/ Timothy L. Ashburn
                                    --------------------------------------------
                                    Timothy L. Ashburn, Chairman and Chief
                                    Executive Officer



Dated:  August 8, 2001           By: /s/ Thomas G. Napurano
                                    --------------------------------------------
                                    Thomas G. Napurano, Executive Vice President
                                    and Chief Financial Officer





                                   - 29 -

<PAGE>
<PAGE>

                                EXHIBIT INDEX

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

   11.1           Computations of Earnings per Share.






                                   - 30 -