FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


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

For the quarterly period ended                     March 31, 2003
                               ------------------------------------------------



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


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

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

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

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


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.                      |X| Yes   |_| No


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


                                                      Number of shares
            Title of class                     outstanding as of May 1, 2003
------------------------------------        -----------------------------------
    Common stock, $0.01 par value                         2,829,246



<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
                                    FORM 10-Q

                                      INDEX
                                                                           Page
                                                                           ----
PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

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

         Consolidated Statements of Operations (Unaudited) -Three Months Ended
         March 31, 2003 and 2002...............................................3

         Consolidated Statements of Comprehensive Income (Unaudited) -Three
         Months Ended March 31, 2003 and 2002..................................4

         Consolidated Statements of Cash Flow (Unaudited) - Three Months Ended
         March 31, 2003 and 2002...............................................5

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

Item 2.  Management's  Discussion and Analysis of Financial Condition and
         Results of Operations................................................15

         Cautionary Statement Regarding Forward-Looking Statements............15

         General..............................................................15

         Comparison of Results for the Three Months Ended March 31, 2003 and
         2002.................................................................16

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

Item 3.  Quantitative and Qualitative Disclosure About Market Risk............22

Item 4.  Controls and Procedures..............................................26

PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.....................................27

SIGNATURES....................................................................28

CERTIFICATION.................................................................29

EXHIBIT INDEX.................................................................33


                                      -i-


<PAGE>



PART I.       FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

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

                                                                              MARCH 31,             DECEMBER 31,
                                                                                2003                    2002
                                                                          --------------          ----------------
Current Assets
     Cash and cash equivalents (see note 12)...........................   $    5,998,868          $   4,564,949
     Due from banks....................................................        2,250,637              1,656,549
     Federal funds sold................................................               --              1,479,000
     Bond investments (see note 12)....................................       10,922,416             15,685,987
     Investment in securities and non-affiliated
       mutual funds....................................................          711,432                709,687
     Note receivable...................................................               --                800,000
     Loans (net of allowance for loan losses of $586,540
       for 2003 and $550,216 for 2002).................................       57,120,832             57,579,002
     Accounts receivable (net of allowance for
       doubtful accounts of $100,113 for 2003 and
       $68,715 for 2002)...............................................        2,810,043              2,607,547
     Receivables from premium financings...............................        3,179,156              2,960,344
     Prepaid and deposits..............................................          680,072                830,512
                                                                          --------------         --------------

         Total current assets..........................................       83,673,456             88,873,577
                                                                          --------------         --------------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated
       depreciation of $2,439,785 for 2003 and
       $2,308,646 for 2002)............................................        1,912,222              2,028,716
                                                                          --------------         --------------

         Total fixed assets............................................        1,912,222              2,028,716
                                                                          --------------         --------------

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

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

              TOTAL ASSETS.............................................   $   86,713,283          $  92,029,898
                                                                          ==============          =============

(Continued on next page)

See accompanying notes.
</TABLE>

                                      -1-
<PAGE>



UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


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

                                                                                MARCH 31,           DECEMBER 31,
                                                                                  2003                  2002
                                                                            ----------------      ----------------

Current Liabilities:
     Borrowed funds.....................................................      $  3,946,510         $   4,742,783
     Deposits (see note 12).............................................        63,565,867            67,277,222
     Accounts payable and accrued expenses..............................         1,581,179             1,766,741
     Accrued compensation and benefits..................................           529,897               491,334
     Payable to broker-dealers..........................................           107,890                79,962
     Income taxes payable...............................................           116,939               144,204
     Other liabilities..................................................         1,675,297             1,975,261
                                                                             -------------         -------------

         Total current liabilities......................................        71,523,579            76,477,507
                                                                             -------------         -------------

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

              Total liabilities.........................................        71,581,149            76,535,077
                                                                             -------------         -------------

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

Stockholders' Equity
     Common stock, par value $.01 per share (authorized shares - 20,000,000;
       issued and outstanding shares - 2,829,246 for
       2003 and 2,844,246 for 2002).....................................            32,793                32,943
     Additional paid-in capital.........................................        15,704,897            16,004,747
     Retained earnings..................................................        (1,104,863)           (1,114,514)
     Accumulated other comprehensive income.............................           499,307               571,645
                                                                             -------------         -------------
              Total stockholders' equity................................        15,132,134            15,494,821
                                                                             -------------         -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..............................     $  86,713,283         $  92,029,898
                                                                             =============         =============


See accompanying notes.
</TABLE>

                                      -2-
<PAGE>



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

<TABLE>
<S>                <C>                 <C>               <C>               <C>             <C>          <C>
                                                                             THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                     ----------------------------------
                                                                         2003                  2002
                                                                     -------------        -------------
REVENUE:
     Gross revenue (see note 8)...............................       $   4,213,795        $   4,329,307
                                                                     -------------        -------------
         Total gross revenue..................................           4,213,795            4,329,307
                                                                     -------------        -------------
COST OF SALES:
     Cost of sales (see note 8)...............................             375,704              601,829
                                                                     -------------        -------------
         Total cost of sales..................................             375,704              601,829
                                                                     -------------        -------------
GROSS PROFIT (see note 8).....................................           3,838,091            3,727,478
                                                                     -------------        -------------

EXPENSES:
     Employee compensation....................................           1,882,308            2,201,731
     Employee insurance and benefits..........................             348,061              398,330
     Commissions..............................................             268,101              279,746
     Data processing..........................................             223,072              156,666
     Mail and courier.........................................              36,515               38,663
     Telephone................................................              51,636               72,313
     Equipment rental and maintenance.........................              94,599              146,640
     Occupancy................................................             233,821              226,125
     Provision for depreciation and amortization..............             131,833               88,814
     Professional fees........................................              69,554               58,281
     Travel and entertainment.................................              65,413                1,663
     Interest.................................................                 698               (8,219)
     Errors expense...........................................              25,357             (169,013)
     Provision for bad debt...................................              45,340               28,209
     Provision for loan losses................................              36,000               30,000
     Business development costs...............................              13,500               36,900
     Insurance................................................             123,501               50,526
     Other operating expenses (see note 10)...................             164,303              112,696
                                                                     -------------        -------------
         Total expenses.......................................           3,813,612            3,750,071
                                                                     -------------        -------------

     Income (loss) from continuing operations.................              24,479              (22,593)
     Other loss...............................................              (4,528)              (6,095)
     Income tax benefit (expense).............................             (10,000)               3,338
                                                                     -------------        -------------

Net income (loss) from continuing operations..................               9,951              (25,350)

Income (loss) from discontinued operations (net of income
     taxes of $0 for 2003 and $8,338 for 2002) ...............                (300)              18,302
                                                                     -------------        -------------
Net income (loss).............................................       $       9,651        $      (7,048)
                                                                     =============        =============

Per share income (loss)
     Basic common shares outstanding..........................           2,829,246            2,877,634
     Net income (loss) - basic................................       $          --        $          --

     Fully diluted common shares outstanding
          (see note 11).......................................           2,829,246            2,877,634
     Net income (loss) - fully diluted........................       $          --        $          --

See accompanying notes.
</TABLE>

                                      -3-
<PAGE>



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

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


                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                     ------------------------------
                                                                         2003              2002
                                                                     -------------    -------------

Net income (loss).............................................       $       9,651    $      (7,048)
Other comprehensive loss, net of tax
     Unrealized loss on securities, net of
         reclassification adjustment..........................             (72,338)         (59,118)
                                                                     -------------    -------------

Comprehensive loss............................................       $     (62,687)   $     (66,166)
                                                                     =============    =============

See accompanying notes.
</TABLE>















                                      -4-
<PAGE>



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

<TABLE>
<S>                 <C>             <C>              <C>               <C>              <C>              <C>
                                                                                THREE MONTHS ENDED
                                                                                     MARCH 31,
                                                                        -----------------------------------
                                                                            2003                 2002
                                                                        --------------       --------------
CASH FLOW FROM OPERATING ACTIVITIES
    Net income (loss)..............................................     $       9,651        $      (7,048)
    Adjustments to reconcile net income (loss) to cash
    provided by (used in) operating activities:
       Income tax payable, net of deferred tax.....................            10,000                4,955
       Provision for depreciation and amortization (see note 2)....           131,833               95,694
       Provision for loan losses...................................            36,000               30,000
       Provision for bad debt......................................            45,340               28,209
       Bond accretion..............................................            (7,957)              (7,959)
       Unrealized loss on securities...............................             4,528                3,863
       Loss on sale/disposal of securities.........................                --                2,232
       (Increase) decrease in operating assets:
          Receivables..............................................          (247,612)            (247,178)
          Receivables from premium financings......................          (219,036)            (347,774)
          Loan receivables, net of repayments......................           422,170           (8,542,885)
          Prepaid and sundry assets................................           150,440               24,888
          Notes receivable.........................................           800,000                   --
       Increase (decrease) in operating liabilities:
          Deposits.................................................        (3,711,355)           5,428,228
          Accounts payable and accrued expenses....................          (157,634)          (1,128,484)
          Accrued compensation and benefits........................            38,563             (123,580)
          Other liabilities........................................          (299,963)            (255,233)
                                                                        -------------        -------------
              Net cash used in operating activities................        (2,995,032)          (5,042,072)
                                                                        -------------        -------------

CASH FLOW FROM INVESTING ACTIVITIES
    Purchase of equipment..........................................           (15,339)             (32,503)
    Due from banks.................................................          (594,088)            (225,433)
    Bond investments...............................................         4,661,925           (6,040,671)
    Federal funds sold/(purchased).................................         1,479,000            4,468,000
    Borrowed funds.................................................          (796,273)           5,002,345
    Proceeds from sale of securities...............................                --                8,274
    Investment in securities and mutual funds......................            (6,274)             (53,770)
                                                                        -------------        -------------
              Net cash provided by investing activities............         4,728,951            3,126,242
                                                                        -------------        -------------

CASH FLOW FROM FINANCING ACTIVITIES
    Retirement of common stock.....................................          (300,000)                  --
    Proceeds from bank line of credit..............................                --              510,000
    Repayment of borrowings........................................                --             (322,255)
    Repayment of capital lease obligations.........................                --                 (140)
                                                                        -------------        -------------
              Net cash provided by (used in) financing activities..          (300,000)             187,605
                                                                        -------------        -------------
Net increase (decrease) in cash and cash equivalents...............         1,433,919           (1,728,225)
Cash and cash equivalents - beginning of year......................         4,564,949            8,844,482
                                                                        -------------        -------------
Cash and cash equivalents - end of period..........................     $   5,998,868        $   7,116,257
                                                                        =============        =============

See accompanying notes.
</TABLE>

                                      -5-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 1 -      NATURE OF OPERATIONS

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

Note 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

              Financial Statement Presentation
              --------------------------------
              Certain amounts in the 2002 financial statements have been
              reclassified to conform to the 2003 presentation.

              The provision for depreciation and amortization expense on our
              Consolidated Statements of Cash Flow includes depreciation and
              amortization from continuing and discontinued operations for the
              first quarter of 2002, but only from continuing operations for
              the first quarter of 2003. On our Consolidated Statements of
              Operations for the quarters ended March 31, 2003 and 2002, the
              provision for amortization and depreciation is for our continuing
              operations, and does not include a provision for discontinued
              operations for either quarter.

              Use of Estimates
              ----------------
              During 2002, we experienced operational issues with respect our
              mutual fund administrative services affiliate, which issues
              primarily are related to problems associated with our
              reconciliation of various accounts. In connection therewith, we
              established an $854,000

                                      -6-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

              reserve, $454,000 of which is related to possible reconciliation
              losses and $400,000 of which is related to estimated costs to
              ascertain the extent and nature of such losses and to design
              control procedures and system enhancements to ensure that such
              reconciliation issues do not recur. During the first quarter of
              2003, we expended $44,561 of the $400,000 reserve.

Note 3 -      OPTIONS

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

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

              As of March 31, 2003 and 2002, options to acquire 105,011 and
              88,571 shares, respectively, of our common stock were outstanding
              and issued to certain of our employees, directors and advisers
              pursuant to our stock incentive plan. In addition, as of such
              dates, our board had granted options to acquire 54,545 and 60,000
              shares, respectively, of our common stock outside of such plan
              (see note 10).

              A summary of our outstanding stock options as of March 31, 2003
              and 2002 is as follows:

<TABLE>
<S>                                                                                      <C>
                                                                                   MARCH 31,
                                                               ------------------------------------------------
                                                                        2003                      2002
                                                               ---------------------     ----------------------
                                                                            WEIGHTED                  WEIGHTED
                                                                             AVERAGE                   AVERAGE
                                                                            EXERCISE                  EXERCISE
                                                               SHARES         PRICE       SHARES        PRICE
                                                               ------         -----       ------        -----
              Options outstanding at beginning of year......   161,986       $38.24       149,396      $41.94
              Forfeitures...................................    (2,430)       16.78          (825)      37.27
              Options outstanding at end of period..........   159,556        38.56       148,571       41.97
              Options exercisable at end of period..........   159,222        38.56       143,701       45.04
              Options available for future grants...........   144,989          n/a       161,429         n/a
</TABLE>

              As of March 31, 2003, 82,706 of such options were intended to
              qualify as incentive stock options pursuant to Section 422 of the
              Internal Revenue Code of 1986, as amended.

              We apply Accounting Principles Board Opinion No. 25, "Accounting
              for Stock Issued to Employees," in accounting for stock-based
              employee compensation arrangements whereby compensation costs
              related to stock options generally are not recognized in
              determining net

                                      -7-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 3 -      OPTIONS (continued)

              income. Had we computed compensation costs for our stock options
              pursuant to Financial Accounting Standard Board Statement of
              Financial Accounting Standards No. 123, "Accounting for
              Stock-Based Compensation," the effect would have been immaterial
              for the quarters ended March 31, 2003 and 2002 (based upon the
              Black-Scholes option pricing model).

Note 4 -      RENTAL AND LEASE INFORMATION

              We lease certain office facilities and equipment. Rental expense
              for the quarters ended March 31, 2003 and 2002 were $233,821 and
              $226,125, respectively.

              At March 31, 2003, we were committed to minimal rental payments
              under certain noncancellable operating leases. As of March 31,
              2003, the minimum future rental commitments for each of the
              succeeding five years subsequent to March 31, 2003 were as
              follows:

                          2004................................... $  846,360
                          2005...................................    831,059
                          2006...................................    680,858
                          2007...................................    613,241
                          2008...................................    488,664
                          Thereafter.............................    581,940
                                                                   ---------
                             Total...........................     $4,042,122
                                                                  ==========

Note 5 -      COMMITMENTS AND CONTINGENCIES

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

Note 6 -      REGULATORY REQUIREMENTS

              Unified Financial Securities is subject to the Securities and
              Exchange Commission's Uniform Net Capital Rule, which requires the
              maintenance of minimum net capital, as defined, of the greater of
              (i) 6-2/3% of aggregate indebtedness or (ii) $50,000, and a ratio
              of aggregate indebtedness to net capital of not more than 15 to 1.
              At March 31, 2003, the net capital and ratio of aggregate
              indebtedness for Unified Financial Securities were $156,788 and
              1.92 to 1, respectively.

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

              Under the Office of Thrift Supervision's regulatory capital
              requirements, savings associations must maintain "tangible"
              capital equal to 1.5% of adjusted total assets, "core" capital
              equal to

                                      -8-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 6 -      REGULATORY REQUIREMENTS (continued)

              at least 4.0% of adjusted total assets and "total" capital (a
              combination of "core" and "supplementary" capital) equal to 8.0%
              of risk-weighted assets. In addition, the Office of Thrift
              Supervision has adopted regulations that impose certain
              restrictions on savings associations that have a total risk-based
              capital ratio that is less than 8.0%, a ratio of Tier 1 capital to
              risk-weighted assets of less than 4.0% or a ratio of Tier 1
              capital to adjusted total assets of less than 4.0%. As of March
              31, 2003, Unified Banking Company had a total risk-based capital
              ratio of 11.04%, a ratio of Tier 1 capital to risk-weighted assets
              of 10.13% and a ratio of Tier 1 capital to adjusted total assets
              of 8.31%.

              Unified Trust Company, National Association, a limited purpose
              national trust company, is chartered, regulated and examined by
              the Office of the Comptroller of the Currency. Unified Trust
              Company, NA also is a member of the Federal Reserve System. As a
              national trust company, the activities of Unified Trust Company,
              NA must comply with various statutory and regulatory requirements,
              including, among other things, the maintenance of adequate capital
              and the exercise of fiduciary powers. Currently, Unified Trust
              Company, NA is required to maintain a minimum of $2.0 million in
              capital, and may be required to maintain additional minimum
              capital as assets under management at the trust company increase.
              As of March 31, 2003, Unified Trust Company, NA had $2,237,344 in
              capital.

Note 7 -      FAIR VALUE OF FINANCIAL INSTRUMENTS

              The following table presents the carrying amounts and estimated
              fair value of our financial instruments at March 31, 2003 and
              2002. Financial Accounting Standards Board Statement No. 107,
              "Disclosures About Fair Value of Financial Instruments," defines
              the fair value of a financial instrument as the amount at which
              the instrument could be exchanged in a current transaction between
              willing parties.

<TABLE>
<S>                                                                                     <C>
                                                                                  MARCH 31,
                                                          -------------------------------------------------------
                                                                      2003                         2002
                                                          --------------------------     ------------------------
                                                            CARRYING         FAIR         CARRYING         FAIR
                                                             AMOUNT          VALUE         AMOUNT          VALUE
              (IN THOUSANDS)
              Financial assets:
                 Cash and cash equivalents............     $ 5,998.9      $  5,998.9     $  7,116.3     $ 7,116.3
                 Due from banks.......................       2,250.6         2,250.6        1,582.9       1,582.9
                 Bond investments.....................      10,922.4        10,922.4       17,333.6      17,333.6
                 Securities and mutual funds..........         711.4           711.4          594.4         594.4
                 Notes receivable.....................            --              --          800.0         800.0
                 Loans, net of allowance..............      57,120.8        57,120.8       52,218.5      52,218.5
                 Receivables (trade), net of allowance       2,810.0         2,810.0        3,482.3       3,482.3
                 Receivables from premium financings..       3,179.2         3,179.2        2,564.6       2,564.6
                 Prepaid and deposits.................         680.1           680.1          400.2         400.2
              Financial liabilities:
                 Current liabilities..................      71,523.6        71,523.6       72,133.4      72,133.4
                 Capital lease obligation.............          --              --              1.0           1.0
</TABLE>



                                      -9-
<PAGE>

                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------


Note 8 -      DISCLOSURES ABOUT REPORTING SEGMENTS

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

              Our banking segment, which includes Unified Banking Company and
              Commonwealth Premium Finance Corporation, reports revenue
              partially in accordance with the AICPA Audit and Accounting Guide
              for Banks and Savings Institutions, which requires that banking
              revenue be reported net of interest expense, and partially in
              accordance with the AICPA Audit and Accounting Guide for
              Financial Institutions (other than banks and insurance
              companies), which treats the provision for loan losses as an
              operating expense. Pursuant to the AICPA guide for banks, banking
              revenue is presented net of the provision for loan losses. As a
              result, we report our provision for loan losses as an operating
              expense on our Statements of Operations. For the quarters ended
              March 31, 2003 and 2002, our banking operation recorded interest
              expense of $646,260 and $693,493, respectively. Our banking
              operation's provision for loan losses was $36,000 and $30,000 for
              the quarters ended March 31, 2003 and 2002, respectively.
              Additionally, pursuant to the AICPA guide for banks, banks
              typically do not report gross profit. However, for comparability
              among our operating segments, we have reported banking gross
              profit, which amount is equal to banking revenue for any given
              period.

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

              Our reportable segments are strategic business units that offer
              different products and services. They are managed separately
              because each business requires different technology and marketing
              strategies. Most of the businesses were acquired as a unit and the
              management at the time of the acquisition was retained. Reportable
              segment revenue, gross profit, total assets, depreciation and
              amortization and capital expenditures were as follows as of or for
              the three months ended March 31, 2003 and 2002:

                                      -10-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 8 -      DISCLOSURES ABOUT REPORTING SEGMENTS (Continued)

<TABLE>
<S>               <C>              <C>                <C>               <C>             <C>            <C>
                                                                                AS OF OR FOR THE
                                                                             THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                     ----------------------------------
                                                                         2003                 2002
                                                                     -------------        -------------
Revenue:
--------
     Trust and retirement.................................           $   1,254,435        $   1,328,421
     Mutual fund administration...........................               1,544,076            1,495,603
     Banking..............................................                 756,214              592,951
     Brokerage............................................                 262,336              496,289
     Investment advisory..................................                 371,127              415,930
     Corporate............................................                  25,607                  113
                                                                     -------------        -------------
          Total...........................................           $   4,213,795        $   4,329,307
                                                                     =============        =============

Gross profit:
-------------
     Trust and retirement.................................           $   1,254,435        $   1,328,421
     Mutual fund administration...........................               1,379,384            1,305,364
     Banking..............................................                 756,214              592,951
     Brokerage............................................                 117,900              148,196
     Investment advisory..................................                 304,551              352,433
     Corporate............................................                  25,607                  113
                                                                     -------------        -------------
          Total...........................................           $   3,838,091        $   3,727,478
                                                                     =============        =============

Total assets:
-------------
     Trust and retirement.................................           $   2,577,257        $   2,906,364
     Mutual fund administration...........................               2,416,535            2,344,652
     Banking..............................................              75,334,360           75,335,768
     Brokerage............................................                 440,506              582,653
     Investment advisory..................................               1,415,369            1,487,801
     Corporate............................................               4,529,256            6,982,644
                                                                     -------------        -------------
          Total...........................................           $  86,713,283        $  89,639,882
                                                                     =============        =============

Depreciation and amortization:
------------------------------
     Trust and retirement.................................           $      32,703        $      29,743
     Mutual fund administration...........................                  44,019               30,396
     Banking..............................................                  40,068               44,022
     Brokerage............................................                   1,011                1,283
     Investment advisory..................................                   2,697                5,057
     Corporate............................................                  11,335              (21,687)
                                                                     -------------        -------------
          Total...........................................           $     131,833        $      88,814
                                                                     =============        =============

Capital expenditures:
---------------------
     Trust and retirement.................................           $          --        $      21,775
     Mutual fund administration...........................                   9,268                5,651
     Banking..............................................                   6,071                   --
     Brokerage............................................                      --                   --
     Investment advisory..................................                      --                   --
     Corporate............................................                      --                5,077
                                                                     -------------        -------------
          Total...........................................           $      15,339        $      32,503
                                                                     =============        =============
</TABLE>

                                      -11-
<PAGE>


                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------


Note 9 -      BANKING SEGMENT STATEMENT OF FINANCIAL CONDITION AND OPERATIONS

              Unified Banking Company commenced operations on November 1, 1999.
              Included in our consolidated financial statements at March 31,
              2003 and 2002 were the bank's total assets of $77,857,605 and
              $77,656,443, respectively, and total liabilities of $72,130,651
              and $71,988,641, respectively. Total assets at March 31, 2003 and
              2002 of Commonwealth Premium Finance Corporation were $3,186,074
              and $2,732,675, respectively, and total liabilities were
              $1,911,548 and $1,555,974, respectively. As of such dates,
              certain components of Unified Banking Company's unconsolidated
              assets and liabilities were as follows:

<TABLE>
<S>                                                                                            <C>
                                                                                         MARCH 31,
                                                                                ---------------------------
                                                                                   2003            2002
                                                                                ----------      -----------

              Due from banks..............................................      $2,250,637      $ 1,582,916
              Investments in securities:
                US agency securities (excludes $4,109,319 for 2003 and
                   $4,906,979 for 2002, see note 12)......................      10,922,416        17,333,589
                FHLB stock................................................         513,900          250,000
              Loans:
                Real estate loans.........................................      35,567,645       33,651,888
                Commercial loans (excludes loan to subsidiary, Commonwealth
                      Premium Finance Corporation for $1,600,000 for 2003.      17,358,459       11,916,918
                Installment loans.........................................       4,760,710        7,081,937
                Other loans...............................................          20,558           27,718
                Allowance for loan losses.................................         586,540          460,000
              Bank deposits:
                Demand deposits (excludes $4,109,319 for 2003 and
                  $4,906,979 for 2002, see note 12).......................       6,578,475        7,293,492
                Official checks...........................................         259,412          371,512
                NOW accounts..............................................       1,987,494        2,801,389
                Money market accounts.....................................      10,124,940        9,053,842
                Savings accounts..........................................          69,002           77,094
                Time deposits.............................................      38,856,944       36,611,400
                Other interest-bearing deposits...........................       5,689,600        5,123,040
              Federal and borrowed funds..................................       3,946,510        5,437,345

              As discussed in Note 8, we report our results of operations in
              accordance with the AICPA guide for financial institutions (other
              than banks and insurance companies). If we reported our results of
              operations in accordance with the AICPA guide for banks, the
              results of operations for our banking segment for the quarters
              ended March 31, 2003 and 2002 would have been as follows:

                                                                                    THREE MONTHS ENDED
                                                                                         MARCH 31,
                                                                                ---------------------------
                                                                                   2003            2002
                                                                                ----------      -----------

              Gross revenue (excludes intercompany revenue of $13,500
                for 2003 and $12,000 for 2002)............................      $1,402,474      $ 1,286,444
              Interest expense............................................         646,260          693,493
                                                                                ----------      -----------
                Net revenue...............................................         756,214          592,951
                        Operating expense.................................         629,024          644,269
                                                                                ----------      -----------
              Profit (loss) before income taxes...........................      $  127,190      $   (51,318)
                                                                                ==========      ===========

</TABLE>

                                      -12-
<PAGE>



                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 10 -     INVESTMENT IN AFFILIATE

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

              VSX Holdings is involved in the development of an alternative
              trading system to be known as VSX.com, which, upon and subject to
              organization and regulatory approval, will serve as a virtual,
              real-time private financial market place. In connection with the
              organization of VSX Holdings, a third-party investor made a $3.0
              million loan to VSX Holdings, which loan is evidenced by a
              debenture issued by VSX Holdings to such investor. The debenture
              is secured by 85,000 shares of our common stock pledged by certain
              executive officers of our company. In addition, concurrent with
              the issuance of such debenture, we issued an option to the
              third-party investor to acquire shares of our common stock, which
              option has a five-year term. The investor may elect to foreclose
              on the pledged collateral or exercise the option. Pursuant to such
              option, the holder of the option and the debenture is entitled to
              surrender the debenture to us in payment of the exercise price of
              the option. During the years ending May 23, 2003, 2004 and 2005,
              the exercise price per share of our common stock subject to the
              option will be $55, $60 and $65, respectively. Should the investor
              foreclose on the pledged collateral, the executive officers would
              succeed to the option and/or the claim against VSX Holdings.
              Should the option be exercised prior to May 23, 2003 by the holder
              of the note (whether the investor, the executive officers or any
              other holder): (a) we would issue 54,545 shares of stock (50,000
              after May 23, 2003) to the investor, the executive officers or any
              other holder, as the case may be, and (b) we would succeed to the
              $3.0 million claim against VSX Holdings.

              We also have entered into a management arrangement with VSX
              Holdings whereby we provide consulting and development services to
              VSX Holdings. For the three months ended March 31, 2003 and 2002,
              we received payments totaling $25,850 and $119,566, respectively,
              from VSX Holdings for such consulting and development services,
              which amounts are recorded as a reduction of "Other operating
              expenses" on our Consolidated Statements of Operations.

Note 11 -     INCOME (LOSS) PER SHARE OF STOCK

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

              Dilutive potential common shares included in the diluted income
              (loss) per share calculation were determined using the treasury
              stock method. Under the treasury stock method, outstanding stock
              options are dilutive when the average "market price" of our common
              stock exceeds the option price during a period. In addition,
              proceeds from the assumed exercise of


                                      -13-
<PAGE>


                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                             MARCH 31, 2003 AND 2002
                             -----------------------

Note 11 -     INCOME (LOSS) PER SHARE OF STOCK (Continued)

              dilutive options along with the related tax benefit are assumed to
              be used to repurchase common shares at the average market price of
              such stock during the period. For the quarters ended March 31,
              2003 and 2002, all potential common shares were considered to be
              anti-dilutive and were excluded from the calculation of diluted
              loss per share.

Note 12 -     RELATED PARTY TRANSACTION

              As of March 31, 2003, December 31, 2002 and March 31, 2002,
              $4,109,319, $1,799,220 and $4,906,979, respectively, were
              eliminated from both bond investments and deposits on our
              Consolidated Statements of Financial Condition, which amounts
              represented cash on deposit at our bank from various subsidiaries
              of our company. We also have eliminated in consolidation
              $1,600,000 outstanding as of March 31, 2003 under a line of credit
              from Unified Banking Company to Commonwealth Premium Finance
              Corporation.

Note 13 -     SALE OF INSURANCE OPERATIONS

               On December 17, 2001,  we sold  substantially  all the assets and
               assigned  substantially  all of the  liabilities of our insurance
               subsidiaries,  Equity Insurance Managers,  Inc., Equity Insurance
               Administrators,  Inc. and 21st Century Claims  Service,  Inc., to
               Arthur J. Gallagher & Co. In connection  with the sale,  $800,000
               in cash was deposited into an escrow  account,  and is subject to
               possible  indemnification  claims of Arthur  J.  Gallagher  & Co.
               pursuant to the sale agreement. Any funds remaining in the escrow
               account after June 16, 2003 (and which are not subject to a claim
               made by Arthur J.  Gallagher  & Co.  before  such  date)  will be
               released  to us.  As of  December  31,  2001,  we  established  a
               long-term  liability  of $800,000  related to the  escrow.  As of
               December 31, 2002, we believed there was a current  potential for
               approximately  $420,000  in  claims  against  the  escrow.  Based
               thereupon,  we recorded  $280,000  as income  related to the sale
               during the year ended December 31, 2002. As of March 31, 2003, we
               believed  there  remained a current  potential for  approximately
               $420,000 in claims  against the  escrow.  Approximately  $100,000
               remained reserved for possible indemnification claims as of March
               31, 2003.


                                      -14-
<PAGE>



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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

GENERAL

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

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

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


                                      -15-


<PAGE>

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

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

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

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

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

COMPARISON OF RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002

         Revenue for the quarter ended March 31, 2003 compared to the same
quarter of 2002 decreased $115,512, or 2.7%, from $4,329,307 to $4,213,795. For
such quarters, gross profit increased $110,613, or 3.0%.

         For the first quarter of 2003 compared to the same quarter of 2002,
trust and retirement services revenue and gross profit declined $73,986, or
5.6%, due to a decline in trustee fees, which fees are tied to assets under
management. During the first quarter of 2003, our trust and retirement
operations added 24 new accounts, representing approximately $54.0 million in
assets under management, but also lost seven accounts representing approximately
$4.7 million in assets under management. As of March 31, 2003, our trust and
retirement services operation had approximately $529.9 million in assets under
management compared to $550.7 million as of March 31, 2002, a decline of
approximately 3.8% between such dates. This decline primarily was due to the
effect of the general decline in the financial markets during such 12-month
period, partially offset by the addition of assets under management as a result
of new client accounts and contributions made to existing client accounts.

         For such quarters, mutual fund administration services revenue
increased $48,473, or 3.2%, and mutual fund administration services gross profit
increased $74,020, or 5.7%, each primarily due to an increase in assets under
service at such operation during mid-year 2002. As of March 31, 2003, we
provided mutual fund administrative services to 30 mutual fund families
consisting of approximately 180 portfolios and approximately $10.3 billion in
assets under service, compared to 30 mutual fund families consisting of 142
portfolios and approximately $5.9 billion in mutual fund assets under service as
of March 31, 2002. Approximately $2.65 billion of the increase in assets under
service was added with our commencement of services for the Huntington Funds
during June 2002. While our assets under service increased quarter to quarter,

                                      -16-

<PAGE>

the mix of services (transfer agency, fund accounting and administrative
services) that we provided to certain of our mutual fund clients changed. We
recognize higher margins on administrative services and, to a lesser extent,
fund accounting services compared to transfer agency services. Our pricing, in
certain instances, also is dependent upon the number of shareholder accounts
serviced. An omnibus account may represent a significant amount of assets under
service, but would not generate as much in fees as an account with hundreds of
shareholders but less assets under service. For the first quarter of 2003
compared to the first quarter of 2002, transfer agency revenues increased
$87,854 while fund accounting and administration revenues declined $1,213 and
$52,199, respectively.

         Banking revenue and gross profit (please see note 8 of the consolidated
financial statements contained in this report) increased $163,263, or 27.5%, for
the first quarter of 2003 compared to the first quarter of 2002, primarily due
to a $103,000 increase in net interest income and a $16,000 increase in
secondary market loan revenue at our bank. The increase in net interest income
primarily was due to an increase in our bank's net interest margin, which
increased from 1.86% for the first quarter of 2002 to 2.25% for the first
quarter of 2003. Our premium finance company also experienced a $42,623 increase
in revenue, primarily due to an increase in its loan volume.

         As of March 31, 2003, our banking operation's ratio of non-performing
loans to total loans was 0.15%. At March 31, 2003, our non-performing loans
totaled $87,000. We did not have any non-performing loans at March 31, 2002. We
are working aggressively to collect all non-performing loans, but may be
required to increase our provision for loan losses in future quarters if we are
unsuccessful in collecting these loans, which could have a material effect on
our results of operations.

         For the quarter ended March 31, 2003 compared to the same quarter of
2002, brokerage revenue declined $233,953, or 47.1%, and gross profit declined
$30,296, or 20.4%. The declines in revenue and gross profit were, in large part,
attributable to a $121,307, or 62.5%, decline in clearing revenue due to the
termination of two clearing relationships. These two client relationships
represented approximately $164,054 in revenue during the first quarter of 2002.
However, clearing revenue from our remaining clients increased by $46,854. Also
contributing to the declines was a $47,167 decline in investment management
fees resulting from a lower trading volume from and lower asset levels at our
trust and retirement services' Manager Resource program. Trail commission
revenue also declined $21,538 as a result of lower asset levels attributable to
the terminated relationships discussed above.

         For such quarters, investment advisory revenue and gross profit
declined $44,803, or 10.8%, and $47,882, or 13.6%, respectively. Such declines
primarily were due to the lower market value of assets under management at such
operation. Assets under management at our investment advisory operation declined
$140.2 million, or 39.6%, from $354.2 million at March 31, 2002 to $213.9
million at March 31, 2003. Of such decline, approximately $40.3 million, or
28.7%, was attributable to the transfer of the assets of the Liquid Green Money
Market Fund to the Huntington Funds and approximately $27.3 million, or 19.8%,
was attributable to the termination of such operation's relationship with one
portfolio manager, which manager represented approximately $30,000 in revenue
during the first quarter of 2002.

         For such quarters, corporate revenue and gross profit increased
$25,494, primarily due to interest income received on a note receivable recorded
in connection with the sale of our insurance operations during December 2001.

         Total expenses increased $63,541, or 1.7%, for the quarter ended March
31, 2003 compared to the same quarter of 2002. Employee compensation expense
declined by $319,423, or 14.5%. This decline primarily was attributable to
salary reductions taken by certain officers of our company during the first
quarter of 2002, which reductions ranged from 20% to 40% of such officers'
annualized salary, and a reduced employee workforce. Employee insurance and


                                      -17-

<PAGE>

benefits expense declined $50,269, or 12.6%, primarily due to reduced staffing,
partially offset by an increase in insurance premiums. Data processing expense
increased $66,406, or 42.4%, primarily due to a $44,259 increase at our trust
and retirement services operation due to its expanded usage of vendor products.
Telephone costs declined $20,677, or 28.6%, primarily due to the elimination of
our wide area network. Equipment rental and maintenance expense declined by
$52,041, or 35.5%. During the first quarter of 2002, our mutual fund
administration services operation and our trust and retirement services
operation upgraded various software products, without any corresponding
expenses for the first quarter of 2003. For such quarters, depreciation and
amortization expense increased $43,019, or 48.4%. The depreciation and
amortization expense recorded for the first quarter of 2003 is typical of our
normal, recurring quarterly expense. The expense recorded for the first quarter
of 2002 included a reversal of an accrual made during a previous quarter, which
resulted in a reduced amortization and depreciation expense for the first
quarter of 2002 compared to the same quarter of 2003. Travel and entertainment
costs increased $63,750, or 3833.40%, primarily due to the reversal of a
$35,720 accrual recorded during the first quarter of 2002 and increased travel
by staff during the same quarter of 2003. Insurance expense increased $72,975,
or 144.4%, primarily due to our purchase of expanded insurance coverages and
due to increased insurance premiums charged for coverage due to the hardening
of the insurance markets. For such quarters, errors expense increased $194,370,
to an expense of $25,357 for the first quarter of 2003 from a credit of
$169,013 for the same quarter of 2002, primarily due to a $190,000 recovery
during 2002 from an insurance carrier with respect to a previously recorded
loss at our mutual fund administration services operation. Our provision for
bad debt increased $17,131, or 60.7%, due to management's assessment of the
collectability of certain receivables. Our provision for loan losses increased
$6,000, or 20.0%, for the quarter ended March 31, 2003 compared to the same
quarter of 2002. Unified Banking Company is required by Federal law to maintain
a reserve for possible loan losses based upon the size of and risks associated
with the loan portfolio. Business development costs declined by $23,400, or
63.4%, due to a $10,000 decline in marketing expenses at our banking operation
and a $13,400 reduction in costs at our trust operations. For such quarters,
other operating expense increased $51,607, or 45.8%, primarily due to a $93,716
net decrease in the benefit received from VSX Holdings during the first quarter
of 2003 compared to the first quarter of 2002. Removing the effect of the VSX
Holdings expense reimbursement, the net decrease was $42,109.

         For the quarter ended March 31, 2003, we recorded net income from
continuing operations of $9,951 compared to a $25,350 net loss for the same
quarter of 2002. The $35,301 increase primarily was due to the increase in gross
profit of $110,613, partially offset by the $63,541 increase in expenses. We
recorded a $300 net loss from discontinued operations for the first quarter of
2003 compared to $18,302 in net income from discontinued operations for the same
quarter of 2002.

         We recorded net income of $9,651, or basic and fully diluted income per
share of $0.00, for the quarter ended March 31, 2003 compared to a net loss of
$7,048, or basic and fully diluted loss per share of $0.00, for the same quarter
of 2002.


                                      -18-

<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

         Critical estimates in valuing goodwill include, but are not limited to,
those discussed above. Management's estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results may differ from estimates.
Effective January 1, 2002, we adopted Financial Accounting Standard No. 142,
"Goodwill and Other Intangible Assets," at which time goodwill amortization
ceased. Goodwill was tested for impairment by comparing implied value to its
carry value. Based upon a third-party valuation as of December 31, 2002, we have
determined that our recorded goodwill was not impaired during the quarter ended
March 31, 2003. Impairment adjustments after adoption of the accounting rule, if
any, are required to be recognized as operating expense when determined.


                                      -19-

<PAGE>

         ACCRUED LIABILITY FOR OPERATIONAL ISSUES. During 2002, we experienced
operational issues at our mutual fund administration services affiliate,
primarily relating to reconciliation issues. In connection therewith, we
established an $854,000 reserve, $454,000 of which is related to possible
reconciliation losses, which may or may not be recoverable, and $400,000 of
which is related to estimated costs for professional fees, related travel and
administration expenses to ascertain the nature and extent of such losses and to
redesign control procedures and make other system enhancements to ensure that
such reconciliation issues do not recur. Management's estimates are based upon
assumptions believed to be reasonable, but which are inherently uncertain and
unpredictable and, as a result, actual results may differ from estimates. During
the first quarter of 2003, we expended $44,561 of the $400,000 reserve.

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

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

         INVESTMENT SECURITIES AVAILABLE-FOR-SALE AT UNIFIED BANKING COMPANY.
Securities expected to be held for an indefinite period of time are classified
as available-for-sale and carried at fair value. Unrealized gains and losses are
reported as a separate component of stockholders' equity, net of estimated
income taxes. Substantially all of our securities have readily determinable
market prices that are derived from third party pricing services. Decisions to
purchase or sell these securities are based on economic conditions, including
changes in interest rates, liquidity and asset/liability management strategies.
At March 31, 2003, we reported other comprehensive income of $499,307. The net
change during the first quarter of 2003 from December 31, 2002 was a decline of
$72,338.

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

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


                                      -20-

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

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

         The net increase in cash and cash equivalents at March 31, 2003 from
December 31, 2002 was $1,433,919. Of such increase, $1,330,435 was related to
cash provided by bond investment of $4,661,925, federal funds sold of
$1,479,000 and customer loans of $422,170, partially offset by cash decreases
due to lower customer deposits of $3,711,355, borrowed funds of $796,273,
interest receivable on loans of $130,944 and higher due from banks of $594,088.
Capital expenditures accounted for a $15,339 usage of cash. Additionally,
retirement of common stock resulted in a usage of cash of $300,000. For the
quarter ended March 31, 2003, and excluding the activities of Unified Banking
Company, net cash provided by operating activities was $418,823. Of this
inflow, we received $800,000 in cash from the note receivable recorded in
connection with the sale of the assets of our insurance subsidiaries in 2001.
In addition, $213,133 relates to our provisions for depreciation, loan loss and
bad debts partially offset by the outflow of $604,298 in working capital. We
also received $25,850 from VSX Holdings, LLC during the first quarter of 2003
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 operation, long-term liquidity is a
function of the core deposit base and an adequate capital base. Our banking
operation is committed to growth of its core deposit base and maintenance of its
capital base. The growth of the deposit base is internally generated through
product pricing and product development.

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

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

         CAPITAL RESOURCES. Total stockholders' equity was $15,132,134 at March
31, 2003 compared to $15,494,821 at December 31, 2002. The decline in total
equity was due to the retirement of common stock and our comprehensive loss,
partially offset by our net income. We had no material commitments for capital
expenditures as of March 31, 2003.

         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.


                                      -21-

<PAGE>

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

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

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

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






                                      -22-
<PAGE>




         The following table illustrates Unified Banking Company's estimated
static gap with prepayments calculated as of March 31, 2003:

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

RATE SENSITIVE ASSETS
   Securities.................
     U.S. agencies............ $     --  $   631  $  609   $ 584  $1,593  $ 1,317  $ 1,063  $  6,155  $  453  $ 1,871  $ 14,276
     FHLB stock...............      514       --      --      --      --       --       --        --      --       --       514
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Total securities.......      514      631     609     584   1,593    1,317    1,063     6,155     453    1,871    14,790
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Loans
     Commercial
       Fixed..................       --      116     305      64     174      185      167     2,973     397        7     4,389
       Variable...............   14,569       --      --      --      --       --       --        --      --       --    14,569
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total commercial.....   14,569      116     305      64     174      185      167     2,973     397        7    18,958
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Real Estate
       Commercial
         Fixed................       --      260      35     180     475      843      337     4,884      --       --     7,013
         Variable.............    2,846       --      --      --      --       --       --        --      --       --     2,846
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total commercial...    2,846      260      35     180     475      843      337     4,884      --       --     9,859
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
       Residential
         Fixed................       --      620      97      96     508      265      739     5,380     907      201     8,813
         Variable.............    5,054       --      --      --      --       --       --        --      --       --     5,054
         Other................       --      445      25       6      17       17       18       709      11       30     1,278
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
           Total residential..    5,054    1,065     122     102     525      282      757     6,089     918      231    15,145
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
              Total real estate   7,900    1,325     157     282   1,000    1,125    1,094    10,973     918      231    25,004
                                -------   ------   -----  ------ -------  ------- --------    ------ ------- -------- ---------
     Construction
       Fixed..................       --        1       1       1       3        3        3        37       8       14        70
       Variable...............    2,398       --      --      --      --       --       --        --      --       --     2,398
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total construction...    2,398        1       1       1       3        3        3        37       8       14     2,468
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     Personal
       Home equity loans......    8,131       --      --      --      --       --       --        --      --       --     8,131
       Installment loans......       --    1,067     266     158     606      103      141     1,085      24        3     3,454
       Cash reserve loan......        3       --      --      --      --       --       --        --      --       --         3
       Personal open end
         letters of credit....    1,277       --      --      --      --       --       --        --      --       --     1,277
       Loans secured by
         deposits.............       --       --      --      --      11        1       15         3      --       --        30
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
         Total personal.......    9,411    1,067     266     159     617      104      155     1,088      24        3    12,895
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
   Total loans................   34,278    2,509     729     505   1,794    1,417    1,420    15,071   1,347      255    59,325
                               --------  -------  ------   -----  ------  -------  -------  --------  ------  -------  --------
     TOTAL RATE
       SENSITIVE ASSETS....... $ 34,792  $ 3,140  $1,338  $1,089  $3,387  $ 2,734  $ 2,481  $ 21,227  $1,801  $ 2,126  $ 74,114
                               ========  =======  ======  ======  ======  =======  =======  ========  ======  =======  ========
</TABLE>


                                      -23-
<PAGE>



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

RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts............. $  1,988 $     -- $    -- $     -- $     -- $     -- $     -- $    --  $    -- $     -- $  1,988
       Money market accounts
       Market rate accounts...    4,589       --      --       --       --       --       --      --       --       --    4,589
       Business market rate
         accounts.............    1,600       --      --       --       --       --       --      --       --       --    1,600
       Special personal
         MMDA.................      738       --      --       --       --       --       --      --       --       --      738
       Special business
         MMDA.................    3,198       --      --       --       --       --       --      --       --       --    3,198
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total money market
           accounts...........   10,125       --      --       --       --       --       --      --       --       --   10,125
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Savings accounts.........       69       --      --       --       --       --       --      --       --       --       69
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Time deposits
       CD's > 100K............       --      976     532      763    2,199    2,282    2,839   6,557       --      114   16,262
       CD's < 100K............       --      740     499    1,038    2,452    2,459    5,123  10,208        1      124   22,595
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total time deposits..       --    1,716     981    1,801    4,651    4,741    7,962  16,765        1      238   38,857
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Individual retirement
         accounts.............       --       28     172       10       70       95      279   4,993       --       41    5,689
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total interest
           bearing deposits...   12,182    1,744   1,153    1,811    4,721    4,836    8,241  21,758        1      279   56,728
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
     Borrowed funds
       Repurchase agreements.        --        9      --       --       --       --       --      --       --       --        9
       FHLB borrowings........       --       27      25       25       75       75      594   1,688      105    1,324    3,938
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
         Total borrowed funds.       --       36      25       25       75       75      594   1,688      105    1,324    3,947
                               -------- -------- ------- -------- -------- -------- -------- -------  ------- -------- --------
   TOTAL RATE
       SENSITIVE LIABILITIES.. $ 12,182 $  1,781 $ 1,179 $  1,837 $  4,795 $  4,910 $  8,834 $23,447  $   106 $  1,604 $ 60,675
                               ======== ======== ======= ======== ======== ======== ======== =======  ======= ======== ========

INCREMENTAL GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 34,792 $  3,140 $ 1,338 $  1,089 $  3,387 $  2,734 $  2,481 $21,226  $ 1,801 $  2,126
   Total rate sensitive
      liabilities.............   12,182    1,781   1,179    1,837    4,795    4,910   8,834   23,447      106    1,604
   Gap........................   22,610    1,359     159     (748)  (1,408)  (2,176) (6,353)  (2,221)   1,695      522
   RSA/RSL....................     2.86x    1.76x   1.13x    0.59x    0.71x    0.56x   0.28x    0.91x   16.99x    1.33x
   RSA/assets.................     0.45     0.04    0.02     0.01     0.04     0.04    0.03     0.27     0.02     0.03
   RSL/assets.................     0.16     0.02    0.02     0.02     0.06     0.06    0.11     0.30     0.00     0.02
   Gap/assets.................    29.04%    1.75%   0.20%   -0.96%   -1.81%   -2.79%  -8.16%   -2.85%    2.18%    0.67%
   Gap/RSA....................    64.99    43.28   11.88   -68.69   -41.57   -79.59 -256.07   -10.46    94.11    24.55
CUMULATIVE GAP REPORT
   SUMMARY INFORMATION
   Total rate sensitive assets $ 34,792 $ 37,932 $39,270  $40,359 $ 43,746 $ 46,480 $ 48,961 $70,187 $ 71,988 $ 74,114
   Total rate sensitive
       liabilities............   12,182   13,963  15,142   16,979   21,774   26,684  35,518   58,965   59,071   60,675
   Gap........................   22,610   23,969  24,128   23,380   21,972   19,796  13,443   11,222   12,917   13,439
   RSA/RSL....................     2.86x    2.72x   2.59x    2.38x    2.01x    1.74x   1.38x    1.19x    1.22x    1.22x
   RSA/assets.................     0.45     0.49    0.50     0.52     0.56     0.60    0.63     0.90     0.92     0.95
   RSL/assets.................     0.16     0.18    0.19     0.22     0.28     0.34    0.46     0.76     0.76     0.78
   Gap/assets.................    29.04%   30.79%  30.99%   30.03%   28.22%   25.43%  17.27%   14.41%   16.59%   17.26%
   Gap/RSA....................    64.99    63.19   61.44    57.93    50.23    42.59   27.46    15.99    17.94    18.13
</TABLE>

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

                                      -24-
<PAGE>


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

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

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

                    -300                              -21.18                               -4.89
                    -200                              -12.89                              -11.36
                    -100                               -6.22                               -5.34
                       0                                0.00                                0.00
                     100                                6.34                                0.31
                     200                               12.42                               -1.33
                     300                               18.19                               -3.57

</TABLE>

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

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

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







                                      -25-

<PAGE>


ITEM 4.       CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our company's
and our subsidiaries' management, including our company's president and chief
executive officer along with our chief financial officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 13a-14. This evaluation included a review of revised
procedures put in place at our mutual fund services administration operation
following the discovery in the fourth quarter of 2002 of potential
reconciliation losses at such operation. Based upon that evaluation, our
president and chief executive officer along with our chief financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to our company (including our
consolidated subsidiaries) required to be included in our periodic SEC filings.

         There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date we carried out this evaluation.















                                      -26-
<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 March 31, 2003.














                                      -27-
<PAGE>



                                   SIGNATURES


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

                              UNIFIED FINANCIAL SERVICES, INC.
                              (Registrant)



Dated:  May 8, 2003            By:    /s/ John S. Penn
                               -----------------------------------------------
                               John S. Penn,
                               President and Chief Executive Officer



Dated:  May 8, 2003            By:    /s/ Thomas G. Napurano
                               -----------------------------------------------
                               Thomas G. Napurano,
                               Executive Vice President and
                               Chief Financial Officer















                                      -28-
<PAGE>



                                  CERTIFICATION

I, John S. Penn, certify that:

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

         (2)      Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

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

         (4)      The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)      designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period for which this
                           quarterly report is being prepared;

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

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

         (5)      The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of the
                  registrant's board of directors (or persons performing the
                  equivalent function):

                  (a)      all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

                                      -29-
<PAGE>

         (6)      The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.




May 8, 2003                       /s/ John S. Penn
                                  --------------------------------------------
                                  John S. Penn
                                  President and Chief Executive Officer


















                                      -30-
<PAGE>



                                  CERTIFICATION

I, Thomas G. Napurano, certify that:

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

         (2)      Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

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

         (4)      The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  (a)      designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period for which this
                           quarterly report is being prepared;

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

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

         (5)      The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of the
                  registrant's board of directors (or persons performing the
                  equivalent function):

                  (a)      all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  (b)      any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and


                                      -31-

<PAGE>

        (6)      The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.




May 8, 2003                    /s/ Thomas G. Napurano
                               -----------------------------------------------
                               Thomas G. Napurano
                               Chief Financial Officer


<PAGE>



                                  EXHIBIT INDEX

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

   11.1       Computations of Earnings per Share, is filed herewith.

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

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














                                      -33-
<PAGE>