<TABLE>
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                                                 UNITED STATES
                                       SECURITIES AND EXCHANGE COMMISSION
                                               WASHINGTON, DC 20549

                                                    FORM 10-Q


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

For the quarterly period ended                                   SEPTEMBER 30, 2001
                               ------------------------------------------------------------------------------------



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


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

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

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

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


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


                                                                                  Number of shares
               Title of class                                            outstanding as of November 1, 2001
--------------------------------------------                         -------------------------------------------
     Common stock, $0.01 par value                                                    2,877,634



<PAGE>



                                      UNIFIED FINANCIAL SERVICES, INC.
                                                  FORM 10-Q

                                                     INDEX
                                                                                                               Page
PART I.           FINANCIAL INFORMATION

     Item 1.      Financial Statements

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

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

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

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

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

     Item 2.      Management's Discussion and Analysis of Financial Condition and Results of
                  Operations.....................................................................................14

                  Cautionary Statement Regarding Forward-Looking Statements......................................14

                  General........................................................................................14

                  Comparison of Results for the Nine Months Ended September 30, 2001 and 2000....................15

                  Comparison of Results for the Three Months Ended September 30, 2001 and 2000...................17

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

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

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

PART II.          OTHER INFORMATION

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

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

EXHIBIT INDEX....................................................................................................31

                                                               -i-


<PAGE>


PART I.           FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                     ASSETS
                                     ------

                                                                        SEPTEMBER 30,               DECEMBER 31,
                                                                            2001                        2000
                                                                       ---------------             --------------
                                                                         (UNAUDITED)
Current Assets
     Cash and cash equivalents...................................     $    4,336,483               $   5,582,098
     Due from banks..............................................          1,383,343                   1,162,639
     Federal funds sold..........................................                 --                   7,667,000
     Bond investments............................................         20,975,732                  10,841,435
     Investments in securities and non-affiliated
       mutual funds..............................................            548,719                     573,272
     Loans (net of allowance for loan losses of
       $395,000 for 2001 and $305,000 for 2000)..................         37,927,059                  20,834,674
     Accounts receivable (net of allowance for
       doubtful accounts of $141,142 for 2001 and
       $500,042 for 2000)........................................         11,583,460                  13,086,031
     Prepaid assets and deposits.................................            383,029                     297,270
     Deferred tax asset..........................................            114,600                      80,037
                                                                      --------------               -------------

         Total current assets....................................         77,252,425                  60,124,456
                                                                      --------------               -------------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated
       depreciation of $4,645,498 for 2001 and
       $4,250,692 for 2000)......................................          3,201,067                   3,500,020
                                                                      --------------               -------------
         Total fixed assets......................................          3,201,067                   3,500,020
                                                                      --------------               -------------
Non-Current Assets
     Investment in affiliates....................................              1,010                          10
     Organization cost (net of accumulated amortization
       of $263,800 for 2001 and $164,227 for 2000)...............            409,352                     508,925
     Goodwill (net of accumulated amortization of
       $321,653 for 2001 and  $243,414 for 2000).................          1,032,141                   1,110,380
     Other non-current assets....................................             98,951                     391,136
                                                                      --------------               -------------
         Total non-current assets................................          1,541,454                   2,010,451
                                                                      --------------               -------------
              TOTAL ASSETS.......................................     $   81,994,946               $  65,634,927
                                                                      ==============               =============

(Continued on next page)

See accompanying notes.

                                                              -1-
<PAGE>


UNIFIED FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


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

                                                                        SEPTEMBER 30,               DECEMBER 31,
                                                                            2001                        2000
                                                                        -------------             ----------------
                                                                         (UNAUDITED)
Current Liabilities:
     Current portion of capital lease obligations................      $         571               $       7,884
     Current portion of bank borrowings..........................          1,604,693                   1,944,662
     Federal funds...............................................          1,536,000                          --
     Borrowed funds..............................................                 --                   1,143,000
     Bank line of credit.........................................          1,044,912                   1,668,626
     Deposits ...................................................         53,731,675                  34,620,338
     Accounts payable and accrued expenses.......................          1,485,999                   2,508,776
     Accrued compensation and benefits...........................            438,803                     440,472
     Payable to insurance companies..............................          7,345,924                   8,016,752
     Payable to broker-dealers...................................             83,216                     172,374
     Income taxes payable........................................                 --                      14,308
     Other liabilities...........................................            855,773                     827,328
                                                                       -------------               -------------
         Total current liabilities...............................         68,127,566                  51,364,520
                                                                       -------------               -------------

Long-Term Liabilities
     Long-term portion of capital lease obligations..............                612                       1,049
     Long-term portion of borrowings.............................                 --                     342,339
     Other long-term liabilities.................................            154,079                      92,553
                                                                       -------------               -------------
         Total long-term liabilities.............................            154,691                     435,941
                                                                       -------------               -------------
              Total liabilities..................................         68,282,257                  51,800,461
                                                                       -------------               -------------

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

Stockholders' Equity
     Common stock, par value $.01 per share......................             33,300                      33,300
     Additional paid-in capital..................................         16,259,091                  16,259,091
     Retained deficit............................................         (3,019,064)                 (2,628,248)
     Accumulated other comprehensive income......................            439,362                     170,323
                                                                       -------------               -------------
              Total stockholders' equity.........................         13,712,689                  13,834,466
                                                                       -------------               -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......................      $  81,994,946               $  65,634,927
                                                                       =============               =============


See accompanying notes.

                                                               -2-
<PAGE>


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

                                                          NINE MONTHS ENDED               THREE MONTHS ENDED
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
                                                   ------------------------------     --------------------------
                                                        2001             2000             2001           2000
                                                   ------------      ------------     -----------    -----------
REVENUE:
     Gross revenue (see note 12).................  $ 23,668,591      $ 21,202,528    $  7,470,570    $ 7,333,971
                                                   ------------      ------------    ------------    -----------
           Total gross revenue...................    23,668,591        21,202,528       7,470,570      7,333,971
                                                   ------------      ------------    ------------    -----------

COST OF SALES:
     Cost of sales (see note 12).................     5,964,612         6,223,606       1,551,219      2,267,558
                                                   ------------      ------------    ------------    -----------
           Total cost of sales...................     5,964,612         6,223,606       1,551,219      2,267,558
                                                   ------------      ------------    ------------    -----------
           Gross profit (see note 12)............    17,703,979        14,978,922       5,919,351      5,066,413
                                                   ------------      ------------    ------------    -----------

EXPENSES:
     Employee compensation and benefits..........    11,333,197         9,453,970       3,793,485      3,534,716
     Mail and courier............................       345,027           329,071         101,420         65,998
     Telephone...................................       525,129           453,944         178,757        161,590
     Equipment rental and maintenance............       544,798           494,217         203,847        212,203
     Occupancy...................................       938,013           693,505         317,503        231,502
     Depreciation and amortization...............       837,351           730,178         264,460        259,085
     Professional fees...........................       936,395         1,191,472         271,834        260,227
     Interest....................................       189,603           360,504          37,459        130,122
     Provision for bad debt......................       261,943           569,346          37,404        187,447
     Provision for loan losses...................        90,000           197,000          35,000         70,000
     Business development costs..................        53,637            51,827           2,968         23,695
     Other operating expenses (see note 14)......     1,983,635         1,347,252         940,952        (98,619)
                                                   ------------      ------------    ------------    -----------
           Total expenses........................    18,038,728        15,872,286       6,185,089      5,037,966
                                                   ------------      ------------    ------------    -----------
Income (loss) from operations....................      (334,749)         (893,364)       (265,738)        28,447
                                                   ------------      ------------    ------------    -----------

OTHER INCOME (LOSS)
     Unrealized gain (loss) on securities........       (41,382)            6,479         (43,566)        (3,752)
     Realized gain (loss) on securities..........       (10,469)           (1,145)              1          9,346
     Gain (loss) on sale/disposal of fixed assets        61,868           (11,924)         45,903         (9,608)
                                                   ------------        -----------     ----------     -----------

           Total other income (loss).............        10,017            (6,590)          2,338         (4,014)
                                                   ------------      ------------    ------------    -----------
Income (loss) before discontinued operations.....      (324,732)         (899,954)       (263,400)        24,433
Loss from discontinued operations................       (41,084)         (439,602)        (23,402)       (23,781)
Income taxes.....................................       (25,000)          (25,000)             --           (475)
                                                   ------------      ------------    ------------    -----------
Net income (loss)................................  $   (390,816)     $ (1,364,556)   $   (286,802)   $       177
                                                   ============      ============    ============    ===========

Per share earnings
     Basic common shares outstanding.............     2,880,028         2,880,028       2,880,028      2,880,028
     Net income (loss) before
         discontinued operations-basic...........  $      (0.11)     $     (0.31)    $      (0.09)   $      0.01
     Net loss-basic..............................         (0.14)           (0.47)           (0.10)            --

     Fully diluted common shares outstanding.....     2,905,564         3,050,825       2,905,564      3,050,825
     Net income (loss) before
         discontinued operations-fully diluted...  $      (0.11)     $     (0.29)    $      (0.09)   $      0.01
     Net loss-fully diluted......................         (0.13)           (0.45)           (0.10)            --

See accompanying notes.

                                                               -3-
<PAGE>


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



                                                         NINE MONTHS ENDED                THREE MONTHS ENDED
                                                           SEPTEMBER 30,                     SEPTEMBER 30,
                                                  ------------------------------      ---------------------------
                                                      2001              2000              2001            2000
                                                  ------------       -----------      -----------    ------------

Net income (loss)...............................  $  (390,816)     $  (1,364,556)    $  (286,802)      $       177
Other comprehensive income, net of tax
     Unrealized gain on securities, net of
         reclassification adjustment............      269,038             51,008         190,109            19,383
                                                  -----------      -------------     -----------       -----------

Comprehensive income (loss).....................  $  (121,778)     $  (1,313,548)    $   (96,693)      $    19,560
                                                  ===========      =============     ===========       ===========

See accompanying notes.

                                                              -4-
<PAGE>


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

                                                                                   NINE MONTHS ENDED
                                                                                     SEPTEMBER 30,
                                                                                     -------------
                                                                                2001              2000
                                                                                ----              ----
CASH FLOW FROM OPERATING ACTIVITIES
   Net loss.................................................                 $  (390,816)     $ (1,364,556)
   Adjustments to reconcile net loss to cash
     provided by (used in) operating activities:
        Income taxes payable................................                          --          (133,401)
        Deferred income taxes...............................                     (48,871)         (132,986)
        Provision for depreciation and amortization.........                     836,937           742,353
        Provision for loan losses...........................                      90,000           197,000
        Provision for bad debt..............................                     261,943           569,346
        Recovery of bad debt................................                      18,980           (22,666)
        Amortization of bond discount.......................                     (18,502)               --
        Loss on disposal of discontinued operations.........                          --           100,513
        Change in market value of securities................                     449,014            (6,166)
        Comprehensive income................................                     269,039            51,008
        Gain on disposal of fixed assets....................                     (61,868)               --
        Loss on sale of securities..........................                      10,469            21,026
        (Increase) decrease in operating assets
           Receivables......................................                   1,221,647        (2,038,444)
           Loans made to customers, net of repayments.......                 (17,182,385)      (15,487,322)
           Prepaid and sundry assets........................                     (85,759)           82,413
           Other non-current assets.........................                     292,185           278,937
        Increase (decrease) in operating liabilities
           Deposits.........................................                  19,111,337        15,744,418
           Accounts payable and accrued expenses............                  (1,782,763)          416,748
           Accrued compensation and benefits................                      (1,669)          (15,285)
           Other liabilities................................                      89,968           320,338
                                                                             -----------      ------------
     Net cash provided by (used in) operating activities....                   3,078,886          (676,726)
                                                                             -----------      ------------

CASH FLOW FROM INVESTING ACTIVITIES
   Purchase of equipment....................................                    (598,302)         (689,993)
   Due from banks...........................................                    (220,704)         (933,448)
   Bond investments.........................................                 (10,523,427)       (5,572,939)
   Federal funds sold/purchased.............................                   9,203,000         6,399,000
   Securities sold/purchased under agreement to repurchase..                  (1,143,000)          900,525
   Proceeds from sale of fixed assets.......................                     300,000             2,968
   Proceeds from sale of securities.........................                      65,964           580,875
   Proceeds from sale of debt securities....................                          --           181,066
   Investment in affiliated mutual funds....................                        (100)          (36,753)
   Investment in affiliate..................................                      (1,000)              (10)
   Investments in securities and non-affiliated mutual funds                     (93,161)         (367,998)
                                                                             -----------      ------------
     Net cash provided by (used in) investing activities....                  (3,010,730)          463,293
                                                                             -----------      ------------

CASH FLOW FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock...................                          --             3,540
   Proceeds from issuance of treasury stock.................                          --           437,158
   Proceeds from borrowings.................................                          --          (588,552)
   Proceeds from bank line of credit........................                   1,125,000           760,000
   Repayment of borrowings..................................                  (2,431,021)         (526,929)
   Repayment of capital lease obligations...................                      (7,750)          (26,928)
   Purchase of treasury shares..............................                          --           (54,551)
                                                                             -----------      ------------
     Net cash provided by (used in) financing activities....                  (1,313,771)            3,738
                                                                             -----------      ------------

Net decrease in cash and cash equivalents...................                  (1,245,615)         (209,695)
Cash and cash equivalents - beginning of year...............                   5,582,098         5,714,345
                                                                             -----------      ------------
Cash and cash equivalents - end of period...................                 $ 4,336,483      $  5,504,650
                                                                             ===========      ============

See accompanying notes.

                                                              -5-
<PAGE>

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

Note 1 -      NATURE OF OPERATIONS

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

Note 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

              The accompanying unaudited consolidated financial statements have
              been prepared in accordance with generally accepted accounting
              principles for interim financial information and with the
              instructions to Form 10-Q and Article 10 of Regulation S-X.
              Accordingly, they do not include all of the information and
              footnotes required by generally accepted accounting principles for
              complete financial statements. In the opinion of management, all
              adjustments (consisting of normal recurring accruals) considered
              necessary for a fair presentation have been included. Operating
              results for the nine- and three-month periods ended September 30,
              2001 are not necessarily indicative of the results that may be
              expected for the year ending December 31, 2001.

              The balance sheet at December 31, 2000 has been derived from the
              audited financial statements at that date but does not include all
              of the information and footnotes required by generally accepted
              accounting principles for complete financial statements.

              For further information refer to the consolidated financial
              statements and footnotes thereto included in our Annual Report on
              Form 10-K for the year ended December 31, 2000.

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

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

                                      -6-

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

Note 3 -      UNIFIED TRUST COMPANY, NATIONAL ASSOCIATION

              On June 26, 2000, First Lexington Trust Company, a subsidiary of
              our company, converted to a limited purpose national banking
              association with the corporate name "Unified Trust Company,
              National Association." On April 30, 2001, all of the outstanding
              capital stock of Health Financial, Inc., a subsidiary of our
              company, was contributed to Unified Trust Company. Unified Trust
              Company, National Association is required by the Office of the
              Comptroller of the Currency to maintain minimum capital of $2.0
              million. As of September 30, 2001, Unified Trust Company, National
              Association reported, on a consolidated basis, approximately $2.6
              million of total capital.


Note 4 -      OPTIONS

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

              As of September 30, 2001, options to acquire 102,836 shares of our
              common stock were outstanding and issued to certain of our
              employees, directors and advisers pursuant to our stock incentive
              plan. In addition, as of such date, our board had granted options
              to acquire 60,000 shares of our common stock outside of such plan.
              Such options have exercise prices as follows:

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

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

                      Options outstanding at December 31, 2000                            170,752
                      Options issued during period                                             --
                      Options exercised during period                                          --
                      Option to acquire 66,666 shares at $45.00
                         per share converted into option to acquire
                         60,000 shares at $50.00 per share                                 (6,666)
                      Forfeitures at $40.00 per share                                      (1,250)
                                                                                         --------
                      Options outstanding at September 30, 2001                           162,836
                                                                                         ========

                                      -7-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

Note 5 -      BANK BORROWINGS

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

              Payable in quarterly principal installments of $100,000,                     $1,599,700
              beginning July 1, 2001, with final payment due
              December 31, 2001, secured by assignment of receivables,
              interest paid monthly at prime bank rate

              Payable in monthly installments including interest at
              10.4%, final payment due April 26, 2002, collateralized
              by equipment                                                                      4,993
                                                                                       --------------

              Total due within twelve months                                               $1,604,693
                                                                                           ==========

              The $1,599,700 bank borrowing listed above represents our
              refinancing of existing bank indebtedness in February 2001, and
              was treated as a non-cash transaction. Consequently, the
              refinancing is not reflected in our Consolidated Statements of
              Cash Flow.

Note 6 -      BANK LINE OF CREDIT

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

                                                                    MAXIMUM LINE      LINE OF CREDIT AT
                                                                      OF CREDIT       SEPTEMBER 30, 2001
                                                                      ---------       ------------------
              Secured by assignment of receivables,
                 bears interest at prime                             $ 2,000,000        $ 1,000,000
              Secured by other collateralized assets                      50,000             44,912
                                                                     -----------        -----------
                     Total                                           $ 2,050,000        $ 1,044,912
                                                                     ===========        ===========


Note 7 -      CAPITAL LEASE OBLIGATIONS

              We lease both computer and office equipment under a capital lease.
              The lease has a remaining term of approximately 20 months. The
              following is a summary of future minimum lease payments under
              capitalized lease obligations as of September 30, 2001:

                    YEAR ENDING SEPTEMBER 30,                                      AMOUNT
                    -------------------------                                      ------

                               2002                                               $   724
                               2003                                                   602
                                                                                  -------
                                                                                    1,326
                               Less:  amount representing interest                    143
                                                                                  -------
                                      Total                                       $ 1,183
                                                                                  =======


                                      -8-

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

Note 8 -      RENTAL AND LEASE INFORMATION

              We lease certain office facilities and equipment. Rental expense
              for the nine months ended September 30, 2001 and 2000 were
              $938,013 and $693,505, respectively.

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

                               2002                                           $ 992,528
                               2003                                             594,126
                               2004                                             473,679
                               2005                                             432,528
                               2006                                             425,325
                               Thereafter                                     1,065,101
                                                                             ----------
                                    Total                                    $3,983,287
                                                                             ==========

Note 9 -      COMMITMENTS AND CONTINGENCIES

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

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

              Unified Financial Securities is subject to the Securities and
              Exchange Commission's Uniform Net Capital Rule, which requires the
              maintenance of minimum net capital, as defined, of the greater of
              (i) 6-2/3% of aggregate indebtedness or (ii) $50,000, and a ratio
              of aggregate indebtedness to net capital of not more than 15 to 1.
              At September 30, 2001, the net capital and ratio of aggregate
              indebtedness for Unified Financial Securities were $178,642 and
              1.767 to 1, respectively.

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


                                      -9-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

Note 11 -     FAIR VALUE OF FINANCIAL INSTRUMENTS

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

                                                                          SEPTEMBER 30,
                                                    -----------------------------------------------------
                                                              2001                            2000
                                                    ----------------------          ---------------------
                                                    CARRYING         FAIR           CARRYING        FAIR
                                                     AMOUNT          VALUE           AMOUNT         VALUE
                                                     ------          -----           ------         -----
              (IN THOUSANDS)
              Financial assets:
                 Cash and cash equivalents         $  4,336.5      $ 4,336.5       $  5,504.7    $  5,504.7
                 Due from banks                       1,383.3        1,383.3          1,248.3       1,248.3
                 Bond investments                    20,975.7       20,975.7         11,088.1      11,088.1
                 Securities and mutual funds            548.7          548.7            564.3         564.3
                 Loans, net of allowance             37,927.1       37,927.1         18,101.2      18,101.2
                 Receivables (trade),
                  net of allowance                   11,583.5       11,583.5         11,096.6      11,096.6
                 Prepaid and sundry                     383.0          383.0            817.5         817.5
              Financial liabilities:
                 Current liabilities                 66,522.3       66,522.3         37,921.9      37,921.9
                 Capital lease obligation                 1.2            1.2             12.0          12.0
                 Term debt                            1,604.7        1,604.7          2,331.1       2,331.1

Note 12 -     DISCLOSURES ABOUT REPORTING SEGMENTS

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

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

              Our reportable segments are strategic business units that offer
              different products and services. They are managed separately
              because each business requires different technology and marketing
              strategies. Most of the businesses were acquired as a unit and the
              management at the time of the acquisition was retained. Reportable
              segment revenue, gross profit, total assets, depreciation and
              amortization and capital expenditures were as follows as of or for
              the nine or three months ended September 30, 2001 and 2000:

                                      -10-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

Note 12 -     DISCLOSURES ABOUT REPORTING SEGMENTS (continued)

                                                               AS OF OR FOR THE                   FOR THE
                                                               NINE MONTHS ENDED            THREE MONTHS ENDED
                                                                 SEPTEMBER 30,                 SEPTEMBER 30,
                                                          --------------------------    --------------------------
                                                             2001           2000            2001          2000
                                                          -----------    -----------    -----------    -----------


     Revenue:
         Trust and retirement..........................   $ 3,696,935    $ 3,256,722    $ 1,293,164    $ 1,042,811
         Mutual fund administration....................     3,986,020      3,418,777      1,318,721      1,257,424
         Banking.......................................     1,509,233      1,150,267        587,588        450,888
         Insurance.....................................    10,399,528      9,151,678      2,982,178      3,483,890
         Brokerage.....................................     2,160,645      2,450,042        712,483        536,416
         Investment advisory...........................     1,492,695      1,453,708        486,604        503,054
         Corporate.....................................       423,535        321,334         89,832         59,488
                                                          -----------    -----------    -----------    -----------
              Total....................................   $23,668,591    $21,202,528    $ 7,470,570    $ 7,333,971
                                                          ===========    ===========    ===========    ===========

     Gross profit:
         Trust and retirement..........................   $ 3,132,380    $ 3,038,091    $   949,997    $   824,180
         Mutual fund administration....................     3,311,489      2,701,239      1,121,599        952,597
         Banking.......................................     1,509,233      1,150,167        587,588        450,788
         Insurance.....................................     7,155,833      5,514,420      2,442,108      2,140,872
         Brokerage.....................................       855,861      1,018,332        296,081        202,259
         Investment advisory...........................     1,356,448      1,269,048        440,889        439,805
         Corporate.....................................       382,735        287,625         81,089         55,912
                                                          -----------    -----------    -----------    -----------
              Total....................................   $17,703,979    $14,978,922    $ 5,919,351    $ 5,066,413
                                                          ===========    ===========    ===========    ===========

     Total assets:
         Trust and retirement..........................   $ 3,199,981    $ 4,320,690
         Mutual fund administration....................     1,917,680      1,656,956
         Banking.......................................    64,316,514     34,056,493
         Insurance.....................................     9,150,470      8,953,464
         Brokerage.....................................       750,970      1,450,861
         Investment advisory...........................     1,401,081      1,844,782
         Corporate.....................................     1,258,250      1,727,589
                                                          -----------    -----------
              Total....................................   $81,994,946    $54,010,835
                                                          ===========    ===========

     Depreciation and amortization:
         Trust and retirement..........................   $    99,879    $    61,912
         Mutual fund administration....................        78,634         59,840
         Banking.......................................       118,236        126,129
         Insurance.....................................       164,104         98,561
         Brokerage.....................................        16,781         25,849
         Investment advisory...........................        98,937        104,581
         Corporate.....................................       260,780        253,306
                                                          -----------    -----------
              Total....................................   $   837,351    $   730,178
                                                          ===========    ===========

     Capital expenditures:
         Trust and retirement..........................   $   137,930    $   168,388
         Mutual fund administration....................        24,625         63,160
         Banking.......................................        72,190        112,832
         Insurance.....................................       222,981        155,501
         Brokerage.....................................         8,216          4,275
         Investment advisory...........................         9,742             --
         Corporate.....................................       122,618        185,837
                                                          -----------    -----------
              Total....................................   $   598,302    $   689,993
                                                          ===========    ===========


                                      -11-
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

Note 13 -     UNIFIED BANKING COMPANY ASSETS AND LIABILITIES

              Unified Banking Company commenced operations on November 1, 1999.
              Included in our consolidated financial statements at September 30,
              2001 and 2000 were the bank's total assets of $61,868,681 and
              $31,685,065, respectively, and total liabilities of $55,694,800
              and $25,054,869, respectively. As of such dates, certain
              components of such assets and liabilities were as follows:

                                                                                       SEPTEMBER 30,
                                                                                       -------------
                                                                                   2001           2000
                                                                                   ----           ----

              Due from banks                                                    $1,384,679      $ 1,248,263
              Investments in securities:
                US agency securities                                            20,975,732       11,088,095
                FHLB stock                                                         189,600          100,000
              Loans:
                Real estate loans                                               22,914,763       11,741,941
                Commercial loans                                                 9,795,098        3,874,399
                Installment loans                                                5,701,533        2,759,805
                Other loans                                                            159               53
                Allowance for loan losses                                          395,000          230,000
              Bank deposits:
                Demand deposits                                                  6,718,278        2,426,678
                Official checks                                                    220,312           86,332
                NOW accounts                                                     1,186,852          695,012
                Money market accounts                                            7,241,353       10,756,640
                Savings accounts                                                    63,056           51,928
                Time deposits                                                   33,513,324        7,927,749
                Other interest-bearing deposits                                  4,788,500          733,574
              Federal and borrowed funds                                         1,536,000        2,377,525

Note 14 -     INVESTMENT IN AFFILIATE

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

              VSX Holdings is involved in the development of an alternative
              trading system to be known as VSX.com, which, upon and subject to
              organization and regulatory approval, will serve as a virtual,
              real-time private financial marketplace. In connection with the
              organization of VSX Holdings, a third party investor made a $3.0
              million loan to VSX Holdings. We also have entered into a
              management agreement with VSX Holdings whereby we provide
              consulting and development services to VSX Holdings. For the nine
              months ended September 30, 2001 and 2000 and the three months
              ended September 30, 2001 and 2000, we received payments totaling
              $819,977 and $1,118,237, respectively, and $0 and $478,237,
              respectively from VSX Holdings for such consulting and development
              services, which amount is recorded as a reduction of "Other
              operating expenses" on our Consolidated Statements of Operations
              for the nine- and three-month periods ended September 30, 2001 and
              2000.

                                      -12
<PAGE>
                        UNIFIED FINANCIAL SERVICES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                           SEPTEMBER 30, 2001 AND 2000
                           ---------------------------

Note 15 -     NEW ACCOUNTING STANDARDS

              In June 2001, the Financial Accounting Standards Board issued
              Statement of Financial Accounting Standards No. 141, Business
              Combinations. SFAS 141 requires the purchase method of accounting
              for business combinations initiated after June 30, 2001 and
              eliminates the pooling-of-interest method of accounting. We do not
              believe that the adoption of SFAS 141 will have a significant
              impact on our financial statements.

              In July 2001, the FASB issued Statement of Financial Accounting
              Standards No. 142, Goodwill and Other Assets. Under SFAS 142,
              which is effective for fiscal years beginning after December 15,
              2001, goodwill and intangible assets deemed to have indefinite
              lives no longer will be amortized but will be subject to annual
              impairment tests in accordance with SFAS 142. Other intangible
              assets will continue to be amortized over their useful lives. We
              will apply the new rules on accounting for goodwill and other
              intangible assets beginning in the first quarter of 2002. We
              currently are assessing, but have not determined, the impact of
              SFAS 142 on our financial position and results of operations.

Note 16 -     INCOME (LOSS) PER SHARE OF STOCK

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

              Dilutive potential common shares included in the diluted income
              (loss) per share calculation were determined using the treasury
              stock method. Under the treasury stock method, outstanding stock
              options are dilutive when the average "market price" of our common
              stock exceeds the option price during a period. In addition,
              proceeds from the assumed exercise of dilutive options along with
              the related tax benefit are assumed to be used to repurchase
              common shares at the average market price of such stock during the
              period. For the nine- and three-month periods ended September 30,
              2001, potential common shares of 137,300 were considered to be
              anti-dilutive and were excluded from the calculation of diluted
              income (loss) per share.


                                      -13-

<PAGE>




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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

GENERAL

         Unified Financial Services, Inc., a Delaware holding company that was
organized on December 7, 1989, is a vertically integrated provider of financial
products and services, distributing these through six lines of business: trust
and retirement services; mutual fund administration services; banking;
insurance; brokerage; and investment advisory services. Unified bases its
foundation upon two of its lines of business which seek to be market leaders in
their respective fields - trust and retirement services and mutual fund
administration services.


         It is the mission of our company to capture market leading positions in
these two business lines, generate supplemental revenue for each line to the
others and, by our ability to distribute our products/services through
electronic delivery channels with strategic third-party relationships, to
provide superior returns to our stockholders.
                                      -14-
<PAGE>

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

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

         Our principal executive offices are located at 2424 Harrodsburg Road,
Lexington, Kentucky 40503, telephone number (859) 296-2016. We and our
subsidiaries also maintain offices at 431 North Pennsylvania Street,
Indianapolis, Indiana, telephone number (317) 917-7001; 2353 Alexandria Drive,
Lexington, Kentucky 40504, telephone number (859) 296-4407; 220 Lexington Green
Circle, Suite 600, Lexington, Kentucky 40512, telephone number (859) 245-2500;
1725 Southlake Boulevard, Southlake, Texas 76092, telephone number (817)
431-2197; 36 West 44th Street, The Bar Association Building, Suite 1310, New
York, New York 10036, telephone number (212) 852-8852; and One Firstar Plaza,
Suite 2605, St. Louis, Missouri 63101, telephone number (314) 552-6440.

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

COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

         Revenue for the nine months ended September 30, 2001 compared to the
nine months ended September 30, 2000 increased $2,466,000, or 11.6%, from
$21,203,000 to $23,669,000. For such periods, trust and retirement services
revenue increased $440,000, or 13.5%, due to an increase in trustee fees earned.
Mutual fund administration services revenue increased $567,000, or 16.6%, due to
an increase in assets under service. As of September 30, 2001, we provided fund
administrative services to 30 mutual fund families consisting of 145 portfolios
and approximately $5.8 billion in mutual fund assets compared to 26 mutual fund
families consisting of 122 portfolios and approximately $4.3 billion in mutual
fund assets as of September 30, 2000. During the nine months ended September 30,
2001, our mutual fund administration services operation added several new
clients. However, as a result of the recent decline in the financial markets,
several clients discontinued operations. Banking revenue increased $359,000, or
31.2%, for the nine months ended September 30, 2001 compared to the same period
of 2000, primarily due to a $17.2 million increase in outstanding loans to
customers. Also contributing to the increase in banking revenue was $232,000 in
secondary market loan revenue. For the nine months ended September 30, 2001
compared to the same period of 2000, insurance revenue increased $1,248,000, or
13.6%, primarily due to a $2,711,000, or 8.6%, increase in total insurance
premiums written. The increase in total insurance premiums written reflected a
continued hardening of the insurance market whereby the overall volume of
specialty lines business has increased due to price increases imposed by
specialty insurance carriers and additional business flowing into the specialty
lines from standard line carriers. Additionally, insurance revenue for the nine
months ended September 30, 2001 increased due to new adjusting contracts and
personal lines business written. For such periods, brokerage revenue declined
$289,000, or 11.8%, primarily due to a $499,000 decline in trading revenue due
to the loss of two client relationships and a decline in business from our
remaining introducing firms. Additionally, brokerage revenue declined $34,000
due to the termination of our Internet brokerage trading web site at the end of
2000. Trading volume for such periods declined approximately 22.7%. Partially
offsetting these declines was an increase in investment management fees and
distribution income, which added $239,000 to income. For such periods,
                                      -15-
<PAGE>

investment advisory revenue increased $39,000, or 2.7%, due to increased
services to existing clients and a shifting of existing investment advisory
clients to bundled fee relationships. This increase in fees was partially offset
by a decline in fees received based upon asset values due to the recent decline
in the market value of many investment portfolios. Assets under management at
our investment advisory operation declined by approximately 14.5% from September
30, 2000 to September 30, 2001. For such periods, corporate revenue increased
$102,000, or 31.8%, primarily due to a $135,000 payment that we received in
connection with the settlement of a trademark dispute, partially offset by a
$79,000 decline in interest income earned.

         Gross profit for the nine months ended September 30, 2001 compared to
the same period of 2000 increased $2,725,000, or 18.2%, from $14,979,000 to
$17,704,000. For such periods, gross profit as a percentage of revenue increased
to 74.8% from 70.6%. Trust and retirement services gross profit increased
$94,000, or 3.1%, due to an increase in trustee fees earned. For such periods,
mutual fund administration services gross profit increased $610,000, or 22.6%,
primarily due to the increase in the amount of assets under service. However, as
discussed above, the closing of several funds offset some of the gain. Banking
gross profit increased $359,000, or 31.2%, for the nine months ended September
30, 2001 compared to the same period of 2000. For the nine months ended
September 30, 2001 compared to the same period of 2000, insurance gross profit
increased $1,641,000, or 29.8%, due to the increase in total insurance premiums
written. We also experienced increases in both our personal and commercial
business lines. For such periods, brokerage gross profit declined $162,000, or
16.0%, principally due to a decline in trading gross revenue due to the loss of
two broker client relationships, decreased trading activity due to overall
market conditions and the termination of our Internet brokerage trading web site
at the end of 2000. Investment advisory gross profit increased $87,000, or 6.9%,
primarily due to bundled fee relationships. For such periods, corporate gross
profit increased $95,000, or 33.1%, due to the reasons previously discussed.

         Total expenses for the nine months ended September 30, 2001 were
$18,039,000, or 76.2% of total revenue, compared to $15,872,000, or 74.9% of
total revenue, for the same period of 2000. Employee compensation and benefits
expense increased $1,879,000, or 19.9%, for the nine months ended September 30,
2001 compared to the same period of 2000 due to: (i) new personnel hired in
connection with the expansion of and merit increases for existing personnel at
our mutual fund administration services and trust and retirement services
operations, which accounted for $547,000 and $236,000, respectively, of such
increase; (ii) additional staffing due to increased volume of business in and
merit increases for existing personnel at our banking, insurance and investment
advisory operations, which accounted for $151,000, $554,000 and $192,000,
respectively, of such increase; and (iii) the hiring of additional information
technology services personnel, which accounted for $502,000 of such increase.
Partially, offsetting these increases was a $305,000 decline in employee
compensation and benefits expense at certain other operations of our company.
Telephone expense increased $71,000, or 15.7%, for the nine months ended
September 30, 2001 compared to the same period of 2000, primarily due to the
roll-out of our wide-area network in March 2000, which accounted for $33,000 of
the increase, and increased telephone expense at our insurance operation due to
increased business, which accounted for $36,000 of such increase. For such
periods, equipment rental and maintenance expense increased by $51,000, or
10.2%, due to software purchases and the hiring of new employees at our mutual
fund operation. For such periods, occupancy expense increased $245,000, or
35.3%, primarily due to additional space leased by our mutual fund
administration services operation in Indianapolis and our trust and retirement
services operation in Lexington, and the relocation of our mutual fund
administration offices in Texas. Depreciation and amortization expense increased
$107,000, or 14.7%, for the first nine months of 2001 compared to the same
period of 2000 due to the expansion of our trust and retirement services
operation into new office space, as well as furniture and equipment purchased
for new personnel at our insurance and mutual fund administration services
operations and our corporate legal department. For such periods, professional
fees declined $255,000, or 21.4%, primarily due to a $293,000 decline in legal
                                      -16-
<PAGE>

fees in 2001 partially offset by a $96,000 increase in outside adjuster and
appraiser fees and a $128,000 systems consulting fee paid by our insurance
operation. Additionally, during 2001, our trust and retirement services
operation incurred $86,000 in consulting fees to develop its manager resource
and revenue sharing projects. For such periods, interest expense declined by
$171,000, or 47.4%, due to our reduction of certain indebtedness, our provision
for bad debt declined $307,000, or 54.0%, due to a larger reserve taken in 2000
for doubtful receivables generated by our mutual fund administration services
operation, and our provision for loan losses declined by $107,000 due to
management's estimation of the quality of our bank's loan portfolio. For the
nine months ended September 30, 2001 compared to the same period of 2000, other
operating expense increased by $637,000, or 68.4%, primarily due to a $219,000
increase in data processing fees at our trust operation, which resulted from
converting to a new data processing system, and a $26,000 increase in data
processing fees at our banking operation. Additionally, the first nine months of
2000 included $1,118,000 recorded as a reduction in operating expense compared
to a $820,000 expense reduction in the comparable period of 2001. Such expense
reduction is related to payments we received from VSX Holdings for management
and consulting services.

         We recorded a net loss of $391,000 for the nine months ended September
30, 2001 compared to a net loss of $1,365,000 for the same period of 2000. For
such periods, gross revenue increased by $2,466,000 with a corresponding
increase in gross profit of $2,725,000. Partially offsetting improved profits
were increased expenses of $2,167,000, resulting primarily from higher employee
compensation and benefits expense of $1,879,000. A $307,000 and $107,000 decline
in the provision for bad debt and provision for loan loss, respectively,
partially offset such increase. The first nine months of 2000 also included a
$440,000 loss from discontinued operations compared to a $41,000 loss in 2001.
Net loss for the first nine months of 2001 was a basic and fully diluted loss
per share of $0.14 and $0.13, respectively. This compares to a basic and fully
diluted loss per share of $0.47 and $0.45, respectively, for the nine months
ended September 30, 2000.

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

         Revenue for the quarter ended September 30, 2001 compared to the same
quarter of 2000 increased $137,000, or 1.9%, from $7,334,000 to $7,471,000. For
such periods, trust and retirement services revenue increased $250,000, or
24.0%, due to an increase in trustee fees earned. Mutual fund administration
services revenue increased $61,000, or 4.9%, due to an increase in assets under
service, partially offset by the closing of several funds. Banking revenue
increased $137,000, or 30.3%, for the quarter ended September 30, 2001 compared
to the same quarter of 2000, primarily due to an increase in outstanding loans.
For the quarter ended September 30, 2001 compared to the same quarter of 2000,
insurance revenue declined $502,000, or 14.4%, primarily due to the non-renewal
of a private passenger market program at the end of the second quarter of 2001.
For such quarters, brokerage revenue increased $176,000, or 32.8%, primarily due
to a new trading relationship with Unified Trust Company, and investment
advisory revenue declined $16,000, or 3.3%, due to the decline in the market
value of investment portfolios. Corporate revenue increased $30,000, or 51.0%,
for the third quarter of 2001compared to the same quarter of 2000 primarily due
to increased filming by our television services operation.

         Gross profit for the quarter ended September 30, 2001 compared to the
same quarter of 2000 increased $853,000, or 16.8%, from $5,066,000 to
$5,919,000. For such quarters, gross profit as a percentage of revenue increased
to 79.2% from 69.1%. Trust and retirement services gross profit increased
$126,000, or 15.3%, for the quarter ended September 30, 2001 compared to the
corresponding quarter of 2000. For such quarters, mutual fund administration
services gross profit increased $169,000, or 17.7%, primarily due to the
increase in the amount of assets under service. However, as discussed above, the
closing of several funds offset some of the gain. Banking gross profit increased
                                      -17-
<PAGE>

$137,000, or 30.3%, for the quarter ended September 30, 2001 compared to the
same quarter of 2000. For such quarters, insurance gross profit increased
$301,000, or 14.1%, due to the reasons discussed above, brokerage gross profit
increased by $94,000, or 46.4%, principally due to its new trading relationship
with Unified Trust Company. Corporate gross profit increased $25,000, or 45%,
for the quarter ended September 30, 2001 compared to the same quarter of 2000
due to the reasons previously discussed.

         Total expenses for the quarter ended September 30, 2001 were
$6,185,000, or 82.8% of total revenue, compared to $5,038,000, or 68.7% of total
revenue, for the same quarter of 2000. Employee compensation and benefits
expense increased $259,000, or 7.3%, for the quarter ended September 30, 2001
compared to the same quarter of 2000 due to: (i) new personnel hired in
connection with the expansion of and merit increases for existing personnel at
our mutual fund administration operation, which accounted for $152,000 of such
increase; (ii) additional staffing due to increased volume of business in and
merit increases for existing personnel at our banking, insurance and investment
advisory operations, which accounted for $38,000, $88,000 and $44,000,
respectively, of such increase; and (iii) the hiring of additional information
technology services personnel, which accounted for $172,000 of such increase.
Partially, offsetting these increases was a $198,000 decline in employee
compensation and benefit expense at our trust and retirement services operation
due, in part, to the closing of our Louisville, Kentucky, trust office. For such
quarters, telephone expense increased $17,000, or 10.6%, primarily due to the
roll-out of our wide-area network in March 2000, which accounted for $8,500 of
the increase. Occupancy expense increased $86,000, or 37.1%, for the quarter
ended September 30, 2001 compared to the same quarter of 2000, primarily due to
the reasons previously discussed. Interest expense declined by $93,000, or
71.2%, for the third quarter of 2001 compared to the same quarter of 2000 due to
our reduction of outstanding indebtedness. For such quarters, our provision for
bad debt declined $150,000, or 80.0%, due to a larger reserve taken in 2000 for
doubtful receivables generated by our mutual fund administration services
operation, and our provision for loan losses declined by $35,000, or 50.0%, due
to management's estimation of the quality of our bank's loan portfolio. For such
quarters, other operating expense increased by $1,040,000, primarily due to a
$478,000 expense reduction recorded in the third quarter of 2000 due to our
management and consulting agreement with VSX Holdings, without any comparable
expense reduction recorded in the third quarter of 2001. In addition, the
quarter ended September 30, 2001 included an $86,000 increase in data processing
fees at our trust and retirement services operation, which resulted from
converting to a new data processing system, a $170,000 increase in advertising
expense at our trust and retirement services operation due to the production of
new marketing materials and a $124,000 increase in fees associated with
secondary market loan originations at our banking operation.

         We recorded a net loss of $287,000 for the quarter ended September 30,
2001 compared to net income of $177 for the third quarter of 2000. For such
quarters, gross revenue increased by $137,000 with a corresponding increase in
gross profit of $853,000. Offsetting improved profits were increased expenses of
$1,147,000, resulting primarily from a $1,040,000 increase in other operating
expenses from the third quarter of 2000 to the same quarter of 2001. Net loss
for the quarter ended September 30, 2001 was a basic and fully diluted loss per
share of $0.10. This compares to basic and fully diluted income per share of
$0.00 for the quarter ended September 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY. Our primary sources of liquidity historically have been and
continue to be cash flow from operating activities, available borrowing capacity
from capitalized leases and a loan from a regional bank. The net decrease in
cash and cash equivalents at September 30, 2001 from December 31, 2000 was
$1,245,615. The net decrease reflected a repayment of borrowings and an increase
in loans receivable. We received $819,977 from VSX Holdings, LLC during the nine
months ended September 30, 2001 in connection with services we provided relating
                                      -18-
<PAGE>

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. We are committed
to growth of our core deposit base and maintenance of our capital base. The
growth of the deposit base is internally generated through product pricing and
product development. During its first three years of operations, Unified Banking
Company is required to maintain a Tier 1 capital to total assets ratio of at
least 8.0%. As of September 30, 2001, Unified Banking Company had a ratio of
Tier 1 capital to total assets equal to 9.3%.

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

         Unified Banking Company experienced net growth in assets of 46.0%
during the nine months of 2001, while deposits increased 55.6% during the same
period. We continue to emphasize growth in stable core deposits while utilizing
the Federal Home Loan Bank and Federal funds purchased as necessary to balance
liquidity and cost effectiveness. We closely monitor our level of liquidity to
meet expected future needs.

         CAPITAL RESOURCES. Total stockholders' equity was $13,712,689 at
September 30, 2001 compared to $13,834,466 at year-end 2000. The decrease in
total stockholders' equity was due to our loss from operations for the nine
months ended September 30, 2001, partially offset by $10,017 in realized and
unrealized gains on securities and fixed assets.

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

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

RISK FACTORS

         You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks not presently known to us or that
we currently believe are immaterial also may impair our business operations. Our
business could be harmed by any of these risks. If any of the following risks
actually occur, our business, financial condition or results of future
operations could be materially adversely affected. In such case, the price of
our common stock could decline, and you may lose all or part of your investment.
In assessing these risks, you should refer to the other information contained in
this report, including our consolidated financial statements and related notes.
                                      -19-
<PAGE>

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

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

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

         NO ASSURANCE OF FUTURE GROWTH. There can be no assurance that we will
achieve growth in assets or earnings. Our ability to achieve growth will be
dependent upon numerous factors including, but not limited to, general economic
conditions, our ability to recruit qualified personnel, our ability to promptly
and successfully integrate acquired businesses with our existing operations and
our ability to execute our business plan. We also have completed various
acquisitions in the past few years that have significantly enhanced our rate of
growth. We cannot provide you assurances that we will continue to sustain this
rate of growth or grow at all.

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

         ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN
LOSSES. As a lender, Unified Banking Company is exposed to the risk that its
customers may be unable to repay their loans according to their terms and that
any collateral securing the payment of their loans may not be sufficient to
assure repayment. Credit losses are inherent in the lending business and could
have a material adverse effect on our consolidated operating results. Unified
Banking Company's credit risk with respect to its real estate and construction
loan portfolio relates principally to the general creditworthiness of
individuals and the value of real estate serving as security for the repayment
of loans. Our credit risk with respect to Unified Banking Company's commercial
and consumer installment loan portfolio relates principally to the general
creditworthiness of businesses and individuals within its local market.
                                      -20
<PAGE>

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

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

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

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

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

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

         RISKS ASSOCIATED WITH RAPID GROWTH. We have experienced rapid growth in
net revenue and expansion of our operations. Such growth has placed, and, if
sustained, will continue to place, strain on our management, information
                                      -21-
<PAGE>

systems, operation and resources. Our ability to manage any future growth will
continue to depend upon the successful expansion of our sales, marketing,
customer support, administrative infrastructure and the ongoing implementation
and improvement of a variety of internal management systems, procedures and
controls. Continued growth also will require us to hire more personnel, and
expand management information systems. Recruiting qualified personnel is an
intensely competitive and time-consuming process. There can be no assurance that
we will be able to attract and retain the necessary personnel to accomplish our
growth strategies or that we will not experience constraints that will adversely
affect our ability to support satisfactorily our clients and operations. There
can be no assurance that we will be able to attract, manage and retain
additional personnel to support any future growth, if any, or will not
experience significant problems with respect to any infrastructure expansion or
the attempted implementation of systems, procedures and controls. If our
management is unable to manage growth effectively, our business, financial
condition and results of operations could be materially adversely affected.

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

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

         RISKS TO PHYSICAL NETWORK; RISKS TO INTEGRITY OF DATA ON NETWORK. Our
operations are partially dependent upon our ability to protect our network
infrastructure against damage from fire, earthquakes, severe flooding,
mudslides, power loss, telecommunications failures and similar events or to
construct networks that are not vulnerable to the effects of these events. The
occurrence of a natural disaster or other unanticipated problems at our network
in the future could cause additional major interruptions in the services
provided by us.
                                      -22-
<PAGE>

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

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

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

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

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

                                      -23-
<PAGE>


ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

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

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

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


                                      -24-
<PAGE>




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

                                                                  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.     $     -- $    515  $  503  $    491  $  1,404 $ 1,306 $  1,216 $    9,425  $      476    $ 4,974  $ 20,310
     FHLB stock..........     190       --     --        --        --      --       --         --          --        190        190
                         -------- -------- -------  --------   -------  ---------------   --------    --------   --------   -------
       Total securities..     190      515     503       491     1,404   1,306    1,216      9,425         476      4,974    20,500
                          -------- -------  ------    ------    ------  ------   ------   --------    --------  --------
 Loans
     Commercial               --        31      31       31         94     296       98      1,295         217        543     2,635
       Variable..........  7,160        --      --       --         --      --       --         --          --         --     7,160
                         -------   ---------------- --------   -------- ------- --------   --------    --------   --------   ------
        Total commercial.  7,160        31      31       31         94      296      98      1,295         217        543     9,795
                        --------  -------- --------  -------   --------  -------   -----   --------    --------   --------  -------
     Real Estate
       Commercial....         --        15      15    1,372         46    1,255     399      3,771          27      1,779     8,680
                         -------  --------  ------ --------   --------  -------  ------   --------    --------   --------   -------
       Residential
         Fixed......          --        45      44       44        129      387     113      1,711         513        802    3,788
         Variable......... 2,737       --       --      --         --        --      --         --          --         --    2,737
                 Other....    --         1       1        1          2         2      2         32           3         80      124
                        --------    ------  ------  -------   --------   ------- ------   --------    --------   --------   ------
         Total residential 2,737        46      45       45        131       389    115      1,743         516        882    6,649
                        --------   --------------- --------   --------    ------ ------   --------    --------   --------  -------
         Total real estate 2,737        61      60    1,417        177     1,644    514      5,514         543      2,661    15,329
     Construction
       Fixed...........       --        --      --       --         --       325     --         --          --         --       325
       Variable.......     1,664        --      --       --         --        --     --         --          --         --     1,664
                          -------- -------- ------- -------     ------   -------  ------   --------    --------   --------   ------
       Total construction. 1,664        --      --       --         --       325     --         --          --         --     1,989
     Personal
       Home equity loans.. 5,916        --      --       --         --        --     --         --          --         --     5,916
       Installment loans...   --        27      37       37         69       367    185        680          12        188     1,601
       Personal open end
       letters of credit.  4,082        --      --       --         --        --     --         --          --         --     4,082
       Loans secured
       by deposits.......     --        --      --       --         11        --     --          5          --          1        19
                         -------- --------  ------  -------   --------   ------- ------   --------    --------   --------   -------
         Total personal... 9,998        27      37       37         80       367    185        685          12        190    11,618
                        --------   -------   ----- --------   --------   -------  -----   --------    --------   --------  --------
   Total loans........... 21,559       119     128    1,485        351     2,632    797      7,494         772      3,393    38,731
                        --------  --------  ------  -------   --------   --------------   --------    --------   --------  --------
   TOTAL RATE
     SENSITIVE ASSETS. $  21,749     $633    $630   $ 1,976    $ 1,755   $ 3,938 $2,013 $   16,919 $     1,249  $   8,368  $ 59,230
                        ======== ======== =======  ========    ========  ======= ======    =======   =========  =========  ========
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts...    $  1,187  $    --  $   --   $   --      $  --    $    -- $  --       $ --    $      --  $      --   $ 1,187
     Money market accounts
      Market rate
      accounts.........    3,975       --      --       --         --         --    --         --          --         --      3,975
       Business market
       rate accounts..     1,879       --      --       --         --         --    --         --          --         --      1,879
       Special
       personal MMDA.      1,070       --      --       --         --         --    --         --          --         --      1,070
       Special
       business MMDA.        317       --      --       --         --         --    --         --          --         --        317
                        --------    ----- ------- --------  ---------    ------- -----   --------    --------   --------   --------
         Total money
         market accounts.  7,241       --        --     --         --         --    --         --          --         --      7,241
     Savings.......           63       --        --     --         --         --    --         --          --         --         63
     Time deposits
       CD's > 100K.....      --       107       227    347      3,263        814   301      4,782         549      1,500     11,891
       CD's < 100K..         --       208       780  1,030      3,846      1,028   556     10,948         776      2,451     21,622
                        --------   --------    --------    --------    --------- -----     --------   --------    --------   ------
      Total
      time deposits...       --       315     1,007 1,377       7,109      1,842   857     15,730       1,325      3,951     33,513
       Individual
       retirement accounts. .--        31       --    --           66        125     2      1,177         520      2,867      4,789
                       --------   -------  -------  -----   ---------    ---------------   --------    --------   --------   ------
       Total interest
        bearing deposits..8,491       346     1,007 1,377       7,175      1,967   859     16,907       1,845      6,818     46,793
   Fed funds purchased... 1,536       --         --    --          --        --     --         --          --         --      1,536
                       --------  --------  --------  ----    --------    -------  -----   --------    --------   --------   -------
   TOTAL RATE SENSITIVE
      LIABILITIES.......$10,027  $    345    $1,007 $1,378  $   7,175    $ 1,967  $859 $   16,907 $     1,844  $   6,818  $  48,328
                        ======     ========  ======  =====    ========   ======== =====   ========    ========  =========    =======
                                                                      -25-
<PAGE>


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

INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate
    Sensitive assets    $ 21,749     $  633 $  630 $1,976     $  1,755    $  3,938    $  2,013   $ 16,919  $    1,249  $   8,368
   Total rate sensitive
    Liabilities......     10,027        345  1,007  1,378        7,175       1,967         859     16,907       1,844      6,818
   Gap ...............    11,722        288   (377)   599       (5,420)      1,971       1,153         11        (596)     1,550
   RSA/RSL...........       2.17x      1.84x    63x  1.43x        0.24x       2.00x       2.34x      1.00x       0.68       1.23x
   RSA/assets.....          0.35       0.01   0.01   0.03         0.03        0.06        0.03       0.27        0.02       0.14
   RSL/assets.......        0.16       0.01   0.02   0.02         0.12        0.03        0.01       0.27        0.03       0.11
   Gap/assets.........     18.95%      0.47% -0.61%  0.97%       -8.76%       3.19%       1.86%      0.02%      -0.96%      2.50%
   Gap/RSA....             53.90      45.51  59.73  30.29      -308.79       50.04       57.31       0.07      -47.69      18.52


Cumulative Gap Report Summary Information
   Total rate sensitive
    Assets.........    $ 21,749  $   22,382  $23,013 $24,989     $ 26,744   $  30,682    $ 32,695 $   49,614 $     50,862 $  59,230
   Total rate sensitive
    Liabilities....      10,027      10,372   11,379  12,757       19,932      21,899      22,758     39,666       41,510    48,328
   Gap ..................11,722      12,010   11,634  12,232        6,813       8,783       9,937      9,948        9,352    10,902
   RSA/RSL...........      2.17x       2.16x    2.02x   1.96x        1.34x       1.40x       1.44x      1.25x        1.23x     1.23x
   RSA/assets.........     0.35        0.36     0.37    0.40         0.43        0.50        0.53       0.80         0.82      0.96
   RSL/assets....          0.16        0.17     0.18    0.21         0.32        0.35        0.37       0.64         0.67      0.78
   Gap/assets...          18.95%      19.41%   18.80%  19.77%       11.01%      14.20%      16.06%     16.08%       15.12%    17.62%
   Gap/RSA..........      53.90       53.66    50.55   48.95        25.47       28.63       30.39      20.05        18.39     18.41


                                                             -26-
<PAGE>




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

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

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

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

                 BASIS POINT                                       PERCENTAGE CHANGE IN
                  CHANGE IN                      NET INTEREST INCOME         MARKET VALUE OF PORTFOLIO EQUITY
               INTEREST RATES                     PROJECTED CHANGE                   PROJECTED CHANGE
               --------------                   -------------------          -------------------------------
                    -400                              -24.83%                              -0.97%
                    -300                              -16.94                              -33.78
                    -200                              -10.55                              -13.38
                    -100                               -5.05                               -2.04
                       0                                0.00                                0.00
                     100                                4.83                               -3.26
                     200                                9.84                               -8.09
                     300                               14.64                              -13.37
                     400                               19.69                              -19.03

         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.
                                      -27-
<PAGE>

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

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

                                      -28-
<PAGE>


PART II.          OTHER INFORMATION

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  See Exhibit Index attached hereto.

         (b)      Reports on Form 8-K.

         We did not file any Current Reports on Form 8-K during the quarter
ended September 30, 2001.

                                      -29
<PAGE>


                                   SIGNATURES


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

                                                     UNIFIED FINANCIAL SERVICES, INC.
                                                    (Registrant)



Dated:  November 2, 2001                             By:    /s/ Timothy L. Ashburn
                                                          ---------------------------------------------------------
                                                          Timothy L. Ashburn, Chairman and Chief Executive Officer



Dated:  November 2, 2001                             By:    /s/ Thomas G. Napurano
                                                          ---------------------------------------------------------
                                                          Thomas G. Napurano, Executive Vice President and Chief
                                                          Financial Officer

                                      -30-
<PAGE>


                                  EXHIBIT INDEX

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

   10.1           Employment Agreement, dated as of April 30, 2001, by and between
                  Fiduciary Counsel, Inc. and Jack R. Orben

   10.2           Fourth Amendment to Loan Agreement and Amendment to Promissory Notes, dated
                  September 1, 2001, by, between and among Bank One, Kentucky, N.A.,
                  Commonwealth Premium Finance Corporation, Unified Financial Services, Inc.,
                  Equity Insurance Managers, Inc., Equity Insurance Administrators, Inc. and
                  21st Century Claims Service, Inc.

   11.1           Computations of Earnings per Share.


                                      -31-


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