UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                   FORM 10-QSB
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934


                       For the quarter ended September 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

                       For the transition period from _____ to _____



                              Commission file number 333-42623



                             THE THAXTON GROUP, INC.
                             -----------------------
                 (Name of small business issuer in its charter)


       South Carolina                                          57-0669498
       --------------                                          ----------
(State or other jurisdiction of                              (IRS Employer
incorporation or organization)                             Identification No.)


             1524 Pageland Highway, Lancaster South Carolina 29270
             -----------------------------------------------------
                    (Address of principal executive offices)


                     Issuers telephone number: 803-285-4337


Indicate by check mark whether the issuer (1) has filed all reports required to
by 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 issuer was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes   X   No
   ------    -----

Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

                                                               Outstanding at
    Class                                                      November 9, 2000
    -----                                                      ----------------
Common Stock                                                      6,974,355

<PAGE>
                            The Thaxton Group, Inc.


                                   Form 10-QSB


                               September 30, 2000


                                Table of Contents
<TABLE>
<CAPTION>

<S>           <C>                                                                                   <C>
Part I        Financial Information                                                                 Page No.
                                                                                                    --------
              Item 1.   Financial Statements
                        Consolidated Balance Sheets at September 30, 2000 and
                        December 31, 1999                                                               2

                        Consolidated Statements of Income for the nine months
                        ended September 30, 2000 and 1999                                               3

                        Consolidated Statements of Income for the three months
                        ended September 30, 2000 and 1999                                               4

                        Consolidated Statements of Cash Flows for the nine months
                        ended September 30, 2000 and 1999                                               5

                        Notes to Consolidated Financial Statements                                      6

              Item 2.   Management's Discussion and Analysis of Financial Condition
                        and Results of Operations                                                      11


Part II       Other Information


              Item 6.   Exhibits and Reports on Form 8-K                                               16
</TABLE>

                                       1
<PAGE>


Part I

Item 1.  Financial Statements

                            The Thaxton Group, Inc.
                           Consolidated Balance Sheet
<TABLE>
<CAPTION>


                                                                                      September 30,            December 31,
                                                                                          2000                    1999
                                                                                      -------------            ------------
                                                                                       (Unaudited)
Assets
------
<S>                                                                                    <C>                     <C>
Cash                                                                                   $   7,467,272           $   2,110,246
Finance receivables, net                                                                 174,416,059             162,780,503
Loans held for sale                                                                        9,778,576              11,400,639
Premises and equipment, net                                                                5,142,824               4,778,719
Accounts receivable                                                                        1,199,890               1,901,497
Repossessed automobiles                                                                      384,399                 131,908
Goodwill and other intangible assets                                                      35,971,707              32,730,803
Other assets                                                                               9,542,870              10,190,071
Assets of discontinued operations                                                                -                 8,910,651
                                                                                       -------------           -------------
              Total assets                                                             $ 243,903,597           $ 234,935,037
                                                                                       =============           =============


Liabilities and Stockholders' Equity
------------------------------------
Liabilities
-----------


Accrued interest payable                                                               $   2,726,171           $   2,174,397
Notes payable                                                                            223,687,205             209,542,862
Notes payable to affiliates                                                                      -                   491,072
Accounts payable                                                                           2,432,860               2,746,712
Employee savings plan                                                                        557,051               1,328,998
Other liabilities                                                                          7,009,834               6,516,470
Liabilities of discontinued operations                                                           -                 2,331,947
                                                                                       -------------           -------------
              Total liabilities                                                          236,413,121             225,132,458
                                                                                       -------------           -------------

Stockholders' Equity
--------------------
Preferred stock $ .01 par value,
Series A:  400,000 shares authorized, issued and outstanding 10,440
   Shares at September 30, 2000, 160,440 shares issued and outstanding
   At December 31, 1999                                                                          104                   1,604
Series C: 50,000 shares authorized, issued and outstanding at
  September 30, 2000 and December 31, 1999                                                       500                     500
Series E: 800,000 shares authorized, issued and
  outstanding at September 30, 2000 and December 31, 1999;
  liquidation value $8,000,000 as of September 30, 2000 and December 1999                      8,000                   8,000
Common stock, $ .01 par value; authorized 50,000,000 shares;
  issued and outstanding 6,974,355 shares at September 30, 2000;
  6,975,359 shares at December 31, 1999                                                       69,743                  69,753
Additional paid-in-capital                                                                 8,610,549              10,116,774
Accumulated deficit                                                                       (1,198,420)               (394,052)
                                                                                       -------------           -------------
              Total stockholders' equity                                                   7,490,476               9,802,579
                                                                                       -------------           -------------
              Total liabilities and stockholders' equity                               $ 243,903,597           $ 234,935,037
                                                                                       =============           =============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>
<TABLE>
<CAPTION>

                            The Thaxton Group, Inc.
                 Consolidated Statements of Income (Unaudited)


                                                                                             Nine Months ended September 30,
                                                                                            2000                         1999
                                                                                            ----                         ----
<S>                                                                                     <C>                          <C>
Interest and fee income                                                                 $ 47,560,269                 $ 44,073,585
Interest expense                                                                          15,556,771                   14,583,095
                                                                                          ----------                   ----------
Net interest income                                                                       32,003,498                   29,490,490

Provision for credit losses                                                               10,844,168                    8,772,823
                                                                                          ----------                    ---------
Net interest income after provision for credit losses                                     21,159,330                   20,717,667
                                                                                          ----------                   ----------
Other income:
Insurance premiums and commissions, net                                                    9,714,577                    6,497,549
Premiums for loans sold                                                                    2,553,632                    2,232,359
Other income                                                                               5,071,427                    6,617,474
                                                                                          ----------                   ----------
Total other income                                                                        17,339,636                   15,347,382
                                                                                          ----------                   ----------
Operating expenses:
     Compensation and employee benefits                                                   22,271,885                   20,810,834
     Telephone, postage, and supplies                                                      3,863,793                    3,524,846
     Net occupancy                                                                         4,436,373                    3,710,757
     Reinsurance claims expense                                                              647,965                      485,000
     Advertising                                                                           1,972,168                    1,513,681
     Collection expense                                                                      189,428                      249,143
     Travel                                                                                  891,446                      731,455
     Professional fees                                                                       687,861                      462,255
     Other                                                                                 2,750,785                    2,658,507
                                                                                          ----------                   ----------
Total operating expenses                                                                  37,711,704                   34,146,478
                                                                                          ----------                   ----------
     Income from continuing operations  before income tax expense                            787,262                    1,918,571
Income tax expense                                                                           582,669                      937,000
                                                                                          ----------                   ----------
     Income from continuing operations                                                       204,593                      981,571
Discontinued operations (Note 6)
              Loss from operations of discontinued Non-Standard
              insurance division (Less benefit from income taxes of $148,904 in
              2000, and $301,188 in 1999)                                                   (475,268)                    (885,848)
Net income (loss)                                                                           (270,675)                      95,723

     Dividends on preferred stock                                                            533,693                      534,000

     Net loss applicable to common shareholders                                            ($804,368)                   ($438,277)
                                                                                           =========                    =========

     Net income (loss) per common share-- basic and diluted                                   ($0.12)                      ($0.06)
                                                                                           =========                    =========

              Continuing operations                                                           ($0.05)                       $0.06
              Discontinued operations                                                         ($0.07)                      ($0.13)

     Weighted average shares outstanding - basic and diluted                               6,974,815                    6,994,687

</TABLE>

See accompanying notes to consolidated financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>

                            The Thaxton Group, Inc.
                 Consolidated Statements of Income (Unaudited)
                                                                                            Three Months Ended September 30,
                                                                                              2000                         1999
                                                                                              ----                         ----
<S>                                                                                     <C>                          <C>
Interest and fee income                                                                 $ 16,669,960                 $ 14,295,427
Interest expense                                                                           5,551,677                    5,190,710
                                                                                          ----------                   ----------
Net interest income                                                                       11,118,283                    9,104,717

Provision for credit losses                                                                4,243,264                    3,054,357
                                                                                          ----------                   ----------
Net interest income after provision for credit losses                                      6,875,019                    6,050,360
                                                                                          ----------                   ----------
Other income:
Insurance premiums and commissions, net                                                    3,129,257                    2,115,054
Premiums for loans sold                                                                      846,592                      906,947
Other income                                                                               1,638,686                    1,130,096
                                                                                          ----------                   ----------
Total other income                                                                         5,614,535                    4,152,097
                                                                                          ----------                   ----------
Operating expenses:
     Compensation and employee benefits                                                    6,976,103                    5,841,798
     Telephone, postage, and supplies                                                      1,321,997                    1,039,234
     Net occupancy                                                                         1,558,052                    1,178,775
     Reinsurance claims expense                                                              244,148                      141,600
     Advertising                                                                             752,787                      566,030
     Collection expense                                                                       62,463                       80,967
     Travel                                                                                  355,852                      266,007
     Professional fees                                                                       317,053                      147,254
     Other                                                                                   753,166                      650,839
                                                                                          ----------                   ----------
Total operating expenses                                                                  12,341,621                    9,912,504
                                                                                          ----------                   ----------
     Income before income tax expense                                                        147,933                      289,953

Income tax expense                                                                           155,297                      120,655
                                                                                          ----------                   ----------
     Income (loss) from continuing operations                                                 (7,364)                     169,298
Discontinued operations (Note 6)
              Loss from operations of discontinued Non-Standard
              insurance division (Less benefit from income taxes of $34,511 in
              2000, and $108,332 in 1999)                                                   (101,502)                    (318,623)

Net loss                                                                                    (108,866)                    (149,325)
     Dividends on preferred stock                                                            188,235                      178,000
     Net loss applicable to common shareholders                                             (297,101)                    (327,325)
                                                                                            ========                     ========
     Net loss per common share-- basic and diluted                                            ($0.04)                      ($0.05)
                                                                                            ========                     ========
              Continuing operations                                                           ($0.03)                      ($0.00)
              Discontinued operations                                                         ($0.01)                      ($0.05)

     Weighted average shares outstanding - basic and diluted                               6,974,555                    6,978,036
</TABLE>


See accompanying notes to consolidated financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                            The Thaxton Group, Inc.
               Consolidated Statements of Cash Flows (Unaudited)
                 Nine months ended September 30, 2000 and 1999


                                                                                            2000                         1999
                                                                                            ----                         ----
<S>                                                                                    <C>                           <C>
Cash flows from operating activities                                                   $  5,983,367                  $ 2,457,000
Cash flows from investing activities                                                    (10,457,142)                  (9,914,000)
Cash flows from financing activities                                                      9,830,801                   10,729,000
                                                                                        -----------                  -----------
Net increase (decrease) in cash                                                           5,357,026                    3,272,000

Cash at beginning of period                                                               2,110,246                      781,000
                                                                                        -----------                  -----------
Cash at end of Period                                                                   $ 7,467,272                  $ 4,053,000
                                                                                        ===========                  ===========
</TABLE>


                                       5
<PAGE>
                            The Thaxton Group, Inc.
             Notes to Consolidated Financial Statements (Unaudited)
                           September 30, 2000 and 1999



    (1) Basis of Presentation

The Thaxton Group, Inc. (the "Company") is incorporated under the laws of the
state of South Carolina and operates primarily through subsidiaries. The Company
operates consumer finance branches in 11 states, primarily under the names of
TICO Credit, Southern Finance, and Covington Credit. The Company also operates
insurance agency branches in two states located in the southeast. The Company is
a diversified financial services company that is engaged primarily in consumer
lending and consumer automobile sales financing to borrowers with limited credit
histories, low incomes or past credit problems. The Company also offers
insurance premium financing to such borrowers. A substantial amount of the
Company's premium finance business has been derived from customers of the
independent insurance agencies formerly owned by the Company, and now owned by a
non-affiliated company that, however, is owned and controlled by the Thaxton
Group's CEO. The Company provides reinsurance through wholly owned subsidiaries,
TICO Reinsurance, Ltd. ("TRL"), Fitch National Reinsurance, Ltd. and Soco
Reinsurance, Inc. Through a wholly owned subsidiary, Paragon, Inc., the Company
is also engaged in mortgage banking, originating mortgage loans to individuals.
The Company sells substantially all mortgage loans it originates through Paragon
to independent third parties. Through another wholly owned subsidiary, Thaxton
Commercial Lending, Inc., the Company makes factoring loans and collateralized
commercial loans to small and medium sized businesses. All significant
intercompany accounts and transactions have been eliminated in consolidation.

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.

Information with respect to September 30, 2000 and 1999, and the periods then
ended, have not been audited by the Company's independent auditors, but in the
opinion of management, reflect all adjustments (which include only normal
recurring adjustments) necessary for the fair presentation of the operations of
the Company. Users of financial information produced for interim periods are
encouraged to refer to the footnotes contained in the Company's Annual Report on
Form 10-KSB when reviewing interim financial statements. The results of
operations for the nine months and quarter ended September 30, 2000 are not
necessarily indicative of results to be expected for the entire fiscal year.

On February 1, 1999, the Company's CEO and majority shareholder purchased 144
consumer finance offices from FirstPlus Consumer Finance, Inc., and operated
those offices in Thaxton Investment Corporation, Inc. ("TIC"), a corporation set
up for that purpose. This acquisition was accounted for as a purchase. TIC was
a private corporation, with Mr. Thaxton as the sole shareholder. TIC operated
independently from the Company from February 1, 1999 through November 8, 1999.
On November 8th, the Company acquired TIC in exchange for 3,223,000 shares of
the Company's common stock. Because TIC and the Company had been under common
ownership and control since February, 1999, the Company's acquisition of TIC was
accounted for at historical cost in a manner similar to pooling of interests
accounting. The 1999 financial statements have been restated to account for the
impact of the acquisition of Thaxton Investment Corporation. Certain amounts in
the 1999 presentation have been reclassified in order to conform to the 2000
presentation.

                                       6
<PAGE>

           (2)   Finance Receivables

Finance receivables consist of the following at September 30, 2000 and December
31, 1999:
<TABLE>
<CAPTION>

                                                                                    September 30,                  December 31,
                                                                                        2000                         1999
                                                                                        ----                         ----
<S>                                                                                 <C>                          <C>
              Automobile sales contracts                                            $ 33,392,604                 $ 33,138,025
              Mortgage loans                                                          28,715,735                   27,477,365
              Commercial loans                                                         3,746,606                    3,440,166
              Direct loans                                                           150,927,627                  140,704,637
              Premium finance contracts                                                7,880,834                    8,362,591
                                                                                     -----------                  -----------
              Total finance receivables                                              224,663,406                  213,122,784

              Unearned interest                                                      (37,372,396)                 (37,805,852)
              Unearned insurance premiums, net                                        (3,133,937)                  (2,797,033)
              Valuation discount for acquired loans                                      (12,533)                     (93,534)
              Bulk purchase discount and dealer holdback                              (1,220,265)                    (704,657)
              Allowance for credit losses                                            (10,596,974)                 (10,661,339)
              Deferred loan cost, net                                                  2,088,758                    1,720,134
                                                                                     -----------                  -----------
              Finance receivables, net                                              $174,416,059                 $162,780,503
                                                                                     ===========                  ===========

              Loans held for sale                                                   $  9,778,576                 $ 11,400,639
                                                                                     ===========                  ===========
</TABLE>


Consumer loans include bulk purchases of receivables, auto dealer receivables
under holdback arrangements, and small consumer loan receivables. With bulk
purchase arrangements, the Company typically purchases a group of receivables
from an auto dealer or other retailer at a discount to par based on management's
review and assessment of the portfolio to be purchased. This discount amount is
then maintained in an unearned income account to which losses on these loans are
charged. To the extent that losses from a bulk purchase exceed the purchase
discount, the allowance for credit losses will be charged. To the extent losses
experienced are less than the purchase discount, the remaining discount is
accreted into income. With holdback arrangements, an automobile dealer or other
retailer will assign receivables to the Company on a loan-by-loan basis,
typically at par. The Company will withhold a certain percentage of the
proceeds, generally 5% to 10%, as a dealer reserve to be used to cover any
losses which occur on these loans. The agreements are structured such that all
or a portion of these holdback amounts can be reclaimed by the dealer based on
the performance of the receivables. To the extent that losses from these
holdback receivables exceed the total remaining holdback amount for a particular
dealer, the allowance for credit losses will be charged. The amount of bulk
purchase and holdback receivables, net of unearned interest and insurance, and
the related holdback and discount amount outstanding were approximately
$20,654,820 and $1,220,265, respectively, at September 30, 2000 and
approximately $26,870,193 and $704,657, respectively, at December 31, 1999.

At September 30, 2000 there were no significant concentrations of receivables in
any type of property or to one borrower.

These receivables are pledged as collateral for a line of credit agreement (see
note 3).

                                       7
<PAGE>


Changes in the allowance for credit losses for the nine months ended September
30, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>

                                                                                         2000                         1999
                                                                                         ----                         ----

              <S>                                                                    <C>                           <C>
              Beginning balance                                                      $ 10,661,339                  $ 4,710,829

              Valuation allowance for acquired loans                                            -                    6,276,309

              Provision for credit losses                                              10,844,168                    8,772,823
              Charge-offs                                                             (11,988,681)                  (9,487,897)
              Recoveries                                                                1,080,148                      822,245
                                                                                      -----------                   ----------
              Net charge-offs                                                         (10,908,533)                  (8,665,652)

              Ending balance                                                         $ 10,596,974                 $ 11,094,309
</TABLE>


The Company's loan portfolio primarily consists of short-term loans, the
majority of which are originated or renewed during the current year.
Accordingly, the Company estimates that fair value of the finance receivables is
not materially different from carrying value.

           (3)   Notes Payable

At September 30, 2000, the Company maintained two lines of credit with a
commercial finance company for $232 million, maturing on July 31, 2004. The
credit line is set up in four Tranches, allowing the Company to borrow against
its eligible collateral of finance receivables. At September 30, 2000 the
Company had approximately $62 million total potential borrowing capacity under
these facilities. However, in addition to the eligible collateral restrictions,
the borrowing availability under Tranches is also limited by amounts borrowed
under other Tranches, outstanding receivables, insurance premiums written, and
in some cases, additional restrictions. As a result of these additional
restrictions, the Company had approximately $3.9 million total potential
borrowing capacity as of September 30, 2000.

The aggregate outstanding balance under these lines of credit was $170.4 million
at September 30, 2000, of which $58.0 million was borrowed at 10.75% (Lenders
prime + 1 1/4%); $101.9 million was borrowed at 10.5% (Lenders prime + 1%); and
$10.5 million was borrowed at 13% (Lenders prime + 3 1/2%).

The terms of the line of credit agreement provide that the finance receivables
are pledged as collateral for the amount outstanding. The agreement requires the
Company to maintain certain financial ratios at established levels and comply
with other non-financial requirements, which may be amended from time to time.
Also, the Company may pay dividends up to 25% of the current year's net income.
The Company met all such ratios and requirements or obtained waivers for any
instances of non-compliance as of the prior year end, and expects to meet all
such ratios and requirements or obtain waivers for any instances of
non-compliance for the current year.

In connection with the FirstPlus acquisition, the Company assumed $2.2 million
of subordinated notes issued to Voyager Insurance Co. In November 1999, those
notes were cancelled and re-issued in the name of the Company. The note
agreement contained an interest coverage ratio restrictive covenant, which the
Company did not meet at December 31, 1999, and a waiver was obtained for the
year. However, the Company cannot say with certainty that it will meet this
covenant requirement for the year 2000, and if it does not meet this requirement
that a waiver will be obtained. However, the Company is confident that it has
adequate availability under it primary credit facility to borrow adequate funds
to liquidate this note, if required.

In 1997, the Company began issuing subordinated term notes to individual
investors in an intrastate public offering registered with the State of South
Carolina. The registration of a similar offering was declared effective by the
U.S. Securities and Exchange Commission in March 1998 (and amended in November
1999), and the Company now offers notes in multiple states under this federal
registration. The Maturity terms on these notes range from daily to sixty
months, and interest rates vary in accordance with market rates. Notes currently
being offered carry interest rates ranging from 5.5% to 9.0%. Approximately
$50.8 million in notes were outstanding at September 30, 2000 and $43.9 million
were outstanding at December 31, 1999 and are reflected as notes payable and
notes payable to affiliates.

                                       8
<PAGE>

           (4)   Business Combinations

On August 18, 2000, the Company acquired all of the stock of Quick Credit
Corporation, a consumer finance company with 25 branch offices located in South
Carolina. The purchase price was $12.75 million in cash. This acquisition was
accounted for as a purchase and resulted in goodwill of approximately $5.0
million which is being amortized over 15 years.

           (5)   Business Segments

The Company has adopted Statement of Financial Accounting Standards No. 131
("SFAS No. 131"), "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 requires the presentation of descriptive information
about reportable segments consistent with that used by management of the Company
to assess performance. Additionally, SFAS No. 131 requires disclosure of certain
information by geographic region.

The Company reports its results of operations in four primary segments; consumer
finance, mortgage banking, insurance agency, and insurance underwriting risk
bearing. The consumer finance segment provides financing to consumers with
limited credit histories, low incomes or past credit problems. Revenues in the
consumer finance business are derived primarily from interest and fees on loans,
and the sale of credit related insurance products to its customers. The
Company's mortgage banking operations are conducted through Paragon, a
wholly-owned subsidiary acquired in November 1998. Paragon originates, closes
and funds predominantly B and C credit quality mortgage loans, which are
warehoused until they can be packaged and sold to long term investors. Paragon
receives fee income from originating mortgages and loans are generally sold at a
premium to the permanent investor. The Company's insurance agency operations
consist of selling, on an agency basis, various lines of automobile, property
and casualty, life and accident and health insurance. Revenue is generated
through fees paid by the insurance for which business is placed.

The following table summarizes certain financial information concerning the
Company's reportable operating segments for the nine months ended September 30,
2000 and 1999:
<TABLE>
<CAPTION>

                           Consumer             Mortgage           Insurance
         2000               Finance             Banking              Agency            Other                        Total
                           ----------------------------------------------------------------------------------------------------
<S>                          <C>                  <C>                 <C>                  <C>                    <C>
Total Revenue                56,016,294           5,089,620           2,999,338            794,653                64,899,905
Income(loss) from
continuing operations           527,976            (123,686)           (286,666)            86,969                   204,593
Total Assets                220,939,141          11,972,387           7,284,520          3,707,952               243,904,000

                           Consumer             Mortgage           Insurance
         1999               Finance             Banking              Agency            Other                       Total
                          ----------------------------------------------------------------------------------------------------

Total Revenue                49,215,031           6,351,210           3,422,528            432,198                59,420,967
Income(loss) from
continuing operations           577,265             206,896             191,039              6,371                   981,571
Total Assets                199,645,908          11,223,361          13,555,160          2,751,571               227,176,000
</TABLE>


                                       9
<PAGE>

           (6)   Discontinued Operations

At the end of 1998, and throughout 1999, the Company made a series of
acquisitions of agencies in Arizona, New Mexico, Nevada, Colorado and North
Carolina, as well as a general insurance agency in Virginia. At the same time,
the Company entered into a contract with American Bankers Insurance Group, Inc.
("ABIG"), where the Company would sell ABIG non-standard insurance policies in
these locations, but Thaxton Group would contractually retain the underwriting
risk, and retain any profit or loss from operations. This business ultimately
contained 30 non-standard automobile agency office locations, plus two insurance
general agencies (located in Virginia and South Carolina).

On March 1, 2000, the Company transferred all of the assets and liabilities of
these agency operations into a newly formed company named Thaxton RBE, Inc.
("Thaxton RBE"). The total amount of the assets transferred approximate $8
million, the majority of which were intangible. The purpose of the transfer was
to raise additional capital for Thaxton RBE, as it operations were in their
initial stages. As such, immediately subsequent to the formation and asset
transfer, Thaxton Life Partners, Inc. invested $2,000,000 in the capital stock
of RBE and obtained a 90% interest in that company as a result of the
investment. Thaxton Life Partners, Inc., is a company owned by James D. Thaxton
(Chairman and majority shareholder of Thaxton Group, Inc.); C. L. Thaxton, Sr.
(Director of Thaxton Group, Inc.); and other Thaxton family members. As a result
of those transactions, Thaxton Group, Inc. had a net receivable from Thaxton RBE
in the amount of $5 million at March 31, 2000.

During the third quarter of 2000, Thaxton Group made the decision to discontinue
operations and dispose of its interest and investment in Thaxton RBE as soon as
suitable financing for Thaxton RBE could be obtained. On August 31, 2000,
Thaxton Life Partners was able to arrange financing for Thaxton RBE independent
of Thaxton Group, Inc., and Thaxton Life Partners purchased the remaining 10%
interest in RBE from Thaxton Group. At the time of the sale, all amounts owed
Thaxton Group were paid in full. Thaxton Group has recognized no gain or loss on
the disposition of Thaxton RBE. The transaction has been accounted for in
accordance with Accounting Principles Board Statement #30, ("APB 30"),
"Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions."

The components of the Discontinued Assets and Discontinued Liabilities in the
consolidated balance sheet at December 31, 1999, are as follows:
<TABLE>
<CAPTION>

                                                                     December 31,
                                                                        1999
                                                                     ------------
Assets
              <S>                                                     <C>
              Cash                                                      (74,142)
              Accounts receivable                                         1,484
              Finance receivables                                        46,716
              Premises and equipment, net                             1,514,869
              Intangibles, net                                        6,780,230
              Other assets                                              641,494
                                                                      ---------
Total Discontinued assets                                             8,910,651

Liabilities
              Subordinated notes payable                              1,676,091
              Accounts payable                                          552,028
              Other liabilities                                         103,828
                                                                      ---------
Total Discontinued liabilities                                        2,331,947
</TABLE>

                                       10
<PAGE>

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

GENERAL

The Thaxton Group, Inc. and its subsidiaries (the "Company") were organized in
July 1978 as C.L. Thaxton & Sons, Inc., and from that date until 1991 was
primarily engaged in making and servicing direct consumer loans ("Direct Loans")
and insurance premium finance loans ("Premium Finance Contracts") to persons
with limited credit histories, low incomes, or past credit problems ("Non-Prime
Borrowers"). In 1991, the Company made a strategic decision to begin
diversifying its portfolio by actively seeking to finance purchases of used
automobiles ("Automobile Sales Contracts") by Non-Prime Borrowers and has since
evolved into a diversified consumer financial services company. The Company also
sells credit related insurance products and, through its subsidiary, Thaxton
Insurance Group, Inc. ("Thaxton Insurance"), on an agency basis, various lines
of property and casualty, life, and accident and health insurance. The Company
also entered the mortgage brokerage business during 1996, and in 1998 acquired
Paragon, Inc., ("Paragon") a mortgage banking company engaged in the
origination, funding, and whole loan sale of primarily "B" and "C" credit
quality residential mortgages. In 1998 the Company also began making factoring
and commercial loans to smaller sized businesses through a wholly owned
subsidiary, Thaxton Commercial Lending, Inc. ("Commercial").

THE INDUSTRY

The segment of the consumer finance industry in which the Company operates,
which is commonly called the "non-prime credit market," provides financing to
consumers with limited credit histories, low incomes, or past credit problems.
These consumers generally do not have access to the same variety of sources of
consumer credit as borrowers with long credit histories, no defaults, and stable
employment, because they do not meet the stringent objective credit standards
imposed by most traditional lenders. The Company, like its competitors in the
same segment of the consumer finance industry, generally charges interest to
Non-prime Borrowers at the maximum rate permitted by law or, in states such as
South Carolina where there are no legal maximum rates, at competitive rates
commensurate with the increased default risk and the higher cost of servicing
and administering a portfolio of loans to such borrowers. By contrast,
commercial banks, captive financing subsidiaries of automobile manufacturers,
and other traditional sources of consumer credit to prime borrowers typically
impose more stringent credit requirements and generally charge lower interest
rates.

The premium finance industry for personal lines of insurance is also highly
fragmented. Insurance companies that engage in direct writing of insurance
policies generally provide financing to their customers who need the service.
Numerous small independent finance companies such as the Company are engaged in
providing premium financing for personal lines of insurance purchased by
Non-prime Borrowers through independent insurance agents. Because the rates they
charge are highly regulated, these companies compete primarily on the basis of
efficiency in providing the financing and servicing the loans. A significant
number of independent insurance agents provide premium financing to their
customers either directly or through affiliated entities. As banks are allowed
to enter the insurance business, they also are increasingly engaging in the
premium finance business.

Independent insurance agencies represent numerous insurance carriers, and
typically place a customer's business with the carrier whose combination of
features and price best match the customer's needs. In comparison, direct agents
represent only one carrier. Most carriers find use of independent agencies to be
a more cost-effective method of selling their products than using a direct agent
force. Competition in the independent insurance agency business is intense.
There are numerous other independent agencies in most of the markets where the
Company's insurance offices are located. There are also direct agents for
various insurers operating in some of these markets. The Company competes
primarily on the basis of service and convenience. The Company attempts to
develop and maintain long-term customer relationships through low employee
turnover and responsive service representatives and offers a broad range of
insurance products underwritten by reputable insurance companies.

                                       11
<PAGE>

Net Interest Margin

The following table sets forth-certain data relating to the Company's net
interest margin for the nine months and three months ended September 30, 2000
and 1999.

<TABLE>
<CAPTION>


                                                    For the Nine Months                        For the Three Months
                                                     Ended September 30                         Ended September 30
                                                 2000                   1999              2000                        1999
                                               -----------            -----------        ------------             -----------
<S>                                            <C>                    <C>                <C>                          <C>
Average Net Finance Receivables (1)            168,861,276            150,222,994        180,732,384               164,745,529
Average notes payable                          210,182,066            191,211,077        219,965,183               206,116,412

Interest and fee income (2)                     47,560,269             44,073,585         16,669,960                14,295,427
Interest expense (2)                            15,556,771             14,583,095          5,551,677                 5,190,710
Net interest income                             32,003,498             29,490,490         11,118,283                 9,104,717

Average interest rate earned (1)                    37.55%                 39.12%             36.89%                     34.71%

Average interest rate paid (1)                       9.87%                 10.17%             10.10%                     10.07%
Net interest spread                                 27.68%                 28.95%             26.80%                     24.64%

Net interest margin (3)                             20.30%                 20.56%             24.61%                     22.11%


(1)   Averages are computed using month-end balances during the periods presented.
(2)   Excludes Thaxton Insurance Group interest income, expense and Paragon Lending loan fee income.
(3)   Net interest margin represents net interest income divided by average Net Finance Receivables.
</TABLE>

                                       12
<PAGE>

Results of Operations for the Nine Months Ended September 30, 2000 and 1999

Net Finance receivables increased for the year ($174,416,000 in 2000 vs.
$162,780,000 in 1999) an increase of 7%. This was primarily due to the purchase
of approximately $10 million of receivables from Quick Credit.

Interest and fee income, increased 8% between years ($47,560,000 in 2000 vs.
$44,074,000 in 1999), primarily as a result of the operations of the First Plus
acquisition being included for only eight months in 1999, and the entire nine
months in the current year; the results of operations of Quick Credit included
for the current year; and an overall attempt to raise interest rates charged to
compensate for increased interest expense on our variable rate debt.

Interest expense increased to $15,557,000 for 2000 from $14,583,000 in 1999.
This increase is primarily attributable to interest rate increases in our
variable rate credit facility associated with an increasing prime rate, as well
as the First Plus acquisition being included in our results of operations for
only eight months of 1999, and additional overall borrowings related to the
acquisition of Quick Credit.

Insurance commissions net of insurance cost increased to $9,715,000 for the nine
months ended September 30, 2000 from $6,498,000 for the same period of 1999, due
to increased penetration in credit insurance sold in our finance branches, as
well as the First Plus acquisition being included in our results of operations
for the entire nine months of the current year, but only eight months of the
prior year.

Operating expenses increased to $37,712,000 for the nine months ended September
30, 2000 from $34,146,000 for the comparable period of 1999, a 12% increase,
primarily as a result of additional branch locations operating in the current
year; the inclusion of the operating expenses of the Quick Credit acquisition
during the current year; and the First Plus acquisition's inclusion in the
results of operations for the entire nine months of the current year, but only
eight months of the prior year.

As a result of the above, the company recognized net income from continuing
operations of $205,000 for the nine months ended September 30, 2000 versus
$982,000 for the nine months ended September 30, 1999.

Stockholders' equity decreased from $9,803,000 at December 31, 1999 to
$7,490,000 at September 30, 2000, a 25% decrease, primarily to the repurchase of
$1,500,000 of preferred stock in March, 2000; and the payment of dividends on
the Company's preferred stock.

Results of Operations for the Three Months Ended September 30, 2000 and 1999

Interest and fee income for the three months ended September 30, 2000 was
$16,670,000, versus $14,295,000 for the three months ended September 30, 1999, a
17% increase, primarily due to higher interest rates charged on small loans,
part of a program to increase this segment of our business.

Interest expense increased to $5,552,000 for the three months ended September
30, 2000 versus $5,191,000 for the three months ended September 30, 1999, a 7%
increase, due primarily to interest rate increases in our variable rate credit
facility associated with an increasing prime rate.

Insurance commissions net of insurance cost increased to $3,129,000 for the
three months ended September 30, 2000 from $2,115,000 for the three months ended
September 30, 1999, a 48% increase due primarily to increase penetration of
credit insurance sold in our finance branches.

Operating expenses increased to $12,342,000 for the three months ended September
30, 2000 from $9,913,000 for the comparable period of 1999, a 25% increase, due
primarily to increased branch locations; additional operating expenses
associated with the Quick Credit acquisition.

As a result of the above, the company recognized a $7,000 net loss from
continuing operations for the three months ended September 30, 2000, versus
income from continuing operations of $169,000 for the comparable period of 1999.

                                       13
<PAGE>
Credit Loss Experience

The following table sets forth the Company's allowance for credit losses at
September 30, 2000, and 1999 and the credit loss experience over the periods
presented.
<TABLE>
<CAPTION>
                                                                                             September 30,
                                                                                             -------------
                                                                                        2000               1999
                                                                                        ----               ----
<S>                                                                                <C>                 <C>
Net finance receivables (1)                                                        174,416,059         162,780,503
Allowance for credit losses                                                         10,596,974          11,094,309
Allowance for credit losses as a percentage of net finance
     receivables (1)                                                                     6.08%               6.82%
Dealer reserves and discounts on bulk purchases                                      1,220,265           1,202,000
Dealer reserves and discounts on bulk purchases as percentage
     of Automobile sales Contracts as period end(2)                                      3.65%               3.18%
Allowance for credit losses and dealer reserves and discount on
     bulk purchases as a percentage of net finance receivables (1)                       6.78%               7.55%

    For the nine months ended September 30,
Average Net finance receivables (1)                                                168,861,276         150,222,994
Provision for loan losses                                                           10,844,168           8,772,823
Charge-offs (net of recoveries)                                                     10,908,533           8,665,652
Charge-offs (net of recoveries) as a percentage of average net
     finance receivables (1)                                                             8.61%               7.69%

    For the three months ended September 30,
Average Net finance receivables (1)                                                180,732,384         164,745,529
Provision for loan losses                                                            4,243,264           3,054,357
Charge-offs (net of recoveries)                                                      3,685,241           2,742,047
Charge-offs (net of recoveries) as a percentage of average net
     finance receivables (1)                                                             8.16%               6.66%

</TABLE>

  (1) Finance Receivable balances are presented net of unearned finance
      charges. Averages are computed using month-end balances of Net Finance
      Receivables during the period presented.
  (2) Percentages are computed using Automobile Sales Contracts, net of
      unearned finance charges only.

The following table sets forth certain information concerning delinquency on our
finance receivable portfolio.
<TABLE>
<CAPTION>
                                                                                    At September 30,             At December 31,
                                                                                        2000                         1999
                                                                                        ----                         ----

<S>                                                                                  <C>                          <C>
Total finance receivables contractually past due
     90 days or more (1)                                                             6,146,149                    5,886,818

Total Finance Receivables (1)                                                      187,291,010                  175,316,932


Finance receivables contractually past due 90 days or more                               3.28%                        3.36%
                                                                                   ==========                   ==========

</TABLE>


  (1) Finance receivable balances are presented net of unearned finance charges.

                                       14
<PAGE>




Liquidity and Capital Resources

At September 30, 2000, the Company maintained two lines of credit with a
commercial finance company for $232 million, maturing on July 31, 2004. The
credit line is set up in four Tranches, allowing the Company to borrow against
its eligible collateral of finance receivables. At September 30, 2000 the
Company had approximately $52 million total potential borrowing capacity under
these facilities. However, in addition to the eligible collateral restrictions,
the borrowing availability under Tranches is also limited by amounts borrowed
under other Tranches, outstanding receivables, insurance premiums written, and
in some cases, additional restrictions. As a result of these additional
restrictions, the Company had approximately $3.9 million total potential
borrowing capacity as of September 30, 2000.

The aggregate outstanding balance under these lines of credit was $170.4 million
at September 30, 2000, of which $58.0 million was borrowed at 10.75% (Lenders
prime + 1 1/4%); $101.9 million was borrowed at 10.5% (Lenders prime + 1%); and
$10.5 million was borrowed at 13% (Lenders prime + 3 1/2%).

Management believes that its borrowing capacity under its existing revolving
credit facility, in addition to its ability to raise additional subordinated
debt under its subordinated note program, will provide the resources necessary
to pursue the Company's business and growth strategies through the next several
years.

                                       15
<PAGE>
Part II

Item 6.     Exhibits and Reports on Form 8-K

(a)           Exhibits

              Exhibit 27                Financial Data Schedule

(b)           Reports on Form 8-K

              There were no reports filed on Form 8-K during the quarter ended
              September 30, 2000.


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                            The Thaxton Group, Inc.
                            -----------------------
                                  (Registrant)


Date: November 1, 2000                /s/James D. Thaxton
                                      James D. Thaxton
                                      President and Chief Executive Officer

Date: November 1, 2000                /s/Allan F. Ross
                                      Allan F. Ross
                                      Vice President, Treasurer, Secretary, and
                                      Chief Financial Officer


                                       16