SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

Mark One

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the quarterly period ended September 30, 2002.

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

                         Commission File Number: 0-23551

                        UNITED TENNESSEE BANKSHARES, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)


            TENNESSEE                               62-1710108
----------------------------------              ------------------
(State or Other Jurisdiction of                  (I.R.S. Employer
Incorporation or Organization)                  Identification No.)


                     344 Broadway, Newport, Tennessee 37821
                     ---------------------------------------
                    (Address of Principal Executive Offices)

         Issuer's Telephone Number, Including Area Code: (423) 623-6088


Check  whether  the issuer:  (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 ninety days: Yes [X]
No [ ]

State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date: 1,311,124
                                         ---------

Transitional Small Business Disclosure Format (Check one):   Yes [  ]   No [X]


<PAGE>


CONTENTS

PART I.  FINANCIAL INFORMATION
         ---------------------

       Item 1. Financial Statements

               Consolidated  Statements  of Financial  Condition as
               of September 30, 2002 (Unaudited) and December 31, 2001         3
               Consolidated  Statements  of Income for the Three
               Month and Nine Month Periods Ended September 30,
               2002 and 2001 (Unaudited)                                       4

               Consolidated  Statements  of  Comprehensive  Income
               for the Three Month and Nine Month  Periods  Ended
               September 30, 2002 and 2001 (Unaudited)                         5

               Consolidated Statement of Changes in Shareholders'
               Equity for the Nine Month Period Ended September 30,
               2002 (Unaudited)                                                6

               Consolidated  Statements of Cash Flows for the Nine
               Month Periods Ended September 30, 2002 and 2001
               (Unaudited)                                                   7-8

               Notes to  Consolidated  Financial  Statements for
               the Three Month and  Nine  Month  Periods  Ended
               September  30,  2002  and  2001 (Unaudited)                  9-11

      Item 2.  Management's Discussion and Analysis or Plan of Operation   12-17

      Item 3.  Controls and Procedures                                        18


PART II.  OTHER INFORMATION
          -----------------

      Item 1.  Legal Proceedings                                              19

      Item 2.  Changes in Securities and Use of Proceeds                      19

      Item 3.  Defaults upon Senior Securities                                19

      Item 4.  Submission of Matters to a Vote of Security Holders            19

      Item 5.  Other Information                                              19

      Item 6.  Exhibits and Reports on Form 8-K                               19

SIGNATURES                                                                    20

CERTIFICATIONS                                                             21-22

                                       2
<PAGE>


PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements

                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 AS OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001

<TABLE>
<CAPTION>
                                                                                September 30,
                                                                                     2002                  December 31,
                                                                                 (Unaudited)                   2001
                                                                              -------------------        -----------------
                                                                                            (in thousands)
                                 Assets
<S>                                                                        <C>                        <C>

Cash and amounts due from depository institutions                          $               2,492      $             2,123
Investment securities available for sale, at fair value                                   25,235                   24,398
Loans receivable, net                                                                     78,962                   72,200
Premises and equipment, net                                                                  616                      496
Foreclosed real estate - held for sale                                                       171                        0
Accrued interest receivable                                                                  707                      603
Goodwill, net of amortization                                                                893                      953
Prepaid expenses and other assets                                                             66                       38
                                                                              -------------------        -----------------
 Total assets                                                              $             109,142      $           100,811
                                                                              ===================        =================

                         Liabilities and Equity
Liabilities:
 Deposits                                                                  $              91,714      $            84,810
 Accrued interest payable                                                                    153                      161
 Accrued income taxes                                                                         25                        2
 Deferred income taxes                                                                       992                      869
 Accrued benefit plan liabilities                                                            697                      743
 Other liabilities                                                                           105                       58
                                                                              -------------------        -----------------

 Total liabilities                                                                        93,686                   86,643
                                                                              -------------------        -----------------

Shareholders' equity:
 Common stock - no par value, Authorized 20,000,000 shares;
   issued and outstanding 1,311,124 shares (1,341,012 in 2001)                            12,448                   12,719
 Unearned compensation - ESOP                                                              (517)                    (678)
 Shares in grantor trust - contra account                                                  (199)                    (195)
 Shares in MRP plan - contra account                                                        (56)                    (210)
 Shares in stock option plan trusts - contra account                                     (1,477)                  (1,591)
 Retained earnings                                                                         3,768                    2,835

 Accumulated other comprehensive income                                                    1,489                    1,288
                                                                              -------------------        -----------------
  Total shareholders' equity                                                              15,456
                                                                                                                   14,168
                                                                              -------------------        -----------------

Total liabilities and equity                                               $             109,142      $           100,811
                                                                              ===================        =================



</TABLE>

The accompanying notes are an integral part of these financial statements.



                                       3
<PAGE>



                UNITED TENNESSEE BANKSHARES, INC., AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001

<TABLE>
<CAPTION>
                                                            (In Thousands Except                      (In Thousands Except
                                                           per Share Information)                      per Share Information)
                                                      ----------------------------------        ---------------------------------
                                                              Three Months Ended                        Nine Months Ended
                                                                 September 30,                            September 30,
                                                      ----------------------------------        ---------------------------------
                                                          2002                 2001                2002                 2001
                                                      (Unaudited)          (Unaudited)          (Unaudited)         (Unaudited)
                                                      -------------        -------------        ------------        -------------
Interest income:
<S>                                               <C>                  <C>                  <C>                 <C>
 Loans                                            $          1,506     $          1,469     $         4,449     $          4,428
 Investment securities                                         311                  335                 922                1,054
 Other interest-earning assets                                   7                   28                  22                   83
                                                      -------------        -------------        ------------        -------------
  Total interest income                                      1,824                1,832               5,393                5,565
                                                      -------------        -------------        ------------        -------------
Interest expense:
 Deposits                                                      544                  884               1,680                2,866
 Advances from Federal Home Loan Bank
  and note payable                                               0                    7                   0                   38
                                                      -------------        -------------        ------------        -------------
  Total interest expense                                       544                  891               1,680                2,904
                                                      -------------        -------------        ------------        -------------
Net interest income                                          1,280                  941               3,713                2,661

Provision for loan losses                                       45                   19                  93                   47
                                                      -------------        -------------        ------------        -------------
Net interest income after provision for loan
 losses                                                      1,235                  922               3,620                2,614
                                                      -------------        -------------        ------------        -------------
Noninterest income:
 Deposit account service charges                                65                   57                 181                  180
 Loan service charges and fees                                  27                   28                  85                   89
 Net gain  on sales of investment
  securities available for sale                                  7                    0                  46                    3
 Other                                                           9                   10                  32                   31
                                                      -------------        -------------        ------------        -------------
  Total noninterest income                                     108                   95                 344                  303
                                                      -------------        -------------        ------------        -------------
Noninterest expense:
 Compensation and benefits                                     317                  302                 918                  926
 Occupancy and equipment                                        77                   54                 184                  156
 Federal deposit insurance premiums                             13                   12                  37                   36
 Data processing fees                                           68                   64                 194                  174
 Advertising and promotion                                      19                   23                  61                   70
 Net (gain) loss on foreclosed real estate                       0                    0                   0                    0
 Amortization                                                   20                   20                  60                   60
 Other                                                         129                   93                 398                  325
                                                      -------------        -------------        ------------        -------------
  Total noninterest expense                                    643                  568               1,852                1,747
                                                      -------------        -------------        ------------        -------------

Income before income taxes                                     700                  449               2,112                1,170

Income taxes                                                   263                  168                 781                  428
                                                      -------------        -------------        ------------        -------------

Net income                                        $            437     $            281     $         1,331     $            742
                                                      =============        =============        ============        =============
Earnings per share:

 Basic                                            $           0.33     $           0.21     $          1.00     $           0.54
                                                      =============        =============        ============        =============
 Diluted                                                      0.33                 0.21     $          1.00                 0.54
                                                  $                    $                                        $
                                                      =============        =============        ============        =============
</TABLE>

The accompanying notes are an integral part of these financial statements.



                                       4
<PAGE>



                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001








<TABLE>
<CAPTION>

                                                      Three Months Ended September 30,          Nine Months Ended September 30,
                                                      ----------------------------------        --------------------------------
                                                         2002                   2001              2002                  2001
                                                      -----------            -----------        ----------            ----------
                                                         (Unaudited - in thousands)               (Unaudited - in thousands)
<S>                                               <C>                   <C>                 <C>                   <C>

Net income                                        $          437        $           281     $       1,331         $         742
                                                      -----------            -----------        ----------            ----------

Other comprehensive income (loss), net of tax:
 Unrealized gains (losses) on investment
securities                                                   200                    229               370                   411
 Less reclassification adjustment for
gains\losses
  included in net income                                     (7)                      0              (46)                   (3)
 Less income taxes related to unrealized
  gains\losses on investment securities                     (73)                   (87)             (123)                 (155)
                                                      -----------            -----------        ----------            ----------
 Other comprehensive income (loss), net of tax               120                    142               201                   253
                                                      -----------            -----------        ----------            ----------


Comprehensive income                              $          557        $           423     $       1,532         $         995
                                                      ===========            ===========        ==========            ==========

</TABLE>




















The accompanying notes are an integral part of these financial statements.



                                       5
<PAGE>



                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
               FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2002



<TABLE>
<CAPTION>

                                                     Shares in     Shares in     Shares in               Accumulated
                                       Unearned       Grantor      MRP Plan-    Stock Option                Other        Total
                            Common   Compensation  Trust-Contra     Contra      Plan Trusts-  Retained  Comprehensive  Shareholders
                             Stock       ESOP         Account       Account    Contra Account Earnings      Income       Equity
                           ---------------------------------------------------------------------------------------------------------
                                                                  (Unaudited - in thousands)
                           ---------------------------------------------------------------------------------------------------------
<S>                                       <C>           <C>             <C>       <C>             <C>         <C>          <C>

Balances,beginning of period $12,719      $    (678)    $    (195)      $   (210) $     (1,591)   $ 2,835     $    1,288  $  14,168

Net income                         0              0             0              0             0      1,331              0      1,331

Issuance of shares of common
 stock pursuant to MRP plan        0              0             0            154             0         0               0        154

Other comprehensive income
 (loss)                            0              0             0              0             0         0             201        201

Payment on ESOP loan principal     0            161             0              0             0         0               0        161

Dividends paid                     0              0             0              0             0      (398)              0       (398)

Adjustment of cost on directors
 long-term incentive plan          0              0           (4)              0             0         0               0         (4)

Purchase and retirement
 of 16,388 shares of common
 stock                          (157)             0            0               0             0         0               0       (157)

Retirement of 13,500 shares of
 common stock held in the stock
 option plan contra account     (114)             0             0              0           114         0               0          0
                              ------- ------------- ------------- -------------- ------------- ---------   -------------  ----------


Balances, end of period      $12,448  $       (517) $       (199) $          (56)$     (1,477) $   3,768   $       1,489  $  15,456
                             =======  ============= ============= ============== ============= =========   =============  ==========



</TABLE>










The accompanying notes are an integral part of these financial statements.



                                       6
<PAGE>



                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001




<TABLE>
<CAPTION>

                                                                                            Nine Months Ended
                                                                                               September 30,
                                                                                      ------------------------------
                                                                                            2002          2001
                                                                                       (Unaudited - in thousands)
                                                                                      ------------------------------
Operating Activities:
<S>                                                                                 <C>              <C>
Net Income                                                                         $         1,331  $          742
                                                                                     --------------  --------------
 Adjustments to reconcile net income to net cash provided by operating
  activities:
   Provision for loan losses                                                                     93              47
   Depreciation                                                                                  57              47
   Amortization of goodwill                                                                      60              60
   Federal home loan bank stock dividends                                                      (30)            (44)
   Net gain on sales of investment securities available for sale                               (46)             (3)
   (Increase) Decrease in:
    Accrued interest receivable                                                               (104)            (12)
    Other assets                                                                               (28)             105
   Increase (Decrease) in:
    Accrued interest payable                                                                    (8)           (127)
    Accrued income taxes                                                                         23               0
    Accrued benefit plan liabilities                                                           (50)            (33)
    Other liabilities                                                                            47            (21)
                                                                                      --------------  --------------
     Total adjustments                                                                           14              19
                                                                                      --------------  --------------
Net cash provided by operating activities                                                     1,345             761
                                                                                      --------------  --------------

Investing Activities:
 Purchases of investment securities available for sale                                      (9,800)         (6,500)
 Proceeds from maturities of investment securities available for sale                         1,580           3,320
 Principal payments received on investment securities available for sale                      5,041           4,230
 Proceeds from sales of investment securities available for sale                              2,742             502
 Net increase in loans                                                                      (7,026)         (2,766)
 Purchases of premises and equipment, net                                                     (177)            (85)
                                                                                      --------------  --------------

Net cash used in investing activities                                                       (7,640)         (1,299)
                                                                                      --------------  --------------

</TABLE>





The accompanying notes are an integral part of these financial statements.


                                       7
<PAGE>



                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                           September 30,
                                                                                 -----------------------------------
                                                                                      2002               2001
                                                                                 ----------------   ----------------
                                                                                     (Unaudited - in thousands)
                                                                                 -----------------------------------
<S>                                                                             <C>                <C>
Financing Activities:
 Dividends paid                                                                            (398)              (414)
 Net increase in deposits                                                                  6,904              4,765
 Purchase and retirement of common stock                                                   (157)              (345)
 Issuance of common stock for MRP plan                                                       154                180
 Payment on ESOP loan and release of shares                                                  161                165
 Net repayment of advances from Federal Home Loan Bank                                         0            (1,575)
                                                                                 ----------------   ----------------
Net cash provided by financing activities                                                  6,664              2,776
                                                                                 ----------------   ----------------

Net increase in cash and cash equivalents                                                    369              2,238

Cash and cash equivalents, beginning of period                                             2,123              3,067
                                                                                 ----------------   ----------------

Cash and cash equivalents, end of period                                        $          2,492   $          5,305
                                                                                 ================   ================

Supplementary disclosures of cash flow information:
 Cash paid during the period for:
 Interest                                                                       $          1,688   $          3,301
 Income taxes                                                                   $            758   $            283

Supplementary disclosures of noncash investing activities:
 Acquisition of foreclosed real estate                                          $            171   $            135
 Sale of foreclosed real estate by origination of mortgage loans                $              0   $             59
 Change in unrealized gain\loss on investment securities
  available for sale                                                            $            324   $            408
 Change in deferred income taxes associated with
  unrealized gain\loss on investment securities available
  for sale                                                                      $            123   $            155
 Change in net unrealized gain\loss on investment
  securities available for sale                                                 $            201   $            253


</TABLE>


The accompanying notes are an integral part of these financial statements



                                       8


<PAGE>


                UNITED TENNESSEE BANKSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
                                   (UNAUDITED)





Note 1 - Basis of Presentation and Principles of Consolidation

United Tennessee Bankshares, Inc. ("Company") was incorporated under the laws of
the State of  Tennessee  for the  purpose of  becoming  the  holding  company of
Newport Federal Savings and Loan Association ("Association"), in connection with
the Association's  conversion from a federally chartered mutual savings and loan
association to a federally chartered capital stock savings bank. The Company had
no assets or  operations  prior to the  conversion.  On  January  1,  1998,  the
Association  converted  from a mutual  savings  association  to a capital  stock
savings  bank,  changed  its name to  Newport  Federal  Bank  ("Bank"),  and was
simultaneously  acquired by its holding company,  United  Tennessee  Bankshares,
Inc.

The Bank provides a variety of financial  services to individuals  and corporate
customers  through its three offices in Newport,  Tennessee.  The Bank's primary
deposit  products are  interest-bearing  savings  accounts and  certificates  of
deposit.  The Bank's  primary  lending  products  are  one-to-four  family first
mortgage loans.

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with the instructions for Form 10-QSB and on the same basis as the
Company's  audited  consolidated   financial  statements.   In  the  opinion  of
management, all adjustments,  consisting of normal recurring accruals, necessary
to present fairly the financial position,  results of operations, and cash flows
for the interim periods presented have been included.  The results of operations
for such interim periods are not necessarily  indicative of the results expected
for the full year.

The consolidated  financial  statements  include the accounts of the Company and
the Bank. All intercompany accounts have been eliminated.

Note 2 - Earnings Per Share

Basic earnings per share represent income  available to shareholders  divided by
the weighted  average number of shares  outstanding  during the period.  Diluted
earnings per share reflect additional shares that would have been outstanding if
dilutive  potential shares had been issued,  as well as any adjustment to income
that would result from the assumed issuance. Potential shares that may be issued
by the Company  relate solely to outstanding  stock options,  and are determined
using the treasury stock method.

Earnings per share have been computed based on the following:
<TABLE>
<CAPTION>

                                                             Three Months Ended                 Nine Months Ended
                                                       -------------------------------     -----------------------------
                                                               September 30,                      September 30,
                                                       -------------------------------     -----------------------------
                                                           2002             2001               2002            2001
                                                       --------------   --------------     -------------   -------------
<S>                                                        <C>              <C>               <C>             <C>

Average number of shares outstanding                       1,312,086        1,344,227         1,324,577       1,369,545
Effect of dilutive options                                        60              738             1,933             567
                                                       --------------   --------------     -------------   -------------

Average number of shares  outstanding                      1,312,146        1,344,965         1,326,510       1,370,112
used to calculate earnings per share                   ==============   ==============     =============   =============

</TABLE>




                                       9

<PAGE>


Note 3 - Comprehensive Income

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standard No. 130, "Reporting  Comprehensive  Income." This statement
establishes  standards for reporting  comprehensive income and its components in
the financial statements.  The objective of the statement is to report a measure
of all changes in equity of an  enterprise  that results from  transactions  and
other economic events of the period other than transactions  with owners.  Items
included in comprehensive income include revenues,  gains, and losses that under
generally  accepted  accounting  principles  are  directly  charged  to  equity.
Examples include foreign currency  translations,  pension liability  adjustments
and unrealized gains and losses on investment securities available for sale. The
Company has included its comprehensive  income in a separate financial statement
as part of its consolidated financial statements.


Note 4 - Management Recognition Plan

In  January  1999,  the  Company's  board of  directors  approved  a  Management
Recognition Plan (MRP), and in May 1999, the Company's shareholders ratified the
plan. The plan authorizes the board of directors to award up to 58,190 shares of
restricted  common  stock to  members  of the  board  of  directors  and  senior
management.

The Company's  board of directors has awarded  54,518 shares as of September 30,
2002 of restricted common stock to certain members of the board of directors and
senior  management.  The shares are  awarded  25% per year.  The Company and its
subsidiary  will  share the cost of the Plan and accrue  the  estimated  cost of
repurchasing shares to be reissued as restricted stock over the period that such
awards are earned.

Activity in the MRP plan is as follows:

                                                     Period Ended September 30,
                                                  ------------------------------
                                                       2002           2001
                                                   -------------- --------------
Accrued Liability Balance at Beginning of Period    $  142,259   $  152,895
Amount Charged to Expense                               14,045      125,531
Less Cost of Shares Issued                            (153,575)    (180,124)
                                                   -------------- --------------
Accrued Liability at End of Period                  $    2,729   $   98,302
                                                   ============== ==============

The  Company  held 4,591  shares of its  common  stock in trust at a net cost of
$56,195  as of  September  30,  2002  (17,138  shares at a cost of  $209,770  at
December 31, 2001). A contra-equity  account has been established to reflect the
cost of such shares held in trust.

Note 5 - Stock Option Plan

In January 1999,  the Company's  board of directors  approved the Company's 1999
stock option plan,  and in May 1999,  the  Company's  shareholders  ratified the
plan.  The plan  reserved  209,299  shares  of the  Company's  common  stock for
issuance  pursuant  to the options to be  granted.  These  shares will be either
newly issued shares or shares purchased on the open market.

The  Company's  board of directors  has  approved the issuance of stock  options
under  the  Plan to  certain  members  of the  board  of  directors  and  senior
management. The options vest at a rate of 25% per year, expire in ten years, and
provide  for the  purchase  of stock at an  exercise  price of $8.60 per  share.
During the nine month  period ended  September  30,  2002,  33,978  options were
purchased  and retired at a total cost of  $70,192.  Stock  options  awarded and
outstanding  totaled  175,321 and 209,299 as of September  30, 2002 and December
31, 2001, respectively.

The Company has  purchased  175,039 and 188,422  shares as of September 30, 2002
and December 31, 2001, respectively, of its common stock, which is being held in
trusts for when the stock options are  exercised.  A  contra-equity  account has
been established to reflect the costs of such shares held in trusts.

The Company applies APB Opinion 25 and related Interpretations in accounting for
its stock option plan. Accordingly, no compensation cost has been recognized.


                                       10
<PAGE>



Note 6 - Improvement Plan for Main Office Facility

During the first quarter of 2001,  the Company's  board of directors  approved a
plan to improve the existing  main office  facilities.  The  Company's  board of
directors  is  currently  seeking  land on which to  construct a new main office
facility.


Note 7 - Recent Accounting Pronouncements

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standard No. 141, Business  Combinations and SFAS No. 142,
Goodwill and Other  Intangible  Assets.  SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations  initiated after June
30, 2001. SFAS No. 142 requires that goodwill and other  intangible  assets with
indefinite  useful  lives no longer be  amortized,  but  instead  be tested  for
impairment  annually.  SFAS No. 142 is effective  on January 1, 2002.  Since the
Company's  intangible asset associated with its branch purchase is accounted for
in accordance with SFAS No. 72, the Company will not change its  amortization of
its intangible asset.

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial   Accounting   Standard  No.  143,  Accounting  for  Asset  Retirement
Obligations.  SFAS No. 143  applies  to legal  obligations  associated  with the
retirement of long-lived assets that result from the acquisition,  construction,
development  and/or the  normal  operation  of a  long-lived  asset,  except for
certain  obligations  of  lessees.  SFAS  No.  143 is  effective  for  financial
statements  issued for fiscal years  beginning  after June 15,  2002.  Since the
Company does not have any legal  obligations as described above,  this statement
is not  expected  to have any  impact on the  Company's  financial  position  or
results of operations.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal
of Long-Lived  Assets (SFAS No. 144).  This  statement  supercedes  SFAS No. 121
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
be Disposed of, and the accounting  and reporting  provisions of APB Opinion No.
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,  for the  disposal  of a segment  of a  business  (as
previously  defined in that  Opinion).  SFAS No. 144 is effective  for financial
statements  issued for fiscal years  beginning  after  December  15,  2001,  and
interim  periods  within those fiscal years.  This  statement is not expected to
have a  significant  impact on the  Company's  financial  position or results of
operations.

In October 2002, the Financial  Accounting  Standards Board issued  Statement of
Financial Standard No. 147, Accounting for Certain Financial Institutions.  This
statement removes acquisitions of financial  institutions from the scope of FASB
Statement  No. 72,  Accounting  for  Certain  Acquisitions  of Banking or Thrift
Institutions, and FASB Interpretation No. 9, Applying APB Opinions No. 16 and 17
When a Savings and Loan  Association  or a Similar  Institution Is Acquired in a
Business  Combination  Accounted for by the Purchase Method.  In addition,  this
statement  amends FASB  Statement  No. 144,  Accounting  for the  Impairment  or
Disposal  of  Long-Lived  Assets,  to  include in its scope  long-term  customer
relationship intangible assets of financial institutions such as depositor - and
borrower-relationship intangible assets and credit cardholder intangible assets.
This statement  intends to improve the  comparability of financial  reporting by
requiring  institutions to follow FASB Statement No. 141, Business Combinations.
SFAS No. 147 is effective for  acquisitions for which the date of acquisition is
on or after October 1, 2002. Management does not expect this statement to have a
significant impact on the Company's financial position or results of operations.



                                       11

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation


General

The principal business of United Tennessee Bankshares, Inc. and our wholly owned
subsidiary  Newport  Federal  Bank  ("we,"  "us," etc.)  consists  of  accepting
deposits from the general  public through our main office and two branch offices
and investing  those funds in loans secured by one- to  four-family  residential
properties  located in our primary  market area. We also maintain a portfolio of
investment  securities and originate a limited amount of commercial  real estate
loans and consumer loans. Our investment  securities  portfolio consists of U.S.
Treasury notes and U.S. government agency securities,  local municipal bonds and
mortgage-backed  securities  that are guaranteed as to principal and interest by
the Federal Home Loan Mortgage Corporation (FHLMC), Government National Mortgage
Association  (GNMA) or Federal National  Mortgage  Association  (FNMA).  We also
maintain an investment in Federal Home Loan Bank of Cincinnati  common stock and
FHLMC common stock.

Our net  income  primarily  depends  on our net  interest  income,  which is the
difference between interest income earned on loans and investment securities and
interest paid on  customers'  deposits and other  borrowings.  Our net income is
also  affected by  noninterest  income,  such as service  charges on  customers'
deposit accounts,  loan service charges and other fees, and noninterest expense,
primarily  consisting  of  compensation  expense,  deposit  insurance  and other
expenses incidental to our operations.

Our  operations  and those of the thrift  industry as a whole are  significantly
affected by prevailing  economic  conditions,  competition  and the monetary and
fiscal policies of governmental  agencies. Our lending activities are influenced
by demand for and supply of housing and competition  among lenders and the level
of interest  rates in our market area.  Our deposit flows and costs of funds are
influenced  by  prevailing  market  rates of  interest,  primarily  on competing
investments, account maturities and the levels of personal income and savings in
our market area.

The  following is a discussion  of our  financial  condition as of September 30,
2002 and for the three and nine-month  periods ended  September 30, 2002.  These
comments  should  be  read  in  conjunction  with  our  consolidated   financial
statements and accompanying footnotes appearing in this report.

The  Company's  board of directors  approved a plan in July 2002 to purchase and
retire up to $500,000  of the  Company's  common  stock over the next two years,
depending upon the stock price.

This  report  contains   "forward-looking   statements"   relating  to,  without
limitation,  future economic performance,  plans and objective of management for
future  operations,  and  projections of revenues and other financial items that
are based on the  beliefs  of  management,  as well as  assumptions  made by and
information currently available to management. The words "expect," "anticipate,"
and  "believe,"  as  well as  similar  expressions,  are  intended  to  identify
forward-looking  statements.  Our actual results may differ  materially from the
results discussed in the forward-looking statements.



                                       12
<PAGE>



Comparison of Financial Condition at September 30, 2002 and December 31, 2001

Total assets  increased  from  December  31, 2001 to September  30, 2002 by $8.3
million,  or 8.2%, from $100.8 million at December 31, 2001 to $109.1 million at
September  30,  2002.  The increase in assets was  principally  the result of an
increase in investment  securities and loans receivable.  Investment  securities
increased  by $837,000  due to an increase in  investment  purchases  during the
current period and an increase in the fair market value of investment securities
available for sale.

Loans  receivable  increased  from  December 31, 2001 to  September  30, 2002 as
originations  exceeded  repayments for the period by approximately $6.8 million.
The following  table sets forth  information  about the  composition of our loan
portfolio  by type of loan at the dates  indicated.  At  September  30, 2002 and
December 31, 2001,  we had no  concentrations  of loans  exceeding  10% of gross
loans other than as disclosed below.


<TABLE>
<CAPTION>
                                                        September 30, 2002              December 31, 2001
                                                      ------------------------        -----------------------
                                                                      (Dollars in Thousands)
                                                           Amount      Percent             Amount      Percent
<S>                                                <C>                  <C>        <C>                <C>

Type of Loan:
Real estate loans:
 One- to four-family residential                   $       63,136       76.8%      $       57,577      76.8%

 Commercial                                                 9,986       12.2%               9,131      12.2%

 Construction                                               4,403        5.4%               3,997       5.3%

Consumer loans:

 Automobile                                                 1,335        1.6%               1,260       1.7%

 Loans to depositors, secured by deposits                   1,489        1.8%               1,380       1.8%

 Home equity and second mortgage                              148        0.2%                 157       0.2%

 Other                                                      1,664        2.0%               1,506       2.0%
                                                      ------------   ---------        ------------ ---------
                                                           82,161      100.0%              75,008     100.0%
                                                                     =========                     =========

Less:

 Loans in process                                           2,036                           1,737

 Deferred fees and discounts                                  375                             352

 Allowance for loan losses                                    788                             719
                                                      ------------                    ------------
  Total                                            $       78,962                  $       72,200
                                                      ============                    ============

</TABLE>

We  actively  monitor  our asset  quality  and charge  off loans and  properties
acquired in settlement of loans against the  allowances for losses on such loans
and such properties when  appropriate and provide  specific loss allowances when
necessary.  Although we believe we use the best  information  available  to make
determinations with respect to the allowances for losses, future adjustments may
be  necessary  if economic  conditions  differ  substantially  from the economic
conditions in the assumptions used in making the initial determinations.



                                       13
<PAGE>



The following table sets forth information about our allowance for loan losses
for the period indicated.

                                          Nine                        Nine
                                      Months Ended                Months Ended
                                      September 30,               September 30,
                                         2002                        2001
                                --------------------       ---------------------
                                                    (In Thousands)
Balance at beginning of period  $          719               $        660
                                --------------------       ---------------------
Charge-offs:
 Consumer                                  (27)                        (8)
 Mortgage                                    0                         (1)
Recoveries:
 Consumer                                    3                          0
 Mortgage                                    0                          0
                                --------------------       ---------------------
Net Charge-offs                            (24)                        (9)
Provision for loan losses                   93                         47
                                --------------------       ---------------------
Balance at end of period       $           788              $         698
                               =====================       =====================

The following table sets forth information about our nonperforming assets at the
dates indicated.

                                      September 30,              September 30,
                                          2002                        2001
                                ---------------------       --------------------
                                                 (In Thousands)
Nonaccrual Loans                   $         0              $           0
Accruing loans which are
 contractually past due
 90 days or more:
Real Estate:
 Residential                               565                        574
 Non-Residential                            15                         43
Consumer                                    12                         16
                               ----------------------       --------------------
Total                             $        592              $         633
                               ======================       ====================

At September 30, 2002, the Bank had one additional  commercial  real estate loan
totaling $465,000,  as to which known information about possible credit problems
of the  borrower  caused us to have doubts as to the ability of the  borrower to
comply with present loan repayment terms. Although the loan is current, the cash
flows  of the  lessee  of the  property  are  below  expectations.  The  loan is
considered  well  secured  and we do not  expect  to incur any loss in excess of
existing reserves on any of our assets. We conduct regular reviews of our assets
and  evaluate  the need to  establish  allowances  on the basis of this  review.
Allowances are  established on a regular basis based on an assessment of risk in
our  assets  taking  into  consideration  the  composition  and  quality  of the
portfolio, delinquency trends, current charge-off and loss experience, the state
of the real  estate  market,  regulatory  reviews  conducted  in the  regulatory
examination  process,  general  economic  conditions  and other  factors  deemed
relevant by us.  Allowances are provided for individual  assets,  or portions of
assets, when ultimate  collection is considered  improbable based on the current
payment status of the assets and the fair value or net  realizable  value of the
collateral.

During the nine months ended  September  30,  2002,  the Company  increased  its
liabilities  by $7.0  million,  or 8.1%,  in order to fund asset  growth.  Total
deposits  increased $6.9 million or 8.1% from $84.8 million at December 31, 2001
to $91.7 million at September 30, 2002.

During 2002, the Bank has accepted deposits totaling  approximately $7.3 million
from various governmental and institutional customers, some of which are outside
of  its  traditional  market  area.  The  average  term  of  these  deposits  is
approximately  six months.  Management  is unable to determine  whether the Bank
will retain these deposits upon  maturity.  In the event the Bank is not able to
retain these  deposits,  management has various  sources of liquidity  available
including  cash and  amounts due from  depository  institutions  and  investment
securities  which are available  for sale.  In addition,  the Bank has borrowing
authority from the Federal Home Loan Bank of approximately $4.0 million.

                                       14
<PAGE>



Our  shareholders'  equity increased $1.3 million from $14.2 million at December
31, 2001 to $15.5  million at September  30, 2002.  The increase was due to $1.3
million  of net  income,  a  $201,000  increase  in our net  unrealized  gain on
investment  securities,  payment  of  approximately  $161,000  on the ESOP  loan
principal,  distribution of shares under the MRP plan at a cost of $154,000, all
of which were partially  offset by the payment of a dividend to  shareholders of
$398,000,  and the purchase and retirement of 16,388 shares of common stock at a
cost of $157,000.  The Company's board of directors approved a plan in July 2002
to purchase  and retire up to $500,000 of the  Company's  common  stock over the
next two years, depending upon the stock price.

Discussion  of Results of  Operations  for the Three Months Ended  September 30,
2002 and 2001

Our net income for the three months ended  September  30, 2002 was  $437,000,  a
$156,000,  or 55.5% increase from the $281,000 we earned during the three months
ended  September  30, 2001.  Basic and diluted  earnings per share for the three
months ended  September 30, 2002 were each $0.33  compared to $0.21 for the same
period  in 2001.  Basic  average  shares  outstanding  for  three  months  ended
September  30,  2002 was  1,312,086  shares and  1,344,227  shares for the three
months ended September 30, 2001.  Average dilutive  potential shares outstanding
were 60 and 738, respectively.

Interest  income  decreased  $8,000,  or 0.4%,  from $1.83 million for the three
months  ended  September  30, 2001 to $1.82  million for the three  months ended
September  30, 2002.  The decrease in interest  income was due to a reduction in
interest income from investment  securities and other interest earning assets of
$45,000  offset by an  increase  in  interest  income on loans of  $37,000.  The
decrease in interest  income on investment  securities is a result of a decrease
in the yields available on investment securities.

Interest  expense on deposits  decreased  $340,000  from  $884,000 for the three
months ended September 30, 2001 to $544,000 for the three months ended September
30, 2002, primarily due to the decrease in deposit account interest rates.

Net  interest  income  increased  $339,000,  or 36.0%,  between the periods as a
result of the decrease in interest  expense  which was  partially  offset by the
slight decrease in interest income. The Company's net interest margin widened to
4.91% for the three months ended  September  30, 2002  compared to 3.91% for the
comparable  period of 2001. The widening of the net interest margin reflects the
current  rate  environment  and the fact that our  variable  rate  loans are not
adjusting as quickly as the rates on our interest-bearing deposits.

Noninterest  income  increased  $13,000  from $95,000 for the three months ended
September  30, 2001 to $108,000 for the three months ended  September  30, 2002.
The increase in  noninterest  income was  primarily  the result of a net gain on
sales of investment  securities  available for sale of $7,000 and an increase in
deposit account service charges of $8,000.

Noninterest  expenses increased $75,000 from $568,000 for the three months ended
September  30, 2001 to $643,000 for the three months ended  September  30, 2002.
The  increase  in  noninterest   expense  was  primarily  from  an  increase  in
compensation  and benefits of $15,000,  an increase in occupancy  and  equipment
expense of $23,000 and an increase in other operating expenses of $36,000.

Our effective  tax rates for the three months ended  September 30, 2002 and 2001
were 37.6% and 37.4%, respectively.


                                       15
<PAGE>



Discussion of Results of Operations for the Nine Months Ended September 30, 2002
and 2001

Our net income for the nine months ended  September 30, 2002 was  $1,331,000,  a
$589,000,  or 79.4%  increase from the $742,000 we earned during the nine months
ended  September  30,  2001.  Basic and diluted  earnings per share for the nine
months ended  September 30, 2002 were each $1.00  compared to $0.54 for the same
period in 2001. Basic average shares outstanding for nine months ended September
30, 2002 was  1,324,577  shares and  1,369,545  shares for the nine months ended
September 30, 2001. Average dilutive potential shares outstanding were 1,933 and
567, respectively.

Interest  income  decreased  $172,000,  or 3.1%, from $5.57 million for the nine
months  ended  September  30, 2001 to $5.39  million  for the nine months  ended
September  30, 2002.  The decrease in interest  income was due to a reduction in
interest income from investment  securities and other interest earning assets of
$193,000  offset by an  increase in  interest  income on loans of  $21,000.  The
decrease in interest income is the result of a decrease in the yields  available
on investment securities.

Interest  expense on deposits  decreased  $1,224,000  from $2.90 million for the
nine months ended  September 30, 2001 to $1.68 million for the nine months ended
September 30, 2002,  primarily due to the decrease in deposit  account  interest
rates.

Net interest income  increased  $1,052,000,  or 39.5%,  between the periods as a
result of the decrease in interest  expense  which was  partially  offset by the
decrease in interest income.  The Company's net interest margin widened to 4.75%
for the  nine  months  ended  September  30,  2002  compared  to  3.68%  for the
comparable  period of 2001. The widening of the net interest margin reflects the
current  rate  environment  and the fact that our  variable  rate  loans are not
adjusting as quickly as the rates on our interest-bearing deposits.

Noninterest  income  increased  $41,000 from  $303,000 for the nine months ended
September 30, 2001 to $344,000 for the nine months ended September 30, 2002. The
increase  in  noninterest  income  was  primarily  from  net  gains  on sales of
investment  securities available for sale of $46,000 with an offsetting decrease
in loan service charges and fees of $4,000.

Noninterest  expenses  increased $107,000 from $1.75 million for the nine months
ended  September 30, 2001 to $1.85  million for the nine months ended  September
30,  2002.  The  increase in  noninterest  expense was from an increase in other
noninterest  expenses  of $73,000  which  includes  an expense of  approximately
$54,000 for the market value  adjustment of the director's  long-term  incentive
plan. Data  processing  fees also increased by $20,000,  occupancy and equipment
expense increase  $28,000,  while  compensation  and benefits expense  decreased
$8,000.

Our  effective  tax rates for the nine months ended  September 30, 2002 and 2001
were 37.0% and 36.6%, respectively.






                                       16




<PAGE>

Liquidity and Capital Resources

The Company  does not  currently  have any  business  activities  other than the
operation of the Bank and does not have significant on-going funding commitments
other than the payment of dividends to  shareholders.  To date,  the Company has
used the proceeds from its initial  public  offering and dividends from the Bank
to  meet  its  liquidity  needs.  The  Bank is  subject  to  various  regulatory
limitations on the payment of dividends to the Company.

Our most liquid  assets are cash and amounts due from  depository  institutions,
which are short-term highly liquid investments with original  maturities of less
than three months that are readily  convertible  to known  amounts of cash.  The
levels of these assets are dependent on our  operating,  financing and investing
activities  during any given period.  Our primary sources of funds are deposits,
proceeds from principal and interest payments on loans and investment securities
and earnings.  While  scheduled  principal  repayments  on loans and  investment
securities are a relatively  predictable source of funds, deposit flows and loan
and investment securities prepayments are greatly influenced by general interest
rates,  economic  conditions,  competition and other factors.  We do not solicit
deposits  outside  of  our  market  area  through  brokers  or  other  financial
institutions;  however,  we do accept  deposits  from various  governmental  and
institutional investors outside our traditional market area from time to time.

We have also  designated all of our investment  securities as available for sale
in order to meet liquidity demands.  In addition to internal sources of funding,
as a  member  of the  Federal  Home  Loan  Bank  we have  substantial  borrowing
authority  with the Federal Home Loan Bank.  Our use of a  particular  source of
funds is based on need, comparative total costs and availability.

We have historically maintained substantial levels of capital. The assessment of
capital adequacy depends on several factors,  including asset quality,  earnings
trends,  liquidity and economic  conditions.  We seek to maintain high levels of
regulatory  capital to give us maximum  flexibility  in the changing  regulatory
environment and to respond to changes in market and economic  conditions.  These
levels of capital have been achieved through consistent earnings enhanced by low
levels of noninterest expense and have been maintained at those high levels as a
result of our policy of moderate growth  generally  confined to our market area.
At September 30, 2002 and December 31, 2001, we exceeded all current  regulatory
capital requirements and met the definition of a "well-capitalized" institution,
the highest regulatory capital category.






                                       17
<PAGE>


Item 3.  Controls and Procedures
         -----------------------

     (a)  Evaluation  of  Disclosure  Controls  and  Procedures.  The  Company's
President and Chief  Executive  Officer and its  Controller  have  evaluated the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures  (as defined in Exchange Act Rule  13a-14(c)) as of a date within
90 days of the filing date of this quarterly  report.  Based on that evaluation,
the President and Chief Executive Officer and its Controller have concluded that
the Company's  disclosure  controls and  procedures are effective to ensure that
material  information  relating to the Company  and the  Company's  consolidated
subsidiaries  is made known to such  officers by others  within these  entities,
particularly  during the period this quarterly report was prepared,  in order to
allow timely decisions regarding required disclosure.



     (b)  Changes in  Internal  Controls.  There  have not been any  significant
changes  in the  Company's  internal  controls  or in other  factors  that could
significantly affect these controls subsequent to the date of their evaluation.















                                       18


<PAGE>



PART II.  OTHER INFORMATION
          -----------------

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities and Use of Proceeds

         None.

Item 3.  Defaults upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits:

         The following exhibits are filed as a part of this report:

         3.1*           Charter of United Tennessee Bankshares, Inc.

         3.2*           Bylaws of United Tennessee Bankshares, Inc.

         4*             Form  of   Stock    Certificate   of   United  Tennessee
                        Bankshares,  Inc.

         10.1**         United Tennessee Bankshares, Inc. 1999 Stock Option Plan

         10.2**         United Tennessee Bankshares, Inc. Management Recognition
                        Plan

         10.3(a)*       Employment  Agreements  between Newport Federal  Savings
                        and Loan  Association  and  Richard G.  Harwood,   Nancy
                        L. Bryant and Peggy Holston

         10.3(b)*       Forms   of    Guarantee    Agreements   between   United
                        Tennessee  Bankshares,  Inc.  and   Richard  G. Harwood,
                        Nancy L. Bryant and Peggy Holston

         10.4(b)*       Newport  Federal  Savings  and  Loan  Association  Long-
                        Term Incentive Plan

         10.5*          Newport  Federal  Savings and Loan Association  Deferred
                        Compensation Plan

         99.1           Certification   Pursuant  to  18  U.S.C.  Section  1350,
                        as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                        Act of 2002, signed  by  Richard  G. Harwood,  President
                        and   Chief   Executive   Officer  of  United  Tennessee
                        Bankshares, Inc. on November 13, 2002.

         99.2           Certification  Pursuant  to 18 U.S.C. Section  1350,  as
                        Adopted  Pursuant to Section 906  of  the Sarbanes-Oxley
                        Act of 2002, signed by Chris H. Triplett, Controller  on
                        November  13,  2002.

   ---------------------

           *   Incorporated by reference to United Tennessee Bankshares,  Inc.'s
               Registration Statement on Form SB-2, File No. 333-36465.

           **  Incorporated   by  reference  to  United   Tennessee  Bankshares,
               Inc.'s Registration Statement on Form S-8, File No. 333-82803.



     (b) Reports on Form 8-K:

         United  Tennessee  Bankshares,  Inc. did not file a current  report  on
         Form 8-K during the quarter covered by this report.



                                       19
<PAGE>


                                   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.

                                     UNITED TENNESSEE BANKSHARES, INC.
                                     Registrant



Date:   November 13, 2002            /s/ Richard G. Harwood
                                     -------------------------------------------
                                     Richard G. Harwood
                                     President and Chief Executive Officer
                                     (Duly Authorized Representative and
                                     Principal Financial and Accounting Officer)








                                       20

<PAGE>


             Certification of President and Chief Executive Officer
                         Pursuant to Section 302 of the
                           Sarbanes-Oxley Act of 2002

I, Richard G. Harwood, certify that:

1.   I have reviewed this  quarterly  report on Form 10-QSB of United  Tennessee
     Bankshares, Inc. ("United Tennessee");

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

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

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

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

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

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

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

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

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

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

                                               /s/ Richard G. Harwood
Date:  November 13, 2002                       ---------------------------------
                                               Richard G. Harwood
                                               President and
                                               Chief Executive Officer



                                       21
<PAGE>


                           Certification of Controller
                         Pursuant to Section 302 of the
                           Sarbanes-Oxley Act of 2002

I, Chris H. Triplett, certify that:

1.   I have reviewed this  quarterly  report on Form 10-QSB of United  Tennessee
     Bankshares, Inc. ("United Tennessee");

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

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

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

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

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

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

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

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

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

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

                                                /s/ Chris H. Triplett
Date:  November 13, 2002                       ---------------------------------
                                                Chris H. Triplett
                                                Controller





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