<PAGE>
                     U.S. Securities and Exchange Commission
                              Washington D.C. 20549

                                   FORM 10-QSB

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

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

Commission file number                  000-24498
                      -------------------------------------------

                       DIAMOND HILL INVESTMENT GROUP, INC.
                       -----------------------------------
                         fka, THE BANC STOCK GROUP, INC.
                         -------------------------------

        (Exact name of small business issuer as specified in its charter)

             FLORIDA                               65-0190407
---------------------------------------------------------------------------
   (State of incorporation)             (IRS Employer Identification No.)

                     1105 SCHROCK ROAD, COLUMBUS, OHIO 43229
---------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (614) 848-5100
---------------------------------------------------------------------------
                           (Issuer's telephone number)

Check whether the issuer (1) 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 90 days.
Yes  X     No
   --------  --------

State the number of shares outstanding of each of the issuer's classes of common
equity, as of October 31, 2001:

         CLASS                                                NUMBER OF SHARES
         -----                                                ----------------
Class A shares, No Par Value                                     1,556,766

            Transitional Small Business Disclosure Format (Check one)

                 Yes     X                          No
                    -------------                     ----------------





                                       1

<PAGE>





              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----

                                                                       PAGE
                                                                       ----

Part I Financial Information:

         Item 1.    Consolidated Financial Statements                   3-7

                    Notes to Consolidated Financial Statements          8-17

         Item 2.    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations       18-23

Part II Other Information:

         Item 6.                                                        24

Signatures                                                              26




















                                       2

<PAGE>



              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                     PART I

                              FINANCIAL INFORMATION
                              ---------------------

ITEM 1.  FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Diamond Hill Investment
Group, Inc., (the "Company") formerly known as, The Banc Stock Group, Inc., are
unaudited but, in the opinion of management, reflect all adjustments (which
include only normal recurring accruals) necessary to present fairly such
information for the periods and at the dates indicated and to make the
consolidated financial statements not misleading. The results of operations for
the nine months ended September 30, 2001, may not be indicative of the results
of operations for the year ending December 31, 2001. Since the accompanying
consolidated financial statements have been prepared in accordance with Item 310
of Regulation S-B, they do not contain all information and footnotes normally
contained in annual consolidated financial statements; accordingly, they should
be read in conjunction with the consolidated financial statements and notes
thereto appearing in the Company's Annual Report.














                                       3

<PAGE>






<TABLE>
<CAPTION>

                                        DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                                        ----------------------------------------------------
                                           CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                                           ---------------------------------------------
                                                      AS OF SEPTEMBER 30, 2001
                                                      ------------------------

                                                             UNAUDITED
                                                             ---------



                                                               ASSETS
                                                               ------
<S>                                                                                          <C>
Cash                                                                                         $ 1,798,950
Investment portfolio:
      Mutual fund shares and limited partnership interests                                     3,978,896
      Marketable equity securities, at market value                                              541,076
      Not readily marketable equity securities, at estimated fair value                          368,449
Accounts receivable:
      Affiliates                                                                                  47,149
      Pending settlements and other                                                               69,090
      Refundable income taxes                                                                    414,251
Property and equipment, net of accumulated depreciation of $318,752                              217,041
Deposits and other                                                                               132,558
                                                                                             -----------

            Total assets                                                                     $ 7,567,460
                                                                                             ===========


                                                            LIABILITIES
                                                            -----------

Accrued expenses                                                                                 447,316
                                                                                             -----------

            Total liabilities                                                                    447,316
                                                                                             -----------


                                                        SHAREHOLDERS' EQUITY
                                                        --------------------

Preference stock, 10,000,000 shares authorized,                                                     --
            none issued or outstanding
Common stock: (note 3)
      Class A, no par value, 30,000,000 shares authorized,
            1,821,972 shares issued and 1,569,914 shares outstanding                           9,562,747
      Treasury stock, at cost
            (251,957 Class A shares)                                                          (1,280,262)
      Deferred compensation                                                                      (44,130)
Retained earnings                                                                             (1,118,211)
                                                                                             -----------

            Total shareholders' equity                                                         7,120,144
                                                                                             -----------

            Total liabilities and shareholders' equity                                       $ 7,567,460
                                                                                             ===========



</TABLE>





                                       4


<PAGE>




<TABLE>
<CAPTION>

                                                    DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                                                    ----------------------------------------------------
                                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                            -------------------------------------
                                           FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                           ----------------------------------------------------------------------

                                                                          UNAUDITED
                                                                          ---------


                                                                           9 MONTHS ENDED                     3 MONTHS ENDED
                                                                           --------------                     --------------
                                                                    SEP 2001          SEP 2000          SEP 2001          SEP 2000
                                                                  -----------       -----------       -----------       -----------

<S>                                                               <C>               <C>               <C>               <C>
OPERATING REVENUES:
     Management fees and commissions                              $   813,414       $ 1,118,954       $   230,036       $   195,262
     Market making gains and losses                                   139,583          (255,043)           47,606           (59,258)
     Investment banking                                                  --              32,982              --                --
                                                                  -----------       -----------       -----------       -----------

         Total operating revenues                                     952,997           896,893           277,642           136,004
                                                                  -----------       -----------       -----------       -----------

OPERATING EXPENSES:
     Salaries, benefits and payroll taxes                           1,330,427           957,295           428,290           315,556
     Brokers' commission                                              122,265           604,631            78,757           148,812
     Professional fees                                                533,314           348,542           199,332           140,778
     General and administrative                                       796,814           690,087           264,044          (175,442)
                                                                  -----------       -----------       -----------       -----------

         Total operating expenses                                   2,782,820         2,600,555           970,423           429,704
                                                                  -----------       -----------       -----------       -----------

OPERATING LOSS                                                     (1,829,823)       (1,703,662)         (692,781)         (293,700)
                                                                  -----------       -----------       -----------       -----------

OTHER REVENUE AND EXPENSES:
     Investment gains and losses                                      546,937          (687,380)         (403,477)           69,039
     Dividend income                                                  143,880           254,655            26,714           107,355
     Interest and other income                                         31,875            44,032            26,076            16,242
     Write off of goodwill of liquidated subsidiary                      --            (309,745)             --            (309,745)
     Interest expense                                                    (493)          (10,622)              (86)             (353)
                                                                  -----------       -----------       -----------       -----------

         Total other revenue and expenses                             722,199          (709,060)         (350,773)         (117,462)
                                                                  -----------       -----------       -----------       -----------

LOSS BEFORE TAXES                                                  (1,107,624)       (2,412,722)       (1,043,554)         (411,162)

     Income tax provision (credit)                                       --            (828,500)             --            (482,000)
                                                                  -----------       -----------       -----------       -----------

     Income (loss) before equity in net earnings of                (1,107,624)       (1,584,222)       (1,043,554)           70,838
         affliated company

     Equity in net losses of ShareholderOnline, Inc.                     --            (138,090)             --                --
                                                                  -----------       -----------       -----------       -----------

NET INCOME (LOSS)                                                 $(1,107,624)      $(1,722,312)      $(1,043,554)      $    70,838
                                                                  ===========       ===========       ===========       ===========




     BASIC EARNINGS (LOSS) PER SHARE                              $     (0.67)      $     (1.02)      $     (0.66)      $      0.04
                                                                  ===========       ===========       ===========       ===========

     DILUTED EARNINGS (LOSS) PER SHARE                            $     (0.67)      $     (1.02)      $     (0.66)      $      0.04
                                                                  ===========       ===========       ===========       ===========


</TABLE>










                                       5

<PAGE>





<TABLE>
<CAPTION>


                                                           DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                                                           ----------------------------------------------------
                                                        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                        ----------------------------------------------------------
                                                               FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
                                                               --------------------------------------------

                                                                                UNAUDITED
                                                                                ---------





                                                               Treasury          Deferred           Retained
                                                Class A          Stock         Compensation         Earnings        Total
                                              -----------     -----------      -------------      -----------    -----------

<S>                                           <C>             <C>              <C>              <C>              <C>
Balance at December 31, 2000                  $ 9,562,747     ($   87,428)     ($   73,150)     ($   10,587)     $ 9,391,582

Amortization of deferred compensation                --              --             29,020             --             29,020

Purchase of treasury stock                           --        (1,192,834)            --               --         (1,192,834)

Net loss                                             --              --               --         (1,107,624)      (1,107,624)

                                              -----------     -----------      -----------      -----------      -----------
Balance at September 30, 2001                 $ 9,562,747     ($1,280,262)     ($   44,130)     ($1,118,211)     $ 7,120,144
                                              ===========     ===========      ===========      ===========      ===========


</TABLE>






















                                       6

<PAGE>




<TABLE>
<CAPTION>

                                         DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES
                                         ----------------------------------------------------
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                -------------------------------------
                                        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                        -----------------------------------------------------

                                                              UNAUDITED
                                                              ---------

                                                                                              2001                 2000
                                                                                          -----------           -----------
<S>                                                                                       <C>                   <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                                            $(1,107,624)          $(1,722,312)
      Adjustments to reconcile net loss
          to net cash provided by (used in) operating activities:
          Depreciation and amortization                                                        51,624                60,552
          Write off of goodwill of liquidated subsidiary                                         --                 309,745
          Recovery of bad debts in kind                                                       (14,025)                 --
          Stock options and warrants compensation expense                                        --                  68,500
          Amortization of deferred compensation                                                29,020                14,827
          Deferred taxes                                                                         --                (496,000)
          Equity in undistributed losses of ShareholderOnline, Inc.                              --                 138,090
          Unrealized (gain) loss                                                              (75,750)            1,040,602
          (Increase) decrease in certain assets-
              Investment portfolio                                                            313,647             5,123,626
              Mortgage participation notes                                                    223,500               (35,000)
              Accounts receivable clients                                                        --                   1,980
              Other accounts receivable                                                        88,921                  --
              Refundable income taxes                                                          96,966              (539,000)
              Other assets                                                                     55,307                51,616
          Increase (decrease) in certain liabilities-
              Securities sold not yet purchased                                                  --                 555,018
              Accounts payable to broker-dealers and other                                     (1,698)              144,354
              Accrued expenses and other                                                       19,979               (99,468)
                                                                                          -----------           -----------
                 Net cash provided by (used in) operating activities                         (320,133)            4,617,130
                                                                                          -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment                                                     (107,697)              (14,632)
      Sale of property                                                                           --                  23,618
                                                                                          -----------           -----------
                 Net cash provided by (used in) investing activities                         (107,697)                8,986
                                                                                          -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Purchase of treasury stock                                                           (1,192,834)             (103,853)
      Advances from affiliates                                                                   --                 (30,662)
      Advances to affiliates                                                                  (23,614)                 --
                                                                                          -----------           -----------
                 Net cash used in financing activities                                     (1,216,448)             (134,515)
                                                                                          -----------           -----------

NET INCREASE (DECREASE) IN CASH                                                            (1,644,278)            4,491,601

CASH, BEGINNING OF PERIOD                                                                   3,443,228             2,456,527
                                                                                          -----------           -----------

CASH, END OF PERIOD                                                                       $ 1,798,950           $ 6,948,128
                                                                                          ===========           ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

      Cash paid during the period for:
          Interest                                                                        $       493           $    10,622
          Income taxes                                                                           --                    --


</TABLE>



















                                       7


<PAGE>



                       DIAMOND HILL INVESTMENT GROUP, INC.
                       -----------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                               SEPTEMBER 30, 2001
                               ------------------

(1)  ORGANIZATION AND NATURE OF BUSINESS
     -----------------------------------

Diamond Hill Investment Group, Inc. (the Company), changed its name from The
Banc Stock Group, Inc., at the annual shareholders' meeting held on April 26,
2001. The Company is a Florida corporation incorporated in April 1990. The
Company has two subsidiary operating companies.

Diamond Hill Capital Management, Inc., (DHCM), an Ohio corporation, is a
wholly-owned subsidiary of the Company and a registered investment adviser. DHCM
is the Investment Adviser to the Diamond Hill Focus Fund (symbol DIAMX), the
Diamond Hill Small Cap Fund (symbol DHSCX), the Diamond Hill Large Cap Fund
(symbol DHLCX), and the Diamond Hill Investment Partners, L.P. and offers
advisory accounts to institutional and individual investors.

Diamond Hill Securities, Inc. (DHS) changed its name from Banc Stock Financial
Services, Inc. effective May 5, 2001. DHS is an Ohio corporation, a wholly-owned
subsidiary of DHCM and an NASD registered broker-dealer. DHS is registered with
the Securities and Exchange Commission and the securities commissions of thirty
states, including Ohio. DHS trades securities on a fully-disclosed basis and
clears customer transactions through an unaffiliated broker-dealer, which also
maintains the customer accounts. DHS is also a registered investment adviser and
offers advisory accounts to institutional and individual investors. DHS is the
Investment Adviser to The Banc Stock Group Fund (symbol BANCX).

Effective December 31, 2000, the Company changed its fiscal year-end to December
31 from the last day of February.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

The preparation of 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 and the reported amounts
of revenues and expenses for the period. Actual results could differ from those
estimates. The following is a summary of the Company's significant accounting
policies:

Reclassifications
-----------------

Certain prior year amounts have been reclassified to conform to the current year
financial statement periods and presentation.





                                       8

<PAGE>




Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include the operations of the
Company, DHCM and DHS. All material intercompany transactions and balances have
been eliminated in consolidation.

Cash
----

The Company has defined cash as demand deposits and money market accounts.

Valuation of Investment Portfolio
---------------------------------

Substantially all of the Company's investment portfolio is managed by DHCM or
DHS, and is comprised of partnerships and investment companies which hold
securities with readily ascertainable market values. Securities and related
options traded on national securities markets and securities not traded on
national securities markets, but with readily ascertainable market values, are
valued at market value. Other securities for which market quotations are not
readily available, due to infrequency of transactions, are valued at fair value
as determined in good faith by the management of the Company. Realized and
unrealized gains and losses are included in investment gains and losses.

Property and Equipment
----------------------

Property and equipment is carried at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over estimated lives
of five to seven years.

Revenues
--------

Securities transactions and commissions are accounted for on the trade date
basis. Management fees for advisory services are paid quarterly and recognized
on a pro rata basis over the period(s) funds are managed. Dividend income is
recorded on the ex-dividend date and interest income is accrued as earned.
Realized gains and losses from sales of securities are determined utilizing the
first-in, first-out method (FIFO). Investment banking revenue is recorded upon
completion of the underwriting.

Earnings Per Share
------------------

Basic and diluted earnings per common share are computed in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings per Share." A
reconciliation of the numerators and denominators used in these calculations is
shown below:










                                       9

<PAGE>
<TABLE>
<CAPTION>

                                                                   For the Nine Months Ended September 30, 2001
                                                                   --------------------------------------------


                                                              Income/(Loss)            Shares                Per-share
                                                              (Numerator)         (Denominator)               Amount
                                                              -----------         -------------               ------

<S>                                                          <C>                    <C>                   <C>
          Basic Earnings                                     $   (1,107,624)        1,645,472             $        (0.67)
          Diluted Earnings                                   $   (1,107,624)        1,645,472             $        (0.67)

<CAPTION>

                                                                     For the Quarter Ended September 30, 2001
                                                                     ----------------------------------------


                                                              Income/(Loss)          Shares                Per-share
                                                              (Numerator)         (Denominator)               Amount
                                                              -----------         -------------               ------

<S>                                                          <C>                    <C>                   <C>
          Basic Earnings                                     $   (1,043,554)        1,573,613             $        (0.66)
          Diluted Earnings                                   $   (1,043,554)        1,573,613             $        (0.66)
<CAPTION>

                                                                  For the Nine Months Ended September 30, 2000
                                                                  --------------------------------------------


                                                              Income/(Loss)          Shares                 Per-share
                                                              (Numerator)         (Denominator)               Amount
                                                              -----------         -------------               ------

<S>                                                          <C>                    <C>                   <C>
          Basic Earnings                                     $   (1,722,312)        1,688,405             $        (1.02)
          Diluted Earnings                                   $   (1,722,312)        1,688,405             $        (1.02)


<CAPTION>
                                                                     For the Quarter Ended September 30, 2000
                                                                     ----------------------------------------


                                                              Income/(Loss)          Shares                  Per-share
                                                              (Numerator)         (Denominator)               Amount
                                                              -----------         -------------               ------

<S>                                                          <C>                    <C>                   <C>
          Basic Earnings                                     $       70,838         1,682,551             $         0.04
          Diluted Earnings                                   $       70,838         1,708,904             $         0.04


</TABLE>




Fair Value of Financial Instruments
-----------------------------------

Substantially all of the Company's financial instruments are carried at fair
value or amounts approximating fair value. Assets, including accounts
receivable, notes and interest receivable and securities owned are carried at
amounts which approximate fair value. Similarly, liabilities, including accounts
payable and accrued expenses are carried at amounts approximating fair value.

(3)      CAPITAL STOCK
         -------------

Stock Split
-----------
Effective September 26, 2001, the Company completed a 1 for 5 reverse stock
split of its Class A common stock. All share amounts have been retroactively
adjusted to reflect the split.

Common Stock
------------
Effective December 1, 2000, the Company has only one class of securities, Class
A Common Stock.






                                       10

<PAGE>




Treasury Stock
--------------
On July 17, 2000, the Company announced a program to repurchase up to 400,000
shares of its Class A Common Stock through open market purchases and privately
negotiated transactions, if any. During the quarter ended September 30, 2001,
the Company purchased 35,900 shares for $174,685.

Authorization of Preference Stock
---------------------------------
The Company's Articles of Incorporation authorize the issuance of 10,000,000
shares of "blank check" preference stock with such designations, rights and
preferences as may be determined from time to time by the Company's Board of
Directors. The Board of Directors is empowered, without shareholder approval, to
issue preference stock with dividend, liquidation, conversion, voting, or other
rights which could adversely affect the voting or other rights of the holders of
the common stock.

(4) INVESTMENT PORTFOLIO

Investment portfolio balances of as September 30, 2001, are comprised of the
following:
<TABLE>
<CAPTION>
                                                                                                        UNREALIZED
                                                                                                        ----------
                                                                 MARKET           COST            GAINS           LOSSES

<S>                                                           <C>              <C>              <C>             <C>
Mutual fund shares and limited partnership interests          $3,978,896       $4,162,338       $ 41,767        $(225,209)
Marketable Equity Securities                                     541,076          572,984          7,198          (39,106)
Not Readily Marketable Equity securities                         368,449          407,750            900          (40,201)

                                                            -------------------------------------------------------------
Total                                                         $4,888,421       $5,143,072       $ 49,865        $(304,516)
                                                            ==============================================================
</TABLE>





Marketable equity securities at September 30, 2001, consist primarily of bank
stocks, at market value, as follows:
<TABLE>

<S>                                                                                                  <C>
         Traded on National Securities Markets                                                       $    223,062
         Not traded on National Securities Markets, but with
                  readily ascertainable market value                                                      318,014
                                                                                                     ------------

                           Total Marketable Equity Securities                                        $    541,076
                                                                                                     ============
</TABLE>

As of September 30, 2001, the Company had four individual equity security
investments representing 18%, 18%, 13% and 12% of its marketable equity
securities.








                                       11

<PAGE>





(5)  RELATED PARTY TRANSACTIONS
     --------------------------

Operating Expenses
------------------

The Company and ShareholderOnline, Inc., an Ohio corporation that has ceased
operations, were under common management through April 27, 2000. Certain
expenses were paid by the Company and allocated to ShareholderOnline, Inc.,
based upon predetermined percentages as approved by the officers of the
Companies. Operating expenses in the allocation were primarily salaries and
benefits. There were no expenses allocated to ShareholderOnline, Inc., for the
quarter ended September 30, 2001, but $13,870 was allocated for the quarter
ended September 30, 2000.

(6)  INCOME TAXES
     ------------

The Company files a consolidated Federal income tax return. It is the policy of
the Company to allocate the consolidated tax provision to subsidiaries as if
each subsidiary's tax liability or benefit were determined on a separate company
basis. As part of the consolidated group, subsidiaries transfer to the Company
their current Federal tax liability or assets. The provisions for income taxes
for the nine months ended September 30, 2001, and 2000 are composed of the
following:
<TABLE>
<CAPTION>

                                                                                         2001               2000
                                                                                      ---------          ---------

<S>                                                                                   <C>                <C>
          Current income taxes                                                        $    --            $(332,500)
          Deferred income taxes                                                            --             (496,000)
                                                                                      ---------          ---------

          Provision for income taxes
                                                                                      $    --            $(828,500)
                                                                                      =========          =========
</TABLE>

Deferred tax assets and liabilities consist of the following at September 30,
2001, and 2000:

<TABLE>
<CAPTION>
                                                                                        2001                       2000
                                                                                      ---------                 ---------

<S>                                                                                   <C>                       <C>
          Deferred tax benefit of NOL carryforward                                    $ 766,000                 $  86,000
          Deferred tax benefit of stock options and Warrants compensation                74,000                    63,000
          Deferred tax benefit (liabilities) on unrealized gains on securities
          owned                                                                          68,000                   (89,000)
          Valuation allowance
                                                                                       (908,000)                  (60,000)
                                                                                      ---------                 ---------

         Deferred taxes
                                                                                      $      --                 $      --
                                                                                      =========                 =========
</TABLE>


As of December 31, 2000, the Company and its subsidiaries had net operating loss
(NOL) carry forwards for tax purposes of approximately $1,000,000. These NOL's
will expire in 2008 through 2020. Any future changes in control may limit the
availability of NOL carry forwards.









                                       12

<PAGE>




 (7) EMPLOYEE INCENTIVE PLANS
     ------------------------

Incentive Compensation Plan
---------------------------

All full-time executive employees of the Company are eligible to participate in
the Diamond Hill Investment Group Incentive Compensation Plan. The Plan provides
that a bonus fund will be established in an amount equal to 20% of the pre-tax
realized profits of the Company in excess of a 15% pre-tax return on equity. The
amount of the bonus fund is calculated each quarter on a cumulative basis. The
allocation of the bonus fund is to be made by the President of the Company. The
Company did not incur any expense under the Plan for the quarters ended
September 30, 2001 or 2000.


(8)  REGULATORY REQUIREMENTS
     ------------------------

DHS is subject to the uniform net capital rule of the Securities and Exchange
Commission (Rule 15c3-1), which requires that the ratio of "aggregate
indebtedness" to "net capital" not exceed 15 to 1 (as those terms are defined by
the Rule). DHS had net capital of $862,120 as of September 30, 2001, which was
in excess of its required minimum net capital of $100,000. The ratio of
aggregate indebtedness to net capital was 0.06 to 1 as of September 30, 2001.
DHS is also subject to regulations of the District of Columbia and thirty states
in which it is registered as a licensed broker-dealer.

DHCM and DHS are Registered Investment Advisers and subject to regulation by the
SEC pursuant to the Investment Advisors Act of 1940.

(9) CONCENTRATIONS OF CREDIT RISK AND FINANCIAL INSTRUMENTS WITH
   --------------------------------------------------------------
         OFF-BALANCE SHEET RISK
        -----------------------

DHS, under a correspondent agreement with its clearing broker, has agreed to
indemnify the clearing broker from damages or losses resulting from customer
transactions. The Company is, therefore, exposed to off-balance sheet risk of
loss in the event that customers are unable to fulfill contractual obligations.
The Company manages this risk by requiring customers to have sufficient cash in
their account before a buy order is executed and to have the subject securities
in their account before a sell order is executed. The Company has not incurred
any losses from customers unable to fulfill contractual obligations.

DHS previously provided investment management services to an agency of the State
of Ohio. In conjunction with these services DHS agreed to indemnify the agency
against losses resulting from violations of the investment management agreement
entered into with the agency or violations of fiduciary duties under applicable
law.





                                       13

<PAGE>



In the normal course of business, DHS is a market maker for a limited number of
stocks, and quotes bid and ask prices for those stocks. In the event of sudden
price movements, DHS may be required to honor a quote at an undesirable price.
DHS controls this risk by monitoring markets closely and updating quotes as
required and generally limits its quotes to 100 or 200 shares of a given
security.

In the normal course of business, the Company periodically sells securities not
yet purchased (short sales) for its own account and writes options. The
establishment of short positions and option contracts exposes the Company to
off-balance sheet market risks in the event prices change, as the Company may be
obligated to cover such positions at a loss. At September 30, 2001, the Company
had no short security position, had not written any option contracts and did not
own any options. The Company did not experience any credit losses due to the
failure of any counterparties to perform during the quarter ended September 30,
2001. Senior management of the Company is responsible for reviewing trading
positions, exposures, profits and losses, trading strategies and hedging
strategies on a daily basis.

The Company's significant industry concentration, primarily through the
operations of DHS, which arises within its normal course of business activities,
is with financial institutions for bank securities transactions.

(10) SEGMENT INFORMATION
     -------------------

With the change in senior executive management in May of 2000, the Company has
shifted its emphasis from its traditional investment related activities at its
DHS subsidiary, to the investment advisory services of its DHCM subsidiary. In
conjunction with this change in emphasis, the Company redefined its operating
segments effective January 1, 2001. These segments have been designed to aid the
operating decision makers in deciding how to allocate resources and in assessing
performance. Segment information for prior periods has been restated to conform
to the new segments.

Description of the types of services from which each reportable segment derives
-------------------------------------------------------------------------------
its revenues
------------

The Company has three reportable segments: Investment Advisory Services,
Brokerage Services and Corporate Portfolio. The Investment Advisory Services
segment provides investment advisory services to the Diamond Hill Focus Fund,
the Diamond Hill Small Cap Fund, and the Banc Stock Group Fund, mutual funds,
Diamond Hill Investment Partners, L.P., an investment limited partnership, and
offers investment advisory services and accounts to institutional and individual
investors, specializing in domestic securities. The Brokerage Services segment
offers brokerage, investment banking and managed accounts to institutional and
individual investors, specializing in regional and community bank stocks. The
Corporate Portfolio segment is represented by revenue generating investments
unrelated to the other operating segments.

Measurement of segment profit or loss and segment assets
--------------------------------------------------------

















                                       14

<PAGE>



The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on profit or loss from operations before income taxes. The Company focuses
its attention on providing services to external customers.

Factors management used to identify the enterprise's reportable segments
------------------------------------------------------------------------

The Company's reportable segments are primarily defined by legal entities that
specialize in different financial products and services. Investment Advisory
Services are provided by DHCM. Brokerage Services are provided by DHS. The
Corporate Portfolio segment is managed by the Company. These segments are
managed separately because each entity operates in a different regulatory
environment.

Financial information for each reportable segment is shown below. The Company
does not operate, or hold assets, in any foreign country. The Company had a
single account with the State of Ohio that represents 11% of revenues for the
nine months ended September 30, 2001, and 9% for each of the nine months and
quarter ended September 30, 2000.

Financial information for the nine months ended September 30, 2001
------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                          Investment
                                                           Advisory         Brokerage        Corporate
                                                           Services          Services        Portfolio      Combined

Revenue from external customers:
<S>                                                       <C>             <C>             <C>            <C>
      Management fees & commissions                       $   472,527     $   340,887     $      --      $    813,414
      Market making gains and (losses)                           --           139,583            --           139,583

Interest revenue                                                   32           1,059           1,168           2,259
Interest expense                                                 --               493            --               493
Depreciation and amortization                                  30,838          16,237           4,549          51,624
Segment operating income (loss)                            (1,259,091)       (252,526)       (214,855)     (1,726,472)
Segment assets                                              4,565,703       1,184,048       1,817,709       7,567,460
Expenditures for segment assets                                30,800          28,995          47,902         107,697

Reconciliation to Consolidated Financial Statements
      Operating income (loss) for reportable segments                                                    $ (1,726,472)
      Other corporate expenses                                                                               (103,351)
                                                                                                         ------------
      Operating income (loss) - Consolidated                                                               (1,829,823)
      Other revenue and expenses                                                                              722,199
                                                                                                         ------------
      Income (loss) before taxes - Consolidated                                                          $ (1,107,624)
                                                                                                         ============


</TABLE>





                                       15
<PAGE>
Financial information for the quarter ended September 30, 2001
--------------------------------------------------------------
<TABLE>
<CAPTION>

                                                     Investment
                                                      Advisory        Brokerage      Corporate
                                                      Services        Services       Portfolio         Combined

<S>                                                      <C>              <C>             <C>            <C>
Revenue from external customers:
          Management fees & commissions             $   144,468          85,568                     $   230,036
          Market making gains and (losses)                               47,606                          47,606

Interest revenue                                             17             190                             207
Interest expense                                                             86                              86
Depreciation and amortization                            13,235           6,749           1,997          21,981
Segment operating income (loss)                        (428,079)       (131,505)        (94,407)       (653,991)
Segment assets                                        4,565,703       1,184,048       1,817,709       7,567,460
Expenditures for segment assets                         (11,779)          2,432          (9,347)

Reconciliation to Consolidated Financial Statements
          Operating income (loss) for reportable segments                                              (653,991)
          Other corporate expenses                                                                      (38,790)
                                                                                                    -----------

          Operating income (loss) - Consolidated                                                       (692,781)
          Other revenue and expenses                                                                   (350,773)
                                                                                                   ------------
          Income (loss) before taxes - Consolidated                                                 $(1,043,554)
                                                                                                   =============
</TABLE>

Financial information for the nine months ended September 30, 2000
------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                       Investment
                                                        Advisory       Brokerage       Corporate
                                                        Services        Services       Portfolio         Combined

<S>                                                 <C>             <C>             <C>            <C>
Revenue from external customers:
          Management fees & commissions             $   287,133     $   831,821     $      --      $  1,118,954
          Market making gains and (losses)                 --          (255,043)           --          (255,043)
          Investment Banking                               --            32,982            --            32,982

Interest revenue                                           --            30,511          13,521          44,032
Interest expense                                           --             6,168           4,454          10,622
Depreciation and amortization                            12,200         336,821          21,276         370,297
Segment operating income (loss)                        (385,899)       (748,777)       (568,986)     (1,703,662)
Segment assets                                          965,804       3,016,975       7,649,547      11,632,326
Expenditures for segment assets                           1,516           3,033          10,083          14,632

Reconciliation to Consolidated Financial Statements
          Operating income (loss) for reportable segments                                          $ (1,703,662)
          Other revenue and expenses                                                                   (709,060)
                                                                                                   ------------
          Income (loss) before taxes - Consolidated                                                $ (2,412,722)
                                                                                                   ============
</TABLE>












                                       16


<PAGE>






Financial information for the quarter ended September 30, 2000
--------------------------------------------------------------
<TABLE>
<CAPTION>

                                                      Investment
                                                       Advisory      Brokerage      Corporate
                                                       Services       Services      Portfolio       Combined

<S>                                                 <C>             <C>             <C>            <C>
Revenue from external customers:
          Management fees & commissions             $   103,847     $    91,415     $      --      $    195,262
          Market making gains and (losses)                 --           (59,258)           --           (59,258)
          Investment Banking                               --              --              --

Interest revenue                                           --             6,443           9,800          16,243
Interest expense                                           --               306              47             353
Depreciation and amortization                            12,200          12,457          (8,878)         15,779
Segment operating income (loss)                        (288,697)        (27,401)         22,398        (293,700)
Segment assets                                          965,804       3,016,975       7,649,547      11,632,326
Expenditures for segment assets                            --              --               762             762

Reconciliation to Consolidated Financial Statements
          Operating income (loss) for reportable segments                                          $   (293,700)
          Other revenue and expenses                                                                   (117,462)
                                                                                                   ------------
          Income (loss) before taxes - Consolidated                                                $   (411,162)
                                                                                                   ============
</TABLE>





                                       17

<PAGE>




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

General
-------

With the change in executive management in May of 2000, the Company has shifted
its emphasis from its traditional investment related activities through its DHS
subsidiary, to the investment advisory services of its DHCM subsidiary. DHCM
manages portfolios of stocks representing interests in entities operating in
various economic sectors, as opposed to a portfolio of bank stocks only.
Staffing and costs associated with this shift and the various marketing
initiatives at DHCM are expected to negatively impact the Company through
calendar year 2002. Management believes that this process is necessary in order
to achieve a critical threshold of assets under management to support operations
in the future. However, there can be no assurance that the Company will be able
to achieve the critical threshold of assets under management to support future
operations.

Forward-looking Statements
--------------------------

Throughout this discussion, the Company may make forward-looking statements
relating to such matters as anticipated operating results, prospects for
achieving the critical threshold of assets under management, technological
developments, economic trends (including interest rates and market volatility),
expected transactions and acquisitions and similar matters. While the Company
believes that the assumptions underlying its forward-looking statements are
reasonable, any of the assumptions could prove to be inaccurate, and
accordingly, the actual results and experiences of the Company could differ
materially from the anticipated results or other expectations expressed by the
Company in its forward-looking statements. Factors that could cause such actual
results or experiences to differ from results discussed in the forward-looking
statements include, but are not limited to: economic conditions; volatility and
direction of interest rates or market values of trading securities; governmental
legislation and regulation; and other risks identified, from time-to-time in the
Company's other public documents on file with the SEC.

Nine Months Ended September 30, 2001, Compared to the Nine Months Ended
-----------------------------------------------------------------------
September 30, 2000
------------------

Operating revenues for the nine months ended September 30, 2001, increased to
$952,997 compared to $896,893 for the nine months ended September 30, 2000, an
increase of 6%. This decrease results primarily from decreases in revenue from
management fees and commissions.

The Company generated management fees and commission revenue of $813,414 for the
nine months ended September 30, 2001, compared to $1,118,954 for the nine months
ended September 30, 2000, a decrease of 27%. This reduction is due primarily to
reduced commissions revenue. However, due to changes in personnel and other
shifts in emphasis, certain clients terminated their accounts effective June 30,
2001. These accounts included individuals as well








                                       18

<PAGE>



as an account with the State of Ohio having assets under management that
produced approximately $151,000 in management fees in the six months ending June
30, 2001. In conjunction with the shift in emphasis to the investment advisory
services of DHCM, a program has been initiated to attempt to gather new assets
under management at the DHCM level. However, there can be no assurance that the
Company will be able to achieve the critical threshold of assets under
management at DHCM to support future operations.

Revenues from market making gains and losses were gains of $139,583 for the nine
months ended September 30, 2001, compared to losses of $255,043 for the nine
months ended September 30, 2000. These gains result primarily from increases in
market values of the securities. Management is unable to predict how future
fluctuations in market values will impact the performance of the Company's
market making portfolio.

There is no revenue from investment banking for the nine months ended September
30, 2001, compared to $32,982 for the nine months ended September 30, 2000. The
Company has not engaged in any investment banking transactions since November
1999. There are no investment banking engagements in progress and none are being
pursued.

Operating expenses for the nine months ended September 30, 2001, increased to
$2,782,820 compared to $2,600,555 for the nine months ended September 30, 2000,
an increase of 7%. Salaries, benefits, and payroll taxes increased to $1,330,427
for the nine months ended September 30, 2001 compared to $957,295 for the nine
months ended September 30, 2000, an increase of 39%. This increase reflects
personnel hired to position DHCM for the anticipated growth of assets under its
management. Brokers' commission expenses decreased to $122,265 for the nine
months ended September 30, 2001, compared to $604,631 for the nine months ended
September 30, 2000, a decrease of 80%. In conjunction with the Company's shift
in emphasis from its traditional investment related activities through DHS, to
the investment advisory services of DHCM, the Company's former retail broker
representatives are now employed by an unaffiliated broker-dealer. This
transition was completed in early December 2000, primarily causing the reduction
of brokers' commission expense. Professional fees increased to $533,314 for the
nine months ended September 30, 2001 compared to $348,542 for the nine months
ended September 30, 2000, an increase of 53%. This increase results primarily
from expenses related to the formation and/or sponsoring of the Diamond Hill
Focus Fund (symbol DIAMX), the Diamond Hill Small Cap Fund (symbol DHSCX), the
Diamond Hill Large Cap Fund (symbol DHLCX), the Diamond Hill Investment
Partners, L.P., and other general consulting fees related to changes in the
emphasis of the Company. General and administrative expenses increased to
$796,814 for the nine months ended September 30, 2001 compared to $690,087 for
the nine months ended September 30, 2000, an increase of 15%. This decrease
results primarily from reductions of investment banking expenses, goodwill
amortization and travel costs.

Other revenue and expenses for the nine months ended September 30, 2001,
increased to net revenue of $722,199 compared to net expenses of $709,060 for
the nine months ended September 30, 2000, an increase of 202%. This increase
results primarily from increases in revenue from trading gains and losses and a
significant write off of goodwill in the prior year. Revenues from trading gains
and losses were gains of $546,937 for the nine months ended








                                       19

<PAGE>



September 30, 2001, compared to losses of $687,380 for the nine months ended
September 30, 2000, an increase of 180%. These trading gains result primarily
from increases in market values of the securities. Management is unable to
predict how future fluctuations in market values will impact the performance of
the Company's trading portfolios.

Because of the change in the executive management of the Company, the business
philosophies and strategies are changing. Management expects this process to
negatively impact operating results over the remainder of this year and it is
most likely that the Company will not be profitable in 2002. Management believes
this process will enable the Company to achieve a critical threshold of assets
under management at the DHCM level to support successful operations in the
future.

Quarter Ended September 30, 2001, Compared to the Quarter Ended September 30,
-----------------------------------------------------------------------------
2000
----

Operating revenues for the quarter ended September 30, 2001, increased to
$277,642 compared to $136,004 for the quarter ended September 30, 2000, an
increase of 104%. This results primarily from increases in revenue from
management fees and market making gains.

The Company generated management fees and commission revenue of $230,036 for the
quarter ended September 30, 2001, compared to $195,262 for the quarter ended
September 30, 2000, an increase of 18%. This is due primarily to increase
management fee revenue. In conjunction with the shift in emphasis to the
investment advisory services of DHCM, a program has been initiated to attempt to
gather new assets under management at the DHCM level. However, there can be no
assurance that the Company will be able to achieve the critical threshold of
assets under management at DHCM to support future operations.

Revenues from market making gains and losses were gains of $47,606 for the
quarter ended September 30, 2001, compared to losses of $59,258 for the quarter
ended September 30, 2000, an increase of 180%. These gains result primarily from
increases in market values of the securities. Management is unable to predict
how future fluctuations in market values will impact the performance of the
Company's market making portfolio.

Operating expenses for the quarter ended September 30, 2001, increased to
$970,423 compared to $429,704 for the quarter ended September 30, 2000, an
increase of 126%. Salaries, benefits, and payroll taxes increased to $428,290
for the quarter ended September 30, 2001, compared to $315,556 for the quarter
ended September 30, 2000, an increase of 36%. This increase reflects personnel
hired to position DHCM for the anticipated growth of assets under its
management. Brokers' commission expenses decreased to $78,757 for the quarter
ended September 30, 2001, compared to $148,812 for the quarter ended September
30, 2000, a decrease of 47%. In conjunction with the Company's shift in emphasis
from its traditional investment related activities through DHS to the investment
advisory services of DHCM, the Company's former retail broker representatives
are now employed by an unaffiliated broker-dealer. This transaction was
completed in early December 2000, primarily causing the reduction of brokers'
commission expense. Professional fees increased to $199,332 for the quarter
ended September 30, 2001 compared to $140,778 for the quarter ended September
30, 2000, an increase of 42%. This







                                       20

<PAGE>

increase results primarily from expenses related to the formation and/or
sponsoring of the Diamond Hill Focus Fund (symbol DIAMX), the Diamond Hill Small
Cap Fund (symbol DHSCX), the Diamond Hill Large Cap Fund (symbol DHLCX), the
Diamond Hill Investment Partners, L.P., and other general consulting fees
related to changes in the emphasis of the Company. General and administrative
expenses increased to $264,044 for the quarter ended September 30, 2001,
compared to $(175,442) for the quarter ended September 30, 2000, an increase of
251%. This decrease is because in the quarter ended September 30, 2000 the
company reversed a number of primarily tax-related over accruals from previous
years based on determinations that the amounts would not be payable.

Other revenue and expenses for the quarter ended September 30, 2001, decreased
to net expense of $350,773 compared to net expenses of $117,462 for the quarter
ended September 30, 2000, an increase of 199%. This results primarily from
decreases in revenue from trading gains and losses and a significant write off
of goodwill in the prior year. Revenues from trading gains and losses were
losses of $403,477 for the quarter ended September 30, 2001, compared to gains
of $69,039 for the quarter ended September 30, 2000, a decrease of 684%. These
trading losses result primarily from decreases in market values of financial
services sector securities. Management is unable to predict how future
fluctuations in market values will impact the performance of the Company's
trading portfolios.


Liquidity and Capital Resources
-------------------------------

Approximately 8% of the value of the Company's trading portfolio is comprised of
small capitalization stocks, which are thinly traded, and there can be no
assurance that active markets will develop. The failure of such markets to
develop could negatively affect the Company's operations and financial
condition. Approximately 92% of the Company's trading portfolio is readily
marketable. Investments in securities traded on national securities markets and
securities not traded on national securities markets, but with readily
ascertainable market values are valued at market value. Other securities for
which market quotations are not readily available, due to infrequency of
transactions, are valued at fair value as determined in good faith by management
of the Company. While management employs objective criteria to ascertain these
values, there is no independent benchmark by which the values assigned by
management can be judged.

As of September 30, 2001, the Company had working capital of approximately
$6,771,000. Working capital includes cash, securities owned and accounts and
notes receivable, net of all liabilities. The Company has no long term debt.

DHS, under a correspondent agreement with its clearing broker, has agreed to
indemnify the clearing broker from damages or losses resulting from customer
transactions. The Company is, therefore, exposed to off-balance sheet risk of
loss in the event that customers are unable to fulfill contractual obligations.
The Company manages this risk by requiring customers to have sufficient cash in
their account before a buy order is executed and to have the subject securities
in their account before a sell order is executed. The Company has not incurred
any losses from customers unable to fulfill contractual obligations.








                                       21

<PAGE>



DHS previously provided investment management services to an agency of the State
of Ohio. In conjunction with these services DHS agreed to indemnify the agency
against losses resulting from violations of the investment management agreement
entered into with the agency or violations of fiduciary duties under applicable
law.

In the normal course of business, DHS is a market maker for a limited number of
community bank stocks, and quotes bid and ask prices for those stocks. In the
event of sudden price movements, DHS may be required to honor a quote at an
undesirable price. DHS controls this risk by monitoring markets closely and
updating quotes as required and generally limits its quotes to 100 or 200 shares
of a given security.

In the normal course of business, the Company periodically sells securities not
yet purchased (short sales) for its own account and writes options. The
establishment of short positions and option contracts exposes the Company to
off-balance sheet market risks in the event prices change, as the Company may be
obligated to cover such positions at a loss. At September 30, 2001, the Company
had no short security positions and had not written any option contracts and did
not own any options. The Company did not experience any credit losses due to the
failure of any counterparties to perform during the nine months ended September
30, 2001. Senior management of the Company is responsible for reviewing trading
positions, exposures, profits and losses, trading strategies and hedging
strategies on a daily basis.

The Company's significant industry concentration, primarily through the
operations of DHS, which arises within its normal course of business activities,
is with financial institutions for bank securities transactions.

The net cash balance decreased $1,644,278 during the nine months ended September
30, 2001. Net cash used by operating activities was $320,133.

Investing activities used $107,697 of cash during the nine months ended
September 30, 2001, primarily for the purchase of computer equipment.

Financing activities used $1,216,448 of cash during the nine months ended
September 30, 2001, primarily to purchase Company stock under a stock buy-back
program.

The operations of the Company are funded primarily by investment management fees
and revenue from the trading portfolio. Management believes that the Company's
existing resources, including available cash and cash provided by operating
activities, will be sufficient to satisfy its working capital requirements in
the foreseeable future. However, no assurance can be given that additional funds
will not be required. To the extent that returns on investments are less than
anticipated, or expenses are greater than anticipated, the Company may be
required to reduce its activities, liquidate inventory or seek additional
financing. Further, this additional financing may not be available on acceptable
terms, if at all. No significant capital expenditures are expected in the
foreseeable future.




                                       22

<PAGE>




Impact of Inflation and Other Factors
-------------------------------------

The Company's operations have not been significantly affected by inflation. The
Company's management fees are dependent on the amount of assets under management
and the negotiation of rates within a very competitive environment. The amount
of assets under management is primarily influenced by investment performance,
customer service and the success of marketing efforts. The Company's trading
portfolios of equity securities are carried at current market values, and
profitability is affected by general economic and market conditions, the volume
of securities trading, and fluctuations in interest rates.

The Company's business is also subject to government regulation and changes in
legal, accounting, tax and other compliance requirements. Changes in these
regulations may have a significant effect on the Company's operations.

The Revenue Reconciliation Act of 1993 includes Mark-to-Market Rules which
essentially require securities dealers to include unrealized gains on their
trading portfolios, in taxable income for income tax purposes. Accordingly,
these Rules have a materially adverse impact on the Company's cash flow because
tax payments have been greater than would otherwise be required.









                                       23

<PAGE>



              DIAMOND HILL INVESTMENT GROUP, INC. AND SUBSIDIARIES

                                     PART II

                                OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

                  a)       None.

                  b)       No reports on Form 8-K were filed during the quarter
                           for which this report is filed.


















































                                       24

<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.

                       DIAMOND HILL INVESTMENT GROUP, INC.
                       -----------------------------------
                                              (Registrant)
                       -----------------------------------


Date     November 2, 2001                 /S/ Roderick H. Dillon, Jr.
         ----------------                 -------------------------------------
                                                   Roderick H. Dillon, Jr.
                                                   President, and Chief
                                                   Executive Officer

Date     November 2, 2001                 /S/ Jeffrey C. Barton
         ----------------                 -------------------------------------
                                                   Jeffrey C. Barton
                                                   Chief Financial Officer
                                                   (chief financial and chief
                                                   accounting officer)











                                       25