U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------
                                   FORM 10-KSB
                              --------------------
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001
                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                        Commission File Number 005-55641
                         UNITED FINANCIAL HOLDINGS, INC.
                 (Name of Small Business Issuer in its Charter)
        Florida                                             59-2156002
 (State or Other Jurisdiction of                          (IRS Employer
  Incorporation or Organization)                       Identification No.)

    333 Third Avenue North, Suite 200                        33701-3346
         St. Petersburg, Florida                            (Zip Code)
 (Address of Principal Executive Offices)
                                 (727) 898-2265
                (Issuer's Telephone Number, Including Area Code)
      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                                      Name of Each Exchange
        Title of each class                           on Which Registered
             None                                            None

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                     Common Stock, par value $.01 per share

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendments to this Form 10-KSB. [ ]

The issuer's gross revenues for its most recent fiscal year was $28,176,193.

The  aggregate  market  value  of  the  Common  Stock  of  the  issuer  held  by
non-affiliates  as of February  22,  2002,  was  approximately  $20,885,755,  as
computed by reference to the closing  price of the Common Stock as quoted on the
Nasdaq National Market System on such date. As of February 22, 2002,  there were
4,440,421 issued and outstanding shares of Common Stock of the issuer.

Transitional Small Business Disclosure Format (check one): Yes ___ No   X

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the  definitive  Proxy  Statement  of the issuer for the 2002 Annual
Meeting of Shareholders to be filed with the Securities and Exchange  Commission
no later  than 120 days  after  the end of the  issuer's  2001  fiscal  year are
incorporated by reference into Part III of this Form 10-KSB.



                         UNITED FINANCIAL HOLDINGS, INC.

                                   FORM 10-KSB

                       Fiscal Year Ended December 31, 2001


  Item Number in
  Form 10-KSB                                                           Page
--------------------------------------------------------------------------------
                             PART I

    1.  Description of Business                                            1

    2.  Description of Property                                           16

    3.  Legal Proceedings                                                 16

    4.  Submission of Matters to a Vote of Security-Holders               16

                                            PART II

    5.  Market for Common Equity and Related Stockholder Matters          17

    6.  Management's Discussion and Analysis or Plan of Operation         18

    7.  Financial Statements                                              35

    8.  Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure                                      35

                           PART III

    9.  Directors, Executive Officers, Promoters and Control Persons
            Compliance with Section 16(a) of the Exchange Act             35

   10.  Executive Compensation                                            35

   11.  Security Ownership of Certain Beneficial
            Owners and Management                                         35

   12.  Certain Relationships and Related Transactions                    36

   13.  Exhibits and Reports on Form 8-K                                  36
















                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

     United  Financial  Holdings,  Inc.  (the  "Company")  is a registered  bank
holding company formed in 1982, the principal subsidiary of which is United Bank
and  Trust   Company  (the  "Bank"),   a   Florida-chartered   commercial   bank
headquartered in St. Petersburg,  Florida. The Bank was founded in 1979 and is a
community-oriented, full service commercial bank with six branch offices serving
Pinellas County, Florida. The Bank provides a broad range of traditional banking
services with emphasis on commercial  loans and loans under the lending  program
of the U.S. Small Business  Administration (the "SBA"). The Company's operations
include  three  business  segments:  commercial  banking,  trust  services,  and
investment   advisory   services,   which  constituted   92.9%,  2.6%  and  4.5%
respectively, of the Company's 2001 pre-tax income before corporate overhead. At
December 31, 2001, the Company had consolidated  total assets of $344.2 million,
net loans of $242.4 million, deposits of $282.6 million and stockholders' equity
of $25.9 million.

     The Bank is a  community-oriented  full service,  commercial bank currently
operating from six branch offices serving  Pinellas County,  Florida.  It offers
consumer and  commercial  loans,  ATM cards,  credit cards,  and a full range of
deposit account types,  including  demand deposits,  NOW accounts,  money market
accounts, savings accounts, and certificates of deposit.  Additionally, the Bank
offers  Internet  banking and a bill payment  service.  The primary focus of the
Bank's  commercial  lending  activities  is on loans to small and  medium  sized
businesses and  professional  firms.  The Bank's  commercial loans include loans
secured by real  estate or other  assets,  loans  made  under the SBA's  lending
program  and  secured  and  unsecured  loans to small  businesses.  The  Company
believes the Bank is the largest  originator,  among  similarly  sized financial
institutions, of SBA loans in the State of Florida (measured by dollar volume of
loans originated).

     The Company's other operating  subsidiaries are EPW Investment  Management,
Inc., formerly Eickhoff, Pieper, & Willoughby, Inc., an investment advisory firm
registered  under the Investment  Advisers Act of 1940 ("EPW")  headquartered in
Tampa, Florida, with an office in Jacksonville, Florida; United Trust Company, a
Florida-chartered  trust company  ("United  Trust")  registered with the Florida
Department of Banking and Finance and located in St.  Petersburg,  Florida;  and
United Bank of the Gulf Coast ("UBGC", formerly known as First Security Bank), a
Florida-chartered  commercial bank with one office located in Sarasota, Florida.
UBGC was started by a group of local  investors in February 1999 and acquired by
the  Company on April 1, 2001.  EPW offers  investment  management  services  to
corporate,  municipal and high net worth individual clients throughout the State
of Florida.  As of December  31,  2001,  EPW had $318.5  million in assets under
management.   United  Trust  is  a  wholesale   provider  of  data   processing,
administrative   and   accounting   support  and  asset   custody   services  to
professionals  holding assets in trust (primarily  legal and accounting  firms).
United Trust also provides  retail trust and investment  management  services to
individual  and  corporate  clients.  As of December 31, 2001,  United Trust had
$315.9 million in assets under trust.

     The  Company's  other  non-operating  subsidiaries  are UFH Capital Trust I
("UFHCT"),  a Delaware  statutory business trust formed in December 1998 for the
exclusive  purpose of issuing $6.75 million of Trust Preferred  securities;  UFH

                                     - 1 -

Statutory  Trust II  ("UFHSTII"),  a  Connecticut  statutory  trust  created  in
November  2001 for the sole  purpose of issuing  $10  million of  floating  rate
pooled  trust  preferred   securities;   and  UFMB  Corp.  ("UFMB"),  a  Florida
corporation  wholly  owned by the  Company for the  purposes of holding  certain
notes, investments and other assets totaling $2.9 million at December 31, 2001.

BACKGROUND

     In 1986 a group of  investors,  headed  by Neil W.  Savage,  the  Company's
President  and  Chief  Executive  Officer  and the  Bank's  Chairman  and  Chief
Executive  Officer,  acquired  control of the  Company,  then known as  Pinellas
Bancshares  Corporation.  The Company's  name was changed to its present name in
1995 and the Bank's name was changed from United Bank of Pinellas to its present
name that same year.

     In September 1995 the Company  purchased  FSC, a trust data  processing and
accounting service for  professionals,  and merged this entity into the Company.
In January  1996,  the Company  acquired  EPW. The Company  formed  United Trust
during the fourth  quarter of 1997 and effective  December 31, 1997  transferred
all of the Bank's trust assets to United Trust.

BUSINESS STRATEGY

     The principal  elements of the Company's  business strategy are to increase
its  market  share in its  existing  business  segments  and to seek  out  niche
business  segments  in which the Company  can  compete  effectively  in order to
create new sources of  non-interest  income and  increase  traditional  interest
income from new lending  opportunities.  The Company has sought to implement its
strategy of  increasing  its market share in its existing  business  segments by
expanding the Bank's market coverage  through de novo branching,  increasing the
Bank's emphasis on originating loans secured by real estate and other assets for
its own portfolio, pursuing small business secured and unsecured lending for its
own portfolio,  and continuing to originate a high volume of SBA loans, both for
its own portfolio and for sale in the secondary market. A primary element of the
Company's  business strategy as a community  banking  organization is to seek to
provide  customers with a level of personalized  service exceeding that provided
by its competitors, including the local banking operations of large regional and
national banking companies.

     The Company has sought to add new sources of  non-interest  income  through
the  creation of United  Trust,  which  receives  fees for the  wholesale  trust
services  it offers  to legal and  accounting  firms  and the  retail  trust and
investment  management services it offers to other clients,  and the acquisition
of EPW, which  generates fee income from the investment  management  services it
offers  to  corporate,  municipal  and high net  worth  individual  clients.  By
expanding the range of trust and investment  management  services it offers, the
Company  seeks to  differentiate  itself from other  similarly  sized  community
banking  organizations  operating in the Company's market.  While pursuing these
strategies,  management  remains committed to improving asset quality,  managing
interest rate risk,  enhancing  profitability  and  maintaining  its status as a
well-capitalized institution for regulatory capital purposes.

     As a result of this  business  strategy,  the  Company's  total assets have
increased  from  approximately  $122.7  million at  December  31, 1996 to $344.2
million at December 31, 2001. The Company's  consolidated net revenues increased
from $10.7 million for the year ended December 31, 1996 to $17.7 million for the
year ended  December 31, 2001.  During this period of asset and revenue  growth,
the Company's net income increased from $1.5 million for the year ended December
                                     - 2 -

31, 1996 to $3.2 million for the year ended December 31, 2001.

     The Company intends to continue  selectively  adding branches in its market
area,  and to that end  completed  its  purchase  and opening of a new branch in
November 2000.  The Company's  current goal is to open one new branch each year.
Accordingly,  in the future, the Company may consider strategic expansion though
the acquisition of other banks or bank branches or by de novo branching. Similar
to the Company's previous efforts that resulted in it establishing  United Trust
and  acquiring  EPW,  the  Company  may  consider  from  time to time  expansion
opportunities  into  other  business  lines  that  might  add to  the  Company's
non-interest  income and the acquisition or development of other businesses that
the Company considers  complementary to its existing business.  For example,  in
March  1999,  the  Company  acquired a 5% equity  interest  in United  Insurance
Holding, LC, a property and casualty insurance company, and in 2000 it increased
its minority  investment in that company to approximately 16%. In addition,  the
Company completed the acquisition of UBGC in April 2001. The acquisition of this
commercial bank allows the Company to provide banking and other services outside
of  Pinellas  County.  From  time to time,  the  Company  may  commence  similar
exploratory  efforts to evaluate the  possibility  of acquiring or  establishing
similar or additional lines of business.

MARKET AREA

     Currently,  the Bank has six offices located in Pinellas  County,  Florida,
which is the Bank's primary  market area. The population of Pinellas  County was
reported to be 921,000 at the 2000 census.  This  compares  with a population of
852,000 at the 1990 census and 729,000 at the 1980 census.  Pinellas  County has
been a retirement and tourism  destination  for many years,  and over 22% of its
population is over 65 years of age, compared with a state-wide average of 18%.

     According to information  published by the Florida Bankers Association,  as
of September 30, 2001,  Pinellas County was the fourth largest county in Florida
in terms of bank and thrift deposits,  with total deposits of $13.9 billion,  or
6.29% of the state's total deposits.  There is a significant seasonal population
increase during the months of November to April of each year; seasonal residents
are not included in the cited population  statistics.  The Company believes that
while the  population  of  Pinellas  County will  continue to grow,  the rate of
growth is likely to be lower  than the  population  growth  rate of the State of
Florida as a whole,  and is likely to slow due to the nature of the market area.
As a peninsula surrounded on the south, east and west by water,  Pinellas County
has limited room for future  development.  The local  economy is dependent  upon
service industries,  manufacturing, tourism, and medical facilities as its major
sources of employment and commerce.

     United Trust's primary market for retail business is also Pinellas  County.
Its  wholesale  services  are  marketed  more  widely  to the  Tampa  Bay  area,
consisting of Pinellas,  Hillsborough,  Pasco and Manatee Counties.  EPW markets
its services to high net worth  individuals  and to commercial and  governmental
clients  throughout  the State of Florida and  secondarily  in the  Southeastern
United States.  UBGC's primary market area is currently  Sarasota  County,  with
future plans to expand into Manatee County.

     Pinellas  County is a highly  competitive  market for financial,  trust and
investment  services.  The  Bank  faces  competition  for  deposits  from  other
commercial  banks,  thrift  institutions,  money market funds and credit unions.
Competition  for  loans of the  types  originated  by the  Bank is also  strong.
Management  believes that Pinellas County is considered an attractive  market by

                                     - 3 -

financial  institutions  seeking to obtain  deposits,  as  evidenced  by the 286
offices of commercial banks and thrift institutions  existing in Pinellas County
at September 30, 2001.

OPERATING STRATEGY

     Management  believes that the consolidation of the banking industry and the
emergence  of large  regional and national  bank holding  companies  has created
opportunities  for  locally-owned   and  operated   financial   institutions  to
effectively  compete for  customers who desire a level of  personalized  banking
services that the large banking organizations may not be able to offer. The Bank
was organized as a community  financial  institution owned and managed by people
who are actively  involved in the Bank's local market area and  committed to the
area's economic growth and development. With local ownership and management, the
Company  believes  that the Bank can be more  responsive to the banking needs of
the community it serves and can tailor its services to meet its customers' needs
rather than  providing  the  standardized  services  that  larger  bank  holding
companies tend to offer.

     Local ownership and operation  allows the Bank faster,  more responsive and
flexible decision-making which may not be available at the branch offices of the
large bank holding  companies  that  constitute  the  majority of the  financial
institution offices located in the Bank's market area.

     The principal  business of the Bank is to attract deposits from the general
public  and  to  invest  those  funds  in  various  types  of  loans  and  other
interest-earning   assets.   The  Bank's  earnings  depend  primarily  upon  the
difference  between (i) the interest  and fees  received by the Bank from loans,
the securities held in its investment portfolio and other investments;  and (ii)
expenses  incurred by the Bank in connection  with  obtaining  funds for lending
(including interest paid on deposits and other borrowings) and expenses relating
to day-to-day operations.

     The  Bank's  customers  are  primarily   individuals   (including  seasonal
residents),   professionals  and  small  and  medium  size  businesses,  located
predominantly  in  Pinellas  County,  Florida.  The Bank  seeks to  develop  new
business  through  an ongoing  program of  personal  calls on both  present  and
potential customers.  As a local independent bank, the Bank utilizes traditional
local  advertising  media as well as direct mailings,  telephone  contacts,  and
brochures to promote the Bank and develop loans and deposits.  In addition,  the
Bank's  directors all have worked or lived in or near the Bank's market area for
a number  of  years,  contributing  to the  Bank's  image as a  locally-oriented
independent institution, which management believes is an important factor to its
targeted customer base.

SOURCES OF FUNDS

     The  primary  source of funds for  lending,  investment  and other  general
business  purposes  is  deposit  accounts.  Other  sources  of  funds  are  loan
repayments,  proceeds  from the sale of loans  and  investment  securities,  and
borrowings.  The Bank expects that loan repayments  will be a relatively  stable
source  of  funds,  while  levels  of  deposits  maintained  at the Bank will be
significantly  influenced by general interest rate and money market  conditions.
Generally,   the  Company  may  use  short-term  borrowings  to  compensate  for
reductions in sources of funds normally available,  while longer term borrowings
may be used to support expanded lending activities. Management believes that the
Company's  funding  requirements  can  be met  through  retail  deposits  in the

                                     - 4 -

Company's  local  market  area  without  reliance  on  brokered  deposits.   For
additional discussion of asset and liability management policies and strategies,
see "Liquidity and Asset/Liability Management."

     As of December 31, 2001,  the scheduled  maturities of deposits of $100,000
or more were as follows (dollars in thousands):

        Three months or less................................ $      19,659
        Over three through six months.......................         9,672
        Over six through twelve months......................        14,781
        Over twelve months..................................         5,960
                                                             -------------
                                                             $      50,072
                                                             =============

     The Bank offers a full range of deposit  services,  including  checking and
other transaction  accounts,  savings accounts and time deposits.  The following
table  sets  forth the  principal  types of  deposit  accounts  offered  and the
aggregate amounts of such accounts at December 31, 2001 (dollars in thousands):

                                        Weighted                       Percent
                                         Average                      of Total
                                      Interest Rate     Amount        Deposits
                                      -------------  ------------    ----------
   Non-interest bearing............         0.00%    $     55,994         19.8%
   NOW and Money Market accounts...         1.51           93,690         33.2
   Savings.........................         1.00            6,316          2.2
   Time deposits with original
      maturities of:
      One year or less.............         4.46          107,105         37.9
      Over 1 year through 5 years..         5.08           19,462          6.9
                                                     ------------    ----------
         Total time deposits.......         4.56          126,567         44.8
                                                     ------------    ---------
         Total deposits............         2.56%    $    282,567        100.0%
                                                     ============    =========

     At December 31, 2001, scheduled maturities of time deposits were as follows
(dollars in thousands):

     Period Ended December 31,                                    Percent of
                                                    Time             Time
                                                  Deposits         Deposits
                                               --------------  -------------
           2002..............................  $      107,105          84.6%
           2003..............................          12,032            9.5
           2004..............................           2,493            2.0
           2005..............................           1,582            1.2
           2006..............................           3,355            2.7
                                               --------------  -------------
             Total time deposits.............  $      126,567          100.0%
                                               ==============  =============

LENDING ACTIVITIES

Overview

     The primary  source of income  generated by the Bank is interest  earned on
                                     - 5 -

loans held in the Bank's loan portfolio.  The Bank's lending  activities include
commercial,  real estate and consumer  loans.  During 2001, the Bank's net loans
increased $60.3 million.

Commercial Loans

     The Bank offers  commercial  loans for working capital  purposes,  business
expansion,  seasonal needs,  acquisition of equipment, and other business needs.
Collateral  pledged  to secure  these  loans  may  include  equipment,  accounts
receivable,  or other assets.  The Bank often  requires  personal  guarantees of
these loans. SBA Loans

     The SBA lending  program was  established by Congress in 1953 to assist new
and established  small  businesses in obtaining  necessary  capital.  Under this
program,  the SBA  guarantees  up to 90% of the  principal  balance of the loan,
subject  to a maximum  guarantee  per loan of  $1,000,000,  thereby  removing  a
portion of the credit risk to the lending  financial  institution  and generally
enabling  lenders to offer loans under this program at more attractive  interest
rates for borrowers than other available financing.  The SBA loans originated by
the  Company  typically  have  SBA  guarantees  for 60% to 90% of the  principal
balance of the loan.  The  existence  of a secondary  market for the  guaranteed
portion of the SBA loans provides the Bank an opportunity to sell the guaranteed
portion  of the loans and  obtain  additional  liquidity  and  income.  The Bank
typically  services such loans and receives  servicing fees with respect to such
loans.

     The only loans sold by the Bank during 2001, 2000, and 1999 were SBA loans.
When  the Bank  sells an SBA loan and  retains  the  servicing  of the  loan,  a
servicing  asset is recorded.  The book value of such assets,  which the Company
believes approximates the fair value of such assets, at December 31, 2001, 2000,
and 1999 was $528  thousand,  $392 thousand,  and $408  thousand,  respectively.
Amortization  expense  relating to such  servicing  assets of $70 thousand,  $43
thousand and $25 thousand was recorded for 2001,  2000, and 1999,  respectively.
The Company periodically  reviews these assets for impairment.  No valuation for
impairment of these assets was deemed necessary for the periods presented.

     At December 31,  2001,  the Bank had $10.8  million of SBA loans,  of which
approximately  17.6%  was  guaranteed  by the SBA.  During  2001,  the Bank sold
guaranteed  portions of its SBA loans totaling  $10.6  million.  At December 31,
2000 the Bank had $12.5 million of SBA loans, of which  approximately  32.7% was
guaranteed by the SBA. During 2000, the Bank sold guaranteed portions of its SBA
loans totaling $5.1 million. At December 31, 1999, the Bank had $10.6 million of
SBA loans, of which  approximately 27.4% was guaranteed by the SBA. During 1999,
the Bank sold  guaranteed  portions of its SBA loans totaling $8.1 million.  The
Bank  recognized  gains on the sale of SBA loans during  2001,  2000 and 1999 of
$656 thousand,  $286 thousand,  and $442  thousand,  respectively,  and had loan
servicing fees on SBA loans during 2001,  2000 and 1999 of $219  thousand,  $210
thousand, and $166 thousand, respectively.

Real Estate Loans

     The Bank offers commercial and, on a limited basis, residential real estate
loans.  Commercial  real estate loans are made for general  corporate  purposes,
construction and expansion of facilities. Residential loans are made in the form
of fixed and variable rate mortgages and home equity loans.



                                     - 6 -

      The following tables set forth information concerning the loan portofolio,
based on total  dollars and percent of portfolio,  by collateral  type as of the
dates indicated (dollars in thousands):

                                                     At December 31,
                                            2001          2000          1999
                                      ------------- ------------- -------------
Real estate mortgage loans:
  Commercial real estate............  $    116,081  $     84,556  $     82,622
  One-to-four family residential....        12,980         9,685         7,933
  Multifamily residential...........        14,911        16,185        13,603
  Construction and land development.        16,796         6,382         4,585
                                      ------------  ------------  ------------
     Total real estate mortgage loans      160,768       116,808       108,743

Commercial loans....................        78,459        61,970        41,358
Consumer loans......................         6,486         5,501         5,930
Other loans.........................         1,773         1,551           839
                                      ------------  ------------  ------------
  Gross loans.......................       247,486       185,830       156,870
Allowances for loan losses..........        (3,790)       (2,761)       (2,341)
Unearned fees                               (1,332)       (1,041)       (1,032)
                                      ------------  ------------- ------------
     Total loans net of allowance
     and unearned fees..............  $    242,364  $    182,028  $    153,497
                                      ============  ============  ============

                                            At December 31,
                                            1998          1997
                                      ------------- ----------
Real estate mortgage loans:
  Commercial real estate............  $     60,693  $     44,547
  One-to-four family residential....         7,075         7,482
  Multifamily residential...........         6,673         5,485
  Construction and land development.         3,572         3,071
                                      ------------  ------------
     Total real estate mortgage loans       78,013        60,585

Commercial loans....................        34,904        30,536
Consumer loans......................         4,438         3,998
Other loans.........................         1,803         1,871
                                      ------------  ------------
  Gross loans.......................       119,158        96,990
Allowances for loan losses..........        (1,984)       (1,648)
Unearned fees                                 (628)         (521)
                                      ------------  ------------
     Total loans net of allowance
     and unearned fees..............  $    116,546  $     94,821
                                      ============  ============









                                     - 7 -

                                                At December 31,
                                           2001          2000          1999
                                     ------------- ------------- -------------
Real estate mortgage loans:
  Commercial real estate...........         46.9%        45.6%          52.7%
  One-to-four family residential...          5.2          5.2            5.1
  Multifamily residential..........          6.0          8.7            8.7
  Construction and land development          6.8          3.4            2.9
                                       ---------      -------       --------
     Total real estate mortgage loans       64.9         62.9           69.4

Commercial loans...................         31.7         33.3           26.4
Consumer loans.....................          2.6          3.0            3.7
Other Loans........................          0.8          0.8            0.5
                                       ---------      -------       --------
  Gross loans......................        100.0%       100.0%         100.0%
                                       ==========     ========   ============

                                             At December 31,
                                            1998          1997
                                       ------------ ----------
Real estate mortgage loans:
  Commercial real estate...........          50.9%        45.9%
  One-to-four family residential...           5.9          7.7
  Multifamily residential..........           5.6          5.7
  Construction and land development           3.1          3.2
                                         --------      -------
     Total real estate mortgage loans        65.5         62.5

Commercial loans...................          29.3         31.5
Consumer loans.....................           3.7          4.1
Other Loans........................           1.5          1.9
                                         --------      -------
  Gross loans......................          100.0%       100.0%
                                         =========     ========

     The following table sets forth the contractual  amortization of real estate
and commercial  loans at December 31, 2001.  Loans having no stated  schedule of
repayments  and no stated  maturity are reported as due in one year or less. The
table also sets forth the dollar  amount of loans  scheduled to mature after one
year, according to their interest rate characteristics (dollars in thousands):
                                                     December 31, 2001
                                          Real Estate              Commercial
                                        -------------            --------------
Amounts due:
  One year or less...................   $      50,500            $       56,048
  After one through five years.......          98,731                    19,829
  More than five years...............          11,537                     2,582
                                        -------------            --------------
      Total..........................   $     160,768            $       78,459
                                        =============            ==============
Interest rate terms on amounts due
  after one year:
  Adjustable.........................   $      73,904            $        5,046
  Fixed..............................          36,364                    17,365
                                        -------------            --------------
      Total..........................   $     110,268            $       22,411
                                        =============            ==============
                                     - 8 -

INVESTMENT MANAGEMENT SERVICES

     EPW offers investment  management  services to high net worth  individuals,
corporate pension and profit sharing plans,  charitable entities,  and state and
local  government  pension plans.  EPW receives fees for its services which vary
according to the amount of assets in the account under  management.  EPW markets
its services throughout the State of Florida.

TRUST SERVICES

     United Trust offers  wholesale  trust  services that include  on-line trust
account information  processing,  asset custody and investment support services.
These  services  are  offered  to  legal  and  accounting  firms  and  to  other
custodians.  United Trust also offers retail trust services including investment
management,  probate and custodian  services  which are marketed  principally to
customers of the Bank and EPW and clients of local attorneys and accountants.

CREDIT ADMINISTRATION

     The loan  approval  process  consists of a combination  of  individual  and
committee loan authority.  Individual lending authority is based upon experience
and is broken down into  secured and  unsecured  requests.  The  Officers'  Loan
Committee is made up of commercial lenders and credit administration  personnel.
The  Officers'  Loan  Committee  currently  has final  approval on all unsecured
credit  for  $100,000  to  $1,000,000  and  secured   credits  for  $250,000  to
$1,000,000.  The  General  Loan  Committee  is  made  up  of  four  non-employee
directors,  the CEO of the Company and the  President  of the Bank.  The General
Loan Committee has final approval authority for all loans over $1,000,000 to the
legal lending  limit of the Bank,  except for loans  involving  directors of the
Company  which must be approved by a vote of the full Board of  Directors of the
Bank with the  interested  director not present  during the loan  discussion and
vote.

     The Bank has a policies and  procedures  manual that addresses the specific
underwriting  guidelines for specific types of credits. Any deviation from these
guidelines is considered to be a policy  exception that must be outlined  during
the approval process and voted upon by the appropriate  committee or approved by
a loan officer with sufficient  lending  authority.  The guidelines are reviewed
and approved by the Board of Directors of the Bank on an annual basis.

     The  Bank's  lending  philosophy  is to  extend  credit  to  businesses  or
individuals in the Bank's market area who  demonstrate  sufficient  cash flow to
repay the debt and whose track record  indicate they are borrowers with whom the
Bank desires to establish an ongoing lending relationship.

     The loan portfolio is under continued review in order to monitor  potential
credit deterioration.  Loans are graded at their inception by the loan officers.
Credit  administration  reviews  existing credits on an on-going basis. The Bank
also  employs an  independent  third-party  loan  review  company  that  reviews
specific  larger size credits on a quarterly  basis.  This  quarterly  review is
presented to the General Loan Committee for its further review.

ASSET QUALITY

Allowance/Provision for Loan Losses

     The allowance for loan losses represents management's estimate of an amount
adequate to provide for potential losses within the existing loan portfolio. The
                                     - 9 -

allowance  is  based  upon  an  ongoing  quarterly  assessment  of the  probable
estimated losses inherent in the loan portfolio,  and to a lesser extent, unused
commitments to provide financing.

     The  methodologies  for  assessing  the  appropriateness  of the  allowance
consists of several key elements,  which include:  1) the formula allowance;  2)
review of the underlying  collateral on specific  loans;  and 3) historical loan
losses.  The  formula  allowance  is  calculated  by  applying  loss  factors to
outstanding  loans and unused  commitments,  in each case based on the  internal
risk  grade of those  loans.  Changes  in risk  grades  of both  performing  and
non-performing  loans affect the amount of the formula allowance.  On the larger
criticized  or  classified  credits,  a review is  conducted  of the  underlying
collateral  that secures each credit.  A worse case scenario review is conducted
on  those  loans to  calculate  the  amount,  if any,  of  potential  loss.  The
historical  loan loss method is a review of the last six years of actual losses.
The loss percentage is calculated and applied to the current  outstanding  loans
in total.

     Various conditions that would affect the loan portfolio are also evaluated.
General economic and business conditions that affect the portfolio are reviewed,
including:  1)  credit  quality  trends,   including  trends  in  past  due  and
non-performing  loans;  2)  collateral  values in general;  3) loan  volumes and
concentration;   4)  recent  loss  experience  in  particular  segments  of  the
portfolio;  5) duration  and  strength of the current  business  cycle;  6) bank
regulatory  examination  results;  and 7) findings of the  external  loan review
process.  Senior  management  and the Directors'  General Loan Committee  review
these conditions quarterly. If any of these conditions presents a problem to the
loan portfolio, an additional allocation may be recommended.

     The following table sets forth  information  concerning the activity in the
allowance for loan losses during the periods indicated (dollars in thousands):

                                                        At December 31,
                                             2001          2000          1999
                                        ------------  ------------  ------------
Allowance at beginning of period.       $     2,761   $    2,341   $     1,984
Allowance related to UBGC......                 256            -             -
Charge-offs:

  Real estate loans............                 115           26           144
  Commercial loans.............                  64          250           274
  Consumer loans...............                  38           38            42
                                        -----------   ----------    ----------
      Total charge-offs........                 217          314           460
Recoveries:
  Real estate loans............                  21           25            -
  Commercial loans.............                  48           54            31
  Consumer loans...............                  14            5             1
                                        -----------   ----------    ----------
      Total recoveries.........                  83           84            32
Net charge-offs................                (134)         230           428
Provision for loan losses......                 907          650           785
                                        -----------   ----------    ----------
Allowance at end of period.....         $     3,790   $    2,761    $    2,341
                                        ===========   ==========    ==========


(Continued on Page 10b)
                                     - 10a -

(Continued from Page 10a)
                                             At December 31,
                                            1998          1997
                                        ------------  -----------
Allowance at beginning of period.       $    1,647    $    1,610
Allowance related to UBGC......                   -            -
Charge-offs:

  Real estate loans............                195             -
  Commercial loans.............                212            52
  Consumer loans...............                 19            39
                                        ----------    ----------
      Total charge-offs........                426            91
Recoveries:
  Real estate loans............                  -             -
  Commercial loans.............                  9            38
  Consumer loans...............                  2             -
                                        -----------   ----------
      Total recoveries.........                 11            38
Net charge-offs................                415            53
Provision for loan losses......                752            90
                                        ----------    ----------
Allowance at end of period.....         $    1,984    $    1,647
                                        ==========    ==========

     The following  table  presents  information  regarding the Company's  total
allowance  for loan losses as well as its general  allocation  of such amount to
the  various  loan  categories  based upon  management's  estimates  (dollars in
thousands):
                                              At December 31,
                                 2001              2000              1999
                           ----------------- ----------------- ----------------
Allowance Allocation             Percentage        Percentage        Percentage
                                 of Loan           of Loan           of Loan
                          Amount Portfolio  Amount Portfolio  Amount Portfolio
                          ----------------- ----------------- -----------------
Performing/not classified:
Commercial Loans....      $  698    27%     $  570    30%     $  448    24%
Real Estate Loans...       1,461    61       1,116    59       1,063    64
Consumer Loans......          85     5         105     5          78     7
                          ------ -------    ------- -------   ------- -------
    Subtotal........       2,244    93       1,791    94       1,589    95

Non-performing/classified:
Marginal............         262     4         127     3         112     3
Substandard.........       1,148     3         836     3         362     2
Doubtful............         135     -           -     -           -     -
Loss................           -     -           -     -           -     -
                          ------ -------    ------- -------   ------- -------
Subtotal............       1,545     7         963     6         474     5
Unallocated.........           1     -           7     -         278     -
                          ------ -------    ------- -------   ------- -------
    Total...........      $3,790   100%     $2,761   100%     $2,341   100%
                          ====== ======     ======= =======   ======= =======



(Continued on Page 10c)
                                     - 10b -

(Continued from Page 10b)          At December 31,
                                1998              1997
                          ----------------- ----------------
Allowance Allocation             Percentage        Percentage
                                 of Loan           of Loan
                          Amount Portfolio  Amount Portfolio
                          ----------------- ----------------
Performing/not classified:
Commercial Loans....      $  485    27%     $  368    31%
Real Estate Loans...         607    59         459    53
Consumer Loans......         121     7          92     9
                          ------- -------   ------- -------
    Subtotal........       1,213    93         919    93

Non-performing/classified:
Marginal............          29     3           2     5
Substandard.........         677     4         483     2
Doubtful............          51     -           -     -
Loss................           -     -           -     -
                          ------- -------   ------- -------
Subtotal............         757     7         485     7
Unallocated.........          14     -         243     -
                          ------- -------   ------- -------
    Total...........      $1,984   100%     $1,647   100%
                          ======= =======   ======= =======

Nonperforming Assets

     Nonperforming  assets  include (i) loans which are 90 days or more past due
and have been placed into  non-accrual  status,  (ii) accruing loans that are 90
days or more delinquent  that are deemed by management to be adequately  secured
and in the process of  collection,  and (iii) ORE (i.e.,  real  estate  acquired
through  foreclosure or deed in lieu of  foreclosure).  All delinquent loans are
reviewed on a regular  basis and are placed on  non-accrual  status when, in the
opinion of  management,  the  possibility of collecting  additional  interest is
deemed insufficient to warrant further accrual. As a matter of policy,  interest
is not  accrued on loans  past due 90 days or more  unless the loan is both well
secured  and in  process  of  collection.  When a loan is placed in  non-accrual
status, interest accruals cease and uncollected accrued interest is reversed and
charged  against  current  income.  Additional  interest income on such loans is
recognized only when received.

     The following  table sets forth  information  regarding  the  components of
nonperforming assets at the dates indicated (dollars in thousands):
                                                      At December 31,
                                            2001          2000          1999
                                       ------------  ------------   -----------
Real estate loans...................   $    2,377    $      309     $   1,462
Commercial loans....................          186           277           453
Consumer loans......................            -             -             -
                                       -----------   -----------    ----------
   Total non-accrual loans............      2,563           586         1,915
Other Real Estate...................          141           175         1,528
Accruing Loans 90 days past due               164           107           441
                                       ----------    ----------     ---------
   Total nonperforming assets.......   $    2,868    $      868     $   3,884
                                       ==========    ==========     =========
(Continued on Page 10e)
                                     - 10c -

(Continued from Page 10c)
                                              At December 31,
                                              1998          1997
                                          -----------   ----------
Real estate loans...................      $   2,820     $     374
Commercial loans....................          1,181            26
Consumer loans......................              -             -
                                          ----------    ---------
   Total non-accrual loans............        4,001           400
Other Real Estate...................          1,015             -
Accruing Loans 90 days past due                 449           251
                                          ---------     ---------
   Total nonperforming assets.......      $   5,465     $     651
                                          =========     =========

     The  amount  of gross  interest  income  that  would  have  been  earned on
nonperforming loans was $56 thousand at December 31, 2001.

COMPETITION

     The banking industry in general,  and the Bank's market area in particular,
are  characterized  by  significant  competition  for both  deposits and lending
opportunities.  In its market  area,  the Bank  competes  with other  commercial
banks,  thrift  institutions,  credit unions,  finance companies,  mutual funds,
insurance  companies,  brokerage and investment banking firms, and various other
non-bank providers of financial services.  Competition for deposits may have the
effect of increasing the rates of interest the Bank will pay on deposits,  which
would  increase the Bank's cost of funds and possibly  reduce its net  earnings.
Competition  for loans may have the effect of lowering  the rate of interest the
Bank will receive on its loans,  which would lower the Bank's return on invested
assets and possibly reduce its net earnings. Many of the Bank's competitors have
been in existence for a  significantly  longer period of time than the Bank, are
larger and have greater  financial and other  resources and lending  limits than
the Bank, and may offer certain services that the Bank does not provide.

     There are  approximately  286 branch offices of commercial banks and thrift
institutions operating in Pinellas County. In order to compete effectively,  the
Bank  seeks  to  differentiate   its  services  from  those  offered  by  larger
institutions,  including the branch  offices of large regional and national bank
holding companies.  The Bank seeks to provide banking products and services that
are customized to its market area and target customers on a personalized  basis,
which management  believes cannot be matched by many of the larger  institutions
that tend to offer many banking  products and services on an  impersonal  basis.
Management  believes  that,  as  the  banking  industry  has  undergone  further
consolidation, the opportunity to attract customers seeking personalized service
has been  enhanced.  The Bank seeks to tailor its  products  and services to its
specific  geographic market and targeted  customers,  and to thereby attract the
business of professionals,  entrepreneurs,  and small to medium sized commercial
businesses  while continuing to provide  exceptional  banking services to all of
its customers. The profitability of the Bank depends upon its ability to compete
effectively in its market area. While management  believes that the Bank's local
ownership,  community  oriented  operating  philosophy and personalized  service
enhances  the Bank's  ability to  compete  in its market  area,  there can be no
assurance that the Bank will be able to continue to compete  effectively or that
competitive  factors  will not have an adverse  effect on the  Bank's  operating
results or financial condition.


                                 - 10e-

EMPLOYEES

     At  December  31,  2001,  the  Company  had 128  full-time  and 9 part-time
employees,  none of whom were  represented by a union or subject to a collective
bargaining  agreement.  The Company believes its relations with its employees to
be good.

SUPERVISION AND REGULATION

Overview

     The Company and the Bank are  extensively  regulated under both federal and
state law.  The  following  is a brief  summary of certain  statutes,  rules and
regulations affecting the Company and the Bank. This summary is qualified in its
entirety by reference to the  particular  statutory  and  regulatory  provisions
referenced  below and is not  intended to be an  exhaustive  description  of the
statutes or  regulations  applicable  to the  Company's  business.  Supervision,
regulation and  examination  of the Company and the Bank by the bank  regulatory
agencies are intended  primarily  for the  protection  of  depositors  and other
customers rather than shareholders.

Regulation of the Company

     The Company is a bank holding  company  registered with the Federal Reserve
under the Bank Holding Company Act of 1956, as amended ("BHC Act"). As such, the
Company is subject to the supervision, examination and reporting requirements of
the BHC Act and the regulations of the Federal Reserve.

     The BHC Act  requires  every  bank  holding  company  to  obtain  the prior
approval of the Federal  Reserve  before:  (i) it may acquire direct or indirect
ownership  or  control  of  any  voting  shares  of  any  bank  if,  after  such
acquisition, the bank holding company will directly or indirectly own or control
more  than  5% of  the  voting  shares  of  the  bank;  (ii)  it or  any  of its
subsidiaries,  other than a bank,  may acquire all or  substantially  all of the
assets of the bank;  or (iii) it may merge or  consolidate  with any other  bank
holding company.  Similar federal  statutes  require bank holding  companies and
other companies to obtain the prior approval of the Office of Thrift Supervision
("OTS") before acquiring ownership or control of a federal savings association.

     The BHC Act further  provides that the Federal  Reserve may not approve any
transaction  that would result in a monopoly or would be in  furtherance  of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking  in any  section  of the  United  States,  or the effect of which may be
substantially  to  lessen  competition  or to tend to create a  monopoly  in any
section of the  country,  or that in any other  manner  would be in restraint of
trade,  unless the  anti-competitive  effects of the  proposed  transaction  are
clearly  outweighed by the public  interest in meeting the convenience and needs
of the community  served.  The Federal  Reserve is also required to consider the
financial  and  managerial  resources  and future  prospects of the bank holding
companies and banks  concerned and the  convenience and needs of the communities
to be served.  Consideration of financial resources generally focuses on capital
adequacy,  and  consideration  of  convenience  and needs  issues  includes  the
parties'  performance  under the Community  Reinvestment Act of 1977, as amended
(the "CRA").




                                     - 11 -

     The BHC  Act,  as  amended  by the  interstate  banking  provisions  of the
Riegle-Neal  Interstate  Banking  and  Branching  Efficiency  Act of  1994  (the
"Interstate  Banking  Act"),  authorizes  (i) the  Company,  and any other  bank
holding company located in Florida to acquire a bank located in any other state,
and (ii) any bank  holding  company  located  outside  Florida  to  acquire  any
Florida-based  bank,  regardless  of state law to the  contrary,  in either case
subject   to  certain   deposit-percentage,   aging   requirements,   and  other
restrictions.  The Interstate  Banking Act also generally provides that national
and state-chartered banks may branch interstate through acquisitions of banks in
other  states,  unless  a state  has  "opted  out" of the  interstate  branching
provisions of the Interstate  Banking Act prior to June 1, 1997. Neither Florida
nor  any  other  state  in the  southeastern  United  States  has  "opted  out".
Accordingly,  the Company would have the ability to acquire a bank in a state in
the Southeast and thereafter  consolidate  all of its bank  subsidiaries  into a
single bank with interstate branches.

     The BHC Act  generally  prohibits  the Company from  engaging in activities
other  than  banking  or  managing  or  controlling  banks or other  permissible
subsidiaries  and from acquiring or retaining  direct or indirect control of any
company engaged in any activities other than those activities  determined by the
Federal  Reserve to be so closely  related to banking or managing or controlling
banks as to be a proper incident thereto.

     In determining  whether a particular  activity is permissible,  the Federal
Reserve must consider whether the performance of such an activity reasonably can
be expected to produce  benefits  to the  public,  such as greater  convenience,
increased  competition,  or gains in efficiency,  that outweigh possible adverse
effects,  such  as  undue  concentration  of  resources,   decreased  or  unfair
competition, conflicts of interest, or unsound banking practices. The investment
management,  data processing,  administrative  and accounting  support and asset
custody  services  offered by EPW and United Trust have been  determined  by the
Federal Reserve to be permissible activities of bank holding companies.  The BHC
Act does not place territorial  limitations on permissible nonbanking activities
of bank holding companies.  Despite prior approval,  the Federal Reserve has the
power to order a bank holding company or its non-bank  subsidiaries to terminate
any activity or to terminate its ownership or control of any subsidiary  when it
has  reasonable  cause to believe  that  continuation  of such  activity or such
ownership  or  control  constitutes  a  serious  risk to the  financial  safety,
soundness, or stability of any bank subsidiary of the holding company.

     Under Federal Reserve policy, bank holding companies are expected to act as
a source of  financial  strength  and support to their  subsidiary  banks.  This
support may be required at times when,  absent such Federal Reserve policy,  the
holding  company may not be inclined  to provide  it. In  addition,  any capital
loans by a bank holding  company to any bank subsidiary are subordinate in right
of payment to deposits  and to certain  other  indebtedness  of such  subsidiary
bank. In the event of a bank holding company's bankruptcy, any commitment by the
bank holding company to a federal bank regulatory agency to maintain the capital
of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority payment.

Financial Services Modernization Legislation

     On November 12, 1999 the President  signed into law the  Gramm-Leach-Bliley
Act ("Act"),  a sweeping piece of financial services reform legislation that for
the first time will permit  commercial  banks to affiliate with investment banks
and insurance  companies  through a holding  company  structure and will greatly

                                     - 12 -

expand the range of activities in which bank  affiliates  and  subsidiaries  may
engage.  The Act repeals key provisions of the  Glass-Steagall  Act of 1933 that
have  heretofore   prohibited  banks  from  affiliating  with  entities  engaged
principally in securities underwriting activities and overrides those state laws
that  prohibit   affiliations  of  banks  and  insurance   companies  or  either
discriminate  against or have a  substantially  adverse  effect on banks selling
insurance.

     The Act amends the BHC Act to authorize new "financial  holding  companies"
("FHCs").  Under the FHC  provisions  of the Act, a BHC can qualify to become an
FHC if all of its bank and thrift  subsidiaries  are well  capitalized  and well
managed and have a CRA rating of "satisfactory" or better. Once a BHC becomes an
FHC, it is permitted to conduct any securities,  insurance and merchant  banking
activities,  as well as any other  activities  that are "financial in nature" or
incidental  or  complementary  to  a  financial  activity,  such  as  developing
financial software, hosting internet web sites relating to financial matters and
operating a travel agency. Under the regulatory structure prescribed by the Act,
the Federal Reserve will act as the "umbrella  regulator" for the FHC, with each
FHC  subsidiary  subject to  supervision  and  regulation by its own  functional
regulator or agency.

     The Act also gives banks the option of conducting  certain  newly-permitted
financial  activities  in a  subsidiary  rather  than  using an FHC.  Banks that
satisfy the well  capitalized  well managed and CRA  requirements  applicable to
FHCs will be able to establish  "financial  subsidiaries"  that are permitted to
conduct all  financial  activities  as agency and some  financial  activities as
principal  such  as  securities  underwriting.  The  main  activities  in  which
financial subsidiaries are prohibited from engaging are insurance  underwriting,
real estate development and, at least for the next five years, merchant banking.

     In addition to enabling banks and their holding companies to conduct a wide
range of  financial  activities,  the Act also  contains  a  number  of  privacy
requirements  with which banks and other  financial  institutions  must  comply.
Under the Act, all financial  institutions  must adopt a privacy policy and make
its policy known to those who become new customers and provide annual disclosure
of its policy to all of its customers.  They must also give their  customers the
right to "opt out" whenever they want to disclose nonpublic customer information
to  non-affiliates.  An exception to this opt out  requirement is made where the
third party is  performing  services on behalf of the financial  institution  or
pursuant to a joint agreement.  Financial institutions are also required to take
such  steps as are  necessary  to insure the  security  and  confidentiality  of
customer records and information and to protect against  unauthorized  access to
or use of such records or information.

Regulation of the Bank

     The  Bank  is  organized  as a  Florida-chartered  commercial  bank  and is
regulated and  supervised by the Florida  Department of Banking and Finance (the
"Department").  In addition, the Bank is regulated and supervised by the Federal
Reserve,  which serves as its primary federal regulator and, to a lesser extent,
by the Federal Deposit  Insurance  Corporation  ("FDIC") as the administrator of
the fund that insures the Bank's deposits.  Accordingly,  the Department and the
Federal Reserve conduct regular examinations of the Bank, reviewing the adequacy
of the loan loss  reserves,  quality  of loans  and  investments,  propriety  of
management practices, compliance with laws and regulations, and other aspects of
the Bank's operations. In addition to these regular examinations,  the Bank must
furnish to the Federal Reserve quarterly reports  containing  detailed financial

                                     - 13 -

statements  and  schedules.  The capital ratios of the Bank at December 31, 2001
all exceed the current  regulatory  minimum  guidelines for a "well capitalized"
bank.

     Federal and Florida  banking laws and  regulations  govern all areas of the
operations of the Bank, including reserves, loans, mortgages, capital, issuances
of  securities,  payment of dividends,  and  establishment  of branches.  As its
primary  federal  regulator,   the  Federal  Reserve  has  authority  to  impose
penalties,  initiate  civil and  administrative  actions  and take  other  steps
intended to prevent the Bank from engaging in unsafe or unsound  practices.  The
Bank is a member of the Bank  Insurance  Fund ("BIF") and, as such,  deposits in
the Bank are insured by the FDIC to the maximum extent permissible by law.

     The Bank is subject to the  provisions of the CRA.  Under the CRA, the Bank
has a continuing and affirmative  obligation  consistent with its safe and sound
operation  to help meet the credit  needs of its entire  communities,  including
low- and  moderate-income  neighborhoods.  The CRA does not  establish  specific
lending  requirements or programs for financial  institutions  nor does it limit
the Bank's  discretion  to develop the types of products  and  services  that it
believes are best suited to their  particular  communities,  consistent with the
CRA. The CRA requires the  appropriate  federal bank  regulatory  agency (in the
case of the Bank,  the  Federal  Reserve),  in  connection  with  their  regular
examinations,  to assess a financial  institution's record in meeting the credit
needs of the  community  serviced  by it,  including  low-  and  moderate-income
neighborhoods.   A  federal   banking   agency's   assessment   of  a  financial
institution's  CRA  record  is  made  available  to the  public.  Further,  such
assessment is required whenever the institution  applies to, among other things,
establish a new branch that will accept deposits, relocate an existing office or
merge or  consolidate  with, or acquire the assets of or assume the  liabilities
of, a federally-regulated  financial institution.  In the case where the Company
applies  for  approval  to acquire a bank or other  bank  holding  company,  the
federal regulator  approving the transaction will also assess the CRA records of
the Bank.  The Bank  received a  "Satisfactory"  CRA  rating in its most  recent
examination.

     In April 1995, the federal banking  agencies  adopted  amendments  revising
their  CRA  regulations,   with  a  phase-in  schedule   applicable  to  various
provisions. Among other things, the amended CRA regulations,  which became fully
effective on July 1, 1997,  substitute  for the prior  process-based  assessment
factors a new  evaluation  system  that will  rate an  institution  based on its
actual  performance in meeting  community  needs. In particular,  the system now
focuses on three tests: (i) a lending test, to evaluate the institution's record
of making loans in its service areas;  (ii) an investment  test, to evaluate the
institution's record of investing in community development projects; and (iii) a
service test,  to evaluate the  institution's  delivery of services  through its
branches  and other  offices.  The amended CRA  regulations  also clarify how an
institution's CRA performance will be considered in the application process. The
Company  does not  anticipate  that the  revised CRA  regulations  will have any
material impact on the Bank's operations or its CRA rating.

Deposit Insurance

     The Bank is subject to FDIC deposit insurance assessments. The Bank is also
subject to a risk-based  assessment system for insured  depository  institutions
that takes into  account the risks  attributable  to  different  categories  and
concentrations  of assets and liabilities.  The system assigns an institution to
one  of  three  capital  categories:  (i)  well  capitalized,   (ii)  adequately

                                     - 14 -

capitalized, and (iii) undercapitalized. An institution is also assigned, by the
FDIC,  to one of three  supervisory  subgroups  within each capital  group.  The
supervisory  subgroup  to  which  an  institution  is  assigned  is  based  on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator  and   information   the  FDIC   determines  to  be  relevant  to  the
institution's  financial  condition and the risk posed to the deposit  insurance
funds  (which  may  include,   if  applicable,   information   provided  by  the
institution's state supervisor).  An institution's  insurance assessment rate is
then determined based on the capital category and supervisory  category to which
it  is  assigned.  Under  the  risk-based  assessment  system,  there  are  nine
assessment  risk  classifications  (i.e.,  combinations  of  capital  groups and
supervisory   subgroups)  to  which  different  assessment  rates  are  applied.
Assessment  rates on deposits for an institution in the highest  category (i.e.,
"well capitalized" and "healthy") are less than assessment rates on deposits for
an institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory  concern").  The Bank is  categorized  as "well  capitalized"  as of
December 31, 2001.

     In  addition to FDIC  insurance  assessments,  the Bank is also  subject to
assessments  used to pay interest on bonds issued by the  Financing  Corporation
(the "FICO") under the Deposit  Insurance Funds Act (the "Funds Act").  Prior to
enactment of the Funds Act, only insurance payments by SAIF-member  institutions
were available to satisfy FICO's interest payment  obligations.  Through the end
of 2001, the FICO assessment rate on BIF-assessable  deposits is required by the
statute to be one-fifth of the SAIF rate. Thereafter,  FICO assessment rates for
members of both insurance funds will presumably be equalized.

     Currently,  the FICO assessment rate for BIF-assessable  deposits is 0.0021
percent (or 2.1 basis points) and the FICO  assessment  rate for SAIF assessable
deposits is 0.0021 percent (or 2.1 basis points). In 2001, the Bank's total FICO
payment   obligation  was  $49,755,   all  of  which  was  attributable  to  the
BIF-assessable deposits.The Bank has no SAIF assessable deposits.



Capital Requirements

     The Company and the Bank are  required to comply with the capital  adequacy
standards established by the Federal Reserve.  There are three basic measures of
capital  adequacy for banks that have been  promulgated by the Federal  Reserve;
two risk-based measures and a leverage measure. All applicable capital standards
must be satisfied  for a bank  holding  company and a bank to be  considered  in
compliance.

     The risk-based  capital  standards are designed to make regulatory  capital
requirements  more sensitive to differences in risk profile among banks and bank
holding companies,  to account for off-balance-sheet  exposure,  and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet  items are
assigned to broad risk categories,  each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total  risk-weighted  assets
and off-balance-sheet items.

     The minimum  guidelines for the ratio of total capital ("Total Capital") to
risk-weighted assets (including certain off-balance-sheet items, such as standby
letters  of  credit)  is 8%.  At  least  half  of  Total  Capital  (i.e.,  4% of
risk-weighted  assets) must  comprise  common stock,  minority  interests in the
equity accounts of consolidated subsidiaries,  noncumulative perpetual preferred

                                     - 15 -

stock,  and a limited  amount of  cumulative  perpetual  preferred  stock,  less
goodwill and certain other intangible  assets ("Tier 1 Capital").  The remainder
may consist of subordinated debt, other preferred stock, and a limited amount of
loan loss  reserves  ("Tier 2 Capital").  In addition,  the Federal  Reserve has
established minimum leverage ratio guidelines for bank holding companies.  These
guidelines provide for a minimum ratio of Tier 1 Capital to average assets, less
goodwill and certain other intangible  assets, of 3% for banks that meet certain
specified  criteria,  including having the highest  regulatory rating. All other
bank holding companies generally are required to maintain a leverage ratio of at
least 3%, plus an additional  cushion of 100 to 200 basis points. The guidelines
also provide that bank holding companies  experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant reliance on intangible
assets.  Furthermore,  the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital  leverage ratio"  (deducting all intangibles) and other
indicators  of capital  strength in  evaluating  proposals  for expansion or new
activities. As of December 31, 2001 the Company's leverage ratio was 9.37%.

     The FDIC  Improvement Act of 1991 ("FDICIA")  contains  "prompt  corrective
action" provisions  pursuant to which banks are to be classified into one of the
five categories based upon capital adequacy,  ranging from "well capitalized" to
"critically undercapitalized", and which require (subject to certain exceptions)
the  appropriate  federal banking agency to take prompt  corrective  action with
respect to an  institution  that  becomes  "significantly  undercapitalized"  or
"critically undercapitalized".

     The Federal  Reserve has issued final  regulations to implement the "prompt
corrective action" provisions of the FDICIA. In general,  the regulations define
the five capital categories as follows: (i) an institution is "well capitalized"
if it has a total  risk-based  capital  ratio  of 10% or  greater,  has a Tier 1
risk-based capital ratio of 6% or greater, has a leverage ratio of 5% or greater
and is not  subject  to any  written  capital  order  or  directive  to meet and
maintain a specific capital level for any capital measures;  (ii) an institution
is "adequately  capitalized" if it has a total risk-based capital ratio of 8% or
greater,  has a Tier 1  risk-based  capital  ratio of 4% or  greater,  and has a
leverage ratio of 4% or greater;  (iii) an institution is  "undercapitalized" if
it has a total risk-based capital ratio of less than 8%, has a Tier 1 risk-based
capital ratio that is less than 4% or has a leverage ratio that is less than 4%;
(iv)  an  institution  is  "significantly  undercapitalized"  if it has a  total
risk-based capital ratio that is less than 6%, a Tier 1 risk-based capital ratio
that is less  than 3% or a  leverage  ratio  that is less  than  3%;  and (v) an
institution is "critically  undercapitalized"  if its "tangible equity" is equal
to or less than 2% of its total  assets.  The  Federal  Reserve  also,  after an
opportunity for a hearing,  has authority to downgrade an institution from "well
capitalized"   to  "adequately   capitalized"   or  to  subject  an  "adequately
capitalized"  or  "undercapitalized"  institution  to  the  supervisory  actions
applicable to the next lower category,  for supervisory concerns.  The degree of
regulatory  scrutiny  of  a  financial   institution  will  increase,   and  the
permissible  activities of the institution  will decrease,  as it moves downward
through the  capital  categories.  Institutions  that fall into one of the three
undercapitalized  categories may be required to (i) submit a capital restoration
plan;  (ii) raise  additional  capital;  (iii)  restrict  their growth,  deposit
interest  rates,  and other  activities;  (iv)  improve  their  management;  (v)
eliminate  management  fees;  or (vi) divest  themselves of all or part of their
operations.  Bank holding companies  controlling  financial  institutions can be
called upon to boost the  institutions'  capital and to partially  guarantee the
institutions'  performance under their capital restoration plans. As of December

                                     - 16 -

31, 2001, the Company met the criteria to be considered well  capitalized,  with
Tier 1 and total  capital  equal to 11.02%  and 15.14% of its  respective  total
risk-weighted  assets. While the Company's capital levels have been in excess of
those required to be maintained by a "well capitalized"  financial  institution,
rapid growth, poor loan portfolio performance,  or poor earnings performance, or
a combination of these factors, could change the Company's capital position in a
relative short period of time, making an additional capital infusion necessary.

Dividends

     As a Florida-chartered  commercial bank, the Bank is subject to the laws of
Florida as to the payment of dividends. Under the Florida Financial Institutions
Code, the prior approval of the Department is required if the dividend  declared
by a bank in any quarter or  semiannual  or annual period will exceed the sum of
the bank's net  profits  for that  period and its  retained  net profits for the
preceding two years.

     Under Federal law, if, in the opinion of the federal banking  regulator,  a
bank or thrift under its  jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which,  depending on the financial  condition of the
depository institution,  could include the payment of dividends), such regulator
may require,  after notice and hearing,  that such institution  cease and desist
from such  practice.  The federal  banking  agencies have  indicated that paying
dividends that deplete a depository  institution's capital base to an inadequate
level  would be an unsafe  and  unsound  banking  practice.  Under the  FDICIA's
"prompt corrective action"  regulations adopted by the federal banking agencies,
a  depository  institution  may not pay any  dividend to its holding  company if
payment  would  cause  it  to  become  undercapitalized  or  if  it  already  is
undercapitalized.

Federal Reserve System

     The   Federal    Reserve    regulations    require    banks   to   maintain
non-interest-earning  reserves against their transaction accounts (primarily NOW
and regular  checking  accounts).  The Federal  Reserve  regulations,  effective
November  28,  2000,  generally  require  that  reserves be  maintained  against
aggregate  transaction  accounts as follows:  (i) for accounts aggregating $42.8
million or less the reserve  requirement  is 3%; and (ii) for  accounts  greater
than $42.8 million, the reserve requirement is $1.284 million plus 10.0% against
that portion of total transaction accounts in excess of $42.8 million. The first
$5.5 million of  otherwise  reservable  balances  are exempted  from the reserve
requirements.  As of December  31,  2001,  the Bank was in  compliance  with the
foregoing requirements. The balances maintained to meet the reserve requirements
imposed by the  Federal  Reserve may be used to satisfy  liquidity  requirements
imposed by the  Department.  These  reserve  requirements  are subject to annual
adjustments  by the  Federal  Reserve  and higher  reserve  requirements  may be
imposed in the future.  Because required reserves must be maintained in the form
of either vault cash, a noninterest-bearing account at a Federal Reserve Bank or
a  pass-through  account as defined by the Federal  Reserve,  the effect of this
reserve requirement is to reduce the Bank's interest-earning assets.

Liquidity

     Under Florida banking regulations, the Bank is required to maintain a daily
liquidity  position equal to at least 15% of its total transaction  accounts and
8% of its total nontransaction accounts, less those deposits of public funds for
which  security  has been  pledged as provided by law.  The Bank may satisfy its

                                     - 17 -

liquidity  requirements  with cash on hand  (including  cash items in process of
collection),  deposits held with the Federal  Reserve,  demand deposits due from
correspondent banks, Federal funds sold,  interest-bearing  deposits maturing in
31  days  or  less  and  the  market  value  of  certain  unencumbered,   rated,
investment-grade  securities  and  securities  issued by Florida or any  county,
municipality  or other  political  subdivision  within  the State.  The  Federal
Reserve also reviews the Bank's  liquidity  position as part of its  examination
and imposes similar requirements on the Bank. Any  Florida-chartered  commercial
bank that fails to comply  with its  liquidity  requirements  generally  may not
further  diminish  liquidity  either by  making  any new  loans  (other  than by
discounting  or  purchasing  bills of  exchange  payable  at sight) or by paying
dividends.  At December  31,  2001,  the Bank's net liquid  assets  exceeded the
minimum amount required under the applicable Florida regulations.

Monetary Policy and Economic Controls

     The banking business is affected not only by general  economic  conditions,
but  also by the  monetary  policies  of the  Federal  Reserve.  Changes  in the
discount  rate on  member  bank  borrowing,  availability  of  borrowing  at the
"discount window", open market operations,  the imposition of changes in reserve
requirements  against bank deposits and the imposition of and changes in reserve
requirements  against certain  borrowings by banks and their affiliates are some
of the  instruments of monetary  policy  available to the Federal  Reserve.  The
monetary  policies  have had a significant  effect on the  operating  results of
commercial  banks and are  expected  to  continue  to do so in the  future.  The
monetary  policies of the Federal  Reserve are  influenced  by various  factors,
including  inflation,  unemployment  and  short-  and  long-term  changes in the
international  trade  balance and in the fiscal  policies  of the United  States
Government.  Future  monetary  policies  and the effect of such  policies on the
future business and earnings of the Bank cannot be predicted.

Future Legislation

     Various  legislation  is from time to time  introduced  in  Congress.  Such
legislation  may change  banking  statutes and the operating  environment of the
Company and its bank and non-bank  subsidiaries in substantial and unpredictable
ways.  There is no  assurance  that any  legislation  will be  enacted  and,  if
enacted, the ultimate effect that any such potential legislation or implementing
regulations would have upon the financial  condition or results of operations of
the Company.

CHANGES IN ACCOUNTING STANDARDS

       On July 20, 2001, the Financial  Accounting Standards Board (FASB) issued
Statement of Financial Accounting  Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after June 30, 2001. SFAS 142 is effective for
fiscal years beginning after December 15, 2001;  however,  certain provisions of
this statement apply to goodwill and other  intangible  assets acquired  between
July 1, 2001 and the  effective  date of SFAS  142.  Major  provisions  of these
statements are as follows:

     *    All business combinations consummated after June 30, 2001 must use the
          purchase method of accounting.

     *    Intangible assets acquired in a business  combination must be recorded
          separately from goodwill if they arise from contractual or other legal

                                 - 18 -

          rights or are  separable  from the  acquired  entity  and can be sold,
          transferred, rented, etc.

     *    Goodwill, as well as intangible assets with indefinite lives, acquired
          after June 30, 2001 will not be amortized.  Effective January 1, 2002,
          all  previously   recognized   goodwill  or  intangible   assets  with
          indefinite lives would no longer be subject to amortization.

     *    Effective  January  1,  2002,  goodwill  and  intangible  assets  with
          indefinite  lives will be tested for impairment  annually and whenever
          there is an impairment indicator.

     *    All acquired goodwill must be assigned to reporting units for purposes
          of impairment testing and segment reporting.

     The Company  does not expect SFAS 141 and 142 to have a material  impact on
the Company's statement of earnings or balance sheet.

     In July 2001,  the FASB issued SFAS 143,  Accounting  for Asset  Retirement
Obligations.  This statement  addresses  financial  accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  This statement  applies to all entities.  It
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. This
statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning  after June 15,  2002.  The Company does not expect SFAS 143 to have a
material impact on the Company's statement of operations or balance sheet.

     In August 2001, the FASB issued SFAS 144,  Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting and
reporting for the  impairment or disposal of  long-lived  assets and  supercedes
FASB 121,  Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. The  provisions  of the  statement  are  effective for
financial  statements issued for fiscal years beginning after December 15, 2001.
The Company does not expect SFAS 144 to have a material  impact on the Company's
statement of earnings or balance sheet.

ITEM 2.       DESCRIPTION OF PROPERTY

     The principal  executive offices of the Company,  the Bank and United Trust
are located in an office  building at 333 Third Avenue  North,  St.  Petersburg,
Florida 33701.  This facility was renovated in 1997, is owned by the Company and
has a total of five floors and approximately 47,400 square feet of usable space.
The Company and its subsidiaries  occupy a total of approximately  25,000 square
feet on the first two floors and a portion of the third  floor of the  building.
As of December  31,  2001,  the balance of the  building  was leased to tenants.
Adequate  parking,  lobby,  safe deposit boxes,  and  drive-thru  facilities are
provided to customers of the Bank at this location.

     The Bank has  additional  branch  locations at 5801 49th Street North,  St.
Petersburg  ("North"),  5601 Park Street North, St.  Petersburg  ("Five Towns"),
6500 Gulf Boulevard,  St. Pete Beach ("St. Pete Beach"),  7490 Bryan Dairy Road,
Largo ("Bryan Dairy") and 3029 Enterprise Road, Clearwater  ("Enterprise"),  and
an Operations  Center at 1770  Commerce  Avenue North,  St.  Petersburg,  all in
Pinellas  County  Florida.  No banking  services  are offered at the  Operations
Center.  Except for Five Towns,  Enterprise  and the  Operations  Center,  these

                                     - 19 -

facilities  are  owned  by the  Company.  All  branches  offer  both  lobby  and
drive-thru  banking  facilities  except for Five Towns,  which offers only lobby
facilities  to the Bank's  customers.  Five Towns is leased for a term  expiring
October 2005, with no renewal  option.  Enterprise is leased for a term expiring
on October  2013,  with 15 renewal  options of 5 years each.  UBGC offers  lobby
banking  services  and is  located  at  1400  State  Street,  Sarasota,  Florida
(Sarasota County). The facility is leased for a term expiring March 2008 and has
one 5-year renewal option.

     EPW's main  office is located in an office  building  in Tampa,  Florida in
which EPW leases  approximately  3,190 square feet of space  pursuant to a lease
expiring  February 2003, with no renewal  option.  EPW's  Jacksonville,  Florida
office operates out of a private home owned by an officer of EPW.

ITEM 3.       LEGAL PROCEEDINGS

     The Company is a party to various legal  proceedings in the ordinary course
of its business.  Based on information presently available,  management does not
believe that the ultimate outcome of such proceedings,  in the aggregate,  would
have a material adverse effect on the Company's financial  position,  results of
operations or liquidity.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

     There were no matters submitted to a vote of the Company's security-holders
during the fourth quarter of its fiscal year ended December 31, 2001.

                                     PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Shares of the Company's Common Stock, par value $.01 per share (the "Common
Stock"),  are quoted on the Nasdaq SmallCap Market under the symbol UFHI. At the
close of business on February 21, 2002, there were outstanding  4,440,421 shares
of Common  Stock  which were held by  approximately  400  record and  beneficial
shareholders.

     The  following  table sets forth the high and low closing  sales prices for
the Common Stock as quoted by Nasdaq for the period indicated:

                                                 High         Low
      YEAR ENDED DECEMBER 31, 1999:
      First Quarter                              $  7.75      $  6.50
      Second Quarter                             $  7.50      $  6.38
      Third Quarter                              $  7.25      $  6.63
      Fourth Quarter                             $  7.19      $  6.69

      YEAR ENDED DECEMBER 31, 2000:
      First Quarter                              $  7.00      $  6.50
      Second Quarter                             $  7.38      $  6.63
      Third Quarter                              $  7.82      $  7.25
      Fourth Quarter                             $  7.63      $  7.00

      YEAR ENDED DECEMBER 31, 2001:
      First Quarter                              $  7.75      $  7.00
      Second Quarter                             $  9.25      $  7.35
      Third Quarter                              $ 10.50      $  8.75
      Fourth Quarter                             $ 11.00      $  9.01
                                     - 20 -

     Since 1995,  the Company has declared and paid  quarterly cash dividends on
the Common Stock to record holders of the Common Stock at each calendar  quarter
end,  payable  on the last day of the  following  month.  Starting  in the first
quarter of 1997,  such  dividends  were paid at the rate of $0.0333 per share of
Common Stock until the third quarter of 1998, when a dividend of $0.04 per share
was  declared.  The dividend  rate was increased to $0.05 per share in the third
quarter of 2000 and $0.05 1/2 per share in the third  quarter  of 2001.  Regular
quarterly cash dividends were declared  throughout  2001. The Company  currently
has no plans to modify the amount or timing of such dividends.

     The  Company is  primarily  a holding  company  with no  material  business
operations,  sources of income or assets of its own other than the shares of its
subsidiaries.   Because  substantially  all  of  the  Company's  operations  are
conducted through subsidiaries,  the Company's cash flow and, consequently,  its
ability to pay dividends or make other  distributions  is dependent  upon either
third-party  borrowings made by the Company or the cash flow of its subsidiaries
and the  payment  of funds by those  subsidiaries,  including  the Bank,  to the
Company  in the form of  loans,  dividends,  fees or  otherwise.  The  Company's
subsidiaries  are  separate  and  distinct  legal  entities  and  will  have  no
obligation, contingent or otherwise, to make any funds available, whether in the
form of  loans,  dividends  or  otherwise.  Regulatory  limitations  on the Bank
restrict its ability to make loans or distributions to the Company.

USE OF PROCEEDS

     On December  10,  1998,  UFH Capital  Trust I ("UFH  Capital"),  a Delaware
statutory  business trust, all of the common equity interests of which are owned
by the Company,  and the  Company's  joint  Registration  Statement on Form SB-2
(Nos.   333-60431  and  333-60431-01)  (the  "Registration   Statement")  became
effective,  registering  the initial  public  offering by the Company of 450,000
shares of the  Company's  common  stock,  par value  $.01 per  share,  and up to
1,200,000  shares  of  9.4%  Cumulative   Trust  Preferred   Securities  with  a
liquidation  amount of $5 per share (the "Preferred  Securities"),  representing
preferred  undivided   beneficial  interests  in  the  assets  of  UFH  Capital.
Furthermore,  pursuant to such Registration Statement, the Company registered up
to an additional 67,500 shares of its common stock and UFH Capital registered up
to an additional  180,000  shares of Preferred  Securities in the event that the
managing   underwriter   for  the   offering,   William  R.  Hough  &  Co.  (the
"Underwriter"),   exercised   its  option  to  purchase  such  shares  to  cover
over-allotments.

     All of the gross proceeds  received by UFH Capital from the offering of the
Preferred  Securities and certain other funds of UFH Capital were invested in an
equivalent  amount of the Company's  9.4% Junior  Subordinated  Debentures  (the
"Junior Subordinated Debentures") totaling $6,959,200,  which were issued by the
Company  to  UFH  Capital.  All  of  the  Junior  Subordinated  Debentures  were
registered as part of the Registration  Statement.  In addition,  a guarantee of
the Company relating to the Preferred  Securities was also registered as part of
the  Registration  Statement.  The Company's and UFH  Capital's  initial  public
offerings  terminated on January 8, 1999, upon the exercise of the Underwriter's
over-allotment  option  with  respect  to the  Common  Stock  and the  Preferred
Securities.

     From  December 10, 1998,  through  December  31, 1998,  approximately  $2.7
million of the  estimated net offering  proceeds of $9,528,446  were used by the
Company to repay debt to the lender under the Company's  senior credit  facility
and $1.5 million was contributed to the capital of the Bank.

                                     - 21 -

     In March  1999,  the  Company  purchased  a $273,000  equity  position,  or
approximately  5  percent,   in  United  Insurance   Holdings,   LC  ("Insurance
Holdings").  In  October  2000,  the  Company  increased  its  ownership  by  an
additional $892,000,  bringing its total investment to approximately  $1,165,000
or 16  percent.  Insurance  Holdings  is the parent  company of United  Property
Insurance and Casualty Company,  Inc. The Company has the option to acquire,  at
its election, up to an aggregate of 20 percent of the common equity of Insurance
Holdings. Additionally, the Company originally made a $1 million loan advance to
Insurance  Holdings  with a  maturity  date  of  June  8,  1999.  The  loan  was
subsequently  renewed for $0.5 million and was paid in full in January 2001. One
director of the Company  also serves as a director of  Insurance  Holdings,  one
director of the company serves as a director of United Insurance Management, LC,
and one  director of the Company  serves as a director  of United  Property  and
Casualty Insurance Company.

     In April  1999,  the  Company  purchased  a $500,000  equity  position,  or
approximately  2.2%  of the  outstanding  capital  stock,  in  Nexity  Financial
Corporation  ("Nexity").  Nexity  acquired an Alabama state  chartered  bank and
intends to pursue an Internet  banking  business  strategy and ultimately  raise
additional capital in an initial public offering.

     In April 2001,  the Company  completed the  acquisition  of UBGC for a cash
payment of  approximately  $2.1  million and the  issuance of 384,394  shares of
Series One Preferred  stock valued at $3.1 million.  With the completion of this
acquisition, the Company has fully disbursed the net offering proceeds.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2001 AND 2000

COMPARISON OF BALANCE SHEETS AT DECEMBER 31, 2001 AND DECEMBER 31, 2000

Overview

     Total  assets of the Company  were $344.2  million at  December  31,  2001,
compared to $243.5  million at December 31, 2000, an increase of $100.7  million
or 41.4%.  This increase was the result of the  acquisition of UBGC, with assets
of approximately  $49 million,  and of the Company's  internal growth of earning
assets  (primarily  loans) funded by an increase in deposits and securities sold
under agreements to repurchase. Investment Securities

Investment Securities
     Investment  securities,  consisting  of U.S.  Treasury  and federal  agency
securities,  obligations of state and political subdivisions and mortgage-backed
and corporate debt securities, were $46.5 million at December 31, 2001, compared
to $27.3  million at December 31, 2000,  an increase of $19.2  million or 70.3%.
The increase in securities was due in part to the acquisition of UBGC, which had
$5.0 million at the date of the  acquisition.  At December 31, 2001, the Company
held certain  securities  totaling  $26.8 million as available  for sale.  These
securities have been recorded at market value.

Loans
     Total loans were $247.5  million at  December  31, 2001  compared to $185.8
million at  December  31,  2000,  an  increase  of $61.7  million or 33.2%.  The
increase in loans was due in part to the  acquisition  of UBGC,  which had $15.2
million  at the  date of the  acquisition.  For the  same  period,  real  estate

                                     - 22 -

mortgage loans increased by $44.0 million or 37.6%,  commercial  loans increased
by $16.5  million  or  26.6%,  and all  other  loans  including  consumer  loans
increased  by $1.2 million or 17.1%.  Net loans were $242.4  million at December
31, 2001, compared to $182.0 million at December 31, 2000.

Asset Quality and Allowance for Loan Losses

     The  allowance  for loan losses  amounted to $3.8  million at December  31,
2001, compared to $2.8 million at December 31, 2000, an increase of $1.0 million
or 35.7%.  During 2001,  $217  thousand in loans were charged off, $907 thousand
was  added to the  allowance  for loan  losses  through a  provision,  which was
accounted  for as an expense,  reducing net income,  $83 thousand was  recovered
from loans  previously  charged off,  and $256  thousand of reserve was acquired
with UBGC.

Nonperforming Assets

     Nonperforming  assets were $2.9 million at December  31, 2001,  compared to
$.9 million at December  31,  2000.  Nonperforming  assets at December  31, 2001
consisted  of  nonperforming  loans of $2.8  million and other real estate owned
(ORE) of $.1 million.  ORE owned consists of two properties,  both of which have
been listed for sale.  Management  believes that these properties are carried at
values that are equal to their current market value.

Premises and Equipment

     Premises and equipment were $11.7 million at December 31, 2001, compared to
$10.1 million at December 31, 2000,  an increase of $1.6 million or 15.7%.  This
increase was primarily due to the  acquisition  of a new branch site and related
equipment,  less the depreciation of buildings and equipment and amortization of
leasehold improvements.

Deposits

     Total deposits were $282.6 million at December 31, 2001, compared to $202.2
million at  December  31,  2000,  an  increase  of $80.4  million or 39.8%.  The
increase in deposits was due in part to the acquisition of UBGC, which had $24.9
million at the date of acquisition. From December 31, 2000 to December 31, 2001,
demand deposits increased $18.9 million, NOW and money market deposits increased
$14.8 million,  savings deposits  increased $1.7 million,  time deposits of $100
thousand or greater increased $22.1 million,  and other time deposits  increased
$22.9 million.

Convertible Subordinated Debentures

     Convertible subordinated debentures of $630 thousand were outstanding as of
December 31, 2000 and December 31, 1999. The debentures were subsequently called
on January 15, 2001,  and the full balance was converted  into 152,783 shares of
Common Stock.

Mandatory Redeemable Capital Securities of Subsidiary Trusts

UFH Capital Trust I

     In December 1998, the Company,  through a statutory  business trust created
and owned by the Company,  issued  $6,749,600  (including  an  overallotment  of
$749,600 that closed on January 14, 1999) of 9.40%  Cumulative  Trust  Preferred

                                     - 23 -

Securities  that will mature on December 10, 2028.  The principal  assets of the
statutory  business trust are  debentures  issued to the Company in an aggregate
amount of $6.96  million,  with an interest rate of 9.40% and a maturity date of
December 10,  2028.  See Note D of the  Consolidated  Financial  Statements  for
additional information.

UFH Statutory Trust II

     In December 2001, the Company,  through a statutory  business trust created
and owned by the Company,  issued  $10,000,000  of  Cumulative  Trust  Preferred
Securities  with a floating  rate of 3 month  LIBOR,  plus 360 basis points that
will mature on December 18, 2031. The principal assets of the statutory business
trust are  debentures  issued to the  Company in an  aggregate  amount of $10.31
million,  with a floating interest rate of 3 month LIBOR, plus 360 basis points,
and a  maturity  date of  December  23,  2031.  See  Note D of the  Consolidated
Financial Statements for additional information.

Stockholders' Equity

     Stockholders'  equity was $25.9  million at December 31, 2001,  or 7.52% of
total assets,  compared to $19.5  million,  or 8.02% of total assets at December
31, 2000. At December 31, 2001,  the Company's  Tier I (core)  Capital ratio was
11.86%, its Tier I Risk-based Capital ratio was 13.96%, and its Total Risk-based
Capital  ratio was 15.14%.  The  capital  ratios of the Company at that date all
exceeded the minimum  regulatory  guidelines for an institution to be considered
"well  capitalized".  The  increase  in  stockholders'  equity  was  due  to the
Company's 2001 net income, less dividends declared.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001
AND 2000

Overview

     Net income for the year ended  December  31, 2001 was $3.2 million or $0.70
per share  diluted,  compared to $3.1 million or $0.69 per share diluted for the
same period in 2000.  On a pre-tax  basis,  United Trust earned $161 thousand in
2001 versus $476 thousand in 2000, EPW's pre-tax  operating profits increased to
$272  thousand  from a $145  thousand  loss  (including  $495  thousand of costs
associated  with the issuance of certain  performance  shares issued pursuant to
the  acquisition  of EPW)  during  this period and  Commercial  Banking  pre-tax
profits increased to $5.7 million from $5.4 million during this same period.


















                                     - 24 -

Business Segment Information

     The  Company's  operations  include  three  business  segments:  commercial
banking,   trust  services   (operated  through  United  Trust)  and  investment
management  services  (operated  through EPW).  The following are the results of
operations  for these three  segments for the years ended  December 31, 2001 and
2000 (dollars in thousands).

                                         Years Ended December 31,
                                                  2001
                                  ----------  ------  ------   ---------
                                  Commercial  United             Company
                                    Banking    Trust     EPW      Total
                                  ----------  ------  ------   ---------
Interest income.................  $  22,179  $   197  $    -   $  22,376
Interest expense................      9,025        -       -       9,025
                                  ---------  -------  ------   ---------
Net interest income.............     13,154      197       -      13,351
Loan loss provision.............        907        -       -         907
                                  ---------  -------  ------   ---------
Net interest income after loan
  loss provision................     12,247      197       -      12,444
Noninterest income..............      3,021    1,587   1,578       6,186
General and Administrative
  expenses......................      9,578    1,531   1,306      12,415
Amortization of goodwill........         39       92       -         131
                                  ---------  -------  ------   ---------
Total noninterest expense.......      9,617    1,623   1,306      12,546
                                  ---------  -------  ------   ---------
Net income (loss) before taxes..  $   5,651  $    161 $  272       6,084
                                  =========  ======== ======
Net corporate overhead expense..                                   1,014
Income tax expense..............                                   1,844
                                                               ---------
Net income......................                               $   3,226
                                                               =========





















(Continued on Page 25b)
                                     - 25a _

(Continued from Page 25a)
                                          Years Ended December 31,
                                                   2000
                                  ---------- -------  -------   ---------
                                  Commercial  United              Company
                                    Banking    Trust      EPW      Total
                                  ----------  ------  ------   ---------
Interest income.................  $   19,034 $    244 $    -    $   19,278
Interest expense................       7,438        -      -         7,438
                                  ---------- -------- ------    ----------
Net interest income.............      11,596      244      -        11,840
Loan loss provision.............         650        -      -           650
                                  ---------- -------- ------    ----------
Net interest income after loan
  loss provision................      10,946      244       -       11,190
Noninterest income..............       2,024    1,519  1,701         5,244
General and Administrative
  expenses......................       7,571    1,214  1,846        10,631
Amortization of goodwill........          14       73      -            87
                                  ---------- -------- ------    ----------
Total noninterest expense.......       7,585    1,287  1,846        10,718
                                  ---------- -------- ------    ----------
Net income (loss) before taxes..  $    5,385 $    476 $ (145)        5,716
                                  ========== ======== =======
Net corporate overhead expense..                                       929
Income tax expense..............                                     1,733
                                                                ----------
Net income......................                                $    3,054
                                                                ==========

     Commercial Banking Activities.  The Company's commercial banking activities
are  conducted  through the Bank and UBGC.  Net  interest  income of  Commercial
Banking  for the year ended  December  31, 2001 was $13.2  million,  compared to
$11.6  million for the same period in 2000,  a $1.6  million or 13.4%  increase.
Based on the Company's analysis of its loan portfolio and loan loss reserve, the
loan loss  provision was  increased to $907 thousand for 2001,  compared to $650
thousand for 2000.  Non-interest  income for 2001 was $3.0 million,  compared to
$2.0  million in 2000.  Total  non-interest  expense was $9.6  million for 2001,
compared to $7.6 million for 2000, a 26.8% increase. Net income before taxes was
$5.7 million for 2001, compared to $5.4 million for 2000, a 5.6% increase.

     Trust  Activities.  United Trust  reported net income  before taxes of $161
thousand for the year ended  December 31,  2001,  compared to $476  thousand for
2000, a decrease of $315  thousand.  The decrease in net income before taxes was
due to an increase of $317 in general and administrative  expense,  including an
increase in salary and benefit  expense  related to the addition of professional
trust staff.

     Investment  Advisory  Activities.  Net income before taxes for EPW was $272
thousand for the year ended December 31, 2001, compared to net loss before taxes
of $145 thousand for the same period of 2000, a $417 thousand increase. In 2001,
no expenses were incurred due to the issuance of "performance  shares"  pursuant
to the  acquisition  of EPW as compared to expenses of $495 thousand in 2000. At
December  31, 2000 all  liability  relating to the  acquisition  of EPW had been
recognized and no more "performance shares" will be issued. Additionally,  EPW's
revenue declined by $123 thousand in 2001, primarily as the result of delines in
the market value of assets under management.

                               - 25b -

Analysis of Net Interest Income

     Net interest income for the year ended December 31, 2001 was $12.4 million,
compared to $11.2  million for the same period in 2000,  a $1.2 million or 10.7%
increase.  Interest  income was $22.4  million for the year ended  December  31,
2001,  compared to $19.3  million for the same period in 2000, a $3.1 million or
16.1%  increase.  Interest  expense was $9.0 million for the year ended December
31,  2001,  compared to $7.4 million for the same period in 2000, a $1.6 million
or 21.3% increase.

     The   following   table   summarizes   the   average   yields   earned   on
interest-earning   assets  and  the  average  rates  paid  on   interest-bearing
liabilities  for the  years  ended  December  31,  2001  and  2000  (dollars  in
thousands):
                                            Year Ended December 31,
                                                      2001
                                       ----------   --------   --------
                                          Average               Average
                                          Balance   Interest    Rate(1)
                                       ----------   --------   --------
Summary of average rates/interest
 earning assets:
Interest earning assets:
  Loans, net(2)......................  $ 214,054  $   19,563      9.30%
  Securities:
  Investment securities - taxable....     34,490       1,940      6.00
  Investment securities - non-taxable (3)    601          29      7.66
  Federal funds sold.................     22,772         739      3.61
                                       ---------  ----------
  Total earning assets...............    271,917      22,271      8.40%
  Non-earning assets.................     34,483
                                       ---------
Total average assets.................  $ 306,400
                                       =========

Interest bearing liabilities:
  NOW & money market.................  $  91,672       2,389      2.70%
  Savings............................      5,060          96      1.90
  Time, $100,000 & over..............     42,315       2,250      5.55
  Time other.........................     72,186       3,761      5.47
  Convertible subordinated
    debentures.......................         26           2      8.00
  Long-term debt.....................        565          29      5.13
  Trust preferred securities.........      7,327         656      8.95
  Other borrowings...................     14,361         416      2.90
                                       ---------  ----------
Total interest bearing liabilities...    233,512       9,599      4.27%

Non-Interest bearing liabilities:
  Deposits...........................     44,858
  Other..............................      3,887
  Stockholders' equity...............     24,143
                                       ---------
Total liabilities and stockholders'    $ 306,400
  equity.............................  =========
  Net interest & net interest spread.             $   12,672       4.13%
                                                  ==========     ======
  Net interest margin................                              4.73%
(Continued on Page 26b)              - 26a)                      ======

(Continued from Page 26a)

                                            Year Ended December 31,
                                                        2000
                                          -------     --------      ------
                                          Average                   Average
                                          Balance     Interest       Rate
                                          -------     --------      ------
Summary of average rates/iterest
  earning assets:
Interest earning assets:
  Loans, net(2)......................  $  166,605  $   17,030      10.22%
  Securities:
  Investment securities - taxable....      25,496       1,618       6.35
  Investment securities - non-taxable (3)     744          37       7.89
  Federal funds sold.................       7,211         452       6.27
                                       ----------  ----------
  Total earning assets...............     200,056      19,137       9.58%
  Non-earning assets.................      28,279
                                       ----------
Total average assets.................  $  228,335
                                       ==========

Interest bearing liabilities:
  NOW & money market.................  $   69,137       2,414       3.49%
  Savings............................       4,974         102       2.05
  Time, $100,000 & over..............      22,053       1,338       6.07
  Time other.........................      53,188       2,980       5.60
  Convertible subordinated
    debentures.......................         630          50       8.00
  Long-term debt.....................           -           -           -
  Trust preferred securities.........       6,750         633       9.40
  Other borrowings...................      12,512         423       3.38
                                       ----------  ----------
Total interest bearing liabilities...     169,244       7,940       4.69%

Non-Interest bearing liabilities:
  Deposits...........................      37,841
  Other..............................       3,006
  Stockholders' equity...............      18,244
                                       ----------
Total liabilities and stockholders'    $  228,335
  equity............................. ==========
  Net interest & net interest spread.              $   11,197      4.89%
                                                   ==========   =======
  Net interest margin................                              5.61%
                                                                =======
(1)   Includes annualized income from the acquisition of UBGC on April 1, 2001.

(2)   Includes non-accrual loans.

(3)   Yield calculated on a tax adjusted basis.






                                     - 26b -

     The  following  table  reflects  the change in net  interest  income due to
changes in the volume and rate of the Company's  assets and  liabilities for the
twelve-month period ended December 31, 2001:
                                                    Increase (Decrease)
                                       ---------------------------------------
Changes in net interest income                             Combination
  (dollars in thousands)                 Volume    Rate    Rate/Volume  Total
                                       --------  --------  ----------- -------
Interest earning assets:
  Loans, net...........................$  4,850  $ (1,536) $  (781)   $  2,533
  Securities:
  Investment securities - taxable......     571       (88)    (161)        322
  Investment securities - non-taxable..     (11)       (2)       5          (8)
  Federal funds sold...................     975      (192)    (497)        286
                                       --------  --------  -------    --------
Total change in interest income........   6,385    (1,818)  (1,434)      3,133

Interest bearing liabilities:
  NOW & money market...................     787      (547)   (265)         (25)
  Savings..............................       2        (8)      -           (6)
  Time, $100,000 & over................   1,230      (115)   (203)         912
  Time other...........................   1,064       (71)   (213)         780
  Convertible subordinated debentures..     (48)        -       -          (48)
  Long-term debt.......................       -         -      29           29
  Trust preferred securities...........      54       (30)     (1)          23
  Other borrowings.....................      63       (61)     (9)          (7)
                                       --------  --------  -------    --------
Total change in interest expense.......   3,152      (832)    (661)      1,658
                                       --------  --------  -------    --------
Increase in net interest income........$  3,233  $   (986) $  (772)   $  1,475
                                        ========  ========- ========  ========

Noninterest Income

     Noninterest  income for the year ended  December 31, 2001 was $5.9 million,
compared to $5.1 million in 2000. Increases in service charges on deposits, gain
on sale of SBA loans,  and other service charges of $854 thousand were offset by
a decrease in trust and investment management income.

     The following table indicates the components of noninterest  income for the
years ended December 31, 2001 and 2000 (dollars in thousands):

                                           For the Years Ended December 31,
                                                                 Increase/
                                               2001       2000   (Decrease)
                                           ---------  ---------  ----------
Service charges on deposit accounts....... $  1,317   $  1,014   $    303
Trust and investment management income....    3,117      3,172        (55)
Other service charges, fees, and income...      448        267        181
Loan servicing fees.......................      219        210          9
Net trading account profit................        -         (6)         6
Income on cash value life insurance.......      148        141          7
Gain on sale of SBA loans.................      656        286        370
                                           --------   --------   --------
Total noninterest income.................. $  5,905   $  5,084   $    821
                                           ========   ========   ========

(Continued on Page 27b)
                                     - 27a -

(Continued from Page 27a)
Noninterest Expense

     Total  noninterest  expense for the year ended  December 31, 2001 was $12.6
million,  compared to $10.8  million for the same period in 2000, an increase of
$1.8  million  or 16.2%.  Substantially  all of the  increase  was in salary and
benefits,  occupancy  expense,  furniture  and  equipment,  and data  processing
expense,  and  includes  $1.0  million of  additional  expense  relating  to the
operation of UBGC.

     The following table reflects the components of noninterest  expense for the
years ended December 31, 2001 and 2000 (dollars in thousands):

                                             For the Years Ended
                                                December 31,
                                                                   Increase/
                                         2001          2000       (Decrease)
                                    ------------  -------------   ------------
Salaries and employee benefits..... $     7,371     $     6,501   $      870
Occupancy expense..................         948             514          434
Furniture and equipment expense....         780             604          176
Data processing expense............         809             587          222
Legal and professional fees........         164             208          (44)
Amortization of intangible assets..         162             118           44
Advertising........................         434             367           67
Telephone expense..................         197             189            8
Stationery and supplies............         205             181           24
Directors fees.....................         207             243          (36)
Postage expense....................         119             108           11
Consulting fees....................          32             151         (119)
Other operating expenses...........       1,173           1,073          100
                                    -----------     -----------   -----------
Total noninterest expense.......... $    12,601     $    10,844   $    1,757
                                    ===========     ===========   ===========

YEARS ENDED DECEMBER 31, 2000 AND 1999

COMPARISON OF BALANCE SHEETS AT DECEMBER 31, 2000 AND DECEMBER 31, 1999

Overview

     Total  assets of the Company  were $243.5  million at  December  31,  2000,
compared to $209.5 million at December 31, 1999, an increase of $34.0 million or
16.2%.  This increase was primarily the result of the Company's  internal growth
of earning assets (primarily loans) funded by an increase in deposits.

Investment Securities

     Investment  securities,  consisting  of U.S.  Treasury  and federal  agency
securities,  obligations of state and political subdivisions and mortgage-backed
and corporate debt securities, were $27.3 million at December 31, 2000, compared
to $24.4 million at December 31, 1999, an increase of $2.9 million or 11.9%.  At
December 31, 2000, the Company held certain securities totaling $11.3 million as
available for sale. These securities have been recorded at market value.




                                     - 27b -

Loans

     Total loans were $185.8  million at December 31,  2000,  compared to $156.9
million at December 31,  1999,  an increase of $28.9  million or 18.4%.  For the
same  period,  real estate  mortgage  loans  increased  by $8.1 million or 7.4%,
commercial  loans  increased  by $20.6  million  or 49.8%,  and all other  loans
including  consumer  loans  increased  by $0.3  million or 4.2%.  Net loans were
$182.0 million at December 31, 2000,  compared to $153.5 million at December 31,
1999.

Allowance for Loan Losses

     The  allowance  for loan losses  amounted to $2.8  million at December  31,
2000, compared to $2.3 million at December 31, 1999, an increase of $0.5 million
or 21.7%.  During 2000,  $314  thousand in loans were charged off, $650 thousand
was  added to the  allowance  for loan  losses  through a  provision,  which was
accounted for as an expense, reducing net income, and $85 thousand was recovered
from loans previously charged off.

Nonperforming Assets

     Nonperforming  assets were $.9 million at December  31,  2000,  compared to
$3.9  million at December 31,  1999.  Nonperforming  assets at December 31, 2000
consisted  of  nonperforming  loans of $.7 million and ORE owned of $.2 million.
ORE owned consisted of two properties,  both of which have been listed for sale.
Management  believes that these  properties are carried at values that are equal
to their current market value.

Bank Premises and Equipment

     Bank  premises  and  equipment  were $10.1  million at December  31,  2000,
compared to $9.6  million at December  31,  1999,  an increase of $.5 million or
5.2%.  This increase was primarily due to the  acquisition  of a new branch site
and related  equipment,  less the  depreciation  of buildings  and equipment and
amortization of leasehold improvements.

Deposits

     Total deposits were $202.2 million at December 31, 2000, compared to $175.1
million at  December  31,  1999,  an increase  of $27.1  million or 15.5%.  From
December 31, 1999 to December 31, 2000, demand deposits  increased $4.1 million,
NOW  and  money  market  deposits  increased  $11.0  million,  savings  deposits
decreased  $0.3 million,  time  deposits of $100  thousand or greater  increased
$11.3 million, and other time deposits increased $.9 million.

Convertible Subordinated Debentures

     Convertible subordinated debentures of $630 thousand were outstanding as of
December 31, 2000 and December 31, 1999. The debentures were subsequently called
on January 15, 2001,  and the full balance was converted  into 152,783 shares of
Common Stock.

Mandatory Redeemable Capital Securities of Subsidiary Trust

     In December 1998, the Company,  through a statutory  business trust created
and owned by the Company,  issued  $6,749,600  (including  an  overallotment  of
$749,600 that closed on January 14, 1999) of 9.40%  Cumulative  Trust  Preferred

                                     - 28 -

Securities  that will mature on December 10, 2028.  The principal  assets of the
statutory  business trust are  debentures  issued to the Company in an aggregate
amount of $6.96  million,  with an interest rate of 9.40% and a maturity date of
December 10,  2028.  See Note D of the  Consolidated  Financial  Statements  for
additional information.

Stockholders' Equity
     Stockholders'  equity was $19.5  million at December 31, 2000,  or 8.02% of
total assets,  compared to $16.8  million,  or 8.02% of total assets at December
31,  1999.  At December  31, 2000,  the Bank's Tier I (core)  Capital  ratio was
7.21%,  its Tier I Risk-based  Capital ratio was 9.27%, and its Total Risk-based
Capital  ratio  was  10.53%.  The  capital  ratios  of the Bank at that date all
exceeded the minimum  regulatory  guidelines for an institution to be considered
"well  capitalized".  The  increase  in  stockholders'  equity  was  due  to the
Company's net income, less dividends declared.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000
AND 1999

Overview

      Net income for the year ended  December 31, 2000 was $3.1 million or $0.69
per share  diluted,  compared to $2.3 million or $0.54 per share diluted for the
same period in 1999.  On a pre-tax  basis,  United Trust earned $476 thousand in
2000 versus $679  thousand in 1999,  EPW's  pre-tax  operating  profits  (before
deducting  $495  thousand  of costs  associated  with the  issuance  of  certain
performance  shares issued pursuant to the acquisition of EPW) increased to $350
thousand from $302 thousand  during this period and the Bank's  pre-tax  profits
increased to $5.4 million  from $3.8 million  during this same period.  Business
Segment Information

      The Company's  operations  include  three  business  segments:  commercial
banking,   trust  services   (operated  through  United  Trust)  and  investment
management  services  (operated  through EPW).  The following are the results of
operations  for these three  segments for the years ended  December 31, 2000 and
1999 (dollars in thousands).





















(Continued on Page 29b)
                                     - 29a -

(Continued from Page 29a)

                                        Year Ended December 31, 2000
                                     Commercial United           Company
                                       Banking   Trust    EPW     Total
                                     --------- ------- ------  ----------
Interest income...................   $  19,034 $   244 $    -  $   19,278
Interest expense..................       7,438       -      -       7,438
                                     --------- ------- ------  ----------
Net interest income...............      11,596     244      -      11,840
Loan loss provision...............         650       -      -         650
                                     --------- ------- ------  ----------
Net interest income after loan
  loss provision..................      10,946     244       -     11,190
Noninterest income................       2,024   1,519  1,701       5,244
General and administrative
  expenses........................       7,571   1,214  1,846      10,631
Amortization of goodwill..........          14      73      -          87
                                     --------- ------- ------  ----------
Total noninterest expense.........       7,585   1,287  1,846      10,718
                                     --------- ------- ------  ----------
Net income before taxes...........   $   5,385 $   476 $ (145)      5,716
                                     ========= ======= =======
Net corporate overhead expense....                                    929
Income tax expense................                                  1,733
                                                               ----------
Net income........................                             $    3,054
                                                               ==========



                                      Year Ended December 31, 1999
                                   Commercial United             Company
                                     Banking   Trust   EPW        Total
                                   --------  -------  ------    --------
Interest income................... $ 14,580  $   196  $    -   $  14,776
Interest expense..................    5,264        -       -       5,264
                                   --------  -------  ------    --------
Net interest income...............    9,316      196      -        9,512
Loan loss provision...............      785        -       -         785
                                   --------  -------  ------   ---------
Net interest income after loan
  loss provision..................    8,531      196       -       8,727
Noninterest income................    2,001    1,630   1,593       5,224
General and administrative
  expenses........................    6,760    1,108   1,588       9,456
Amortization of goodwill..........       15       39       -          54
                                   --------  -------  ------   ---------
Total noninterest expense.........    6,775    1,147   1,588       9,510
                                   --------  -------  ------   ---------
Net income before taxes........... $  3,757  $    679 $    5       4,441
                                   ========  ======== ======
Net corporate overhead expense....                                   786
Income tax expense................                                 1,322
                                                               ---------
Net income........................                             $   2,333
                                                               =========

                                     - 29b -

      Commercial Banking Activities. The Company's commercial banking activities
are  conducted  through the Bank.  Net interest  income of the Bank for the year
ended December 31, 2000 was $11.6 million, compared to $9.3 million for the same
period  in 1999,  a $2.3  million  or  24.7%  increase.  Based on the  Company's
analysis of its loan  portfolio and loan loss reserve,  the loan loss  provision
was  decreased to $650  thousand for 2000,  compared to $785  thousand for 1999.
Non-interest  income  for 2000 was $2.0  million,  unchanged  from  1999.  Total
non-interest  expense was $7.6  million for 2000,  compared to $6.8  million for
1999,  an 11.8%  increase.  Net income  before  taxes was $5.4 million for 2000,
compared to $3.8 million for 1999, a 42.1% increase.

      Trust  Activities.  United Trust  reported net income before taxes of $476
thousand for the year ended  December 31,  2000,  compared to $679  thousand for
1999, a decrease of $203 thousand.  Results from 1999 included an  extraordinary
fee of $350 thousand from a trust account for services  provided in  conjunction
with the sale of a closely held company.

      Investment  Advisory  Activities.  Net loss before  taxes for EPW was $145
thousand for the year ended  December 31,  2000,  compared to net income  before
taxes of $5 thousand for the same period of 1999, a $150 thousand  decrease.  In
2000,   expenses  of  $495  thousand  were  incurred  due  to  the  issuance  of
"performance  shares" pursuant to the acquisition of EPW as compared to expenses
of $297  thousand in 1999.  At December 31, 2000 all  liability  relating to the
acquisition of EPW had been recognized and no more "performance  shares" will be
issued.  Income before taxes without this expense would have been $350 thousand,
an increase of $48 thousand over 1999.  This increase  would have been primarily
due to an increase in the volume of assets under management by EPW.

Analysis of Net Interest Income

      Net  interest  income  for the year  ended  December  31,  2000 was  $11.2
million, compared to $8.9 million for the same period in 1999, a $2.3 million or
25.8%  increase.  Interest  income was $19.1 million for the year ended December
31, 2000,  compared to $14.7 million for the same period in 1999, a $4.4 million
or 29.9% increase. Interest expense was $7.9 million for the year ended December
31,  2000,  compared to $5.8 million for the same period in 1999, a $2.1 million
or 36.2% increase.

      The   following   table   summarizes   the   average   yields   earned  on
interest-earning   assets  and  the  average  rates  paid  on   interest-bearing
liabilities  for the  years  ended  December  31,  2000  and  1999  (dollars  in
thousands):














(Continued on Page 30b & 30c)

                                     - 30a -

(Continued from Page 30a)

                                            Year  Ended December 31,
                                                     2000
                                       ------------------------------------
                                          Average                 Average
                                          Balance   Interest       Rate
                                       ---------  ----------      -------
Summary of average rates/interest
  earning assets:
Interest earning assets:
  Loans, net(1)......................  $ 166,605  $   17,030       10.22%
  Securities:
  Investment securities - taxable....     25,496       1,618        6.35
  Investment securities -                    744          37        7.89
non-taxable(2)

  Federal funds sold.................      7,211         452        6.27
                                       ---------  ----------
  Total earning assets...............    200,056      19,137        9.58%
  Non-earning assets.................     28,279
                                       ---------
Total average assets.................  $ 228,335
                                       =========

Interest bearing liabilities:
  NOW & money market.................  $  69,137       2,414        3.49%
  Savings............................      4,974         102        2.05
  Time, $100,000 & over..............     22,053       1,338        6.07
  Time other.........................     53,188       2,980        5.60
  Convertible subordinated
    debentures.......................        630          50        8.00
  Long-term debt.....................          -           -           -
  Trust preferred securities.........      6,750         633        9.40
  Other borrowings...................     12,512         423        3.38
                                       ---------  ----------
Total interest bearing liabilities...    169,244       7,940        4.69%

Non-Interest bearing liabilities:
  Deposits...........................     37,841
  Other..............................      3,006
  Stockholders' equity...............     18,244
                                       ---------
Total liabilities and stockholders'
   equity............................  $ 228,335
                                       =========
  Net interest & net interest spread.             $   11,197        4.89%
                                                  ==========     =======
  Net interest margin................                               5.61%
                                                                 =======






(Continued on Page 30c)

                                     - 30b -

(Continued from Page 30a & Page 30b)

                                               Year  Ended December 31,
                                                         1999
                                       -------------------------------------
                                           Average                   Average
                                           Balance     Interest       Rate
                                           ----------  --------      -------
Summary of average rates/interest
  earning assets:
Interest earning assets:
  Loans, net(1)......................     $  133,243   $   12,784       9.59%
  Securities:
  Investment securities - taxable....         25,344        1,613       6.36
  Investment securities -                        854           43       7.99
non-taxable(2)

  Federal funds sold.................          5,454          270       4.95
                                          ----------   ----------
  Total earning assets...............        164,895       14,710       8.94%
  Non-earning assets.................         26,534
                                          ----------
Total average assets.................     $  191,429
                                          ==========

Interest bearing liabilities:
  NOW & money market.................     $   57,058        1,628       2.85%
  Savings............................          5,230          107       2.05
  Time, $100,000 & over..............         13,437        7,004       5.21
  Time other.........................         50,911        2,527       4.96
  Convertible subordinated
    debentures.......................            630           50       8.00
  Long-term debt.....................             11            1       9.09
  Trust preferred securities.........          6,750          633       9.40
  Other borrowings...................          7,296          193       2.65
                                          ----------   ----------
Total interest bearing liabilities...        141,323        5,839       4.13%

Non-Interest bearing liabilities:
  Deposits...........................         31,779
  Other..............................          2,354
  Stockholders' equity...............         15,973
                                          ----------
Total liabilities and stockholders'
   equity............................     $  191,429
                                          ==========
  Net interest & net interest spread.                   $    8,871      4.80%
                                                        ==========      ====
  Net interest margin................                                   5.40%
                                                                        ====

(1)    Includes non-accrual loans.

(2)    Yield calculated on a tax adjusted basis.




                                - 30c)

      The  following  table  reflects the change in net  interest  income due to
changes in the volume and rate of the Company's  assets and  liabilities for the
twelve month period ended December 31, 2000:

                                                  Increase (Decrease)
Changes in net interest income                          Rate/   Combination
  (dollars in thousands)               Volume    Rate   Volume     Total
                                      ---------  -----  ------  -----------
Interest earning assets:
  Loans, net..........................$   3,201  $ 836  $  209  $   4,246
  Securities:
  Investment securities - taxable.....       10     (5)     (0)         5
  Investment securities - non-taxable.       (9)    (1)      4         (6)
  Federal funds sold..................       87     72      23        182
                                      ---------  -----  ------  ---------
Total change in interest income.......    3,289    902      236     4,427

Interest bearing liabilities:
  NOW & money market..................      345    364     77         786
  Savings.............................       (5)     0       0         (5)
  Time, $100,000 & over...............      449    115      74        638
  Time other..........................      113    325     15         453
  Convertible subordinated debentures.        -      -       -          -
  Long-term debt......................       (1)    (1)      1         (1)
  Trust preferred securities..........        -      -       -          -
  Other borrowings....................      138     54      38        230
                                      ---------  -----  ------  ---------
Total change in interest expense......    1,039    857     205      2,101
                                      ---------  -----  ------  ---------
Increase in net interest income.......$   2,250  $  45  $   31  $   2,326
                                      =========  =====  ======  =========

Noninterest Income

      Noninterest  income for the year ended December 31, 2000 was $5.1 million,
unchanged from the same period in 1999. Increases in service charges on deposits
and loan  servicing  fees of $261  thousand were offset by decreases in gains on
sale of SBA loans and other service charges.

      The following table indicates the components of noninterest income for the
years ended December 31, 2000 and 1999 (dollars in thousands):

                                                     For the Years Ended
                                                        December 31,
                                                                Increase/
                                              2000       1999  (Decrease)
                                         ---------  ---------  ----------
Service charges on deposit accounts..... $   1,014  $     797  $     217
Trust and investment management income..     3,172      3,176         (4)
Other service charges, fees, and income.       267        363        (96)
Loan servicing fees.....................       210        166         44
Net trading account profit..............        (6)        42        (48)
Income on cash value life insurance.....       141        135          6
Gain on sale of SBA loans...............       286        442       (156)
                                         ---------  ---------  ----------
Total noninterest income................ $   5,084  $   5,121  $     (37)
                                         ========== =========  ==========

                                     - 31 -

Noninterest Expense

      Total  noninterest  expense for the year ended December 31, 2000 was $10.8
million,  compared to $9.6  million for the same period in 1999,  an increase of
$1.2  million  or 12.5%.  Substantially  all of the  increase  was in salary and
benefits,  and includes the expense of staffing new branch offices as well as an
increase in expense related to the EPW "performance shares."

      The following table reflects the components of noninterest expense for the
years ended December 31, 2000 and 1999 (dollars in thousands):

                                               For the Years Ended
                                                  December 31,
                                                                     Increase/
                                       2000            1999         (Decrease)
                                  -------------   -------------    -----------
Salaries and employee benefits....$     6,501     $     5,361      $     1,140
Occupancy expense.................        514             520               (6)
Furniture and equipment expense...        604             607               (3)
Data processing expense...........        587             487              100
Legal and professional fees.......        208             175               33
Amortization of intangible assets.        118              85               33
Advertising.......................        367             352               15
Telephone expense.................        189             185                4
Stationery and supplies...........        181             177                4
Directors fees....................        243             191               52
Postage expense...................        108             112               (4)
Consulting fees...................        151             275             (124)
Other operating expenses..........      1,073           1,025               48
                                  -----------     -----------     ------------

Total noninterest expense.........$    10,844     $     9,552     $      1,292
                                  ===========     ===========     ============

LIQUIDITY AND ASSET/LIABILITY MANAGEMENT

     The Investment and  Asset/Liability  Committee of the Board of Directors of
the Bank  reviews  the  Bank's  liquidity,  which  is its  ability  to  generate
sufficient  cash to meet the  funding  needs of  current  loan  demand,  deposit
withdrawals,  and other cash  demands.  The primary  sources of funds consist of
deposits,  amortization  and prepayments of loans,  sales of investments,  other
funds  from  operations  and the  Bank's  capital.  The Bank is a member  of the
Federal  Home Loan Bank of  Atlanta  ("FHLB")  and has the  ability to borrow to
supplement its liquidity needs.

     When the Bank's primary sources of funds are not sufficient to meet deposit
outflows, loan originations and purchases and other cash requirements,  the Bank
may supplementally  borrow funds from the FHLB and from other sources.  The FHLB
acts as an additional  source of funding for banks and thrift  institutions that
make residential mortgage loans.

     FHLB  borrowings,  known as "advances",  are secured by the Bank's mortgage
loan  portfolio,  and the terms  and rates  charged  for FHLB  advances  vary in
response to general economic conditions.  As a shareholder of the FHLB, the Bank
is  authorized to apply for advances from this bank. A wide variety of borrowing
plans are offered by the FHLB, each with its own maturity and interest rate. The
FHLB will  consider  various  factors,  including  an  institution's  regulatory

                                     - 32 -

capital  position,  net  income,  quality  and  composition  of assets,  lending
policies and practices,  and level of current  borrowings  from all sources,  in
determining the amount of credit to extend to an institution. As of December 31,
2001, the Company had no FHLB advances outstanding.

     A Florida  chartered  commercial  bank is  required to maintain a liquidity
reserve of at least 15% of its total  transaction  accounts  and 8% of its total
nontransaction  accounts  less deposits of certain  public funds.  The liquidity
reserve  may consist of cash on hand,  cash on demand  with other  correspondent
banks and other investments and short-term  marketable  securities as determined
by the rules of the  Department,  such as federal  funds sold and United  States
securities  or securities  guaranteed by the United States or agencies  thereof.
The Company  complies with  applicable  liquidity  reserve  requirements.  As of
December  31, 2001 the Bank had  liquidity  of  approximately  $51.3  million or
approximately  18.1% of total deposits  combined with borrowings.  The Company's
primary  sources of funds consist of principal  payments on loans and investment
securities,  proceeds from sales and maturities of securities available for sale
and net  increases  in  deposits.  The  Company  uses its funds  principally  to
purchase   investment   securities  and  fund  existing  and   continuing   loan
commitments.  At December 31,  2001,  the Company had  commitments  to originate
loans totaling $47.5 million.  Scheduled  maturities of  certificates of deposit
during the 12 months  following  December  31, 2001 total  $107.1  million as of
December 31,  2001.  Management  believes the Company has adequate  resources to
fund all its  commitments,  and, if so desired,  that it can adjust the rates on
certificates  of  deposit  to  retain  deposits  in  a  changing   interest-rate
environment.

Asset/Liability Management

      One of the primary objectives of the Company is to reduce  fluctuations in
net interest income caused by changes in interest rates. To manage interest rate
risk,  the Board of Directors has  established  interest-rate  risk policies and
procedures  which delegate to the Investment and  Asset/Liability  Committee the
responsibility to monitor and report on interest-rate risk, devise strategies to
manage  interest-rate risk, monitor loan originations and deposit activity,  and
approve all pricing strategies.

      The  management  of  interest-rate  risk  is one of the  most  significant
factors  affecting the ability to achieve  future  earnings.  The measure of the
mismatch of assets maturing or repricing within certain periods, and liabilities
maturing or  repricing  within the same period,  is commonly  referred to as the
"gap" for such period. Controlling the maturity or repricing of an institution's
assets and  liabilities  in order to  minimize  interest  rate risk is  commonly
referred to as gap  management.  "Negative  gap" occurs when,  during a specific
time period, an institution's  liabilities are scheduled to reprice more rapidly
than its assets, so that,  barring other factors  affecting  interest income and
expense, in periods of rising interest rates the institution's  interest expense
would increase more rapidly than its interest income,  and in periods of falling
interest rates the  institution's  interest  expense would decrease more rapidly
than its interest income. "Positive gap" occurs when an institution's assets are
scheduled to reprice more rapidly than its liabilities,  so that,  barring other
factors  affecting  interest income and expense,  in periods of falling interest
rates,  the  institution's  interest income would decrease more rapidly than its
interest  expense,  and in periods of rising interest rates,  the  institution's
interest  income would  increase more rapidly than its interest  expense.  It is



                                     - 33 -

common to focus on the one-year gap, which is the difference  between the dollar
amount of assets and the dollar  amount of  liabilities  maturing  or  repricing
within the next 12 months.

      To the  extent  market  conditions  permit,  the Bank  follows a  strategy
intended to protect its net  interest  income from  adverse  changes in interest
rates by maintaining  spreads through the  adjustability of its interest earning
assets  and its  interest  bearing  liabilities.  The Bank  employs  a number of
strategies  designed to protect its net interest income. The Bank calculates its
net interest  margin on a monthly basis and compares it to a quarterly  national
peer group  ratio.  Historically,  the Bank has enjoyed a higher than peer group
average  net  interest  margin  as  well as a  higher  margin  than  most of the
community banks operating in Pinellas County.

      Additionally,  the Investment  and  Asset/Liability  Committee  meets on a
quarterly  basis to review the most recent margin  analysis,  the Bank's overall
pricing  strategies,  and a monthly  gap  report  measuring  its  interest  rate
sensitivity position.

      The Bank is also a member  of the  FHLB.  Member  banks  have  access to a
variety of fixed and variable rate  borrowings,  ranging from overnight to up to
20 years or  longer.  Access to these  instruments  can permit the Bank to match
maturities  of  either  specific  groups  of  loans  or  larger,  single  loans.
Currently, the Bank has no FHLB advances outstanding.

      The  cumulative  one-year  gap at December  31, 2001 was a positive  $26.4
million or a positive  7.7%  (expressed as a percentage  of total  assets).  The
Company  performs an income  simulation  analysis to measure net interest income
volatility  when the  portfolio is subjected to a 200 basis point  interest rate
shock.  Based on the results of this  simulation  and the current  interest rate
environment   (taking  into  account  competitive  pricing  and  other  external
factors), the Company believes that its gap position as of December 31, 2001 was
acceptable,  and currently anticipates that a similar positive gap position will
continue in the subsequent one year time period.

      The   following   table   presents   the   maturities   or   repricing  of
interest-earning  assets and interest-bearing  liabilities at December 31, 2001.
The balances shown have been derived based on the financial  characteristics  of
the various  assets and  liabilities.  Adjustable and  floating-rate  assets are
included  in the period in which  interest  rates are next  scheduled  to adjust
rather than their scheduled  maturity dates.  Fixed-rate  loans are shown in the
periods  in which  they are  scheduled  to be repaid  according  to  contractual
amortization and, where appropriate,  prepayment assumptions based on the coupon
rates in the portfolio have been used to adjust the repayment amounts. Repricing
of time deposits is based on their scheduled maturities.













                                     - 34 -

                                INTEREST SENSITIVITY ANALYSIS
                                   (dollars in thousands)
                             0        4        13      37
                           to 3     to 12    to 36    to 60    60+
                          Months   Months    Months   Months  Months    Total
                         ========  =======  =======  =======  =======  ========
ASSETS:
  Federal funds sold.....$ 12,671  $     -  $     -  $     -  $     -  $ 12,671
  Securities.............  13,449    7,365   10,900    3,234   11,514    46,462
  Total Loans............ 110,518   49,328   60,799   16,220   10,621   247,486
                         --------  -------  -------  -------  -------  --------
Total rate sensitive
  assets.................$136,638  $56,693  $71,699  $19,454  $22,135  $306,619
                         ========  =======  =======  =======  =======  ========

LIABILITIES:
  Interest demand and
     savings............ $ 33,939  $     -  $58,954  $     -  $     -  $100,006
  Time deposits..........  41,152   66,137   14,383    4,895        -   126,567
  Other borrowings.......  15,525      151        -        -        -    15,676
  Long term debt.........  10,000        -        -        -    6,750    16,750
                         --------  -------  -------  -------  -------  --------
Total rate sensitive
  liabilities            $100,616  $66,288  $73,337  $ 4,895  $ 6,750  $258,999
                         ========  =======  =======  =======  =======  ========
Dollar gap...............$ 36,022  $(9,595) $(1,638) $14,559  $15,385  $ 47,620
Cumulative dollar gap....$ 36,022  $26,427  $24,789  $39,348  $54,733  $ 47,620
Cumulative gap/total
 assets(1)...............   10.47%    7.68%    7.20%   11.43%   15.90%   13.84%
-------------------
 (1) Calculated based on total assets of $344,192.

The following  tables presents  various  operating ratios at the period ended or
for the period ended:
                                               December 31,
                                      2001           2000          1999
                                      -------------- ------------- ----
Return on average assets............           1.05%         1.34%         1.22%
Return on average equity............          13.36%        16.74%        14.61%
Equity to total assets..............           7.52%         8.02%         8.03%
Dividend payout.....................          31.02%        25.00%        28.46%
Net interest margin.................           4.73%         5.61%         5.40%

      The following  table  summarizes the Company's  securities by maturity and
weighted  average yields at December 31, 2001.  Yields on tax exempt  securities
are  stated  at their  nominal  rates  and have not been  adjusted  for tax rate
differences.  Refer  to  Note  G -  Securities  in  the  Company's  Consolidated
Financial  Statements  for  additional   information  regarding  the  Securities
portfolio.









                                     - 35 -

                                                After One           After 5
                                                Year But           Years But
                              Within One Year   Within 5 Years   Within 10 Years
                              --------------------------------------------------
                              Carrying  Avg     Carrying Avg.    Carrying  Avg.
                              Value     Yield   Value    Yield   Value     Yield
                              ------    -----  -------   -----   -------   -----
Securities held
 to maturity:
  U.S. Treasury
  securities and
  obligations of U.S.
  government corporations
  and agencies               $ 1,000    6.05%  $ 2,410   6.01%   $ 1,500   6.73%

  Obligations of State and
  political subdivisions           0    0.00%      339   6.88%       600   6.15%

  Other short term
  investments                    100    4.10%        -   0.00%         -   0.00%
                             ---------------------------------------------------
                               1,100    5.87%    2,749   6.12%     2,100   6.57%
Mortgage Backed Securities
                             ---------------------------------------------------
Total                        $ 1,100    5.87%  $ 2,749   6.12%   $ 2,100   6.57%
                             ===================================================

Securities available
  for sale:
  U.S. Treasury
  securities and
  obligations of U.S.
  government corporations
  and agencies               $ 1,798    5.78%  $ 1,218   7.15%         -   0.00%

 Obligations of State and
 political subdivisions             -   0.00%    1,216   6.19%       512   9.50%

 Corporate obligations              -   0.00%      525   7.15%         -   0.00%
 Other                          6,750   1.75%        -   0.00%         -   0.00%
                             ---------------------------------------------------
                                8,548   2.60%    2,959   6.33%       512   9.50%
Mortgage Backed Securities
Equity Securities
                             ---------------------------------------------------
Total                        $  8,548   2.60%  $ 2,959   6.33%   $   512   9.50%
                             ===================================================










(Continued on Page 36b)
                                     - 36a -

(Continued from Page 36a)

                                After 10 Years      Total Years
                             ---------------------------------------
                              Carrying  Average   Carrying  Average
                              Value     Yield     Value     Yield
                              ------    -----     -------   ------
Securities held to
  maturity:
  U.S. Treasury
  securities and
  obligations of U.S.
  government corporations
  and agencies                $ 1,003   5.80%     $ 5,913   6.16%

  Obligations of State and
  political subdivisions          515   4.77%       1,454   5.83%

  Other short term
  investments                       -   0.00%         100   4.10%
                           --------------------------------------
                                1,518   5.45%       7,467   6.07%
Mortgage Backed Securities                         12,176   5.92%
                           --------------------------------------
Total                      $  $ 1,518   5.45%    $ 19,643   6.07%
                           ======================================

Securities available
 for sale:
  U.S. Treasury
  securities and
  obligations of U.S.
  government corporations
  and agencies             $  $     -    0.00%   $  3.016    6.34%

 Obligations of State and
 political subdivisions             -    0.00%      1,728    7.17%

 Corporate obligations            500    9.16%      1,025    8.14%
 Other                              -    0.00%      6,750    1.75%
                           --------------------------------------
                                  500    9.16%     12,519    4.12%
Mortgage Backed Securities                         12,302    5.75%
Equity Securities                                   1,998    0.00%
                           --------------------------------------
Total                      $  $   500    9.16%   $ 26,819    4.56%
                           ======================================











                                     - 36b -

FORWARD LOOKING STATEMENTS

      This Form 10-KSB  contains  statements  that  constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
words  "believe,"  "estimate,"  "expect,"  "intend,"  "anticipate"  and  similar
expressions  and variations  thereof  identify  certain of such  forward-looking
statements,  which  speak  only as of the  dates on which  they were  made.  The
Company   undertakes   no   obligation   to   publicly   update  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events,  or  otherwise.  Readers  are  cautioned  that any such  forward-looking
statements  are not  guarantees  of future  performance  and  involve  risks and
uncertainties,  and  that  actual  results  may  differ  materially  from  those
indicated in the forward-looking statements as a result of various factors. Such
factors include competition,  general economic conditions,  potential changes in
interest  rates,  and changes in the value of real estate securing loans made by
the issuer.

FACTORS AFFECTING FUTURE RESULTS

IMPACT OF CHANGES IN REAL ESTATE VALUES

      A significant  portion of the Company's loan  portfolio  consists of loans
secured by real estate.  At December 31, 2001,  5.2% of the Company's loans were
secured by one-to-four  family  residential  real estate,  52.9% were secured by
commercial and multifamily residential real estate, 6.8% were construction loans
and the Company had ORE acquired  through  foreclosure with a book value of $0.1
million. The properties securing these loans are located in Florida. Real estate
values and real estate  markets  generally  are affected by, among other things,
changes in national,  regional or local  economic  conditions,  fluctuations  in
interest rates and the availability of loans to potential purchasers, changes in
the tax laws and other governmental statutes,  regulations and policies and acts
of nature.  Any decline in real estate prices,  particularly  in Florida,  could
significantly  reduce  the  value of the real  estate  collateral  securing  the
Company's real estate loans,  increase the level of the Company's  nonperforming
loans,  require  write-downs  in the book value of its ORE,  and have a material
negative impact on the Company's financial performance. NONPERFORMING ASSETS

Nonperforming Assets
      The Company's  ratio of  nonperforming  assets to total assets was .83% at
December  31,  2001,  which the Company  believes is somewhat  above the average
level  of  other  similarly-sized  financial  institutions.  While  the  Company
carefully manages its loan portfolio with a view to minimizing its nonperforming
assets,  there can be no assurance  that the  Company's  ratio of  nonperforming
assets to total assets will  improve or not  increase,  particularly  if general
economic conditions deteriorate.

ADEQUACY OF ALLOWANCE FOR LOAN LOSSES
      Industry  experience  indicates that a portion of the Company's loans will
become  delinquent  and a portion  of the loans will  require  partial or entire
charge-off.  Regardless of the  underwriting  criteria  utilized by the Company,
losses may be  experienced  as a result of various  factors beyond the Company's
control,  including,  among other things, changes in market conditions affecting
the value of properties and problems  affecting the credit of the borrower.  The
Company's  determination  of the  adequacy of its  allowance  for loan losses is
based  on  various   considerations,   including   an   analysis   of  the  risk
characteristics  of  various   classifications  of  loans,  previous  loan  loss

                                     - 37 -

experience,  specific  loans which would have loan loss  potential,  delinquency
trends,  estimated fair value of the  underlying  collateral,  current  economic
conditions,  the view of the Company's  regulators,  and geographic and industry
loan concentration. If, however, delinquency levels were to increase as a result
of adverse general  economic  conditions,  especially in Florida,  the loan loss
reserve so determined by the Company may not be adequate. To the extent that the
Company's  loan losses  exceed its  allowance  for loan  losses,  the  Company's
results of  operations  would be adversely  affected.  There can be no assurance
that the Company's  allowance for loan losses will be adequate to cover its loan
losses or that the  Company  will not  experience  losses in its loan  portfolio
which may require significant  increases to the allowance for loan losses in the
future.

POTENTIAL IMPACT OF CHANGES IN INTEREST RATES

      The  Company's  profitability  is  dependent  to a large extent on its net
interest  income,  which  is the  difference  between  its  interest  income  on
interest-earning   assets  and  its   interest   expense   on   interest-bearing
liabilities.  The  Company,  like most  financial  institutions,  is affected by
changes in general  interest rate levels,  which are currently at relatively low
levels,  and by other economic  factors  beyond its control.  Interest rate risk
arises from mismatches  (i.e., the interest  sensitivity gap) between the dollar
amount of repricing or maturing assets and liabilities, and is measured in terms
of the ratio of the interest rate  sensitivity gap to total assets.  More assets
repricing or maturing  than  liabilities  over a given time frame is  considered
asset-sensitive  and is  reflected  as a  positive  gap,  and  more  liabilities
repricing  or  maturing  than  assets  over a given  time  frame  is  considered
liability-sensitive  and is  reflected  as a negative  gap.  An  asset-sensitive
position  (i.e.,  a positive gap) will  generally  enhance  earnings in a rising
interest  rate  environment  and will  negatively  impact  earnings in a falling
interest  rate  environment,  while  a  liability-sensitive  position  (i.e.,  a
negative  gap)  will  generally  enhance  earnings  in a falling  interest  rate
environment   and  negatively   impact   earnings  in  a  rising  interest  rate
environment. Fluctuations in interest rates are not predictable or controllable.
The  Company has  attempted  to  structure  its asset and  liability  management
strategies  to mitigate the impact on net  interest  income of changes in market
interest  rates.  At December  31, 2001,  the Company had a one-year  cumulative
positive gap of 7.7%.  This positive  one-year gap position may, as noted above,
have a negative impact on earnings in a falling interest rate environment.

REGULATORY OVERSIGHT

      The Bank is subject to extensive  regulation,  supervision and examination
by the  Department as its  chartering  authority and primary  regulator,  by the
Federal Reserve as its federal regulator and by the FDIC as administrator of the
insurance fund that insures the Bank's deposits up to applicable  limits. As the
holding  company of the Bank, the Company is subject to regulation and oversight
by the Federal Reserve.  Such regulation and supervision  governs the activities
in which an institution may engage and is intended  primarily for the protection
of the FDIC insurance funds and  depositors.  Regulatory  authorities  have been
granted   extensive   discretion  in  connection  with  their   supervisory  and
enforcement   activities  and  regulations  have  been  implemented  which  have
increased capital  requirements,  increased insurance premiums and have resulted
in increased administrative,  professional and compensation expenses. Any change
in the regulatory structure or the applicable statutes or regulations could have
a material  impact on the  Company,  the Bank and their  operations.  Additional


                                     - 38 -

legislation  and regulations may be enacted or adopted in the future which could
significantly  affect the powers,  authority and  operations of the Bank and the
Bank's  competitors  which in turn could have a material  adverse  effect on the
Bank and its operations.

DEPENDENCE ON EXISTING MANAGEMENT

     The Company's  business  depends in large part upon the availability of the
services of its senior  management,  including  Neil W. Savage,  Ward J. Curtis,
Jr.,  Harold J. Winner and William A.  Eickhoff.  If the services of any of such
senior  management  personnel  were to become  unavailable  to the Company,  the
Company's business and operating results could be adversely affected.  While the
Company  maintains  key-man  life  insurance  policies  on certain of its senior
management  personnel,  naming  the  Company  as  beneficiary,  there  can be no
assurance that the proceeds of any such policies would adequately compensate the
Company for the loss of the services of any of such persons.  Neither Mr. Savage
nor Mr. Winner has entered into a non-competition  agreement with the Company or
the Bank.  Although both Mr.  Eickhoff's and Mr. Curtis's  employment  contracts
contain   non-competition   clauses,  the  provisions  terminate  under  certain
conditions.

CONTROL BY EXISTING SHAREHOLDERS

      The  Company's  directors and  executive  officers  (and their  respective
affiliates  and  immediate  family  members)  own  approximately  39.4%  of  the
outstanding  Common  Stock.  As a result of such  ownership,  these persons will
likely be able to  effectively  control the election of the Company's  directors
and the outcome of matters requiring shareholder  approval,  and thereby control
the management and policies of the Company.

COMPETITION

      The  Company  competes  with  various  types  of  financial  institutions,
including  other  commercial  banks and savings  institutions,  and with finance
companies,  mortgage banking  companies,  money market mutual funds,  investment
advisory firms and companies and credit unions, many of which have substantially
greater financial  resources than the Company and, in some cases,  operate under
fewer regulatory constraints.

ANTI-TAKEOVER CONSIDERATIONS

      The Company's articles of incorporation and bylaws and Florida law contain
certain  provisions  that may discourage or make more difficult any attempt by a
person or group to obtain  control of the  Company.  In  addition,  the board of
directors  of the  Company is  empowered  to issue from time to time one or more
series of Undesignated  Preferred Stock without shareholder approval,  the terms
of which could have the effect of delaying or  preventing a change in control of
the Company.

POSSIBLE VOLATILITY OF SHARE PRICE

      The market price of the Common Stock may experience  fluctuations that are
unrelated to the operating  performance of the Company.  The market price of the
Common Stock may be affected by conditions in the securities  markets  generally
as well as  developments  in the banking  industry or the United States or world
economy.  Any  securities  exchange on which the Common  Stock may be traded may


                                     - 39 -

from time to time experience  significant price and volume fluctuations that may
be unrelated to the operating  performance of particular  companies.  The market
price of the Common Stock,  like the stock prices of many  publicly  traded bank
holding companies, may prove to be highly volatile.

RESTRICTIONS ON ABILITY TO PAY DIVIDENDS

      The Company is  primarily  a holding  company  with no  material  business
operations,  sources of income or assets of its own other than the shares of its
subsidiaries.   Because  substantially  all  of  the  Company's  operations  are
conducted through subsidiaries,  the Company's cash flow and, consequently,  its
ability to pay dividends or make other  distributions  is dependent  upon either
third-party  borrowings made by the Company or the cash flow of its subsidiaries
and the  payment  of funds by those  subsidiaries,  including  the Bank,  to the
Company  in the form of  loans,  dividends,  fees or  otherwise.  The  Company's
subsidiaries  are  separate  and  distinct  legal  entities  and  will  have  no
obligation, contingent or otherwise, to make any funds available, whether in the
form of  loans,  dividends  or  otherwise.  Regulatory  limitations  on the Bank
restrict its ability to make loans or distributions to the Company.

ITEM 7.         FINANCIAL STATEMENTS

The following  financial  statements  are contained on pages F-1 through F-46 of
this Report:

   Report of Independent Certified Public Accountants;

   Consolidated Balance Sheets - December 31, 2001 and 2000

   Consolidated Statements of Earnings - Years ended December 31, 2001, 2000
and 1999;

   Consolidated  Statements of  Comprehensive  Income - Years ended December 31,
2001, 2000 and 1999;

   Consolidated  Statement of  Stockholders'  Equity - Years ended  December 31,
2001, 2000 and 1999;

   Consolidated  Statements of Cash Flows - Years ended December 31, 2001,  2000
and 1999;

   Notes to Consolidated Financial Statements

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

None.











                                     - 40 -

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     Information  required  by Item 9 of Form 10-KSB is  incorporated  herein by
reference  to the  Company's  definitive  Proxy  Statement  for the 2002  Annual
Meeting of  Shareholders  which will be filed with the  Securities  and Exchange
Commission no later than 120 days after the close of the Company's fiscal year.

ITEM 10.        EXECUTIVE COMPENSATION

     Information  required by Item 10 of Form 10-KSB is  incorporated  herein by
reference  to the  Company's  definitive  Proxy  Statement  for the 2002  Annual
Meeting of  Shareholders  which will be filed with the  Securities  and Exchange
Commission no later than 120 days after the close of the Company's fiscal year.

ITEM 11.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information  required by Item 11 of Form 10-KSB is  incorporated  herein by
reference  to the  Company's  definitive  Proxy  Statement  for the 2002  Annual
Meeting of  Shareholders  which will be filed with the  Securities  and Exchange
Commission no later than 120 days after the close of the Company's fiscal year.

ITEM 12.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information  required by Item 12 of Form 10-KSB is  incorporated  herein by
reference  to the  Company's  definitive  Proxy  Statement  for the 2002  Annual
Meeting of  Shareholders  which will be filed with the  Securities  and Exchange
Commission no later than 120 days after the close of the Company's fiscal year.

ITEM 13.        EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits
           3.1  Amended and Restated Articles of Incorporation of the Company*
           3.2  Bylaws of the Company*
          10.1  UFH Stock  Option  and  Incentive  Compensation  Plan*
          10.2  Trust Department Stock Option Plan*
          10.3  Eickhoff, Pieper & Willoughby Stock Option Plan*
          10.4  Modification  Agreement*
          10.5  Property  Management Agreement between Imaginative Investments,
                Inc. and the Southeast Companies of Tampa Bay, Inc.*
          10.6  Employment Agreement of Charles O. Lowe*
          10.7  Employment Agreement of Ward J. Curtis, Jr.*
          10.8  Employment Agreement of Harold J. Winner*
          10.9  Employment Agreement of John H. Pieper**
         10.10  Employment Agreement of Neil W. Savage*
         10.11  Employment Agreement of William A. Eickhoff*
         10.12  Salary Continuation Agreement of Harold J. Winner*
         10.13  Salary Continuation Agreement of Neil W. Savage*
         10.14  Agreement  between  Willow  Green  Partnership,  LTD  and  Irwin
                Contracting  relating to foreclosed  property acquired by United
                Bank**
         10.15  Pinellas Bancshares Corporation 8% Convertible Debentures held
                by Eickhoff & Pieper, a Florida General Partnership*
         10.16  Loan Agreement between AmSouth f/k/a AmSouth Bank of Florida and
                UFH f/k/a Pinellas Bancshares Corporation*
            21  List of Subsidiaries
                                     - 41 -


     *This  information  is  incorporated  herein by reference to the  Company's
     Amendment No. 2 to Registration Statement on Form SB-2 (File No. 333-60431)
     previously filed with the Commission on October 7, 1998.

     **This  information  is  incorporated  herein by reference to the Company's
     Form 10KSB filed on March 31, 1999.

(b)  Reports on Form 8-K

     One Form 8-K was filed on April 30, 2001,  announcing the completion of the
Stock Purchase  Agreement and Amendments  dated September 22, 2000,  pursuant to
which the  company  acquired  all  outstanding  shares of Common  Stock of First
Security Bank. The transaction was completed on April 6, 2001, with an effective
date of April 1, 2001.

     One Form 8-K was filed on  December 3, 2001,  announcing  that the Board of
Directors of the Company had  authorized  the repurchase of up to 300,000 shares
of its Common Stock.

 SIGNATURES

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

                                               UNITED FINANCIAL HOLDINGS, INC.
Date:    February 26, 2002                     By: /s/ Neil W. Savage
                                               ------------------
                                               Neil W. Savage
                                               President and
                                               Chief Executive Officer

     In accordance  with the  Securities  Exchange Act of 1934,  this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

                  Signature              Title                     Date
                  ---------              -----                     ----
/s/ John B. Norrie                Chairman of the Board       February 26, 2002
---------------------------
John B. Norrie

/s/ Neil W. Savage               President, Chief Executive   February 26, 2002
---------------------------      Officer and Director
Neil W. Savage                   (Princial) Executive Officer)

/s/ Robert J. Banks                     Director              February 26, 2002
---------------------------
Robert J. Banks

/s/ Ronald E. Clampitt                  Director              February 26, 2002
---------------------------
Ronald E. Clampitt




                                     - 42 -


/s/ Ward J. Curtis                      Director              February 26, 2002
---------------------------
Ward J. Curtis

/s/ David K. Davis                      Director              February 26, 2002
---------------------------
David K. Davis

/s/ William A. Eickhoff                 Director              February 26, 2002
---------------------------
William A. Eickhoff

/s/ Edward D. Foreman                   Director              February 26, 2002
---------------------------
Edward D. Foreman

/s/ Ian F. Irwin                        Director              February 26, 2002
---------------------------
Ian F. Irwin

/s/ Charles O. Lowe                     Director              February 26, 2002
---------------------------
Charles O. Lowe

/s/ Jack A. MaCris, M.D.                Director              February 26, 2002
Jack A. MaCris, M.D.

/s/ William B. McQueen                  Director              February 26, 2002
----------------------------
William B. McQueen

/s/ Ronald R. Petrini                   Director              February 26, 2002
----------------------------
Ronald R. Petrini

/s/ John B. Wier, Jr.                   Director              February 26, 2002
----------------------------
John B. Wier, Jr.


/s/ Harold J. Winner                    Director              February 26, 2002
----------------------------
Harold J. Winner

/s/ C. Peter Bardin              Chief Financial Officer      February 26, 2002
----------------------------     (Principal Financial Officer)
C. Peter Bardin










                                     - 43 -