<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    Form 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____

                       Commission File Number: 000-24853

                         FRONTIER NATIONAL CORPORATION
            (Exact name of registrant as specified in its charter)

         Alabama                                        72-1355228
(State of Incorporation)                     (IRS Employer Identification No.)

                                43 N. Broadway
                              Sylacauga, AL 35150
                    (Address of Principal Executive Office)

                                 256-401-2041
               (Issuer's telephone number, including area code)

    (Former name, former address and former fiscal year, if changed since
                                 last report)

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

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

Class A, Common Stock, $.001 par       Outstanding at August 10, 2001: 3,427,569
                                                                       ---------
<PAGE>

                         FRONTIER NATIONAL CORPORATION

                            June 30, 2001 Form 10-Q

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                Page No.
                                                                                --------
<C>      <S>                                                                    <C>
Part 1.  Financial Information

 Item 1. Financial Statements (Unaudited)

         Consolidated Statements of Financial Condition as of
             June 30, 2001 and December 31, 2000..............................      2

         Consolidated Statements of Income For the Three Months and Six Months
             Ended June 30, 2001 and 2000.....................................      3

         Consolidated Statements of Comprehensive Income For the Three Months
             and Six Months Ended June 30, 2001 and 2000......................      4

         Consolidated Statements of Cash Flows For the Six Months
             Ended June 30, 2001 and 2000.....................................      5

         Consolidated Statement of Shareholders' Equity For the Six Months
             Ended June 30, 2001..............................................      6

         Notes to Consolidated Financial Statements...........................      7

 Item 2. Management's Discussion and Analysis of
             Financial Condition and Results of Operations....................     10

 Item 3. Quantitative and Qualitative Disclosures About Market Risk...........     15

Part 2.  Other Information

 Item 1. Legal Proceedings....................................................     16

 Item 4. Submission of Matters to a Vote of Security Holders..................     17

 Item 6. Exhibits and Reports on Form 8-K.....................................     18

 Signatures...................................................................     19

</TABLE>
<PAGE>

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>

                                                                     June 30,
                                                                       2001       December 31,
                                                                   (Unaudited)      2000
                                                                  ------------   ------------
<S>                                                               <C>            <C>
Assets
 Cash and due from banks........................................  $  7,439,690   $  4,847,281
 Interest bearing deposits with other banks.....................       376,619        231,466
 Federal funds sold.............................................     5,034,000      6,220,000
                                                                  ------------   ------------
  Cash and cash equivalents.....................................    12,850,309     11,298,747
 Securities available-for-sale..................................    43,780,345     44,683,224
 Loans, net of unearned income..................................   163,414,965    160,199,121
 Allowance for loan losses......................................    (1,678,741)    (1,711,665)
 Premises and equipment, net....................................     9,012,841      8,458,207
 Accrued interest receivable....................................     1,740,214      1,861,978
 Cash surrender value on life insurance.........................     5,462,116      5,330,815
 Intangible assets, net.........................................     1,322,839      1,370,180
 Foreclosed real estate.........................................       224,383        392,582
 Other assets...................................................       953,265        916,639
                                                                  ------------   ------------
     Total Assets...............................................  $237,082,536   $232,799,828
                                                                  ------------   ------------
Liabilities and Shareholders' Equity

 Liabilities
  Deposits:
   Noninterest bearing deposits.................................  $ 23,872,676   $ 24,126,119
   Interest-bearing deposits....................................   157,342,577    153,844,037
                                                                  ------------   ------------
     Total Deposits.............................................   181,215,253    177,970,156
  Dividends payable.............................................            --        436,152
  Accrued interest payable......................................     1,290,830      1,158,688
  Short-term borrowings.........................................       244,773      3,961,078
  Long-term debt................................................    30,592,000     25,442,000
  Other liabilities.............................................       765,179        861,209
                                                                  ------------   ------------
     Total Liabilities..........................................   214,108,035    209,829,283
                                                                  ------------   ------------
 Shareholders' Equity
  Common stock ($.001 par value; 10,000,000 shares authorized,
   3,497,497 issued of which 3,427,569 were outstanding at
   June 30, 2001, and 3,421,953 at December 31, 2000)...........         3,498          3,498
  Paid-in capital...............................................    14,220,854     14,239,609
  Retained earnings.............................................     9,436,084      9,684,470
  Treasury stock, at cost (69,928 shares at June 30, 2001, and
   75,544 shares at December 31, 2000)..........................      (960,453)    (1,046,547)
  Accumulated other comprehensive income (loss): net
   unrealized holding gains on securities available-for-sale,
   net of deferred income tax...................................       274,518         89,515
                                                                  ------------   ------------
     Total Shareholders' Equity.................................    22,974,501     22,970,545
                                                                  ------------   ------------
     Total Liabilities and Shareholders' Equity.................  $237,082,536   $232,799,828
                                                                  ============   ============
</TABLE>

                See notes to consolidated financial statements

                                       2
<PAGE>

                       CONSOLIDATED STATEMENTS OF INCOME

                FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

           Three Months and Six Months Ended June 30, 2001 and 2000
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                    Three Months Ended           Six Months Ended
                                                         June 30                     June 30
                                                 -------------------------  -------------------------
                                                     2001          2000          2001          2000
                                                 ----------    ----------    ----------    ----------
<S>                                              <C>           <C>           <C>           <C>
Interest Income
       Interest and fees on loans..............  $3,735,537    $3,712,083    $7,440,273    $7,290,985
       Interest and dividends on securities:
          Taxable securities...................     419,700       438,255       816,986       908,053
          Nontaxable securities................     221,062       298,496       481,222       626,964
       Interest on deposits with other banks...       4,580         4,010        14,699        14,472
       Interest earned on federal funds sold...      72,907        32,713       176,254       104,105
                                                 ----------    ----------    ----------    ----------
          Total Interest Income................   4,453,786     4,485,557     8,929,434     8,944,579

Interest Expense
       Interest on deposits....................   1,830,931     1,700,475     3,722,376     3,352,310
       Interest on borrowed funds..............     400,441       408,512       816,537       769,624
                                                 ----------    ----------    ----------    ----------
          Total Interest Expense...............   2,231,372     2,108,987     4,538,913     4,121,934

Net Interest Income............................   2,222,414     2,376,570     4,390,521     4,822,645
Provision for loan losses......................      (7,477)      (29,996)      (58,184)     (226,763)
                                                 ----------    ----------    ----------    ----------

Net Interest Income After Provision for
   Loan Losses.................................   2,214,937     2,346,574     4,332,337     4,595,882

Noninterest Income
       Customer service fees...................     308,143       445,160       612,897       760,351
       Commission income.......................     352,640       380,594       668,784       739,447
       Other operating income..................     147,400        88,558       268,749       246,542
       Securities gains........................          --         2,914        83,940         2,914
                                                 ----------    ----------    ----------    ----------
          Total Noninterest Income.............     808,183       917,226     1,634,370     1,749,254

Noninterest Expense
       Salaries and employee benefits..........   1,212,532     1,122,496     2,451,467     2,229,920
       Net occupancy expense...................     345,378       357,299       695,456       681,980
       Other operating expenses................     794,145       706,648     1,539,572     1,401,300
                                                 ----------    ----------    ----------    ----------
          Total Noninterest Expenses...........   2,352,055     2,186,443     4,686,495     4,313,200

Income before income taxes.....................     671,065     1,077,357     1,280,212     2,031,936
Provision for income taxes.....................    (126,988)     (320,184)     (270,727)     (590,742)
                                                 ----------    ----------    ----------    ----------
Net Income.....................................  $  544,077    $  757,173    $1,009,485    $1,441,194
                                                 ==========    ==========    ==========    ==========

Earnings Per Common Share
       Basic...................................       $0.16         $0.22         $0.29         $0.42
       Diluted.................................        0.15          0.22          0.29          0.41
Weighted Average Shares Outstanding
       Basic...................................   3,424,436     3,416,224     3,423,320     3,415,985
       Diluted.................................   3,511,833     3,484,789     3,516,072     3,485,960
</TABLE>

                See notes to consolidated financial statements

                                       3
<PAGE>

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

           Three Months and Six Months Ended June 30, 2001 and 2000
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                         Three Months Ended         Six Months Ended
                                                               June 30                  June 30
                                                       ---------------------    -----------------------
                                                          2001        2000          2001          2000
                                                       ---------    --------    ----------    ----------
<S>                                                    <C>         <C>         <C>           <C>
Net Income...........................................  $ 544,077    $757,173    $1,009,485    $1,441,194
Other comprehensive, net of tax:
Unrealized gains (losses) on securities:
   Unrealized holding gains (losses) arising
       during the period.............................   (125,901)    (96,822)      383,169       282,000
   Reclassification adjustments for (gains)
       losses included in net income.................         --      (2,914)      (83,940)       (2,914)
                                                       ---------    --------    ----------    ----------
          Net unrealized gains (losses)..............   (125,901)    (99,736)      299,229       279,086
   Income tax (expense) benefit related to items of
       other comprehensive income....................     45,198      37,984      (114,226)     (101,825)
                                                       ---------    --------    ----------    ----------
Other comprehensive income (loss)....................    (80,703)    (61,752)      185,003       177,261
                                                       ---------    --------    ----------    ----------
Comprehensive Income.................................  $ 463,374    $695,421    $1,194,488    $1,618,455
                                                       =========    ========    ==========    ==========
</TABLE>

                See notes to consolidated financial statements

                                       4
<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                    Six Months Ended June 30, 2001 and 2000
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                             2001           2000
                                                         -----------   ------------
<S>                                                      <C>           <C>
Operating Activities
  Net cash provided by operating activities............  $   818,291   $  2,199,329

Investing Activities
 Proceeds from sales of securities available-for-sale..    9,003,378      5,978,499
 Purchases of securities available-for-sale............   (7,706,614)      (250,000)
 Net increase in loans to customers....................   (3,288,152)   (19,635,919)
 Purchases of premises and equipment, net..............     (913,000)    (1,400,882)
 Proceeds from sale of foreclosed real estate..........      149,399         90,903
                                                         -----------   ------------
  Net Cash Used In Investing Activities................   (2,754,989)   (15,217,399)
                                                         -----------   ------------

Financing Activities
 Net increase in deposits..............................    3,245,097      5,065,462
 Net increase (decrease) in federal funds purchased....   (2,000,000)     3,240,000
 Net increase (decrease) in short-term borrowings......   (1,716,305)       213,148
 Dividends paid........................................   (1,257,871)      (874,281)
 Proceeds from sale of treasury stock..................       67,339         58,032
 Treasury stock purchased..............................           --        (38,500)
 Proceeds from notes payable, net......................    5,150,000      1,400,000
                                                         -----------   ------------
  Net Cash Provided By Investing Activities............    3,488,260      9,063,861
                                                         -----------   ------------

Net Increase (Decrease) in Cash and Cash Equivalents...    1,551,562     (3,954,209)

Cash and Cash Equivalents at Beginning of Period.......   11,298,747     13,644,076
                                                         -----------   ------------

Cash and Cash Equivalents at End of Period.............  $12,850,309   $  9,689,867
                                                         ===========   ============
</TABLE>

                 See notes to consolidated financial statements

                                       5
<PAGE>

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                         Six Months Ended June 30, 2001
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                Accumulated
                                                                                   Other
                            Common   Paid-In      Retained         Treasury    Comprehensive
                            Stock    Capital      Earnings          Stock      Income (Loss)     Total
                           ------  -----------   -----------     -----------   -------------  -----------
<S>                       <C>      <C>           <C>           <C>             <C>       <C>
Balance at
 December 31, 2000......   $3,498  $14,239,609   $ 9,684,470     $(1,046,547)     $ 89,515    $22,970,545
Net income -
 June 30, 2001..........       --           --     1,009,485              --            --      1,009,485

Unrealized gains on
 securities available-
 for sale, net of
 reclassification
 adjustment, net of
 tax of ($114,226)......       --           --            --              --       185,003        185,003
                                                                                              -----------
Comprehensive
 income.................       --           --            --              --            --      1,194,488
                                                                                              -----------

Cash dividends-
 common.................       --           --    (1,257,871)             --            --     (1,257,871)

Issuance of
 treasury stock.........       --      (18,755)           --          86,094            --         67,339
                           ------  -----------   -----------     -----------   -------------  -----------

Balance at
 June 30, 2001..........   $3,498  $14,220,854   $ 9,436,084     $  (960,453)     $274,518    $22,974,501
                          =======  ===========   ===========   =============      ========    ===========
</TABLE>


                 See notes to consolidated financial statements

                                       6
<PAGE>

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                                 June 30, 2001
                                  (Unaudited)

Note A - Basis of Presentation

The consolidated financial statements include the accounts of Frontier National
Corporation (the "Company") and its wholly-owned subsidiaries, Frontier National
Bank, Lanett, Alabama, Frontier National Bank, Sylacauga, Alabama, Frontier
Finance Company, Inc., and Frontier Financial Services, Inc., collectively, the
Bank.  The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the six-month period ended June 30, 2001,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001.  For further information, refer to the consolidated
financial statements and footnotes thereto for Frontier National Corporation and
subsidiaries for the year ended December 31, 2000, included in Form 10-K filed
in March 2001.

Note B - Income Taxes

The effective tax rates of approximately 21 percent and 29 percent for the six
months ended June 30, 2001 and 2000, respectively, are less than the statutory
rate principally because of the effect of tax-exempt interest income.

Note C - Securities

The Company applies the accounting and reporting requirements of Statement of
Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain
Investments in Debt and Equity Securities. This pronouncement requires that all
investments in debt securities be classified as either "held-to-maturity"
securities, which are reported at amortized cost; "trading" securities, which
are reported at fair value, with unrealized gains and losses included in
earnings; or "available-for-sale" securities, which are reported at fair value,
with unrealized gains and losses excluded from earnings and reported in a
separate component of shareholders' equity (net of deferred tax effect).

At June 30, 2001, the Company had net unrealized gains of $422,816 in available-
for-sale securities that are reflected in the presented assets and resulted in
an increase in shareholders' equity of $274,518, net of deferred tax.  There
were no trading securities.

The net increase in shareholders' equity as a result of the SFAS No. 115
adjustment from December 31, 2000 to June 30, 2001 was $185,003.  See also
Note D - Shareholders' Equity.

                                       7
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                                  June 30, 2001
                                  (Unaudited)

Note D - Shareholders' Equity

During the first six months of 2001, cash dividends of $1,257,871 were charged
against equity. Equity was increased by $185,003 for the increase in net
unrealized gains on securities. Treasury stock was reissued, increasing
shareholders' equity $67,339. See also Note E - Treasury Stock.

Note E - Treasury Stock

During the first six months of 2001, 5,616 shares of common stock held in
treasury at cost were reissued and accounted for on a first-in-first-out method.
The treasury stock balance represents 69,928 shares at June 30, 2001, and 75,544
shares at December 31, 2000.

Note F - Segment Reporting

All of the Company's offices offer similar products and services, are located in
the same geographic region, and serve the same customer segments of the market.
As a result, management considers all units as one operating segment and
therefore feels that the basic financial statements and related footnotes
provide details related to segment reporting.

Note G - Subsequent Events

On July 9, 2001, the Board declared a dividend of $0.1275 payable to
stockholders of record as of July 9, 2001, and to be paid on September 26, 2001.

Note H - Stock Options

The Company has issued a total of 251,500 incentive stock options of which all
are outstanding at exercise prices ranging from $6.67 to $13.00 (the fair market
values on the grant dates).  These options vest over a five-year time period at
20% on each anniversary of the grant date and expire ten years from the grant
date.

The Company has issued a total of 54,000 nonqualified stock options at exercise
prices ranging from $9.375 to $13.00 (the fair market values on the grant
dates).  These options are immediately exercisable and expire on the one-year
anniversary date of the director's termination of service to the Board.

                                       8
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                                  June 30, 2001
                                  (Unaudited)

Note I - Business Combination

First Bank Of Childersburg ("First Bank") is a state-chartered bank with offices
located in Childersburg, Chelsea, and Vincent, Alabama (located in Talladega and
Shelby counties), as well as Grant, Alabama, (located in Marshall county).  The
sole shareholder of First Bank has decided to concentrate his resources and time
with his bank assets in Northern Alabama, as well as other assets in Tennessee.
As a result, he has decided to sell the offices in Talladega and Shelby
counties. After many discussions with the management of Frontier National Bank,
a Purchase and Assumption Agreement was entered into between the parties on
April 27, 2001, and further amended on May 18, 2001.

The transaction will basically involve the purchase of substantially all assets
and the assumption of certain liabilities pursuant to the Purchase Agreement and
related documents except that $3.2 million in loans will be retained by First
Bank. Frontier National Bank will also acquire real property located in
Childersburg and Vincent.    The purchase price will be in the form of 58,667
shares of Series A preferred stock of the Company with a stated value of
$704,000.

Note J - New Subsidiary

Frontier Reinsurance, Inc., formed on May 18, 2001, offers credit life and
credit accident and health insurance products for sale. Frontier Reinsurance,
Inc. was initially capitalized with $250,000 (allocated $75,000 to common stock
and $175,000 to paid-in capital).

As a result of the creation and operation of the reinsurance operation, the Bank
enjoys certain tax advantages, enhanced profits, and reduced financial risk.

                                       9
<PAGE>

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

This discussion is intended to assist an understanding of the Company and its
Subsidiaries' financial condition and results of operations.  Unless the context
otherwise indicates, "the Company" shall include the Company and its
Subsidiaries.  This analysis should be read in conjunction with the consolidated
financial statements and related notes appearing in Item 1 of the June 30, 2001,
Form 10-Q.

Forward-Looking Statements

Certain statements in this report are forward-looking in nature and relate to
trends and events that may affect the Company's future financial position and
operating results.  Such statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  The terms
"expect," "anticipate," "intend," and "project" and similar words or expressions
are intended to identify forward-looking statements. These statements speak only
as of the date of this report.  The statements are based on current
expectations, are inherently uncertain, are subject to risks, and should be
viewed with caution.  Actual results and experience may differ materially from
the forward-looking statements as a result of many factors, including changes in
economic conditions in the markets served by the Company, increasing competition
and other unanticipated events and conditions.  It is not possible to foresee or
identify all such factors. The Company makes no commitment to update any
forward-looking statements or to disclose any facts, events, or circumstances
after the date hereof that may affect the accuracy of any forward-looking
statement.

FINANCIAL CONDITION

June 30, 2001, compared to December 31, 2000

Loans

Loans comprised the largest single category of the Company's earning assets on
June 30, 2001.  Loans, net of unearned income and allowance for loan losses,
were 68.2% of total assets at June 30, 2001, and 68.1% of total assets at
December 31, 2000. Total net loans were $161,736,224 at June 30, 2001,
representing a 2.0% increase from the December 31, 2000, total of $158,487,456.
This slight increase is the result of a general slowdown in the economy and
lowered residential interest rates.  The slower economy has resulted in lower
demand for the Company's loan products, while the lower interest rates have
caused many consumers to refinance existing loans.

Investment Securities and Other Earning Assets

The investment securities portfolio is used to make various term investments, to
provide a source of liquidity and to serve as collateral to secure certain
government deposits.  Federal funds sold are a tool in managing the daily cash
position of the Company.  Investment securities and federal funds sold decreased
$2,088,879 from December 31, 2000 to June 30, 2001.  Investment securities and
federal funds sold at June 30, 2001, were $48,814,345 compared with $50,903,224
at December 31, 2000, reflecting a 4.1% decrease.

                                       10
<PAGE>

Asset Quality

Between December 31, 2000 and June 30, 2001, the Company experienced an increase
in nonperforming assets (defined as nonaccrual loans, loans past due 90 days or
more, restructured loans, nonaccruing securities, and other real estate) from
$2.319 million to $3.237 million. The ratio of loan loss allowance to total
nonperforming assets decreased from .738 to .519, the ratio of nonperforming
loans to total loans increased from .012 to .018. All of these ratios are
favorable as compared to industry averages, and management is aware of no
factors that would suggest that they are prone to erosion in future periods.

Deposits

Total deposits of $181,215,253 at June 30, 2001, increased $3,245,097 (1.8%)
over total deposits of $177,970,156 at year-end 2000. Deposits are the Company's
primary source of funds with which to support its earning assets. Noninterest
bearing deposits decreased $253,443 or 1.05% from year-end 2000 to June 30,
2001, and interest bearing deposits increased $3,498,540 (2.27%) from year-end
2000.

Long-term Debt

At June 30, 2001 and December 31, 2000, the Company had notes payable totaling
$30,592,000 and $25,442,000, respectively.

Maturities of long-term debt for the years ending December 31 are as follows:

                           Maturities of Long-term Debt
                                 (In thousands)
<TABLE>
<CAPTION>

                             2001    2002    2003    2004    2005
                            ------  ------  ------  ------  ------
<S>                         <C>     <C>     <C>     <C>     <C>

Interest in indebtedness..  $1,632  $1,613  $1,484  $1,423  $1,284
Repayment of principal....     350      --   2,500     500   2,500
                            ------  ------  ------  ------  ------

                            $1,982  $1,613  $3,984  $1,923  $3,784
                            ======  ======  ======  ======  ======
</TABLE>

Shareholders' Equity

Company shareholders' equity increased $3,956 from December 31, 2000 to June 30,
2001, due to net income of $1,009,485, the declaration of cash dividends of
$1,257,871, the increase of unrealized gains on securities available-for-sale
totaling $185,003, net of deferred tax, and the reissuance of treasury stock of
$67,339.

Liquidity Management

Liquidity is defined as the ability of a company to convert assets into cash or
cash equivalents without significant loss. Liquidity management involves
maintaining the Bank's ability to meet the day-to-day cash flow requirements of
its customers, whether they are depositors wishing to withdraw funds or
borrowers requiring funds to meet their credit needs.  Without proper liquidity
management, the Bank would not be able to perform the primary function of a
financial intermediary and would, therefore, not be able to meet the production
and growth needs of the communities it serves.

The primary function of asset and liability management is not only to assure
adequate liquidity in order for the Bank to meet the needs of its customer base,
but to maintain an appropriate balance between interest-sensitive assets and
interest-sensitive liabilities so that the Bank can also meet the investment
requirements of its shareholders.  Daily monitoring of the sources and uses of
funds is necessary to

                                       11
<PAGE>

maintain an acceptable cash position that meets both requirements. In the
banking environment, both assets and liabilities are considered sources of
liquidity funding and both are, therefore, monitored on a daily basis.

The asset portion of the balance sheet provides liquidity primarily through loan
principal repayments and sales of investment and trading account securities.
Loans that mature in one year or less equaled approximately $51.0 million or
31.2% of the total loan portfolio at June 30, 2001, and there are $392 thousand
of investment securities maturing within one year.  Other sources of liquidity
include short-term investments such as federal funds sold.

The liability portion of the balance sheet provides liquidity through various
customers' interest bearing and noninterest bearing deposit accounts. At June
30, 2001, funds were also available through the purchase of federal funds from
correspondent commercial banks from available lines of up to an aggregate of
$14,000,000. Each of the Company's subsidiary banks is a member of the Federal
Home Loan Bank of Atlanta. Membership provides the Company with additional lines
of credit up to $40,000,000 for liquidity needs. The Company has also
established a line of credit under the parent company for $5,000,000.

Capital Resources

A strong capital position is vital to the continued profitability of the Company
because it promotes depositor and investor confidence and provides a solid
foundation for future growth of the organization.  The Company has provided the
majority of its capital requirements through the retention of earnings.

Bank regulatory authorities are placing increased emphasis on the maintenance of
adequate capital.  In 1990, new risk-based capital requirements became
effective.  The guidelines take into consideration risk factors, as defined by
regulators, associated with various categories of assets, both on and off the
balance sheet.  Under the guidelines, capital strength is measured in two tiers
which are used in conjunction with risk-adjusted assets to determine the risk-
based capital ratios.  The Company's Tier I capital, which consists of common
equity less goodwill, amounted to approximately $21,379,619 at June 30, 2001.
Tier II capital components include supplemental capital components such as
qualifying allowance for loan losses and qualifying subordinated debt. Tier I
capital plus the Tier II capital components are referred to as Total Risk-Based
capital and was approximately $23,058,360 at June 30, 2001.

The Company's current capital positions exceed the regulatory guidelines.
Management has reviewed and will continue to monitor the Company's asset mix and
product pricing, and the loan loss allowance, which are the areas determined to
be most affected by these requirements.

RESULTS OF OPERATIONS

Six months and three months ended June 30, 2001 and 2000

Summary

Net earnings of the Company for the six months ended June 30, 2001, were
$1,009,485 compared to $1,441,194 for the same period in 2000, representing an
30.0% decrease.  This decrease was due to an increase in interest expense on
deposits coupled with rising salary and benefits expense and other operating
expense partially offset by a decline in the provision for loan losses and
taxes.  The increase in interest expense is a direct result from an increase of
$7,308,427 or 4.05% in interest-bearing liabilities over the same period in
2000.

The results for the quarter ended June 30, 2001, bear a strong resemblance to
those results reported for the six months ended June 30, 2001.  All ratios and
trends are quite similar.

                                       12
<PAGE>

Net Interest Income

Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
net income. Revenue from earning assets of the Company during the six months
ended June 30, 2001, decreased $15,145 (0.17%) from the same period in 2000.
This decrease was due to a decrease in investment income from the same period in
2000.  In order to shorten the duration of the portfolio and to improve
liquidity, higher yielding investments with longer maturities were sold and
investments with shorter maturities and lower yields were purchased.  The
decrease in investment income was partially offset with an increase in loan fees
over the same period in 2000. Interest expense for the six months ended June 30,
2001, increased $416,979 or 10.1% over the corresponding period of 2000. As a
result of these factors, net interest income decreased $432,124 or 8.97% in the
six months ended June 30, 2001, compared to the same period of 2000.

Net interest income decreased $154,156 during the quarter ended June 30, 2001,
as compared to the same period in 2000. An increase of $130,456 in deposit
interest expense is the primary reason for the decline in net interest income
for the quarter.

Provision for Loan Losses

The provision for loan losses represents the charge against current earnings
necessary to maintain the reserve for loan losses at a level which management
considers appropriate.  This level is determined based upon the Company's
historical charge-offs, management's assessment of current economic conditions,
the composition of the loan portfolio and the levels of nonaccruing and past due
loans.  The provision for loan losses was $58,184 for the six months ended June
30, 2001, compared to $226,763 for the same period of 2000.  Charge-offs
exceeded recoveries by $91,108 for the six months ended June 30, 2001.  The
allowance for loan losses as a percent of outstanding loans, net of unearned
income, was 1.03% at June 30, 2001, compared to 1.07% at year-end 2000.

The provision for loan losses was $7,477 for the three months ended June 30,
2001, compared to $29,996 for the same period in 2000.

Noninterest Income

Noninterest income for the six months ended June 30, 2001, was $1,634,370
compared to $1,749,254 for the same period of 2000.  This 6.57% decrease was
primarily due to customer service fees of $612,897 in the first six months of
2001 as compared to $760,351 in the same period of 2000. Other significant
components of noninterest income are as follows: Insurance commissions decreased
$70,663 (9.56%), other operating income increased $22,207 and gains on the sale
of securities increased $81,026.

Noninterest income decreased by $109,043 or 11.9% for the quarter ended June 30,
2001, compared to the same period in 2000.  The decline in noninterest income
can be attributed to declining customer service fees, down $137,017 when
compared to last years second quarters fees.

Noninterest Expenses

Noninterest expenses for the six months ended June 30, 2001, were $4,686,495
reflecting an 8.65% increase over the same period of 2000.  The primary
components of noninterest expenses are salaries and employee benefits, which
increased to $221,547 for the six months ended June 30, 2001, 9.94% higher than
in the same period of 2000.  Occupancy costs increased $13,476 and other
operating expenses increased $138,272.

                                       13
<PAGE>

Noninterest expenses rose $165,612 or 7.6% for the three months ended June 30,
2001, compared to the same period in 2000. The escalation in expenses is
attributable in large part to increases in salary and employee benefits of
$90,036 and increases in other operating expenses of $87,497.

Income Taxes

The Company attempts to maximize its net income through active tax planning.
The provision for income taxes of $270,727 for the six months ended June 30,
2001, decreased $320,015 compared to the same period of 2000, due to reduced
earnings along with an increase in tax-free income as a percentage of total
earnings. Taxes as a percent of earnings decreased from 29% to 21%.  The
effective tax rate of approximately 21% is less than the statutory rate
principally because of the effect of tax-exempt interest income.

The provision for income taxes of $126,988 for the quarter ended June 30, 2001,
compared to $320,184 for the period during 2000.

Recently Issued Accounting Standards

In September 2000, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -
a replacement of FASB Statement No. 125. While SFAS No. 140 carries over most of
the provisions of SFAS No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, it provides new standards
for reporting financial assets transferred as collateral and new standards for
the derecognition of financial assets, in particular transactions involving the
use of special purpose entities. SFAS No. 140 also prescribes additional
disclosures for collateral transactions and for securitization transactions
accounted for as sales.  The new collateral standards and disclosure
requirements are effective for fiscal years ending after December 15, 2000,
while the new standards for the derecognition of financial assets are effective
for transfers made after March 31, 2001.  The adoption of this statement did not
have a material effect on the Company's consolidated financial statements.

In June 2001, the FASB issued SFAS No. 141, Business Combinations. This
statement addresses financial accounting and reporting for business combinations
and supersedes APB Opinion No. 16, Business Combinations, and SFAS No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises. All
business combinations in the scope of this statement are to be accounted for
using one method, the purchase method. Prior to the issuance of this statement,
subject to certain criteria, business combinations were accounted for using one
of two methods, the pooling-of-interests method or the purchase method. The two
methods produced dramatically different financial statement results. The single-
method approach used in this statement reflects the conclusion that virtually
all business combinations are acquisitions and, thus, all business combinations
should be accounted for in the same way that other asset acquisitions are
accounted for based on the values exchanged. Expanded and revised guidance is
provided related to the allocation of the purchase price to goodwill and other
intangibles arising from the business combination. The provisions of this
statement apply to all business combinations initiated after June 30, 2001.

Also in June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets.  This statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It also provides new standards for how these intangible
assets should be accounted for after they have been initially recognized in the
financial statements. The major changes required by this Statement relate to the
discontinuance of the accounting practice of amortizing or expensing intangibles
ratably over a prescribed time period. The new guidance

                                       14
<PAGE>

requires that goodwill and certain other intangibles be tested for impairment at
least annually by comparing the fair values of those assets with their recorded
amounts. Additional disclosure requirements are also provided. The provisions of
this statement are required to be applied starting with fiscal years beginning
after December 15, 2001.

Due to their recent issuance, the outcome of adopting SFAS No. 141 and SFAS No.
142 has not been fully analyzed or quanitified by management, therefore, the
future impact on the Company's consolidated financial statements cannot
presently be projected.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk arising from adverse changes in the fair value of
financial instruments due to a change in interest rates, exchange rates and
equity prices.  The Bank's primary risk is interest rate risk.

The primary objective of Asset/Liability Management at the Bank is to manage
interest rate risk and achieve reasonable stability in net interest income
throughout interest rate cycles. This is achieved by maintaining the proper
balance of rate sensitive earning assets and rate sensitive liabilities. The
relationship of rate sensitive earning assets to rate sensitive liabilities is
the principal factor in projecting the effect that fluctuating interest rates
will have on future net interest income. Rate sensitive earning assets and
interest-bearing liabilities are those that can be repriced to current market
rates within a relatively short time period. Management monitors the rate
sensitivity of earning assets and interest-bearing liabilities over the entire
life of these instruments, but places particular emphasis on the first year and
through three years. The Bank's Asset/Liability Management policy requires
cumulative gap (the difference between rate sensitive asset and rate sensitive
liabilities) to total asset to stay within a +/-20%. At June 30, 2001, the
Bank's cumulative gap is well within this range through a five-year time frame
with the one-year cumulative gap at -8.61%, the two-year at -6.35% and the
three-year at -1.15%.

The Bank has not experienced a high level of volatility in net interest income
primarily because of the relatively large base of core deposits that do not
reprice on a contractual basis.  These deposit products include regular savings,
interest-bearing transaction accounts and money market savings accounts.
Balances for these accounts are reported based on historical repricing
experienced at each bank.  However, the rates paid are typically not directly
related to market interest rates, since management has some discretion in
adjusting these rates as market rates change.

The Bank uses additional tools to monitor and manage interest rate sensitivity.
One of the primary tools is simulation analysis.  Simulation analysis is the
primary method of estimating earnings at risk and capital at risk under varying
interest rate conditions.  Simulation analysis is used to test the sensitivity
of The Bank's net interest income and stockholders' equity to both the level of
interest rates and the slope of the yield curve.  Simulation analysis accounts
for the expected timing and magnitude of assets and liability cash flows, as
well as the expected timing and magnitude of deposits that do not reprice on a
contractual basis. In addition, simulation analysis includes adjustments for the
lag between movements in market interest rates on loans and interest-bearing
deposits.  These adjustments are made to reflect more accurately possible future
cash flows, repricing behavior and ultimately net interest income. Although net
interest income is not materially impacted during simulation analysis under
different rate scenarios, the Bank is asset  sensitive in the 30, 60, and 90-day
time frame and is slightly liability sensitive in the 360-day through five-year
time frame.

                                       15
<PAGE>

PART 2. OTHER INFORMATION

Item 1. Legal Proceedings

        1.  Cagle's Inc. v. Valley National Bank, (currently Frontier National
            Bank, Lanett) Case No. 00-A-851-E, pending in the U.S. District
            Court for the Middle District of Alabama.

        On June 30, 2000, a complaint alleging breach of duty, and negligence
        against Frontier National Bank, Lanett, Alabama in connection with its
        acceptance for deposit of five checks totaling in excess of $1,000,000
        was filed in federal court in Alabama. The plaintiff, a publicly traded
        poultry processing concern, alleged that the Bank knew or should have
        known that the checks were not authorized. The plaintiffs sought
        unspecified compensatory and punitive damages as well as other relief.
        The Bank denied liability and defended the action vigorously. The Bank
        recently received notice that the federal judge hearing the case granted
        summary judgment in the Bank's favor ordering the dismissal of all
        claims against the Bank. Cagle's is deciding whether it wishes to appeal
        this decision to the 11/th/ Circuit Court of Appeals in Atlanta.

        2.  Craig Wheelus et. al. v. First National America's Bank et. al.,
            (currently, Frontier National Bank, Sylacauga) Case No. CV2000-408,
            pending in the Circuit Court of Talladega County, Alabama.

        On September 25, 2000 plaintiff filed a complaint against the Bank, one
        of its employees, and a residential homebuilder alleging conspiracy,
        conversion, breach, and fraud relating to the construction of and
        financing of a residential home being built and purchased by the
        plaintiffs. All defendants denied liability and vigorously defended the
        claim by asserting, among other things, that the plaintiffs' claims were
        not entitled to be tried before a jury as the plaintiffs had agreed in
        advance of the disputes to arbitrate any and all disputes. After hearing
        arguments on the motions relating to the arbitration issue, the trial
        judge entered an order compelling arbitration of all claims against all
        defendants. The defendants are pleased with this outcome and in the
        event that this lawsuit is not dismissed by the plaintiffs, the
        defendants will seek the services of an arbitrator to rule on the claims
        raised by the plaintiffs.

        3.  Valley National Bank (currently, Frontier National Bank, Lannett) v
            Bill Heard Chevrolet Company, Rhonda Stillwell and Edmund Stillwell,
            Civil Action No. CV-00-38, pending in the Circuit Court of Chambers
            County, Alabama.

        This action was initially filed by Frontier National Bank, Lanett in the
        Circuit Court of Chambers County seeking a declaratory judgment against
        defendant Bill Heard Chevrolet. Later, Frontier National Bank, Lanett
        filed an amended complaint adding Rhonda Stillwell and Edmund Stillwell
        as additional defendants. The suit sought the issuance of a declaratory
        judgment to the effect that Bill Heard Chevrolet Company made fraudulent
        misrepresentations to the Bank in securing a cashier's check. It also
        sought a judgment against defendants Rhonda and Edmund Stillwell for the
        amount of any sum which the Bank might ultimately be obligated to pay
        defendant Bill Heard Chevrolet Company. Defendants Rhonda and Edmund
        Stillwell filed a cross-claim against Bill Heard Chevrolet Company
        alleging a variety of fraud claims and negligence and a counter-claim
        against the Bank alleging claims for breach, fraud, and negligence.
        Discovery in the matter has not yet commenced; therefore, it is too
        early to ascertain all of the relevant facts. However, the Bank intends
        to vigorously defend this claim and the Bank denies all liability.


                                       16
<PAGE>

Other than the cases described above, the Company is not involved in any legal
proceeding nor is it a party to any pending or threatened claim that could
reasonably by expected to have a material adverse effect on its financial
condition or results of operations.

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

On June 11, 2001, the Company held its Annual Meeting of Shareholders.  The
following items were presented to a vote of holders (the "Shareholders") of the
Company's outstanding Common Stock.

1.  The Shareholders elected (a) Wesley L. Bowden, (b) Harry I. Brown, Jr., (c)
    Harry I. Brown, Sr., (d) Jerry L. Fielding, (e) Charles M. Reeves, Jr., (f)
    Steven E. Sprayberry, (g) Raymond C. Styres, (h) Steven R. Townson, (i)
    Barry D. Vaughn, (j) Christopher N. Zodrow to the Company's Board of
    Directors to serve as directors for the ensuing year and until successors
    are appointed or elected.

2.  The shareholders appointed Schauer, Taylor, Cox, Vise & Morgan, P.C. as the
    Company's auditors for the 2001 fiscal year.

  The number of votes for each of the above is summarized in the table below.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
         Item Submitted to Shareholders              For     Against  Abstain    Total
-----------------------------------------------------------------------------------------
<S>                                               <C>        <C>      <C>      <C>
(1)(a)  Election of Wesley L. Bowden              2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(b)  Election of Harry I. Brown, Jr.           2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(c)  Election of Harry I. Brown, Sr.           2,623,342    6,039     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(d)  Election of Jerry L. Fielding             2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(e)  Election of Charles M. Reeves, Jr.        2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(f)  Election of Steven E. Sprayberry          2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(g)  Election of Raymond C. Styres             2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(h)  Election of Steven R. Townson             2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(i)  Election of Barry D. Vaughn               2,623,342    6,039     0     2,629,381
-----------------------------------------------------------------------------------------
(1)(j)  Election of Christopher N. Zodrow         2,628,340    1,041     0     2,629,381
-----------------------------------------------------------------------------------------
(2)     Appointment of Schauer, Taylor, Cox,      2,628,421        0    960    2,629,381
        Vise & Morgan, P.C. as auditors
-----------------------------------------------------------------------------------------
</TABLE>


                                       17
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

        (a) Exhibits

            Exhibit 11 - Statement Re: Computation of Earnings per Share

        (b) Reports on Form 8-K

            On May 4, 2001 Frontier National Corporation filed a report on Form
            8-K announcing an agreement to purchase certain assets of the First
            Bank of Childersburg.

                                       18
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


               FRONTIER NATIONAL CORPORATION

               By: /s/  STEVEN R. TOWNSON               August 13, 2001
                   ----------------------------------   ---------------
                   Steven R. Townson
                   Chief Executive Officer, President
                   and Chief Financial Officer

                                       19