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, 2002

[   ]     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 value
                    Outstanding at August 9, 2002: 3,434,213




<PAGE>



                                    Form 10-Q

                          FRONTIER NATIONAL CORPORATION

                                  June 30, 2002


                                                               TABLE OF CONTENTS
<TABLE>
<CAPTION>


                                                                                                        Page No.
Part 1.   Financial Information

   Item 1.    Financial Statements (Unaudited)

              Consolidated Statements of Financial Condition as of
<S>                   <C> <C>               <C> <C>                                                               <C>
                 June 30, 2002 and December 31, 2001................................................              2

              Consolidated Statements of Income For the Three Months and Six Months
                 Ended June 30, 2002 and 2001.......................................................              3

              Consolidated Statements of Comprehensive Income For the Three Months
                 and Six Months Ended June 30, 2002 and 2001........................................              4

              Consolidated Statements of Cash Flows For the Six Months
                 Ended June 30, 2002 and 2001.......................................................              5

              Consolidated Statement of Shareholders' Equity For the Six Months
                 Ended June 30, 2002................................................................              6

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

   Item 2.    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations......................................             13

   Item 3.    Quantitative and Qualitative Disclosures About Market Risk............................             20

Part 2.   Other Information

   Item 1.    Legal Proceedings.....................................................................             21

   Item 4.    Submission of Matters to a Vote of Security Holders...................................             21

   Item 6.    Exhibits and Reports on Form 8-K......................................................             22

   Signatures
</TABLE>

                 See notes to consolidated financial statements

                                       2
<PAGE>




PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED Statements of Financial Condition
<TABLE>
<CAPTION>

                                                                                     June 30,
                                                                                       2002          December 31,
                                                                                    (Unaudited)          2001
                                                                                  ---------------  ----------------
Assets
<S>                                                                               <C>              <C>
   Cash and due from banks...................................................     $    10,232,125  $      9,980,614
   Interest bearing deposits with other banks................................             304,546           185,445
   Federal funds sold........................................................              61,000         8,860,000
                                                                                  ---------------  ----------------
       Cash and Cash Equivalents.............................................          10,597,671        19,026,059

   Securities held-to-maturity, fair value of $100,386.......................             100,386                --
   Securities available-for-sale.............................................          36,726,932        36,185,416

   Loans, net of unearned income.............................................         210,366,728       204,095,286
   Allowance for loan losses.................................................          (2,001,140)       (2,095,895)
                                                                                  ---------------  ----------------
       Net Loans.............................................................         208,365,588       201,999,391

   Premises and equipment, net...............................................          11,443,128        11,120,087
   Accrued interest receivable...............................................           1,886,053         1,919,294
   Cash surrender value on life insurance....................................           5,728,769         5,601,096
   Intangible assets, net....................................................           1,952,418         1,962,888
   Foreclosed real estate....................................................           2,730,703           117,807
   Other assets..............................................................           1,103,455         1,507,663
                                                                                  ---------------  ----------------

       Total Assets..........................................................     $   280,635,103  $    279,439,701
                                                                                  ===============  ================

Liabilities and Shareholders' Equity

Liabilities
   Deposits:
     Noninterest-bearing deposits............................................     $    33,596,147  $     31,178,483
     Interest-bearing deposits...............................................         180,526,117       183,846,971
                                                                                  ---------------  ----------------
       Total Deposits........................................................         214,122,264       215,025,454

   Accrued interest payable..................................................             882,357         1,207,945
   Short-term borrowings.....................................................           6,620,138         4,418,266
   Long-term debt............................................................          33,592,000        33,592,000
   Other liabilities.........................................................           1,061,330         1,121,172
                                                                                  ---------------  ----------------
       Total Liabilities.....................................................         256,278,089       255,364,837
                                                                                  ---------------  ----------------

Shareholders' Equity
   Common stock, $.001 par value; 10,000,000 shares authorized, 3,505,497 issued
     of which 3,442,005 were outstanding at June 30, 2002, and 3,502,497 issued
     of which 3,437,724 were
     outstanding at December 31, 2001........................................               3,506             3,503
   Series A preferred stock, par value $.001 per share, 200,000 shares
     authorized, 58,667 shares issued and outstanding at December 31,
     2001; minimum stated value of $12.00 per share..........................             704,000           704,000
   Paid-in capital...........................................................          14,258,033        14,233,965
   Retained earnings.........................................................           9,808,737         9,842,754
   Accumulated other comprehensive income: net unrealized holding
     gains on securities available-for-sale, net of deferred income tax......             446,508           173,307
   Treasury stock, at cost, 63,492 shares at June 30, 2002,
     and 64,773 shares at December 31, 2001..................................            (863,770)         (882,665)
                                                                                  ---------------  ----------------
       Total Shareholders' Equity............................................          24,357,014        24,074,864
                                                                                  ---------------  ----------------

       Total Liabilities and Shareholders' Equity............................     $   280,635,103  $    279,439,701
                                                                                  ===============  ================
</TABLE>
                 See notes to consolidated financial statements


                                       2

<PAGE>



                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

            Three Months and Six Months Ended June 30, 2002 and 2001
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                     Three Months Ended                  Six Months Ended
                                                           June 30                            June 30
                                               ------------------------------    ----------------------------------
                                                   2002              2001             2002               2001
                                               -------------    -------------    --------------    ----------------

Interest Income
<S>                                            <C>              <C>              <C>               <C>
     Interest and fees on loans...........     $   3,871,164    $   3,735,537    $    7,692,972    $      7,440,273
     Interest and dividends on securities:
       Taxable securities.................           347,073          419,700           718,848             816,986
       Nontaxable securities..............           121,140          221,062           244,690             481,222
     Interest on deposits with other banks             1,301            4,580             2,454              14,699
     Interest earned on federal funds sold            12,779           72,907            49,583             176,254
                                               -------------    -------------    --------------    ----------------
       Total Interest Income..............         4,353,457        4,453,786         8,708,547           8,929,434

Interest Expense
     Interest on deposits.................         1,173,103        1,830,931         2,587,174           3,722,376
     Interest on borrowed funds...........           474,840          400,441           942,324             816,537
                                               -------------    -------------    --------------    ----------------
       Total Interest Expense.............         1,647,943        2,231,372         3,529,498           4,538,913

Net Interest Income.......................         2,705,514        2,222,414         5,179,049           4,390,521

Provision for loan losses.................           (13,248)          (7,477)          (13,248)            (58,184)
                                               --------------   -------------    --------------    ----------------

Net Interest Income After Provision for
     Loan Losses..........................         2,692,266        2,214,937         5,165,801           4,332,337

Noninterest Income
     Customer service fees................           321,733          308,143           627,272             612,897
     Commission income....................           357,000          352,640           691,065             668,784
     Other operating income...............           109,118          147,400           319,887             268,749
     Securities gains.....................                --               --                --              83,940
                                               -------------    -------------    --------------    ----------------
       Total Noninterest Income...........           787,851          808,183         1,638,224           1,634,370

Noninterest Expense
     Salaries and employee benefits.......         2,012,477        1,212,532         3,282,079           2,451,467
     Net occupancy expense................           432,310          345,378           863,866             695,456
     Other operating expenses.............         1,043,954          794,145         1,855,969           1,539,572
                                               -------------    -------------    --------------    ----------------
       Total Noninterest Expenses.........         3,488,741        2,352,055         6,001,914           4,686,495

Income (loss) before income taxes.........            (8,624)         671,065           802,111           1,280,212
Provision for income taxes................            46,971         (126,988)         (189,085)           (270,727)
                                               -------------    -------------    ---------------   ----------------

Net Income................................     $      38,347    $     544,077    $      613,026    $      1,009,485
                                               =============    =============    ==============    ================

Earnings Per Common Share
     Basic................................     $        0.01    $        0.16    $         0.18    $           0.30
     Diluted..............................              0.01             0.16              0.18                0.29

Weighted Average Shares Outstanding
     Basic................................         3,441,060        3,424,436         3,439,494           3,423,320
     Diluted..............................         3,517,336        3,511,833         3,512,990           3,516,072
</TABLE>

                 See notes to consolidated financial statements


                                       3

<PAGE>


                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

            Three Months and Six Months Ended June 30, 2002 and 2001
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                     Three Months Ended                  Six Months Ended
                                                           June 30                            June 30
                                               ------------------------------    ----------------------------------
                                                   2002              2001             2002               2001
                                               -------------    -------------    --------------    ----------------

<S>                                            <C>              <C>              <C>               <C>
Net Income..................................   $      38,347    $     544,077    $      613,026    $      1,009,485

Other comprehensive, net of tax:
   Unrealized gains (losses) on securities:
     Unrealized holding gains (losses)
       arising during the period............         719,924         (125,901)          482,770             383,169
   Reclassification adjustments for (gains)
     losses included in net income..........              --               --                --             (83,940)
                                               -------------    -------------    --------------    ----------------
       Net unrealized gains (losses)........         719,924         (125,901)          482,770             299,229
   Income tax (expense) benefit
     related to items of other
     comprehensive income...................        (299,485)          45,198          (209,569)           (114,226)
                                               -------------    -------------    --------------    ----------------
Other comprehensive income (loss)...........         420,439          (80,703)          273,201             185,003
                                               -------------    -------------    --------------    ----------------

Comprehensive Income........................   $     458,786    $     463,374    $      886,227    $      1,194,488
                                               =============    =============    ==============    ================
</TABLE>

                 See notes to consolidated financial statements


                                       4

<PAGE>



                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Six Months Ended June 30, 2002 and 2001
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                                                       2002              2001
                                                                                  ---------------  ----------------
Operating Activities
<S>                                                                               <C>              <C>
   Net income................................................................     $       613,026  $      1,009,485
   Adjustments to reconcile net income to net
     cash provided by operating activities:
   Depreciation, amortization and accretions, net............................             469,338           394,218
   Provision for loan losses.................................................              13,248            58,184
   Loss on disposal of assets................................................             110,784                --
   Deferred income taxes.....................................................             (23,000)          (38,000)
   Realized security gains, net..............................................                  --           (83,940)
   Gain on disposal of foreclosed real estate................................              (2,527)               --
   Decrease in accrued interest receivable...................................              33,240           121,764
   Increase (decrease) in accrued interest payable...........................            (325,588)          132,142
   Other, net................................................................              24,912          (775,562)
                                                                                  ---------------  ----------------
     Net Cash Provided By Operating Activities...............................             913,433           818,291
                                                                                  ---------------  ----------------

Investing Activities
   Proceeds from sales of securities available-for-sale......................           4,985,433         9,003,378
   Purchases of securities available-for-sale................................          (5,147,985)       (7,706,614)
   Net increase in loans to customers........................................          (9,009,720)       (3,288,152)
   Purchases of premises and equipment, net..................................            (955,114)         (913,000)
   Proceeds from sale of fixed assets........................................              71,055                --
   Proceeds from sale of foreclosed real estate..............................              19,905           149,399
                                                                                  ---------------  ----------------
     Net Cash Used In Investing Activities...................................         (10,036,426)       (2,754,989)
                                                                                  ---------------  ----------------

Financing Activities
   Net increase (decrease) in deposits.......................................            (903,190)        3,245,097
   Net increase (decrease) in short-term borrowings..........................           2,201,872        (3,716,305)
   Dividends paid............................................................            (647,043)       (1,257,871)
   Proceeds from sale of treasury stock......................................              14,091            67,339
   Issuance of common stock..................................................              28,875                --
   Proceeds from issuance of debt............................................                  --         5,150,000
                                                                                  ---------------  ----------------
     Net Cash Provided By Investing Activities...............................             694,605         3,488,260
                                                                                  ---------------  ----------------

Net Increase (Decrease) in Cash and Cash Equivalents.........................          (8,428,388)        1,551,562

Cash and Cash Equivalents at Beginning of Period.............................          19,026,059        11,298,747
                                                                                  ---------------  ----------------

Cash and Cash Equivalents at End of Period...................................     $    10,597,671  $     12,850,309
                                                                                  ===============  ================
</TABLE>

                 See notes to consolidated financial statements


                                       5

<PAGE>


                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                         Six Months Ended June 30, 2002
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                  Accumulated
                                                                                     Other
                              Common      Preferred     Paid-In       Retained   Comprehensive  Treasury
                               Stock        Stock       Capital       Earnings      Income       Stock        Total
                              ---------   ---------  -------------   ----------- ------------  ----------  -----------

Balance at
<S>         <C> <C>           <C>         <C>        <C>             <C>         <C>           <C>         <C>
   December 31, 2001........  $   3,503   $ 704,000  $  14,233,965   $ 9,842,754 $    173,307  $(882,665)  $24,074,864

Net income -
   June 30, 2002............         --          --             --       613,026           --          --      613,026

Unrealized gains on
   securities available-for-
   sale, net of reclassification
   adjustment, net of
   tax of $209,569..........         --          --             --            --      273,201          --      273,201
                                                                                                           -----------

Comprehensive income........         --          --             --            --           --          --      886,227

Cash dividends - common.....         --          --             --     (636,190)           --          --    (636,190)

Cash dividends - preferred..         --          --             --      (10,853)           --          --     (10,853)

Stock options - exercise....          3          --         28,872            --           --          --       28,875

Issuance of treasury stock..         --          --        (4,804)            --           --      18,895       14,091
                              ---------   ---------  ------------    ----------- ------------  ----------  -----------

Balance at
   June 30, 2002............  $   3,506   $ 704,000  $  14,258,033   $ 9,808,737 $    446,508  $(863,770)  $24,357,014
                              =========   =========  =============   =========== ============  =========   ===========
</TABLE>

                 See notes to consolidated financial statements


                                       6

<PAGE>


                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 2002
                                   (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
Acquisition Corporation,  Frontier National Bank, Sylacauga,  Alabama,  Frontier
National Bank, Lanett,  Alabama  (subsequently  referred to as Frontier National
Bank, LaGrange,  Georgia - See Note I), Frontier Finance Company, Inc., Frontier
Financial Services, Inc. and Frontier Reinsurance, 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, 2002,
are not necessarily  indicative of the results that may be expected for the year
ending December 31, 2002.

The consolidated statement of financial condition at December 31, 2001, has been
derived from the audited  consolidated  financial  statements at that date,  but
does not include all of the  information  and  footnotes  required by  generally
accepted accounting principles for complete financial statements.

For further  information,  refer to the  consolidated  financial  statements and
footnotes  thereto for Frontier  National  Corporation and  subsidiaries for the
year ended December 31, 2001, included in Form 10-K filed in March 2002.


Note B - Income Taxes

The effective tax rates of  approximately  24 percent and 21 percent for the six
months ended June 30, 2002 and 2001,  respectively,  are less than the statutory
rate  principally  because of the effect of tax-exempt  interest  income and the
benefit from filing a  consolidated  tax return,  which allows the  consolidated
entity to take advantage of the net loss incurred at the Holding Company.


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).


                                       7

<PAGE>


Note C - Securities - Continued

At June  30,  2002,  the  Company  had  net  unrealized  gains  of  $744,180  in
available-for-sale  securities  that are reflected in the  presented  assets and
resulted in an increase in  shareholders'  equity of  $446,508,  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, 2001 to June 30, 2002 was $273,201. See also Note D
- Shareholders' Equity.


Note D - Shareholders' Equity

During the first six months of 2002,  cash  dividends  of $647,043  were charged
against  equity.  Equity was  increased  by  $273,201  for the  increase  in net
unrealized  gains  on  securities.   Treasury  stock  was  reissued,  increasing
shareholders' equity $14,091. See also Note E - Treasury Stock. Common stock was
issued, pursuant to the exercise of stock options, increasing equity $28,875 and
net income of $613,026  was also  added,  thereby,  resulting  in an overall net
increase in shareholders equity totaling $282,150.


Note E - Treasury Stock

During  the  first six  months of 2002,  1,281  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 63,492 shares at June 30, 2002, and 64,773
shares at December 31, 2001.


Note F - Segment Reporting

All of the Company's segment information is presented by line of business.  Each
line of business is a distinct unit that offers  products and services unique to
its operations and customers.  The Company's  reportable  operating segments are
commercial banking and insurance  services.  The segment results include certain
overhead allocations and intercompany transactions.



              [The remainder of this page intentionally left blank]


                                       8

<PAGE>


Note F - Segment Reporting - Continued

The following  tables reflect the  approximate  amounts of revenue,  expense and
assets for the  Company's  segments as of and for the  six-month  and  quarterly
periods ended June 30, 2002 and 2001.

<TABLE>
<CAPTION>


                                            Six Months Ended June 30, 2002            Six Months Ended June 30, 2001
                                      ----------------------------------------   --------------------------------------
                                       Commercial      Insurance                  Commercial     Insurance
                                         Banking       Services        Total        Banking      Services        Total
                                      -------------  ------------  -----------   -------------  -----------  ----------
                                                                         (In Thousands)

<S>                                   <C>            <C>           <C>           <C>            <C>          <C>
   Total interest income...........   $       8,707  $          1  $     8,708   $       8,928  $         1  $    8,929
   Total interest expense..........           3,529            --        3,529           4,539           --       4,539
   Provision for loan losses.......              13            --           13              58           --          58
   Noninterest income..............             934           704        1,638             970          664       1,634
   Noninterest expense.............           5,493           509        6,002           4,119          488       4,687
   Income before income tax........             606           196          802           1,102          177       1,279
   Income tax expense..............             120            69          189             202           68         270
   Net income......................             486           127          613             900          109       1,009

   Total assets....................   $     278,904  $      1,731  $   280,635   $     277,797  $     1,643  $  279,440

</TABLE>

<TABLE>
<CAPTION>

                                      Three Months Ended June 30, 2002           Three Months Ended June 30, 2001
                                      --------------------------------           --------------------------------
                                       Commercial    Insurance                   Commercial     Insurance
                                         Banking     Services       Total         Banking        Services     Total
                                      -----------    ----------   ---------      ----------     ----------  ---------
                                                                       (In Thousands)

<S>                                   <C>             <C>       <C>             <C>            <C>          <C>
   Total interest income...........   $   4,352       $    1    $    4,353      $    4,453     $       --   $   4,453
   Total interest expense..........       1,647           --         1,647           2,231             --       2,231
   Provision for loan losses.......          13           --            13               7             --           7
   Noninterest income..............         428          359           787             461            347         808
   Noninterest expense.............       3,216          273         3,489           2,112            241       2,353
   Income before income tax........         (96)          87            (9)            564            106         670
   Income tax expense..............         (74)          27           (47)             89             37         126
   Net income......................         (22)          60            38             475             69         544

   Total assets....................   $278,904      $  1,731    $  280,635      $  277,797      $   1,643   $  279,440
</TABLE>


                                       9

<PAGE>


Note G - Stock Options

The Company has issued incentive stock options to certain key employees of which
232,000 are  outstanding at June 30, 2002, at exercise prices ranging from $6.66
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 also issued nonqualified stock options primarily to directors of
the Company of which 50,000 are outstanding at June 30, 2002, at exercise prices
ranging from $9.375 to $13.00 (the fair market values on the grant dates). These
options are fully exercisable and expire on the one-year anniversary date of the
director's termination of service to the Board, if applicable, or ten years from
the grant date, whichever is earlier.


Note H - Subsequent Events

On July  16,  2002,  the  Board  declared  a  dividend  of  $0.0925  payable  to
stockholders  of record as of July 16,  2002,  and to be paid on  September  25,
2002.

On July 9,  2002,  55,700  shares of the  outstanding  232,000  incentive  stock
options at June 30, 2002 were  exercised at prices  ranging from $6.66 to $9.375
per share. Equity was increased by $372,862 as a result of this transaction.


Note I - Business Combination

Frontier National Bank,  Lanett,  Alabama,  a wholly owned banking subsidiary of
Frontier  National  Corporation,  received  approval from the Comptroller of the
Currency to relocate  its main office  from 1011 North  Lanier  Avenue,  Lanett,
Alabama to 401 Vernon Street, LaGrange, Georgia.

Frontier National Bank, Sylacauga, Alabama, a wholly owned banking subsidiary of
Frontier  National  Corporation,  received  approval from the Comptroller of the
Currency to purchase  certain assets and assume certain  liabilities of Frontier
National Bank,  LaGrange,  Georgia  (formerly,  Frontier National Bank,  Lanett,
Alabama) and to establish a branch at 1011 North Lanier Avenue, Lanett, Alabama.

The above  transactions are the first phase of Frontier  National  Corporation's
plans to merge its  banking  subsidiaries  into one which is  executed  to occur
prior to year end.  These  transactions  did not have an impact on the Company's
consolidated statement of financial condition and took place on July 12, 2002.


                                       10

<PAGE>


Note J - Effect of FASB 142, Goodwill and Other Intangible Assets

In June 2001 the FASB issued  Statement No. 142,  Goodwill and Other  Intangible
Assets.  The statement  requires that goodwill and other intangible  assets with
indefinite  useful  lives no longer be  amortized,  but  instead an entity  must
perform an  assessment  of whether  these  assets are impaired as of the date of
adoption  and test for  impairment  at least  annually  in  accordance  with the
provisions of the statement.  The statement also requires that intangible assets
with determinable  lives be amortized.  The Company adopted Statement No. 142 on
January 1, 2002. The initial assessment of the Company's intangible assets as of
January 1, 2002, indicated that no impairment of values existed at that date.

Acquired  goodwill and other intangible  assets at June 30, 2002 are detailed as
follows:
<TABLE>
<CAPTION>

                                                          As of June 30, 2002
                                                             Gross Carrying     Accumulated      Net Carrying
                                                                Amount          Amortization        Amount

<S>                                                         <C>               <C>                <C>
  Identifiable amortizing assets......                      $   247,935       $  101,811         $    146,124
  Nonamortizing assets................                        2,381,240          574,946            1,806,294
                                                              ---------          -------            ---------
  Total acquired intangible assets....                      $ 2,629,175       $  676,757         $  1,952,418
</TABLE>


Aggregate  amortization  expense for the period ended June 30, 2002 was $10,471.
Aggregate  amortization  expense estimated for the years ended December 31, 2002
through 2006 is: $18,699, $16,323, $16,323, $16,323 and $16,323, respectively.

The following  table  presents net income and earnings per share as reported and
adjusted  to exclude tax  effected  amortization  of goodwill  that is no longer
being amortized.
<TABLE>
<CAPTION>

                                           Three Months Ended June 30,           Six Months Ended June 30,
                                           ---------------------------           -------------------------
                                           2002               2001               2002              2001
                                           ----               ----               ----              ----

<S>                                    <C>                 <C>               <C>              <C>
Reported net income:.................. $  38,347           $ 544,077         $  613,026       $  1,009,485
Add back:  Goodwill amortization......        --              16,754                 --             33,091
                                       ---------           ---------         ----------       ------------

Adjusted net income................... $  38,347          $  560,831         $  613,026       $  1,042,576

Basic earnings per share:
   Reported net income................ $    0.01          $     0.16         $     0.18       $       0.30
   Goodwill amortization..............      0.00                0.00               0.00               0.01
                                       ---------          ----------         ----------       ------------
   Adjusted net income................ $    0.01          $     0.16         $     0.18       $       0.31

Diluted earnings per share:
   Reported net income................ $    0.01          $     0.16         $     0.18       $       0.29
   Goodwill amortization..............      0.00                0.00               0.00               0.01
                                       ---------          ----------         ----------       ------------

   Adjusted net income................ $    0.01          $     0.16         $     0.17       $       0.30
</TABLE>


                                       11

<PAGE>

Note K - Recently Passed Legislation

On July 30, 2002,  President Bush signed into law the Sarbanes-Oxley Act of 2002
(the "Act"),  which  immediately  impacts  Securities  and  Exchange  Commission
registrants,  public accounting  firms,  lawyers and securities  analysts.  This
legislation is the most  comprehensive  since the passage of the Securities Acts
of 1933 and 1934. It has far reaching  effects on the standards of integrity for
corporate management,  board of directors, and executive management.  Additional
disclosures,  certifications  and  possibly  procedures  will be required of the
Company. We do not expect any material adverse effect on the Company as a result
of the passage of this legislation,  however,  the full scope of the Act has not
been determined. The Act provides for additional regulations and requirements of
publicly-traded companies which have yet to be issued.


                                       12

<PAGE>



                        FRONTIER NATIONAL CORPORATION AND
                                  SUBSIDIARIES

                                  June 30, 2002
                                   (Unaudited)


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, 2002,
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, 2002, compared to December 31, 2001

Loans

Loans comprised the largest single  category of the Company's  earning assets on
June 30, 2002. Loans, net of unearned income and allowance for loan losses, were
74.25% of total assets at June 30, 2002,  and 72.29% of total assets at December
31, 2001.  Total net loans were  $208,365,488  at June 30, 2002,  representing a
$6,366,197 or 3.15% increase from the December 31, 2001, total of $201,999,391.

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 used to manage the daily cash
position of the Company.  Investment securities and federal funds sold decreased
$8,157,098  from December 31, 2001 to June 30, 2002.  Investment  securities and
federal funds sold at June 30, 2002, were $36,888,318  compared with $45,045,416
at December 31, 2001, reflecting an 18.11% decrease.


                                       13

<PAGE>


Asset Quality

Between December 31, 2001 and June 30, 2002, 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
$5.664  million to $8.285  million.  The ratio of loan loss  allowance  to total
nonperforming assets decreased from .370 to .241, and the ratio of nonperforming
loans to total loans decreased from .027 to .026.

Deposits

Total deposits were $214,122,264 at June 30, 2002, which represented a decreased
$903,190 (0.42%) over total deposits of $215,025,454 at year-end 2001.  Deposits
are the Company's  primary source of funds with which to support earning assets.
Noninterest bearing deposits increased $2,417,664 or 7.75% from year-end 2001 to
June 30, 2002, and interest bearing deposits  decreased  $3,320,854 (1.81%) from
year-end 2001.

Long-term Debt

At June 30, 2002 and December 31, 2001,  the Company had notes payable  totaling
$33,592,000.

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

                                     Maturities of Long-term Debt
                                           (In thousands)

                                        2002           2003            2004           2005           2006
                                        ----           ----            ----           ----           ----

<S>                                  <C>            <C>             <C>            <C>            <C>
Interest on indebtedness..........   $ 1,750        $ 1,620         $ 1,559        $ 1,419        $ 1,385
Repayment of principal............        --          2,500             500          2,500             --
                                     -------        -------         -------        -------        -------
                                     $ 1,750        $ 4,120         $ 2,059        $ 3,919        $ 1,385
</TABLE>


Shareholders' Equity

Company  shareholders'  equity increased $282,150 from December 31, 2001 to June
30, 2002,  due to net income of $613,026,  the  declaration of cash dividends of
$647,043,  the increase of  unrealized  gains on  securities  available-for-sale
totaling $273,201,  net of deferred tax, and the reissuance of treasury stock of
$14,091, and the issuance of common stock of $28,875.

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.


                                       14

<PAGE>

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 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  $71.0  million or
34.09% of the total loan  portfolio at June 30, 2002, and there are $3.2 million
or 8.67% of investment securities maturing within one year.

The liability  portion of the balance sheet provides  liquidity  through various
customers'  interest bearing and noninterest  bearing deposit accounts.  At June
30, 2002,  funds were also available  through the purchase of federal funds from
correspondent  commercial  banks from  available  lines of up to an aggregate of
$14,300,000.  Each of the Company's  subsidiary banks is a member of the Federal
Home Loan Bank of  Atlanta.  Membership  provides  the Company  with  additional
aggregate lines of credit up to $39,000,000 for liquidity needs. The Company has
also  established  a line of credit under the parent  company for  $5,000,000 of
which $1,500,000 is available.

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  place  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  $21,958,089  at June 30,  2002.  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 $23,959,229 at June 30, 2002.

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.


                                       15

<PAGE>


RESULTS OF OPERATIONS

Six months and three months ended June 30, 2002 and 2001

Summary

Net  earnings  of the  Company  for the six  months  ended June 30,  2002,  were
$613,026  compared to  $1,009,485  for the same period in 2001,  representing  a
39.27%  decrease.  This decrease was due to a $1,315,419  or 28.07%  increase in
noninterest expense over the same period in 2001. Management's decision to close
a  non-profitable  branch,  coupled  with  the  restructuring  of the  executive
management team,  resulting in one time expenses of  approximately  $731,000 for
settlement  of  contractual  obligations  and a one  time  asset  write  down of
$100,871 were the primary reasons for the increase in noninterest expense. These
expenses  were  partially  offset by an  increase  of  $788,528 or 17.96% in net
interest income and a decline in taxes compared to the same period in 2001.

The results for the quarter ended June 30, 2002,  bear a strong  resemblance  to
those  results  reported for the six months ended June 30, 2002.  All ratios and
trends are quite similar, with the exception of net income,  noninterest expense
and provision for taxes with the reasons for the variances noted above.

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, 2002,  decreased  $220,887 or 2.47% from the same period in 2001.
Interest  income on loans increased $ 252,699 or 3.40% while  investment  income
decreased by $473,586 or 31.80%.  The decrease in investment  income is a direct
result of a  decrease  of  approximately  $11  million in the  combined  average
balances of the investment  portfolio,  interest-bearing  deposits,  and federal
funds sold from the same  period of 2001.  Interest  expense  for the six months
ended June 30,  2002,  decreased  $1,009,415  or 22.24%  over the  corresponding
period of 2001.  As a result of these  factors,  net interest  income  increased
$788,528 or 17.96% in the six months ended June 30,  2002,  compared to the same
period of 2001.

Net interest income  increased  $483,100 during the quarter ended June 30, 2002,
as  compared  to the same  period in 2001.  A decrease  of  $657,828  in deposit
interest  expense,  a direct result of lower interest rates from the same period
in 2001,  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 $ 13,248 for the six months ended June
30, 2002, compared to $58,184 for the same period of 2001.  Charge-offs exceeded
recoveries by $108,003 for the six months ended June 30, 2002. The allowance for
loan losses as a percent of outstanding loans, net of unearned income, was 0.95%
at June 30, 2002, compared to 1.03% at year-end 2001.


                                       16

<PAGE>

The  provision  for loan losses was $13,248 for the three  months ended June 30,
2002, compared to $7,477 for the same period in 2001.

Noninterest Income

Noninterest  income  for the six  months  ended June 30,  2002,  was  $1,638,224
compared to  $1,634,370  for the same period of 2001.  This 0.24%  increase  was
primarily due to other operations  income or $319,887 in the first six months of
2002 as  compared to  $268,749  in the same  period of 2001.  Other  significant
components of noninterest income are as follows: customer service fees increased
$14,375,  insurance commissions increased $22,281 or 3.33% and gains on the sale
of securities decreased $83,940.

Noninterest  income decreased by $20,332 or 2.52% for the quarter ended June 30,
2002, compared to the same period in 2001. The decline in noninterest income can
be attributed to a $30,349  insurance  claim  received in the second  quarter of
2001 for the reimbursement of legal fees paid in 2000.

Noninterest Expenses

Noninterest  expenses for the six months ended June 30, 2002,  were  $1,315,419,
reflecting  a 28.07%  increase  over  the  same  period  of  2001.  The  primary
components of  noninterest  expenses are salaries and employee  benefits,  which
increased to  $3,282,079  for the six months ended June 30, 2002,  33.88% higher
than in the same period of 2001.  Occupancy costs  increased  $168,410 and other
operating expenses increased $316,397.

Noninterest  expenses rose $1,136,686 or 48.33 % for the three months ended June
30, 2002,  compared to the same period in 2001.  The  escalation  in expenses is
attributable in a large part to the one time asset write down of $100,871,  from
the closing of a  nonprofitable  branch,  and the  additional  salary  expenses,
resulting from contractual obligations.

Income Taxes

The Company attempts to maximize its net income through active tax planning. The
provision  for income  taxes of $189,085 for the six months ended June 30, 2002,
decreased  $81,642,  compared  to the same period of 2001,  due to the  $396,459
decline in net income.  Taxes as a percent of earnings  increased from 21.15% to
23.57%. The increase in the company's effective tax rate is due to a decrease of
$236,532 or 49.15% in nontaxable  security  income compare to the same period of
2001.  The  effective tax rate of  approximately  24% is less than the statutory
rate principally because of the effect of tax-exempt interest income.

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


                                       17

<PAGE>

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, 2002. The adoption of this statement is not expected to have a material
effect on the Company's consolidated financial statements.

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  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.  The  adoption of this  statement is not expected to have a
material  effect on the Company's  consolidated  financial  statements.  For the
current  impact  of this  statement  see  Note J to the  consolidated  financial
statements.

In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations.  This statement  requires that the fair value of a liability for an
asset retirement  obligation be recognized in the period in which it is incurred
if a  reasonable  estimate  of fair  value  can be made.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  This statement is effective for financial  statements issued
for fiscal years  beginning  after June 15, 2002. The adoption of this statement
is not  expected  to  have a  material  effect  on  the  Company's  consolidated
financial statements.

In August 2001,  the FASB issued SFAS No. 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.  This statement
supersedes  FASB Statement No. 121,  Accounting for the Impairment of Long-Lived
Assets and for  Long-Lived  Assets to Be  Disposed  Of, and the  accounting  and
reporting   provisions  of  APB  Opinion  No.  30,   Reporting  the  Results  of
Operations--Reporting  the Effects of


                                       18

<PAGE>

Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and  Transactions,  for the disposal of a segment of a business
(as previously  defined in that opinion).  This statement also amends Accounting
Research Bulletin No. 51, Consolidated  Financial  Statements,  to eliminate the
exception to  consolidation  for a subsidiary  for which control is likely to be
temporary.  The  major  changes  resulting  from  this  statement  relate to the
establishment  of a single method for the  recognition  of impairment  losses on
long-lived assets to be held and used whether from  discontinuance of a business
segment or  otherwise.  This  statement is effective  for  financial  statements
issued for fiscal years  beginning after December 15, 2001. The adoption of this
statement  is  not  expected  to  have  a  material   effect  on  the  Company's
consolidated financial statements.

In December 2001, the Accounting  Standards Executive Committee issued Statement
of Position  ("SOP") 01-6,  Accounting by Certain Entities  (Including  Entities
With Trade  Receivables) That Lend to or Finance the Activities of Others.  This
statement  reconciles  and  conforms  the  accounting  and  financial  reporting
provisions for similar  transactions as applied to different entities within the
financial services industry.  It eliminates  differences in disclosure practices
where not  warranted  and should  provide  greater  consistency  in reporting by
entities in the financial  services  industry.  This  statement is effective for
annual and interim financial  statements issued for fiscal years beginning after
December 15,  2001.  The adoption of SOP 01-6 is not expected to have a material
effect on the Company's consolidated financial statements.

In December  2001,  the Auditing  Standards  Board issued SAS No. 95,  Generally
Accepted  Auditing  Standards.  This  statement  supersedes  Generally  Accepted
Auditing  Standards of SAS No. 1 and generally provides  additional  guidance to
the  independent  auditor in the conduct of an audit  engagement,  primarily  by
addressing   authoritative   and   nonauthoritative   publications   for   audit
consideration  and  guidance.  This SAS is  effective  for  audits of  financial
statements for periods beginning on or after December 15, 2001.

In  January  2002,  the  Auditing  Standards  Board  issued  SAS No.  96,  Audit
Documentation.  This statement  supersedes SAS No. 41, Working Papers and amends
SAS No. 47,  Audit Risk and  Materiality  in  Conducting  an Audit,  SAS No. 56,
Analytical Procedures and SAS No. 59, The Auditor's Consideration of an Entity's
Ability to Continue as a Going Concern. This statement provides revised guidance
to the  independent  auditor as to the type,  purpose and  requirements of audit
documentation.  This SAS is  effective  for audits of financial  statements  for
periods beginning on or after May 15, 2002.

The  impact  of SAS  No.  95  and  SAS  No.  96 on the  audit  of the  Company's
consolidated  financial statements resulting from the issuance of these auditing
standards is not expected to be material.

Recently Passed Legislation

On July 30, 2002,  President Bush signed into law the Sarbanes-Oxley Act of 2002
(the "Act"),  which  immediately  impacts  Securities  and  Exchange  Commission
registrants,  public accounting  firms,  lawyers and securities  analysts.  This
legislation is the most  comprehensive  since the passage of the Securities Acts
of 1933 and 1934. It has far reaching  effects on the standards of integrity for
corporate management,  board of directors, and executive management.  Additional
disclosures,  certifications  and  possibly  procedures  will be required of the
Company. We do not expect any material adverse effect on the Company as a result
of the passage of this legislation,  however,  the full scope of the Act has not
been determined. The Act provides for additional regulations and requirements of
publicly-traded  companies which have yet to be issued.


                                       19

<PAGE>

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 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, 2002,  the Bank's  cumulative gap is
within this range  through a five-year  time frame with the one-year  cumulative
gap at -14.16%, the two-year at -11.97% and the three-year at -4.59%.

The Bank has not  experienced  a high level of  volatility  in its net  interest
margin  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 as  immediately  repricing.
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.


                                       20

<PAGE>


PART 2.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company and its subsidiaries are defendants in legal proceedings  arising in
the ordinary  course of business.  Some of these  proceedings  which  related to
lending, collections, servicing, investment, insurance and other activities seek
substantial sums as damages.

In the  Opinion  of  management,  based on review  and  consultation  with legal
counsel,  the outcome of any litigation  presently pending is not anticipated to
have  a  material  adverse  effect  on  the  company's   consolidated  financial
statements or results of operations.

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

On May 21,  2002,  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 2002 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    Withhold       Total
-----------------------------------------  ---------------  -----------  ---------  -----------  ------------

<C>                                              <C>                                          <C>   <C>
(1)(a)  Election of Wesley L. Bowden             2,962,076                                    2     2,962,078
(1)(b)  Election of Harry I. Brown, Jr.          2,957,078                                5,000     2,962,078
(1)(c)  Election of Harry I. Brown,Sr.           2,957,078                                5,000     2,962,078
(1)(d)  Election of Jerry L. Fielding            2,962,076                                    2     2,962,078
(1)(e)  Election of Charles M. Reeves, Jr.       2,962,076                                    2     2,962,078
(1)(f)  Election of Steven E. Sprayberry         2,957,078                                5,000     2,962,078
(1)(g)  Election of Raymond C. Styres            2,962,076                                    2     2,962,078
(1)(h)  Election of Steven R. Townson            2,957,078                                5,000     2,962,078
(1)(i)  Election of Barry D. Vaughn              2,957,078                                5,000     2,962,078
(1)(j)  Election of Christopher N. Zodrow        2,962,076                                    2     2,962,078
(2)     Appointment of Schauer,Taylor,
        Cox, Vise & Morgan, P.C. as
        auditors                                 2,966,724       1,600                        2     2,968,386
</TABLE>


                                       21

<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 June 12, 2002,  Frontier  filed a Form 8-K with the  Securities and
          Exchange Commission disclosing the resignation,  and related financial
          information,  of Harry I. Brown,  Jr. from his position as Chairman of
          the Board of Directors of Frontier National Corporation.


                                       22

<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, 2002
                              ---------------------------  ---------------------
                              Steven R. Townson
                              Chief Executive Officer, President
                              and Chief Financial Officer


                                       23

<PAGE>



Exhibit 11

                 FRONTIER NATIONAL CORPORATION AND SUBSIDIARIES

                 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE



The following  tabulation presents the calculation of basic and diluted earnings
per common share for the three-month  and six-month  periods ended June 30, 2002
and 2001.

<TABLE>
<CAPTION>

                                                Three Months Ended                 Six Months Ended
                                                     June 30                            June 30
                                               ---------------------             ----------------------
                                               2002             2001             2002              2001
                                               ----             ----             ----              ----

Basic Earnings Per Share
<S>                                      <C>               <C>             <C>              <C>
   Net Income........................    $   38,347        $  544,077      $  613,026       $ 1,009,485

   Earnings on common shares.........    $   38,347        $  544,077      $  613,026       $ 1,009,485

   Weighted average common shares
     outstanding - basic..............    3,441,060         3,424,436       3,439,494         3,423,320
                                         ==========        ==========      ==========       ===========

   Basic earnings per common share....   $     0.01        $     0.16      $     0.18       $      0.30

Diluted Earnings Per Share
   Net Income.........................   $   38,347        $  544,077      $   613,026      $ 1,009,485

   Weighted average common shares
     outstanding - diluted............    3,517,336         3,511,833        3,512,990        3,516,072
                                         ==========        ==========      ===========      ===========
   Diluted earnings per common share..   $     0.01        $     0.16      $      0.18      $      0.29
</TABLE>


                                       24