<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-QSB


     [X]  Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
          Exchange Act of 1934 for the quarterly period ended September 30, 2001

     [ ]  Transition report under Section 13 or 15(d) of the Exchange Act for
          the transition period from ____________ to ____________

                       Commission file number: 000-23991

                               CNB HOLDINGS, INC.
       (Exact name of small business issuer as specified in its charter)

              Georgia                                58-2362335
     (State of Incorporation)           (I.R.S. Employer Identification No.)

                            7855 North Point Parkway
                                   Suite 200
                         Alpharetta, Georgia 30022-4849
                    (Address of principal executive offices)

                                 (770) 650-8262
                (Issuer's telephone number, including area code)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

            Class                    Outstanding at November 13, 2001
            -----                    --------------------------------
Common Stock, $1.00 par value                   1,059,259

         Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>

                         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.
                               CNB HOLDINGS, INC.
                                 AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                       SEPTEMBER 30,   DECEMBER 31,
                                                                                           2001           2000
                                                                                       -------------   ------------
                                                                                        (Unaudited)     (Audited)
<S>                                                                                    <C>             <C>
ASSETS

Cash and due from banks.......................................................          $ 1,789,027    $ 2,421,769
Federal funds sold............................................................            9,450,299      3,991,606
Investment securities:
  Securities available-for-sale, at market value..............................           31,046,568     12,507,223
  Other securities............................................................              488,000        488,000
Loans net of allowance for loan losses
  of $590,638 and $585,000....................................................           55,655,239     43,022,547
Premises and equipment (net)..................................................              624,643        693,008
Other assets..................................................................              870,215      1,072,649
                                                                                        -----------    -----------
  TOTAL ASSETS................................................................          $99,923,991    $64,196,802
                                                                                        ===========    ===========

LIABILITIES

Deposits:
  Non interest-bearing demand.................................................          $ 8,292,820    $ 5,811,525
  Interest-bearing demand and money market....................................           16,206,361      6,922,344
  Savings.....................................................................               64,314         34,606
  Time deposits of $100,000 or more...........................................           19,466,802     12,411,858
  Other time deposits.........................................................           39,986,929     23,783,452
                                                                                        -----------    -----------
  Total Deposits..............................................................           84,017,226     48,963,785
Federal funds purchased.......................................................              790,521      1,278,097
Other borrowed money..........................................................            4,539,500      4,494,500
Other liabilities.............................................................            1,595,763        750,615
                                                                                        -----------    -----------
 TOTAL LIABILITIES............................................................           90,943,010     55,486,997

STOCKHOLDERS' EQUITY

Preferred stock, par value not stated;
  10,000,000 shares authorized, no
  shares issued and outstanding...............................................                   --             --
Common stock, par value $1.00 per share;
  10,000,000 shares authorized; 1,235,000 issued..............................            1,235,000      1,235,000
Surplus.......................................................................           10,004,858     10,170,283
Accumulated other comprehensive income-
  market valuation reserve on investment
  securities available-for-sale...............................................              273,209         61,232
Treasury stock................................................................           (1,402,333)    (1,967,756)
Unearned ESOP shares..........................................................             (399,998)            --
Accumulated deficit...........................................................             (729,755)      (788,954)
                                                                                        -----------    -----------
  TOTAL STOCKHOLDERS' EQUITY..................................................            8,980,981      8,709,805
                                                                                        -----------    -----------
  TOTAL LIABILITIES AND EQUITY................................................          $99,923,991    $64,196,802
                                                                                        ===========    ===========
</TABLE>
              See notes to the consolidated financial statements.
<PAGE>

                               CNB HOLDINGS, INC.
                                 AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                             FOR THE                 FOR THE
                                                                                           NINE-MONTH              THREE-MONTH
                                                                                          PERIOD ENDED             PERIOD ENDED
                                                                                          SEPTEMBER 30,            SEPTEMBER 30,
                                                                                    -----------------------   ----------------------
                                                                                        2001        2000         2001         2000
                                                                                    ----------   ----------   ----------  ----------
<S>                                                                                 <C>          <C>          <C>         <C>

Interest income loans and leases, including fees...............................     $3,689,482   $2,709,933   $1,249,035  $1,022,323
Investment securities:
  U.S. Treasury securities.....................................................         13,070      102,968           --      31,044
  U.S. government agencies.....................................................        677,521      270,204      354,856     108,713
Other investments..............................................................        616,030       19,969      106,196       3,951
Federal funds sold.............................................................        272,187      105,320       30,565      34,155
                                                                                    ----------   ----------   ----------  ----------
Total interest income..........................................................      5,268,290    3,208,394    1,740,652   1,200,186
Interest expense:
  Interest bearing demand and money market.....................................        368,599      410,490      133,165     119,909
  Savings......................................................................            971          245          409          98
  Time deposits of $100,000 or more............................................        904,506      379,404      291,698     171,391
  Other time deposits..........................................................      1,755,417      545,419      583,532     266,687
  Other borrowings.............................................................        169,639      101,365       46,134      36,982
                                                                                    ----------   ----------   ----------  ----------
    Total interest expense.....................................................      3,199,132    1,436,923    1,054,938     595,067
                                                                                    ----------   ----------   ----------  ----------
  Net interest income..........................................................      2,069,158    1,771,471      685,714     605,119
Provision for possible loan losses.............................................        141,000      112,000       33,000      26,000
                                                                                    ----------   ----------   ----------  ----------
  Net interest income after provision for possible loan losses.................      1,928,158    1,659,471      652,714     579,119

Other income:
  Service charges on deposit accounts..........................................         43,266       28,061       15,975      10,530
  Gains on the sale of loans and leases (net)..................................        207,367      151,157       81,653      83,705
  Gains on the sale of securities available for sale...........................         57,581           --       17,297          --
  Other income.................................................................         86,078       46,466       26,403      16,727
                                                                                    ----------   ----------   ----------  ----------
    Total other income.........................................................        394,292      225,684      141,328     110,962
Other expense:
  Salaries and other compensation..............................................      1,058,594      858,698      343,399     307,427
  Employee benefits............................................................        199,921      160,978       63,254      52,564
  Net occupancy and equipment expense..........................................        366,548      328,577      116,135     110,881
  Professional and other outside services......................................        197,401      184,135       66,914      69,552
  Other expense................................................................        440,787      363,252      163,661     126,817
                                                                                    ----------   ----------   ----------  ----------
    Total other expenses.......................................................      2,263,251    1,895,640      753,363     667,241
                                                                                    ----------   ----------   ----------  ----------

Net income (loss) before income tax benefit....................................         59,199      (10,485)      40,679      22,840
Income tax benefit.............................................................             --           --           --          --
                                                                                    ----------   ----------   ----------  ----------
Net income (loss)..............................................................     $   59,199   $  (10,485)  $   40,679  $   22,840
                                                                                    ==========   ==========   ==========  ==========

Basic and diluted earnings (loss) per share....................................     $      .06   $     (.01)  $      .04  $      .02
                                                                                    ==========   ==========   ==========  ==========

</TABLE>
              See notes to the consolidated financial statements.
<PAGE>

                               CNB HOLDINGS, INC.
                                 AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                       FOR THE                    FOR THE
                                                                                      NINE-MONTH                THREE-MONTH
                                                                                     PERIOD ENDED               PERIOD ENDED
                                                                                     SEPTEMBER 30,              SEPTEMBER 30,
                                                                               -------------------------    -----------------------
                                                                                  2001            2000         2001         2000
                                                                               ---------       ---------    ---------     ---------
<S>                                                                            <C>             <C>          <C>           <C>

Net income (loss)........................................................      $  59,199        $(10,485)   $  40,679     $ 22,840
Other comprehensive income, before tax:
  Unrealized holding gains arising during period.........................        335,512          76,449      314,575       70,357
  Income tax provision...................................................       (123,535)        (24,772)    (113,247)     (23,208)
                                                                               ---------        --------    ---------     --------
Comprehensive income.....................................................      $ 271,176        $ 41,192    $ 242,007     $ 69,959
                                                                               =========        ========    =========     ========

</TABLE>

              See notes to the consolidated financial statements.
<PAGE>

                               CNB HOLDINGS, INC.
                                 AND SUBSIDIARY
                            STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                                  FOR THE
                                                                                                                 NINE-MONTH
                                                                                                                PERIOD ENDED
                                                                                                                SEPTEMBER 30,
                                                                                                         --------------------------
                                                                                                            2001           2000
                                                                                                         -----------   ------------
<S>                                                                                                      <C>            <C>

Cash flows from operating activities:
  Net income (loss)....................................................................................  $     59,199  $    (10,485)
  Adjustments to reconcile net income (loss) to net cash provided by
    operating activities:
    Net amortization of investment securities..........................................................        11,925           498
    Depreciation and amortization of premises and equipment............................................       132,712       129,330
    Gains on the sale of loans and leases..............................................................      (207,367)     (151,157)
    Gains on the sale of securities available for sale.................................................       (57,581)           --
    Provision for loan losses..........................................................................       141,000       112,000
    Increase (decrease) in other assets................................................................       202,434      (211,805)
    Increase in other liabilities......................................................................       721,613       391,926
                                                                                                         ------------  ------------
      Net cash provided by operating activities .......................................................     1,003,935       260,307

Cash flows from investing activities:
  Maturities of investment securities available-for-sale...............................................    16,512,168     1,371,442
  Purchases of investment securities available-for-sale................................................   (42,483,056)   (4,284,292)
  Purchases of other investments.......................................................................            --       (50,200)
  Proceeds from sales of investment securities available-for-sale......................................     7,812,711            --
  Proceeds from sale of loans and leases...............................................................     3,962,127     2,198,441
  Loans originated, net of principal repayments........................................................   (16,528,452)  (14,252,671)
  Purchases of premises and equipment..................................................................       (64,347)     (376,690)
                                                                                                         ------------  ------------
    Net cash used in investing activities..............................................................   (30,788,849)  (15,393,970)

Cash flows from financing activities:
  Decrease in federal funds purchased..................................................................      (487,576)           --
  Increase in other borrowings.........................................................................        45,000       964,500
  Purchase of treasury stock...........................................................................            --      (657,700)
  Increase in deposits.................................................................................    35,053,441    16,452,253
                                                                                                         ------------  ------------
    Net cash provided by financing activities..........................................................    34,610,865    16,759,053
                                                                                                         ------------  ------------

Net increase in cash and cash equivalents..............................................................     4,825,951     1,625,390
Cash and cash equivalents, beginning of period.........................................................     6,413,375     3,047,377
                                                                                                         ------------  ------------

Cash and cash equivalents, end of period...............................................................  $11,239,326   $  4,672,767
                                                                                                         ===========   ============

</TABLE>
              See notes to the consolidated financial statements.
<PAGE>

                               CNB HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              FOR THE NINE MONTHS
                            ENDED SEPTEMBER 30, 2001
                                  (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements for CNB
Holdings, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions for Form 10-QSB. Accordingly, they do not include all 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 adjustments) considered necessary for a fair
presentation have been included. Operating results for the nine and three month
periods ended September 30, 2001 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2001.  For further
information, refer to the financial statements and footnotes included in the
Company's consolidated financial statements and footnotes thereto for the year
ended December 31, 2000, included in the Company's Form 10-KSB.

The consolidated financial statements include the account of the Company and its
wholly owned subsidiary, Chattahoochee National Bank (the "Bank"), with all
significant intercompany accounts and transactions eliminated in consolidation.

NOTE 2 - EARNINGS (LOSS) PER COMMON SHARE

     Earnings (loss) per share is computed by dividing net income or (loss)
available to common shareholders by the weighted average number of share
outstanding during the period, which totaled 1,059,259 shares for the nine and
three months ended September 30, 2001.  There were no potentially dilutive
common shares at September 30, 2001.

NOTE 3 - LOANS AND LEASES RECEIVABLE

     Major classifications of loans and leases are as follows in thousands
(000):
<TABLE>
<CAPTION>

                                                        SEPTEMBER 30, 2001    DECEMBER 31, 2000
                                                        ------------------    -----------------
     <S>                                                <C>                   <C>
     Commercial Loans                                         $23,614              $25,000
     Real Estate -- construction                               21,314                7,715
     Real Estate - mortgage                                     5,262                4,419
     Leasing financing                                          3,419                4,214
     Installment Loans                                          2,706                2,306
                                                              -------              -------
     Total Loans                                               56,315               43,654
     Less: Deferred loan fees and costs                            69                   46
     Less: Allowance for loans and lease losses                   591                  585
                                                              -------              -------
     Loans and leases receivable, net                         $55,655              $43,023
                                                              =======              =======

</TABLE>

NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income market valuation reserve on investment
securities available-for-sale is as follows:
<TABLE>
<CAPTION>

               <S>                                     <C>
               Beginning balance - January 1, 2001     $ 61,232
               Current - period change                  211,977
                                                       --------
               Ending balance - September 30, 2001     $273,209
                                                       ========

</TABLE>
<PAGE>

NOTE 5 - NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS AFFECTING FUTURE PERIODS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities".  The effective
date of this statement was deferred by SFAS No. 137 until fiscal years beginning
after June 15, 2000.  However, the statement permitted early adoption as of the
beginning of any fiscal quarter after its issuance.  The Company adopted this
statement effective January 1, 2001.  SFAS No. 133 requires the Company to
recognize all derivatives as either assets or liabilities in the balance sheet
at fair value.  For derivatives that are not designated as hedges, the gain or
loss must be recognized in earnings in the period of change.  For derivatives
that are designated as hedges, changes in the fair value of the hedged assets,
liabilities, or firm commitments must be recognized in earnings or recognized in
other comprehensive income until the hedged item is recognized in earnings,
depending on the nature of the hedge.  The ineffective portion of a derivative's
change in fair value must be recognized in earnings immediately.   The adoption
of SFAS No. 133 had no material effect on the Company's operations or financial
position.

There are no other recent accounting pronouncements that have had, or are
expected to have, a material effect on the Company's financial statements.


              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Certain of the statements made in this Report and in documents incorporated
by reference herein, including matters discussed under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as oral statements made by the Company or its officers, directors or
employees, may constitute forward-looking statements within the meaning of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as amended.
Such forward-looking statements are based on management's beliefs, current
expectations, estimates and projections about the financial services industry,
the economy and about CNB Holdings, Inc. (the "Company") and its wholly-owned
subsidiary, Chattahoochee National Bank (the "Bank") in general.  The words
"expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and
similar expressions are intended to identify such forward-looking statements;
however, this Report also contains other forward-looking statements in addition
to historical information.  Such forward-looking statements are not guarantees
of future performance and are subject to risks, uncertainties and other factors
that may cause the actual results, performance or achievements of the Company to
differ materially from any results expressed or implied by such forward-looking
statements.  Such factors include, without limitation, (i) increased competition
with other financial institutions, (ii) lack of sustained growth in the economy
in Fulton County, Georgia, (iii) the inability of the Bank to maintain
regulatory capital standards, (iv) changes in the legislative and regulatory
environment and (v) the consequences of the September 11, 2001 terrorist
attacks and the war on terrorism, including a prolonged economic slowdown.
Additionally, rapid increases or decreases in interest rates could significantly
harm the Bank's net-interest income, which is the difference between the
interest income earned on its interest-earning assets (such as loans), and the
interest expense paid on its interest-bearing liabilities (such as deposits).
Because the Bank is cumulatively asset sensitive (its assets reprice sooner that
its liabilities) within the next six months, continued decreases in interest
rates could result in reduced earnings. Many of the forgoing factors are beyond
the Company's ability to control or predict, and readers are cautioned not to
put undue reliance on such forward-looking statements. The Company disclaims any
obligation to update or revise any forward-looking statements contained in this
Report, whether as a result of new information, future events or otherwise.
<PAGE>

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

     The Company was incorporated in Georgia on November 5, 1997 to become a
bank holding company and to own and control all of the outstanding shares of the
Bank. In a private offering and a separate public offering conducted during
1998, the Company sold and issued an aggregate of 1,235,000 shares of common
stock, par value $1.00 per share (the "Common Stock"), at $10.00 per share.
Proceeds from these stock offerings amounted to an aggregate of $11,103,625, net
of selling expenses and repayment of the organizers' expense. The Company
purchased 100% of the Bank's common stock by injecting approximately $9.6
million into the Bank's capital accounts immediately prior to the Bank's opening
on July 27, 1998.

FINANCIAL CONDITION

     Management continuously monitors the financial condition of the Bank in
order to protect depositors, increase retained earnings and protect current and
future earnings. Further discussion of significant items affecting the Bank's
financial condition are discussed in detail below.

     Total assets increased from $64,196,802 on December 31, 2000 to $99,923,991
on September 30, 2001, an increase of $35,727,189. This increase was due in
large part to an increase in loans of $12,632,692, a $18,539,345 increase in
securities available for sale, and a $5,458,693 increase in federal funds. This
growth was primarily funded by a $35,053,441 increase in deposits. Increased
marketing efforts were largely responsible for this deposit increase. Due to
lower than expected loan demand, negotiable securities were used to invest these
new deposits.

     The $35,053,441 increase in deposits came in large part from an increase of
$2,481,295 in non-interest bearing demand, an increase of $7,054,944 in time
deposits of $100,000 or more and an increase of $16,203,477 in other time
deposits. Interest-bearing demand and money market deposits increased
$9,284,017.

Allowance for Loan Losses

     The allowance for loan losses as of September 30, 2001 was $590,638
compared to $585,000 as of December 31, 2000.  The allowance for loan losses, as
a percentage of total gross loans, for September 30, 2001 was 1.05%, compared to
1.34% as of December 31, 2000. The increase in the provision for possible loan
losses during the third quarter of 2001 was prompted by risks inherent in the
loan portfolio. During the first and third quarters of 2001, a review of the
Bank's loan portfolio by an independent firm was conducted.  The purpose of this
review was to assess the risk in the loan portfolio and to determine the
adequacy of the allowance for loan losses.  The review included analyses of
historical performance, the level of non-conforming and rated loans, loan volume
and activity, review of loan files and consideration of economic conditions and
other pertinent information.  Upon completion and review by the Bank's Board of
Directors and management, the Bank approved the firm's report. The Bank will
continue engaging, on a biannual basis, an independent firm to review the Bank's
loan portfolio.  In addition to the independent reviews, the Bank's primary
regulator, the OCC, also conducts an annual examination of the loan portfolio.
Upon completion, the OCC presents its report of findings to the Bank's Board of
Directors and management. Information provided from the above two independent
sources, together with information provided by the management and other
information known to the Bank's Board of Directors, are utilized by the Board of
Directors to monitor, on a quarterly basis, the loan portfolio.  Specifically,
the Bank's Board of Directors attempts to identify risks inherent in the loan
portfolio (e.g., problem loans, potential problem loans and loans to be charged
off), assess the overall quality and collectibility of the loan portfolio, and
determine amounts of the allowance for loan losses and the provision for loan
losses to be reported based on the results of their review.

     Management considers the allowance for loan losses to be adequate and
sufficient to absorb future losses; however, there can be no assurance that
charge-offs in future periods will not exceed the allowance for loan losses or
that additional provisions of the allowance will not be required.
<PAGE>

Liquidity and Sources of Capital

     Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers.  The
September 30, 2001 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to approximately
$11,239,326, representing 11.25% of total assets. Securities amounted to
$31,534,568, representing 31.56% of total assets; these securities provide a
secondary source of liquidity since they can be converted into cash in a timely
manner. The Company's ability to maintain and expand its deposit base and
borrowing capabilities are a source of liquidity. For the nine-month period
ended September 30, 2001, total deposits increased $35,053,441 as a result of
increased marketing efforts.  Additionally, the Company has offered secure
repurchase accounts to its customers totalling $790,521. The Company's
management closely monitors and maintains appropriate levels of interest earning
assets and interest bearing liabilities so that maturities of assets are such
that adequate funds are provided to meet customer withdrawals and loan demand.
Management is not aware of any trends, demands, commitments, events or
uncertainties that will result in, or are reasonably likely to result in, the
Company's liquidity increasing or decreasing in any material way.

     During 2001, the Company reissued 59,259 shares of its common stock which
were purchased by the Bank's ESOP. The Company made a loan to the ESOP for this
stock purchase and took a pledge and assignment of its stock as collateral.

     This table below illustrates the Company's regulatory capital ratios at the
date indicated:

                                                                     MINIMUM
                                                                    REGULATORY
                                           SEPTEMBER 30, 2001       REQUIREMENT
                                           ------------------       -----------

          Tier 1 Capital                         13.59%                4.0%
          Tier 2 Capital                          0.87                  --
                                                 -----                 ---
               Total risk-based capital ratio    14.46%                8.0%
                                                 =====                 ===
           Leverage ratio                         9.92%                3.0%
                                                 =====                 ===

RESULTS OF OPERATIONS

Nine-Month Period Ended September 30, 2001

     Net income for the six-month period ended September 30, 2001 amounted to
$59,199, or $.06 per basic and diluted income per share compared to a net loss
of $10,485 or $.01 per basic and diluted loss per share. The following is a
brief discussion of the more significant components of net loss during this
period:

     a.  Net interest income represents the difference between interest received
         on interest earning assets and interest paid on interest bearing
         liabilities. The following presents, in a tabular form, the main
         components of interest earning assets and interest bearing liabilities.
<PAGE>

<TABLE>
<CAPTION>

           September 30, 2001
           ------------------

                 Interest                              Interest    Annualized
             Earning Assets/               Average      Income/      Yield/
            Bearing Liabilities            Balance       Cost         Cost
          ---------------------          -----------  ----------   ----------
          <S>                            <C>          <C>          <C>

          Federal funds sold             $ 7,311,792  $  272,187      4.96%
          Securities                      27,852,734   1,306,621      6.25%
          Loans                           50,574,130   3,689,482      9.72%
                                         -----------  ----------
               Total                     $85,738,656  $5,268,290      8.19%
                                         ===========  ==========

          Deposits                       $73,872,896  $3,029,493      5.47%
          Other borrowings                 4,497,045     169,639      5.03%
                                         -----------  ----------
               Total                     $78,369,941  $3,199,132      5.44%
                                         ===========  ----------     -----

          Net interest income                         $2,069,158      2.75%
                                                      ==========     =====

          Net yield on earning assets                                 3.22%
                                                                     =====
</TABLE>

<TABLE>
<CAPTION>


          September 30, 2000
          ------------------

               Interest                                Interest   Annualized
            Earning Assets/                Average      Income/     Yield/
          Bearing Liabilities              Balance       Cost        Cost
          -------------------            -----------  ----------  ----------
          <S>                            <C>          <C>         <C>

          Federal funds sold             $ 2,420,080  $  105,320      5.80%
          Securities                       8,633,140     393,141      6.07%
          Loans                           32,753,882   2,709,933     11.03%
                                         -----------  ----------
               Total                     $43,807,102  $3,208,394      9.76%
                                         ===========  ==========

          Deposits                       $34,299,928  $1,335,558      5.19%
          Other borrowings                 2,467,263     101,365      5.48%
                                         -----------  ----------
               Total                     $36,767,191  $1,436,923      5.21%
                                         ===========  ----------     -----

          Net interest income                         $1,771,471      4.55%
                                                      ==========     =====
          Net yield on earning assets                                 5.39%
                                                                     =====
</TABLE>


     b.  Total other income for the nine-month period ended September 30, 2001
         amounted to $394,292 compared to $225,684 for 2000. On an annualized
         basis, this represents 0.39% of total assets compared to 0.61% of total
         assets for the same period in 2000. The Bank sold loans and leases
         totaling $3,962,127 without recourse compared with $2,198,441 in 2000.
         The profit from these sales was $207,367 or 52.59% of total other
         income compared with $151,157 and 66.98% for 2000. The service charge
         on deposit accounts is relatively low, at $43,266 or 10.97% of total
         other income compared with $28,061 or 12.43% for 2000. Most of our
         deposit customers maintain balances at levels that prevent service
         charges. Additionally, available for sale securities were sold for net
         gains of $57,581 or 14.60% of total other income. There were no such
         gains for the comparative nine-month period in 2000. Of the $86,078 of
         miscellaneous other income or 21.83% of total other income, $75,693 or
         87.94% of miscellaneous other income consists of mortgage origination
         and fee income from mortgage loans, which are not added to the Bank's
         loan portfolio. For 2000, of the $46,466 of miscellaneous other income,
         or 20.59% of total other income, $37,193
<PAGE>

         or 80.04% related to mortgage origination activity. Decreased mortgage
         rates have increased mortgage loan activity during 2001.


     c.  Operating expenses for the nine-month period ended September 30, 2001
         amounted to $2,263,251 compared to $1,895,640 for 2000. The largest
         expense being related to salaries and employee benefits and
         professional and outside services. The majority of the increase was due
         to the opening of a second location in March 2000, the addition of
         staff for Small Business Loan origination in February 2000 and the
         addition of a chief lending officer in August 2000. These expenses were
         present for the entire nine-month period in 2001, but not for the
         comparative period in 2000. On an annualized basis, operating expenses
         represent 3.02% of total assets compared to 3.49% in 2000.

     d.  The Company has recorded no provision for income taxes due to
         accumulated deficits incurred to date.


Three-Month Period Ended September 30, 2001

     Net income for the three-month period ended September 30, 2001 amounted to
$40,679, or $.04 per diluted share compared to $22,840, or $.02 per diluted
share. The following is a brief discussion of the more significant components of
net income during this period:

     a.   Net interest income represents the difference between interest
          received on interest earning assets and interest paid on interest
          bearing liabilities. The following presents, in a tabular form, the
          main components of interest earning assets and interest bearing
          liabilities.
<TABLE>
<CAPTION>

          September 30, 2001
          ------------------

               Interest                                 Interest     Annualized
            Earning Assets/                Average       Income/        Yield/
          Bearing Liabilities              Balance        Cost          Cost
          -------------------            -----------   ----------    ----------
          <S>                            <C>           <C>           <C>

          Federal funds sold             $ 3,693,354   $   30,565       3.31%
          Securities                      29,911,543      461,052       6.17%
          Loans                           55,959,413    1,249,035       8.93%
                                         -----------   ----------
               Total                     $89,564,310   $1,740,652       7.77%
                                         ===========

          Deposits                       $77,979,596   $1,008,804       5.17%
          Other borrowings                 4,635,765       46,134       3.98%
                                         -----------   ----------
               Total                     $82,615,361   $1,054,938       5.11%
                                         ===========   ----------       ----


          Net interest income                          $  685,714       2.66%
                                                       ==========       ====

          Net yield on earning assets                                   3.06%
                                                                        ====


</TABLE>
<PAGE>

<TABLE>
<CAPTION>


          September 30, 2000
          ------------------

               Interest                                 Interest     Annualized
             Earning Assets/               Average       Income/       Yield/
          Bearing Liabilities              Balance        Cost          Cost
          -------------------            -----------   ----------    -----------
          <S>                            <C>           <C>           <C>

          Federal funds sold             $ 2,385,542   $   34,155        5.73%
          Securities                       9,622,456      143,708        5.97%
          Loans                           36,317,749    1,022,323       11.26%
                                         -----------   ----------
               Total                     $48,325,747   $1,200,186        9.93%
                                         ===========

          Deposits                       $38,996,552   $  558,085        5.72%
          Other borrowings                 2,277,525       36,982        6.50%
                                         -----------   ----------
               Total                     $41,274,077   $  595,067        5.77%
                                         ===========   ----------       -----

          Net interest income                          $  605,119        4.16%
                                                       ==========       =====

          Net yield on earning assets                                    5.01%
                                                                        =====
</TABLE>

     b.  Total other income for three-month period ended September 30, 2001
         amounted to $141,328 compared with $110,962 for 2000. On an annualized
         basis, this represents 0.14% of total assets compared with 0.27% for
         2000. The Bank sold loans and leases totaling $1,015,999 without
         recourse compared to $1,572,743 in 2000. The profit in 2001 from these
         sales was $81,653 or 57.78% of total other income compared with $83,705
         or 75.44% for 2000. The service charge on deposit accounts was $15,975
         or 11.30% of total other income compared with $10,530 or 9.49% for
         2000. Most of our deposit customers maintain balances at levels that
         prevent service charges. Miscellaneous other income was $26,403 or
         18.68% of total other income compared to $16,727 or 15.08% of total
         other income for 2000. The majority of other income is related to
         mortgage origination activities. Decreased mortgage rates have
         increased mortgage loan activity during 2001, resulting in increased
         mortgage origination income.

     c.  Operating expenses for the three-month period ended September 30, 2001
         amounted to $753,363 compared to $667,241 in 2000, with the largest
         expense being related to salaries and employee benefits and
         professional and outside services. On an annualized basis, this
         represents 3.01% of total assets compared with 4.81% of total assets in
         2000.


     We have provided for income taxes at an effective tax rate of 38% including
     state income taxes for the first nine months of 2001. No taxes were
     recorded during the first nine months of 2000 due to cumulative net
     operating losses.

     The terrorist attacks that occurred in New York City and Washington, D.C.
     on September 11, 2001 and the United States' subsequent response to these
     events have resulted in a general economic slowdown that may adversely
     effect our banking business. Economic slowdowns or recessions in our
     primary market area may be accompanied by reduced demand for credit,
     decreasing interest margins and declining real estate values, which may in
     turn result in a decrease in net earnings and an increased possibility of
     potential loan losses in the event of default. Any sustained period of
     decreased economic activity, increased delinquencies, foreclosures or
     losses could limit our growth and negatively effect our results of
     operations. We cannot predict the extent, duration of these events or
     effect upon our business and operations. We will, however, closely monitor
     the effect of these events upon our business, and make adjustments to our
     business strategy as deemed necessary.

     We are not aware of any known trends, events or uncertainties, other than
     the effect of events as described above, that will have or that are
     reasonably likely to have a material effect on our liquidity, capital
     resources or operations. We are also not aware of any current
     recommendations by the regulatory authorities which, if they were
     implemented, would have such an effect.
<PAGE>

                           PART II. OTHER INFORMATION


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

(a)  Exhibits. The following exhibits are filed with this Report:

   Exhibit No.        Description
   -----------        -----------

      None

(b)  Reports on Form 8-K.  None
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934 as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

Date: November 13, 2001       By: /s/ H. N. Padget, Jr.
                                  ----------------------------
                                  H. N. Padget, Jr., President and
                                  Chief Executive Officer
                                  (principal executive officer)

Date: November 13, 2001       By: /s/ Danny F. Dukes
                                  ----------------------------
                                  Danny F. Dukes, Senior Vice President,
                                  Chief Financial Officer
                                  (principal financial and accounting officer)