UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-KSB

         [x]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001
                                       OR
         [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to
                               ---------------    ----------------

                        Commission file number: 33-58832

                         FIRST CENTRAL BANCSHARES, INC.
        (Exact name of small business issue as specified in its charter)

                                    Tennessee
         (State or other jurisdiction of incorporation or organization)

                  725 Highway 321 North, Lenoir City, Tennessee
                     (Address of principal executive office)

                                   62-1482501
                      (I.R.S. Employer Identification No.)

                                   37771-0230
                                   (Zip Code)

Registrant's telephone number, including area code:  (865) 986-1300

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock
(par value $5.00 per share)

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

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

The issuer's revenues for its most recent fiscal year were $11,431,149.

At February 1, 2002,  the  aggregate  market  value of the voting  stock held by
non-affiliates of the Company was approximately  $10,281,288.  The last recorded
trade of shares  between  individuals  was on February 1, 2002 at a price of $24
per share.

As of March 14,  2002,  issuer had 547,228  shares of its $5.00 par value Common
Stock outstanding.


<PAGE>


                                     PART I

Item 1. Description of Business

(a)      Business Development

First Central Bancshares, Inc. (the "Company") is a one-bank holding company for
First Central Bank (the "Bank").  The formation was approved by the shareholders
of the Bank on March 18,  1993.  On April 6, 1993 the Bank became a wholly owned
subsidiary  of the Company  with the  exchange of one share of Bank common stock
for one share of common stock of the Company.  The Company currently has 547,228
shares of its $5.00 par value Common Stock (the "Common Stock") outstanding.

(b)      Business of Issuer

The Bank operates out of the main office located in Lenoir City,  Loudon County,
Tennessee and six branch offices, one located in Loudon, one in Tellico Village,
Loudon County,  Tennessee, one located in Farragut, Knox County,  Tennessee, one
located in Kingston,  Roane County,  Tennessee, and two located in Alcoa, Blount
County,  Tennessee.  All  offices  are full  service  branches  serving  an area
approximately 50 miles in radius, which encompasses parts of Loudon County, Knox
County,  Roane County, and Blount County.  The competition  includes seven other
commercial  banks  in  Loudon  County  with  only  one  of  them  being  locally
headquartered.  The adjoining counties include nineteen commercial banks and one
savings and loan institution.

All offices  provide  typical  commercial  bank  products  such as checking  and
savings accounts, certificates of deposit, individual retirement accounts, and a
complete  range of loans  including  commercial,  personal,  real  estate,  home
improvement,  automobile,  and student  education loans. Each office also offers
Visa and MasterCard,  ATM cards, safe deposit boxes,  traveler's  checks,  money
orders, cashiers checks,  collection items, wire transfers,  and other customary
bank services. All offices have drive-up window facilities and ATM machines. The
ATM cards may be used at all Star and Cirrus network machines.

The Company is subject to regulation  by the Federal  Reserve Bank (FRB) and the
Securities and Exchange  Commission  (SEC). The Bank is subject to regulation by
the  Tennessee  Department  of  Financial  Institutions  (TDFI) and the  Federal
Deposit Insurance  Corporation (FDIC). As a bank holding company, the Company is
subject to  regulation by the Board of Governors of the Federal  Reserve  System
(Federal  Reserve  Board).  The Bank  Holding  Company  Act  requires  the prior
approval of the Federal  Reserve Board in any case where a bank holding  company
proposes to acquire  direct or indirect  ownership or control of more than 5% of
the voting  shares of any bank (unless it owns a majority of such bank's  voting
shares) or to merge or  consolidate  with any other bank  holding  company.  The
Federal Reserve Board may not approve such acquisition,  merger or consolidation
that would have  anticompetitive  effects  or that would  permit a bank  holding
company to acquire a bank outside of the holding  company's  principal  state of
operations  unless  the  statutes  of the  second  state  expressly  permit  the
acquisition.

The Bank Holding Company Act also prohibits a bank holding company, with certain
exceptions, from acquiring or retaining more than 5% of the voting shares of any
company that is not a bank and from engaging in any business  other than banking
or managing or controlling banks and other  subsidiaries  authorized by the Bank
Holding Company Act or providing  services to them. The Federal Reserve Board is
authorized to approve the  ownership of shares by a bank holding  company of any
company whose activities have been determined by the Federal Reserve Board to be
so closely  related to banking or to  managing or  controlling  banks as to be a
proper incident thereto.

The Federal Reserve Board may issue cease and desist orders against bank holding
companies  and  non-bank  subsidiaries  to stop  actions  believed  to present a
serious threat to a subsidiary bank. It also regulates changes in the control of
bank holding  companies and the ability to proscribe the payment of dividends by
banks and bank holding  companies.  The Federal  Reserve Board has expressed its
view that a bank holding company  experiencing  earnings weakness should not pay
cash  dividends  exceeding  its net income or which could only be funded in ways
that weaken the bank holding company's financial health, such as by borrowing.

The Financial  Institutions  Reform,  Recovery,  and Enforcement Act ("FIRREA"),
signed into law in 1989,  amended  provisions of the Bank Holding Company Act to
specifically  authorize a bank  holding  company,  upon  receipt of  appropriate
approvals  from the  Federal  Reserve  Board and the  Director  of the Office of
Thrift  Supervision  ("OTS"),  to acquire control of any savings  association or
holding company thereof wherever located. A savings and loan holding company may
not  acquire  control of a bank.  Pursuant  to rules  promulgated  by FIRREA,  a
savings  association  acquired by a bank holding  company (i) may, so long as it
continues to meet the qualified  thrift  lender test,  continue to branch to the
same extent as permitted to their nonaffiliated  savings associations  similarly
chartered in the state, and (ii) may not continue any nonbanking  activities not

                                      -2-
<PAGE>

authorized for bank holding companies.  Savings associations  acquired by a bank
holding  company may, if located in a state where the holding company is legally
authorized  to acquire a bank, be  converted,  to the extent  permitted by state
law,  to the status of a bank but deposit  insurance  assessments  and  payments
continue to be paid by the association to the Savings Association Insurance Fund
of the FDIC. A savings association so converted to a bank becomes subject to the
branching  restrictions  applicable  to banks.  Under certain  circumstances,  a
savings  association  acquired by a bank  holding  company may be merged with an
existing bank subsidiary of a holding company.

The Company is also a bank holding company under the Bank Structure Act of 1974.
A bank holding  company whose principal place of business is within the State of
Tennessee  is  allowed  to  enter  any and all  counties  in the  State  through
acquisitions of existing banks.  However, a bank holding company may not acquire
any of the shares of a bank in Tennessee  unless such bank has been in operation
for at least five (5) years,  except in certain  circumstances.  A bank  holding
company is  prohibited  from  acquiring  any bank in  Tennessee as long as banks
which the holding company  controls retain sixteen and one-half  (16.5)% percent
or more of the total  individual,  partnership  or corporate  demand and savings
deposits in all banks in Tennessee as reported  annually by the FDIC.  Tennessee
law provides that any out-of-state  holding company may acquire a Tennessee bank
holding company or a Tennessee bank with the approval of the Commissioner of the
Tennessee Department of Financial  Institutions (the "Commissioner") if the laws
of the state in which the  out-of-state  bank holding  company has its principal
office  permit such bank holding  company to acquire or be acquired by Tennessee
bank holding  companies.  The  Tennessee  banks or bank holding  companies to be
acquired must have been in existence for more than five years.

The  Riegle-Neal  Interstate  Banking and Branching  Efficiency Act of 1994 (the
"IBBEA") authorizes interstate  acquisitions of banks and bank holding companies
without geographic  limitation beginning one year after enactment.  In addition,
since  June 1, 1997,  a bank may merge  with a bank in another  state as long as
neither of the states has opted out of interstate  branching between the date of
enactment of the IBBEA and May 31, 1997. Tennessee did not opt out of interstate
branching.  The IBBEA  further  provides  that states may enact laws  permitting
interstate merger  transactions  prior to June 1, 1997.  Tennessee did not enact
such a law.  A bank may  establish  and  operate a de novo  branch in a state in
which the bank does not  maintain a branch if that state  explicitly  permits de
novo  branching.  Once a bank has  established  branches  in a state  through an
interstate  merger  transaction,  the bank may establish and acquire  additional
branches at any location in the state where any bank involved in the  interstate
merger  transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through de
novo  branching may establish and acquire  additional  branches in such state in
the same  manner and to the same  extent as a bank having a branch in such state
as a result of an interstate merger. If a state opts out of interstate branching
within the  specified  time period,  no bank in any other state may  establish a
branch in the opting out of state, whether through an acquisition or de novo.

Compliance  with  environmental  laws has not  directly  impacted the Company or
Bank.  However,  compliance  has impacted  the lending  functions of the Bank to
commercial  business  customers.  All commercial  loans require an environmental
assessment at varying levels of expertise.

As of December 31,  2001,  the Bank  employed 57 salaried  persons and 10 hourly
persons.

(b)(1) Distribution of Assets,  Liabilities and Stockholders'  Equity;  Interest
       Rates and Interest Differential

See Schedule I (Attached).

(b)(2) Investment and Loan Portfolio  Maturities and Sensitivities to Changes in
       Interest Rates

See Schedules III and IV (Attached).

(b)(3)   Risk Elements

See Item 6 -  Management's  Discussion  and  Analysis or Plan of  Operation  and
Schedule V - Nonperforming Assets (Attached).

(b)(4) Summary of Loan Loss Experience

See Schedule VI - Analysis of Loan Loss Reserve and Schedule VII - Allocation of
the Loan Loss Reserve (Attached).

(b)(5) Deposits

See Item 7 - Financial Statements and Schedule I (Attached)

(b)(6) Return on Equity and Assets

See Item 6 -  Management's  Discussion  and  Analysis or Plan of  Operation  and
Schedule VIII - Return on Assets and Equity (Attached).

(b)(7) Short-Term Borrowings

None.

                                      -3-
<PAGE>

Item 2. Description of Property

(a) Location of Property

As detailed in Item 1, the Bank operates offices in Lenoir City, Loudon, Tellico
Village, Loudon County, Tennessee;  Farragut, Knox County, Tennessee;  Kingston,
Roane County, Tennessee; and Alcoa, Blount County, Tennessee. The main office in
Lenoir City is a modern facility containing approximately 10,000 square feet and
was occupied upon  completion  of  construction  in January of 1993.  The Loudon
office is a modern  facility,  which was remodeled and expanded during 1996. The
extensive  remodeling  in the first half of 1996  better  supports  the level of
business  maintained at that  location.  The Tellico  Village office is a modern
facility  containing  approximately  3,000  square  feet of space  and is a full
service  office with a drive-up  ATM. The Farragut  office,  which opened in May
1995, is a modern full service facility of approximately  6,000 square feet. The
Kingston office,  which opened  December,  1997, is similar to the Loudon branch
with approximately  2,500 square feet. The first Alcoa office,  which was opened
in December,  1998, is located in a temporary facility.  The second Alcoa office
was opened in August,  2000 and  contains  approximately  4,000  square  feet of
space.

(b)  Investment Policies

     (1)  The Bank and  Company  do not  invest in real  estate  other  than for
          property from which to conduct its operations.

     (2)  The Bank makes mortgage loans for single-family dwellings,  commercial
          properties,   unimproved  land,  and  developmental  property.   These
          mortgage  loans may be first or second  mortgages and are serviced and
          held by the  Bank.  The  Bank  may  also  from  time to time  purchase
          government  agency  bonds  secured  by  mortgages  and  backed  and/or
          guaranteed by  governmental  agencies.  These agency bonds may include
          Federal  National  Mortgage  Association,  Federal Home Loan  Mortgage
          Corporation, and Government National Mortgage Association.

     (3)  No investment is made in securities of or interest in persons  engaged
          in real estate activities.

(c)  Description of Real Estate and Operating Data

     (1)  The Company has its principal offices in its headquarters  building at
          725 Highway 321 North, Lenoir City, Tennessee 37771, which is owned by
          the Bank. The Bank also owns  properties,  which house the branches at
          Loudon and Tellico Village, Loudon,  Tennessee,  Farragut,  Tennessee,
          Kingston,  Tennessee,  and Alcoa,  Tennessee.  None of the  properties
          amount to ten (10%) percent of total assets and none are encumbered.


Item 3. Legal Proceedings

The Company is not aware of any material pending legal  proceedings to which the
Company or the Bank is a party.


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

None.


                                      -4-
<PAGE>


                                    PART II

Item 5. Market for Common Equity and Related Stockholder Matters

(a)  Market Information

The  Common  Stock of the  Company is not  publicly  traded on any  exchange  or
market. The shares are traded between  individual  shareholders only. The Common
Stock was issued in a one for one share exchange with the Bank shareholders when
the Bank was merged with the Company on April 6, 1993.  The price for the traded
shares is set between the individuals.  However,  Company officials believe that
the  Common  Stock has  traded  from a low of $25 per share to a high of $28 per
share between  January 2001 and the date of this report,  as per individuals who
have sold and/or purchased shares.

(b)  Holders

There were 650  shareholders  of record of the Common  Stock as of December  31,
2001.

(c)  Dividends

In February  2000, the Company  distributed a ten (10%) percent  dividend to its
shareholders by issuing an additional 51,080 shares of Common Stock. The Company
used a fair market value of $26.00 per share and credited common stock $5.00 per
share or $255,400,  additional  paid in capital  $21.00 per share or $1,072,680,
and  charged  retained  earnings  a  total  of  $1,328,080.  No  dividends  were
distributed in 2001.



                                      -5-
<PAGE>


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

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

First Central Bancshares, Inc. is a one-bank holding company, which owns 100% of
the  outstanding  stock of First Central Bank.  The  investment in First Central
Bank represents virtually all of the assets of First Central Bancshares, Inc.

The  Company's  subsidiary,  First  Central  Bank formed a new  subsidiary,  FCB
Financial  Services,  Inc. in 2000.  This  subsidiary  is a  financial  services
company  authorized by the State of Tennessee to sell insurance and investments.
In 2001, FCB Financial  Services,  Inc.  established a new  management  team and
began  operations.   Management   expects  this  subsidiary  to  become  a  more
significant part of operations in 2002.

The following  represents a narrative  analysis of the  financial  condition and
operational  results of the Company and its  subsidiaries  for 2001.  For a more
complete  understanding  of this  narrative,  please  refer to the  Consolidated
Financial  Statements  and notes  thereto  presented  elsewhere  in this  Annual
Report.

This  report  contains   "forward-looking   statements"   relating  to,  without
limitation, future economic performance,  plans and objectives of management for
future  operations,  and  projections of revenues and other financial items that
are based on the  beliefs  of  management,  as well as  assumptions  made by and
information currently available to management. The words "expect," "anticipate,"
and  "believe,"  as  well as  similar  expressions,  are  intended  to  identify
forward-looking  statements.  Our actual results may differ  materially from the
results discussed in the forward-looking statements.

FINANCIAL CONDITION

The accompanying  financial  statements are consolidated  statements of the Bank
and the Company as detailed above. In 2001, total assets increased 13.8%,  total
liabilities  increased  14.2%,  and total  shareholders'  equity increased 8.8%.
Federal funds sold increased 119.4%. The increase in federal funds sold resulted
from large increases in deposits as customers were looking for more conservative
methods  of  investing  due to a slowing  economy  and a falling  interest  rate
environment. The Bank's liquidity ratio remains high, ending the year at 33.7%.

The Bank  continues  to have  consistent  loan growth with net loans  increasing
17.7% in 2001.  This  increase  included  a 67.1%  increase  in  commercial  and
industrial  real  estate and  non-real  estate  loans,  and a 16.1%  increase in
residential loans.  Increases in commercial,  industrial,  and residential loans
can be attributed to changing our market  concentrations with a greater focus by
management to attract these types of loans.


                                      -6-
<PAGE>
Management  has  continued to evaluate  the loan loss reserve  through a monthly
analysis of loans  outstanding.  The  adequacy of the loan loss  reserve is also
evaluated  quarterly  by the board of  directors.  The  reserve  for loan losses
increased 31.0% from 2000 to 2001.  Nonperforming assets increased approximately
$294,000   from  $11,000  in  2000  to  $305,000  in  2001.   This  resulted  in
nonperforming  loan ratios of 0.34% at December 31, 2001, and 0.01% of net loans
at December 31, 2000.

Nonperforming  loans  were  31.5% and 1.5% of loan loss  reserves  for the years
ending December 31, 2001 and 2000,  respectively.  Total nonperforming assets to
total assets were 0.21% at December 31, 2001 and 0.01% at December 31, 2000.

Past due loans of 30 days or more but less than 90 days total 1.27% of total net
loans.  We continue to monitor loans very closely and anticipate  that past dues
and losses will be effectively managed to keep both low.

Investment  securities decreased 6.1%.  Investment  securities are accounted for
under Financial  Accounting  Standards (FAS) No. 115, (see notes to consolidated
financial  statements).  Most  securities  are U.S.  Government  Agency  issues,
mortgage backed securities, municipal securities, and stock in Federal Home Loan
Bank of Cincinnati and Banker's Bank.

Net  investment  in premises  and  equipment  decreased  6.0% in 2001.  This was
primarily due to normal  depreciation  on premises and  equipment.  Other assets
decreased  4.3%  primarily due to a decrease in the deferred  income tax benefit
related to unrealized losses on investment  securities as the bond market took a
large upturn in the second half of 2001.  As of December  31,  2001,  the Bank's
investment  portfolio  includes  an  unrealized  gain of  approximately  $31,000
compared to an  unrealized  loss of  approximately  $292,000 as of December  31,
2000. The fair value of securities  fluctuates  with movement of interest rates.
Generally,  fair values improve in a strengthening bond market and decrease in a
weakening bond market.

Total deposits  increased  13.8% in 2001 as the Bank continued to concentrate on
increasing  loans.  Deposit  growth is not expected to increase as quickly since
2002  is  expected  to  present  a low  interest  rate  environment  and  strong
liquidity.  Demand deposits  increased  26.5% and term deposits  increased 5.0%.
Noninterest-bearing  demand  deposits  increased  19.6%  while  interest-bearing
demand deposits  increased 30.9%, as many customers shifted from certificates of
deposit due to lower interest rates. Term deposits under $100,000 increased 3.8%
while term deposits over $100,000 increased 8.1%.

As  mentioned  previously,  the  Company's  ability  to  mobilize  cash  to meet
operating needs (liquidity)  remains strong. The Bank is a member of the Federal
Home Loan Bank of Cincinnati  and is eligible to obtain both short and long-term
credit advances. Also, the Bank may enter into repurchase agreements or purchase
federal funds should the need for additional  liquidity arise.  Cash and amounts
due  from  correspondent  banks  increased  5.3% in 2001 as the  Bank  showed  a
decrease in total investments.

RESULTS OF OPERATIONS

The Company  experienced a 20.4% decrease in net income for 2001.  This decrease
was the result of the gain on the sale of the Bank's  Sweetwater  branch in 2000
of  approximately  $435,000  compared  to  having no  branch  sale in 2001.  Net
interest income  decreased  slightly while  noninterest  income increased 20.7%.
Noninterest  expense  increased  13.5% for 2001 compared to 2000.  The return on
average  assets (ROAA) was 0.77% for the year versus 1.10% for 2000.  The return
on average tangible equity (ROAE) was 9.2% in 2001 and 12.8% in 2000.

Interest income increased  approximately $198,000 or 2.2% in 2001.  Contributing
to the increase was an increase of approximately $232,000 or 3.4% in interest on
loans and an  increase  in  income  from  federal  funds  sold of  approximately
$294,000.  This was offset by a decrease of  approximately  $328,000 or 15.1% in
interest on investments.  Investment  options available to the Bank were limited
due to the falling interest rate environment in 2001.

Interest  expense  increased 4.8% as a result of strong overall  deposit growth.
This was due to the  attraction  of new customers and the effect of a staggering
stock market. Interest expense on NOW and money market accounts decreased 26.5%,
and interest expense on savings accounts decreased 2.0% primarily as a result of
the decrease in interest  rates paid on these deposit  accounts.  The net result
was a net interest margin of 3.64% and 4.20% for 2001 and 2000, respectively.

Noninterest  income  increased  20.7% (61.9% when not  including the gain on the
sale of the Sweetwater branch in 2000) as total loan fees and service charges on
demand  deposits  increased  $456,000 in 2001.  Service charge income on deposit
accounts  increased  45.3% due primarily to the generation of fees from our free
checking and overdraft  protection product.  Loan fees and other service charges
increased  due to the  origination  and sale of over $41  million  in  secondary
market loans.

Noninterest  expense increased 13.5%.  Salaries and benefits and data processing
fees  account  for  the  largest  components  on  noninterest  expense  as  both
increased.  Salaries  and  benefits  increased  14.5%  due  to the  addition  of
employees  throughout our system to handle considerable loan and deposit growth.
Data  processing  expenses  increased  15.3%,  primarily  due to a full  year of
operations  for our Hunters  Crossing  branch and a full year of franchise  fees
paid for the Bank's use of the free checking and overdraft  protection  product.
Other noninterest expenses increased 11.6%.

                                      -7-
CAPITAL ADEQUACY

The Company and Bank had  consolidated  total equity of $4.6 million on December
31, 1993. The Company has issued stock dividends in 1994 (38,560  shares),  1996
(42,376 shares),  1998 (46,526  shares),  and the most recent dividend of 51,080
shares in February 2000.

Total regulatory capital at December 31, 2001 was $12.4 million and total Tier 1
capital was $11.5  million.  Total  regulatory  capital at December 31, 2000 was
$11.5 million and total Tier 1 capital was $10.7 million.

Risk based capital guidelines as defined by banking regulators required the Bank
to maintain minimum total capital ratios of 8% to risk-weighted  assets,  Tier I
capital to  risk-weighted  assets of 4%, and Tier I capital to average assets of
5%.

Total regulatory capital to risk-weighted  assets was 12.7% at December 31, 2001
and 13.3% at December 31, 2000. Tier I capital to risk-weighted assets was 11.7%
at December 31, 2001 and 12.5% at December  31, 2000.  Tier I capital to average
assets was 8.1% at December 31, 2001 and 8.8% at December 31, 2000.

The Bank exceeded all minimum  capital ratio  requirements  in 2001 and 2000 and
management  believes  that the  capital  position  is  adequate  to support  the
operations of the Company and subsidiary Bank.

REGULATORY MATTERS AND RECENT LEGISLATION

The Bank is state chartered and federally  insured,  and is subject to the rules
and regulations of the Tennessee Department of Financial Institutions (TDFI) and
the Federal Deposit Insurance Corporation (FDIC). The Company is also subject to
the rules and  regulations of the Federal  Reserve Bank (FRB) and the Securities
and Exchange Commission (SEC).

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standard (SFAS) No. 141, Business Combinations and SFAS No.
142 Goodwill and Other  Intangible  Assets.  SFAS 141 requires that the purchase
method of accounting be used for all business combinations  initiated after June
30, 2001. Since the Company has not purchased any other banks or entities,  this
statement  is not  expected  to have any  impact on the  Company's  consolidated
financial  statements.  SFAS 142 requires  that  goodwill  and other  intangible
assets  with  indefinite  useful  lives no longer be  amortized,  but instead be
tested for impairment annually. SFAS 142 is effective January 1, 2002. It is not
expected that these statements will have an impact on the Company's consolidated
financial  position or results of  operations.  Since the Bank does not have any
goodwill or other intangible assets,  this statement is not expected to have any
impact on the Bank's financial position or results of operations.

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial   Accounting   Standard  No.  143,  Accounting  for  Asset  Retirement
Obligations.  SFAS No. 143  applies  to legal  obligations  associated  with the
retirement of long-lived assets that result from the acquisition,  construction,
development  and/or the  normal  operation  of a  long-lived  asset,  except for
certain  obligations  of  lessees.  SFAS  No.  143 is  effective  for  financial
statements issued for fiscal years beginning after June 15, 2002. Since the Bank
does not have any legal  obligations as described  above,  this statement is not
expected  to have any  impact on the  Bank's  financial  position  or results of
operations.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets. This statement  supercedes SFAS 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  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).  SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years. This statement is not expected to have a significant impact on the
Bank's financial position or results of operations.



NUMERICAL  ENTRIES  APPEARING  IN THIS  REPORT  HAVE  BEEN  ROUNDED  FOR EASE IN
READABILITY.  ACTUAL  BALANCES  APPEAR  IN THE  AUDITED  CONSOLIDATED  FINANCIAL
STATEMENTS, WHICH IS CONTAINED WITHIN THE FOLLOWING PAGES OF THIS DOCUMENT.

                                      -8-
<PAGE>


Item 7. Financial Statements











                         FIRST CENTRAL BANCSHARES, INC.
                                 AND SUBSIDIARY

                             Lenoir City, Tennessee

                        CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2001, 2000, and 1999



                                      -9-
<PAGE>











                        [PUGH & COMPANY, P.C. LETTERHEAD]


                          INDEPENDENT AUDITOR'S REPORT



Board of Directors
First Central Bancshares, Inc.
Lenoir City, Tennessee


We have audited the  accompanying  consolidated  balance sheets of First Central
Bancshares,  Inc.  and  subsidiary  as of December  31,  2001 and 2000,  and the
related  consolidated  statements of income,  comprehensive  income,  changes in
shareholders'  equity,  and cash flows for the years ended  December  31,  2001,
2000, and 1999. These consolidated  financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of First  Central
Bancshares, Inc. and subsidiary as of December 31, 2001 and 2000 and the results
of their  operations and their cash flows for the years ended December 31, 2001,
2000, and 1999, in conformity with accounting  principles  generally accepted in
the United States of America.




                                                    Pugh & Company, P.C.
                                                    Certified Public Accountants
                                                    March 1, 2002



                                      -10-
<PAGE>


                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                             As of December 31,
                                                                                    -----------------------------------
                                                                                          2001                  2000
                                                                                    -------------         -------------
                                   ASSETS
<S>                                                                                  <C>                   <C>
Cash and Due From Banks                                                              $  5,698,470          $  5,409,424
Federal Funds Sold                                                                     11,758,000             5,360,000
                                                                                     -------------         ------------
  Total Cash and Cash Equivalents                                                      17,456,470            10,769,424

Investment Securities, at Fair Value                                                   31,559,011            33,613,495
Loans, Net                                                                             89,508,746            76,069,878
Premises and Equipment, Net                                                             4,483,874             4,768,958
Accrued Interest Receivable                                                               713,939             1,038,141
Prepaid Expenses and Other                                                                184,884               131,735
Prepaid Income Taxes                                                                            0                29,913
Deferred Income Tax Benefit                                                               121,502               158,401
                                                                                     -------------         ------------
TOTAL ASSETS                                                                         $144,028,426          $126,579,945
                                                                                     =============         ============

                           LIABILITIES AND EQUITY
LIABILITIES
 Deposits:
  Demand                                                                             $ 60,315,670          $ 47,682,623
  Term                                                                                 70,714,215            67,376,817
                                                                                     -------------         ------------
   Total Deposits                                                                     131,029,885           115,059,440
                                                                                     -------------         ------------

 Accrued Interest Payable                                                                 467,170               528,746
 Securities Sold Under Agreements to Repurchase                                           819,933               257,759
 Accrued Income Taxes                                                                      48,857                     0
 Other                                                                                    181,583               185,448
                                                                                     -------------         ------------
   Total Liabilities                                                                  132,547,428           116,031,393
                                                                                     -------------         ------------

SHAREHOLDERS' EQUITY
 Common Stock - $5.00 Par Value, 2,000,000 Shares
  Authorized; 564,361 Shares Issued                                                     2,821,805             2,821,805
 Capital in Excess of Par Value                                                         5,430,199             5,430,199
 Treasury Stock, at Cost; 17,333 Shares
  (5,000 in 2000)                                                                        (430,646)             (130,000)
 Retained Earnings                                                                      3,640,575             2,607,818
                                                                                     -------------         ------------
 Shareholders' Equity Before Accumulated Other
  Comprehensive Income (Loss)                                                          11,461,933            10,729,822
 Accumulated Other Comprehensive Income (Loss)                                             19,065              (181,270)
                                                                                     -------------         -------------
   Total Shareholders' Equity                                                          11,480,998            10,548,552
                                                                                     -------------         ------------
TOTAL LIABILITIES AND EQUITY                                                         $144,028,426          $126,579,945
                                                                                     =============         ============
</TABLE>




     The accompanying notes are an integral part of these financial statements.

                                      -11-
<PAGE>


                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                For the Years Ended December 31,
                                                                      -----------------------------------------------
                                                                         2001              2000               1999
                                                                      ----------        ----------         ----------
  INTEREST INCOME
<S>                                                                   <C>               <C>                <C>
   Loans                                                              $7,141,229        $6,908,948         $6,091,993
   Investment Securities                                               1,840,892         2,168,750          1,792,025
   Federal Funds Sold                                                    388,713            95,119            305,820
                                                                      ----------         ---------         ----------
    Total Interest Income                                              9,370,834         9,172,817          8,189,838

  INTEREST EXPENSE                                                     4,816,584         4,595,659          3,930,390
                                                                      ----------        ----------         ----------

  NET INTEREST INCOME                                                  4,554,250         4,577,158          4,259,448

  PROVISION FOR LOAN LOSSES                                              459,112           209,038            160,000
                                                                      ----------        ----------         ----------

  NET INTEREST INCOME AFTER PROVISION
   FOR LOAN LOSSES                                                     4,095,138         4,368,120          4,099,448
                                                                      ----------        ----------         ----------

  NONINTEREST INCOME
   Service Charges on Demand Deposits                                  1,037,296           713,546            640,953
   Loan Fees and Other Service Charges                                   540,963           408,492            461,590
   Gain on Sales of Investment Securities                                117,001             6,365             23,578
   Income From Non-Refundable Deposit
    on Sale of Branch                                                          0                 0            300,000
   Gain on Sale of Branch                                                      0           434,797                  0
   Net Gain on Sales of Loans                                            295,368            68,687            120,271
   Other                                                                  69,687            75,364             36,480
                                                                      ----------        ----------         ----------
    Total Noninterest Income                                           2,060,315         1,707,251          1,582,872
                                                                      ----------        ----------         ----------

  NONINTEREST EXPENSE
   Salaries and Employee Benefits                                      2,449,661         2,140,117          1,969,530
   Occupancy Costs                                                       431,085           385,040            352,250
   Data Processing Fees                                                  462,778           401,499            352,721
   Furniture and Equipment Depreciation
    and Maintenance                                                      340,908           359,942            402,540
   Federal Insurance Premiums                                             45,702            44,089             37,073
   Advertising and Promotion                                             104,420           131,904            128,991
   Office Supplies and Postage                                           269,701           225,327            231,119
   Other                                                                 430,461           307,987            379,956
                                                                      ----------        ----------         ----------
    Total Noninterest Expense                                          4,534,716         3,995,905          3,854,180
                                                                      ----------        ----------         ----------

  INCOME BEFORE INCOME TAXES                                           1,620,737         2,079,466          1,828,140

  INCOME TAXES                                                           587,980           782,394            645,724
                                                                      ----------        ----------         ----------

  NET INCOME                                                          $1,032,757        $1,297,072         $1,182,416
                                                                      ==========        ==========         ==========

  EARNINGS PER SHARE AMOUNTS                                          $    1.85         $    2.33          $    2.30
                                                                      ==========        ==========         =========
</TABLE>


     The accompanying notes are an integral part of these financial statements.

                                      -12-
<PAGE>

                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME





<TABLE>
<CAPTION>
                                                                            For the Years Ended December 31,
                                                                  -------------------------------------------------
                                                                       2001                2000              1999
                                                                  ------------        -----------       -----------
<S>                                                               <C>                 <C>               <C>
NET INCOME                                                        $ 1,032,757         $1,297,072        $ 1,182,416
                                                                  ------------        -----------       -----------
OTHER COMPREHENSIVE INCOME (LOSS),
 NET OF TAX:
 Unrealized Gains (Losses) on Investment
  Securities Available for Sale                                       206,120          1,158,048         (1,553,486)
 Reclassification Adjustment for Gains
  on Sales of Investment Securities
  Available for Sale                                                  117,001              6,365             23,578
 Change in Deferred Income Tax Associated
  With Unrealized Gains/Losses on
   Investment Securities Available
   for Sale                                                          (122,786)          (442,477)           581,365
                                                                  ------------       ------------       -----------
   Other Comprehensive Income (Loss),
    Net of Tax                                                        200,335            721,936           (948,543)
                                                                  ------------       ------------       -----------
COMPREHENSIVE INCOME                                              $ 1,233,092        $ 2,019,008        $   233,873
                                                                  ============       ============       ===========
</TABLE>









     The accompanying notes are an integral part of these financial statements.

                                      -13-
<PAGE>


                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                      For the Years Ended December 31, 2001
<TABLE>
<CAPTION>

                                                                             Accumulated
                                                                                Other
                                          Capital in                       Comprehensive                          Total
                             Common       Excess of          Retained          Income          Treasury      Shareholders'
                             Stock         Par Value         Earnings          (Loss)            Stock           Equity
                           ----------     ----------       ----------      ------------      ----------      ------------
<S>                        <C>            <C>              <C>               <C>              <C>             <C>
BALANCES,
 JANUARY 1,
 1999                      $2,566,405     $4,357,519       $1,456,410        $   45,337       $       0       $ 8,425,671

Other
 Comprehensive
 Loss                               0              0                0          (948,543)              0          (948,543)

Net Income                          0              0        1,182,416                 0               0         1,182,416
                           ----------     ----------       -----------        ----------      ----------      -----------

BALANCES,
 DECEMBER 31,
 1999                       2,566,405      4,357,519        2,638,826          (903,206)              0         8,659,544

Other
 Comprehensive
 Income                             0              0                0           721,936               0           721,936

Stock Dividend
 of 51,080
 Shares of
 Common Stock                 255,400      1,072,680       (1,328,080)                0               0                 0

Purchase of
 Treasury
 Stock                              0              0                0                 0        (130,000)         (130,000)

Net Income                          0              0        1,297,072                 0               0         1,297,072
                           ----------     ----------      -----------        ----------      ----------       -----------
BALANCES,
 DECEMBER 31,
 2000                       2,821,805      5,430,199        2,607,818          (181,270)       (130,000)       10,548,552

Other
 Comprehensive
 Income                             0              0                0           200,335               0           200,335

Purchases of
 Treasury
 Stock                              0              0                0                 0        (430,646)         (430,646)

Sale of
 Treasury
 Stock                              0              0                0                 0         130,000           130,000

Net Income                          0              0        1,032,757                 0               0         1,032,757
                           ----------     ----------       ----------         ---------       ---------       -----------
BALANCES,
 DECEMBER 31,
 2001                      $2,821,805     $5,430,199       $3,640,575         $  19,065       $(430,646)      $11,480,998
                           ==========     ==========       ==========         =========       =========       ===========
</TABLE>

     The accompanying notes are an integral part of these financial statements.

                                      -14-
<PAGE>


                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                For the Years Ended December 31,
                                                                      ---------------------------------------------------
                                                                           2001                2000               1999
                                                                      -------------       -------------      ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                   <C>                 <C>                <C>
Net Income                                                            $  1,032,757        $  1,297,072       $  1,182,416
                                                                      -------------       -------------      ------------
 Adjustments to Reconcile Net Income to
  Net Cash Provided by Operating Activities:
   Provision for Loan Losses                                               459,112             209,038            160,000
   Depreciation                                                            291,057             303,740            326,718
   (Gain) on Sales of Investment Securities                               (117,001)             (6,365)           (23,578)
   Loss on Sales of Premises and Equipment                                  13,253                   0                  0
   (Gain) on Sale of Branch                                                      0            (434,797)                 0
   Net (Gain) on Sales of Loans                                           (295,368)            (68,687)          (120,271)
   Deferred Income Tax (Benefit)                                           (85,887)             (7,415)            14,083
   (Decrease) in Unearned Interest                                        (241,003)           (458,148)          (177,024)
   (Increase) Decrease in Unearned Loan Fees                                26,239                 700            (19,802)
   Amortization of Premiums and Discounts
    on Investment Securities, Net                                          (10,016)            (19,301)            13,278
   Federal Home Loan Bank Stock Dividends                                  (25,800)            (26,200)           (22,500)
   (Increase) Decrease in Accrued Interest
     Receivable                                                            324,202            (260,688)          (105,440)
   (Increase) Decrease in Prepaid Expenses
    and Other                                                              (53,149)             32,217             23,766
   (Increase) Decrease in Prepaid Income Taxes                              29,913             (29,913)            10,050
   Increase (Decrease) in Accrued Interest
    Payable                                                                (61,576)            140,283            (52,523)
   (Increase) Decrease in Income Taxes Payable                              48,857            (108,302)           108,302
   Increase (Decrease) in Other Liabilities                                 (3,865)             21,113             63,140
                                                                      -------------       -------------      ------------
    Total Adjustments                                                      298,968            (712,725)           198,199
                                                                      -------------       -------------      ------------
     Net Cash Provided by Operating Activities                           1,331,725             584,347          1,380,615
                                                                      -------------       -------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Net Proceeds From Sale of Branch                                                0             676,148                  0
 Proceeds From Sales of Premises and Equipment                              19,379                   0                  0
 Purchases of Investment Securities Available
  for Sale                                                             (30,549,754)         (5,668,860)       (11,782,649)
 Principal Repayments on Mortgage-Backed
  Securities Available for Sale                                          2,174,514             892,074          1,457,869
 Maturities of Investment Securities Available
  for Sale                                                              30,905,662             111,907          6,250,000
 Increase in Loans                                                     (54,190,343)        (11,923,316)       (18,483,255)
 Sales of Investment Securities Available
  for Sale                                                                       0             496,875          1,487,641
 Proceeds From Sales of Loans                                           40,802,495           6,695,387          8,221,961
 Net Purchases of Premises and Equipment                                  (38,605)            (744,059)        (1,131,632)
 Proceeds From Sales of Foreclosed Real Estate                                   0             200,000                  0
                                                                      -------------       -------------      ------------
     Net Cash Used in Investing Activities                             (10,876,652)         (9,263,844)       (13,980,065)
                                                                      -------------       -------------      -------------
</TABLE>



     The accompanying notes are an integral part of these financial statements.

                                      -15-
<PAGE>


<TABLE>
<CAPTION>

                                                                                For the Years Ended December 31,
                                                                      ----------------------------------------------------
                                                                           2001                2000               1999
                                                                      -------------       -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                                                     <C>                 <C>                   <C>
 Increase in Deposits                                                   15,970,445          13,491,507            984,701
 Net Increase (Decrease) in Securities Sold
 Under Agreements to Repurchase                                            562,174          (2,413,694)         2,637,020
 Purchases of Treasury Stock                                              (430,646)           (130,000)                 0
 Sale of Treasury Stock                                                    130,000                   0                  0
                                                                      -------------       -------------      ------------
     Net Cash Provided by Financing Activities                          16,231,973          10,947,813          3,621,721
                                                                      -------------       -------------      ------------

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                        6,687,046           2,268,316         (8,977,729)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                            10,769,424           8,501,108         17,478,837
                                                                      -------------       -------------      ------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                $ 17,456,470        $ 10,769,424       $  8,501,108
                                                                      =============       =============      ============

Supplementary Disclosures of Cash Flow Information:
 Cash Paid During the Year for:
  Interest                                                            $  4,878,160        $  4,458,100       $  3,982,913
  Income Taxes                                                        $    537,414        $    932,785       $    513,289

Supplementary Disclosures of Noncash Investing Activities:
 Change in Unrealized Gain (Loss) on
  Investment Securities                                               $    323,121        $  1,164,413       $ (1,529,908)
 Change in Deferred Income Tax Associated With
  Unrealized Gain (Loss) on Investment
   Securities)                                                        $    122,786        $    442,477       $   (581,365)
 Change in Net Unrealized Gain (Loss) on
  Investment Securities                                               $    200,335        $    721,936       $   (948,543)
 Issuance of Common Stock Dividend:
  Par Value                                                           $          0        $    255,400       $          0
  Capital in Excess of Par Value                                      $          0        $  1,072,680       $          0
  Reduction in Retained Earnings Due to
   Issuance of Common Stock Dividend                                  $          0        $  1,328,080       $          0
  Acquisition of Foreclosed Real Estate                               $          0        $          0       $   (210,292)
  Sale of Branch:
   Assets Removed:
    Loans                                                             $          0        $    626,848       $          0
    Premises and Equipment                                            $          0        $    780,662       $          0
    Accrued Interest Receivable                                       $          0        $      1,877       $          0
    Other Assets                                                      $          0        $      4,200       $          0
   Liabilities Removed:
    Deposits                                                          $          0        $ (1,169,512)      $          0
    Accrued Interest Payable                                          $          0        $     (2,724)      $          0
</TABLE>




     The accompanying notes are an integral part of these financial statements.

                                      -16-
<PAGE>



                  FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2001, 2000, and 1999




NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations - The Company's subsidiary,  First Central Bank (the Bank),
provides a variety of banking services to individuals and businesses through its
main office in Lenoir City and six branches located in Loudon,  Roane, Knox, and
Blount County,  Tennessee.  Its primary deposit products are demand deposits and
certificates  of  deposit,  and its  primary  lending  products  are  commercial
business,  real estate mortgage, and installment loans. In 2000, the Bank formed
a new  subsidiary,  FCB  Financial  Services,  Inc.  for the  purpose of selling
insurance and investment products.

Principles of Consolidation - The consolidated  financial statements include the
accounts  of  First  Central  Bancshares,  Inc.,  a bank  holding  company,  its
wholly-owned  subsidiary,  First Central Bank,  and the Bank's  subsidiary,  FCB
Financial Services, Inc. All significant  intercompany balances and transactions
have been eliminated.

Consolidated  Statements  of  Comprehensive  Income - The  Financial  Accounting
Standards  Board  SFAS  No.  130,  Reporting  Comprehensive  Income  establishes
standards  for  reporting   comprehensive  income  and  its  components  in  the
consolidated  financial  statements.  The object of the statement is to report a
measure of all changes in equity of an enterprise that results from transactions
and other  economic  events of the period other than  transactions  with owners.
Items included in comprehensive income include revenues,  gains, and losses that
under accounting  principles  generally accepted in the United States of America
are directly charged to equity.  Examples include foreign currency translations,
pension  liability  adjustments,  and unrealized  gains and losses on investment
securities available for sale.

Estimates - The preparation of consolidated  financial  statements in accordance
with accounting  principles  generally  accepted in the United States of America
requires  management to make  estimates  and  assumptions.  Those  estimates and
assumptions affect certain reported amounts and disclosures. Accordingly, actual
results could vary from those estimates.

Cash and Due From Banks - Cash and due from  banks  includes  balances  in three
correspondent  commercial  banks  located  in the  Southeastern  United  States,
approximately  $105,700  ($249,400 in 2000) on deposit with the Nashville branch
of Federal Reserve Bank of Atlanta,  and approximately  $7,200 ($16,000 in 2000)
on  deposit  with  the  Federal  Home  Loan  Bank  of  Cincinnati.  Balances  in
correspondent bank accounts in excess of FDIC insurance limits are approximately
$38,000 as of December 31, 2001 ($3,200 in 2000).

                                      -17-
<PAGE>


Federal  Funds Sold - Federal  funds  sold  consist  of  unsecured  loans to two
correspondent  commercial banks located in the Southeastern United States. These
loans are repaid on the next business day.

Investment  Securities - The Bank  applies the  Financial  Accounting  Standards
Board  Statement of  Financial  Accounting  Standards  No. 115,  Accounting  for
Certain Investments in Debt Equity Securities (SFAS No. 115). In accordance with
SFAS No. 115, the Bank has classified  all of its  investment  securities in the
available for sale category. These securities are carried at fair value based on
quoted  market  prices.   Any  unrealized  gain  or  loss  is  reported  in  the
consolidated statements of comprehensive income, net of any deferred tax effect.

Realized gains and losses on the sales of investment securities are based on the
net proceeds  and  amortized  cost of the  securities  sold,  using the specific
identification method.

See Note 2 for additional information on investment securities.

Recognition  of Interest on Loans - Unearned  interest on  installment  loans is
recognized  as  income  over the terms of the loans  using a  declining  balance
method.  Interest on other loans is calculated  using the simple interest method
on the principal outstanding. Accrual of interest is discontinued on a loan when
management  believes,  after  considering  economic and business  conditions and
collection  efforts,  that  the  borrower's  financial  condition  is such  that
collection of interest is doubtful.

Allowance  for Loan Losses - The  allowance  for loan losses is  maintained at a
level which,  in  management's  judgment,  is adequate to absorb  credit  losses
inherent  in the  loan  portfolio.  The  amount  of the  allowance  is  based on
management's  evaluation of the collectibility of the loan portfolio,  including
the nature of the portfolio,  credit  concentrations,  trends in historical loss
experience,  specific  impaired loans, and economic  conditions.  Allowances for
impaired  loans  are  generally  determined  based on  collateral  values or the
present value of estimated cash flows. Because of uncertainties  associated with
regional  economic  conditions,  collateral  values,  and  future  cash flows on
impaired loans, it is reasonably  possible that management's  estimate of credit
losses  inherent  in the loan  portfolio  and the related  allowance  may change
materially in the near term.  The allowance is increased by a provision for loan
losses,  which  is  charged  to  expense  and  reduced  by  charge-offs,  net of
recoveries.  Changes in the allowance  relating to impaired loans are charged or
credited to the provision for loan losses.

Loan Fees - Loan fees,  net of initial  direct costs related to  initiating  and
closing loans,  have been deferred and are being  amortized into interest income
over the  remaining  lives of the  loans as an  adjustment  of yield  using  the
interest method.

Premises  and  Equipment  - Premises  and  equipment  are  stated at cost,  less
accumulated   depreciation.   Depreciation,   computed   principally  using  the
straight-line method, is based on the following estimated useful lives:

Buildings and Land Improvements                                 15 to 40 years
Leasehold Improvements                                           7 to 31 years
Furniture, Fixtures, and Equipment                               5 to  7 years

                                      -18-
<PAGE>


Earnings Per Share - Earnings per share is based on the weighted  average number
of shares  outstanding of 558,244 in 2001 (555,427 and 513,281 in 2000 and 1999,
respectively).

Income Taxes - Income  taxes are  provided  for the tax effects of  transactions
reported in the consolidated financial statements and consist of taxes currently
due plus deferred taxes related  primarily to  differences  between the basis of
the allowance for loan losses, accumulated depreciation, and the conversion from
the accrual basis of accounting  for  financial  reporting  purposes to the cash
basis of accounting for tax reporting.  The deferred tax assets and  liabilities
represent the future tax return  consequences  of those  differences  which will
either be taxable or deductible when the assets and liabilities are recovered or
settled.

Advertising  and  Promotion - Advertising  and  promotion  costs are expensed as
incurred.

Reclassifications  - Certain items in the 2000  financial  statements  have been
reclassified to conform with the 2001 financial statements.

NOTE 2 - INVESTMENT SECURITIES

The Bank applies  SFAS No. 115 in  accounting  for  investment  securities.  The
amortized cost and estimated fair value of investment  securities as of December
31, 2001 and 2000:
<TABLE>
<CAPTION>

                                                            Investment Securities Available for Sale
                                          -----------------------------------------------------------------------------
                                                                   Gross                Gross             Estimated
                                             Amortized           Unrealized          Unrealized             Market
                                               Cost                Gains               Losses               Value
                                          ----------------    -----------------    ----------------     ---------------
<S>                                    <C>                 <C>                  <C>                  <C>
As of December 31, 2001:
 Debt Securities:
 U.S. Treasury Securities
  and Obligations of U.S.
  Government Corporations
  and Agencies                         $        9,755,355  $            93,048  $          (8,335)   $       9,840,068
 Obligations of States
  and Political
  Subdivisions                                  2,509,726               36,519            (18,839)           2,527,406
 Corporate Debt
  Securities                                      491,109               28,016                  0              519,125
 Mortgage-Backed
  Securities                                   18,295,396               85,236           (184,895)          18,195,737
                                          ----------------    -----------------    ----------------     ---------------
                                               31,051,586              242,819           (212,069)          31,082,336
 Equity Securities:
 Stock in Federal Home
  Loan Bank of
  Cincinnati, at Cost                             402,100                    0                  0              402,100
 Stock in Banker's Bank,
  at Cost                                          74,575                    0                  0               74,575
                                          ----------------    -----------------    ----------------     ---------------
                                       $       31,528,261  $           242,819  $        (212,069)   $      31,559,011
                                          ================    =================    ================     ===============
</TABLE>


                                      -19-
<PAGE>

<TABLE>
<CAPTION>
                                                            Investment Securities Available for Sale
                                          -----------------------------------------------------------------------------
                                                                   Gross                Gross             Estimated
                                             Amortized           Unrealized          Unrealized             Market
                                               Cost                Gains               Losses               Value
                                          ----------------    -----------------    ----------------     ---------------
<S>                                    <C>                 <C>                  <C>                  <C>
As of December 31, 2000:
 Debt Securities:
 U.S. Treasury Securities
  and Obligations of U.S.
  Government Corporations
  and Agencies                         $       26,595,011  $           76,081   $        (353,708)   $      26,317,384
 Obligations of States
  and Political
  Subdivisions                                  2,436,039              13,294             (22,952)           2,426,381
 Corporate Debt
  Securities                                      488,897               3,758                   0              492,655
 Mortgage-Backed                                3,935,044              12,876             (21,720)           3,926,200
  Securities
                                          ----------------    -----------------    ----------------     ---------------
                                               33,454,991             106,009            (398,380)          33,162,620
 Equity Securities:
 Stock in Federal Home
  Loan Bank of
  Cincinnati, at Cost                             376,300                   0                   0              376,300
 Stock in Banker's Bank,
  at Cost                                          74,575                   0                   0               74,575
                                          ----------------    -----------------    ----------------     ---------------
                                       $       33,905,866  $          106,009   $        (398,380)   $      33,613,495
                                          ================    =================    ================     ===============
</TABLE>

The amortized cost and estimated  market value of debt securities as of December
31, 2001 by contractual  maturity are shown below.  Actual maturities may differ
from  contractual  maturities  because  borrowers  may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>

                                                                                          Available for Sale
                                                                                 --------------------------------------
                                                                                                         Estimated
                                                                                    Amortized             Market
                                                                                      Cost                 Value
                                                                                 ----------------    ------------------
<S>                                                                           <C>                 <C>
Due in One Year or Less                                                       $            8,648  $              8,757
Due After One Year Through Five Years                                                  7,219,182             7,285,638
Due After Five Years Through Ten Years                                                 8,185,748             8,263,930
Due After Ten Years                                                                   15,638,008            15,524,010
                                                                                 ----------------    ------------------
 Total Debt Securities                                                        $       31,051,586  $         31,082,335
                                                                                 ================    ==================
</TABLE>

For purposes of the maturity table,  mortgage-backed  securities,  which are not
due at a single maturity date, have been allocated over maturity groupings based
on their  contractual  maturities.  The  mortgage-backed  securities  may mature
earlier than their contractual maturities because of principal prepayments.

Gross  gains of  $117,001,  $6,365,  and  $23,578  were  realized on the sale of
certain investment  securities classified as available for sale during the years
ended December 31, 2001, 2000, and 1999, respectively.

Investments with carrying values of approximately $5,259,000 and $6,704,000 were
pledged to secure  deposits of public  funds as of  December  31, 2001 and 2000,
respectively.

                                      -20-
<PAGE>


NOTE 3 - LOANS AND ALLOWANCE FOR LOAN LOSSES

The Bank  provides  mortgage,  commercial,  and  consumer  lending  services  to
businesses and  individuals  primarily in the East Tennessee  area. A summary of
loans is as follows:
<TABLE>
<CAPTION>

                                                                                  2001                   2000
                                                                           -------------------    --------------------
Loans Secured by Real Estate:
<S>                                                                     <C>                    <C>
 Non-Farm, Non-Residential                                              $         30,471,629   $           8,140,345
 Construction and Land Development                                                14,341,228              12,119,303
 Residential and Other Properties                                                 26,057,913              22,450,191
                                                                           -------------------    --------------------
  Total Loans Secured by Real Estate                                              70,870,770              42,709,839
Commercial and Industrial Loans                                                   10,091,954              16,135,289
Consumer Loans                                                                     9,311,121              17,273,275
Other Loans                                                                          347,443               1,049,884
                                                                           -------------------    --------------------
                                                                                  90,621,288              77,168,287

Less:  Allowance for Loan Losses                                                    (967,420)               (738,523)
       Unearned Interest                                                            (101,274)               (342,277)
       Unearned Loan Fees                                                            (43,848)                (17,609)
                                                                           -------------------    --------------------
                                                                        $         89,508,746   $          76,069,878
                                                                           ===================    ====================
</TABLE>

In the ordinary course of business,  the Bank has entered into off-balance-sheet
financial  instruments  consisting of commitments  to extend credit,  commercial
letters of credit,  and standby letters of credit.  These financial  instruments
are recorded in the financial  statements when they become payable.  Outstanding
letters of credit were  approximately  $1,976,000  and $1,006,000 as of December
31, 2001 and 2000,  respectively.  Unadvanced lines of credit and commitments to
extend credit were approximately  $22,076,000 and $16,670,000 as of December 31,
2001 and 2000,  respectively.  Of the total  outstanding  letters  of credit and
unadvanced lines and commitments as of December 31, 2001 and 2000, approximately
$12,874,000  and  $7,898,000,  respectively,  were  secured,  primarily  by real
estate.

From  time  to  time,  the  Bank  provides  credit  to its  executive  officers,
directors, and their affiliates. Such transactions are made on the same terms as
those  prevailing for comparable  transactions  with other  borrowers and do not
represent more than a normal risk of collection.

Loans to executive officers, directors, and their affiliates are as follows:
<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                           -------------------------------------------
                                                                                  2001                   2000
                                                                           -------------------    --------------------
<S>                                                                     <C>                    <C>
Loans at Beginning of Year                                              $          1,870,117   $           1,212,989
 Disbursements                                                                     1,288,258               1,142,518
 Repayments and Reclassifications                                                   (769,544)               (485,390)
                                                                           -------------------    --------------------
Loans at End of Year                                                    $          2,388,831   $           1,870,117
                                                                           ===================    ====================
</TABLE>


                                      -21-
<PAGE>


The transactions in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>

                                                           2001                   2000                   1999
                                                    -------------------    -------------------    --------------------
<S>                                              <C>                    <C>                    <C>
Balance, Beginning of Year                       $            738,523   $            618,034   $             594,059
Provision - Charged to Expense                                459,112                209,038                 160,000
Recoveries of Loans Previously
 Charged Off                                                   52,084                 57,318                  59,653
Loans Charged Off                                            (282,299)              (145,867)               (195,678)
                                                    -------------------    -------------------    --------------------
Balance, End of Year                             $            967,420   $            738,523   $             618,034
                                                    ===================    ===================    ====================
</TABLE>

Loans  past  due  ninety  days or more  and  still  accruing  interest  totalled
approximately  $344,580 as of December  31, 2001  ($91,369 in 2000).  There were
loans totalling approximately $304,602 on which the accrual of interest had been
discontinued as of December 31, 2001 ($10,950 in 2000).

As of December 31, 2001 and 2000, the Bank had loans amounting to  approximately
$1,472,871  and $944,335,  respectively,  that were  specifically  classified as
impaired.  The average  individual loan balance of these impaired loans amounted
to approximately $15,000 and $27,000, respectively, for the years ended December
31, 2001 and 2000.  As of  December  31,  2001 and 2000 the  allowance  for loan
losses for  impaired  loans  amounted to  approximately  $241,300  and  $85,700,
respectively.  Also,  interest income of $120,975 and $75,800  relating to these
impaired  loans was  recognized  for the years ended December 31, 2001 and 2000,
respectively.

NOTE 4 - PREMISES AND EQUIPMENT

A summary of premises and equipment is as follows:
<TABLE>
<CAPTION>

                                                                                  2001                   2000
                                                                           -------------------    --------------------
<S>                                                                     <C>                    <C>
Land                                                                    $           1,463,470  $            1,463,470
Buildings                                                                           3,173,578               3,160,257
Furniture, Fixtures, and Equipment                                                  1,861,149               1,904,406
                                                                           -------------------    --------------------
                                                                                    6,498,197               6,528,133
Less Accumulated Depreciation                                                       2,014,323               1,759,175
                                                                           -------------------    --------------------
                                                                        $           4,483,874  $            4,768,958
                                                                           ===================    ====================

NOTE 5 - ACCRUED INTEREST RECEIVABLE

A summary of accrued interest receivable is as follows:
                                                                                  2001                   2000
                                                                           -------------------    --------------------
Investment Securities                                                   $             273,441  $              555,068
Loans                                                                                 440,498                 483,073
                                                                           -------------------    --------------------
                                                                        $             713,939  $            1,038,141
                                                                           ===================    ====================
NOTE 6 - DEPOSITS

A summary of deposits is as follows:
                                                                                  2001                   2000
                                                                           -------------------    --------------------
Demand Deposits:
 Noninterest-Bearing Accounts                                           $          22,183,697  $           18,541,376
 NOW and MMDA Accounts                                                             31,714,993              23,767,510
 Savings Accounts                                                                   6,416,980               5,373,737
                                                                           -------------------    --------------------
  Total Demand Deposits                                                            60,315,670              47,682,623
                                                                           -------------------    --------------------

Term Deposits:
 Less Than $100,000                                                                51,721,945              49,809,443
 $100,000 or More                                                                  18,992,270              17,567,374
                                                                           -------------------    --------------------
  Total Term Deposits                                                              70,714,215              67,376,817
                                                                           -------------------    --------------------
                                                                        $         131,029,885  $          115,059,440
                                                                           ===================    ====================
</TABLE>


                                      -22-
<PAGE>


As of December 31, 2001, the scheduled  maturities of term deposits above are as
follows:

           2002                                   $          39,985,783
           2003                                              23,394,994
           2004                                               5,052,420
           2005                                                 928,753
           2006                                               1,352,265
                                                     -------------------
                                                  $          70,714,215
                                                     ===================
NOTE 7 - INTEREST EXPENSE

A summary of interest expense is as follows:
<TABLE>
<CAPTION>

                                                           2001                   2000                   1999
                                                    -------------------    -------------------    --------------------
Deposits:
<S>                                              <C>                    <C>                    <C>
 NOW and MMDA Accounts                           $             669,871  $             911,896  $              862,001
 Savings Accounts                                              111,069                116,407                 108,868
 Term Deposits                                               4,035,644              3,531,340               2,959,521
                                                    -------------------    -------------------    --------------------
  Total Interest                                             4,816,584              4,559,643               3,930,390
   Expense on Deposits
                                                    -------------------    -------------------    --------------------
Borrowings:
 Federal Funds Purchased                                             0                 36,016                       0
                                                    -------------------    -------------------    --------------------
  Total Interest
   Expense on Borrowings                                             0                 36,016                       0
                                                    -------------------    -------------------    --------------------
    Total Interest Expense                       $           4,816,584  $           4,595,659  $            3,930,390
                                                    ===================    ===================    ====================
</TABLE>

NOTE 8 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

The Bank has sold certain  investment  securities  with agreements to repurchase
primarily on an overnight basis to selected  depositors  totalling  $819,933 and
$257,759 as of December 31, 2001 and 2000, respectively.

Securities sold under agreements to repurchase averaged  approximately  $814,000
and $738,000 during 2001 and 2000, respectively. The maximum amounts outstanding
at  any  month-end  during  2001  and  2000  were  approximately   $946,000  and
$4,375,000, respectively.

NOTE 9 - INCOME TAXES

Income taxes as shown in the  consolidated  statements of income differ from the
amount computed using the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>

                                                  2001                          2000                       1999
                                           -------------------          -------------------         -------------------
                                                       Percent                      Percent                     Percent
                                                          of                           of                          of
                                                       Pretax                       Pretax                      Pretax
                                          amount       Income          Amount       Income         Amount       Income
                                         --------     --------        --------     --------       --------     -------
Federal Income Tax at
<S>                                     <C>             <C>          <C>             <C>         <C>             <C>
 Statutory Rate                         $551,051        34.0 %       $707,018        34.0 %      $621,567        34.0 %
Tax Exempt Income                        (27,966)       (1.7)         (22,681)       (1.2)        (22,442)       (1.2)
State Income Taxes, Net                   64,181         4.0           82,347         4.0          68,470         3.7
Other, Net                                   714         0.0           15,710         0.8         (21,871)       (1.2)
                                        ---------       ------       ---------       ------       --------       -----
                                         587,980        36.3 %        782,394        37.6 %       645,724        35.3 %
                                        ---------       ------       ---------      -------      ---------       ------
Income Taxes Consist of:
 Current                                 673,867                      789,809                     631,641
 Deferred (Benefit)                      (85,887)                      (7,415)                     14,083
                                        ---------                    ---------                   --------
                                        $587,980                     $782,394                    $645,724
                                        =========                    =========                   ========
</TABLE>


                                      -23-
<PAGE>


The net  deferred  tax  asset in the  December  31,  2001 and 2000  consolidated
balance sheets includes the following components:
<TABLE>
<CAPTION>
                                                                                  2001                   2000
                                                                           -------------------    --------------------
Deferred Tax Assets:
<S>                                                                     <C>                    <C>
 Provision for Loan Losses                                              $             283,444  $              211,687
 Deferred Loan Fees                                                                    16,645                   6,684
 Capitalized Loan Interest on Building                                                  8,098                       0
 Other                                                                                  1,576                       0
 Unrealized Holding Loss on
  Investment Securities                                                                     0                 111,101
                                                                           -------------------    --------------------
   Total Deferred Tax Assets                                                          309,763                 329,472
                                                                           -------------------    --------------------

Deferred Tax Liabilities:
 Depreciation                                                                          77,081                  83,573
 FHLB Stock Dividends                                                                  56,295                  46,501
 Prepaid Items                                                                         24,480                  26,805
 Unrealized Holding Gain on
  Investment Securities                                                                11,685                       0
 Other                                                                                 18,720                  14,192
                                                                           -------------------    --------------------
   Total Deferred Tax Liabilities                                                     188,261                 171,071
                                                                           -------------------    --------------------
    Net Deferred Tax Assets                                             $             121,502  $              158,401
                                                                           ===================    ====================
</TABLE>

NOTE 10 - RETIREMENT PLAN

The Bank has a profit  sharing  retirement  plan which allows for  discretionary
contributions by the Bank as determined annually by its board of directors.  The
plan also allows for voluntary  401(k)  contributions by employees up to fifteen
percent  of their  compensation.  The Bank's  contributions  to the plan for the
years ended December 31, 2001, 2000, and 1999 are as follows:
<TABLE>
<CAPTION>

                                                       401(k) Matching       Profit Sharing              Total
                                                     ------------------    -------------------    --------------------
<S>           <C>                                 <C>                   <C>                    <C>
              2001                                $              8,388  $              80,371  $               88,759
              2000                                $             10,084  $              86,282  $               96,366
              1999                                $              7,452  $              70,484  $               77,936
</TABLE>


NOTE 11 - REGULATORY MATTERS

The Bank is subject to various regulatory capital  requirements  administered by
the  federal  and  state  banking  agencies.  Failure  to meet  minimum  capital
requirements   can  initiate   certain   mandatory,   and  possibly   additional
discretionary,  actions by regulators  that, if undertaken,  could have a direct
material  effect on the Bank's  financial  statements.  Under  capital  adequacy
guidelines and the regulatory  framework for prompt corrective  action, the Bank
must meet specific capital guidelines that involve quantitative  measures of the
Bank's assets,  liabilities,  and certain  off-balance-sheet items as calculated
under  regulatory   accounting   practices.   The  Bank's  capital  amounts  and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below) of Total, Tier I Capital (as defined in the regulations) to Risk-Weighted
Assets (as  defined),  and of Tier I Capital (as defined) to Average  Assets (as
defined).  Management believes, as of December 31, 2001, that the Bank meets all
capital adequacy requirements to which it is subject.

                                      -24-
<PAGE>


As of December 31, 2001, the Bank is categorized as well  capitalized  under the
regulatory  framework for prompt  corrective  action.  To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based,
and Tier I leverage ratios as set forth in the table. There are no conditions or
events  since  that  date that  management  believes  have  changed  the  Bank's
category.

The Bank's actual  capital  amounts and ratios are also  presented in the table.
All amounts are in thousands of dollars.
<TABLE>
<CAPTION>

                                                                                                      To Be Well
                                                                      To Comply With               Capitalized Under
                                                                      Minimum Capital              Prompt Corrective
                                             Actual                    Requirements                Action Provisions
                                     ------------------------    --------------------------    --------------------------
                                      Amount         Ratio         Amount          Ratio         Amount          Ratio
                                     ----------    ----------    -----------     ----------    ------------    ----------
As of
December 31, 2001:
 Total Capital
<S>                               <C>                  <C>    <C>                     <C>   <C>                    <C>
  (to Risk-                       $     12,403         12.7%  $       7,810          >8.0%  $        9,763        >10.0%
  Weighted Assets)
 Tier I Capital
  (to Risk-                       $     11,436         11.7%  $       3,905          >4.0%  $        5,858         >6.0%
  Weighted Assets)
 Tier I Capital
  (to Average Assets)             $     11,436          8.1%  $       4,214          >5.0%  $        7,023         >5.0%

As of
December 31, 2000:
 Total Capital
  (to Risk-                       $     11,450         13.3%  $       6,875          >8.0%  $        8,594        >10.0%
  Weighted Assets)
 Tier I Capital
  (to Risk-                       $     10,712         12.5%  $       3,438          >4.0%  $        5,157         >6.0%
  Weighted Assets)
 Tier I Capital
  (to Average Assets)             $     10,712          8.8%  $       6,093          >5.0%  $        6,093         >5.0%
</TABLE>


NOTE 12 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Financial  Accounting  Standards  Board has issued  Statement  of Financial
Accounting  Standards  No.  107,  Disclosures  About  Fair  Value  of  Financial
Instruments  (SFAS No.  107),  which  requires  the Company to disclose the fair
value of financial  instruments,  both assets and liabilities recognized and not
recognized in the consolidated  statements of financial condition,  for which it
is practicable to estimate fair value.

According to SFAS No. 107, a financial  instrument is defined as cash,  evidence
of an ownership  interest in an entity,  or a contract that both: (1) imposes on
one  entity a  contractual  obligation  to  deliver  cash or  another  financial
instrument to a second  entity,  or to exchange other  financial  instruments on
potentially  unfavorable  terms with the second entity,  and (2) conveys to that
second  entity  a  contractual  right  to  receive  cash  or  another  financial
instrument from the first entity, or to exchange other financial  instruments on
potentially favorable terms with the first entity.

                                      -25-
<PAGE>


SFAS No. 107 also states that the fair value of a  financial  instrument  is the
amount at which  the  instrument  could be  exchanged  in a current  transaction
between  willing  parties,  other than in a forced or liquidation  sale.  Quoted
market prices in an active  market,  if available,  are the best evidence of the
fair value of financial instruments. For financial instruments that do not trade
regularly,  management's  best  estimate  of fair  value is based on either  the
quoted market price of a financial instrument with similar characteristics or on
valuation  techniques  such as the present value of estimated  future cash flows
using a discount rate commensurate with the risks involved.

For the Bank, as for most financial institutions, the majority of its assets and
liabilities are considered  financial  instruments as defined above.  However, a
large  majority of those assets and  liabilities  do not have an active  trading
market nor are their characteristics  similar to other financial instruments for
which an active trading market exists.  In addition,  it is the Bank's  practice
and intent to hold the majority of its financial instruments to maturity and not
to engage in trading or sales activities.  Therefore, much of the information as
well as the amounts  disclosed  below are highly  subjective  and  judgmental in
nature.   The  subjective   factors  include  estimates  of  cash  flows,  risks
characteristics, credit quality, and interest rates, all of which are subject to
change.  Because the fair value is  estimated  as of December 31, 2001 and 2000,
the amounts which will actually be realized or paid upon  settlement or maturity
of the various financial instruments could be significantly different.

The estimates of fair value are based on existing financial  instruments without
attempting to estimate the value of anticipated  future business or activity nor
the  value  of  assets  and  liabilities  that  are  not  considered   financial
instruments.  For example,  the value of mortgage loan servicing  rights and the
value of the Bank's long-term  relationships with depositors,  commonly known as
core deposit  intangibles,  have not been  considered  in the  estimates of fair
values  presented  below.  In  addition,  the tax  implications  related  to the
realization of unrealized gains and losses can have a significant effect on fair
value estimates and have not been included in the estimated fair values below.

The following  methods and  assumptions  were used to estimate the fair value of
the following classes of financial instruments:

Cash and Cash Equivalents - Cash and cash equivalents  include cash and due from
banks,   and   interest-bearing   deposits  with  banks.  For  these  short-term
instruments, the recorded book value is a reasonable estimate of fair value.

Investment Securities - Quoted market prices are used to determine the estimated
fair value of investment securities.

Net Loans - The estimated fair value of fixed rate mortgage loans and commercial
loans is calculated  by  discounting  future cash flows to their present  value.
Future cash flows,  consisting  of both  principal  and interest  payments,  are
discounted using current Bank rates for similar loans with similar maturities.

The estimated fair value of variable rate loans is considered  equal to recorded
book value.

                                      -26-
<PAGE>


Fixed rate installment  loans have an average maturity of less than three years,
a  relatively  stable  average  interest  rate,  and a variety  of credit  risks
associated  with them. The fair value of these loans is estimated by discounting
future  estimated cash flows to their present value using current Bank rates for
similar loans with similar maturities.

The  estimated  fair value of the  allowance for loan losses is considered to be
recorded book value.  Additionally,  the credit  exposure  known to exist in the
loan portfolio is embodied in the allowance for loan losses.

Deposits - The estimated  fair value of demand,  savings,  NOW, and money market
deposits is the amount  payable on demand at the reporting  date. The fair value
of fixed-maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar maturities.

Off-Balance-Sheet Loan Commitments - The fair value of loan commitments is based
on fees currently charged to enter into similar agreements,  taking into account
the remaining  terms of the agreements and the present  creditworthiness  of the
counterparties.  For fixed rate loan commitments,  fair value also considers the
difference between current levels of interest rates and the committed rates. The
fair value of letters of credit is based on fees  currently  charged for similar
agreements or on the estimated  cost to terminate  them or otherwise  settle the
obligations  with the  counterparties  at the  reporting  date.  The face  value
compared to the fair value of these  items is not  material to the Company as of
December 31, 2001 and 2000.


The recorded  book value and  estimated  fair value of the  Company's  financial
instruments as of December 31 are as follows:
<TABLE>
<CAPTION>

                                                         2001                                      2000
                                         --------------------------------------    -------------------------------------
                                             Recorded            Estimated            Recorded             Estimated
                                               Book                 Fair                Book                 Fair
                                              Value                Value                Value                Value
                                         -----------------    -----------------    ----------------     ----------------
FINANCIAL ASSETS:
<S>                                   <C>                  <C>                  <C>                  <C>
 Cash and
  Cash Equivalents                    $        17,456,470  $        17,456,470  $       10,769,424   $        10,769,424
 Investment Securities                $        31,559,011  $        31,559,011  $       33,613,495   $        33,613,495
 Net Loans                            $        89,508,746  $        89,751,198  $       76,069,878   $        76,072,629

FINANCIAL LIABILITIES:
 Deposits                             $       131,029,885  $       132,819,703  $      115,059,440   $       115,108,958
</TABLE>



NOTE 13 - SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

The Bank's  primary  business  activity is with  customers  located  within East
Tennessee.  Note 2 discusses the types of  securities  that the Bank invests in.
Note 3 discusses  the types of lending  that the Bank  engages in. The Bank does
not have any significant concentrations to any one industry or customer.

                                      -27-
<PAGE>


NOTE 14 - CONDENSED PARENT COMPANY ONLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>

Condensed financial information of First Central Bancshares, Inc. (parent company only) is as follows:

                             CONDENSED BALANCE SHEET
                                December 31, 2001
Assets:
<S>                                                                                        <C>
 Demand Balance With Subsidiary                                                            $                 17,147
 Accounts Receivable - Subsidiary                                                                                 0
 Prepaid Income Taxes                                                                                         8,353
 Investment in Subsidiary                                                                                11,436,476
                                                                                              -----------------------
  Total Assets                                                                             $             11,461,976
                                                                                              =======================

Liabilities:
 Accrued Expenses                                                                          $                     43
                                                                                              -----------------------
  Total Liabilities                                                                                              43
                                                                                              -----------------------

Shareholders' Equity:
 Common Stock - Par Value $5.00,
  Authorized 2,000,000 Shares; 564,361 Shares
  Shares Issued                                                                                           2,821,805
 Capital in Excess of Par Value                                                                           5,430,199
 Treasury Stock, at Cost; 17,333 Shares (5,000 in 2000)                                                    (430,646)
 Retained Earnings                                                                                        3,640,575
                                                                                              -----------------------
  Total Shareholders' Equity                                                                             11,461,933
                                                                                              -----------------------
Total Liabilities and Shareholders' Equity                                                 $             11,461,976
                                                                                              =======================

                                                 CONDENSED STATEMENT OF INCOME
                                                 Year Ended December 31, 2001

Expenses                                                                                   $                 13,496
                                                                                              -----------------------
Loss Before Equity in Undistributed
 Earnings of Subsidiary                                                                                     (13,496)
Undistributed Earnings of Subsidiary                                                                      1,046,253
                                                                                              -----------------------
  Net Income                                                                               $              1,032,757
                                                                                              =======================

                                               CONDENSED STATEMENT OF CASH FLOWS
                                                 Year Ended December 31, 2001

Operating Activities:
 Net Income                                                                                $              1,032,757
                                                                                              -----------------------
 Adjustments to Reconcile Net Income to
  Net Cash Used in Operating Activities:
   Undistributed Earnings of Subsidiary                                                                  (1,046,253)
   Decrease in Prepaid Income Taxes                                                                           2,369
   Increase in Accrued Expenses                                                                                  28
                                                                                              -----------------------
    Total Adjustments                                                                                    (1,043,856)
                                                                                              -----------------------
     Net Cash Used in Operating Activities                                                                  (11,099)
                                                                                              -----------------------
Financing Activities:
   Dividends Received                                                                                       322,000
   Purchase of Treasury Stock                                                                              (300,646)
                                                                                              -----------------------
      Net Cash Provided by Financing Activities                                                              21,354
                                                                                              -----------------------
Net Increase in Demand Account Balance With Subsidiary                                                       10,255
Demand Account Balance With Subsidiary, Beginning of Year                                                     6,892
                                                                                              -----------------------
Demand Account Balance With Subsidiary, End of Year                                        $                 17,147
                                                                                              =======================
</TABLE>


                                      -28-
<PAGE>


NOTE 15 - STOCK DIVIDENDS

The Company did not declare a dividend in 2001. During 2000, the Company's board
of  directors  approved  the  issuance  of  a  ten  percent  stock  dividend  to
shareholders  of record as of February 14, 2000. An additional  51,080 shares of
Common Stock were issued at $26 per share, and retained earnings were reduced by
$1,328,080  in 2000 as a result  of the  stock  dividend.  The  Company  did not
declare a dividend in 1999.


NOTE 16 - TREASURY STOCK

During 2001,  the Company's  board of directors  approved the purchase of 17,333
shares of its Common Stock at a total cost of $430,646, which was funded by cash
dividends  from the  subsidiary  bank and the sale of 5,000 shares of its common
stock for  $130,000,  acquired in 2000.  During  2000,  the  Company's  board of
directors  approved  the purchase of 5,000 shares of its Common Stock at $26 per
share, which was funded by a cash dividend from the subsidiary.

NOTE 17 - STOCK OPTION PLAN

At the April 20, 2000 annual shareholders'  meeting,  shareholders  approved the
designation of 25,000 shares of Common Stock of First Central  Bancshares,  Inc.
for stock options for employees, to be awarded at the discretion of the board of
directors. No options have been granted to date.

NOTE 18 - BRANCH SALE

The Bank and the Company entered into an agreement,  effective  October of 1999,
to  sell  the  Sweetwater  branch.  The  total  consideration  of  approximately
$1,500,000  was for the  opportunity  to  acquire  the branch and for the branch
itself and was payable in two components.  The buyer paid $300,000  (received in
1999)  upon  the   execution  of  the   agreement.   The  $300,000   amount  was
nonrefundable,  and as such, was recorded in the 1999 consolidated  statement of
income as Income From  Non-Refundable  Deposit on Sale of Branch.  The remaining
approximate  $1,200,000  was paid at the closing of the  transaction  in June of
2000. In addition,  the buyer paid $167,188 for the operating loss of the branch
from the date of the agreement to the closing.  Of this amount,  $40,262,  which
was for the 1999 loss from the agreement  date to December 31, 1999, is included
in the $434,797 gain on sale of branch.  The  remainder,  which was $126,926 and
represented  the loss of the branch from  January 2000 to the closing in June of
2000, eliminated the loss of the branch for the year 2000.

NOTE 19 - EMPLOYMENT AGREEMENTS

The Bank has entered into employment  agreements  with the chairman,  president,
and one other officer of the Bank. The  agreements  contain  various  provisions
related to salary, benefits, and non-compete clauses.


                                      -29-
<PAGE>


<TABLE>
<CAPTION>

                            FINANCIAL DATA SCHEDULES

                                   SCHEDULE I
                  AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
                                 (IN THOUSANDS)

                                                                  2001                                2000
                                                      ---------------------------          ---------------------------
                                                Average                  Average      Average                 Average
                                                Balance      Interest     Yield       Balance     Interest     Yield
ASSETS
<S>                                            <C>             <C>          <C>       <C>           <C>          <C>
Federal Funds Sold                             $ 10,588        $  389       3.67%     $ 1,465       $   95       6.48%
Investment Securities:
Available for Sale:
 Taxable                                         27,610         1,736       6.29%      30,029        2,083       6.94%
 Tax-Exempt                                       2,828           105       3.71%       2,417           86       3.56%
Gross Loans, Including Fees                      84,030         7,141       8.50%      75,093        6,910       9.20%
                                              ----------      -------       -----   ----------     -------       -----
Total Interest-Earning Assets                   125,056        $9,371       7.49%     109,004       $9,174       8.42%
                                                              =======       =====                  =======       =====

Cash and Due From Banks                           4,323                                 4,072
All Other Assets                                  5,579                                 6,047
Less:
 Reserve for Loan Losses                           (773)                                 (669)
 Unearned Fees and Interest                        (228)                                 (611)
                                               ----------                            --------
TOTAL ASSETS                                   $133,957                              $117,843
                                               ==========                            ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Deposits:
 Time Deposits                                 $ 70,967        $4,036       5.69%    $ 60,071       $3,531       5.88%
 Other Deposits                                  31,290           781       2.50%      31,240        1,029       3.29%
Federal Funds Purchased                               0             0       0.00%         493           36       7.30%
                                              ----------      -------      ------    ---------         ---       -----
Total Interest Bearing
 Liabilities                                    102,257        $4,817       4.71%      91,804       $4,596       5.01%
                                                               ======       =====                   ======       =====
Noninterest-Bearing Deposits                     19,636                                16,651
Total Cost of Funds                                                         3.95%                                4.24%
                                                                            =====                                =====
All Other Liabilities                               753                                   145
Shareholders' Equity                             11,213                                10,124
Unrealized Gain/(Loss) on
 Securities Available for Sale                       98                                  (881)
                                              ----------                             --------
Total Liabilities and
 Shareholders' Equity                          $133,957                              $117,843
                                              ==========                             ========
Net Interest Yield                                                          2.78%                                3.41%
                                                                            =====                                =====
Net Interest Margin                                                         3.64%                                4.20%
                                                                            =====                                =====
</TABLE>


                                      -30-
<PAGE>


                                   SCHEDULE II
                              RATE/VOLUME ANALYSIS
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>

                                                           2001/2000                                   2000/1999
                                                  ----------------------------                ------------------
                                                   Increase (Decrease) Due                     Increase (Decrease) Due
                                                          to Change in                                to Change in
                                                  ----------------------------                --------------------
                                           Average       Average                       Average       Average
                                           Balance         Rate         Total          Balance         Rate         Total
                                           -------       -------        ------         -------       -------        -----
    INTEREST REVENUE
<S>                                         <C>           <C>           <C>             <C>            <C>          <C>
    Federal funds sold                      $ 335         $ (41)        $ 294           $(312)         $101         $(211)
    Securities available for sale,
    Taxable                                  (152)         (195)         (347)            273           100           373
    Securities available for sale,
    Tax-Exempt                                 15             4            19               7            (3)            4
    Loans, including fees                     759          (528)          231             595           102           697
                                            ------         -----        ------          ------        ------        -----

    Total interest revenue                    957          (760)          197             563           300           863

    INTEREST EXPENSE

    Interest bearing deposits                 516          (259)          257             220           410           630
    Other short term borrowings                 0             0             0               0             0             0
    Federal funds purchased                     0           (36)          (36)             36             0            36
                                           -------        ------        ------         -------       -------        -----

    Total interest expense                    516          (295)          221             256           410           666
                                           -------         -----       -------         -------       -------        -----

    Net change in net interest
    revenue                                 $ 441         $(465)        $ (24)          $ 307         $(110)        $ 197
                                           =======        ======        ======         =======        ======        =====
</TABLE>




                                      -31-
<PAGE>


                                  SCHEDULE III
                            INTEREST RATE SENSITIVITY
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                  December 31,  2001
                                             --------------------------------------------------------------------
                                                0-3         4 Months       1 Year to         > 5
                                              Months        to 1 Year      5 Years          Years           Total
                                             ---------      ---------     ----------       --------       -------
ASSETS
<S>                                          <C>             <C>           <C>             <C>            <C>
Federal Funds Sold                           $ 11,758        $     0       $      0        $     0        $ 11,758
Investments                                     6,698          2,890          8,355         13,616          31,559
Loans                                          34,175         12,804         43,642              0          90,621
                                                    0              0              0              0               0
                                             --------       --------       --------        -------        --------

Total Earning Assets                         $ 52,631       $ 15,694       $ 51,997        $13,616        $133,938
                                             ========       ========       ========        =======        ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing
 Deposits                                    $ 55,554       $ 25,054       $ 28,238        $     0        $108,846

Noninterest-Bearing
 Deposits                                      22,184              0              0              0          22,184

Securities Sold Under
 Agreements to Repurchase                         820              0              0              0             820
                                             --------       --------       --------        -------        --------

Total Interest- and
 Noninterest-Bearing
 Deposits                                    $ 78,558       $ 25,054       $ 28,238        $     0        $131,850
                                             ========       ========       ========        =======        ========

Interest Rate
 Sensitivity Gap                             $(25,927)      $ (9,360)      $ 23,759        $13,616        $  2,088
                                             ========       ========       ========        =======        ========

Cumulative Interest
 Rate Sensitivity Gap                        $(25,927)      $(35,287)      $(11,528)       $ 2,088
                                             ========       ========       ========        =======

Net Repricing Gap as a Percentage of
Total Earning Assets                           (19.36)%        (6.99)%        17.74%         10.17%           1.56%
                                             ========       ========       ========        =======        ========

Cumulative Gap a Percentage of Total
Earning Assets                                 (19.36)%       (26.35)%        (8.61)%         1.56%
                                             ========       ========       ========        =======
</TABLE>


                                      -32-
<PAGE>


                                   SCHEDULE IV
                                 LOAN REPRICING
                                 (IN THOUSANDS)





<TABLE>
<CAPTION>

                                                                         December 31, 2001
                                                 ------------------------------------------------------------------
                                                  0-3          4 Months        1 Year to        > 5
                                                 Months        to 1 Year        5 Years         Years         Total
                                                 -------       ---------       ---------        -----        ------
Loan Category:
<S>                                              <C>             <C>             <C>               <C>       <C>
Real Estate -
 Commercial                                      $ 8,457         $ 5,307         $20,561           $0        $34,325
Real Estate -
 Construction and
 Land Development                                  3,586           2,079           8,676            0         14,341
Real Estate -
 Residential                                      11,852           2,653           7,955            0         22,460
Commercial and
 Industrial                                        7,574             601           1,390            0          9,565
Installment Loans -
 Consumer and Other                                2,706           2,164           5,060            0          9,930
                                                --------        --------        --------          ---        -------

Total                                            $34,175         $12,804         $43,642           $0        $90,621
                                                ========        ========        ========          ===        =======
</TABLE>




                                      -33-
<PAGE>


                                   SCHEDULE V
                              NONPERFORMING ASSETS
                                 (IN THOUSANDS)








                                                            December 31,
                                                     -------------------------
                                                     2001                 2000
                                                     ----                 ----

Non-Accrual Loans                                    $305                  $11
Restructured Loans                                      0                    0
                                                     -----                 ---

Total Non-Performing Assets                          $305                  $11
                                                     =====                 ===




                                      -34-
<PAGE>


                                   SCHEDULE VI
                          ANALYSIS OF LOAN LOSS RESERVE
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                       --------------------------------------------
                                                                       2001                2000                1999
                                                                       ----                ----                ----

<S>                                                                   <C>                 <C>                 <C>
Balance at Beginning of Period                                         $739                $618                $594
                                                                       ----                ----                ----

Charge-Offs:
Commercial, Financial, and Agricultural                                  57                  37                   0
Real Estate - Construction                                                0                   0                   0
Real Estate - Mortgages                                                   0                   0                   0
Installment - Consumer                                                  226                 108                 196
Other                                                                     0                   0                   0
                                                                       ----                ----                ----

Total Charge-Offs                                                       283                 145                 196
                                                                       ----                ----                ----

Recoveries:
Commercial, Financial, and Agricultural                                   0                  13                   0
Real Estate - Construction                                                0                   0                   0
Real Estate - Mortgages                                                   0                   0                   0
Installment - Consumer                                                   52                  44                  60
Other                                                                     0                   0                   0
                                                                       ----                ----                ----

Total Recoveries                                                         52                  57                  60
                                                                       ----                ----                ----

Net Charge-Offs                                                         231                  88                 136

Provision for Loan Losses                                               459                 209                 160
                                                                       ----                ----                ----

Balance at the End of the Period                                       $967                $739                $618
                                                                       ====                ====                ====

Ratio of Net Charge-Offs to
 Average Loans Outstanding                                             0.27%               0.12%               0.20%
                                                                       ====                ====                ====
</TABLE>


                                      -35-
<PAGE>


                                  SCHEDULE VII
                         ALLOCATION OF LOAN LOSS RESERVE
                                 (IN THOUSANDS)





<TABLE>
<CAPTION>

                                                                    December 31,
                                                 ---------------------------------------------------
                                                 2001       % of Total        2000        % of Total
                                                 ----       ----------        ----        ----------
<S>                                              <C>            <C>           <C>             <C>
Commercial, Financial, and
 Agricultural                                    $410           42.40%        $152            20.57%
Real Estate - Construction                        104           10.75%         123            16.64%
Real Estate - Mortgages                           150           15.51%         205            27.74%
Installment - Consumer                            269           27.82%         255            34.51%
Other                                              34            3.52%           4             0.54%
Unallocated                                         0            0.00%           0             0.00%
                                                 ----           -----         ----            -----

Total                                            $967          100.00%        $739           100.00%
                                                 ====          ======         ====           ======

</TABLE>


                                      -36-
<PAGE>


                                  SCHEDULE VIII
                           RETURN ON ASSETS AND EQUITY
                                 (IN THOUSANDS)









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

Return on Average Assets                               0.77%             1.10%

Return on Average Equity                               9.21%            12.81%

Dividend Payout Ratio                                  0.00%             0.00%

Average Tangible Equity to Average Assets              8.37%             8.59%





                                      -37-
<PAGE>


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

There have been no disagreements with the Company's  independent  accountants on
any matter of accounting or financial statement disclosure.

                                    PART III

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

     (a)  Directors and Executive Officers

The information  appearing under the caption  "Election of Directors" on pages 3
and 4 of  the  Proxy  Statement  relating  to the  2002  Annual  Meeting  of the
Shareholders is incorporated herein by reference.

Item 10. Executive Compensation

The information  appearing under the caption "Compensation of Executive Officers
and  Directors"  on page 5 of the  Proxy  Statement  is  incorporated  herein by
reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The  information  appearing  under the caption  "Information  Regarding  Certain
Beneficial  Owners" on page 2 of the Proxy Statement is  incorporated  herein by
reference.

Item 12. Certain Relationships and Related Transactions

The information  appearing under the caption "Certain  Relationships and Related
Transactions"  on  page 6 of the  Proxy  Statement  is  incorporated  herein  by
reference.

Item 13. Exhibits and Reports on Form 8-K

     (a)  The following exhibits either are filed or otherwise furnished as part
          of this report or are incorporated herein by reference:

No.               Description
---               -----------
3.1*              Charter of First Central Bancshares, Inc.
3.2*              Bylaws of First Central Bancshares, Inc.
21                Subsidiaries of the Registrant
------------
*    Incorporated herein by reference to the Registrant's Registration Statement
     on Form S-4, filed with the Securities and Exchange  Commission on February
     15, 1993 (File number 33-58832).


     (b)  Reports on Form 8-K.

          The registrant did not file any Current Reports on Form 8-K during the
          last fiscal year ending December 31, 2001.


                                      -38-
<PAGE>


FORM 1O-KSB

                                   SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.





FIRST CENTRAL BANCSHARES, INC.

Date:  March 28, 2002        By:  /s/ Ed F. Bell
                             --------------------
                             Ed F. Bell Chairman and
                             Chief Executive Officer


Date:  March 28, 2002        By:  /s/ Joseph Y. Hamdi
                             ------------------------
                             President

Date:  March 28, 2002        By: /s/ Ralph Micalizzi
                             -----------------------
                             Ralph Micalizzi, Vice President,
                             Cashier and Controller, First
                             Central Bank


<PAGE>


In accordance with Section 13 or 15(d) of the Exchange Act, this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated:


/s/ Ed F. Bell                             /s/ Joseph Y. Hamdi
---------------------------------          ------------------------------------
Ed F. Bell, Chairman, and Chief            Joseph Y. Hamdi, President
 Executive Officer                           and Director
Date: March 28, 2002                       Date: March 28, 2002


/s/ Ralph Micalizzi                       /s/ Barry H. Gordon
---------------------------------         ------------------------------------
Ralph Micalizzi, Vice President,          Barry H. Gordon, Director
Cashier and Controller, First             Date: March 28, 2002
Central Bank
Date: March 28, 2002


/s/ Robert D. Grimes                      /s/ Gary Kimsey
-----------------------------------       ------------------------------------
Robert D. Grimes, Director                Gary Kimsey, Director
Date: March 28, 2002                      Date: March 28, 2002


/s/ G. Bruce Martin                       /s/ Peter G. Stimpson
-----------------------------------       ------------------------------------
G. Bruce Martin, Director                 Peter G. Stimpson, Director
Date: March 28, 2002                      Date: March 28, 2002


/s/ Benny L. Shubert                      /s/ Ted L. Wampler, Jr.
-----------------------------------       ------------------------------------
Benny L. Shubert, Director                Ted L. Wampler, Jr., Director
Date: March 28, 2002                      Date: March 28, 2002


/s/ James W. Wilburn, III
------------------------------------
James W. Wilburn, III, Director
Date: March 28, 2002


<PAGE>


                                                                      EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT

First Central Bank, a Tennessee banking corporation

FCB Financial Services, Inc., a Tennessee corporation