<PAGE>

================================================================================

                                UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                                  FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                     THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000          COMMISSION FILE NO. 0-22629

                      UNIFIED FINANCIAL SERVICES, INC.
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                        35-1797759
       (STATE OF INCORPORATION)                                (IRS EMPLOYER
                                                            IDENTIFICATION NO.)

         2424 HARRODSBURG ROAD                                    40503
          LEXINGTON, KENTUCKY                                   (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

     REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (859) 296-2016

      SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

         SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                        COMMON STOCK, $0.01 PAR VALUE
                      PREFERRED STOCK, $0.01 PAR VALUE


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
   TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    DURING THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING
                      REQUIREMENTS FOR THE PAST 90 DAYS.
                                   YES X  NO
                                      ---    ---

 INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT 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-K OR ANY
                      AMENDMENT TO THIS FORM 10-K. [X]

  AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
 REGISTRANT AS OF MARCH 1, 2001: COMMON STOCK, $0.01 PAR VALUE, $60,985,000

 NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON
STOCK, AS OF MARCH 1, 2001: COMMON STOCK, $0.01 PAR VALUE, 2,880,028 SHARES
                                OUTSTANDING

                     DOCUMENTS INCORPORATED BY REFERENCE
    AS PROVIDED HEREIN, PORTIONS OF THE DOCUMENTS BELOW ARE INCORPORATED
                                BY REFERENCE:

             DOCUMENT                                  PART--FORM 10-K
             --------                                  ---------------

         REGISTRANT'S PROXY STATEMENT FOR THE 2001
         ANNUAL MEETING OF STOCKHOLDERS                PART III

================================================================================


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                      UNIFIED FINANCIAL SERVICES, INC.

                                  FORM 10-K

                              TABLE OF CONTENTS

                                                                        PAGE
                                                                        ----
PART I
        Item 1.   Business                                                 2
        Item 2.   Properties                                              12
        Item 3.   Legal Proceedings                                       12
        Item 4.   Submission of Matters to a Vote of
                    Security Holders                                      12
        Item 4A.  Executive Officers of the Registrant                    12

PART II
        Item 5.   Market for Registrant's Common Equity
                    and Related Stockholder Matters                       14
        Item 6.   Selected Financial Data                                 15
        Item 7.   Management's Discussion and Analysis of
                    Financial Condition and Results of Operations         17
        Item 7A.  Quantitative and Qualitative Disclosure
                    about Market Risk                                     26
        Item 8.   Financial Statements and Supplementary Data             31
        Item 9.   Changes in and Disagreements with
                    Accountants on Accounting and Financial Disclosure    56

PART III
        Item 10.  Directors and Executive Officers of the
                    Registrant                                            56
        Item 11.  Executive Compensation                                  56
        Item 12.  Security Ownership of Certain
                    Beneficial Owners and Management                      56
        Item 13.  Certain Relationships and Related
                    Transactions                                          56
        Item 14.  Exhibits, Financial Statement Schedule
                    and Reports on Form 8-K                               56

SIGNATURES                                                                57


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                               PART I

ITEM 1.  BUSINESS
         --------

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Annual Report on Form 10-K are
or may constitute forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Such forward-looking
statements are based on current expectations, estimates and projections
about Unified Financial Services' industries, management's beliefs and
assumptions made by management. For example, a downturn in economic
conditions generally and in particular those affecting bond and securities
markets could lead to an exit of investors from mutual funds. Similarly, an
increase in Federal and state regulations of the mutual fund, insurance or
banking industries or the imposition of regulatory penalties could have an
effect on our operating results. In addition, by accepting deposits at fixed
rates, at different times and for different terms, and lending funds at
fixed rates for fixed periods, a bank accepts the risk that the cost of
funds may rise and interest on loans and investment securities may be at a
fixed rate. Similarly, the cost of funds may fall, but a bank may have
committed by virtue of the term of a deposit to pay what becomes an
above-market rate. Investments may decline in value in a rising interest
rate environment. Loans have the risk that the borrower will not repay all
funds due in a timely manner as well as the risk of total loss. Collateral
may or may not have the value attributed to it. Although we believe our loan
loss reserve is adequate, it may prove inadequate if one or more large
borrowers, or numerous smaller borrowers, or a combination of both,
experience financial difficulty for individual, national or international
reasons. Because the financial services industry is highly regulated,
decisions of governmental authorities can have a major effect on operating
results. These uncertainties, as well as others, are present in the
financial services industry and we caution stockholders that management's
view of the future on which we price and distribute our products and
estimate costs of operations and regulations may prove to be other than as
anticipated. In addition, our current expectations with respect to our six
business lines, our mission with respect to market leading positions of our
trust and retirement services and mutual fund administration services
business lines, our ability to generate supplemental revenues for our other
business lines, our ability to provide superior returns to our stockholders
and the development of VSX Holdings as an alternative trading system may
prove to be other than expected. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such
words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
are subject to certain risks, uncertainties and assumptions that are
difficult to predict; therefore, actual results and outcomes may differ
materially from what is expressed or forecasted in any such forward-looking
statements. Such risks and uncertainties include those set forth herein
under "Risk Factors." Unless required by law, we undertake no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. The data presented in the following
pages should be read in conjunction with our consolidated financial
statements and the notes thereto on pages 31 to 55 of this report.

GENERAL

         Unified Financial Services, Inc., a Delaware holding company that
was organized on December 7, 1989, is a vertically integrated provider of
financial products and services, distributing these through six lines of
business: trust and retirement services; mutual fund administration
services; banking; insurance; brokerage; and investment advisory services.
Unified bases its foundation upon two of its lines of business which seek to
be market leaders in their respective fields - trust and retirement services
and mutual fund administration services.

                                    - 2 -

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<PAGE>

         It is the mission of our company to capture market leading
positions in these two business lines, generate supplemental revenue for
each line to the others and, by our ability to distribute our
products/services through electronic delivery channels with strategic
third-party relationships, to provide superior returns to our stockholders.

         The current organizational structure and the refinement of our business
strategy is the culmination of the work over the last two and one-half years
towards the creation of today's Unified Financial Services, Inc.  Our
foundation, Unified Financial Securities, Inc., dates back to 1952.  Unified
Financial Securities, Inc. began as Unified Underwriters, Inc. and today is a
regional discount brokerage firm with a link to mutual fund assets via its
brokerage account services. It is our broker-dealer subsidiary.

         In 1990, Unified Fund Services, Inc. was formed. Unified Fund
Services is a highly automated, registered stock transfer agent that
provides transfer agency, fund accounting, administrative and/or compliance
services for mutual fund families.

         Beginning in 1997 with our acquisitions of First Lexington Trust
Company and Health Financial, Inc., our fundamental business model was born.
The business model was intent on creating a vertically integrated financial
services platform from which all essential products and support systems
necessary to compete in the financial services industry would be built or
acquired. The guiding principle was to provide one-stop shopping for
consumers and to create an infrastructure whereby all support systems and
related costs are confined within the company. Thus, we were to become a
low-cost provider of all such services.

         In 1998, seven new affiliates joined our company and in 1999, six
more were either started or acquired. The organization has been streamlined
through consolidation of like-business affiliates. Thus, over the course of
two and one-half years, thirteen affiliates and four start-ups have been
restructured into the six core businesses.

         Over the first half of 2000, as the consolidation process was
proceeding, we determined that two of our business lines have an opportunity
to become market leaders in their respective disciplines. A market leader
commands a national lead position in a segment of an industry as opposed to
a lead position in the entire industry. Our two potential market leaders, we
believe, are trust and retirement services (Unified Trust Company, National
Association) and mutual fund administration services (Unified Fund
Services).

         Going forward, the vertically integrated platform will be refined
and managed with these two businesses forming the foundation and being the
main drivers of our income. While we expect the other core lines to be
profitable in their own discipline, each should be significantly enhanced by
the supplemental income each should receive through its affiliation with the
two main driver businesses.

         Additionally, we intend to develop the VSX project, a virtual
real-time private financial marketplace. It will be funded by independent
investment and we will retain an equity position and management contract for
services rendered.

         Our principal executive offices are located at 2424 Harrodsburg
Road, Lexington, Kentucky 40503, telephone number (859) 296-2016. We and our
subsidiaries also maintain offices at 431 North Pennsylvania Street,
Indianapolis, Indiana, telephone number (317) 917-7001; 2353 Alexandria
Drive, Lexington, Kentucky 40504, telephone number (859) 296-4407; 100
Browenton Place, Louisville, Kentucky 40222, (502) 326-5016; 220 Lexington
Green Circle, Suite 600, Lexington, Kentucky 40512, telephone number (859)
245-2500; 1725 Southlake Boulevard, Southlake, Texas 76092, telephone number

                                  - 3 -

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<PAGE>

(817) 431-2197; 36 West 44th Street, The Bar Association Building, Suite
1310, New York, New York 10036, telephone number (212) 852-8852; and One
Firstar Plaza, Suite 2605, St. Louis, Missouri 63101, telephone number (314)
552-6440.

ACQUISITIONS AND ASSET PURCHASES

         The following table lists the acquisitions and asset purchases
completed by us during the years ended December 31, 2000, 1999, 1998 and
1997.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                          CONSIDERATION
                                                                     --------------------------
                                                                                     SHARES OF
                                                                                       COMMON                 ACCOUNTING
ACQUISITIONS AND ASSET PURCHASES COMPLETED                  DATE        CASH           STOCK                    METHOD
-------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>         <C>             <C>                      <C>
Health Financial, Inc.                                    06/01/97                    325,000                   Pooling
First Lexington Trust Company                             12/31/97                     80,008                   Pooling
Resource Benefit Planners, Inc.                           03/10/98                     12,000                   Pooling
Unified Investment Advisers, Inc.                         03/31/98                         (1)                    (1)
Fiduciary Counsel, Inc.                                   08/21/98    $800,835         36,110                  Purchase
EMCO Estate Management Company, Inc.(2)                   08/21/98                     11,000                   Pooling
Equity Underwriting Group, Inc.(3)                        12/17/98                    241,745                   Pooling
Commonwealth Premium Finance Corporation                  12/17/98                     12,800                   Pooling
Strategic Fund Services, Inc.                             12/22/98                      7,500                   Pooling
AmeriPrime Financial Services, Inc.(4)                    12/31/98                    410,000                   Pooling
M. Wilson & Associates, Inc.                              01/01/99                      3,636                   Pooling
First Insight Securities, Ltd.(5)                         05/06/99    $ 51,700                                 Purchase
Commonwealth Investment Services, Inc.                    06/01/99                     27,500                   Pooling
Fully Armed Productions, Inc.                             06/01/99                     18,182                   Pooling
-------------------------------------------------------------------------------------------------------------------------

<FN>
(1)   Unified Investment Advisers became our wholly owned subsidiary upon the
      surrender to Unified Investment Advisers by all of its stockholders
      (other than us) of their capital stock.
(2)   We purchased certain of the assets and business and assumed certain of
      the obligations of The Patty Corporation (f/k/a EMCO Estate Management
      Company, Inc.). The acquisition company used by us to acquire such assets
      and obligations changed its name after the acquisition to EMCO Estate
      Management Company, Inc.
(3)   Equity Underwriting Group, Inc. was the 100% shareholder of Equity
      Insurance Managers, Inc., 21st Century Claims Service, Inc. and Equity
      Insurance Administrators, Inc. Equity Insurance Managers was the sole
      member of Equity Insurance Managers of Illinois, L.L.C. (d/b/a/ Irland
      & Rogers).
(4)   AmeriPrime Financial Services, Inc. was the 100% shareholder of
      AmeriPrime Financial Securities, Inc.
(5)   We, through our wholly owned subsidiary, Archer Trading, Inc., purchased
      certain of the assets and assumed certain of the liabilities of First
      Insight Securities, Ltd. In connection with such acquisition we assumed
      liabilities of approximately $22,000 and paid an additional $51,700 in
      cash.
</TABLE>

OUR AFFILIATED MUTUAL FUNDS

         As of December 31, 2000, the Unified Funds maintained approximately
$42.6 million in total net assets, predominantly in its money market
portfolio. The AmeriPrime Advisers Trust maintained approximately $213.8 in
total net assets, and the AmeriPrime Funds maintained approximately $163.0
million in total net assets.

         The Unified Funds features its proprietary property, V.O.I.C.E.
(Vision for Ongoing Investment in Charity and Education).(sm) The Unified
 -          -       -             -           -
Funds' mission, largely due to its relationship with Unified Investment
Advisers, is to capture existing small fund assets via: tax-free
reorganizations; acquisitions;

                                - 4 -


<PAGE>
<PAGE>

asset mergers; construction of portfolios for certain registered investment
advisers; and the marketing of its V.O.I.C.E.(sm) concept.

         Each of the AmeriPrime Funds and AmeriPrime Advisers Trust is
administered by Unified Fund Services and distributed by Unified Financial
Securities.

         The board of trustees of the Unified Funds consists of four
disinterested trustees and two interested trustees, Timothy L. Ashburn, our
chairman and chief executive officer, and Philip L. Conover, a director of
our company. The board of trustees of each of the AmeriPrime Funds and
AmeriPrime Advisers Trust consists of two disinterested trustees and one
interested trustee, Kenneth D. Trumpfheller, a director and the president of
Unified Fund Services.

REGULATION OF HOLDING COMPANY ACTIVITIES

         Unified Financial Services is registered and qualified as a unitary
savings and loan holding company. As such, we are periodically examined by
and file reports with the Office of Thrift Supervision. Generally there are
few restrictions on the activities of a unitary savings and loan holding
company and its non-savings association subsidiaries. If we cease to be a
unitary savings and loan holding company, and continue to own Unified
Banking Company, our activities and the activities of our non-savings
association subsidiaries would thereafter be subject to substantial
restrictions.

         In November 1999, legislation was enacted that could have a
far-reaching impact on the financial services industry. The
Gramm-Leach-Bliley Financial Services Modernization Act authorizes
affiliations between banking, securities and insurance firms and authorizes
bank holding companies and national banks to engage in a variety of new
financial activities. Among the new activities permitted for bank holding
companies are securities and insurance brokerage, securities underwriting,
insurance underwriting and merchant banking. The Federal Reserve Board, in
consultation with the Department of Treasury, may approve additional
financial activities. National bank subsidiaries are permitted to engage in
similar financial activities but only on an agency basis unless they are one
of the 50 largest banks in the country. National bank subsidiaries are
prohibited from insurance underwriting, real estate development and merchant
banking. The Gramm-Leach-Bliley Act, however, prohibits future acquisitions
of existing unitary savings and loan holding companies, like Unified
Financial Services, by firms that are engaged in commercial activities and
prohibits the formation of new unitary holding companies. We are unable to
predict the impact of the Gramm-Leach-Bliley Act on our operations at this
time. Although the Gramm-Leach- Bliley Act reduces the range of companies
with which we may affiliate, it may facilitate affiliations with companies
in the financial services industry.

DEPOSITORY INSTITUTION REGULATION

         GENERAL. Unified Banking Company is a Federally chartered savings
institution, a member of the Federal Home Loan Bank of Cincinnati and its
deposits are insured by the Federal Deposit Insurance Corporation through
the Savings Association Insurance Fund. As a Federal savings institution,
Unified Banking Company is subject to regulation and supervision by the
Office of Thrift Supervision and the Federal Deposit Insurance Corporation
and to Office of Thrift Supervision regulations governing such matters as
capital standards, mergers, establishment of branch offices and activities
and general investment authority. The Office of Thrift Supervision
periodically will examine Unified Banking Company for compliance with
various regulatory requirements and for safe and sound operations. The
Federal Deposit Insurance Corporation also has the authority to conduct
special examinations of Unified Banking Company because its deposits are
insured by the Savings Association Insurance Fund. Unified Banking Company
must file reports with the Office of Thrift Supervision describing its
activities and

                                  - 5 -


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<PAGE>

financial condition and must obtain the approval of the Office of Thrift
Supervision prior to entering into certain transactions.

         REGULATORY CAPITAL REQUIREMENTS. Under the Office of Thrift
Supervision's regulatory capital requirements, savings associations must
maintain "tangible" capital equal to 1.5% of adjusted total assets, "core"
capital equal to at least 4.0% or (3.0% if the institution is rated
composite 1 CAMELS under the Office of Thrift Supervision's examination
rating system) of adjusted total assets and "total" capital (a combination
of "core" and "supplementary" capital) equal to 8.0% of risk-weighted
assets. In addition, the Office of Thrift Supervision has adopted
regulations that impose certain restrictions on savings associations that
have a total risk-based capital ratio that is less than 8.0%, a ratio of
Tier 1 capital to risk-weighted assets of less than 4.0% or a ratio of Tier
1 capital to adjusted total assets of less than 4.0% (or 3.0% if the
institution is rated composite 1 CAMELS under the Office of Thrift
Supervision's examination rating system). As of December 31, 2000, Unified
Banking Company had a total risk-based capital ratio of 26.5%, a ratio of
Tier 1 capital to risk-weighted assets of 25.3% and a ratio of Tier 1
capital to adjusted total assets of 15.0%.

         QUALIFIED THRIFT LENDER TEST. A savings institution that does not
meet the Qualified Thrift Lender (QTL) test must either convert to a bank
charter or comply with the following restrictions on its operations: (i) the
institution may not engage in any new activity or make any new investment,
directly or indirectly, unless such activity or investment is permissible
for both a national bank and a savings institution; (ii) the branching
powers of the institution shall be restricted to those of a national bank;
(iii) the institution shall not be eligible to obtain any advances from its
Federal Home Loan Bank; and (iv) payment of dividends by the institution shall
be subject to the rules regarding payment of dividends by a national bank. In
addition, any company that controls a savings institution that fails to qualify
as a QTL will be required to register as, and to be deemed, a bank holding
company subject to all of the provisions of the Bank Holding Company Act of
1956, as amended, and other statutes applicable to bank holding companies. To
meet the QTL test, an institution's "Qualified Thrift Investments" must total
at least 65% of "portfolio assets." Under Office of Thrift Supervision
regulations, portfolio assets are defined as total assets less intangibles,
property used by a savings institution in its business and liquidity
investments in an amount not exceeding 20% of assets. At December 31, 2000,
the percentage of Unified Banking Company's portfolio assets invested in
Qualified Thrift Investments was in excess of the percentage required to
qualify Unified Banking Company under the QTL test.

         PROMPT CORRECTIVE REGULATORY ACTION. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991, the Federal banking
regulators are required to take prompt corrective action if an insured
depository institution fails to satisfy certain minimum capital
requirements, including a leverage limit, a risk-based capital requirement
and any other measure of capital deemed appropriate by the Federal banking
regulators for measuring the capital adequacy of an insured depository
institution. All institutions, regardless of their capital levels, are
restricted from making any capital distribution or paying any management
fees if the institution would thereafter fail to satisfy the minimum levels
for any of its capital requirements. An institution that fails to meet the
minimum level for any relevant capital measure (an "undercapitalized
institution") may be: (i) subject to increased monitoring by the appropriate
Federal banking regulator; (ii) required to submit an acceptable capital
restoration plan within 45 days; (iii) subject to asset growth limits; and
(iv) required to obtain prior regulatory approval for acquisitions,
branching and new lines of businesses. The capital restoration plan must
include a guarantee by the institution's holding company that the
institution will comply with the plan until it has been adequately
capitalized on average for four consecutive quarters, under which the
holding company would be liable up to the lesser of 5% of the institution's
total assets or the amount necessary to bring the institution into capital
compliance as of the date it failed to comply with its capital restoration
plan. Any company controlling the institution also could be required to
divest the institution or the institution could be

                                  - 6 -

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<PAGE>

required to divest subsidiaries. If an institution's ratio of tangible capital
to total assets falls below a "critical capital level," the institution will be
subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better
protect the deposit insurance fund. The Federal banking regulators will
generally measure a depository institution's capital adequacy on the basis
of the institution's total risk-based capital ratio (the ratio of its total
capital to risk-weighted assets), Tier 1 risk-based capital ratio (the ratio
of its core capital to risk-weighted assets) and leverage ratio (the ratio
of its core capital to adjusted total assets). Under the regulations, a
savings institution that is not subject to an order or written directive to
meet or maintain a specific capital level will be deemed "well capitalized"
if it also has: (i) a total risk-based capital ratio of 10% or greater; (ii)
a Tier 1 risk-based capital ratio of 6.0% or greater; and (iii) a leverage
ratio of 5.0% or greater. The Office of Thrift Supervision may reclassify a
well capitalized savings institution as adequately capitalized and may
require an adequately capitalized or undercapitalized institution to comply
with the supervisory actions applicable to institutions in the next lower
capital category if the Office of Thrift Supervision determines, after
notice and an opportunity for a hearing, that the savings institution is in
an unsafe or unsound condition or that the institution has received and not
corrected a less-than-satisfactory rating for any CAMEL rating category. As
of December 31, 2000, Unified Banking Company was classified as "well-
capitalized" under these prompt corrective action regulations.

         TRANSACTIONS WITH RELATED PARTIES. Generally, transactions between
a savings bank or its subsidiaries and its affiliates must be on terms as
favorable to the bank as transactions with non-affiliates. In addition,
certain of these transactions are restricted to a percentage of the bank's
capital. Affiliates of Unified Banking Company include Unified Financial
Services and each of our other subsidiaries. Unified Banking Company's
authority to extend credit to executive officers, trustees and 10%
stockholders, as well as entities under such persons control, currently are
governed by Sections 22(g) and 22(h) of the Federal Reserve Act and
Regulation O promulgated by the Board of Governors of the Federal Reserve
System. Among other things, these regulations require such loans to be made
on terms substantially similar to those offered to unaffiliated individuals,
place limits on the amount of loans Unified Banking Company may make to such
persons based, in part, on the bank's capital position, and require certain
approval procedures to be followed.

TRUST COMPANY REGULATIONS

         Unified Trust Company, National Association, a limited purpose
national trust company, is chartered, regulated and examined by the Office
of the Comptroller of the Currency. Unified Trust Company, NA also is a
member of the Federal Reserve System. As a national trust company, the
activities of Unified Trust Company, NA must comply with various statutory
and regulatory requirements, including, among other things, the maintenance
of adequate capital and the exercise of fiduciary powers. Currently, Unified
Trust Company, NA is required to maintain a minimum of $2.0 million in
capital, and may be required to maintain additional minimum capital as
assets under management at the trust company increase.

REGULATION OF OUR SECURITIES, PREMIUM FINANCE AND INSURANCE BROKERAGE BUSINESSES

         Under the Investment Company Act of 1940, as amended, the advisory,
subadvisory shareholder servicing and distribution agreements between our
subsidiaries and various mutual funds are subject to annual review by each
fund's board of directors and the agreements must be approved annually to
remain in effect. There are no assurances that the funds' boards of
directors will renew each agreement with these funds. The non-renewal of
those agreements by a fund's board of directors could have a material
adverse effect on our business. We have no reason to believe that such
approvals will not be granted and that the various mutual fund agreements
will not be renewed.

                                  - 7 -

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<PAGE>

         The securities industry, including broker-dealer, investment
advisory and transfer agency firms in the United States, are subject to
extensive regulation under Federal and state laws. Much of the regulation of
broker-dealers has been delegated to self-regulatory organizations,
principally the National Association of Securities Dealers, Inc. The
regulations to which broker-dealers are subjected cover all aspects of the
securities business, including sales methods, trade practices, capital
structure of securities firms, recordkeeping and the conduct of directors,
officers and employees. Additional state and Federal legislation, changes in
rules promulgated by the Securities and Exchange Commission and by
self-regulatory organizations, or changes in the interpretation or
enforcement of existing laws and rules often directly affect the methods of
operation and profitability of money managers, broker-dealers and transfer
agents. Subject to certain preemptive Federal law, investment-related firms
also are subject to regulation and licensing by state securities commissions
in the states in which they transact business. The Securities and Exchange
Commission, state securities administrators and the self-regulatory
organizations may conduct administrative proceedings that can result in
censure, fine, suspension or expulsion of an investment adviser or
broker-dealer, its officers or employees. The principal purpose of
regulation and discipline of broker-dealers, investment advisers and
transfer agents is the protection of customers and the securities markets
rather than protection of creditors and shareholders of such firms. We also
are subject to extensive regulation as to our duties, affiliations, conduct
and limitations on fees.

         The insurance industry is highly regulated by state law. Our
subsidiary, Commonwealth Premium Finance Corporation, must be licensed as a
premium finance company in the states of Kentucky, Tennessee, Illinois and
Ohio. Although Commonwealth Premium Finance Corporation also conducts
business in the states of West Virginia and Indiana, such states presently
do not require premium finance licensure. Applicable regulations in all
states in which Commonwealth Premium Finance Corporation conducts business
require the approval of service charges, forms and applications used by
Commonwealth Premium Finance Corporation in its business and also require
compliance with certain recordkeeping and record inspection requirements.

         Our other insurance-related subsidiaries also are subject to state
regulation. 21st Century Claims Service must be licensed as a claims
adjusting company in all states in which it conducts business or, in the
alternative, must employ licensed claims adjusters. Equity Insurance
Managers, Inc. must be licensed as a managing general agent or broker in
most states in which it conducts business and, in some instances, must
employ licensed agents. Most insurance programs written by such companies
are subject to some degree of regulation by state insurance departments.
Violations of state regulations may subject these companies to civil and
criminal penalties, including fines.

INDUSTRY REGULATIONS

         Our broker-dealer subsidiary, Unified Financial Securities, Inc., is
a National Association of Securities Dealers member.  The National Association
of Securities Dealers is a self-regulatory organization that has prescribed
rules with respect to maximum commissions, charges and fees related to sales
of shares in any open-end investment company registered under the Investment
Company Act.

         Each of Unified Investment Advisers, Health Financial and Fiduciary
Counsel is an investment adviser registered with the Securities and Exchange
Commission under the Investment Advisers Act of 1940, as amended. Unified
Investment Advisers serves as the adviser to the Unified Funds. Under the
Investment Advisers Act, it is unlawful for any investment adviser to: (1)
employ any device, scheme or artifice to defraud any client or prospective
client; (2) engage in any transaction, practice or course of business that
operates as a fraud or deceit upon any client or prospective client; or (3)
engage in any act, practice or course of business that is fraudulent,
deceptive or manipulative.

                                  - 8 -

<PAGE>
<PAGE>

         We, from time to time, may acquire investment advisers to mutual
funds. Once an investment adviser is acquired, its advisory agreement is
assigned to us and automatically terminates under the Investment Company
Act. Unified Investment Advisers' assumption of an advisory agreement must
be approved by a majority of the fund's board of directors and a majority of
its outstanding voting securities. An investment adviser purchased by us may
not benefit from the sale of its advisory business to Unified Investment
Adviser which results in the assignment of an advisory contract with a
mutual fund unless, for a period of three years after the sale, at least 75%
of the board of directors of the fund are not interested persons of the new
adviser or the predecessor adviser, and no unfair burden is imposed on the
fund as a result of the sale. This 75% requirement is stricter than the
general requirement that only two-thirds of mutual fund's board of directors
must be "disinterested" under the Investment Company Act. The effect of such
transfer results in the assignment of the old investment advisory agreement,
which requires the new agreement to be approved by the boards of trustees
and the acquired fund's shareholders. There can be no assurances that a
fund's board or its shareholders will approve an advisory agreement with
Unified Investment Advisers after Unified Investment Advisers has acquired
the former adviser to the fund. In addition, Unified Investment Advisers may
be required to assume an advisory contract previously entered into under
disadvantageous terms in order to convince the fund's board or its
shareholders to approve Unified Investment Advisers' assumption of the
agreement.

         Mutual fund directors and investment advisers to mutual funds are
deemed to be "fiduciaries" of the fund. The Securities and Exchange
Commission is authorized to initiate an action to enjoin a breach of
fiduciary duties involving personal misconduct by any officer, director,
investment adviser or principal underwriter of a fund. Shareholders or the
Securities and Exchange Commission also may bring an action against the
officers, directors, investment adviser or principal underwriters for breach
of fiduciary duty in establishing the compensation paid to the investment
adviser or underwriter. An investment adviser or underwriter to a fund, its
principals and its employees, also may be subject to proceedings initiated
by the Securities and Exchange Commission to impose remedial sanctions for
violation of any provision of the Federal securities laws and the
regulations adopted thereunder, and the Securities and Exchange Commission
may preclude a firm that has been sanctioned from continuing to act in such
capacity. Investment companies such as the Unified Funds, the AmeriPrime
Funds and AmeriPrime Advisers Trust are subject to substantive regulation
under the Investment Company Act. Such companies must comply with periodic
reporting requirements. Proxy solicitations are subject to the general proxy
rules as well as to special proxy rules applicable only to investment
companies. Shares of investment companies can only be offered at the next-
determined net asset value plus any sales load. A fund's management
agreement initially must be approved by the fund's board of directors and a
majority of the outstanding shares and, after two years, must be annually
approved, either by the board or by the outstanding voting shares. A fund's
management agreement must automatically terminate in the event of assignment
and typically is subject to termination upon 60-days' notice by the board or
by a vote of the majority of the outstanding voting shares. The underwriting
or distribution agreement also must be annually approved by the board or by
a vote of a majority of the outstanding voting shares, and must provide for
automatic termination in event of assignment. Transactions between the
investment company and an affiliate are prohibited.

REGULATORY PENALTIES FOR FAILURE TO MAINTAIN MINIMUM NET CAPITAL REQUIREMENTS

         The Securities Exchange Act imposes minimum net capital
requirements for broker-dealer firms. A decrease below the minimum level of
net capital required to be maintained by Unified Financial Securities under
the Securities Exchange Act could force Unified Financial Securities to
suspend activities pending recovery of net capital. Factors that may affect
Unified Financial Securities' net capital include the general investment
climate as well as our ability to obtain any assets necessary to
contribute equity capital to Unified Financial Securities. Information
regarding regulatory minimum net capital is

                                  - 9 -

<PAGE>
<PAGE>

set forth in Note 10 of our consolidated financial statements included in this
Annual Report on Form 10-K.

RISKS OF BUSINESS

         Our businesses are subject to various risks and contingencies, many
of which are beyond our ability to control. These risks include: economic
conditions generally and, in particular, those affecting the bond and
securities markets; fluctuations in interest rates; discretionary income
available for investment; customer inability to meet payment or delivery
commitments; customer fraud; and employee fraud, misconduct and error.

COMPLIANCE REQUIREMENTS AND REGULATORY PENALTIES FOR NONCOMPLIANCE

         Various aspects of our businesses are subject to Federal and state
regulation as well as to oversight by self-regulatory organizations that,
depending on the nature of any failure to comply with an applicable entity's
rules, may result in the suspension or revocation of licenses or
registration, including broker-dealer, investment adviser, transfer agent,
premium finance and managing general agent licenses and registrations, as
well as the imposition of civil fines and criminal penalties. Failure by us
or any of our employees to comply with such regulations or with any of the
laws, rules or regulations of Federal, state or industry authorities
(principally the National Association of Securities Dealers, Securities and
Exchange Commission, Office of the Comptroller of the Currency, Office of
Thrift Supervision and state insurance departments) could result in censure,
imposition of fines or other sanctions, including revocation of our right to
do business or in suspension or expulsion from the National Association of
Securities Dealers. Any of the foregoing could have a material adverse
effect upon us. Such National Association of Securities Dealers, Securities
and Exchange Commission, Office of the Comptroller of the Currency and
Office of Thrift Supervision regulations are designed primarily for the
protection of the investing customers of securities firms and financial
institutions and not our stockholders. Finally, there is no assurance that
we, along with other financial institutions, fund distributors,
administrators and managers will not be subjected to additional stringent
regulation and publicity that may adversely affect our business.

COMPETITION

         Since inception, we have encountered substantial competition in the
businesses in which we compete. Our principal competitors include mutual
funds, investment advisers, investment counsel firms and financial
institutions such as banks, trust companies, savings and loan institutions
and credit unions. Competition is influenced by various factors, including
breadth, quality of service and price. All aspects of our business are
competitive. Large national firms have much greater marketing capabilities,
offer a broader range of financial services and compete not only with us and
among themselves but also with commercial banks, insurance companies and
others for retail and institutional clients. Our affiliated mutual funds are
subject to competition from nationally and regionally distributed funds
offering equivalent financial products with returns equal to or greater than
those offered by the Unified Funds, the AmeriPrime Funds or AmeriPrime
Advisers Trust. Competition for assets under management is intense from both
national and regional firms. Access to local investment and the population
of the region by modern communication systems is so efficient that our
geographical position cannot be deemed an advantage. Our investment
management operations compete with a large number of other investment
management firms, commercial banks, insurance companies, broker-dealers and
other financial service firms. Most of these firms are larger and have
access to greater resources than us. The investment advisory industry is
characterized by relatively low cost of entry and the formation of new
investment advisory entities that may compete directly with us is a frequent
occurrence. We directly compete with as

                                  - 10 -

<PAGE>
<PAGE>

many as several hundred firms that are of similar or larger size. Our ability
to increase and retain clients' assets could be materially adversely affected
if client accounts under-perform the market. The ability of our investment
management subsidiaries to compete with other investment management firms also
is dependent, in part, on the relative attractiveness of their investment
philosophies and methods under prevailing market conditions. A large number
of mutual funds are sold to the public by investment management firms,
broker-dealers, insurance companies and banks in competition with the
Unified Funds, the AmeriPrime Funds and AmeriPrime Advisers Trust. Many of
our competitors apply substantial resources to advertising and marketing
their mutual funds, which may adversely affect the ability of the Unified
Funds, the AmeriPrime Funds and AmeriPrime Advisers Trust to attract new
assets. We expect that there will be increasing pressures among mutual
fund sponsors to obtain and hold market share. Although we may expand the
financial services we provide to our customers, we do not now offer as broad
a range of financial services as national stock exchange member firms,
commercial banks, insurance companies and others.

DEPENDENCE ON KEY CLIENTS

         As of December 31, 2000, we provided mutual fund services, transfer
agency, fund accounting, administration and/or distribution services to 29
mutual fund families consisting of 138 portfolios. Ten of those portfolios,
the Unified Funds, originally were organized and are sponsored by Unified
Investment Advisers. The Unified Funds and those of the remaining parties,
have entered into contracts with us that typically expire within one to
three years. No assurance can be given that any of these third party funds
will remain our clients upon expiration or termination of the various
administration and distribution agreements. The loss by us of such mutual
fund clients could have a material adverse effect on us.

         Additionally, Unified Financial Securities has entered into
clearing agreements with its introduced broker-dealer clients that represent
a substantial portion of the assets in the Unified Funds through the use of
the Unified Taxable Money Market Funds as their brokerage sweep facility.
The introduced broker-dealer relationships also represent a significant
portion of Unified Financial Securities' revenues from trading commissions.
The loss of clearing clients could have a material adverse effect on the
Unified Funds and us.

         Unified Investment Advisers receives management fees from the
Unified Funds. As the Unified Funds' manager and adviser, Unified Investment
Advisers, and, therefore, our company, are economically dependent on the
Unified Funds for a portion of their revenue.

         Contracts for portfolio management performed by Unified Investment
Advisers in the case of the Unified Funds are awarded annually by review and
approval of the independent board of trustees of the Unified Funds. The
board of trustees consists of six trustees, four of whom are independent,
and Timothy L. Ashburn and Philip L. Conover who are affiliated with us. The
board also is responsible for awarding our subsidiaries the various service
agreements for the Unified Funds.

DEPENDENCE ON KEY PERSONNEL

         We are dependent in a large part on Timothy L. Ashburn, our chief
executive officer and chairman, as well as a group of senior management
personnel. The loss or unavailability of any of these persons could have a
material adverse effect on us. Our success also will depend on our ability
to attract and retain highly skilled personnel in all areas of our business.
There can be no assurance that we will be able to attract and retain
personnel on acceptable terms in the future. Other than a $1 million policy
on the life of each of Timothy L. Ashburn and Dr. Gregory W. Kasten, the
president of Health Financial and Unified Trust Company, National
Association, each a wholly owned subsidiary of our company, we do

                                  - 11 -

<PAGE>
<PAGE>

not presently own insurance covering the lives of our senior management. There
can be no assurance that the services of our senior management will continue
to be available.

EMPLOYEES

         As of December 31, 2000, we and our subsidiaries had 264 employees,
of which 259 were full-time employees. None of our employees or the
employees of our subsidiaries are subject to a collective bargaining
agreement. We consider our relationship with our employees and those of our
subsidiaries to be good.

ITEM 2.  PROPERTIES
         ----------

         We, through our subsidiary, Unified Banking Company, lease our
corporate headquarters and administrative office facilities located at 2424
Harrodsburg Road, Lexington, Kentucky. We sublease approximately 1,700
square feet from Unified Banking Company. Unified Financial Securities' and
Unified Fund Services' administrative offices are located at 431 North
Pennsylvania Street, Indianapolis, Indiana. Such facilities consist of
approximately 10,820 square feet and are subject to a lease expiring in 2007.
Health Financial's and Unified Trust Company, National Association's
administrative offices are located at 2353 Alexandria Drive, Lexington,
Kentucky. The operating leases for Health Financial's and Unified Trust Company,
National Association's offices expire in 2002 and 2003 and such offices have
approximately 10,721 square feet. Unified Trust Company, National Association
also leases approximately 1,530 square feet at 100 Browenton Place, Louisville,
Kentucky pursuant to a lease expiring in 2005. Unified Banking Company's
offices are located at 2424 Harrodsburg Road, Lexington, Kentucky. The
operating lease for such offices expires in 2011 and such offices have
approximately 8,472 square feet. Fiduciary Counsel's and EMCO Estate
Management Company's administrative offices are located at 36 West 44th
Street, New York, New York. The operating lease for such offices expires in
2002 and such offices have approximately 3,231 square feet. Equity Insurance
Managers', Equity Insurance Administrators' and 21st Century Claims Service's
administrative offices are located at 220 Lexington Green Circle, Suite 600,
Lexington, Kentucky. The operating lease for such subsidiaries expires in 2001
and such offices have approximately 20,080 square feet. Unified Fund Services
also maintains administrative offices at 1725 Southlake Boulevard, Southlake,
Texas. Such operating lease expires in 2004 and such office has approximately
1,778 square feet. Our current offices are considered adequate to serve our
foreseeable needs. Other than the administrative office leases, we have no
other significant property holdings.

ITEM 3.  LEGAL PROCEEDINGS
         -----------------

         Various claims and lawsuits, incidental to our ordinary course of
business, are pending against us and our subsidiaries. In the opinion of
management, after consultation with legal counsel, resolution of these
matters is not expected to have a material effect on our financial condition
or results of operations.

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

         There were no matters submitted during the quarter ended December
31, 2000 to a vote of our stockholders, through the solicitation of proxies
or otherwise.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT
          ------------------------------------

         The name, age and position with respect to each of our executive
officers are set forth below:

                                  - 12 -

<PAGE>
<PAGE>

         TIMOTHY L. ASHBURN, 50, has served as our chairman of the board
since 1989, as our chief executive officer from 1989 to 1992 and 1994 to
present, and as our president from November 1997 to April 2000. Mr. Ashburn
was employed by Vine Street Trust Company, Lexington, Kentucky, a wholly
owned subsidiary of Cardinal Bancshares, Inc., a Kentucky bank holding
company, for the two-year period from April 1992 through March 1994. Mr.
Ashburn also is a member of the executive committee of our board of
directors.

         JOHN S. PENN, 49, has served as our president since April 2000, our
chief operating officer since July 1999 and a director since September 1999.
Mr. Penn also served as an executive vice president from July 1999 to April
2000 Mr. Penn served as a director and executive vice president of Area
Bancshares Corporation, a bank holding company located in Owensboro,
Kentucky from September 1997 to July 1999. Prior thereto, Mr. Penn served as
the president, chief executive officer and a director of Cardinal
Bancshares, Inc., a bank holding company located in Lexington, Kentucky. Mr.
Penn also is a member of the executive and 401(k) investment oversight
committees of our board of directors.

         THOMAS G. NAPURANO, 59, a certified public accountant and a
certified management accountant, has served as a director, our chief
financial officer and an executive vice president since 1989. Mr. Napurano
also is a member of the executive committee of our board of directors.

         CHARLES H. BINGER, 44, has served as an executive vice president
and our general counsel since December 1999. Prior thereto, Mr. Binger was a
partner in the law firm of Thompson Coburn LLP, St. Louis, Missouri.

         ANTHONY J. GHOSTON, 41, has served as a senior vice president and
our chief information officer since November 1997. Mr. Ghoston has been
employed by us in various management positions since 1989.

         DAVID F. MORRIS, 39, has served as a senior vice president and our
associate general counsel since December 1999. Prior thereto, Mr. Morris was
an associate in the law firm of Thompson Coburn LLP, St. Louis, Missouri.

         The name, age and position of executive officers of certain of our
subsidiaries are set forth below:

         DR. GREGORY W. KASTEN, 45, has served as a director and the
president and chief executive officer of Health Financial, Inc. and Unified
Trust Company, National Association, each a wholly owned subsidiary of our
company, since 1986 and 1994, respectively. Dr. Kasten served as a director
of our company from 1997 to 2000. Dr. Kasten has been awarded certified
financial planner and certified pension consultant designations and received
a Master of Business Administration degree with an emphasis on finance and
investment management. Dr. Kasten also received a medical degree but has
retired from medical practice.

         JACK R. ORBEN, 62, has served as a director since 1989.  Mr. Orben
also is a director of each of Fiduciary Counsel, Inc. and EMCO Estate
Management Company, Inc., each a wholly owned subsidiary of our company.
For various periods during the past five years, Mr. Orben served as the
chairman of the board, chief executive officer and treasurer of each of
Fiduciary Counsel, EMCO Estate Management Company, Venvestech Corp., Seward,
Groves, Richards & Wells, Starwood Corporation, Fiduciary Alliance Inc.,
NUSTAR Inc., Intellectronic Management Systems Inc., Economic Analysts Inc.,
Ra X Productions Inc. and EMCO Nominees Inc.

                                  - 13 -

<PAGE>
<PAGE>

                                   PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
         ---------------------------------------------------------------------

         There currently is no established public trading market for our
common stock. We have not had any stock splits or paid any stock dividends
during the periods presented.

                                                        SALES PRICE
                                                -------------------------
                                                 HIGH                LOW
                                                ------             ------
                  1999
                  ----
                  First Quarter                 $40.00             $40.00
                  Second Quarter                 40.00              40.00
                  Third Quarter                  40.00              40.00
                  Fourth Quarter                 40.00              40.00

                  2000
                  ----
                  First Quarter                 $40.00             $40.00
                  Second Quarter                 40.00              40.00
                  Third Quarter                  40.00              40.00
                  Fourth Quarter                 40.00              40.00


         Because of our closely held nature, no representation is made that
the foregoing prices are or are not reflective of a "market price." As of
March 1, 2001, we reported approximately 375 stockholders of record holding
our common stock.

         We have not paid any cash dividends with respect to our common
stock during the disclosed time periods.

         For the year ended December 31, 2000, the only sales of our
securities were 11,530 shares of our common stock issued in connection with
private offerings of our common stock at a price of $40.00 per share. All
shares of our common stock issued by us during such period were issued
pursuant to the exemption provided by Rule 506, as promulgated by the
Securities and Exchange Commission.

                                - 14 -

<PAGE>
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
         -----------------------

         The following is a selected summary of our consolidated financial
condition and operating results as of and for the years ended December 31,
2000, 1999, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                           -----------------------------------------------------------------------------
                                                2000             1999            1998            1997           1996
                                           --------------   --------------  --------------   ------------   ------------

<S>                                        <C>              <C>             <C>              <C>            <C>
Income Statement Data:
   Gross revenue.......................... $   28,730,665   $   24,061,788  $   20,809,474   $ 18,966,526   $ 16,683,514
   Gross profit...........................     19,988,456       16,802,180      14,388,122     11,570,393     11,183,329
   Total expenses.........................     20,752,689       17,997,159      13,085,910     11,760,877     10,257,632
   Income (loss) from operations..........       (764,233)      (1,194,979)      1,302,212       (190,484)       925,697
   Other income (loss)....................        (69,044)         193,423          87,887         67,222       (169,279)
   Income (loss) before taxes.............       (833,277)      (1,001,556)      1,390,099       (123,262)       756,418
   Income tax benefit (expense)...........        (35,000)         (29,730)       (151,108)       376,852        (47,455)
   Net income (loss) before
     discontinued operations..............       (868,277)      (1,031,286)      1,238,991        253,590        708,963
   Discontinued operations (net of taxes)        (467,177)        (741,629)       (326,830)      (441,454)            --
   Net income (loss)......................     (1,335,454)      (1,772,915)        912,161       (187,864)       708,963

Common Share Data:
   Book value per share at year-end
     (fully diluted)...................... $         4.53   $         4.90  $         3.67   $       1.64   $       2.97
   Basic earnings (loss) per share before
     discontinued operations..............          (0.30)           (0.36)           0.51           0.07           0.50
   Basic earnings (loss) per share........          (0.46)           (0.62)           0.37          (0.18)          0.50
   Fully diluted earnings (loss) per share
     before discontinued operations.......          (0.28)           (0.35)           0.45           0.07           0.50
   Fully diluted earnings (loss) per share          (0.44)           (0.60)           0.33          (0.18)          0.50

   Basic common shares outstanding at
     year-end.............................      2,880,028        2,869,862       2,316,767      1,758,931      1,142,553
   Fully diluted common shares
     outstanding at year-end..............      3,050,825        2,975,823       2,580,013      1,765,731      1,142,553

Balance Sheet Data (at year-end):
   Total assets........................... $   65,634,927   $   36,748,994  $   26,498,577   $ 14,344,531   $ 12,239,450
   Investment securities..................        573,272        1,819,176       1,720,342      1,816,758      1,619,577
   Total loans, net of allowance..........     20,834,674        2,810,876              --             --             --
   Total deposits.........................     34,620,338        7,331,853              --             --             --
   Shareholders' equity...................     13,834,466       14,577,987       9,455,834      2,902,816      3,394,740

Other Selected Financial Data:
   Assets under management................ $  977,844,600   $1,003,982,000  $  857,875,355   $786,407,155   $221,324,007
   Assets under service...................  4,800,000,000    4,200,000,000   3,435,000,000    650,000,000    580,000,000
   Insurance premiums written.............     46,328,012       36,396,711      36,945,198     37,719,588     30,963,192
   Total employees at year-end............            264              216             n/m            n/m            n/m
</TABLE>

                                  - 15 -

<PAGE>
<PAGE>

         The following is a summary of our quarterly consolidated operating
results for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                   FIRST            SECOND            THIRD            FOURTH
                                                  QUARTER           QUARTER          QUARTER           QUARTER
                                                  -------           -------          -------           -------
<S>                                            <C>              <C>               <C>              <C>
2000
----

Income Statement Data:
   Gross revenue..........................     $   6,743,484    $   7,035,210     $   7,423,734    $    7,528,237
   Gross profit...........................         4,643,086        5,030,824         5,262,234         5,052,312
   Total expenses.........................         5,646,065        5,039,520         5,143,922         4,923,182
   Income (loss) from operations..........        (1,002,979)          (8,696)          118,312           129,130
   Other income (loss)....................            52,029           35,257           (93,876)          (62,454)
   Income (loss) before taxes.............          (950,950)          26,561            24,436            66,676
   Income taxes...........................           (12,610)         (11,915)             (475)          (10,000)
   Net income (loss) before
     discontinued operations..............          (963,560)          14,646            23,961            56,676
   Discontinued operations
     (net of income taxes)................          (252,986)        (162,835)          (23,781)          (27,575)
   Net income (loss)......................        (1,216,546)        (148,189)              180            29,101

Earnings Per Share:
   Basic earnings (loss) per share before
     discontinued operations..............     $       (0.33)   $        0.01     $        0.01    $         0.02
   Basic earnings (loss) per share........             (0.42)           (0.05)               --              0.01
   Fully diluted earnings (loss) per share
     before discontinued operations.......             (0.32)              --              0.01              0.02
   Fully diluted earnings (loss) per share             (0.41)           (0.05)               --              0.01

   Basic common shares outstanding at
     period end...........................         2,878,462        2,870,147         2,880,028         2,880,028
   Fully diluted common shares outstanding
     at period end........................         2,979,868        3,039,994         3,050,825         3,050,825

1999
----

Income Statement Data:
   Gross revenue..........................     $   6,126,678    $   6,140,500     $   6,117,209    $    5,677,401
   Gross profit...........................         4,671,062        3,976,890         4,816,716         3,337,512
   Total expenses.........................         4,458,205        3,895,565         5,021,186         4,622,203
   Income (loss) from operations..........           212,857           81,325          (204,470)       (1,284,691)
   Other income (loss)....................           (23,796)          90,702           (88,104)          214,621
   Income (loss) before taxes.............           189,061          172,027          (292,574)       (1,070,070)
   Income taxes...........................                --          (30,943)            6,944            (5,731)
   Net income (loss) before
     discontinued operations..............           189,061          141,084          (285,630)       (1,075,801)
   Discontinued operations (net of
     income taxes)........................            (5,634)        (325,395)         (197,535)         (213,065)
   Net income (loss)......................           183,427         (184,311)         (483,165)       (1,288,866)

Earnings Per Share:
   Basic earnings (loss) per share before
     discontinued operations..............     $        0.08    $        0.05     $       (0.10)   $        (0.37)
   Basic earnings (loss) per share........              0.08            (0.07)            (0.17)            (0.45)
   Fully diluted earnings (loss) per share
     before discontinued operations.......              0.07             0.05             (0.10)            (0.36)
   Fully diluted earnings (loss) per share              0.07            (0.06)            (0.16)            (0.43)

   Basic common shares outstanding at
     period end...........................         2,275,580        2,585,042         2,773,727         2,869,862
   Fully diluted common shares outstanding
     at period end........................         2,540,151        2,843,958         2,945,855         2,975,823
</TABLE>

         Certain data presented above varies from the amounts previously
reported in our quarterly reports filed with the SEC. We have adjusted
certain previously reported amounts to reflect operations that have been
discontinued since the respective filing date of each such quarterly report
and to reflect certain income statement reclassifications.

                                - 16 -


<PAGE>
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ---------------------------------------------------------------
         RESULTS OF OPERATIONS
         ---------------------

         The following presents management's discussion and analysis of our
consolidated financial condition and results of operations as of the dates
and for the years indicated. This discussion should be read in conjunction
with the other information set forth in this Annual Report on Form 10-K,
including our audited, consolidated financial statements and the
accompanying notes thereto.

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

         Revenue for the year ended December 31, 2000 compared to the year
ended December 31, 1999 increased $4,669,000, or 19.4%, from $24,062,000 to
$28,731,000. For such years, trust and retirement revenue increased
$220,000, or 5.4%, primarily due to an increase in trustee fees earned. For
such years, fund administration services revenue increased $2,080,000, or
76.8%, due to an increase in the number of mutual fund clients serviced and
a growth in the amount of assets under service. As of December 31, 2000, we
provided fund administrative services to 29 mutual fund families consisting
of 138 portfolios and approximately $4.8 billion in mutual fund assets as
compared to 25 mutual fund families consisting of 136 portfolios and
approximately $4.2 billion in mutual fund assets as of December 31, 1999.

         Banking revenue increased $862,000, or 164.2%, for the year ended
December 31, 2000 compared to the prior year due to the inclusion of the
results of operations of Unified Banking Company, which commenced operations
on November 1, 1999, in the 2000 revenues (without any revenues for the
first ten months of 1999).

         For the year ended December 31, 2000 compared to the prior year,
insurance revenue increased $3,306,000, or 35.2%, due to a $9,879,000, or
27.1%, increase in total insurance premiums written. We experienced
increases in both our personal and commercial business lines. Additionally,
insurance revenues for the year ended December 31, 2000 included a $451,040
revenue sharing payment received by our insurance operations based upon
lower than anticipated claims losses compared to a $131,632 payment for the
prior year.

         For such years, brokerage revenue declined $1,475,000, or 32.1%,
principally due to a $787,000 decline in 2000 in private placement
commissions received by our broker-dealer subsidiaries in connection with
our recently completed private placements. We also experienced a $381,000
decline in trading revenues due to the loss of one client relationship,
which was partially offset by an increase in brokerage revenues due to our
relationship with certified public accountants. In addition, the 1999
revenue included a one-time commission of fund sales of approximately
$100,000.

         Investment advisory services revenue increased $138,000, or 7.7%,
primarily due to an increase in revenue earned on assets under management
due to new fee arrangements.

         For such years, corporate revenues declined $462,000, or 48.9%,
which was due to a reduction in interest income earned on the proceeds of
our private placements and a decline in revenues at certain start-up and
discontinued operations.

         Gross profit for the year ended December 31, 2000 compared to the
prior year increased $3,186,000, or 19.0%, from $16,802,000 to $19,988,000.
For such years, gross profit as a percentage of revenue was relatively
constant.

         Trust and retirement services gross profit increased $157,000, or
4.1%, for the year ended December 31, 2000 compared to the prior year due to
the increase in trustee fees earned. For such years,

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mutual fund administration services gross profit increased $1,708,000, or
83.3%, due to the increase in the number of mutual fund clients served and the
growth in the amount of assets under service. Banking gross profit increased
$863,000, or 164.7%, for the year ended December 31, 2000 compared to the prior
year due to the inclusion of the results of Unified Banking Company in banking
gross profit for 2000 (without any amount included for the first ten months
of 1999).

         For the year ended December 31, 2000 compared to the prior year,
insurance gross profit increased $1,655,000, or 30.0%, due to the increase in
total insurance premiums written and the revenue sharing payment we received
due to lower than anticipated claims losses. Brokerage gross profit declined
$862,000, or 40.5%, for the year ended December 31, 2000 compared to the prior
year principally due to the $787,000 decline in private placement commissions
received by our broker-dealer subsidiaries in connection with our recently
completed private placements and a $85,000 decline in gross profits due to the
loss of one client relationship, which declines were partially offset by a
$100,000 recovery in 2000 from our insurance carrier with respect to an employee
theft loss which occurred in the third quarter of 1999. Additionally, 1999
gross profits included a one-time commission of fund sales of approximately
$100,000.

         For such years, investment advisory gross profit increased
$130,000, or 7.7%, due to the increased revenue earned on assets under
management due to new fee arrangements. Corporate gross profit declined
$465,000, or 49.3%, for such years due to declines at certain start-up and
discontinued operations and a decline in interest income earned on our
private placement proceeds.

         We recorded a $764,000 loss from operations for the year ended
December 31, 2000 compared to a $1,195,000 loss from operations for the
prior year.

         Total expenses for the year ended December 31, 2000 were
$20,753,000, or 72.2% of total revenue, as compared to $17,997,000, or 74.8%
of total revenue for the prior year. Employee compensation and benefits
expense increased $2,671,000, or 25.2%, for the year ended December 31, 2000
compared to the prior year primarily due to (i) new personnel hired in
connection with the expansion of our trust and retirement services and
mutual fund administration services operations, which accounted for $789,582
of such increase, (ii) the expansion of our senior management team and the
hiring of additional accounting and information services personnel, which
accounted for $1,162,000 of such increase, and (iii) the commencement of
operations of Unified Banking Company in November 1999, which accounted for
$690,000 of such increase. These increases in compensation and benefits
expenses were partially offset by a $879,000 decline in such expenses
associated with discontinued operations, a $173,000 decline in such expenses
at our insurance operations and a $32,000 decline in such expenses at our
brokerage operations. For such years, telephone expense increased $138,000,
or 30.6%, due to the roll-out of our wide-area network and telephone costs
associated with increased marketing efforts at our insurance and mutual fund
administration operations. Equipment rental and maintenance expense
increased $192,000, or 38.9%, primarily due to equipment costs associated
with the increased number of funds serviced at our mutual fund
administration operations and, to a lesser extent, costs associated with the
start-up of Unified Banking Company and expansion activities at our trust
and retirement services operations. For such years, depreciation and
amortization expense increased $287,000, or 40.6%, primarily due to the
depreciation and amortization expense associated with equipment purchased
by Unified Banking Company in connection with its commencement of business.
The purchases of new computers and systems upgrades in 2000 at various
operations also added to the increase in such expense. Our provision for
loan losses increased $239,000, or 724.2%, for such years due to the 641.2%
increase in the amount of loans generated by Unified Banking Company.
Unified Banking Company is required by Federal law to maintain a reserve for
possible loan losses. Our provision for bad debt was $546,000 for 2000
without any corresponding amount for 1999 due to a

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reserve made during 2000 for doubtful receivables generated by our mutual fund
administration services operations. Other operating expenses declined
$1,195,000, or 76.0%, due to a $1,536,000 benefit received by us during the
year ended December 31, 2000 in connection with the construction and
development of the VSX marketplace and its corresponding products, with no
corresponding benefit included for 1999. This was partially offset by a
$206,000 increase in other operating expenses at our trust and retirement
services operations.

         For the year ended December 31, 2000, we recorded a net loss before
discontinued operations of $868,000 compared with a net loss before
discontinued operations of $1,031,000 for the prior year. Net losses
associated with discontinued operations were $467,000 and $742,000 for the
years ended December 31, 2000 and 1999, respectively.

COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

         Revenues for the year ended December 31, 1999 compared to the prior
year increased $3,253,000, or 15.6%, to $24,062,000 from $20,809,000. For
such years, trust and retirement services revenue increased $514,000, or
14.3%, mutual fund administration revenue increased $668,000, or 32.7%, banking
revenue increased $130,000, or 32.9%, insurance revenue declined $60,000, or
0.6%, brokerage revenue increased $502,000, or 12.3%, investment advisory
revenue increased $1,071,000, or 146.9%, and corporate revenue increased
$428,000, or 82.9%.

         For such years, trust and retirement revenue increased principally
due to an increase in the number of retirement plans serviced, a
$101,900,000, or 22.3%, increase in assets under management and an increase
in fees received for additional services rendered. Mutual fund
administration revenues increased due to a growth in the number of mutual
fund clients serviced, additional fees associated with assets under service
and a growth in assets under service. Mutual fund clients serviced increase
to 183 at year-end 1999, up from 64 at year-end 1998. Total mutual fund
assets under service increased from $3.4 billion at year-end 1998 to $4.2
billion at year-end 1999. For such years, banking revenue increased due to
an increase in commercial insurance contracts financed in 1999 at our
premium finance operations and due to the inclusion of two months of
operations of Unified Banking Company in 1999 (without any revenues included
for the year ended December 31, 1998), which amounted to $78,000 of such
increase. Unified Banking Company commenced operations on November 1, 1999.

         For the year ended December 31, 1999 compared to the prior year,
insurance revenue declined due to a reduction in insurance premiums written.
Although commercial line insurance premiums rose $2,698,000, or 11.1%, for
the year ended December 31, 1999 compared to the prior year, overall
insurance related revenues declined due to a decline in personal line sales
volume, which declined $3,157,000, or 30%, for 1999 compared to 1998. A new
personal lines non-standard auto program was introduced during 1999, but did
not perform as expected in the intensely competitive market. For such years,
brokerage revenue increased due to additional trading revenue received due
to our Internet brokerage Website, an increase in revenue due to our
relationship with certified public accountants (which increased to 25 CPAs
at year-end 1999 from nine at year-end 1998) and a $117,000 increase in
commissions received by our broker-dealer subsidiaries in connection with
our private placements.

         Investment advisory revenue increased principally due to a
$26,373,000, or 6.2%, increase in assets under management. Additionally,
revenue reported for the year ended December 31, 1998 reflected only nine
months of activity for Unified Investment Advisers, control of which we
acquired on March 31, 1998. For the year ended December 31, 1999 compared to
the prior year, corporate revenue increased due to the inclusion in 1999 of
$339,000 in revenues of start-up operations (without any such

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revenues for 1998), a $60,000 consulting fee that we received during 1999 and
a $107,000, or 43.7%, increase in interest income received on the proceeds of
our private placements.

         Gross profit for the year ended December 31, 1999 compared to the
prior year increased $2,414,000, or 16.8%, from $14,388,000 to $16,802,000.
For such years, gross profit as a percentage of revenue increased to 69.8%
from 69.1%. Trust and retirement services gross profit increased $518,000,
or 15.5%, for the year ended December 31, 1999 compared to the prior year.
The increase was due principally to an increase in the number of retirement
plans serviced as well as the $101,900,000 increase in assets under
management. For such years, mutual fund administration gross profit
increased $573,000, or 38.8%, due to the addition of mutual fund clients, an
increase in the market value of assets under management and new business.
Banking gross profit increased $129,000, or 32.7%, due to the increase in
the number of commercial insurance contracts financed during 1999 as well as
the inclusion in 1999 of two months of results for Unified Banking Company.

         For the year ended December 31, 1999 compared to the prior year,
insurance gross profit increased $82,000, or 1.5%. While we experienced a
reduction in the amount of insurance premiums written, the change in the mix
of business resulted in lower commissions paid and higher net commission
income. For such years, brokerage gross profit declined $351,000, or 14.2%,
due to an increase in cost of sales. Investment advisory gross profit
increased $1,035,000, or 142.0%, principally due to the growth in assets
under management and the increase in the market value of assets being
managed. For the year ended December 31, 1999 compared to the prior year,
corporate gross profit increased due to the increased revenues of start-up
operations, the consulting fee that we received during 1999 and the
increased interest income we received on the proceeds of our private
placements.

         We recorded a $1,195,000 loss from operations for the year ended
December 31, 1999 compared to income from operations of $1,302,000 for the
previous year. The $2,414,000 increase in gross profit from 1998 to 1999 was
more than offset by the $4,911,000 increase in operating expenses for such
years. Total expenses for the year ended December 31, 1999 were $17,997,000,
or 74.8% of total revenue, compared to $13,086,000, or 62.9% of total
revenue, for the prior year. For the year ended December 31, 1999, Fiduciary
Counsel and Unified Investment Advisers, each of which was acquired by us
during 1998, accounted for $929,000 of the increased expenses for 1999 when
compared to 1998 ($614,000 of which was related to employee compensation and
benefits). Expenses for the year ended December 31, 1999 were up
significantly compared to 1998 due to the following: (i) additional staffing
at our mutual fund administration and investment advisory operations, each
of which experienced significant growth in new clients and assets under
services and under management; (ii) the re-engineering of our retirement and
trust services operations which resulted in the hiring of additional
technical personnel and additional spending to improve recordkeeping and
computer systems (represented $200,000 of total expenses for 1999 as
compared to $30,000 for 1998); (iii) start-up of our Internet online
brokerage service, which required additional staff, Website development and
other Website costs (represented $106,000 of the total expenses for 1999
compared to $30,000 for 1998); (iv) the ability for clients to view their
accounts via the Internet and the development of Websites for us and each of
our subsidiaries (represented $354,000 of total expenses for 1999 compared
to $204,000 in 1998); (v) our management expansion program which started in
late 1998 (represented an increase of $300,000 for 1999 as compared to
1998); and (vi) professional and legal fees related to our expansion program
(represented an increase of $687,000 for 1999 as compared to 1998). Our
start-up of VSX Technologies, Unified Banking Company, Unified Capital
Resources and Unified Employee Services added $1,273,000 in expense to 1999
without comparable expenses in 1998.

         For the year ended December 31, 1999, we recorded a net loss before
discontinued operations of $1,031,000 compared with net income before
discontinued operations of $1,239,000 for the prior year.

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Net losses associated with discontinued operations were $742,000 and $327,000
for the years ended December 31, 1999 and 1998, respectively. Net loss was
$1,773,000 for the year ended December 31, 1999 compared to net income of
$912,000 for 1998.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY. Our primary sources of liquidity historically have been
and continue to be cash flow from operating activities, available borrowing
capacity from capitalized leases and a loan from a regional bank. The net
decrease in cash and cash equivalents at December 31, 2000 from December 31,
1999 was $132,000. The net decrease reflected the repayment of borrowings
and the purchase of fixed assets. We received $461,200 from the issuance of
11,530 shares of common stock in our private placement during the year ended
December 31, 2000. We also received $1,535,500 from VSX Holdings, LLC during
the year ended December 31, 2000 in connection with services we provided
relating to the construction and development of the VSX marketplace and its
corresponding products.

         With respect to our banking operations, long-term liquidity is a
function of the core deposit base and an adequate capital base. We are
committed to the growth of our core deposit base and maintenance of our
capital base. The growth of the deposit base is internally generated through
product pricing and product development. During its first three years of
operations, Unified Banking Company is required to maintain a Tier 1 capital
to total assets ratio of at least 8.0%. As of December 31, 2000, Unified
Banking Company had a ratio of Tier 1 capital to total assets equal to
15.0%.

         Short-term liquidity needs arise from continuous fluctuations in
the flow of funds on both sides of the balance sheet resulting from growth
and seasonal and cyclical customer demands. The securities portfolio
provides stable long-term earnings as well as being a primary source of
liquidity. The designation of securities as available-for-sale and
held-to-maturity does not impact the portfolio as a source of liquidity due
to the ability to enter into repurchase agreements using those securities.
We anticipate continued loan demand in our market area. We have utilized,
and expect to continue to utilize, Federal Home Loan Bank borrowings to fund
a portion of future loan growth at Unified Banking Company.

         Unified Banking Company experienced net growth in assets of 193.0%
during the year ended December 31, 2000, while deposits increased 372.2%
during the same period. We continue to emphasize growth in stable core
deposits while utilizing the Federal Home Loan Bank and Federal funds purchased
as necessary to balance liquidity and cost effectiveness. We closely monitor
our level of liquidity to meet expected future needs.

         CAPITAL RESOURCES. Total stockholders' equity was $13,834,000 at
December 31, 2000 compared to $14,578,000 at year-end 1999. The decline in
total equity was due to our loss from operations for the year ended December
31, 2000, partially offset by the issuance of 11,530 shares of our common
stock in our recently completed private placement.

         The growth of Unified Banking Company will have an effect on our
working capital. It currently is anticipated that as Unified Banking Company
grows, our working capital ratio will become more in line with ratios
traditionally associated with bank holding companies.

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         We believe that anticipated revenues from operations should be
adequate for the working capital requirements of our existing core
businesses over the next twelve months. In the event that our plans or
assumptions change, or if our resources available to meet unanticipated
changes in business conditions prove to be insufficient to fund operations,
we could be required to seek additional financing prior to that time.

RISK FACTORS

         You should carefully consider the risks described below before
making an investment decision. The risks and uncertainties described below
are not the only ones facing our company. Additional risks not presently
known to us or that we currently believe are immaterial also may impair our
business operations. Our business could be harmed by any of these risks. If
any of the following risks actually occur, our business, financial condition
or results of future operations could be materially adversely affected. In
such case, the price of our common stock could decline, and you may lose all
or part of your investment. In assessing these risks, you should refer to
the other information contained in this report, including our consolidated
financial statements and related notes.

         NEED FOR ADDITIONAL CAPITAL; RISK RELATING TO ACQUISITIONS. Our
pending and proposed projects have required and will continue to require
substantial capital for investments in and development of such projects.
There can be no assurance that we will be able to raise the capital
necessary to fund our projects. The failure to raise or generate such funds
may require us to delay or abandon some of our planned future expansion or
expenditures, which could have a material adverse effect on our growth.

         To expand our markets and take advantage of the consolidation trend
in the financial services industry, our business strategy includes growth
through acquisitions. Although we believe that the operations of the
companies we have acquired since June 1, 1997 are being successfully
integrated with our operations, there can be no assurance that such
integration will continue to be successful, that future acquisitions can be
consummated on acceptable terms or that any acquired companies can be
successfully integrated into our operations. We also are continually
investigating opportunities for acquisitions. In connection with future
acquisitions, we may incur additional indebtedness or may issue additional
equity. Our ability to make future acquisitions may be constrained by our
ability to obtain such additional financing. To the extent we use equity to
finance future acquisitions, there is a risk of dilution to holders of our
common stock.

         In addition, acquisitions may involve a number of special risks,
including: initial reductions in our reported operating results; diversion
of management's attention; unanticipated problems or legal liabilities; and
a possible reduction in reported earnings due to amortization of acquired
intangible assets in the event that such acquisitions are made at levels
that exceed the fair market value of net tangible assets. Some or all of
these items could have a material adverse effect on us. There can be no
assurance that businesses acquired in the future will achieve sales and
profitability that justify the investment therein. In addition, to the
extent that consolidation becomes more prevalent in the industry, the prices
for attractive acquisition candidates may increase to unacceptable levels.

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         NO ASSURANCE OF FUTURE GROWTH. There can be no assurance that we
will continue to achieve growth in assets or earnings. Our ability to
achieve such growth will be dependent upon numerous factors including, but
not limited to, general economic conditions, our ability to recruit
qualified personnel, our ability to promptly and successfully integrate
acquired businesses with our existing operations and our ability to execute
our business plan. We also have completed various acquisitions in the past
few years that have significantly enhanced our rate of growth. We cannot
provide you assurances that we will continue to sustain this rate of growth
or grow at all.

         CHANGES IN THE LOCAL ECONOMIC CONDITIONS COULD ADVERSELY AFFECT
UNIFIED BANKING COMPANY'S LOAN PORTFOLIO. Unified Banking Company's success
depends to a great extent upon the general economic conditions of Fayette
County, Kentucky. Unlike larger banks that are more geographically
diversified, we primarily provide banking and financial services to
customers in Fayette County, Kentucky. Our commercial, real estate and
construction loans, the ability of the borrowers to repay these loans and
the value of the collateral securing these loans are impacted by our local
economic conditions. We cannot assure you that favorable economic conditions
will exist in our market.

         ALLOWANCE FOR LOAN LOSSES MAY NOT BE ADEQUATE TO COVER ACTUAL LOAN
LOSSES. As a lender, Unified Banking Company is exposed to the risk that its
customers will be unable to repay their loans according to their terms and
that any collateral securing the payment of their loans may not be
sufficient to assure repayment. Credit losses are inherent in the lending
business and could have a material adverse effect on our consolidated
operating results. Unified Banking Company's credit risk with respect to its
real estate and construction loan portfolio relates principally to the
general creditworthiness of individuals and the value of real estate serving
as security for the repayment of loans. Our credit risk with respect to
Unified Banking Company's commercial and consumer installment loan portfolio
relates principally to the general creditworthiness of businesses and
individuals within its local market.

         We make various assumptions and judgments about the collectibility
of Unified Banking Company's loan portfolio and provide an allowance for
potential losses based on a number of factors. If our assumptions are wrong,
the allowance for loan losses may not be sufficient to cover loan losses. We
may have to increase the allowance in the future. Additions to our allowance
for loan losses would decrease our net income.

         UNIFIED BANKING COMPANY MAY BE UNABLE TO MANAGE INTEREST RATE RISKS
THAT COULD REDUCE OUR NET INTEREST INCOME. Like other financial
institutions, Unified Banking Company's results of operations are affected
principally by net interest income, which is the difference between interest
earned on loans and investments and interest expense paid on deposits and
other borrowings. We cannot predict or control changes in interest rates.
Regional and local economic conditions and the policies of regulatory
authorities, including monetary policies of the Board of Governors of the
Federal Reserve System, affect interest income and interest expense. While
Unified Banking Company continually takes measures intended to manage the
risks from changes in market interest rates, changes in interest rates can
still have a material adverse effect on our profitability.

         In addition, certain assets and liabilities may react in different
degrees to changes in market interest rates. For example, interest rates on
some types of assets and liabilities may fluctuate prior to changes in
broader market interest rates, while rates on other types may lag behind.
Further, some of Unified Banking Company's assets, such as adjustable rate
mortgages, have features, including rate caps, which restrict changes in
their interest rates.

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         Factors such as inflation, recession, unemployment, money supply,
international disorders, instability in domestic and foreign financial
markets, and other factors beyond our control may affect interest rates.
Changes in market interest rates also will affect the level of voluntary
prepayments on loans and the receipt of payments on mortgage-backed
securities resulting in the receipt of proceeds that may be reinvested at a
lower rate than the loan or mortgage-backed security being prepaid. Although
Unified Banking Company pursues an asset-liability management strategy
designed to control our risk from changes in market interest rates, changes
in interest rates can still have a material adverse effect on our
profitability.

         INSIDERS MAY CONTROL OUR FUTURE OPERATIONS AS A RESULT OF THE
CONCENTRATION OF CONTROL OF OUR COMMON STOCK. Our executive officers and
directors beneficially own approximately 35.1% of our outstanding common
stock. As a result, these insiders may be able to control the election of our
board of directors and thus our direction and future operations, and our
stockholders may lack an effective vote with respect to such matters.

         WE ARE SUBJECT TO EXTENSIVE REGULATION. The banking, trust and
securities industries are heavily regulated under both Federal and state
law. These regulations are primarily intended to protect depositors and the
Federal Deposit Insurance Corporation, with respect to banks, and customers,
with respect to trust companies, broker-dealers and investment advisors, not
our creditors or stockholders. We and our subsidiaries also are subject to
the supervision of the Securities and Exchange Commission, the Office of
Thrift Supervision and the Office of the Comptroller of the Currency, in
addition to other regulatory and self-regulatory organizations. Regulations
affecting banks, trust companies and other financial services companies
undergo continuous change, and the ultimate effect of such changes cannot be
predicted. Regulations and laws may be modified at any time, and new
legislation may be enacted that affects us and our subsidiaries. We cannot
assure you that such modifications or new laws will not adversely affect us
or our subsidiaries.

         RISKS ASSOCIATED WITH RAPID GROWTH. We have experienced rapid
growth in net revenues and expansion of our operations and anticipate that
further significant expansion will be required to address potential growth
in our customer base and market opportunities. Such growth has placed, and,
if sustained, will continue to place, strain on our management, information
systems, operation and resources. Our ability to manage any future growth
will continue to depend upon the successful expansion of our sales,
marketing, customer support, administrative infrastructure and the ongoing
implementation and improvement of a variety of internal management systems,
procedures and controls. Continued growth also will require us to hire more
personnel, and expand management information systems. Recruiting qualified
personnel is an intensely competitive and time-consuming process. There can
be no assurance that we will be able to attract and retain the necessary
personnel to accomplish our growth strategies or that we will not experience
constraints that will adversely affect our ability to support satisfactorily
our clients and operations. There can be no assurance that we will be able
to attract, manage and retain additional personnel to support any future
growth, if any, or will not experience significant problems with respect to
any infrastructure expansion or the attempted implementation of systems,
procedures and controls. If our management is unable to manage growth
effectively, our business, financial condition and results of operations
could be materially adversely affected.

         DEPENDENCE UPON TECHNOLOGY; PROPRIETARY RIGHTS. Our success and
ability to compete is dependent in part upon our technology, although we
believe that our success is more dependent upon our technical expertise than
our proprietary rights. We principally rely upon a combination of copyright,
trademark and trade secret laws and contractual restrictions to protect our
proprietary technology. It may be possible for a third party to copy or
otherwise obtain and use our products or technology without authorization or
to develop similar technology independently, and there can be no assurance
that such

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measures have been, or will be, adequate to protect our proprietary technology
or that our competitors will not independently develop technologies that are
substantially equivalent or superior to our technology. We propose to operate
a substantial portion of our business over the Internet, which is subject to a
variety of risks. Such risks include, but are not limited to, the substantial
uncertainties that exist regarding the system for assigning domain names and
the status of private rules for resolution of disputes regarding rights to
domain names. There can be no assurance that we will continue to be able to
employ our current domain names in the future or that the loss of rights to
one or more domain names will not have a material adverse effect on our
business and results of operations.

         Although we do not believe that we infringe the proprietary rights
of any third parties, there can be no assurance that third parties will not
assert such claims against us in the future or that such claims will not be
successful. We could incur substantial costs and diversion of management
resources with respect to the defense of any claims relating to proprietary
rights, which could have a material adverse effect on our business,
financial condition and results of operations. In addition, we may become
obligated under certain agreements to indemnify another party in connection
with infringement by us of the proprietary rights of third parties. In the
event we are required to indemnify parties under these agreements, it could
have a material adverse effect on our business, financial condition and
results of operations. In the event a claim relating to proprietary
technology or information is asserted against us, we may seek licenses to
such intellectual property. There can be no assurance, however, that
licenses could be obtained on commercially reasonable terms, if at all, or
that the terms of any offered licenses would be acceptable to us. The
failure to obtain the necessary licenses or other rights could have a
material adverse effect on our business, financial condition and results of
operations.

         RISKS TO PHYSICAL NETWORK; RISKS TO INTEGRITY OF DATA ON NETWORK.
Our operations are partially dependent upon our ability to protect our
network infrastructure against damage from fire, earthquakes, severe
flooding, mudslides, power loss, telecommunications failures and similar
events or to construct networks that are not vulnerable to the effects of
these events. The occurrence of a natural disaster or other unanticipated
problems at our network in the future could cause additional major
interruptions in the services provided by us.

         In addition, some networks may experience interruptions in service
as a result of the accidental or intentional actions of Internet users,
current and former employees or others. Unauthorized use of our network
could jeopardize the security of confidential information stored in our
computer systems, which may result in liability to our customers or deter
potential customers.

         Our failure to adequately manage service disruptions resulting from
physical damage to our network or breaches of the network's integrity, could
have a material adverse effect on our business, financial condition and
results of operations.

         SECURITY RISKS. Despite the implementation of network security
measures by us, such as limiting physical and network access to our routers,
our Internet access systems and information services are vulnerable to
computer viruses, break-ins and similar disruptive problems caused by our
customers or other Internet users. Such problems caused by third parties
could lead to interruption, delays or cessation in service to our customers.
Furthermore, such inappropriate use of the Internet by third parties also
could potentially jeopardize the security of confidential information stored
in the computer systems of our customers and other parties connected to the
Internet, which may deter potential subscribers. Persistent security
problems continue to plague public and private data networks. Recent
break-ins reported in the press and otherwise have reached computers
connected to the Internet at major corporations and Internet access
providers and have involved the theft of information, including incidents in
which hackers bypassed firewalls by posing as trusted computers. Alleviating
problems caused by computer viruses,

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break-ins or other problems caused by third parties may require significant
expenditures of capital and resources by us, which could have a material
adverse effect on us. Until more comprehensive security technologies are
developed, the security and privacy concerns of existing and potential
customers may inhibit the growth of the Internet service industry in general
and our customer base and revenues in particular. Moreover, if we experience
a breach of network security or privacy, there can be no assurance that our
customers will not assert or threaten claims against us based on or arising
out of such breach, or that any such claims will not be upheld, which could
have a material adverse effect on our business, financial condition and results
of operation.

         THERE IS INTENSE COMPETITION FOR INTERNET PRODUCTS AND SERVICES,
ADVERTISING AND SALES OF GOODS AND SERVICES. Competition for Internet
products and services, advertising and electronic commerce is intense. We
expect that competition will continue to intensify. Barriers to entry are
minimal, and competitors can launch new Web sites at a relatively low cost.
Our competitors may develop Internet products and services that are superior
to, or have greater market acceptance than, our solutions. If we are unable
to compete successfully against our competitors, our business, financial
condition and operating results will be adversely affected. Many of our
competitors have greater brand recognition and greater financial, marketing
and other resources than us. This may place us at a disadvantage in
responding to our competitors' pricing strategies, technological advances,
advertising campaigns, strategic partnerships and other initiatives.

         COMPETITION. We encounter substantial competition in the businesses
in which we compete. Our principal competitors include mutual funds,
investment advisers, investment counsel firms and financial institutions
such as banks, savings and loan institutions and credit unions. Many of the
institutions with which we compete are larger and have substantially greater
financial resources than us.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
          ---------------------------------------------------------

         The business activities of our company expose it to a variety of
risks. Management of these risks is necessary for the long-term
profitability of our company. We manage these risks through the
establishment of numerous policies, procedures and controls. The most
significant risks that affect us are market risk and credit risk.

         Market risk is the risk of loss to us resulting from changes in
interest rates, equity prices or both. We are exposed to market risk since
we, through our subsidiaries, maintain positions in fixed-income and equity
securities. We primarily manage our risk through the establishment of
trading policies and guidelines and through the implementation of control
and review procedures.

         Our asset/liability strategy is to minimize the sensitivity of
earnings to changes in interest rates while maintaining an acceptable net
interest margin. Unified Banking Company's asset/liability committee
monitors the interest rate sensitivity of the bank's balance sheet on a
monthly basis. The committee reviews asset and liability repricing in the
context of current and future interest rate scenarios affecting the economic
climate in our market areas.

         Our pricing policy is that all earning assets and interest bearing
liabilities be either based on floating rates or have a fixed rate not
exceeding five years. Real estate mortgage loans held by us, while having
long final maturities, are comprised of one-, two- or three-year adjustable
rate loans. The adjustable basis of these loans significantly reduces
interest rate risk.

                                  - 26 -

<PAGE>
<PAGE>

         The following table illustrates Unified Banking Company's estimated
static gap with prepayments calculated as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                              TIME TO MATURITY OR REPRICING
                                                               0 TO 1      1 TO 2      2 TO 3       3 TO 6      6 TO 9      9 TO 12
(DOLLARS IN THOUSANDS)                          IMMEDIATE      MONTHS      MONTHS      MONTHS       MONTHS      MONTHS      MONTHS
                                                ---------      ------      ------      ------       ------      ------      ------

<S>                                              <C>          <C>         <C>         <C>          <C>         <C>         <C>
RATE SENSITIVE ASSETS
   Federal funds sold.......................     $  7,667     $     --    $     --    $     --     $     --    $     --    $     --
                                                 --------     --------    --------    --------     --------    --------    --------
   Securities
     U. S. agencies.........................           --          187         185         181          529         506         484
     FHLB stock.............................          100           --          --          --           --          --          --
                                                 --------     --------    --------    --------     --------    --------    --------
       Total securities.....................          100          187         185         181          529         506         484
                                                 --------     --------    --------    --------     --------    --------    --------
   Loans
     Commercial
       Fixed................................           --           16          16          17          249          50          51
       Variable.............................        3,027           --          --          --           --          --          --
                                                 --------     --------    --------    --------     --------    --------    --------
         Total commercial...................        3,027           16          16          17          249          50          51
                                                 --------     --------    --------    --------     --------    --------    --------
     Real Estate
       Commercial...........................           --           12          12          12        2,015         109         492
                                                 --------     --------    --------    --------     --------    --------    --------
       Residential
         Fixed..............................           --           14          14          14          425         275          27
         Variable...........................           --           --          50          --          880         951          --
         Other..............................           --            1           1           1            2           2           2
                                                 --------     --------    --------    --------     --------    --------    --------
           Total residential................           --           15          65          15        1,306       1,228          29
                                                 --------     --------    --------    --------     --------    --------    --------
              Total real estate.............           --           27          77          27        3,322       1,337         521
                                                 --------     --------    --------    --------     --------    --------    --------
    Construction...........................
       Fixed................................           --           --          --          --           --          --          --
       Variable.............................          653           --          --          --           --          --          --
                                                 --------     --------    --------    --------     --------    --------    --------
         Total construction.................          653           --          --          --           --          --          --
                                                 --------     --------    --------    --------     --------    --------    --------
     Personal
       Home equity loans....................        3,196           --          --          --           --          --          --
       Installment loans....................           --          102          17         364          199         102          36
       Personal open end letters of credit..        1,232           --          --          --           --          --          --
       Loans secured by deposits............           --           --          --          --           --          --          --
                                                 --------     --------    --------    --------     --------    --------    --------
         Total personal.....................        4,428          102          17         364          199         102          36
                                                 --------     --------    --------    --------     --------    --------    --------
   Total loans..............................        8,108          145         110         408        3,770       1,489         608
                                                 --------     --------    --------    --------     --------    --------    --------
     TOTAL RATE SENSITIVE ASSETS............     $ 15,875     $    332    $    295    $    589     $  4,299    $  1,994    $  1,091
                                                 ========     ========    ========    ========     ========    ========    ========


<PAGE>
<CAPTION>
                                                       TIME TO MATURITY OR REPRICING
                                                                           GREATER
                                                 12 to 48      48 TO 54    THAN 54
(DOLLARS IN THOUSANDS)                           MONTHS        MONTHS      MONTHS       TOTALS
                                                 ------        ------      ------       ------

<S>                                              <C>          <C>         <C>         <C>
RATE SENSITIVE ASSETS
   Federal funds sold.......................     $     --     $     --    $     --    $  7,667
                                                 --------     --------    --------    --------
   Securities
     U. S. agencies.........................        4,316          685       3,511      10,584
     FHLB stock.............................           --           --          --         100
                                                 --------     --------    --------    --------
       Total securities.....................        4,316          685       3,511      10,684
                                                 --------     --------    --------    --------
   Loans
     Commercial
       Fixed................................          757            9          64       1,230
       Variable.............................           --           --          --       3,027
                                                 --------     --------    --------    --------
         Total commercial...................          757            9          64       4,257
                                                 --------     --------    --------    --------
     Real Estate
       Commercial...........................        1,669          269       2,218       6,808
                                                 --------     --------    --------    --------
       Residential
         Fixed..............................          305          112         521       1,707
         Variable...........................           --           --          --       1,881
         Other..............................           24           29         221         281
                                                 --------     --------    --------    --------
           Total residential................          329          141         742       3,870
                                                 --------     --------    --------    --------
              Total real estate.............        1,998          410       2,960      10,677
                                                 --------     --------    --------    --------

    Construction...........................
       Fixed................................           61           --          --          61
       Variable.............................           --           --          --         653
                                                 --------     --------    --------    --------
         Total construction.................           --           --          --         714
                                                 --------     --------    --------    --------
     Personal
       Home equity loans....................           --           --          --       3,196
       Installment loans....................          332            2          17       1,171
       Personal open end letters of credit..           --           --          --       1,232
       Loans secured by deposits............           16           --          --          16
                                                 --------     --------    --------    --------
         Total personal.....................          348            2          17       5,615
                                                 --------     --------    --------    --------
   Total loans..............................        3,164          421       3,041      21,263
                                                 --------     --------    --------    --------
     TOTAL RATE SENSITIVE ASSETS............     $  7,480     $  1,106    $  6,553    $ 39,615
                                                 ========     ========    ========    ========

</TABLE>

                                     - 27 -

<PAGE>
<PAGE>

<TABLE>
<CAPTION>
                                                                                TIME TO MATURITY OR REPRICING
                                                               0 TO 1      1 TO 2      2 TO 3       3 TO 6      6 TO 9       9 TO 12
(DOLLARS IN THOUSANDS)                          IMMEDIATE      MONTHS      MONTHS      MONTHS       MONTHS      MONTHS       MONTHS
                                                ---------      ------      ------      ------       ------      ------       ------
<S>                                              <C>         <C>          <C>         <C>         <C>          <C>        <C>
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts...........................     $    426    $      --    $     --    $     --    $      --    $     --    $     --
                                                 --------    ---------    --------    --------    ---------    --------    --------
     Money market accounts
       Market rate accounts.................        3,422           --          --          --           --          --          --
       Business market rate accounts........        2,669           --          --          --           --          --          --
       Special personal MMDA................          998           --          --          --           --          --          --
       Special business MMDA................        5,635           --          --          --           --          --          --
                                                 --------    ---------    --------    --------    ---------    --------    --------
        Total money market accounts........        12,724           --          --          --           --          --          --
                                                 --------    ---------    --------    --------    ---------    --------    --------
     Savings accounts.......................           35           --          --          --           --          --          --
                                                 --------    ---------    --------    --------    ---------    --------    --------
     Time deposits
       CD's greater than 100K...............           --        3,380         153         462        1,206         304         586
       CD's less than 100K..................           --          127         121          --          527         385       1,458
                                                 --------    ---------    --------    --------    ---------    --------    --------
         Total time deposits................           --        3,507         274         462        1,733         689       2,044
                                                 --------    ---------    --------    --------    ---------    --------    --------
       Individual retirement accounts.......           --            2           6          --           12          --          29
                                                 --------    ---------    --------    --------    ---------    --------    --------
         Total interest bearing deposits....       13,185        3,509         280         462        1,745         689       2,073
                                                 --------    ---------    --------    --------    ---------    --------    --------
        Borrowed funds
          (repurchase agreements)...........           --        1,143          --          --           --          --          --
                                                 --------    ---------    --------    --------    ---------    --------    --------
     TOTAL RATE SENSITIVE LIABILITIES.......     $ 13,185    $   4,652    $    281    $    462    $   1,745    $    689    $  2,073
                                                 ========    =========    ========    ========    =========    ========    ========
INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets..............     $ 15,875    $     332    $    295    $    589    $   4,299    $  1,994    $  1,091
   Total rate sensitive liabilities.........       13,185        4,652         281         462        1,745         689       2,073
   Gap......................................        2,690       (4,320)         14         127        2,553       1,305        (982)
   RSA/RSL..................................         1.20x        0.07x       1.05x       1.27x        2.46x       2.89x       0.53x
   RSA/assets...............................         0.37%        0.01%       0.01%       0.01%        0.10%       0.05%       0.03%
   RSL/assets...............................         0.31         0.11        0.01        0.01         0.04        0.02        0.05
   Gap/assets...............................         6.35       -10.20        0.03        0.30         6.03        3.08       -2.32
   Gap/RSA..................................        16.94    -1,300.63        4.90       21.51        59.40       65.45      -89.97

CUMULATIVE GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets..............     $ 15,875    $  16,207    $ 16,502    $ 17,091    $  21,390    $ 23,384    $ 24,475
   Total rate sensitive liabilities.........       13,185       17,837      18,118      18,580       20,325      21,014      23,087
   Gap......................................        2,690       (1,630)     (1,615)     (1,489)       1,065       2,370       1,388
   RSA/RSL..................................         1.20x        0.91x       0.91x       0.92x        1.05x       1.11x       1.06x
   RSA/assets...............................         0.37%        0.38%       0.39%       0.40%        0.50%       0.55%       0.58%
   RSL/assets...............................         0.31         0.42        0.43        0.44         0.48        0.50        0.54
   Gap/assets...............................         6.35        -3.85       -3.81       -3.51         2.51        5.59        3.28
   Gap/RSA..................................        16.94       -10.06       -9.79       -8.71         4.98       10.13        5.67



<PAGE>
<CAPTION>
                                                         TIME TO MATURITY OR REPRICING

                                                                           GREATER
                                                 12 TO 48     48 TO 54     THAN 54
(DOLLARS IN THOUSANDS)                           MONTHS       MONTHS        MONTHS     TOTALS
                                                 ------       ------        ------     ------
<S>                                             <C>           <C>         <C>         <C>
RATE SENSITIVE LIABILITIES
   Interest bearing deposits
     NOW accounts...........................     $     --     $     --    $     --    $    426
                                                 --------     --------    --------    --------
     Money market accounts
       Market rate accounts.................           --           --          --       3,422
       Business market rate accounts........           --           --          --       2,669
       Special personal MMDA................           --           --          --         998
       Special business MMDA................           --           --          --       5,635
                                                 --------     --------    --------    --------
        Total money market accounts........            --           --          --      12,724
                                                 --------     --------    --------    --------
     Savings accounts.......................           --           --          --          35
                                                 --------     --------    --------    --------
     Time deposits
       CD's greater than 100K...............        2,083           75         566       8,816
       CD's less than 100K..................        4,314          105         795       7,832
                                                 --------     --------    --------    --------
         Total time deposits................        6,397          180       1,361      16,648
                                                 --------     --------    --------    --------
       Individual retirement accounts.......          427           79         601       1,157
                                                 --------     --------    --------    --------
         Total interest bearing deposits....        6,824          259       1,962      30,990
                                                 --------     --------    --------    --------
        Borrowed funds
          (repurchase agreements)..........            --           --          --       1,143
                                                 --------     --------    --------    --------
     TOTAL RATE SENSITIVE LIABILITIES.......     $  6,824     $    259    $  1,963    $ 32,132
                                                 ========     ========    ========    ========
INCREMENTAL GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets..............     $  7,480     $  1,106    $  6,553
   Total rate sensitive liabilities.........        6,824          259       1,963
   Gap......................................          656          847       4,590
   RSA/RSL..................................         1.10x        4.27x       3.34x
   RSA/assets...............................         0.18%        0.03%       0.15%
   RSL/assets...............................         0.16         0.01        0.05
   Gap/assets...............................         1.55         2.00       10.84
   Gap/RSA..................................         8.77        76.56       70.05

CUMULATIVE GAP REPORT SUMMARY INFORMATION
   Total rate sensitive assets..............     $ 31,956     $ 33,062    $ 39,615
   Total rate sensitive liabilities.........       29,912       30,171      32,133
   Gap......................................        2,044        2,891       7,481
   RSA/RSL..................................         1.07x        1.10x       1.23x
   RSA/assets...............................         0.75%        0.78%       0.94%
   RSL/assets...............................         0.71         0.71        0.76
   Gap/assets...............................         4.83         6.82       17.66
   Gap/RSA..................................         6.40         8.74       18.89
</TABLE>

                                 - 28 -



<PAGE>
<PAGE>

         We measure the impact of interest rate changes on our income
statement through the use of gap analysis. The gap represents the net
position of assets and liabilities subject to repricing in specified time
periods. During any given time period, if the amount of rate-sensitive
liabilities exceeds the amount of rate-sensitive assets, a company would
generally be considered negatively gapped and would benefit from falling
rates over that period of time. Conversely, a positively gapped company
would generally benefit from rising rates.

         We have structured our assets and liabilities to mitigate the risk
of either a rising or falling interest rate environment. Depending upon our
assessment of economic factors such as the magnitude and direction of
projected interest rates over the short and long term, we generally operate
within guidelines set by our asset/liability policy and attempt to maximize
our returns within an acceptable degree of risk.

         Interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously. There are other factors that are
difficult to measure and predict that would influence the effect of interest
rate fluctuations on our income statement. For example, a rapid drop in
interest rates might cause our borrowers to repay their loans at a more
rapid pace and certain mortgage-related investments to be prepaid more
quickly than projected. This could mitigate some of the benefits of falling
rates as are expected when negatively gapped. Conversely, a rapid rise in
rates could give us an opportunity to increase our margins and stifle the
rate of repayment on our mortgage-related loans which would increase our
returns.

         The following table shows the "rate shock" results of a simulation
model that attempts to measure the effect of rising and falling interest
rates over a two-year horizon in a rapidly changing rate environment.

<TABLE>
<CAPTION>
                                                                     PERCENTAGE CHANGE IN
                 BASIS POINT                     ------------------------------------------------------------
                  CHANGE IN                      NET INTEREST INCOME         MARKET VALUE OF PORTFOLIO EQUITY
               INTEREST RATES                     PROJECTED CHANGE                   PROJECTED CHANGE
               --------------                     ----------------           --------------------------------
                    <S>                                <C>                                <C>
                    -400                               -4.84%                               7.46%
                    -300                               -3.51                                5.42
                    -200                               -2.04                                5.01
                    -100                               -1.03                                3.84
                       0                                0.00                                0.00
                     100                                0.67                               -4.85
                     200                                1.25                              -10.02
                     300                                2.05                              -14.89
                     400                                2.73                              -19.62
</TABLE>

         We use a sensitivity model that simulated these interest rate
changes on our earning assets and interest-bearing liabilities. This process
allows us to explore the complex relationships among the financial
instruments in various interest rate environments.

         The preceding sensitivity analysis is based on numerous assumptions
including: the nature and timing of interest rate levels including the shape
of the yield curve; prepayments on loans and securities; changes in deposit
levels; pricing decisions on loans and deposits; reinvestment/replacement of
asset and liability cash flows; and others. While assumptions are developed
based upon current economic and local market conditions, we cannot make any
assurances as to the predictive nature of these assumptions including how
client preferences or competitor influences might change.

                                - 29 -

<PAGE>
<PAGE>

         Interest rate exposure is measured by the potential impact on our
income statement of changes in interest rates. We use information from our
gap analysis and rate shock calculations as input to help manage our
exposure to changing interest rates.

         We use our rate shock information to tell us how much exposure we
have to rapidly changing rates. Based on historical information and our
assessment of future interest rate trends, we do not believe it is likely
that rapidly rising rates would have a significant positive impact on our
results of operations. Conversely, we also believe there is minimal
likelihood that rapidly falling rates would have a significant negative
impact on our results of operations.

         We continue to monitor our gap and rate shock analyses to detect
changes to our exposure to fluctuating rates. We have the ability to shorten
or lengthen maturities on newly acquired assets, sell investment securities,
or seek funding sources with different maturities in order to change our
asset and liability structure for the purpose of mitigating the effect of
interest rate risk.

                                - 30 -

<PAGE>
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------

To the Board of Directors and
   Stockholders of Unified Financial Services, Inc.


                        INDEPENDENT AUDITORS' REPORT
                        ----------------------------

We have audited the accompanying consolidated statements of financial
condition of Unified Financial Services, Inc. and subsidiaries as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, comprehensive income, cash flows and changes in stockholders'
equity for the years ended December 31, 2000, 1999 and 1998. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Unified Financial Services,
Inc. and subsidiaries at December 31, 2000 and 1999, and the results of
their operations and their cash flows for the years ended December 31, 2000,
1999 and 1998 in conformity with generally accepted accounting principles.




/s/ Larry E. Nunn & Associates, LLC
Columbus, Indiana
February 1, 2001

                                - 31 -


<PAGE>
<PAGE>

<TABLE>
                                     UNIFIED FINANCIAL SERVICES, INC.
                             CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                        DECEMBER 31, 2000 AND 1999
                                        --------------------------

<CAPTION>
                                                  ASSETS
                                                  ------

                                                                                2000                   1999
                                                                                ----                   ----
<S>                                                                       <C>                    <C>
Current Assets
     Cash and cash equivalents.........................................   $    5,582,098         $    5,714,345
     Due from banks....................................................        1,162,639                314,815
     Federal funds sold................................................        7,667,000              4,922,000
     Bond investments..................................................       10,841,435              5,515,156
     Investment in affiliated mutual funds.............................               --                326,271
     Investment in securities and non-affiliated
       mutual funds....................................................          573,272                419,284
     Loans (net of allowance for loan losses of
       $305,000 for 2000 and $33,000 for 1999).........................       20,834,674              2,810,876
     Accounts receivable (net of allowance for
       doubtful accounts of $500,042 for 2000 and
       $38,326 for 1999)...............................................       13,086,031              9,604,834
     Prepaid assets and deposits.......................................          297,270                774,646
     Deferred tax asset................................................           80,037                130,927
                                                                          --------------         --------------

         Total current assets..........................................       60,124,456             30,533,154
                                                                          --------------         --------------

Fixed Assets, at cost
     Equipment and furniture (net of accumulated
       depreciation of $4,250,692 for 2000 and
       $3,512,135 for 1999).......................................             3,500,020              2,944,610
                                                                          --------------         --------------

         Total fixed assets.......................................             3,500,020              2,944,610
                                                                          --------------         --------------

Non-Current Assets
     Investment in debt securities.....................................               --              1,073,621
     Investment in affiliate...........................................               10                     --
     Organization costs (net of accumulated
       amortization of $164,227 for 2000
       and $32,019 for 1999)...........................................          508,925                641,688
     Goodwill (net of accumulated amortization of
       $243,414 for 2000 and  $139,093 for 1999).......................        1,110,380              1,214,701
     Other non-current assets..........................................          391,136                341,220
                                                                          --------------         --------------

         Total non-current assets......................................        2,010,451              3,271,230
                                                                          --------------         --------------

              TOTAL ASSETS.............................................   $   65,634,927         $   36,748,994
                                                                          ==============         ==============
</TABLE>
                                - 32 -



<PAGE>
<PAGE>

<TABLE>
                                        UNIFIED FINANCIAL SERVICES, INC.
                                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                           December 31, 2000 and 1999
                                           --------------------------

                                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                      ------------------------------------
<CAPTION>

                                                                                   2000                 1999
                                                                                   ----                 ----
<S>                                                                          <C>                   <C>
Current Liabilities:
     Current portion of capital lease obligations.......................     $       7,884         $      30,072
     Current portion of bank borrowings.................................         1,944,662             2,343,965
     Bank line-of-credit................................................         1,668,626             1,727,003
     Deposits...........................................................        34,620,338             7,331,853
     Accounts payable and accrued expenses..............................         2,508,776             2,727,093
     Accrued compensation and benefits..................................           440,472               553,971
     Payable to insurance companies.....................................         8,016,752             5,670,974
     Payable to broker-dealers..........................................           172,374               255,158
     Income taxes payable, current......................................                --               136,630
     Deferred income taxes..............................................            14,308                83,157
     Other liabilities..................................................         1,970,328               597,646
                                                                             -------------         -------------

         Total current liabilities......................................        51,364,520            21,457,522
                                                                             -------------         -------------

Long-Term Liabilities
     Long-term portion of capital lease obligations.....................             1,049                 8,933
     Long-term portion of borrowings....................................           342,339               514,031
     Other long-term liabilities........................................            92,553               104,742
     Deferred income taxes..............................................                --                85,779
                                                                             -------------         -------------

         Total long-term liabilities....................................           435,941               713,485
                                                                             -------------         -------------

              Total liabilities.........................................        51,800,461            22,171,007
                                                                             -------------         -------------

Commitments and Contingencies...........................................                --                    --
                                                                             -------------         -------------

Stockholders' Equity
     Common stock, par value $.01 per share.............................            33,300                33,294
     Additional paid-in capital.........................................        16,259,091            16,050,189
     Retained deficit...................................................        (2,628,248)           (1,292,794)
     Accumulated other comprehensive income (loss)......................           170,323               (35,463)
                                                                             -------------         -------------
                                                                                13,834,466            14,755,226
     Treasury stock, at cost............................................                --              (177,239)
                                                                             -------------         -------------

              Total stockholders' equity................................        13,834,466            14,577,987
                                                                             -------------         -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..............................     $  65,634,927         $  36,748,994
                                                                             =============         =============

See independent auditors' report and accompanying notes.
</TABLE>
                                - 33 -



<PAGE>
<PAGE>

<TABLE>
                                             UNIFIED FINANCIAL SERVICES, INC.
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                        YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                        --------------------------------------------

<CAPTION>
                                                            2000                  1999                  1998
                                                            ----                  ----                  ----
REVENUE:
<S>                                                   <C>                    <C>                   <C>
     Gross revenue (see note 15)...................   $    28,730,665        $   24,061,788        $  20,809,474
                                                      ---------------        --------------        -------------
         Total gross revenue.......................        28,730,665            24,061,788           20,809,474
                                                      ---------------        --------------        -------------
COST OF SALES:
     Cost of sales (see note 15)...................         8,742,209             7,259,608            6,421,352
                                                      ---------------        --------------        -------------
         Total cost of sales.......................         8,742,209             7,259,608            6,421,352
                                                      ---------------        --------------        -------------
GROSS PROFIT (see note 15).........................        19,988,456            16,802,180           14,388,122
                                                      ---------------        --------------        -------------

EXPENSES:
     Employee compensation and benefits............        13,276,930            10,605,613            6,341,772
     Mail and courier..............................           441,927               428,107              471,804
     Telephone.....................................           591,219               452,781              253,842
     Equipment rental and maintenance..............           685,139               493,268              367,833
     Occupancy.....................................           998,102               919,647              647,123
     Depreciation and amortization.................           993,537               706,634              865,571
     Professional fees.............................         1,419,566             1,620,081              497,410
     Interest......................................           277,321               322,172              297,996
     Provision for loan losses.....................           272,000                33,000                   --
     Provision for bad debt........................           546,385                    --               36,875
     Business development costs....................           872,361               842,869              504,924
     Other operating expenses (see note 17)........           378,202             1,572,987            2,800,760
                                                      ---------------        --------------        -------------
         Total expenses............................        20,752,689            17,997,159           13,085,910
                                                      ---------------        --------------        -------------

         Income (loss) from operations.............          (764,233)           (1,194,979)           1,302,212

OTHER INCOME (LOSS)
     Unrealized gain (loss) on securities..........           (18,347)               16,023               23,946
     Realized gain (loss) on securities............           (35,036)              (11,826)              13,496
     Loss on sale/disposal of fixed asset..........           (15,661)              (24,285)              (8,752)
     All other.....................................                --               213,511               59,197
                                                      ---------------        --------------        -------------
         Total other income (loss).................           (69,044)              193,423               87,887
                                                      ---------------        --------------        -------------

         Income (loss) before income taxes.........          (833,277)           (1,001,556)           1,390,099

     Income taxes..................................            35,000                29,730              151,108
                                                      ---------------        --------------        -------------

Net income (loss) before discontinued operations...          (868,277)           (1,031,286)           1,238,991
Discontinued operations (net of income taxes)......          (467,177)             (741,629)            (326,830)
                                                      ---------------        --------------        -------------
Net income (loss)..................................   $    (1,335,454)       $   (1,772,915)       $     912,161
                                                      ===============        ==============        =============

Per share earnings (loss)
     Basic common shares outstanding...............         2,880,028             2,869,862            2,316,767
     Net income (loss) before discontinued
         operations................................   $         (0.30)        $       (0.36)         $      0.51
     Net income (loss) - basic.....................             (0.46)                (0.62)                0.37
     Fully diluted common shares outstanding.......         3,050,825             2,975,823            2,580,013
     Net income (loss) before discontinued
         operations fully diluted..................   $         (0.28)        $      ( 0.35)         $      0.45
     Net income (loss) - fully diluted.............             (0.44)                (0.60)                0.33

See independent auditors' report and accompanying notes.
</TABLE>

                                 - 34 -


<PAGE>
<PAGE>

<TABLE>
                                           UNIFIED FINANCIAL SERVICES, INC.
                                   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                     YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                     --------------------------------------------

<CAPTION>
                                                            2000                  1999                  1998
                                                            ----                  ----                  ----

<S>                                                   <C>                    <C>                   <C>
Net income (loss)..................................   $    (1,335,454)       $   (1,772,915)       $     912,161

Other comprehensive income (loss), net of tax
   Unrealized gain (loss) on securities, net of
      re-classification adjustment.................           205,786               (35,463)                  99
                                                      ---------------        --------------        -------------

Comprehensive income (loss)........................   $    (1,129,668)       $   (1,808,378)       $     912,260
                                                      ===============        ==============        =============

See independent auditors' report and accompanying notes.
</TABLE>

                                  - 35 -


<PAGE>
<PAGE>

<TABLE>
                                            UNIFIED FINANCIAL SERVICES, INC.
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                       --------------------------------------------

<CAPTION>
                                                                    2000                  1999              1998
                                                                    ----                  ----              ----
<S>                                                           <C>                  <C>                  <C>
CASH FLOW FROM OPERATING ACTIVITIES
   Net income (loss)......................................    $  (1,335,454)       $   (1,772,915)      $   912,161
   Adjustments to reconcile net income to cash
      provided by (used in) operating activities:
         Deferred income taxes............................         (103,738)               89,685           125,343
         Provision for depreciation and amortization......        1,005,987               830,606           949,349
         Provision for loan losses........................          272,000                33,000                --
         Provision for bad debt...........................          546,385                23,732                --
         Comprehensive income.............................          205,786               (35,463)               --
         Unrealized gain (loss) on securities.............           18,347                27,680           (23,946)
         Loss on disposal of discontinued operations......          100,203               129,487                --
         Loss on disposal of fixed assets.................           15,661                   342            22,832
         Cash value of  officers' life insurance..........               --                    --           (12,500)
         Loss on sale of securities.......................           35,036                    --                --
         Results of affiliate/minority interest...........               --                    --           (59,197)
         Deferred start-up costs..........................               --              (105,622)         (643,169)
         (Increase) decrease in operating assets
              Receivables.................................       (3,827,983)             (718,644)       (2,317,320)
              Loans made to customers, net of repayments..      (18,295,799)           (2,638,676)               --
              Prepaid and sundry assets...................          477,377              (522,943)           28,824
              Other non-current assets....................          (49,916)                   --                --
         Increase (decrease) in operating liabilities
              Deposits....................................       27,288,485             7,331,853                --
              Accounts payable and accrued expenses.......        2,127,462                99,266         1,069,207
              Accrued compensation and benefits...........         (113,499)                   --                --
              Accrued income taxes........................         (136,630)              118,766            47,788
              Payable to broker-dealers...................          (82,785)                   --                --
              Other liabilities...........................        1,160,897            (1,181,429)         (253,928)
                                                              -------------        --------------       -----------
         Net cash provided by (used in) operating
           activities.....................................        9,307,822             1,708,725          (154,556)
                                                              -------------        --------------       -----------

CASH FLOW FROM INVESTING ACTIVITIES
   Purchase of equipment..................................       (1,445,190)           (2,027,635)         (512,023)
   Investment in affiliated mutual funds..................          (29,461)                   --                --
   Due from banks.........................................         (847,824)             (314,815)               --
   Federal funds sold.....................................       (2,745,000)           (4,922,000)               --
   Bond investments.......................................       (5,326,279)           (5,515,156)               --
   Proceeds from sale of fixed assets.....................            4,814                    --             9,220
   Proceeds from sale of investments......................        1,617,863                    --                --
   Repayment of note receivable...........................               --                    --             4,502
   Appreciation of debt securities........................               --                    --              (531)
   Investments in securities and mutual funds.............         (395,684)              (92,611)          224,634
   Investment in debt securities..........................               --               (33,148)          (21,034)
   Investment in other assets.............................               --               (57,480)               --
   Investment in affiliate................................              (10)                   --                --
                                                              -------------        --------------       -----------
         Net cash used in investing activities............       (9,166,771)          (12,962,845)         (295,232)
                                                              -------------        --------------       -----------

CASH FLOW FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock.................           21,640             7,012,656        10,222,635
   Proceeds from issuance of Series C preferred stock.....               --               100,900           210,000
   Redemption of Series A and B preferred stock...........               --                    --        (1,706,900)
   Borrowings on bank line of credit......................        1,270,000               360,000                --
   Dividends on common and preferred stock................               --               (35,252)         (352,108)
   Acquisition of subsidiaries............................               --                    --          (413,026)
   Proceeds from issuance of treasury stock...............          419,058             1,501,800        (2,921,024)
   Proceeds from borrowings...............................           10,627             2,307,450         3,373,770
   Repayment of borrowings................................       (1,910,000)            3,753,457)          (81,537)
   Repayment of capital lease obligations.................          (30,072)              (48,475)          (92,755)
   Purchase of treasury shares............................          (54,551)             (873,000)               --
                                                              -------------        --------------       -----------
     Net cash provided by (used in) financing activities..         (273,298)            6,572,622         8,239,055
                                                              -------------        --------------       -----------

Net increase (decrease) in cash and cash equivalents......         (132,247)           (4,681,498)        7,789,267

Cash and cash equivalents - beginning of year.............        5,714,345            10,395,843         2,606,576
                                                              -------------        --------------       -----------
Cash and cash equivalents - end of period.................    $   5,582,098         $   5,714,345       $10,395,843
                                                              =============         =============       ===========

See independent auditors' report and accompanying notes.
</TABLE>

                                - 36 -


<PAGE>
<PAGE>

<TABLE>
                                          UNIFIED FINANCIAL SERVICES, INC.
                            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                  --------------------------------------------
<CAPTION>
                                                                                          ACCUMULATED
                                                                ADDITIONAL                   OTHER
                                          COMMON    PREFERRED    PAID-IN       RETAINED  COMPREHENSIVE  TREASURY
                                           STOCK      STOCK      CAPITAL       EARNINGS     INCOME       STOCK        TOTAL
                                           -----      -----      -------       --------     ------       -----        -----
<S>                                       <C>       <C>        <C>           <C>           <C>         <C>         <C>
Balance at December 31, 1997              $21,728   $ 17,069   $ 2,199,921   $   603,749   $    (99)   $      --   $ 2,842,368
  1998 net income                                                                912,161                               912,161
  Other comprehensive income                                                                     99                         99
  Redemption of preferred stock                      (17,069)   (1,689,831)                                         (1,706,900)
  Issuance of preferred stock                          2,100       207,900                                             210,000
  Issuance of common stock                  4,507               10,218,128                                          10,222,635
  Conversion of preferred
    stock to common stock                     578       (428)         (150)                                                 --
  Acquisition of Unified Investment
    Advisers, Inc.                                                (683,210)      (31,387)                             (714,597)
  Acquisition of Fiduciary Counsel, Inc.      361                  902,389                                             902,750
  Acquisition of M. Wilson                     36                      (36)
  Acquisition of Fully Armed
    Productions                               183                    1,743         1,461                                 3,387
  Acquisition of Commonwealth
    Investment Services                       275                  109,725       (52,937)                               57,063
  Repurchase of common shares at
    Equity Underwriting Group                                   (2,921,024)                                         (2,921,024)
  Dividends to acquired
    companies' stockholders                                                     (286,264)                             (286,264)
  Dividends on preferred stock                                                   (65,844)                              (65,844)
                                          -------   --------   -----------   -----------   --------    ---------   -----------

Balance at December 31, 1998               27,668      1,672     8,345,555     1,080,939         --           --     9,455,834
  1999 net loss                                                               (1,772,915)                           (1,772,915)
  Other comprehensive loss                                                                  (35,463)                   (35,463)
  Issuance of common stock                  2,007                7,010,649                                           7,012,656
  Issuance of preferred stock                          1,009        99,891                                             100,900
  Repurchase of stock for treasury                                                                      (873,000)     (873,000)
  Re-issuance of treasury stock                                    806,039                               695,761     1,501,800
  Reduction of goodwill                                           (211,007)                                           (211,007)
  Conversion of preferred stock
    to common stock                         3,619     (2,681)         (938)                                                 --
  Acquisition of minority interest                                              (565,566)                             (565,566)
  Dividends to acquired
    companies' stockholders                                                      (35,252)                              (35,252)
                                          -------   --------   -----------   -----------   --------    ---------   -----------

Balance at December 31, 1999               33,294         --    16,050,189    (1,292,794)   (35,463)    (177,239)   14,577,987
  2000 net loss                                                               (1,335,454)                           (1,335,454)
  Other comprehensive income                                                                205,786                    205,786
  Issuance of common stock                      6                   21,634                                              21,640
  Repurchase of stock for treasury                                                                       (54,551)      (54,551)
  Re-issuance of treasury stock                                    187,268                               231,790       419,058
                                          -------   --------   -----------   -----------   --------    ---------   -----------

Balance at December 31, 2000              $33,300   $     --   $16,259,091   $(2,628,248)  $170,323    $      --   $13,834,466
                                          =======   ========   ===========   ===========   ========    =========   ===========

See independent auditors' report and accompanying notes.
</TABLE>

                                 - 37 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 1 -  NATURE OF OPERATIONS

          Unified Financial Services, Inc., a Delaware holding company for
          various financial services companies, was organized on December 7,
          1989. We distribute a vertically integrated financial services
          platform via the traditional industry channels of our subsidiaries
          and via the Internet. Through our subsidiaries, all of which are
          wholly owned, we provide services primarily in six lines of
          business: trust and retirement services; mutual fund administration
          services; banking; insurance; brokerage; and investment advisory
          services.

          Our trust and retirement services operation, which is headquartered
          in Lexington, Kentucky, provides professional financial management
          to individuals and institutions, including private pension plans
          and foundations. Our trust subsidiary, a national trust company,
          specializes in retirement plans and is regulated by the Office of
          the Comptroller of the Currency. Our trust company also provides
          consulting, recordkeeping and trust accounting services for
          qualified retirement and cafeteria plans.

          Our mutual fund administration services operation, which is based
          in Southlake, Texas and Indianapolis, Indiana, provides services
          such as transfer agency, fund accounting, and administrative,
          regulatory, compliance and start-up services for mutual funds,
          investment advisors, banks and other money managers in their
          proprietary mutual fund efforts. In addition, such subsidiary
          provides all of the mutual fund services for the Unified Funds
          portfolios, and performs other clerical functions to the Unified
          Funds in addition to typical mutual fund services.

          Our banking operation is headquartered in Lexington, Kentucky.
          Unified Banking Company, a federal savings bank, offers various
          bank products and services (including, but not limited to,
          certificates of deposit, residential mortgage loans and secured
          personal loans) to its banking customer base and to our
          subsidiaries' customers. Our premium finance subsidiary provides
          financing for the payment of premiums on insurance coverage placed
          by our insurance brokerage operation and is licensed under
          applicable governing regulations in the States of Kentucky,
          Tennessee, Illinois and Ohio and also conducts business in the
          states of West Virginia and Indiana, which do not require licensing
          of premium finance companies.

          Our insurance operation is headquartered in Lexington, Kentucky and
          provides specialty insurance products as a general agent or as a
          broker in the States of Kentucky, Tennessee, West Virginia, Ohio,
          Indiana and Illinois. The insurance operation writes insurance
          products for primarily niche areas in the insurance marketplace
          that are considered more "non-standard," representing a higher risk
          of insured. We, through our insurance subsidiaries, operate as a
          managing general agent between a number of admitted and excess and
          surplus line insurance companies. We also provide administrative
          claims services on a contractual basis for property and casualty
          insurance carriers and claims adjusting services for various
          insurance companies in the private passenger and commercial
          trucking lines.

          Our brokerage operation, which is headquartered in Indianapolis,
          Indiana, consists of a registered broker-dealer under the
          Securities Exchange Act of 1934, as amended, that also is a member
          of the National Association of Securities Dealers, Inc.

          Our investment advisory services operation, which is based in New
          York City and Lexington and Louisville, Kentucky, provides
          professional financial management to individuals and institutions
          on a customized basis. Our wealth management subsidiary, which is
          based in New York City,

                                    - 38 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 1 -  NATURE OF OPERATIONS (Continued)

          assists clients in a variety of disciplines, including the following:
          financial, tax and estate planning; family office services such as
          budgeting, bill paying and payroll administration; trust
          administration; and income tax return preparation and filing for
          individuals, trusts, partnerships and small businesses.

          On January 31, 2000, Unified Management Company acquired substantially
          all of the assets of Commonwealth Investment Services, Inc. Effective
          February 29, 2000, Resource Benefit Planners, Inc. was merged with
          and into First Lexington Trust Company.  Effective September 29, 2000,
          Unified Management Company was renamed Unified Financial Securities,
          Inc. Effective October 12, 2000, Unified Fund Services, Inc. was
          merged with and into AmeriPrime Financial Services, Inc.  Immediately
          following, AmeriPrime Financial Services, Inc. was renamed Unified
          Fund Services, Inc.  Effective November 9, 2000, Equity Underwriting
          Group, Inc. was dissolved.  On December 31, 2000, Unified Financial
          Securities, Inc. acquired substantially all of the assets of
          AmeriPrime Financial Securities, Inc.  Effective December 31, 2000,
          Equity Insurance Managers, Inc. paid a dividend of all of the member
          interests of Equity Insurance Managers of Illinois, L.L.C. to us.
          In December 2000, each of Strategic Fund Services, Inc., Unified
          Capital Resources, Inc. and VSX Technologies, Inc. was merged with
          and into Unified Internet Services, Inc.  Each of Unified Financial
          Securities, Inc., Commonwealth Investment Services, Inc., Resource
          Benefit Planners, Inc., First Lexington Trust Company, Unified Fund
          Services, Inc., AmeriPrime Financial Services, Inc., Equity
          Underwriting Group, Inc., AmeriPrime Financial Securities, Inc.,
          Unified Capital Resources, Inc., Strategic Fund Services, Inc., VSX
          Technologies, Inc. and Unified Internet Services, Inc. is/was a
          wholly owned subsidiary of our company.

          On June 26, 2000, First Lexington Trust Company, a subsidiary of our
          company, converted to a limited purpose national banking association
          with the corporate name "Unified Trust Company, National Association."
          Unified Trust Company, National Association is required by the
          Office of the Comptroller of the Currency to maintain minimum capital
          of $2.0 million. As of December 31, 2000, Unified Trust Company,
          National Association had $2.1 million total capital.

Note 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Basis of Presentation
          ---------------------
          The Consolidated Financial Statements include the accounts of Unified
          Financial Services, Inc. and our subsidiaries after elimination of
          all material intercompany accounts and transactions.

          The Consolidated Financial Statements give retroactive effect to
          our pooling-of-interests transactions. As a result, the
          Consolidated Statements of Financial Condition, Statements of
          Operations, Statements of Comprehensive Income, Statements of Cash
          Flows and Statements of Changes in Stockholders' Equity are
          consolidated for all periods presented. As required by generally
          accepted accounting principles, the Consolidated Financial
          Statements become our historical consolidated financial statements
          upon issuance of the financial statements for the periods that
          include the date of the transaction. The Consolidated Statements of
          Changes in Stockholders' Equity reflect our accounts as if the
          shares of our common stock, $0.01 par value, issued in the
          pooling-of-interests transactions had been outstanding during all
          periods presented. The Consolidated Financial Statements, including
          the notes thereto, should be read in conjunction with our
          historical consolidated financial statements.


                                     - 39 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Fees and Commissions
          --------------------
          We record revenue on the accrual basis of accounting. For our
          brokerage operation, commissions and clearing revenue are recorded
          on the settlement date of the related security transaction. This
          does not materially differ from recording commissions based upon
          trade date. In connection with our private placements of equity
          securities, Unified Financial Securities, Inc., a subsidiary of our
          company, recorded revenue on the accrual basis of accounting (equal
          to ten percent of the proceeds of the private placement) and
          incurred expenses related to the private placement. Our trust and
          retirement services operation's revenue, as well as the investment
          adviser fees earned by third party advisers, are recorded on the
          accrual basis. The fees earned by the operation and paid to
          sub-advisers are based on established fee schedules and contracts.
          Generally, fees may be collected from the invested assets. Thus,
          collection of the fees is reasonably certain. Revenue is recorded
          as it is earned each month based upon accounts and account balances.
          In connection with this, we earn income on the accounts established
          to transfer these funds for customers. For our banking operation,
          recorded revenue consists of interest income less interest expense.
          For our insurance operation, commission income and expense are
          recorded on the effective date of each policy; return commissions
          are recorded when a policy cancellation occurs. All other revenue
          is recorded as earned.

          Property and Equipment
          ----------------------
          Property and equipment are stated at cost. Depreciation, including
          the depreciation of capital leased equipment, is provided on the
          straight-line or accelerated method over the estimated useful life
          of the assets for financial statement purposes.

          Investments
          -----------
          Investments, which consist primarily of an investment in mutual
          funds (affiliated or non-affiliated), are recorded and adjusted to
          the fair market value as of the date of the financial statements and
          reported on the Consolidated Statements of Operations as unrealized
          gain or loss on securities.

          Income Taxes
          ------------
          We file consolidated Federal and state income tax returns with
          our subsidiaries.

          We have adopted Statement of Financial Accounting Standards No.
          109 "Accounting for Income Taxes," which requires use of the
          liability method of accounting for deferred income taxes.

          Other Non-Current Assets
          ------------------------
          Included in other non-current assets are intangible assets for
          non-compete covenants, the value of acquired companies' names and
          the present value of building leases below fair market value. For
          financial reporting basis, these assets are amortized on a straight-
          line basis over a three-, eight- or fifteen-year period.

          Goodwill
          --------
          We, in acquiring certain businesses, acquired goodwill.  We
          have determined the value of the goodwill, which is amortized over
          the estimated economic lives of the assets on a straight-line basis
          over a period of 10 to 15 years for financial reporting basis. For
          tax purposes, goodwill is amortized on a straight-line basis over
          15 years.

                                       - 40 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Organization Costs
          ------------------
          Costs related to the organization of our various operations have been
          capitalized and amortized over a 60-month period on a straight-line
          basis.

          Use of Estimates
          ----------------
          The presentation of financial statements in conformity with
          generally accepted accounting principles requires management to
          make estimates and assumptions that affect the reported amounts of
          assets and liabilities and disclosure of contingent assets and
          liabilities at the date of the financial statements and the reported
          amounts of revenue and expenses during the reporting period.
          Actual results could differ from those estimates.

          Statements of Cash Flows
          ------------------------
          For purposes of the Consolidated Statements of Cash Flows, we
          consider all liquid investments with an original maturity of three
          months or less to be cash equivalents. We maintain money market
          investments that are not insured by the Federal Deposit Insurance
          Corporation and bank accounts that periodically exceed the Federal
          Deposit Insurance Corporation's insurance limit during the year.

          Recent Accounting Pronouncements
          --------------------------------
          In June 1998, the Financial Accounting Standards Board issued
          Statement of Financial Accounting Standards No. 133 "Accounting for
          Derivative Instruments and Hedging Activities," which establishes new
          accounting and reporting standards for companies to report information
          about derivative instruments, including certain derivative instruments
          embedded in other contracts (collectively referred to as derivatives)
          and for hedging activities. In June 1999, the Financial Accounting
          Standards Board issued Statement of Financial Accounting Standards
          No. 137 "Accounting for Derivative Instruments and Hedging Activities
          Deferral of the Effective Date of SFAS 133," which statement amended
          the effective date of SFAS 133, which was effective for financial
          statements issued for all fiscal quarters of fiscal years beginning
          after June 15, 2000. We do not expect that this statement will have a
          material impact on our results of operations, financial position or
          liquidity.

          Financial Statement Presentation
          --------------------------------
          Certain amounts in the 1999 and 1998 consolidated financial
          statements have been reclassified to conform to the 2000 presentation.

Note 3 -  ACQUISITIONS, DISPOSALS AND SALES

          On March 31, 1998, Unified Investment Advisers, Inc. became a wholly
          owned subsidiary of our company upon surrender to Unified Investment
          Advisers of all the capital stock of Unified Investment Advisers by
          all stockholders of Unified Investment Adviser (other than our
          company). Prior to the surrender of the capital stock to Unified
          Investment Advisers, we accounted for our 33.3% ownership in Unified
          Investment Advisers pursuant to the equity method of accounting.
          Unified Investment Advisers reported gross revenue for the four months
          (Unified Investment Adviser's fiscal year end was November 30) ended
          March 31, 1998 of $146,519 and a loss for the period of $195,967.

                                       - 41 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 3 -  ACQUISITIONS, DISPOSALS AND SALES (Continued)

          On March 10, 1998, we acquired Resource Benefit Planners, Inc. in a
          transaction accounted for under the pooling-of-interests method of
          accounting. We issued 12,000 shares of our common stock in exchange
          for all the outstanding capital stock of Resource Benefit Planners.

          On August 21, 1998, we acquired EMCO Estate Management Company, Inc.
          in a transaction accounted for under the pooling-of-interests method
          of accounting. We issued 11,000 shares of our common stock in exchange
          for all of the assets and certain of the liabilities of EMCO Estate
          Management Company.

          On August 21, 1998, we acquired Fiduciary Counsel, Inc. in a
          transaction accounted for under the purchase method of accounting.
          In connection with such acquisition, we issued 36,110 shares of our
          common stock and paid $800,835 in cash. The results of operations of
          Fiduciary Counsel have been included in our consolidated financial
          statements since its date of acquisition.

          On December 17, 1998, we acquired Equity Underwriting Group, Inc.
          in a transaction accounted for under the pooling-of-interests method
          of accounting. We issued 241,745 shares of our common stock in
          exchange for all of the outstanding capital stock of Equity
          Underwriting Group.

          On December 17, 1998, we acquired Commonwealth Premium Finance
          Corporation in a transaction accounted for under the pooling-of-
          interests method of accounting. We issued 12,800 shares of our common
          stock in exchange for all of the outstanding capital stock of
          Commonwealth Premium Finance Corporation.

          On December 22, 1998, we acquired Strategic Fund Services, Inc. in a
          transaction accounted for under the pooling-of-interests method of
          accounting. We issued 7,500 shares of our common stock in exchange
          for all of the outstanding capital stock of Strategic Fund Services.

          On December 31, 1998, we acquired AmeriPrime Financial Services,
          Inc. in a transaction accounted for under the pooling-of-interests
          method of accounting. We issued 410,000 shares of our common stock
          in exchange for all of the outstanding capital stock of AmeriPrime
          Financial Services.

          On January 1, 1999, we acquired M. Wilson & Associates, Inc. in a
          transaction accounted for under the pooling-of-interests method of
          accounting. We issued 3,636 shares of our common stock in exchange
          for all of the outstanding capital stock of M. Wilson & Associates.

          On May 6, 1999, we, via our subsidiary, Archer Trading, Inc.,
          purchased certain of the assets and assumed certain of the liabilities
          of First Insight Securities, Ltd. In connection with such acquisition,
          we assumed liabilities of approximately $22,000 and paid an additional
          $51,700 in cash. This transaction is accounted for under the purchase
          method of accounting.

          On June 1, 1999, we acquired Fully Armed Productions, Inc. in a
          transaction accounted for under the pooling-of- interests method of
          accounting. We issued 18,182 shares of our common stock in exchange
          for all of the outstanding capital stock of Fully Armed Productions.

                                   - 42 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 3 -  ACQUISITIONS, DISPOSALS AND SALES (Continued)

          On June 1, 1999, we acquired Commonwealth Investment Services,
          Inc in a transaction accounted for under the pooling-of-interests
          method of accounting. We issued 27,500 shares of our common stock in
          exchange for all of the outstanding capital stock of Commonwealth
          Investment Services.

          At year-end 1999, we sold an insurance contract segment of business
          of Equity Insurance Managers of Illinois, L.L.C. (d/b/a/ Irland and
          Rogers). The sale price is determined on continued contract revenue
          and we anticipate receiving payment for the sale of the contracts over
          a two-year period. We recorded this transaction in 1999 based upon the
          estimated revenue and costs to our company of closing the location
          where the business was conducted. During 2000, the amount of the
          anticipated selling price of the book of business was reduced based
          upon the continuing revenue and cash received during 2000 and the
          additional cost of legal fees related to the business.

                                                         2000          1999
                                                         ----          ----

                Sale price                            $ (55,200)     $ 205,200
                Value of fixed assets and goodwill           --       (192,205)
                Costs to close the location                 248       (142,482)
                                                      ---------      ---------
                Loss on the sale                      $ (54,952)     $(129,487)
                                                      =========      =========

          Equity Insurance Managers of Illinois, L.L.C. was formed to
          acquire insurance contracts from an existing business in
          1996. A subsidiary of Equity Underwriting Group owned 55% of this
          new limited liability company. The transaction was reported under
          the purchase method of accounting and this continued with our
          acquisition of Equity Underwriting Group in December 1998. In 1999,
          the seller agreed to a reduction of the unpaid balance of the note
          resulting from the sale in the amount of $255,628. The reduction of
          this price reduced the goodwill reported under the original
          purchase. The minority owner of the new limited liability company
          turned in stock certificates and gave up all rights to ownership
          during 1999. The receivable from the minority owner of $565,566,
          due to its share of operating losses, has been adjusted and
          recorded as a reduction of retained earnings in 1999.

          During 2000, we discontinued our Strategic Fund Services operation
          and Archer Trading operation, in addition to Equity Insurance
          Managers of Illinois, L.L.C. As of June 2000, we ceased funding
          Archer Trading, Inc.'s losses. The losses of these three discontinued
          operations, including the loss on the sale of the Equity Insurance
          Managers of Illinois book of business, resulted in the following:

<TABLE>
<CAPTION>

                                                          2000         1999          1998
                                                          ----         ----          ----

<S>                                                    <C>          <C>           <C>
                Gross revenue                          $  96,896    $ 118,473     $1,145,126
                Loss from discontinued operations       (467,176)    (741,629)      (326,830)
</TABLE>

                                     - 43 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 3 -  ACQUISITIONS, DISPOSALS AND SALES (Continued)

<TABLE>
<CAPTION>
          Assets and liabilities at December 31, 2000 and 1999 of the
          discontinue operations are summarized below:

                                                               2000              1999
                                                           ------------     -------------
                <S>                                        <C>              <C>
                Receivables............................    $     10,610     $     471,532
                Accounts payable and accrued payable...          29,869           774,533
                Payable to parent......................       1,662,748         1,049,054
</TABLE>

Note 4 -  OPTIONS


          On May 20, 1998, our stockholders adopted the Unified Financial
          Services, Inc. 1998 Stock Incentive Plan, which plan subsequently
          was amended by our stockholders on May 27, 1999. The Stock
          Incentive Plan provides for the granting of stock options and
          other stock-based awards. The total number of shares of our common
          stock issuable under our Stock Incentive Plan is not to exceed
          500,000 shares, subject to adjustment in the event of any change
          in our outstanding shares by reason of a stock dividend, stock
          split, capitalization, merger, consolidation or other similar
          changes generally affecting our stockholders. Of these 500,000
          shares of stock, no more than 250,000 shares may be issued to
          participants in our Stock Incentive Plan in any plan year.

          Under the terms of our Stock Incentive Plan, employees, directors,
          advisors and consultants of our company and subsidiaries will be
          eligible to receive the following: (a) incentive stock options;
          (b) nonqualified stock options; (c) stock appreciation rights
          ("SAR"); (d) restricted stock; (e) restricted stock units; and (f)
          performance awards.

          As of December 31, 2000, 1999 and 1998, options to acquire 104,086,
          105,961 and 37,526 shares, respectively, of our common stock were
          outstanding pursuant to our Stock Incentive Plan. In addition, as
          of December 31, 2000, our board had granted options to acquire
          66,666 share of our common stock outside of such plan. Such options
          had exercise prices as follows:

                For the year ended December 31, 2000:

                6,350 shares at $25.00 per share
                19,186 shares at $27.50 per share
                500 shares at $30.25 per share
                77,050 shares at $40.00 per share
                1,000 shares at $44.00 per share
                66,666 shares at $45.00 per share

                For the year ended December 31, 1999:

                6,400 shares at $25.00 per share
                19,551 shares at $27.50 per share
                500 shares at $30.25 per share
                79,010 shares at $40.00 per share
                500 shares at $44.00 per share

                For the year ended December 31, 1998:

                6,800 shares at $25.00 per share
                19,551 shares at $27.50 per share
                500 shares at $30.25 per share
                10,675 shares at $40.00 per share


                                     - 44 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 4 -  OPTIONS (Continued)

          As of December 31, 2000, 85,786 of such options were intended to
          qualify as incentive stock options pursuant to Section 422 of the
          Internal Revenue Code of 1986, as amended.
<TABLE>
<CAPTION>
       <S>                                                                         <C>
       Options outstanding at December 31, 1999..................................  105,961
       Options issued during period at exercise price of $40.00 per share........   11,150
       Options issued during period at exercise price of $44.00 per share........      500
       Options issued during period at exercise price of $45.00 per share........   66,666
       Options exercised during period...........................................       --
       Forfeitures at $25.00 per share...........................................       50
       Forfeitures at $27.50 per share...........................................      365
       Forfeitures at $40.00 per share...........................................   13,110
       Options outstanding at December 31, 2000..................................  170,752
</TABLE>

Note 5 -  DEBT AND RELATED MATTERS
<TABLE>
<CAPTION>
          Debt at December 31, 2000, 1999 and 1998 consisted of the following:

          Bank notes payable:                                    2000          1999           1998
          ------------------                                 -----------   ------------   -----------
          <S>                                                <C>           <C>            <C>
          Term loan, interest at prime...................    $ 1,893,750   $ 2,293,750    $        --

          Payable in monthly installments including
          interest at prime plus 0.5%, final payment
          due December 31, 2001, collateralized by
          communication and computer hardware
          and software...................................         32,699       183,418        321,576

          Payable in monthly installments including
          interest at 8.25%, final payment due March 31,
          2014, collateralized by equipment..............        350,939       364,827             --

          Payable in monthly installments including
          interest at 10.4%, final payment due April
          26, 2002, collateralized by equipment..........          9,613        16,001             --

          Payable at maturity, January 30, 2001, interest
          at prime secured by certain company assets.....             --            --      3,050,000

          Note payable, individual, payable in six annual
          installments of $150,952, interest at prime
          plus 1%, final payment due January 1, 2004,
          unsecured......................................             --            --        579,611
                                                             -----------   -----------    -----------

          Total..........................................      2,287,001     2,857,996      3,951,187
                                                             -----------   -----------    -----------

          Less current maturities........................      1,944,662     2,343,965      1,926,608
                                                             -----------   -----------    -----------
          Long-term portion..............................    $   342,339   $   514,031    $ 2,024,579
                                                             ===========   ===========    ===========
</TABLE>


                                     - 45 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 5 -  DEBT AND RELATED MATTERS (Continued)

<TABLE>
<CAPTION>
          The maturities of notes payable for each of the succeeding five years
          subsequent to December 31, 2000 are as follows:

                           <S>                          <C>
                           2001....................     $ 1,944,662
                           2002....................          18,145
                           2003....................          13,108
                           2004....................          13,108
                           2005 and beyond.........         297,978
                                                        -----------
                                  Total............     $ 2,287,001
                                                        ===========
</TABLE>

<TABLE>
<CAPTION>

          Lines of credit at December 31, 2000, 1999 and 1998 consisted of the following:

          Lines of credit:
          ---------------
                                                                          2000           1999           1998
                                                                          ----           ----           ----
          <S>                                                         <C>            <C>            <C>
          Payable on demand, interest at prime.....................   $        --    $         --   $     50,000

          Payable at maturity, June 30, 2001, interest
          at prime, secured by assignment of receivables...........      1,660,000      1,710,000      1,350,000

          Payable at maturity, June 30, 1999, interest at
          prime, secured by certain company assets.................             --             --        400,000

          Payable at maturity, December 31, 2002, interest
          at 10.25%................................................          8,626             --             --

          Payable on demand, interest at prime.....................             --             --        160,004

          Payable in monthly installments including interest at
          10.576%, final payment due September 24, 2002,
          collateralized by equipment..............................             --         17,003             --
                                                                      ------------    ------------  ------------
                Total..............................................   $  1,668,626   $  1,727,003   $  1,960,004
                                                                      ============   ============   ============
</TABLE>

Note 6 -  CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>

          We lease both computer and office equipment under capital leases.
          Such lease obligations are payable over a 60-month period.
          Following is a summary of future minimum lease payments under
          capitalized lease obligations as of December 31, 2000, 1999 and
          1998:

                                                              2000       1999         1998
                                                              ----       ----         ----
                <S>                                        <C>        <C>          <C>
                1999....................................   $      --   $      --   $ 108,103
                2000....................................          --      32,385      31,970
                2001....................................       8,355       8,355       7,702
                2002....................................         724         724          --
                2003....................................         422         483          --
                                                           ---------   ---------   ---------
                                                               9,501      41,947     147,775
                Less:  amount representing interest              568       2,942       9,908
                                                           ---------   ---------   ---------
                        Total...........................   $   8,933   $  39,005   $ 137,867
                                                           =========   =========   =========
</TABLE>

          We did not acquire equipment through capital lease obligations
          during the years ended December 31, 2000, 1999 and 1998, other than
          in connection with our acquisitions of Commonwealth Investment
          Services, Inc. and Fully Armed Productions, Inc.


                                     - 46 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 7 -  RENTAL AND LEASE INFORMATION

          We, through our subsidiary, Unified Banking Company, lease our
          corporate headquarters and administrative office facilities located
          at 2424 Harrodsburg Road, Lexington, Kentucky, which facility has
          approximately 2,000 square feet, and is leased pursuant to an
          operating lease expiring in 2006. The lease includes provisions for
          adjustment of operating costs and real estate taxes.

          We also maintain administrative offices at the corporate offices
          of Unified Financial Securities and Unified Fund Services, Inc,
          each of which is located at 429-431 N. Pennsylvania Street,
          Indianapolis, Indiana and One Firstar Plaza, Saint Louis, Missouri.

          At December 31, 2000, we were committed to minimal rental payments
          under certain non-cancellable operating leases. Generally, these
          leases include cancellation clauses. The aggregate minimum rental
          commitments required under operating leases for office space and
          equipment at December 31, 2000 for all operations were as follows:
<TABLE>
<CAPTION>
                  FOR THE YEARS ENDING DECEMBER 31,                              LEASE COMMITMENTS
                  ---------------------------------                              -----------------
                                    <S>                                              <C>
                                    2001...................................          $   1,203,555
                                    2002...................................                777,558
                                    2003...................................                498,347
                                    2004...................................                425,482
                                    Thereafter.............................                926,039
                                                                                     -------------
                                           Total...........................          $   3,830,981
                                                                                     =============
</TABLE>

          We lease certain office facilities and equipment. Rental expense
          for the years ended December 31, 2000, 1999 and 1998 were
          $1,006,325, $973,820 and $704,977, respectively.

Note 8 -  COMMITMENTS AND CONTINGENCIES

          We are a party to various lawsuits, claims and other legal actions
          arising in the ordinary course of business. In the opinion of
          management, all such matters are without merit or are of such
          kind, or involve such amounts, that unfavorable disposition would
          not have a material adverse effect on our financial position or
          results of operations.

Note 9 -  EMPLOYEE BENEFIT PLANS

          We and our subsidiaries provide a defined contribution retirement
          plan that covers substantially all employees. Our board of
          directors determines contributions to the plan. For the years
          ended December 31, 2000, 1999 and 1998, our board of directors
          made contributions to the plan of $-0-, $-0- and $10,851,
          respectively.

          We also maintain a 401(k) plan as part of the defined contribution
          retirement plan. The plan includes a matching for funds
          contributed. We will match the employee's contribution up to fifty
          percent of the first six percent of the employee's pre-tax
          contribution.

                                     - 47 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 10 - CASH SEGREGATED UNDER FEDERAL REGULATION AND NET CAPITAL
          REQUIREMENTS

          Unified Financial Securities, our brokerage subsidiary, is subject
          to the Securities and Exchange Commission's Uniform Net Capital
          Rule ("Rule 15c3-1"), which requires the maintenance of minimum net
          capital, as defined, of the greater of (i) 6-2/3% of aggregate
          indebtedness or (ii) $50,000, whichever is greater, and a ratio of
          aggregate indebtedness to net capital of not more than 15 to 1. At
          December 31, 2000, 1999 and 1998, Unified Financial Securities' net
          capital was $374,461, $424,177 and $548,703, respectively, and its
          ratio of aggregate indebtedness was 1.44 to 1, 1.19 to 1 and 0.506
          to 1, respectively.

          Pursuant to Rule 15c3-3 as promulgated by the Securities and
          Exchange Commission, Unified Financial Securities calculates its
          reserve requirement and segregates cash and/or securities for the
          exclusive benefit of its customers on a periodic basis. The reserve
          requirement for Unified Financial Securities was $0 at December 31,
          2000, 1999 and 1998. Balances segregated in excess of reserve
          requirements are not restricted.

          As disclosed in Note 1, Unified Financial Securities acquired
          substantially all of the assets of Commonwealth Investment Services
          and AmeriPrime Financial Securities on January 31, 2000 and
          December 31, 2000, respectively. As of such dates, Commonwealth
          Investment Services and AmeriPrime Financial Securities,
          respectively, ceased operations.

Note 11 - COMMON AND PREFERRED STOCK

          Common Stock:

          Acquisitions
          ------------
          We have 20,000,000 authorized shares of our common stock. In
          connection with acquisitions consummated during 1999 and 1998, we
          issued shares of our common stock as follows:
<TABLE>
<CAPTION>

         COMPANY ACQUIRED                           DATE ACQUIRED      SHARES ISSUED
         ----------------                           -------------      -------------
         <S>                                      <C>                  <C>
         1999
         ----
           M. Wilson & Associates                  January 1, 1999          3,636
           Commonwealth Investment Services         June 1, 1999           27,500
           Fully Armed Productions                  June 1, 1999           18,182
         1998
         ----
           Resource Benefit Planners               March 10, 1998          12,000
           EMCO Estate Management Company          August 21, 1998         11,000
           Fiduciary Counsel                       August 21, 1998         36,110
           Equity Underwriters Group              December 17, 1998       241,745
           Commonwealth Premium
             Finance Corporation                  December 17, 1998        12,800
           Strategic Fund Services                December 22, 1998         7,500
           AmeriPrime Financial Services          December 31, 1998       410,000
</TABLE>

          Private Placement Offerings
          ---------------------------
          Effective December 10, 1998, we commenced a private placement
          offering to sell a maximum of 1,750,000 shares of our common
          stock. Effective September 27, 1999, the size of the offering was
          reduced to 750,000 shares of our common stock, which shares were
          offered at a price of $40.00 per share. The offering terminated on
          March 31, 2000. For the years ended December 31, 2000 and 1999, we
          issued 11,530 and 238,270 shares, respectively, of our common
          stock (including 10,929 and 37,545 shares, respectively, from
          treasury). For the years ended December 31, 2000 and 1999,
          aggregate brokerage fees of $20,500 and $901,780, respectively,

                                     - 48 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 11 - COMMON AND PREFERRED STOCK (Continued)

          were paid to our brokerage subsidiaries in connection with this
          private placement offering, which amount is inclusive of $18,300
          and $2,400, respectively, paid to external brokerage firms.

          Effective January 22, 1998, we commenced a private placement
          offering to sell a maximum of 600,000 shares of our common stock.
          The first 400,000 shares offered were offered at a price of $25.00
          per share and, upon acceptance by us of subscriptions for such
          400,000 shares, the remaining 200,000 shares in the private
          placement were offered at a price of $27.50 for share. The
          offering terminated on June 30, 1998. As of December 31, 1998, we
          had issued 450,738 shares of our common stock pursuant to such
          offering. For the year ended December 31, 1998, aggregate
          brokerage fees of $772,000 were paid to Unified Financial
          Securities in connection with the private placement offering,
          which amount is inclusive of $140,000 paid to external brokerage
          firms.

          In our two private placements, all shares of our common stock were
          offered on a best efforts basis. There is no public market for any
          of our securities and there can be no assurance that a market will
          develop in the future. The securities offered and sold by us in
          our private placements will not be and have not been registered
          under the Securities Act of 1933, as amended, and may not be
          offered or sold in the United States absent registration or an
          applicable exemption from registration requirements.

          Preferred Stock:

          As of December 31, 2000, 1999 and 1998, our total preferred shares
          authorized was 1,000,000 with a par value of $.01 per share, of
          which the following were designated at December 31, 2000, 1999 and
          1998:
<TABLE>
<CAPTION>

           PREFERRED              SHARES        SHARES       SHARES      STATED     PAR
             STOCK               DESIGNATED     ISSUED     OUTSTANDING    VALUE    VALUE
             -----               ----------     ------     -----------    -----    -----
          <S>                    <C>            <C>        <C>           <C>       <C>
          2000:
              Series D.......     200,000           --          --         $200    $0.01

          1999:
              Series D.......     200,000           --          --          200     0.01

          1998:
              Series C.......       2,100        1,672       1,672          100     0.01
              Series D.......     100,000           --          --          200     0.01
</TABLE>

          Series C Preferred Stock
          ------------------------
          In 1999 and 1998, we issued 1,009 and 2,100 shares, respectively,
          of our Series C 6.75% Cumulative Convertible Preferred Stock to
          certain directors, executive officers and agents of our company
          for total consideration of $310,900. Each share of Series C
          Preferred Stock was convertible, at any time at the option of
          the holder thereof and without the payment of any additional
          consideration with respect thereto, into 135 shares of our common
          stock. During the years ended December 31, 1999 and 1998, 2,681
          and 428 shares of Series C Preferred Stock were converted into
          361,935 and 57,780 shares, respectively, of our common stock. As
          of November 30, 1999, all outstanding shares of Series C Preferred
          Stock had been converted to common stock and, on December 23,
          1999, we filed a Certificate of Elimination with respect to the
          Series C Preferred Stock with the Office of the Delaware Secretary
          of State.


                                     - 49 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 11 - COMMON AND PREFERRED STOCK (Continued)

          Series D Preferred Stock Authorized
          -----------------------------------
          In July 1998, we authorized 100,000 shares of Series D Convertible
          Junior Participating Preferred Stock. This amount was increased to
          200,000 in May 1999. We have reserved all of the shares of Series
          D Preferred Stock for issuance under a Rights Agreement dated
          August 26, 1998 between us and Unified Fund Services, as rights
          agent. On August 26, 1998, our board of directors declared a
          dividend distribution of one Preferred Stock Purchase Right for
          each outstanding share of our common stock. The dividend
          distribution was payable to the stockholders of record at the
          close of business on August 26, 1998. Generally, each Preferred
          Stock purchase right, when exercisable, entitles the registered
          holder to purchase from our company one one-hundredth of a share
          of Series D Preferred Stock at a price of $200.00 per one
          one-hundredth of a share.

          Series A and Series B Preferred Stock Redemption
          ------------------------------------------------
          On April 25, 1998, we redeemed our outstanding Series A and Series
          B Preferred Stock. Total consideration of $1,738,326, consisting
          of principal and accrued interest, was paid to the holders of the
          Series A and Series B Preferred Stock in connection with the
          redemption of such shares. On September 14, 1998, we filed
          Certificates of Elimination with respect to the Series A and
          Series B Preferred Stock with the Office of the Delaware Secretary
          of State.

Note 12 - INCOME TAXES

          Consolidated net operating loss carryforwards at December 31,
          2000, 1999 and 1998 amounted to approximately $17,500,000,
          $16,191,000 and $14,004,000, respectively, expiring from 2004 to
          2015.

          Consolidated State of Indiana net operating loss carryforwards at
          December 31, 2000, 1999 and 1998 amounted to approximately
          $16,000,000, $15,000,000 and $13,000,000, respectively, expiring
          from 2004 to 2015.

          We increased our net operating loss carryforwards by approximately
          $1,300,000 and $1,600,000 in 2000 and 1999, respectively, which
          reduced current consolidated Federal income tax expense to zero.

          We record deferred income taxes in accordance with Financial
          Accounting Standard ("FAS") No. 109. The deferred tax liability in
          our consolidated financial statements as of December 31, 2000,
          1999 and 1998 were as follows:

<TABLE>
<CAPTION>
                                              2000         1999          1998
                                              ----         ----          ----
         <S>                              <C>           <C>           <C>
         Deferred tax assets..........     $ (80,037)   $ (130,927)   $ (51,062)
         Deferred tax liability.......        14,308       168,936       90,318
                                           ---------    ----------    ---------
         Net deferred tax liability...     $ (65,729)   $   38,009    $  39,256
                                           =========    ==========    =========
</TABLE>

                                     - 50 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 12 - INCOME TAXES (Continued)
<TABLE>
          The components of income tax expense for the years ended December
          31, 2000, 1999 and 1998 were as follows:
<CAPTION>

                                                  2000       1999       1998
                                                  ----       ----       ----
         <S>                                   <C>        <C>        <C>
         Current income tax:
               Federal......................   $      --  $  48,083  $  62,848
               State and local..............      35,000     32,470      8,083
                                               ---------  ---------  ---------
                 Total current income tax...      35,000     80,553     70,931
                                               ---------  ---------  ---------
          Deferred income tax:
               Federal......................          --    (37,863)    19,080
               State and local..............          --    (12,960)    61,097
                                               ---------  ---------  ---------
                 Total deferred.............          --    (50,823)    80,177
                                               ---------  ---------  ---------
                    Total income tax........   $  35,000  $  29,730  $ 151,108
                                               =========  =========  =========
</TABLE>

Note 13 - RELATED PARTY TRANSACTIONS

          Commonwealth Premium Finance Corporation ("CPFC") employees are
          paid through the Equity Insurance Managers, Inc. ("EIM") payroll
          system, which serves as a common paymaster. CPFC's employees are
          eligible for all benefits that EIM offers, although these benefits
          are paid for by CPFC. As of December 31, 2000, 1999 and 1998,
          CPFC's balance in unfunded contracts payable of $356,770, $171,746
          and $448,040, respectively, was owed to EIM for the amount due on
          the insurance policy premiums that EIM sold and CPFC financed.

Note 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

          The following table presents the carrying amounts and estimated
          fair value of our financial instruments at December 31, 2000, 1999
          and 1998. Financial Accounting Standard No. 107, "Disclosures
          about Fair Value of Financial Instruments," defines the fair value
          of a financial instrument as the amount at which the instrument
          could be exchanged in a current transaction between willing
          parties.
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                  ----------------------------------------------------------------
                                         2000                  1999                   1998
                                  ------------------    ------------------     -------------------
                                  CARRYING     FAIR     CARRYING     FAIR      CARRYING     FAIR
        (IN THOUSANDS)             AMOUNT      VALUE     AMOUNT      VALUE      AMOUNT      VALUE
                                   ------      -----     ------      -----      ------      -----
<S>                               <C>        <C>        <C>        <C>         <C>        <C>
Financial assets
  Cash and cash equivalents....   $  5,582   $  5,582   $  5,714   $  5,714    $ 10,396   $ 10,396
  Investment in:
  Mutual funds and
    securities.................        573        573        419        419         232        232
  Mutual funds - affiliates             --         --        326        326         494        494
  Receivables..................     13,086     13,086      9,605      9,605       8,911      8,911
  Prepaid and sundry...........        297        297        775        775         230        230

Financial obligations
  Current liabilities..........     49,411     49,411     19,083     19,083      10,575     10,575
  Capital lease obligation.....          9          9         39         39         138        138
  Long-term debt...............      2,287      2,287      2,858      2,858       5,911      5,911
</TABLE>

                                     - 51 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 15 - DISCLOSURES ABOUT REPORTING SEGMENTS

          We have six reportable operating segments: trust and retirement
          services; mutual fund administration services; banking; insurance;
          brokerage; and investment advisory services. In addition, we also
          report corporate as a separate segment.

          The accounting policies of these segments are the same as those
          described in the summary of significant accounting policies. We
          evaluate performance based on profit or loss from operations
          before income taxes, not including recurring gains and losses.

          Our reportable segments are strategic business units that offer
          different products and services. They are managed separately
          because each business requires different technology and marketing
          strategies. Most of the businesses were acquired as a unit and the
          management at the time of the acquisition was retained. Reportable
          segment revenues, gross profit, total assets, capital expenditures
          and depreciation and amortization were as follows as of or for the
          years ended December 31, 2000, 1999 and 1998:



                                     - 52 -

<PAGE>
<PAGE>


                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 15 - DISCLOSURES ABOUT REPORTING SEGMENTS (Continued)
<TABLE>
<CAPTION>


                                                2000         1999          1998
(IN THOUSANDS)                                -------       -------       -------
<S>                                           <C>           <C>           <C>
Revenues
    Trust and retirement ...............      $ 4,330       $ 4,110       $ 3,596
    Mutual fund administration .........        4,790         2,710         2,042
    Banking ............................        1,387           525           395
    Insurance ..........................       12,689         9,383         9,443
    Brokerage ..........................        3,115         4,590         4,088
    Investment advisory ................        1,938         1,800           729
    Corporate ..........................          482           944           516
                                              -------       -------       -------
       Total ...........................      $28,731       $24,062       $20,809
                                              =======       =======       =======

Gross profit
    Trust and retirement ...............      $ 4,025       $ 3,868       $ 3,350
    Mutual fund administration .........        3,759         2,051         1,478
    Banking ............................        1,387           524           395
    Insurance ..........................        7,179         5,524         5,442
    Brokerage ..........................        1,265         2,127         2,478
    Investment advisory ................        1,894         1,764           729
    Corporate ..........................          479           944           516
                                              -------       -------       -------
       Total ...........................      $19,988       $16,802       $14,388
                                              =======       =======       =======

Total assets
    Trust and retirement ...............      $ 3,793       $ 3,911       $ 3,055
    Mutual fund administration .........        2,286         1,746           700
    Banking ............................       44,634        16,630         1,914
    Insurance ..........................       10,334         7,998         9,407
    Brokerage ..........................        1,346         1,894         2,118
    Investment advisory ................        1,981         2,077         2,309
    Corporate ..........................        1,261         2,493         7,320
                                              -------       -------       -------
       Total ...........................      $65,635       $36,749       $26,823
                                              =======       =======       =======

Capital expenditures
    Trust and retirement ...............      $   272       $    84       $    84
    Mutual fund administration .........           87            91            18
    Banking ............................          630           889            54
    Insurance ..........................          240           137           229
    Brokerage ..........................            6            28            43
    Investment advisory ................           --            26             9
    Corporate ..........................          210           773            75
                                              -------       -------       -------
       Total ...........................      $ 1,445       $ 2,028       $   512
                                              =======       =======       =======

Depreciation and amortization
    Trust and retirement ...............      $    89       $    65       $    65
    Mutual fund administration .........           82            67            53
    Banking ............................          153            84            70
    Insurance ..........................          155           130           193
    Brokerage ..........................           35            36           423
    Investment advisory ................          139           140            51
    Corporate ..........................          341           185            11
                                              -------       -------       -------
       Total ...........................      $   994       $   707       $   866
                                              =======       =======       =======
</TABLE>

                                     - 53 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 16 - UNIFIED BANKING COMPANY ASSETS AND LIABILITIES

          Unified Banking Company commenced operations on November 1, 1999.
          Included in our consolidated financial statements at December 31,
          2000 and 1999 were the bank's total assets of $42,365,604 and
          $14,456,890, respectively, and total liabilities of $35,856,084
          and $7,314,639, respectively, as of such dates. As of such dates,
          certain components of such assets and liabilities were as follows:
<TABLE>
<CAPTION>

                                                           2000           1999
                                                           ----           ----
          <S>                                          <C>             <C>
          Cash ...................................     $    124,952    $  106,912
          Due from banks .........................        1,162,639       314,815
          Federal funds sold .....................        7,667,000     4,922,000
          Investments in securities:
               US agency securities ..............       10,841,435     5,515,156
               FHLB stock ........................          100,000           500
          Loans:
               Real estate loans .................       14,569,481       611,789
               Commercial loans ..................        4,257,141     1,638,324
               Installment loans .................        2,419,352       386,979
               Other loans .......................            1,141         1,583
               Allowance for loan losses..........          305,000        33,000
          Bank deposits:
               Demand deposits ...................        3,468,441     4,141,635
               Official checks ...................           64,135       309,374
               NOW accounts ......................          426,457       259,015
               Money market accounts .............       12,724,377     1,906,068
               Savings accounts ..................           34,935        15,926
               Time deposits .....................       16,648,180       399,643
               Other interest-bearing deposits ...        1,157,109       257,313
          Federal and borrowed funds..............        1,143,000            --
</TABLE>


Note 17 - INVESTMENT IN AFFILIATE

          On May 23, 2000, we subscribed for 10 shares of VSX Holdings, LLC,
          a Delaware limited liability company, in exchange for $10 and
          certain intangible property rights. We currently own approximately
          0.5% of the outstanding shares of VSX Holdings, but have the right
          to purchase up to an additional 1,990 shares at a price of $1 per
          share, upon the occurrence of certain specified events. Our
          investment in VSX Holdings is accounted for on the equity method
          of accounting.

          VSX Holdings is involved in the development of an alternative
          trading system to be known as VSX.com, which, upon and subject to
          organization and regulatory approval, will serve as a virtual,
          real-time private financial market place. In connection with the
          organization of VSX Holdings, a third party investor made a $3.0
          million loan to VSX Holdings. We also have entered into a
          management arrangement with VSX Holdings whereby we provide
          consulting and development services to VSX Holdings. For the year
          ended December 31, 2000, we received payments totaling $1,535,504
          from VSX Holdings for such consulting and development services,
          which amount is recorded as a reduction of "Other operating
          expenses" on our Consolidated Statement of Operations for the year
          ended December 31, 2000.


                                     - 54 -

<PAGE>
<PAGE>

                      UNIFIED FINANCIAL SERVICES, INC.
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 2000, 1999 AND 1998
                      --------------------------------

Note 18 - INVESTMENTS IN DEBT SECURITIES

          Prior to its conversion to a limited purpose national banking
          association known as Unified Trust Company, National Association,
          First Lexington Trust Company, a subsidiary of our company, was
          required by the Kentucky Department of Financial Institutions to
          maintain a minimum of $800,000 capital as long as trust assets
          under management did not exceed $100,000,000. When trust assets
          under management exceeded $100,000,000, the capital requirement
          increased by $350,000. The incremental increase of $25,000,000 in
          assets under management required the capital requirement to
          increase by $90,000. As of December 31, 1999, First Lexington
          Trust Company was required to maintain a minimum of $1,510,000
          capital, which capital was invested in debt securities. Subsequent
          to its conversion, Unified Trust Company, National Association
          liquidated its investment in debt securities. As noted in Note 1,
          Unified Trust Company, National Association is required by the
          Office of the Comptroller of the Currency to maintain minimum
          capital of $2.0 million.

          The marketable investments in debt securities were classified as
          "Held to Maturity" and the amortized cost and fair market value of
          such investments as of December 31, 1999 was as follows:
<TABLE>
<CAPTION>
                                            MATURITY                  AMORTIZED    UNREALIZED    MARKET
       DEBT SECURITY                          DATE       FACE VALUE     COST       GAIN(LOSS)    VALUE
       -------------                          ----       ----------     ----       ----------    -----
<S>                                        <C>           <C>          <C>          <C>         <C>
Federal Home Loan Mortgage:
      REMIC 1675-P ....................    10 15 2023    $  100,000   $   71,609   $  (4,301)  $   67,308
      REMIC 1646-N ....................    03 15 2023       200,000      190,824      (2,556)     188,268
      REMIC 1681-B ....................    10 15 2023       220,000      212,024      (1,768)     210,256
      REMIC 1663-L ....................    08 15 2023        40,000       39,208      (1,486)      37,722
      Note ............................    06 30 2014        50,000       50,899      (3,633)      47,266

Federal National Mortgage Association
      REMIC 94-23-0 ...................    10 25 2007        97,000       89,733         807       90,540
      Note ............................    11 10 2005       125,000      128,948      (7,932)     121,016
      Note ............................    07 28 2008        75,000       75,414      (5,102)      70,312
      Note ............................    07 02 2000        75,000       74,660      (4,983)      69,677

Cleveland Electric
      Illumination Company ............    07 01 2013        60,000       64,833      (4,571)      60,252
Wells Fargo Capital
      Bonds ...........................    12 01 2026        50,000       50,469      (3,625)      46,844
TVA Subordinated
      Debenture .......................    04 24 2002        25,000       25,000      (2,000)      23,000
                                                         ----------   ----------   ---------   ----------

          Totals                                         $1,117,000   $1,073,621   $ (41,150)  $1,032,471
                                                         ==========   ==========   =========   ==========
</TABLE>


Note 19 - SUBSEQUENT EVENT

          Effective February 27, 2001, we refinanced our outstanding term
          loan to Bank One, Kentucky, N.A. The outstanding principal amount
          of such loan, $1,800,000, was refinanced at prime, with accrued
          interest being payable monthly beginning April 1, 2001, principal
          payments of $100,000 being due every three months beginning July
          1, 2001 and the remaining principal amount outstanding and any
          accrued interest being due on April 30, 2002, the maturity date of
          such loan.


                                     - 55 -

<PAGE>
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         ---------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

         Not applicable.

                                  PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

         Information regarding our directors is contained in our Proxy
Statement for the 2001 Annual Meeting of Stockholders under the caption
"Proposal 1: Election of Directors" and is incorporated herein by reference.
Information regarding our executive officers is contained in this report
under Item 4A--"Executive Officers of the Registrant" and is incorporated
herein by reference.

         Information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended, is included in our Proxy
Statement for the 2001 Annual Meeting of Stockholders under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance," and is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION
         ----------------------

         Information regarding executive compensation is contained in our
Proxy Statement for the 2001 Annual Meeting of Stockholders under the
captions "Report of Audit, Nominating and Compensation Committee on
Executive Compensation and Audit Matters" and "Compensation of Executive
Officers," and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

         Information regarding security ownership of certain beneficial
owners and management is contained in our Proxy Statement for the 2001
Annual Meeting of Stockholders under the caption "Security Ownership of
Certain Beneficial Owners and Management," and is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

         Information regarding certain relationships and related
transactions is contained in our Proxy Statement for the 2001 Annual Meeting
of Stockholders under the captions "Board of Directors and Committees" and
"Certain Relationships and Related Transactions," and is incorporated herein
by reference.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
         ---------------------------------------------------------------

       (a)   Exhibits:

             See Exhibit Index on pages 59-61 hereto.

       (b)   Reports on Form 8-K.

             During the three months ended December 31, 2000 we did not file
             any Current Reports on Form 8-K.



                                     - 56 -

<PAGE>
<PAGE>

                                 SIGNATURES


         In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of the 23rd day
of February 2001.

                              UNIFIED FINANCIAL SERVICES, INC.
                              (Registrant)


                              By /s/ Timothy L. Ashburn
                                 ---------------------------------------------
                                 Timothy L. Ashburn, Chairman of the Board
                                 and Chief Executive Officer



                              POWER OF ATTORNEY

         We, the undersigned officers and directors of Unified Financial
Services, Inc., hereby severally and individually constitute and appoint
Timothy L. Ashburn and John S. Penn, and each of them, the true and lawful
attorneys and agents of each of us to execute in the name, place and stead
of each of us (individually and in any capacity stated below) any and all
amendments to this Annual Report on Form 10-K and all instruments necessary
or advisable in connection therewith and to file the same with the
Securities and Exchange Commission, each of said attorneys and agents to
have the power to act with or without the others and to have full power and
authority to do and perform in the name and on behalf of each of the
undersigned every act whatsoever necessary or advisable to be done in the
premises as fully and to all intents and purposes as any of the undersigned
might or could do in person, and we hereby ratify and confirm our signatures
as they may be signed by our said attorneys and agents or each of them to
any and all such amendments and instruments.

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

      Signature                           Title                       Date

<S>                            <C>                              <C>
/s/ Timothy L. Ashburn         Chairman of the Board            February 23, 2001
-------------------------      and Chief Executive Officer
Timothy L. Ashburn



/s/ John S. Penn               President, Chief Operating       February 23, 2001
-------------------------      Officer and Director
John S. Pen



/s/ Thomas G. Napurano         Executive Vice President,        February 23, 2001
-------------------------      Chief Financial Officer
Thomas G. Napurano             and Director



                                     - 57 -

<PAGE>
<PAGE>


/s/ Philip L. Conover          Director                         February 23, 2001
-------------------------
Philip L. Conover



/s/ Weaver H. Gaines           Director                         February 23, 2001
-------------------------
Weaver H. Gaines



/s/ Jack R. Orben              Director                         February 23, 2001
-------------------------
Jack R. Orben


/s/ Richard A. Walker          Director                         February 23, 2001
-------------------------
Richard A. Walker

</TABLE>

                                     - 58 -

<PAGE>
<PAGE>
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

Ex. No.                              Description
-------                              -----------
     <S>          <C>
     3.1(a)       Amended and Restated Certificate of Incorporation of
                  the Company, filed as Exhibit 4.1(a) to the Company's
                  Quarterly Report on Form 10-QSB for the quarter
                  ended September 30, 1997, is incorporated herein by
                  reference.

     3.1(b)       Certificate of Amendment of Amended and Restated
                  Certificate of Incorporation of the Company, is filed
                  herewith.

     3.1(c)       Certificate of Amendment of Amended and Restated Certificate
                  of Incorporation of the Company, filed as Exhibit 3.1
                  to the Company's Quarterly Report on Form 10-QSB for the
                  quarter ended June 30, 1999, is incorporated by reference
                  herein.

     3.2          By-laws of the Company, filed as Exhibit 4.2 to the Company's
                  Quarterly Report on Form 10-QSB for the quarter ended
                  September 30, 1997, is incorporated herein by reference.

     4.1          Certificate of Designations, Preferences and Rights
                  of Series D Junior Participating Preferred Stock of the
                  Company, filed as Exhibit 4.2 to the Company's Quarterly
                  Report on Form 10-QSB for the quarter ended September 30,
                  1998, is incorporated herein by reference.

     4.2          Rights Agreement, dated as of August 26, 1998, between the
                  Company and Unified Fund Services, Inc., filed as Exhibit 1 to
                  the Company's Registration Statement on Form 8-A dated
                  September 3, 1998, is incorporated herein by reference.

     10.1         Employment Agreement dated as of June 1, 1997 by and between
                  Health Financial, Inc. and Dr. Gregory W. Kasten, filed as
                  Exhibit 10.1 to Amendment No. 1 to the Company's Registration
                  Statement on Form 10-SB, is incorporated herein by reference.*

     10.2         Employment Agreement dated as of December 16, 1998 by and between
                  Equity Underwriting Group, Inc. and John R. Owens, filed as
                  Exhibit 10.8 to the Company's Annual Report on Form 10-KSB for
                  the year ended December 31, 1998, is incorporated herein by
                  reference.*

     10.3         Employment Agreement, dated as of December 31, 1999, by and
                  between the Company and Charles H. Binger, filed as Exhibit
                  10.24 to the Company's Annual Report on Form 10-KSB for the
                  year ended December 31, 1999, is incorporated herein by
                  reference.*

     10.4         Employment Agreement, dated as of December 31, 1999, by
                  and between the Company and David F. Morris, filed as Exhibit
                  10.25 to the Company's Annual Report on Form 10-KSB for the
                  year ended December 31, 1999, is incorporated herein by
                  reference.*


                                     - 59 -

<PAGE>
<PAGE>

     10.5         Amended and Restated Unified Financial Services Inc. 1998
                  Stock Incentive Plan, filed as Annex A to the Company's Proxy
                  Statement for the Company's 1999 Annual Meeting, is
                  incorporated herein by reference.*

     10.6         Loan Agreement, dated as of December 28, 1999, by and among
                  Bank One, Kentucky, NA, the Company and Commonwealth Premium
                  Finance Corporation, filed as Exhibit 10.26 to the Company's
                  Annual Report on Form 10-KSB for the year ended December 31,
                  1999, is incorporated herein by reference.

     10.7         Security Agreement, dated as of December 28, 1999, by and
                  between Commonwealth Premium Finance Corporation and Bank One,
                  Kentucky, NA, filed as Exhibit 10.27 to the Company's Annual
                  Report on Form 10-KSB for the year ended December 31, 1999, is
                  incorporated herein by reference.

     10.8         First Amendment to Loan Agreement, dated as of June 28, 2000,
                  by and among Bank One, Kentucky, NA, the Company, Commonwealth
                  Premium Finance Corporation and Equity Underwriting Group,
                  Inc., is filed herewith.

     10.9         Renewal Revolving Credit Note, dated as of June 28, 2000,
                  by Commonwealth Premium Finance Corporation in favor of Bank
                  One, Kentucky, NA, is filed herewith.

     10.10        Second Amendment to Loan Agreement, dated as of December 11,
                  2000, by and among Bank One, Kentucky, NA, the Company,
                  Commonwealth Premium Finance Corporation, Equity Insurance
                  Managers, Inc., Equity Insurance Administrators, Inc. and
                  21st Century Claims Service, Inc., is filed herewith.

     10.11        Stock Pledge and Security Agreement, dated as of December 11,
                  2000, by and between the Company and Bank One, Kentucky, NA,
                  is filed herewith.

     10.12        Third Amendment to Loan Agreement, dated as of February 27,
                  2001, by and among Bank One, Kentucky, NA, the Company,
                  Commonwealth Premium Finance Corporation, Equity Insurance
                  Managers, Inc., Equity Insurance Administrators, Inc. and 21st
                  Century Claims Service, Inc., is filed herewith.

     10.13        Renewal Term Note, dated as of February 27, 2001, by the
                  Company in favor of Bank One, Kentucky, NA, is filed herewith.

     10.14        Guaranty of Payment and Performance, dated as of February 27,
                  2001, by the Company in favor of Bank One, Kentucky, NA, is
                  filed herewith.

     11.1         Computations of Earnings per share, is filed herewith.

     21.1         List of Subsidiaries, is filed herewith.


                                     - 60 -

<PAGE>
<PAGE>

     23.1         Consent of Larry E. Nunn & Associates, LLC with respect to
                  its report dated February 1, 2001 regarding the consolidated
                  financial statements of the Company as of December 31, 2000
                  and 1999 and for the years ended December 31, 2000, 1999 and
                  1998, is filed herewith.

     24.1         Power of Attorney (included on signature page hereto).
<FN>
------------------
*   Management contract or compensatory plan or arrangement.

</TABLE>


                                     - 61 -