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

                                   FORM 10-KSB

[X]    Annual Report Pursuant To Section 13 Or 15(d)of The Securities Exchange
       Act Of 1934 For The Fiscal Year December 31, 2002.
                                       Or

[ ]   Transition Report Pursuant To Section 13 Or 15 (D) Of The Securities
      Exchange Act Of 1934
         For the Transition Period from             to
                                        -----------    ------------

                        Commission file number 333-83851

                        Greenville First Bancshares, Inc.
                        ---------------------------------
             (Exact name of registrant as specified in its charter)

      South Carolina                                      58-2459561
---------------------------                  -----------------------------------
(State of Incorporation)                    (I.R.S. Employer Identification No.)

112 Haywood Road
Greenville , S.C.                                           29607
----------------------------                 -----------------------------------
(Address of principal executive offices)                 (Zip Code)

                                  864-679-9000
                                  ------------
                               (Telephone Number)

                                 Not Applicable
                          ----------------------------
                          (Former name, former address
                             and former fiscal year,
                          if changed since last report)

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

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

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

     The issuer's revenue for its most recent fiscal year was $8,673,081.  As of
March 20, 2002, 1,150,000 shares of Common Stock were issued and outstanding.

     The  estimated   aggregate  market  value  of  the  Common  Stock  held  by
non-affiliates  (shareholders  holding less than 5% of an  outstanding  class of
stock,  excluding  directors and executive officers) of the Company on March 20,
2002 is  $11,265,450.  This  calculation  is based upon an  estimate of the fair
market value of the Common Stock of $14.00 per share, which was the price of the
last trade of which management is aware prior to this date.

     Transitional Small Business Disclosure Format. (Check one): Yes     No  X
                                                                    ---     ---

                       DOCUMENTS INCORPORATED BY REFERENCE
Company's Proxy Statement for the 2002 Annual Meeting of Shareholders   Part III




<PAGE>




Item 1.    Description of Business
----------------------------------

     This Report contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and the
Securities Exchange Act of 1934. These statements are based on many assumptions
and estimates and are not guarantees of future performance. Our actual results
may differ materially from those projected in any forward-looking statements, as
they will depend on many factors about which we are unsure, including many
factors which are beyond our control. The words "may," "would," "could," "will,"
"expect," "anticipate," "believe," "intend," "plan," and "estimate," as well as
similar expressions, are meant to identify such forward-looking statements.
Potential risks and uncertainties include, but are not limited to:

     o   significant  increases  in  competitive  pressure  in the  banking  and
         financial services industries;

     o   changes in the interest rate environment which could reduce anticipated
         or actual margins;

     o   changes  in  political  conditions  or the  legislative  or  regulatory
         environment;

     o   general  economic  conditions,  either  nationally  or  regionally  and
         especially  in primary  service  area,  becoming  less  favorable  than
         expected  resulting in, among other things,  a deterioration  in credit
         quality;

     o   changes occurring in business conditions and inflation;

     o   changes in technology;

     o   changes in monetary and tax policies;

     o   the level of allowance for loan loss;

     o   the rate of delinquencies and amounts of charge-offs;

     o   the rates of loan growth;

     o   adverse  changes in asset  quality and  resulting  credit  risk-related
         losses and expenses;

     o   changes in the securities markets; and

     o   other risks and uncertainties detailed from time to time in our filings
         with the Securities and Exchange Commission.

General

     Greenville  First  Bancshares,  Inc., was incorporated to operate as a bank
holding company pursuant to the Federal Bank Holding Company Act of 1956 and the
South Carolina Banking and Branching Efficiency Act, and to purchase 100% of the
issued and  outstanding  stock of Greenville  First Bank,  N.A., an  association
organized  under the laws of the United  States,  to  conduct a general  banking
business in Greenville, South Carolina.

     In  October  1999 we  commenced  our  initial  public  offering  and raised
$10,646,700 net of underwriting discounts and commissions.  On January 10, 2000,
we  opened  the  bank.  Of the net  proceeds  from the  offering,  we have  used
$10,400,000 to capitalize  the bank. The bank's funds were applied  primarily to
provide funds for the bank's investments and lending operations, for leasing our
temporary and permanent  facilities,  for furnishing and equipping the bank, and
for other general corporate purposes.





                                       2
<PAGE>




Marketing Focus

     The bank is the first  independent bank organized in the City of Greenville
in over ten years. Because there are few locally owned banks left in Greenville,
we believe we offer a unique  banking  alternative  for the market by offering a
higher level of client  service and a management  team more focused on the needs
of the  community  than most of our  competitors.  We believe that this approach
will be  enthusiastically  supported by the  community.  The bank uses the theme
"Welcome to Hometown  Banking," and actively  promotes it in our target  market.
While the bank has the ability to offer a breadth of  products  similar to large
banks,  we emphasize  the client  relationship.  We believe  that the  continued
community focus of the bank will succeed in this market,  and that the area will
react  favorably  to  the  bank's  emphasis  on  service  to  small  businesses,
individuals,  and professional  concerns.  We will continue to take advantage of
existing contacts and relationships  with individuals and companies in this area
to more effectively market the services of the bank.

Location and Service Area

     Our primary service area consists of Greenville County, South Carolina.  We
will  draw a large  percentage  of our  business  from the  central  portion  of
Greenville County,  within a ten mile radius of our main office.  This principal
service area is bounded by Rutherford Road to the north, Poinsett Highway to the
west,  Mauldin Road and Butler Road to the south,  and Highway 14 and Batesville
Road to the east.  Included in this area is the highest per capita  income tract
in the county.  Our  expansion  plans  include the  development  of two "service
centers"  located along the periphery of our service area. These service centers
will extend the market  reach of our bank,  and they will  increase our personal
service delivery capabilities to all of our clients.

Lending Activities

     General.  We emphasize a range of lending services,  including real estate,
commercial,  and  equity-  line  consumer  loans to  individuals  and  small- to
medium-sized  businesses and professional firms that are located in or conduct a
substantial  portion of their business in the bank's market area. We compete for
these loans with competitors who are well  established in the Greenville  County
area and have greater  resources and lending limits. As a result, we may have to
charge lower interest rates to attract borrowers.

     Loan  Approval and Review.  The bank's loan approval  policies  provide for
various levels of officer lending authority.  When the amount of aggregate loans
to a single borrower exceeds an individual officer's lending authority, the loan
request will be  considered  and  approved by an officer  with a higher  lending
limit or the officers' loan committee.  The officers' loan committee has lending
limits,  and any loans in excess of this  lending  limit will be approved by the
directors'  loan  committee.  The bank does not make any loans to any  director,
officer,  or  employee  of the bank  unless the loan is approved by the board of
directors  of the bank and is made on terms not more  favorable  to such  person
than would be  available  to a person  not  affiliated  with the bank.  The bank
generally adheres to Federal National Mortgage Association and Federal Home Loan
Mortgage  Corporation  guidelines in its mortgage loan review  process,  but may
alter this policy in the future. The bank currently intends to sell its mortgage
loans into the secondary market, but may choose to hold them in the portfolio in
the future.

     Lending Limits.  The bank's lending  activities are subject to a variety of
lending  limits  imposed by federal  law. In  general,  the bank is subject to a
legal limit on loans to a single borrower equal to 15% of the bank's capital and
unimpaired surplus. Different limits may apply in certain circumstances based on
the  type  of loan or the  nature  of the  borrower,  including  the  borrower's
relationship  to the bank.  These limits will increase or decrease as the bank's
capital  increases or decreases.  Based upon the  capitalization of the bank, at
December 31, 2002, the bank has a self-imposed loan limit of $1.8 million, which
represents  approximately  100% of our legal lending limit at December 31, 2002.
However,  these limits could drop should the bank incur  losses,  and  therefore
have less capital.  Unless the bank is able to sell  participations in its loans
to other  financial  institutions,  the bank will not be able to meet all of the
lending needs of loan customers requiring  aggregate  extensions of credit above
these limits.




                                       3
<PAGE>


     Real Estate Mortgage Loans. At December 31, 2002, loans secured by first or
second mortgages on real estate made up 78% of the bank's loan portfolio. These
loans will generally fall into one of four categories: commercial real estate
loans, construction and development loans, residential real estate loans, or
home equity loans. Each of these categories is discussed in more detail below,
including their specific risks. Interest rates for all categories may be fixed
or adjustable, and will more likely be fixed for shorter-term loans. The bank
will generally charge an origination fee for each loan.

     Real estate  loans are subject to the same  general  risks as other  loans.
They are  particularly  sensitive to  fluctuations  in the value of real estate,
which is generally the underlying  security for real estate loans.  Fluctuations
in the value of real estate,  as well as other factors  arising after a loan has
been made, could negatively affect a borrower's cash flow, creditworthiness, and
ability to repay the loan.

     We have the  ability  to  originate  real  estate  loans  for sale into the
secondary  market. We can limit our interest rate and credit risk on these loans
by locking  the  interest  rate for each loan with the  secondary  investor  and
receiving the investor's underwriting approval prior to originating the loan.

     o   Commercial  Real Estate Loans.  Commercial  real estate loans generally
         have terms of five years or less,  although  payments may be structured
         on a  longer  amortization  basis.  We  evaluate  each  borrower  on an
         individual basis and attempt to determine its business risks and credit
         profile. We attempt to reduce credit risk in the commercial real estate
         portfolio  by  emphasizing  loans on  owner-occupied  office and retail
         buildings  where the  loan-to-value  ratio,  established by independent
         appraisals,  does not exceed 80%. We also generally require that debtor
         cash flow exceed 115% of monthly debt service obligations. We typically
         review all of the personal financial statements of the principal owners
         and require their personal  guarantees.  These reviews generally reveal
         secondary sources of payment and liquidity to support a loan request.

     o   Construction and Development Real Estate Loans. We offer adjustable and
         fixed rate  residential and commercial  construction  loans to builders
         and  developers  and to consumers who wish to build their own home. The
         term of  construction  and  development  loans  generally is limited to
         eighteen  months,  although  payments  may be  structured  on a  longer
         amortization  basis. Most loans mature and require payment in full upon
         the sale of the property.  Construction and development loans generally
         carry a higher  degree of risk than long  term  financing  of  existing
         properties. Repayment depends on the ultimate completion of the project
         and usually on the sale of the property. Specific risks include:

             o   cost overruns;
             o   mismanaged construction;
             o   inferior or improper construction techniques;
             o   economic changes or downturns during construction;
             o   a downturn in the real estate market;
             o   rising interest  rates which  may prevent sale of the property;
                 and
             o   failure to sell completed projects in a timely manner.

     We attempt to reduce risk by obtaining personal  guarantees where possible,
and by keeping the loan-to-value  ratio of the completed project below specified
percentages.  We also reduce risk by selling  participations  in larger loans to
other institutions when possible.

     Residential Real Estate Loans. Residential real estate loans generally have
longer terms up to 30 years. We offer fixed and adjustable  rate  mortgages.  We
have limited  credit risk on these loans as most are sold to third  parties soon
after closing.

     Commercial Loans. We make loans for commercial purposes in various lines of
businesses.  Commercial loans are generally considered to have greater risk than
first or second  mortgages on real estate  because they may be unsecured,  or if
they are secured,  the value of the security may be difficult to assess and more
likely to decrease than real estate.



                                       4
<PAGE>



     We also offer small business loans utilizing  government  enhancements such
as the Small  Business  Administration's  7(a)  program and SBA's 504  programs.
These loans typically are partially guaranteed by the government, which helps to
reduce the bank's risk.  Government guarantees of SBA loans do not exceed 80% of
the loan value and are generally less. As of December 31, 2002, the bank has not
originated any small business loans utilizing government enhancements.

     The   well-established   banks  in  the   Greenville   County   area   make
proportionately more loans to medium to large-sized businesses than we can. Many
of the bank's  commercial  loans are made to small- to  medium-sized  businesses
that  may be  less  able  to  withstand  competitive,  economic,  and  financial
conditions than larger borrowers.

     Consumer  Loans.  The bank  makes a  variety  of loans to  individuals  for
personal and household  purposes,  including  secured and unsecured  installment
loans and revolving lines of credit.  Installment loans typically carry balances
of less than $50,000 and are  amortized  over periods up to 60 months.  Consumer
loans are  offered  with a single  maturity  basis  where a  specific  source of
repayment is  available.  Revolving  loan  products  typically  require  monthly
payments  of  interest  and a  portion  of the  principal.  Consumer  loans  are
generally considered to have greater risk than first or second mortgages on real
estate because they may be unsecured,  or if they are secured,  the value of the
security  may be  difficult  to assess  and more  likely to  decrease  than real
estate.

     We also offer home equity  loans.  Our  underwriting  criteria for, and the
risks  associated  with, home equity loans and lines of credit will generally be
the  same as those  for  first  mortgage  loans.  Home  equity  lines of  credit
typically  have terms of 15 years or less,  typically  carry  balances less than
$125,000, and may extend up to 100% of the available equity of each property.

Deposit Services

     We offer a full range of deposit  services that are typically  available in
most banks and  savings  and loan  associations,  including  checking  accounts,
commercial accounts, savings accounts, and other time deposits of various types,
ranging from daily money market accounts to longer-term certificates of deposit.
The  transaction  accounts  and time  certificates  are  tailored to our primary
market area at rates competitive to those offered in the Greenville County area.
In addition,  we offer certain  retirement  account  services,  such as IRAs. We
solicit   these   accounts   from   individuals,    businesses,    associations,
organizations, and governmental authorities.

Other Banking Services

     The  bank  offers  other  bank  services   including  safe  deposit  boxes,
traveler's checks,  direct deposit, U.S. Savings Bonds, and banking by mail. The
bank is associated with the Honor, Cirrus, and Master-Money ATM networks,  which
are available to its customers  throughout the country. We believe that by being
associated  with a shared  network  of ATMs,  we are  better  able to serve  our
customers  and  are  able  to  attract  customers  who  are  accustomed  to  the
convenience  of using ATMs,  although we do not believe  that  maintaining  this
association is critical to our success.  We began offering  Internet services in
the second  quarter of 2000. We do not expect the bank to exercise  trust powers
during its next few years of operation.

Market Share

     As of June  30,  2002,  the  most  recent  date for  which  market  data is
available,  total deposits in the bank's  primary  service area were almost $6.1
billion,  which represented a 13.9% deposit increase from 2001. At June 30, 2002
the bank represented 2.1% of the market. Our plan over the next five years is to
grow our deposit base to $250 million.  Of course,  we cannot be sure that these
deposit growth rates will continue, or that we will accomplish this objective.

Employees

     As of March 20, 2003, the bank had 26 employees and the holding company had
no full-time employees.



                                       5
<PAGE>


                           Supervision and Regulation

     Both the company and the bank are  subject to  extensive  state and federal
banking laws and regulations  that impose specific  requirements or restrictions
on and provide for general  regulatory  oversight  of  virtually  all aspects of
operations.  These  laws and  regulations  are  generally  intended  to  protect
depositors, not shareholders. The following summary is qualified by reference to
the statutory and regulatory provisions discussed. Changes in applicable laws or
regulations may have a material effect on our business and prospects.  Beginning
with the enactment of the Financial  Institution Report Recovery and Enforcement
Act in 1989  and  following  with  the  FDIC  Improvement  Act in  1991  and the
Gramm-Leach Bliley Act in 1999, numerous additional regulatory requirements have
been  placed on the  national  banking  industry in the past  several  years and
additional  changes  have been  proposed.  Our  operations  may be  affected  by
legislative  changes and the  policies  of various  regulatory  authorities.  We
cannot predict the effect that fiscal or monetary policies, economic control, or
new federal or state  legislation  may have on our  business and earnings in the
future.

USA Patriot Act of 2001

     In October 2001, the USA Patriot Act of 2001 was enacted in response to the
terrorist attacks in New York, Pennsylvania and Washington D.C. that occurred on
September  11,  2001.  The  Patriot  Act is  intended  to  strengthen  U.S.  law
enforcement's and the intelligence  communities' abilities to work cohesively to
combat terrorism on a variety of fronts. The potential impact of the Patriot Act
on financial  institutions  of all kinds is  significant  and wide ranging.  The
Patriot Act contains sweeping anti-money  laundering and financial  transparency
laws and imposes various  regulations,  including standards for verifying client
identification  at  account  opening,  and rules to  promote  cooperation  among
financial  institutions,  regulators and law enforcement entities in identifying
parties that may be involved in terrorism or money laundering.


Gramm-Leach-Bliley Act

     On  November 4, 1999,  the U.S.  Senate and House of  Representatives  each
passed the  Gramm-Leach-Bliley  Act,  previously known as the Financial Services
Modernization Act of 1999. President Clinton signed the Act into law on November
12,  1999.  Among  other  things,  the Act  repeals  the  restrictions  on banks
affiliating  with  securities  firms  contained  in  sections  20  and 32 of the
Glass-Steagall  Act. The Act also permits bank holding  companies to engage in a
statutorily  provided  list of financial  activities,  including  insurance  and
securities  underwriting and agency activities,  merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are "complementary" to financial activities.

     The Act is intended, in part, to grant to community banks certain powers as
a matter of right that larger  institutions have accumulated on an ad hoc basis.
Nevertheless,  the  Act  may  have  the  result  of  increasing  the  amount  of
competition that we face from larger  institutions and other types of companies.
In fact, it is not possible to predict the full effect that the Act will have on
us. From time to time, other changes are proposed to laws affecting the national
banking industry, and these changes could have a material effect on our business
and prospects.

     The  Act  also  contains  provisions  regarding  consumer  privacy.   These
provisions   require  financial   institutions  to  disclose  their  policy  for
collecting  and protecting  confidential  information.  Customers  generally may
prevent financial  institutions from sharing personal financial information with
nonaffiliated   third   parties   except  for  third   parties  that  market  an
institution's own products and services.  Additionally,  financial  institutions
generally may not disclose consumer account numbers to any  nonaffiliated  third
party for use in telemarketing, direct mail marketing, or other marketing to the
consumer.



                                       6
<PAGE>


Greenville First Bancshares, Inc.

     We own the  outstanding  capital  stock of the bank,  and  therefore we are
considered to be a bank holding  company under the federal Bank Holding  Company
Act of 1956 and the South Carolina Banking and Branching Efficiency Act.

     The Bank Holding  Company Act.  Under the Bank Holding  Company Act, we are
subject to  periodic  examination  by the Federal  Reserve and  required to file
periodic  reports of its  operations  and any  additional  information  that the
Federal  Reserve may require.  Our  activities  at the bank and holding  company
level are limited to:

     o   banking and managing or controlling banks;
     o   furnishing services to or performing services for its subsidiaries; and
     o   engaging in other activities that the Federal Reserve  determines to be
         so closely  related to banking and managing or controlling  banks as to
         be a proper incident thereto.

     Investments,  Control, and Activities. With certain limited exceptions, the
     Bank Holding Company Act  requires every bank holding company to obtain the
     prior approval of the Federal Reserve before:

     o   acquiring substantially all the assets of any bank;
     o   acquiring direct or indirect  ownership or control of any voting shares
         of any bank if after the  acquisition it would own or control more than
         5% of the  voting  shares  of such  bank  (unless  it  already  owns or
         controls the majority of such shares); or
     o   merging or consolidating with another bank holding company.

     In addition,  and subject to certain  exceptions,  the Bank Holding Company
Act and the Change in Bank Control Act,  together with  regulations  thereunder,
require  Federal  Reserve  approval  prior to any  person or  company  acquiring
"control" of a bank holding company.  Control is conclusively  presumed to exist
if an  individual  or  company  acquires  25% or more  of any  class  of  voting
securities of a bank holding company. Control is rebuttably presumed to exist if
a person  acquires  10% or more,  but less  than  25%,  of any  class of  voting
securities and either the company has registered  securities under Section 12 of
the Securities Exchange Act of 1934 or no other person owns a greater percentage
of that class of voting securities immediately after the transaction. Our common
stock is registered  under the Securities  Exchange Act of 1934. The regulations
provide a procedure for challenge of the rebuttable control presumption.

     Under the Bank Holding  Company  Act, a bank  holding  company is generally
prohibited  from  engaging in, or acquiring  direct or indirect  control of more
than 5% of the voting  shares of any company  engaged in  nonbanking  activities
unless the  Federal  Reserve  Board,  by order or  regulation,  has found  those
activities to be so closely related to banking or managing or controlling  banks
as to be a proper  incident  thereto.  Some of the  activities  that the Federal
Reserve  Board  has  determined  by  regulation  to be proper  incidents  to the
business of a bank holding company include:

     o   making or servicing loans and certain types of leases;
     o   engaging in certain insurance and discount brokerage activities;
     o   performing certain data processing services;
     o   acting  in  certain  circumstances  as a  fiduciary  or  investment  or
         financial adviser;
     o   owning savings associations; and
     o   making  investments  in  certain   corporations  or  projects  designed
         primarily to promote community welfare.

     The Federal  Reserve  Board imposes  certain  capital  requirements  on the
company under the Bank Holding Company Act,  including a minimum  leverage ratio
and a minimum  ratio of  "qualifying"  capital to  risk-weighted  assets.  These
requirements  are described  below under "Capital  Regulations."  Subject to its
capital requirements and certain other restrictions, we are able to borrow money
to make a capital  contribution  to the bank, and these loans may be repaid from
dividends  paid from the bank to the company.  Our ability to pay dividends will
be subject to regulatory  restrictions as described  below in "Greenville  First
Bank -  Dividends."  We are also able to raise capital for  contribution  to the
bank by  issuing  securities  without  having to  receive  regulatory  approval,
subject to compliance with federal and state securities laws.



                                       7
<PAGE>


     Source of Strength;  Cross-Guarantee.  In accordance  with Federal  Reserve
Board  policy,  we are expected to act as a source of financial  strength to the
bank and to commit  resources to support the bank in  circumstances  in which we
might not  otherwise  do so.  Under the Bank  Holding  Company  Act, the Federal
Reserve  Board may require a bank holding  company to terminate  any activity or
relinquish control of a nonbank subsidiary, other than a nonbank subsidiary of a
bank,  upon the Federal  Reserve  Board's  determination  that such  activity or
control  constitutes a serious risk to the  financial  soundness or stability of
any  subsidiary  depository  institution of the bank holding  company.  Further,
federal bank regulatory authorities have additional discretion to require a bank
holding company to divest itself of any bank or nonbank subsidiary if the agency
determines  that  divestiture  may aid the  depository  institution's  financial
condition.

     South Carolina State  Regulation.  As a South Carolina bank holding company
under the South Carolina Banking and Branching Efficiency Act, we are subject to
limitations  on sale or merger and to regulation by the South  Carolina Board of
Financial Institutions. Prior to acquiring the capital stock of a national bank,
we are not required to obtain the approval of the Board, but we must notify them
at least 15 days prior to doing so. We must receive the Board's  approval  prior
to engaging in the  acquisition  of a South  Carolina  state  chartered  bank or
another South Carolina bank holding company.

     Greenville First Bank

     The bank operates as a national banking association  incorporated under the
laws of the  United  States  and  subject  to  examination  by the Office of the
Comptroller of the Currency.  Deposits in the bank are insured by the FDIC up to
a  maximum  amount,  which  is  generally  $100,000  per  depositor  subject  to
aggregation rules.

     The Office of the  Comptroller  of the  Currency  and the FDIC  regulate or
monitor virtually all areas of the bank's operations, including:

     o   security devices and procedures;
     o   adequacy of capitalization and loss reserves;
     o   loans;
     o   investments;
     o   borrowings;
     o   deposits;
     o   mergers;
     o   issuances of securities;
     o   payment of dividends;
     o   interest rates payable on deposits;
     o   interest rates or fees chargeable on loans;
     o   establishment of branches;
     o   corporate reorganizations;
     o   maintenance of books and records; and
     o   adequacy  of  staff  training  to  carry on safe  lending  and  deposit
         gathering practices.

     The Office of the Comptroller of the Currency requires the bank to maintain
specified  capital  ratios  and  imposes  limitations  on the  bank's  aggregate
investment in real estate, bank premises, and furniture and fixtures. The Office
of the  Comptroller  of the  Currency  requires  the bank to  prepare  quarterly
reports on the bank's financial  condition and to conduct an annual audit of its
financial affairs in compliance with its minimum standards and procedures.

     Under the FDIC  Improvement  Act,  all insured  institutions  must  undergo
regular on site  examinations by their appropriate  banking agency.  The cost of
examinations  of  insured  depository  institutions  and any  affiliates  may be
assessed by the appropriate  agency against each  institution or affiliate as it
deems  necessary or  appropriate.  Insured  institutions  are required to submit
annual reports to the FDIC,  their federal  regulatory  agency,  and their state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository  institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent



                                       8
<PAGE>




feasible and practicable,  in any balance sheet, financial statement,  report of
condition or any other report of any insured  depository  institution.  The FDIC
Improvement  Act also  requires  the  federal  banking  regulatory  agencies  to
prescribe, by regulation,  standards for all insured depository institutions and
depository  institution holding companies  relating,  among other things, to the
following:

     o   internal controls;
     o   information systems and audit systems;
     o   loan documentation;
     o   credit underwriting;
     o   interest rate risk exposure; and
     o   asset quality.

     National  banks and their holding  companies  which have been  chartered or
registered  or have  undergone a change in control  within the past two years or
which have been deemed by the Office of the  Comptroller  of the Currency or the
Federal  Reserve Board to be troubled  institutions  must give the Office of the
Comptroller  of the  Currency or the Federal  Reserve  Board  thirty days' prior
notice of the appointment of any senior  executive  officer or director.  Within
the 30 day period,  the Office of the Comptroller of the Currency or the Federal
Reserve  Board,  as the  case  may  be,  may  approve  or  disapprove  any  such
appointment.

     Deposit Insurance.  The FDIC has adopted a risk-based assessment system for
determining an insured depository  institutions'  insurance assessment rate. The
system that takes into account the risks  attributable  to different  categories
and concentrations of assets and liabilities.  An institution is placed into one
of three capital categories:  (1) well capitalized;  (2) adequately capitalized;
or (3)  undercapitalized.  The FDIC also assigns an  institution to one of three
supervisory  subgroups,  based on the FDIC's  determination of the institution's
financial  condition  and  the  risk  posed  to  the  deposit  insurance  funds.
Assessments  range  from 0 to 27 cents per $100 of  deposits,  depending  on the
institution's  capital group and  supervisory  subgroup.  In addition,  the FDIC
imposes assessments to help pay off the $780 million in annual interest payments
on the $8 billion  Financing  Corporation bonds issued in the late 1980s as part
of the government rescue of the thrift industry.

     Transactions  With  Affiliates  and  Insiders.  The bank is  subject to the
provisions of Section 23A of the Federal Reserve Act, which places limits on the
amount of loans or extensions of credit to, or investments  in, or certain other
transactions  with,  affiliates  and on the amount of advances to third  parties
collateralized by the securities or obligations of affiliates.  The aggregate of
all covered  transactions is limited in amount, as to any one affiliate,  to 10%
of the bank's capital and surplus and, as to all affiliates combined,  to 20% of
the bank's capital and surplus. Furthermore, within the foregoing limitations as
to amount, each covered transaction must meet specified collateral requirements.
Compliance is also required with certain provisions designed to avoid the taking
of low quality assets.

     The bank is subject to the provisions of Section 23B of the Federal Reserve
Act which, among other things, prohibits an institution from engaging in certain
transactions  with  certain  affiliates  unless  the  transactions  are on terms
substantially  the same,  or at least as  favorable to such  institution  or its
subsidiaries,  as those prevailing at the time for comparable  transactions with
nonaffiliated  companies.  The  bank  is  subject  to  certain  restrictions  on
extensions  of  credit  to  executive  officers,  directors,  certain  principal
shareholders, and their related interests. Such extensions of credit (i) must be
made on substantially the same terms,  including  interest rates and collateral,
as those prevailing at the time for comparable  transactions  with third parties
and (ii) must not  involve  more than the normal  risk of  repayment  or present
other unfavorable features.

     The Federal Reserve Board has recently issued  Regulation W, which codifies
prior  regulations  under  Sections  23A and 23B of the Federal  Reserve Act and
interpretative  guidance  with respect to affiliate  transactions.  Regulation W
incorporates the exemption from the affiliate  transaction rules but expands the
exemption  to cover the purchase of any type of loan or extension of credit from
an affiliate. In addition, under Regulation W:

     o   a bank and its subsidiaries  may not purchase a low-quality  asset from
         an affiliate;
     o   covered transactions and other specified transactions between a bank or
         its  subsidiaries and an affiliate must be on terms and conditions that
         are consistent with safe and sound banking practices; and


                                       9
<PAGE>

     o   with some exceptions,  each loan or extension of credit by a bank to an
         affiliate  must be secured by  collateral  with a market value  ranging
         from 100% to 130%,  depending on the type of collateral,  of the amount
         of the loan or extension of credit.

     Regulation W generally  excludes all non-bank and  non-savings  association
subsidiaries  of banks from treatment as  affiliates,  except to the extent that
the Federal  Reserve Board decides to treat these  subsidiaries  as  affiliates.
Concurrently  with the adoption of Regulation  W, the Federal  Reserve Board has
proposed a regulation  which would  further limit the amount of loans that could
be  purchased  by a bank from an  affiliate  to not more than 100% of the bank's
capital and surplus. Comments on the proposed rule were due by January 13, 2003.

     Dividends.  A national  bank may not pay  dividends  from its capital.  All
dividends must be paid out of undivided  profits then on hand,  after  deducting
expenses,  including reserves for losses and bad debts. In addition,  a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus  equals its stated  capital,  unless there has been  transferred  to
surplus no less than  one-tenth of the bank's net profits of the  preceding  two
consecutive half-year periods (in the case of an annual dividend).  The approval
of the Office of the Comptroller of the Currency is required if the total of all
dividends  declared by a national bank in any calendar year exceeds the total of
its net profits for that year  combined  with its  retained  net profits for the
preceding two years, less any required transfers to surplus.

     Branching.  National  banks are required by the National Bank Act to adhere
to branch office  banking laws  applicable to state banks in the states in which
they are located.  Under  current  South  Carolina law, the bank may open branch
offices  throughout  South Carolina with the prior approval of the Office of the
Comptroller of the Currency.  In addition,  with prior regulatory approval,  the
bank  is  able  to  acquire  existing  banking  operations  in  South  Carolina.
Furthermore,  federal  legislation  has been  passed  which  permits  interstate
branching.  The new  law  permits  out-of-state  acquisitions  by  bank  holding
companies, interstate branching by banks if allowed by state law, and interstate
merging by banks.

     Community  Reinvestment Act. The Community  Reinvestment Act requires that,
in  connection  with  examinations  of  financial   institutions   within  their
respective  jurisdictions,  the Federal Reserve,  the FDIC, or the Office of the
Comptroller  of the  Currency,  shall  evaluate  the  record  of each  financial
institution  in meeting the credit needs of its local  community,  including low
and  moderate  income  neighborhoods.  These  factors  are  also  considered  in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose  additional  requirements
and  limitations  on our bank.  Under the  Gramm-Leach-Bliley  Act,  banks  with
aggregate  assets of not more than $250  million  will be subject to a Community
Reinvestment  Act examination  only once every 60 months if the bank receives an
outstanding rating,  once every 48 months if it receives a satisfactory  rating,
and as needed if the rating is less than satisfactory.  Additionally,  under the
Gramm-Leach-Bliley  Act,  banks are  required to publicly  disclose the terms of
various Community Reinvestment Act-related agreements.

     Other  Regulations.  Interest and other charges collected or contracted for
by the bank are subject to state usury laws and federal laws concerning interest
rates. The bank's loan operations are also subject to federal laws applicable to
credit transactions, such as:

     o   the federal Truth-In-Lending Act, governing disclosures of credit terms
         to consumer borrowers;
     o   the  Home  Mortgage   Disclosure  Act  of  1975,   requiring  financial
         institutions  to  provide  information  to enable the public and public
         officials to determine  whether a financial  institution  is fulfilling
         its  obligation  to help meet the  housing  needs of the  community  it
         serves;
     o   the Equal Credit  Opportunity Act,  prohibiting  discrimination  on the
         basis of race, creed or other prohibited factors in extending credit;
     o   the Fair Credit Reporting Act of 1978,  governing the use and provision
         of information to credit reporting agencies;
     o   the Fair Debt  Collection  Act,  governing the manner in which consumer
         debts may be collected by collection agencies; and
     o   the rules and regulations of the various federal  agencies charged with
         the responsibility of implementing such federal laws.



                                       10
<PAGE>

     o   The deposit operations of the bank also are subject to:
     o   the Right to Financial  Privacy Act,  which  imposes a duty to maintain
         confidentiality of consumer financial records and prescribes procedures
         for complying with administrative subpoenas of financial records; and
     o   the  Electronic  Funds  Transfer  Act and  Regulation  E issued  by the
         Federal  Reserve Board to implement that act,  which governs  automatic
         deposits to and withdrawals from deposit accounts and customers' rights
         and liabilities  arising from the use of automated  teller machines and
         other electronic banking services.

     Capital Regulations.  The federal bank regulatory  authorities have adopted
risk-based  capital  guidelines  for banks and bank holding  companies  that are
designed to make regulatory  capital  requirements more sensitive to differences
in risk  profiles  among  banks  and bank  holding  companies  and  account  for
off-balance sheet items. The guidelines are minimums, and the federal regulators
have noted  that  banks and bank  holding  companies  contemplating  significant
expansion  programs  should not allow expansion to diminish their capital ratios
and should maintain  ratios in excess of the minimums.  We have not received any
notice  indicating  that  either  the  company  or the bank is subject to higher
capital requirements.  The current guidelines require all bank holding companies
and  federally-regulated  banks to maintain a minimum  risk-based  total capital
ratio  equal to 8%, of which at least 4% must be Tier 1 capital.  Tier 1 capital
includes common shareholders' equity,  qualifying perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries, but excludes
goodwill and most other  intangibles  and excludes  the  allowance  for loan and
lease  losses.  Tier 2 capital  includes the excess of any  preferred  stock not
included in Tier 1 capital,  mandatory  convertible  securities,  hybrid capital
instruments,  subordinated  debt  and  intermediate  term-preferred  stock,  and
general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

     Under these guidelines, banks' and bank holding companies' assets are given
risk-weights of 0%, 20%, 50%, or 100%. In addition,  certain  off-balance  sheet
items are given credit  conversion  factors to convert them to asset  equivalent
amounts to which an appropriate  risk-weight applies.  These computations result
in the total  risk-weighted  assets.  Most loans are  assigned  to the 100% risk
category,  except for first mortgage loans fully secured by residential property
and, under certain circumstances,  residential construction loans, both of which
carry a 50% rating. Most investment securities are assigned to the 20% category,
except for municipal or state revenue bonds, which have a 50% rating, and direct
obligations of or obligations guaranteed by the United States Treasury or United
States Government agencies, which have a 0% rating.

     The federal bank regulatory  authorities  have also  implemented a leverage
ratio,  which is equal to Tier 1 capital as a percentage of average total assets
less intangibles,  to be used as a supplement to the risk-based guidelines.  The
principal  objective  of the  leverage  ratio  is to place a  constraint  on the
maximum  degree to which a bank holding  company may leverage its equity capital
base. The minimum required leverage ratio for top-rated  institutions is 3%, but
most institutions are required to maintain an additional cushion of at least 100
to 200 basis points.

     The FDIC Improvement Act established a new capital-based  regulatory scheme
designed to promote early  intervention  for troubled banks,  which requires the
FDIC  to  choose  the  least  expensive  resolution  of bank  failures.  The new
capital-based  regulatory  framework contains five categories of compliance with
regulatory  capital  requirements,  including  "well  capitalized,"  "adequately
capitalized,"   "undercapitalized,"    "significantly   undercapitalized,"   and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total  risk-based  capital ratio of no less than 10%, and
the  bank  must not be  under  any  order  or  directive  from  the  appropriate
regulatory agency to meet and maintain a specific capital level.  Initially,  we
will qualify as "well capitalized."

     Under the FDIC Improvement Act regulations, the applicable agency can treat
an institution as if it were in the next lower category if the agency determines
(after  notice and an  opportunity  for hearing) that the  institution  is in an
unsafe or unsound condition or is engaging in an unsafe or unsound practice. The
degree of  regulatory  scrutiny of a financial  institution  increases,  and the
permissible  activities  of the  institution  decreases,  as it  moves  downward
through the  capital  categories.  Institutions  that fall into one of the three
undercapitalized categories may be required to do some or all of the following:

     o   submit a capital restoration plan;
     o   raise additional capital;
     o   restrict their growth, deposit interest rates, and other activities;


                                       11
<PAGE>

     o   improve their management;
     o   eliminate management fees; or
     o   divest themselves of all or a part of their operations.

     These  capital  guidelines  can affect us in several  ways. If we grow at a
rapid pace, our capital may be depleted too quickly, and a capital infusion from
the holding  company  may be  necessary  which  could  impact our ability to pay
dividends.  Our capital levels currently are more than adequate;  however, rapid
growth,  poor  loan  portfolio  performance,  poor  earnings  performance,  or a
combination  of these factors could change our capital  position in a relatively
short period of time.

     Failure to meet these capital  requirements would mean that a bank would be
required to develop and file a plan with its primary federal  banking  regulator
describing  the  means  and  a  schedule  for  achieving  the  minimum   capital
requirements.  In addition,  such a bank would generally not receive  regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger  application,  unless  the bank could  demonstrate  a
reasonable plan to meet the capital  requirement  within a reasonable  period of
time. Bank holding companies  controlling  financial  institutions can be called
upon  to  boost  the  institutions'  capital  and  to  partially  guarantee  the
institutions' performance under their capital restoration plans.

     Enforcement   Powers.   The  Financial   Institution  Report  Recovery  and
Enforcement  Act expanded and increased civil and criminal  penalties  available
for use by the federal regulatory  agencies against depository  institutions and
certain   "institution-affiliated   parties."   Institution-affiliated   parties
primarily include management,  employees, and agents of a financial institution,
as well as  independent  contractors  and  consultants  such  as  attorneys  and
accountants  and  others  who  participate  in  the  conduct  of  the  financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the  submission  of  inaccurate  reports.  Civil  penalties may be as high as
$1,000,000 a day for such  violations.  Criminal  penalties  for some  financial
institution crimes have been increased to 20 years. In addition,  regulators are
provided  with  greater  flexibility  to commence  enforcement  actions  against
institutions and  institution-affiliated  parties.  Possible enforcement actions
include the termination of deposit  insurance.  Furthermore,  banking  agencies'
power to issue  cease-and-desist  orders were  expanded.  Such orders may, among
other things,  require  affirmative  action to correct any harm resulting from a
violation or practice, including restitution, reimbursement,  indemnification or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts,  or take
other actions as determined by the ordering agency to be appropriate.

     Effect of  Governmental  Monetary  Policies.  Our  earnings are affected by
domestic economic  conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had,  and are  likely  to  continue  to have,  an  important  impact on the
operating  results of commercial  banks through its power to implement  national
monetary  policy in order,  among other  things,  to curb  inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans,  investments and deposits through its open market
operations in United States government  securities and through its regulation of
the discount  rate on  borrowings  of member banks and the reserve  requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.

     Proposed  Legislation and Regulatory  Action.  New regulations and statutes
are  regularly  proposed  that contain  wide-ranging  proposals for altering the
structures, regulations, and competitive relationships of the nation's financial
institutions.  We cannot predict whether or in what form any proposed regulation
or statute  will be adopted or the extent to which our  business may be affected
by any new regulation or statute.

Location and Service Area

     We conduct a general  commercial and retail banking  business,  emphasizing
the needs of individuals and small- to medium-sized  businesses.  We operate our
banking business  through our bank,  Greenville First Bank, N.A. Our main office
is located at 212 Haywood Road in Greenville, South Carolina. We primarily serve
Greenville, South Carolina and the surrounding area.




                                       12
<PAGE>

Competition

     The  banking  business  is  highly  competitive.   We  compete  with  other
commercial banks, savings and loan associations,  credit unions and money market
mutual funds operating in the Greenville County area and elsewhere.  As of March
20,  2003,  there were 24  commercial  banks and 2 savings  banks  operating  in
Greenville  County.  Some of these  competitors have been in business for a long
time and have already  established their customer base and name recognition.  We
believe  that our  community  bank focus,  with our emphasis on service to small
businesses, individuals, and professional concerns, gives us an advantage in the
market.  Nevertheless,  a number of these competitors have greater financial and
personnel  resources than we may have.  Most of them offer  services,  including
extensive and established  branch  networks and trust  services,  that we do not
currently provide. In addition, competitors that are not depository institutions
are generally not subject to the extensive  regulations  that apply to our bank.
As a result of these  competitive  factors,  we may have to pay higher  rates of
interest to attract deposits.


Item 2.    Description of Property
----------------------------------

     Our main office  facility  opened on January 16, 2001 at 112 Haywood  Road,
Greenville, South Carolina. We intend to lease the main office for approximately
$27,000 per month for 20 years. The facility is located at the corner of Haywood
Road and Halton Road in downtown  Greenville.  The bank is leasing the building.
The building is a full service banking facility with three drive-through-banking
stations and an automatic teller machine. Between January 10, 2000, the date the
bank opened for  business and the opening of our new  facility,  we operated our
headquarters and a full-service  branch in a temporary facility that was located
on the same site as the permanent facility.

Item 3.    Legal Proceedings.
----------------------------

     None.

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

     No matter was  submitted  to a vote of security  holders  during the fourth
quarter of the fiscal year covered by this report.


Item 5.    Market for Common Equity and Related Stockholder Matters.
-------------------------------------------------------------------

     Since our public  offering on October 26,  1999,  our common stock has been
quoted on the OTC Bulletin Board under the symbol "GVBK."  However,  trading and
quotations  in our common  stock have been  limited and  sporadic  and we do not
believe that there is a publicly established trading market in the common stock.
The price of the last trade of which we are aware is $14.00  per  share,  but we
have not determined that this trade was the result of arm's length  negotiations
between  the parties and we can provide no  assurance  this price  reflects  the
market value of our common stock. Our articles of incorporation  authorize us to
issue up to 10,000,000  shares of common stock, of which  1,150,000  shares were
outstanding  as of March 20, 2003. We have  approximately  950  shareholders  of
record.

     To date, we have not paid cash dividends on our common stock.  We currently
intend to retain  earnings  to support  operations  and  finance  expansion  and
therefore do not anticipate paying cash dividends in the foreseeable future. All
of our  outstanding  shares of common  stock are  entitled  to share  equally in
dividends from funds legally  available  when, and if,  declared by the board of
directors.



                                       13
<PAGE>



The following  table sets forth equity compensation plan information at December
31, 2002.

<TABLE>
                      Equity Compensation Plan Information
                                                                                             Number of securities
                                   Number of securities                                     remaining available for
                                       to be issued               Weighted-average           future issuance under
                                     upon exercise of             exercise price of        equity compensation plans (c)
                                   outstanding options,         outstanding options,         (excluding securities)
Plan Category                     warrants and rights (a)      warrants and rights (b)      reflected in column (a))
-------------                     -------------------          -------------------          ------------------------
<S>                                       <C>                          <C>                           <C>
Equity compensation
plans approved by
security holders (1)                      124,000                      $10.13                        48,500

Equity compensation
plans not approved
by security holders(2)                    129,950                      $10.00                             -

         Total                            253,950                      $10.06                        48,500

<FN>
(1)  The 172,500 of shares of common stock  available  under the 2000 Greenville
     First  Bancshares,  Inc. Stock Incentive Plan will  automatically  increase
     each time we issue  additional  shares so that it continues to equal 15% of
     our total outstanding shares.
(2)  Each of our organizers received, for no additional consideration, a warrant
     to purchase  one share of common  stock for $10.00 per share for each share
     purchased during our initial public offering.  The warrants are represented
     by separate warrant  agreements.  One third of the warrants vest on each of
     the first three anniversaries of the date our bank opened for business, and
     they  are  exercisable  in  whole or in part  during  the ten  year  period
     following  that  date.  The  warrants  may  not be  assigned,  transferred,
     pledged,  or hypothecated in any way. The 129,950 of shares issued pursuant
     to the exercise of such  warrants are  transferable,  subject to compliance
     with applicable  securities  laws. If the South Carolina Board of Financial
     Institutions  or the  FDIC  issues  a  capital  directive  or  other  order
     requiring  the bank to obtain  additional  capital,  the  warrants  will be
     forfeited, if not immediately exercised.
</FN>
</TABLE>

     The following is a summary of the bid prices for our common stock  reported
by the OTC Bulletin Board for the periods indicated:

           2002                        High                   Low
           ----                        ----                   ---
       First Quarter                 $ 12.00              $  10.50
      Second Quarter                   19.00                 10.90
       Third Quarter                   12.00                 10.25
      Fourth Quarter                   13.50                 11.00

           2001                        High                   Low
           ----                        ----                   ---
       First Quarter                 $ 10.38               $  8.62
      Second Quarter                   12.90                  8.50
       Third Quarter                   11.07                 10.10
      Fourth Quarter                   11.50                 10.06

     The prices listed above are quotations,  which reflect inter-dealer prices,
without retail mark-up,  mark-down or commission,  and may not represent  actual
transactions.



                                       14
<PAGE>





Item 6.  Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------------
Results of Operation.
---------------------

DISCUSSION OF FORWARD-LOOKING STATEMENTS

The following is our discussion and analysis of certain significant factors that
have  affected our  financial  position and  operating  results and those of our
subsidiary,  Greenville  First Bank,  N.A.,  during the periods  included in the
accompanying financial statements. This commentary should be read in conjunction
with the financial  statements  and the related notes and the other  statistical
information included in this report.

This  report  contains   "forward-looking   statements"   relating  to,  without
limitation, future economic performance,  plans and objectives of management for
future  operations,  and  projections of revenues and other financial items that
are based on the  beliefs  of  management,  as well as  assumptions  made by and
information  currently  available  to  management.   The  words  "may,"  "will,"
"anticipate," "should," "would," "believe," "contemplate," "expect," "estimate,"
"continue,"  "may," and "intend," as well as other similar words and expressions
of the future, are intended to identify forward-looking  statements.  Our actual
results may differ materially from the results discussed in the  forward-looking
statements,  and our  operating  performance  each quarter is subject to various
risks and  uncertainties  that are  discussed  in detail in our filings with the
Securities and Exchange Commission, including, without limitation:

     o   the effects of future economic conditions;
     o   governmental  monetary and fiscal policies,  as well as legislative and
         regulatory changes;
     o   changes in interest rates and their effect on the level and composition
         of deposits, loan demand, and the values of loan collateral, securities
         and other interest-sensitive assets and liabilities;
     o   our ability to control costs, expenses, and loan delinquency rates; and
     o   the  effects of  competition  from  other  commercial  banks,  thrifts,
         mortgage  banking firms,  consumer  finance  companies,  credit unions,
         securities brokerage firms, insurance companies, money market and other
         mutual funds and other financial  institutions  operating in our market
         area  and  elsewhere,   including  institutions  operating  regionally,
         nationally,   and  internationally,   together  with  such  competitors
         offering banking products and services by mail, telephone, computer and
         the Internet.
     o   the level of allowance for loan loss;
     o   the rate of delinquencies and amounts of charge-offs;
     o   the rates of loan growth;
     o   adverse  changes in asset  quality and  resulting  credit  risk-related
         losses and expenses;

CRITICAL ACCOUNTING POLICIES

     We have adopted various accounting  policies that govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements.  Our significant  accounting policies are described
in the footnotes to the consolidated  financial  statements at December 31, 2002
as filed on our annual report on Form 10-KSB.

     Certain accounting policies involve  significant  judgments and assumptions
by us that have a material  impact on the carrying  value of certain  assets and
liabilities.  We consider these  accounting  policies to be critical  accounting
policies. The judgment and assumptions we use are based on historical experience
and other factors,  which we believe to be reasonable  under the  circumstances.
Because of the nature of the judgment and  assumptions  we make,  actual results
could  differ  from these  judgments  and  estimates  that could have a material
impact on our  carrying  values of assets  and  liabilities  and our  results of
operations.

     We believe the  allowance for loan losses is a critical  accounting  policy
that requires the most significant judgment and estimates used in preparation of
our consolidated  financial statements.  Refer to the portion of this discussion
that  addresses our allowance for loan losses for a description of our processes
and methodology for determining our allowance for loan losses.



                                       15
<PAGE>

GENERAL

     The following is a discussion of our financial condition as of December 31,
2002 and the results of operations for the year ended  December 31, 2002.  These
comments  should  be  read  in  conjunction  with  our  consolidated   financial
statements and accompanying consolidated footnotes appearing in this report. The
significant  accounting  policies are described  throughout  the  Management and
Discussion  section of this document and included in Note 1 to the  consolidated
financial statements.

NATIONAL AND ECONOMIC EVENTS

     Nationally,  during  most  of 2001  and  during  2002,  the  United  States
experienced a slowing economy  following a tenth year of expansion.  During this
period,  the economy was also affected by lower returns and  expectations of the
stock  markets.  Economic  data led the Federal  Reserve to begin an  aggressive
program of rate cutting, which moved the Federal Funds rate down 11 times during
2001 for a total reduction of 475 basis points,  bringing the Federal Funds rate
to its lowest level in 40 years.  During the fourth quarter of 2002, the Federal
Reserve reduced the Federal Funds rate down an additional 50 basis points.

     Despite sharply lower  short-term  rates,  stimulus to the economy has been
muted and consumer  demand and business  investment  activity has been weak. The
financial  markets are operating now under very low historical  interest  rates.
Under  these  unusual  conditions,  many  observers  expect  Congress to pass an
economic  stimulus plan. Many economists  believe the Federal Reserve will begin
increasing  interest  rate in the second half of the 2003 year. No assurance can
be given that the Federal Reserve will take such action.  We continue to believe
that the markets we serve generally perform better than national  markets,  even
in times of recession.

     We believe that the economic  impact of the terrorist  attacks of September
11, 2001 did not  materially  affect our  operations.  It is evident from recent
economic data that the U.S. economy was affected  significantly by these events.
The  extent  and  duration  of the  economic  impact  from the  attacks  are not
predictable but could affect consumer confidence and the financial activities of
retail and business  customers.  Prior to these  events,  many  economists  were
predicting  that  the U.S.  had  been in a  recession.  Official  economic  data
released in November  2001  confirms  that the U.S. has been in a recession  for
several  months and it is likely that  recovery  will not occur  until  sometime
later in 2003 or beyond.

INCOME STATEMENT REVIEW
Net Interest Income

     Net interest income, the largest component of our income, was $4,660,647 in
2002 compared to  $2,957,313 in 2001, or an increase of 57.6%.  The level of net
interest   income  is  determined  by  the  level  of  earning  assets  and  the
successfully managing of the net interest margin. Changes in interest rates paid
on assets and  liabilities,  the rate of growth of the asset and liability base,
the  ratio of  interest-earning  assets  to  interest-bearing  liabilities,  and
management  of the balance  sheet's  interest rate  sensitivity  all factor into
changes in net interest income.

     Interest  income for 2002 of  $8,152,830  consisted of $7,390,202 on loans,
$712,699 in investments,  and $49,929 on federal funds sold. Interest income for
the  year  2001  of  $6,310,254  included  $5,186,555  on  loans,   $963,087  on
investments, and $160,612 on federal funds sold.

     Interest expense for 2002 of $3,492,183  consisted of $3,160,563 related to
deposits  and  $331,620  related to  borrowings.  Interest  expense  for 2001 of
$3,352,941  consisted of $3,243,960  related to deposits and $108,981 related to
borrowings.




                                       16
<PAGE>



     The following  table sets forth,  for the years ended December 31, 2002 and
2001,  information  related to our average  balance sheet and average  yields on
assets and average  costs of  liabilities.  We derived  these yields by dividing
income  or  expense  by the  average  balance  of the  corresponding  assets  or
liabilities.  We derived average balances from the daily balances throughout the
periods indicated.
<TABLE>
<CAPTION>
          Average Balances, Income and Expenses, and Rates (in $000's)
                                                                    For the years ended December 31,
                                                                 2002                                     2001
                                                                 ----                                     ----

                                                   Average     Income/   Yield/           Average    Income     Yield/
                                                   Balance     Expense   Rate             Balance    Expense    Rate
                                                   -------     -------   ----             -------    -------    ----
<S>                                                <C>         <C>       <C>              <C>        <C>         <C>
   Earning Assets:
     Federal funds sold                            $   2879    $   50    1.74%            $  3,716   $   160     4.31%
     Investment securities                           14,913       713    4.78%              15,456       963     6.23%
     Loans                                          123,261     7,390    6.00%              67,046     5,187     7.74%
                                                   ---------------------------            ----------------------------
        Total earning-assets                        141,053     8,153    5.78%              86,218     6,310     7.32%
                                                               ------                                -------
   Non-earning assets                                 7,112                                  5,364
                                                   --------                               --------
        Total assets                               $148,165                               $ 91,582
                                                  =========                               ========

   Interest-bearing liabilities:
     NOW accounts                                  $ 27,367    $  261     .95%            $ 12,559   $   164     1.31%
     Savings & money market                          22,811       316    1.39%              19,588       675     3.45%
     Time deposits                                   71,846     2,584    3.60%              42,982     2,405     5.60%

        Total interest-bearing deposits             122,024     3,161    2.59%              75,129     3,244     4.32%
     FHLB advance                                     7,090       216    3.05%               1,858        74     3.98%
     Other borrowings                                 5,293       116    2.19%               1,333        35     2.63%
                                                   ---------------------------            ----------------------------
        Total interest-bearing liabilities          134,407     3,493    2.60%              78,320     3,353     4.28%
                                                               ------                                -------
   Non-interest bearing liabilities                   4,023                                  3,813
   Shareholders' equity                               9,735                                  9,449
                                                   --------                               --------
        Total liabilities and shareholders'
          equity                                   $148,165                               $ 91,582
                                                   ========                               ========

   Net interest spread                                                      3.18%                                  3.04%
   Net interest income/margin                                  $4,660       3.30%                    $ 2,957       3.43%
                                                               ------                                -------
</TABLE>

     Our net interest  spread was 3.18% for the year ended  December 31, 2002 as
compared to 3.04% for the year ended December 31, 2001. The net interest  spread
is the difference between the yield we earn on our  interest-earning  assets and
the rate we pay on our interest-bearing liabilities.

     Our net interest margin for the period ended December 31, 2002 was 3.30% as
compared to 3.43% for the year ended  December  31, 2001.  During 2002,  earning
assets  averaged  $141.1  million as compared to $86.2 million in 2001.  The net
interest  margin is calculated as net interest  income  divided by  year-to-date
average earning assets.

     In pricing  deposits,  we considered our liquidity needs, the direction and
levels of interest rates and local market conditions. As such, higher rates have
been paid initially to attract deposits.



                                       17
<PAGE>


Rate/Volume Analysis
     Net  interest  income can be  analyzed  in terms of the impact of  changing
rates and changing  volume.  The following table sets forth the effect which the
varying  levels of  earning  assets  and  interest-bearing  liabilities  and the
applicable  rates  have had on changes in net  interest  income for the  periods
presented.
<TABLE>
<CAPTION>

                                               December 31, 2002 vs 2001                 December 31, 2001 vs 2000
                                       ------------------------------------------------------------------------------------
                                       Increase (Decrease) Due to                Increase (Decrease) Due to
                                       ------------------------------            ------------------------------
                                                              Rate/                                     Rate/
                                        Volume      Rate     Volume     Total     Volume      Rate     Volume     Total
                                       ------------------------------------------------------------------------------------

<S>                                    <C>          <C>         <C>       <C>       <C>         <C>       <C>       <C>
Interest income
  Loans                                $  4,349     (1,167)     (979)     2,203     4,213       (477)     (867)     2,869
  Investment securites                      (34)      (224)        8       (250)      543        (10)      (12)       521
  Federal funds sold                        (36)       (96)       22       (110)     (150)      (127)       49       (228)
                                       ------------------------------------------------------------------------------------
      Total interest income               4,279     (1,487)     (949)     1,843     4,606       (614)     (830)     3,162
                                       ------------------------------------------------------------------------------------

Interest expense
  Deposits                                2,025     (1,298)     (810)       (83)    2,532       (305)     (507)     1,720
  FHLB advances                             208        (17)      (49)       142        74          -         -         74
  Other borrowings                          104         (6)      (17)        81        35          -         -         35
                                       ------------------------------------------------------------------------------------
      Total interest expense              2,337     (1,321)     (876)       140     2,641       (305)     (507)     1,829
                                       ------------------------------------------------------------------------------------

Net interest income                    $  1,942       (166)      (73)     1,703     1,965       (309)     (323)     1,333
                                       ====================================================================================

</TABLE>

Provision for Loan Losses

     Included in the results of operations  for the periods  ended  December 31,
2002 and 2001 is a non-cash expense of $1.1 million and $600,000,  respectively,
related to the provision for loan losses. The loan loss reserve was $1.8 million
and $1.2 million as of December 31, 2002 and 2001,  respectively.  The allowance
for loan losses as a  percentage  of gross loans was 1.22% at December  31, 2002
and 1.24% at December 31, 2001. The loan portfolio is  periodically  reviewed to
evaluate  the  outstanding  loans and to  measure  both the  performance  of the
portfolio  and the  adequacy  of the  allowance  for loan  losses.  Management's
judgment  as to the  adequacy  of the  allowance  is  based  upon  a  number  of
assumptions about future events that it believes to be reasonable, but which may
or may not be accurate.  Because of the inherent uncertainty of assumptions made
during the  evaluation  process,  there can be no assurance  that loan losses in
future periods will not exceed the allowance for loan losses or that  additional
allocations  will not be required.  For the year ended  December  31,  2002,  we
reported net charge-offs of $418,098. Included in the $418,098 was the writedown
on a commercial business loan in the amount of $410,000. The remaining $8,098 of
the  charge-offs  in 2002  related  to credit  lines  associated  with  customer
checking  accounts.  For the year ended  December  31,  2001,  we  reported  net
charge-offs  of $7,753.  All of the  charge-offs in 2001 related to credit lines
associated with customer checking accounts.

Noninterest Income and Expense

     Noninterest  income  in 2002  was  $520,251,  an  increase  of  83.2%  over
noninterest  income of $283,991 in 2001.  This  increase  was  primarily  due to
increases  in service  charges on  deposits,  increases  in fees  charged on ATM
transactions,  and additional  loan fees received on the origination of mortgage
loans that were sold.

     We incurred  general and  administrative  expenses of $3.4  million for the
year ended  December 31, 2002  compared to $2.8  million for the 2001 year.  The
$596,000 additional general and administrative  expenses resulted primarily from
the  additional  staff hired  during 2001 to handle the current and  anticipated
future growth in both loans and deposits.



                                       18
<PAGE>


Salaries  and  benefits in 2002 were $1.8  million,  or an increase of $288,000.
Salaries  and  benefits  represented  52.4% of the  total  noninterest  expense.
Salaries and benefits in 2001 were $1.5 million.  All other  expenses  increased
only $308,295.  This increase relates primarily to $184,784  additional cost for
outside services,  $25,841 of added professional fees, and $61,482 of additional
occupancy expenses.  The primary reason for the higher level of outside services
is the additional  data processing  expense  associated with the higher level of
activity  that  resulted  from  the  significant  increases  in both  loans  and
deposits.  The significant  portion of the increase in professional fees relates
to legal fees associated with loan  collection  efforts.  The primary reason for
the increase in occupancy  cost is that the bank  increased the amount of square
footage that was being rented in the 2002 period. The significant portion of the
remaining  increases  are  related to $9,454  additional  marketing  expense and
$30,355  of  additional  insurance  expenses.  The  significant  portion  of the
increase in insurance  expense  relates to the higher cost of deposit  insurance
resulting from the higher level of deposits.

     No income tax income tax benefit or expense was recorded in 2002. A $22,000
benefit for income taxes was recorded in 2001.

BALANCE SHEET REVIEW

General
     At December 31, 2002,  we had total  assets of $170.4  million,  consisting
principally  of $148.1 million in loans,  $14.8 million in investments  and $4.4
million in cash and due from banks.  Liabilities  at December  31, 2002  totaled
$160.1  million,  consisting  principally of $133.6  million in deposits,  $13.0
million in FHLB advances, and $9.1 million of short-term borrowings. At December
31, 2002, shareholders' equity was $10.2 million.

Investments
     At December 31, 2002, the $14.6 million of investment  securities portfolio
represented  approximately  8.6% of our total  assets.  We were invested in U.S.
Government agency securities and mortgage-backed securities with a fair value of
$14.6 million and an amortized cost of $14.4 million for an unrealized gain of $
224 thousand.

     Contractual  maturities  and yields on our  investments  (all available for
sale)  at  December  31,  2002 are  shown in the  following  table  (dollars  in
thousands).  Expected maturities may differ from contractual  maturities because
issuers may have the right to call or prepay obligations with or without call or
prepayment  penalties.  Based on the comparison of investment  securities coupon
rates and the market interest rate as of December 31, 2002, the bank anticipates
that approximately $8.6 million will be called during the 2003 year.

<TABLE>
<CAPTION>
                                        After one but
                      Within             Within five               Over
                     one year    Yield      Years       Yield     Five years    Yield      Total      Yield
                     --------    -----   -----------    -----     ----------    -----      -----      ------
<S>                  <C>         <C>     <C>            <C>       <C>           <C>       <C>          <C>
   U.S.Government
   agencies          $      -        -   $     8,157    4.54%     $ 1,627       6.05%     $   9,784    4.79%
   Mortgage-backed
   securities               -        -             -       -%       4,808       4.73%         4,808    4.73%
                     -----------------   --------------------     -------------------     ------------------
   Total                    -        -   $     8,157    4.54%     $ 6,435       5.06%     $  14,592    4.77%
                     =================   ====================     ===================     ==================
</TABLE>

     At December  31, 2002,  the $42,000 of  short-term  investments  in federal
funds sold on an overnight  basis comprised .02% of total assets at December 31,
2002, as compared to $101,000, or .09% of total assets, at December 31, 2001.



                                       19
<PAGE>


Loans
     Since loans typically provide higher interest yields than do other types of
interest earning assets, it is our intent to channel a substantial percentage of
our earning  assets into the loan  portfolio.  Average loans for the years ended
December 31, 2002 and 2001 were $123.3 million and $67.0 million,  respectively.
Total loans  outstanding  at December 31, 2002 and 2001 were $149.9  million and
$96.5 million, respectively, before allowance for loan losses.

     The following  table  summarizes  the  composition of the loan portfolio at
December 31:
<TABLE>
<CAPTION>
                                                              2002                                 2001
                                                              ----                                 ----
                                                    Amount           % of Total           Amount           % of Total
                                                    ------           ----------           ------           ----------
<S>                                               <C>                  <C>                <C>                <C>
Real estate:
  Commercial
   Owner occupied                                 $ 22,653,311         15.11%             $ 16,532,696       17.13%
   Non-owner occupied                               43,076,993         28.74%               22,813,424       23.63%
   Construction                                      4,007,650          2.67%                8,292,228        8.59%
                                                  -------------------------------------------------------------------
      Total commercial real-estate                  69,737,954         46.52%               47,638,348       49.35%
                                                  -------------------------------------------------------------------

  Consumer
    Residential                                     25,499,625         17.01%               12,898,543       13.36%
    Home Equity                                     18,069,407         12.05%                8,937,054        9.26%
    Construction                                     4,199,848          2.80%                3,972,206        4.11%
                                                  -------------------------------------------------------------------
      Total consumer real-estate                    47,768,880         31.86%               25,807,803       26.73%
                                                  -------------------------------------------------------------------
      Total real-estate                            117,506,834         78.39%               73,446,151       76.08%

Commercial business                                 28,192,407         18.81%               20,529,004       21.27%
Consumer-other                                       4,590,552          3.06%                2,812,703        2.91%
Deferred origination fees, net                        (386,632)         (.26%)                (255,990)       (.26%)
                                                  -------------------------------------------------------------------
 Total gross loans, net of deferred fees           149,903,161        100.00%               96,531,868      100.00%
                                                                     ========                              ========

Less--allowance for loan losses                     (1,824,149)                             (1,192,247)
                                                  ------------                            ------------

 Total loans, net                                 $148,079,012                            $ 95,339,621
                                                  ============                            ============

</TABLE>

         The principal component of our loan portfolio at year-end 2002 and 2001
was loans secured by real estate mortgages. Due to the short time the portfolio
has existed, the current mix of loans may not be indicative of the ongoing
portfolio mix. Management will attempt to maintain a relatively diversified loan
portfolio to help reduce the risk inherent in concentration of collateral.

Provision and Allowance for Loan Losses
     We have  developed  policies  and  procedures  for  evaluating  the overall
quality  of our credit  portfolio  and the timely  identification  of  potential
credit  problems.  Management's  judgment as to the adequacy of the allowance is
based on a number of assumptions  about future  events,  which it believes to be
reasonable,  but  which  may  or may  not  be  valid.  Based  on our  judgments,
evaluation,  and analysis of the loan  portfolio,  we consider the allowance for
loan losses to be adequate.  However, there can be no assurance that charge-offs
in future  periods will not exceed the allowance for loan losses as estimated at
any point in time or that  provisions  for loan losses may be  significant  to a
particular accounting period.

     We have  established  an allowance for loan losses  through a provision for
loan losses  charged to expense on our  statement of  operations.  The allowance
represents an amount which we believe will be adequate to absorb probable losses
on existing loans that may become uncollectible. Our judgment in determining the
adequacy of the  allowance  is based on  evaluations  of the  collectibility  of
loans, including consideration of factors such as the balance of impaired loans;
the quality,  mix and size of our overall loan  portfolio;  economic  conditions
that may  affect the  borrower's  ability  to repay;  the amount and  quality of
collateral  securing the loans; our historical loan loss experience and a review
of specific  problem loans.  We adjust the amount of the allowance  periodically
based on changing circumstances as a component of the provision for loan losses.
We charge recognized losses to the allowance and add subsequent  recoveries back
to the allowance.



                                       20
<PAGE>


     We do not allocate the allowance for loan losses to specific  categories of
loans but evaluate  the adequacy on an overall  portfolio  basis  utilizing  our
credit  grading  system which we apply to each loan. The bank has an independent
consultant to review the loan files on a test basis,  to verify that the lenders
have  properly  graded each loan.  The bank's  analysis  of the  adequacy of the
allowance  also  considers  subjective  issues  such as changes  in the  lending
policies and procedures, changes in local/national economy, changes in volume or
type of credits,  changes in volume/severity  of problem loans,  quality of loan
review and board of director oversight, concentrations of credit, and peer group
comparisions.  Due to our limited  operating  history,  the  provision  for loan
losses has been made primarily as a result of management's assessment of general
loan loss risk as compared to banks of similar size and maturity.

     At  December  31,  2002 and 2001,  the  allowance  for loan losses was $1.8
million  and  $1.2  million,  respectively,  or 1.22%  of  outstanding  loans at
December 31, 2002 and 1.24% at December 31, 2001, respectively.  During the year
ended December 31, 2002, we charged off loans of $418,098. During the year ended
December 31, 2001, we charged off loans of $7,753.

     At December 31, 2002,  nonaccrual loans  represented .1% of total loans. At
December 31, 2002 and 2001, the bank had $113,105 and $359,987,  respectively on
non-accrual  status.  Generally,  a loan is placed on nonaccrual  status when it
becomes  90 days  past  due as to  principal  or  interest,  or when  management
believes,  after  considering  economic and business  conditions  and collection
efforts,  that the borrower's financial condition is such that collection of the
loan is  doubtful.  A  payment  of  interest  on a loan  that is  classified  as
nonaccrual is recognized as income when received.

Maturities and Sensitivity of Loans to Changes in Interest Rates
     The  information  in the  following  table  is  based  on  the  contractual
maturities of individual loans,  including loans which may be subject to renewal
at their  contractual  maturity.  Renewal of such loans is subject to review and
credit  approval,  as well as modification of terms upon their maturity.  Actual
repayments of loans may differ from maturities reflected below because borrowers
have the right to prepay obligations with or without prepayment penalties.

     The following table summarizes the loan maturity distribution, by type, and
related  interest  rate   characteristics  at  December  31,  2002  (dollars  in
thousands):

<TABLE>
<CAPTION>
                                                          After one but
                                              One year     within five       After
                                              or less         years         five years     Total
                                              -------         -----         ----------     -----


<S>                                         <C>           <C>             <C>             <C>
              Commercial                    $    17,039   $    11,098     $        55     $   28,192

              Real estate - construction          7,173         1,034               -          8,207

              Real estate - mortgage             15,810        89,479           3,624        108,913

              Consumer and other                  1,651         2,546             394          4,591
                                            -----------   -----------     -----------     ----------

              Total loans                   $    41,673   $   104,157     $     4,073     $  149,903
                                            -----------   -----------     -----------     ----------


              Loans maturing after one year with:

              Fixed interest rates                                                        $   30,812

              Floating interest rates                                                     $   77,418
</TABLE>






                                       21
<PAGE>



Deposits and Other Interest-Bearing Liabilities
     Our  primary  source of funds for loans and  investments  is our  deposits,
advances from FHLB, and  short-term  repurchase  agreements.  National and local
market trends over the past several years suggest that  consumers  have moved an
increasing  percentage of  discretionary  savings funds into investments such as
annuities and stock and fixed income mutual funds.

     The following is a table of deposits by category at December 31 (dollars in
thousands):

<TABLE>
<CAPTION>
                                                               2002                           2001
                                                               ----                           ----

<S>                                                 <C>                <C>          <C>              <C>
     Demand deposit accounts                      $     13,809         10.34%       $   7,729        8.34%
     NOW accounts                                       15,378         11.51%           8,295        8.95%
     Money market accounts                              19,727         14.77%          24,139       26.04%
     Savings accounts                                    1,774          1.33%             255         .27%
     Time deposits less than $100,000                   32,024         23.98%          31,900       34.41%
     Time deposits of $100,000 or more                  50,851         38.07%          20,382       21.99%
                                                  ---------------------------------------------------------

     Total deposits                               $    133,563        100.00%       $  92,700      100.00%
                                                  =========================================================
</TABLE>


     Core deposits,  which exclude time deposits of $100,000 or more,  provide a
relatively  stable  funding  source  for our loan  portfolio  and other  earning
assets.  Our core  deposits were $82.7 million and $72.3 million at December 31,
2002 and 2001,  respectively.  The increase in time deposits of $100,000 or more
resulted from the bank  utilizing  deposits  that were  obtained  outside of the
bank's primarily  market.  At December 31, 2002 the total of deposits outside of
the bank's primary market totaled $46.2 million. The bank anticipates being able
to either  renew or  replace  these  deposits  when  they  mature,  however,  no
assurance can be given that the bank will be able to replace these deposits with
the same terms or rates. Our loan-to-deposit ratio was 111% and 103% at year-end
2002 and 2001,  respectively.  The maturity distribution of our time deposits of
$100,000 or more at December 31, 2002 and 2001 is as follows:

<TABLE>
<CAPTION>
                                                         2002                       2001
                                                         ----                       ----
                                                              (Dollars in thousands)
<S>                                                   <C>                        <C>
     Three months or less                             $   13,226                 $   7,929
     Over three through six months                         9,155                     3,680
     Over three through twelve months                     10,391                     5,023
     Over twelve months                                   18,079                     3,750
                                                      --------------------------------------
     Total                                            $   50,851                 $  20,382
                                                      ======================================
</TABLE>

Borrowings

     At December  31, 2002 the bank had  $7,892,000  sales of  securities  under
agreements to repurchase  with brokers with a weighted rate of 1.38% that mature
in less than 90 days. These agreements are secured with approximately $8,000,000
of investment securities.  The securities under agreement to repurchase averaged
$4,349,076 during 2002, with $8,482,600 being the maximum amount  outstanding at
any month-end.

     At December  31, 2001 the bank had  $7,682,600  sales of  securities  under
agreements to repurchase  with brokers with a weighted rate of 1.96% that mature
in less than 90 days. These agreements are secured with approximately $8,000,000
of investment securities.  The securities under agreement to repurchase averaged
$1,335,382 during 2001, with $7,682,600 being the maximum amount  outstanding at
any month-end.

     At December 31, 2002 the bank had utilized  $1,215,000 of its $3,700,000 of
federal  funds  purchased  line of credit.  At  December  31,  2001 the bank had
utilized  $800,000 of its $2,800,000 of federal funds  purchased line of credit.
These  lines of credit  are  unsecured  and bear  interest  at the daily rate of
federal funds plus 25 basis points (1.50% at December 31, 2002).



                                       22
<PAGE>

     At December 31, 2002 the bank had  $13,000,000  of advances  from the FHLB.
These  advances are secured with  approximately  $22,400,000  of first  mortgage
loans  and  stock  in the  FHLB.  Listed  below  is a  summary  of the  term and
maturities of the advances:

     o   The  maturity on  $5,000,000  of the advances  with a weighted  rate of
         1.63%  is July 16,  2004.  The FHLB has the  option  to  re-price  this
         advance as of April 16, 2003.
     o   The  maturity on  $5,000,000  of the advances  with a weighted  rate of
         1.56% is October 15,  2007.  The FHLB has the option to  re-price  this
         advance as of October 15, 2003.
     o   The  maturity on  $3,000,000  of the advances  with a weighted  rate of
         4.86% is August  24,  2011.  The FHLB has the option to  re-price  this
         advance as of August 24, 2006.

     At December 31, 2001 the bank had  $6,000,000  of advances from the FHLB of
Atlanta. These advances are secured by a combination of approximately $9,000,000
of first  mortgage  loans,  investment  securities  and stock in the  FHLB.  The
maturity on  $3,000,000  of the advances  with a weighted rate of 2.67% is March
27,  2002 and the  remaining  $3,000,000  with a  weighted  rate of 4.83%  has a
maturity of August 24, 2011. The FHLB has the option to re-price this advance as
of August 24, 2006.

     At December 31, 2002 the company had a $2,500,000  revolving line of credit
with another bank with a maturity of June 30,  2003.  At December 31, 2002,  the
company had outstanding $2,500,000.  The company used $2,375,000 of the proceeds
to increase  its  investment  in the Bank.  The  remaining  $125,000 was used to
establish a $125,000 escrow fund to be used to pay interest  payments.  The line
of credit bears  interest at a rate of prime minus 1.25%,  which at December 31,
2002  was  3.00%.  The  company  has  pledged  all of the  stock  of the bank as
collateral  for this  line of  credit.  The line of  credit  agreement  contains
various  covenants  related to net income and asset quality.  As of December 31,
2002, the company believes it is in compliance with all covenants.


CAPITAL RESOURCES
     Total shareholders' equity amounted to $10,231,789 at December 31, 2002 and
$9,459,419 at December 31, 2001.  The increase  between 2001 and 2002  primarily
resulted from the $752,416 of net income  incurred  during 2002, and the $19,954
increase in unrealized gain on investment securities, net of tax.

     The following  table shows the return on average assets (net income divided
by average  total  assets),  return on average  equity  (net  income  divided by
average  equity),  and equity to assets ratio (average equity divided by average
total  assets)  for 2002 and 2001.  Since our  inception,  we have not paid cash
dividends.

                                                  2002         2001
                                                  ----         ----

                   Return on average assets        0.5%        -0.1%

                   Return on average equity       7.73%        -1.3%

                   Equity to assets ratio          6.0%         8.0%


     The Federal Reserve Board and bank regulatory agencies require bank holding
companies  and financial  institutions  to maintain  capital at adequate  levels
based on a percentage of assets and off-balance  sheet  exposures,  adjusted for
risk weights ranging from 0% to 100%.


                                       23
<PAGE>



     Under the  capital  adequacy  guidelines,  capital is  classified  into two
tiers.  These  guidelines  require an institution to maintain a certain level of
Tier 1 and Tier 2 capital to  risk-weighted  assets.  Tier 1 capital consists of
common stockholders' equity, excluding the unrealized gain or loss on securities
available for sale, minus certain  intangible  assets. In determining the amount
of risk-weighted assets, all assets, including certain off-balance sheet assets,
are multiplied by a risk-weight factor of 0% to 100% based on the risks believed
inherent in the type of asset.  Tier 2 capital  consists of Tier 1 capital  plus
the general reserve for loan losses subject to certain limitations.  The bank is
also  required to  maintain  capital at a minimum  level based on total  average
assets, which is known as the Tier 1 leverage ratio.

     We are both subject to various regulatory capital requirements administered
by the  federal  banking  agencies.  Under  these  capital  guidelines,  we must
maintain a minimum total risk-based capital of 8%, with at least 4% being Tier 1
capital.  In addition,  we must  maintain a minimum Tier 1 leverage  ratio of at
least 4%. To be considered "well-capitalized", we must maintain total risk-based
capital of at least 10%, Tier 1 capital of at least 6%, and a leverage  ratio of
at least 5%.

     The following table sets forth the company's and the bank's various capital
ratios at December  31, 2002 and 2001.  At December  31, 2002 and 2001,  we both
were in compliance with each of the applicable  regulatory capital  requirements
and were considered to be "well capitalized" at the bank level.

                                           2002                      2001
                                           ----                      ----
                                     The         The           The        The
                                   Company       Bank        Company      Bank
                                   -------       ----        -------      ----


       Total risk-based capital       8.6%       10.3%         10.4%      10.1%

       Tier 1 risk-based capital      7.4%        9.1%          9.2%       8.9%

       Leverage capital               6.1%        7.5%          8.2%       7.9%

     We believe that capital is  sufficient  to fund the  activities of the bank
over  the  next  two  years.  The  company  is  currently   evaluating   various
alternatives for increasing  capital.  It is management's  objective to maintain
the  capital  levels  such that the bank will  continue  to be  considered  well
capitalized.  However,  no assurance  can be given that this  objective  will be
achieved. We do anticipate that capital levels will be maintained at levels that
will allow the company and the bank to qualify as being  adequately  capitalized
as  defined  by OCC  regulations.  Depending  on the  timing of when  additional
capital is obtained,  the bank may be required to limit the level of growth that
has been  experienced  in the past three years.  As of December 31, 2002,  there
were no significant firm commitments outstanding for capital expenditures.


EFFECT OF INFLATION AND CHANGING PRICES

     The effect of relative  purchasing power over time due to inflation has not
been taken into effect in our financial statements.  Rather, the statements have
been prepared on an historical cost basis in accordance with generally  accepted
accounting principles.

     Unlike most industrial  companies,  the assets and liabilities of financial
institutions  such as our  company  and bank are  primarily  monetary in nature.
Therefore,  the effect of changes in interest rates will have a more significant
impact on our performance  than will the effect of changing prices and inflation
in general.  In addition,  interest rates may generally  increase as the rate of
inflation  increases,  although  not  necessarily  in  the  same  magnitude.  As
discussed  previously,  we seek to  mange  the  relationships  between  interest
sensitive  assets  and  liabilities  in  order  to  protect  against  wide  rate
fluctuations, including those resulting from inflation.



                                       24
<PAGE>


OFF-BALANCE SHEET RISK

     Commitments  to extend credit are  agreements to lend to a customer as long
as there is no violation of any material condition  established in the contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require the payment of a fee. At December 31, 2002, unfunded commitments
to extend  credit were  $34,086,000,  of which  $2,103,000 is at fixed rates and
$31,983,000  is at  variable  rates.  The  significant  portion of the  unfunded
commitments  relates to consumer equity lines of credit.  The bank  anticipates,
based on historical  experience,  that the significant portion of these lines of
credit will not be funded.  The bank evaluates each customer's credit worthiness
on a case-by-case basis. The amount of collateral obtained,  if deemed necessary
by the bank upon extension of credit, is based on management's credit evaluation
of  the  borrower.  Collateral  varies  but  may  include  accounts  receivable,
inventory,  property,  plant and equipment,  and commercial and residential real
estate.

     At December 31,  2002,  there was a $877,000  commitment  under a letter of
credit. The credit risk involved in issuing letters of credit is essentially the
same as that involved in extending  loan  facilities  to  customers.  Collateral
varies but may include accounts  receivable,  inventory,  equipment,  marketable
securities  and  property.  Since most of the letters of credit are  expected to
expire without being drawn upon, they do not necessarily  represent  future cash
requirements.

     Except as  disclosed in this  report,  we are not  involved in  off-balance
sheet  contractual  relationships,  unconsolidated  related  entities  that have
off-balance  sheet  arrangements or transactions  that could result in liquidity
needs or other commitments or significantly impact earnings.

MARKET RISK

     Market risk is the risk of loss from adverse  changes in market  prices and
rates, which principally arises from interest rate risk inherent in our lending,
investing,  deposit  gathering and borrowing  activities.  Other types of market
risks,  such as foreign currency exchange rate risk and commodity price risk, do
not normally  arise in the normal  course of our business.  Management  actively
monitors and manages its interest rate risk exposure.

     The  principal  interest  rate risk  monitoring  technique we employ is the
measurement of our interest sensitivity "gap," which is the positive or negative
dollar  difference  between assets and liabilities  that are subject to interest
rate repricing  within a given period of time.  Interest rate sensitivity can be
managed   by   repricing    assets   or    liabilities,    selling    securities
available-for-sale,  replacing an asset or  liability at maturity,  or adjusting
the interest rate during the life of an asset or liability.  Managing the amount
of assets and  liabilities  repricing in this same time interval  helps to hedge
the risk and  minimize  the impact on net  interest  income of rising or falling
interest  rates.  We generally  would  benefit from  increasing  market rates of
interest  when we have an  asset-sensitive  gap  position  and  generally  would
benefit   from    decreasing    market   rates   of   interest   when   we   are
liability-sensitive.

     Due to the fact that  approximately  75% of our loans  were  variable  rate
loans at December 31, 2002, we are currently asset sensitive during the one-year
time frame. However, our gap analysis is not a precise indicator of our interest
sensitivity position.  The analysis presents only a static view of the timing of
maturities and repricing  opportunities,  without taking into consideration that
changes in interest rates do not affect all assets and liabilities  equally. For
example,  rates  paid on a  substantial  portion  of core  deposits  may  change
contractually  within a relatively  short time frame, but those rates are viewed
by management as significantly less  interest-sensitive  than market-based rates
such as those paid on non-core deposits.  Net interest income may be impacted by
other  significant  factors  in a given  interest  rate  environment,  including
changes  in  the  volume  and  mix  of  earning   assets  and   interest-bearing
liabilities.



                                       25
<PAGE>




LIQUIDITY & INTEREST RATE SENSITIVITY

     Liquidity  management  involves monitoring our sources and uses of funds in
order to meet our day-to-day cash flow  requirements  while maximizing  profits.
Liquidity  represents  the  ability of a company to convert  assets into cash or
cash  equivalents  without  significant  loss and to raise  additional  funds by
increasing  liabilities.  Liquidity  management is made more complicated because
different  balance sheet components are subject to varying degrees of management
control.  For example,  the timing of maturities of the investment  portfolio is
fairly  predictable  and  subject  to a high  degree of  control at the time the
investment decisions are made. However, net deposit inflows and outflows are far
less predictable and are not subject to nearly the same degree of control.

     At December 31, 2002 and 2001,  our liquid  assets,  consisting of cash and
due from banks and federal funds sold,  amounted to $4,471,026  and  $2,982,956,
representing 2.6% and 2.5% of total assets, respectively.  Investment securities
at  December  31,  2002  and  2001  amounted  to  $15,497,190  and  $18,468,460,
representing  9.10% and 15.6% of total assets,  respectively;  these  securities
provide a secondary source of liquidity since they can be converted into cash in
a timely  manner.  Our  ability to  maintain  and expand  our  deposit  base and
borrowing capabilities also serves as a source of liquidity.

     We plan to meet our future cash needs through the  liquidation of temporary
investments, maturities and sale of loans and maturity of investment securities,
and generation of deposits. During most of 2002, as a result of historically low
rates that were being earned on short-term  liquidity  investments,  we chose to
maintain  a lower than  normal  level of  short-term  liquidity  securities.  In
addition,  the bank  maintains  federal  funds  purchased  lines of credit  with
correspondent  banks in the amount of  $3,700,000.  The bank is also a member of
the Federal Home Loan Bank of Atlanta from which applications for borrowings can
be made for leverage purposes, if so desired. The FHLB requires that securities,
qualifying single family mortgage loans, and stock of the FHLB owned by the bank
be pledged to secure any advances from the FHLB. The unused  borrowing  capacity
currently  available  from the FHLB at December  31,  2002 was $3.7  million and
assumes that the bank's $650,000  investment in FHLB stock as well as qualifying
mortgages  would be pledged to secure  any future  borrowings.  During the first
quarter of 2003, the bank became  eligible to pledge first  mortgage  commercial
loans.  The  pledging  of the  commercial  mortgage  loans  increase  the bank's
borrowing  capacity  by  $18.6  million.  The bank  plans to use the  additional
borrowing capacity to both fund anticipated  additional loans and for short-term
liquidity needs that may arise.

     Management  believes  that  our  existing  stable  base of  core  deposits,
borrowings from the FHLB, and short-term repurchase agreements will enable us to
successfully meets our long term liquidity needs.

     Asset/liability  management  is the process by which we monitor and control
the mix and maturities of our assets and liabilities.  The essential purposes of
asset/liability  management are to ensure adequate  liquidity and to maintain an
appropriate  balance  between  interest  sensitive  assets  and  liabilities  to
minimize potentially adverse impacts on earnings from changes in market interest
rates. The bank's  asset/liability  management  committee  ("ALCO") monitors and
considers  methods of managing exposure to interest rate risk. The ALCO consists
of members of the board of directors and senior management of the bank and meets
quarterly.  The ALCO is charged with the responsibility to maintain the level of
interest  rate   sensitivity  of  the  bank's  interest   sensitive  assets  and
liabilities within Board-approved limits.



                                       26
<PAGE>



     The  following  table  presents  our rate  sensitivity  at each of the time
intervals  indicated as of December 31, 2002. The table may not be indicative of
our rate sensitivity position at other points in time. In addition,  the table's
maturity distribution may differ from the contractual  maturities of the earning
assets and  interest  bearing  liabilities  presented  due to  consideration  of
prepayment   speeds  under  various   interest  rate  change  scenarios  in  the
application of the interest rate sensitivity methods described above.

<TABLE>
<CAPTION>
                                       Within       After three but       After one but      After
                                        three        within twelve         within five        five
                                       months           months                years          years
                                       ------           ------                -----          -----

                                                                                                             Total
                                                                  (Dollars in thousands)
Interest-earning assets:
<S>                                <C>               <C>                 <C>              <C>            <C>
  Federal funds sold               $           42    $         -         $          -     $           -  $          42
  Investment securities                     8,917            750                4,518               407         14,592
  Loans                                   112,052          7,039               30,090               722        149,903
                                    --------------    -----------------   ---------------  -------------  ------------

Total earning assets               $      121,011    $     7,789         $     34,608     $       1,129  $     164,537
                                    --------------    -----------------   ---------------  -------------  -------------

Interest-bearing liabilities:
  Money market and NOW             $       35,104    $         -         $          -     $           -  $      35,104
  Regular savings                           1,774              -                    -                 -          1,774
  Time deposits                            22,915         33,689               26,273                 -         82,877
  Federal funds purchased                   1,215              -                    -                 -          1,215
  Repurchase Agreements                     7,892              -                    -                 -          7,892
  Note payable                              2,500              -                    -                 -          2,500
  FHLB advances                             5,000          5,000                 3,000                -         13,000
                                    --------------    -----------------   ---------------  -------------  -------------

Total interest-bearing
liabilities                        $       76,400    $    38,689         $     29,273     $           -  $     144,362
                                    --------------    -----------------   ---------------  -------------  -------------

Period gap                         $       44,611    $   (30,900)        $     5,335      $       1,129 $       20,175
Cumulative gap                     $       44,611    $    13,711         $    19,046      $      20,175 $       20,175

Ratio of cumulative gap to
   total earning assets                     27.1%           8.3%               11.6%              12.3%
</TABLE>


ACCOUNTING, REPORTING AND REGULATORY MATTERS

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  This statement  requires  companies to record the fair value of an
asset  retirement  obligation  as a liability in the period in which it incurs a
legal obligation  associated with the retirement of tangible  long-lived  assets
that result from the acquisition, construction, development and/or normal use of
assets. A corresponding  asset (which is depreciated over the life of the asset)
must also be recorded.  The company  adopted the  provisions  of SFAS NO. 143 on
January 1, 2003 with no impact on financial position and results of operations.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets,   which  supersedes  prior  pronouncements
associated  with  impairment  or disposal of  long-lived  assets.  The statement
establishes   methodologies  for  assessing  impairment  of  long-lived  assets,
including  assets to be disposed of by sale or by other  means.  The adoption of
this standard had no impact on the financial position of the company.



                                       27
<PAGE>

     In April 2002, The FASB issued SFAS No. 145,  Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections. This statement rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishments of Debt and SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements.  This statement also rescinds SFAS No. 44, Accounting
for Intangible  Assets of Motor Carriers and amends SFAS No. 13,  Accounting for
Leases. This new statement requires gains and losses from extinguishment of debt
to be classified as an extraordinary  item only if they meet the criteria of APB
Opinion No. 30,  Reporting  the Results of  Operations-Reporting  the Effects of
Disposal of a Segment of Business,  and Extraordinary,  Unusual and Infrequently
Occurring Events and Transactions,  which will distinguish transactions that are
part of an  entity's  recurring  operations  from  those  that  are  unusual  or
infrequent  or that meet the criteria  for  classification  as an  extraordinary
item.  The  adoption  of the  provisions  of SFAS No.  145 had no  impact on the
Company's financial position or results of operations

     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal  Activities,  which  addresses  financial  accounting  and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force  (EITF) Issue No. 94-3,  Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including Certain Costs Incurred in a Restructuring). This Statement applies to
costs  associated  with specific exit  activities and requires a liability for a
cost associated with an exit or disposal  activity to be recognized and measured
initially at its fair value in the period in which the liability is incurred.  A
liability for a cost  associated  with an exit or disposal  activity is incurred
when the  definition of a liability is met. The provisions of this statement are
effective for exit or disposal  activities that are initiated after December 31,
2002.  The company  adopted the  provisions of this statement on January 1, 2003
with no impact on financial position or results of operations.

     In October  2002,  the FASB  issued SFAS No.  147,  Acquisition  of Certain
Financial Institutions - an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9, which brings all business combinations involving financial
institutions,  except mutual financial institutions,  into the scope of SFAS No.
141,  Business  Combinations.  This statement  requires that all acquisitions of
financial  institutions  that  meet  the  definition  of a  business,  including
acquisitions  of part of a financial  institution  that meet the definition of a
business,  must be accounted for in accordance with SFAS No. 141 and the related
intangibles  accounted for in accordance with SFAS No. 142. SFAS No. 147 removes
such  acquisitions  from the  scope  of SFAS  No.  72,  Accounting  for  Certain
Acquisitions  of Banking or Thrift  Institutions.  SFAS No. 147 also amends SFAS
No. 144 to include in its scope long-term customer  relationship  intangibles of
financial  institutions.  SFAS No. 147 was  effective  upon  issuance and had no
impact on the company's financial statements.

     In December 2002,  the FASB issued SFAS No. 148 Accounting for  Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No. 123.
This  Statement  amends FASB  Statement  No.  123,  Accounting  for  Stock-Based
Compensation,  to provide  alternative  methods of  transition  for a  voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition, this statement amends the disclosure requirements of
Statement No. 123 to require  prominent  disclosures  in both annual and interim
financial  statements  about the method of accounting for  stock-based  employee
compensation and the effect of the method used on reported results.  The company
adopted this standard  effective December 31, 2002 and has included the required
disclosures in the footnotes to the financials.  The company has not elected the
fair value  treatment  of  stock-based  compensation  and the  adoption  of this
standard had no impact on its financial position.

     Other accounting standards that have been issued or proposed by the FASB or
other standards-setting  bodies that do not require adoption until a future date
are not  expected  to  have a  material  impact  on the  consolidated  financial
statements upon adoption.



                                       28
<PAGE>



Item 7.  Financial Statements
-----------------------------



                          INDEX TO FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001



Report of Independent Public Accountant.......................................31

Consolidated Balance Sheets...................................................32

Consolidated Statements of Operations.........................................33

Consolidated Statements of Shareholders' Equity...............................34

Statements of Cash Flows......................................................35

Notes to Consolidated Financial Statements....................................36







                                       29
<PAGE>












                        GREENVILLE FIRST BANCSHARES, INC.
                                 AND SUBSIDIARY


                   REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001












                                       30
<PAGE>




REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




The Directors
Greenville First Bancshares, Inc. and Subsidiary
Greenville, South Carolina


     We have audited the accompanying  consolidated balance sheets of Greenville
First  Bancshares,  Inc. and Subsidiary as of December 31, 2002 and 2001 and the
related  consolidated   statements  of  operations,   shareholders'  equity  and
comprehensive  income  (loss),  and cash flows for the years then  ended.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audits 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  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial position of Greenville
First  Bancshares,  Inc. and Subsidiary as of December 31, 2002 and 2001 and the
results  of their  operations  and  their  cash  flows  for the  years  ended in
conformity with accounting principles generally accepted in the United States of
America.



/s/ Elliott Davis, LLC

Elliott Davis, LLC
Greenville, South Carolina
February 14, 2003







                                       31
<PAGE>



<TABLE>
<CAPTION>
                 GREENVILLE FIRST BANCSHARES, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                                                                   December 31,
                                                                                       -------------------------------------
                                                                                             2002                2001
                                                                                       -----------------   -----------------
                                                          Assets
<S>                                                                                      <C>                <C>
    Cash and due from banks                                                              $   4,429,290      $   2,882,115
    Federal funds sold                                                                          41,736            100,841
    Investment securities available for sale                                                14,592,190         17,913,460
    Other investments, at cost                                                                 905,000            555,000
    Loans, net                                                                             148,079,012         95,339,621
    Accrued interest                                                                           730,028            840,448
    Property and equipment, net                                                                785,942            890,761
    Other real estate owned                                                                    524,625                  -
    Other assets                                                                               269,840             42,764
                                                                                      ------------------   -----------------
             Total assets                                                                $ 170,357,663      $ 118,565,010
                                                                                      ==================   =================

                                           Liabilities and Shareholders' Equity

Liabilities
    Deposits                                                                             $ 133,563,270      $  92,700,010
    Official checks outstanding                                                                889,270            891,129
    Federal funds purchased and repurchase agreements                                        9,107,000          8,482,600
    Federal Home Loan Bank advances                                                         13,000,000          6,000,000
    Note payable                                                                             2,500,000                  -
    Accrued interest payable                                                                   606,072            748,091
    Accounts payable and accrued expenses                                                      460,262            283,761
                                                                                      ------------------   -----------------
         Total liabilities                                                                 160,125,874        109,105,591
                                                                                      ------------------   -----------------

Commitments and contingencies - Note 11

Shareholders' equity
    Preferred stock, par value $.01 per share, 10,000,000 shares
      authorized, no shares issued                                                                   -                  -
    Common stock, par value $.01 per share, 10,000,000 shares
      authorized, 1,150,000 issued                                                              11,500             11,500
    Additional paid-in capital                                                              10,635,200         10,635,200
    Accumulated other comprehensive income                                                     147,733            127,779
    Retained deficit                                                                          (562,644)        (1,315,060)
                                                                                      ------------------   -----------------
         Total shareholders' equity                                                         10,231,789          9,459,419
                                                                                      ------------------   -----------------
         Total liabilities and shareholders' equity                                      $ 170,357,663      $ 118,565,010
                                                                                      ==================   =================

</TABLE>

See notes to  consolidated  financial  statements  that are an integral  part of
these consolidated statements.



                                       32
<PAGE>

<TABLE>
<CAPTION>

                 GREENVILLE FIRST BANCSHARES, INC. & SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                               For the years ended
                                                                                                   December 31,
                                                                                      --------------------------------------
                                                                                            2002                2001
                                                                                      ------------------  ------------------

<S>                                                                                        <C>                <C>
Interest income
    Loans                                                                                  $  7,390,202       $  5,186,555
    Investment securities                                                                       712,699            963,087
    Federal funds sold                                                                           49,929            160,612
                                                                                      ------------------  ------------------

         Total interest income                                                                8,152,830          6,310,254
Interest  expense
   Deposits                                                                                   3,160,563          3,243,960
   Borrowings                                                                                   331,620            108,981
                                                                                      ------------------  ------------------
        Total interest expense                                                                3,492,183          3,352,941
                                                                                      ------------------  ------------------
         Net interest income before provision for loan losses                                 4,660,647          2,957,313
   Provision for loan losses                                                                  1,050,000            600,000
                                                                                      ------------------  ------------------
         Net interest income after provision for loan losses                                  3,610,647          2,357,313
                                                                                      ------------------  ------------------
Noninterest income
    Loan fee income                                                                             155,401             81,974
    Service fees on deposit accounts                                                            182,667             94,612
    Other income                                                                                182,183            107,405
                                                                                      ------------------  ------------------
         Total noninterest income                                                               520,251            283,991
                                                                                      ------------------  ------------------

Noninterest expenses
    Salaries and benefits                                                                     1,768,878          1,481,173
    Professional fees                                                                           153,257            127,416
    Marketing                                                                                   123,553            114,099
    Insurance                                                                                    93,282             62,927
    Occupancy                                                                                   587,783            526,301
    Data processing and related costs                                                           473,577            288,793
    Telephone                                                                                    23,674             20,663
    Other                                                                                       154,478            161,110
                                                                                      ------------------  ------------------
         Total noninterest expenses                                                           3,378,482          2,782,482
                                                                                      ------------------  ------------------
         Income (loss) before income taxes benefit                                              752,416           (141,178)

Income tax benefit                                                                                    -             22,000
                                                                                      ------------------  ------------------
Net income (loss)                                                                          $    752,416       $   (119,178)
                                                                                      ==================  ==================

Earnings (loss) per common share:
    Basic                                                                                  $        .65       $       (.10)
                                                                                      ==================  ==================
    Diluted                                                                                $        .64       $       (.10)
                                                                                      ==================  ==================

Weighted average common shares outstanding
   Basic                                                                                      1,150,000          1,150,000
                                                                                      ==================  ==================
   Diluted                                                                                    1,169,251          1,150,000
                                                                                      ==================  ==================
</TABLE>
              See notes to consolidated financial statements that are an
integral part of these consolidated statements.



                                       33
<PAGE>


<TABLE>
<CAPTION>
                GREENVILLE FIRST BANCSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                                               Accumu-
                                                                                lated
                                                                                other                             Total
                                                              Additional       compre-                           share-
                                       Common stock             paid-in        hensive          Retained        holders'
                                ---------------------------
                                  Shares        Amount          capital         income          deficit          equity
                                -----------  --------------  -------------- ---------------  ---------------  --------------

<S>                              <C>         <C>             <C>            <C>              <C>              <C>
   December 31, 2000             1,150,000   $    11,500     $10,635,200    $   24,162       $  (1,195,882)   $  9,474,980

   Net loss                              -             -               -             -            (119,178)       (119,178)

   Comprehensive loss, net
   of tax -
     Unrealized holding gain
     on securities available
     for sale                            -             -               -       103,617                   -         103,617
                                                                                                              --------------

   Comprehensive loss                    -             -               -             -                   -         (15,561)
                                -----------  --------------  -------------- ---------------  ---------------  --------------

   December 31, 2001             1,150,000        11,500      10,635,200       127,779          (1,315,060)      9,459,419

   Net  income                           -             -               -             -             752,416         752,416

   Comprehensive income, net
   of tax -
      Unrealized holding gain
      on securities available
      for sale                           -             -               -        19,954                   -          19,954
                                                                                                              --------------

   Comprehensive income                  -             -               -             -                   -         772,370
                                -----------  --------------  -------------- ---------------  ---------------  --------------

   December 31, 2002             1,150,000   $    11,500     $10,635,200    $  147,733       $    (562,644)   $ 10,231,789
                                ===========  ==============  ============== ===============  ===============  ==============
</TABLE>









See notes to  consolidated  financial  statements  that are an integral  part of
these consolidated statements.



                                       34
<PAGE>



<TABLE>
<CAPTION>
                 GREENVILLE FIRST BANCSHARES, INC.AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                               For the years ended
                                                                                                   December 31,

                                                                                   --------------------------------------------
                                                                                          2002                    2001
                                                                                   --------------------   ---------------------

<S>                                                                                <C>                    <C>
Operating activities
    Net income (loss)                                                              $      752,416         $        (119,178)
    Adjustments to reconcile net income (loss) to cash provided by operating
      activities:
      Provision for loan losses                                                         1,050,000                   600,000
      Depreciation and other amortization                                                 209,810                   192,546
      Accretion and amortization of securities
         discounts and premium, net                                                        56,320                   (32,917)
      Increase in other assets, net                                                      (278,294)                 (292,561)
      Increase (decrease) in other liabilities, net                                        22,344                   (89,176)
                                                                                   --------------------   ---------------------
           Net cash provided by operating activities                                    1,812,596                   258,714
                                                                                   --------------------   ---------------------

Investing activities
      Origination of loans, net                                                       (54,152,378)              (49,914,594)
      Purchase of property and equipment                                                 (104,991)                 (466,686)
      Purchase of securities available for sale                                       (11,494,137)              (18,328,767)
      Principal repayments and maturity of investment securities
         available for sale                                                            14,439,320                 9,394,736
                                                                                   --------------------   ---------------------
           Net cash used for investing activities                                     (51,312,186)              (59,315,311)
                                                                                   --------------------   ---------------------

Financing activities
    Increase in deposits, net                                                          40,863,260                42,705,581
    Increase in federal funds purchased and repurchase agreements                         624,400                 8,482,600
    Proceeds from note payable                                                          2,500,000                         -
    Proceeds from Federal Home Loan Bank advances                                       7,000,000                 6,000,000
                                                                                   --------------------   ---------------------
           Net cash provided by financing activities                                   50,987,660                57,188,181
                                                                                   --------------------   ---------------------
           Net increase (decrease) in cash and cash equivalents                         1,488,070                (1,868,416)

Cash and cash equivalents at beginning of  the year                                     2,982,956                 4,851,372

                                                                                   --------------------   ---------------------

Cash and cash equivalents at end of the year                                       $    4,471,026         $       2,982,956
                                                                                   ====================   =====================

Supplemental information
    Cash paid for
      Interest                                                                     $    3,634,202         $       3,163,044
                                                                                   ====================   =====================
      Income taxes                                                                 $       35,948         $               -
                                                                                   ====================   =====================

Supplemental schedule of non-cash transaction
    Real estate acquired in settlement of loan                                     $      362,987         $               -
                                                                                   ====================   =====================

    Unrealized gain on securities, net of income taxes                             $       19,954         $         103,617
                                                                                   ====================   =====================
</TABLE>

See notes to  consolidated  financial  statements  that are an integral  part of
these consolidated statements.



                                       35
<PAGE>




                GREENVILLE FIRST BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES
         ---------------------------------------------------------

     Greenville  First  Bancshares,  Inc. (the  "Company")  is a South  Carolina
corporation  organized  for the  purpose  of owning and  controlling  all of the
capital  stock of  Greenville  First  Bank,  N.A.  (the  "Bank").  The Bank is a
national bank under the laws of the United States located in Greenville  County,
South Carolina.  The Company received approval to begin banking  operations from
both the Federal Deposit  Insurance  Corporation  ("FDIC") and the Office of the
Comptroller  of the  Currency  ("OCC")  on  January  7,  2000.  The  Bank  began
operations on January 10, 2000.

     On October 26, 1999, the Company sold 1,100,000  shares of its common stock
at $10 per share and on November  30, 1999 sold 50,000  additional  shares for a
total of 1,150,000 shares.  The offering raised  $10,646,700 net of underwriting
discounts,  commissions  and offering  expenses.  The  directors  and  executive
officers  of the Company  purchased  266,900  shares of common  stock at $10 per
share,  for a total of  $2,669,000.  The Company  has used $10.4  million of the
proceeds to capitalize the Bank.

     The  following is a  description  of the more  significant  accounting  and
reporting  policies  which the  Company  follows  in  preparing  and  presenting
consolidated financial statements.


Basis of presentation
  The accompanying consolidated financial statements include the accounts of the
  Company and its wholly owned  subsidiary,  Greenville First Bank (the "Bank").
  In  consolidation   all  significant   intercompany   transactions  have  been
  eliminated.  The  accounting  and  reporting  policies  conform  to  generally
  accepted  accounting  principles.  The  company  uses  the  accrual  basis  of
  accounting.

Estimates
  The  preparation  of  consolidated  financial  statements in  conformity  with
  accounting  principles  generally  accepted  in the  United  States of America
  requires management to make estimates and assumptions that affect the reported
  amounts of assets and  liabilities  and  disclosure of  contingent  assets and
  liabilities as of the date of the  consolidated  financial  statements and the
  reported  amount of income and expenses during the reporting  periods.  Actual
  results could differ from those estimates.


Risks and uncertainties
  In the normal course of its business the Company  encounters  two  significant
  types of risks:  economic and  regulatory.  There are three main components of
  economic risk: interest rate risk, credit risk and market risk. The Company is
  subject  to  interest  rate  risk  to the  degree  that  its  interest-bearing
  liabilities mature or reprice at different speeds, or on different bases, than
  its  interest-earning  assets.  Credit  risk  is the  risk of  default  on the
  Company's   loan  portfolio   that  results  from   borrower's   inability  or
  unwillingness to make contractually  required  payments.  Market risk reflects
  changes  in the  value  of  collateral  underlying  loans  receivable  and the
  valuation of real estate held by the Company.

  The Company is subject to the  regulations of various  governmental  agencies.
  These regulations can and do change  significantly  from period to period. The
  Company also undergoes periodic examinations by the regulatory agencies, which
  may subject it to further changes with respect to asset valuations, amounts of
  required  loss  allowances  and  operating  restrictions  resulting  from  the
  regulators'  judgments  based on information  available to them at the time of
  their examination.

  The bank makes loans to  individuals  and  businesses in and around  "Upstate"
  South Carolina for various  personal and commercial  purposes.  The Bank has a
  diversified loan portfolio and the borrowers'  ability to repay their loans is
  not dependent upon any specific economic sector.



                                       36
<PAGE>




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued
         --------------------------------------------------------------------

Investment securities
  The Company accounts for investment securities in accordance with Statement of
  Financial  Accounting  Standards  (SFAS)  No.  115,  "Accounting  for  Certain
  Investments in Debt and Equity Securities". The statement requires investments
  in equity and debt securities to be classified into three categories:

  1. Available for sale securities: These are securities that are not classified
     as either held to maturity or as trading  securities.  These securities are
     reported at fair market  value.  Unrealized  gains and losses are reported,
     net of  income  taxes,  as  separate  components  of  shareholders'  equity
     (accumulated other comprehensive income).

  2. Held to  maturity  securities:  These are  investment  securities  that the
     Company has the ability and intent to hold until maturity. These securities
     are stated at cost, adjusted for amortization of premiums and the accretion
     of discounts. The Company has no held to maturity securities.

  3. Trading  securities:   These  are  securities  that  are  bought  and  held
     principally  for  the  purpose  of  selling  in the  near  future.  Trading
     securities are reported at fair market value, and related  unrealized gains
     and losses are  recognized  in the income  statement.  The  Company  has no
     trading securities.

  Gains or losses on  dispositions  of  investment  securities  are based on the
  differences  between the net proceeds and the adjusted  carrying amount of the
  securities  sold,  using the  specific  identification  method.  Premiums  and
  discounts  are  amortized  or accrued  into  interest  income by a method that
  approximates a level yield.

Other investments
  The  Bank,  as  a  member  institution,  is  required  to  own  certain  stock
  investments  in the Federal Home Loan Bank of Atlanta and the Federal  Reserve
  Bank.  The stock is  generally  pledged  against  any  borrowings  from  these
  institutions. No ready market exists for the stock and it has no quoted market
  value. However, redemption of these stocks has historically been at par value.

Loans, interest and fee income on loans
  Loans are stated at the principal  balance  outstanding.  Unamortized net loan
  fees and the  allowance for possible loan losses are deducted from total loans
  in the balance sheet.  Interest income is recognized over the term of the loan
  based on the principal  amount  outstanding.  The net of loan origination fees
  received and direct costs incurred in the origination of loans is deferred and
  amortized to interest income over the  contractual  life of the loans adjusted
  for actual principal  prepayments  using a method  approximating  the interest
  method.

  Loans are generally  placed on  non-accrual  status when principal or interest
  becomes ninety days past due, or when payment in full is not anticipated. When
  a loan is placed on non-accrual  status,  interest accrued but not received is
  generally  reversed against interest income.  If  collectibility  is in doubt,
  cash receipts on non-accrual  loans are not recorded as interest  income,  but
  are used to reduce principal.

Allowance for loan losses
  The  provision  for loan losses  charged to  operating  expenses  reflects the
  amount deemed  appropriate  by management to establish an adequate  reserve to
  meet the present and  foreseeable  risk  characteristics  of the current  loan
  portfolio.  Management's judgement is based on periodic and regular evaluation
  of individual loans, the overall risk characteristics of the various portfolio
  segments,  past experience with losses and prevailing and anticipated economic
  conditions.  Loans that are determined to be uncollectable are charged against
  the  allowance.  Provisions  for possible loan losses and  recoveries on loans
  previously charged off are added to the allowance.



                                       37
<PAGE>



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued
         --------------------------------------------------------------------

  The  Bank  accounts  for  impaired  loans in  accordance  with  SFAS No.  114,
  "Accounting  by Creditors for  Impairment of a Loan".  This standard  requires
  that all lenders  value loans at the loan's fair value if it is probable  that
  the lender will be unable to collect all amounts due according to the terms of
  the loan agreement.  Fair value may be determined based upon the present value
  of expected cash flows,  market price of the loan,  if available,  or value of
  the underlying  collateral.  Expected cash flows are required to be discounted
  at the loan's  effective  interest rate.  SFAS No. 114 was amended by SFAS No.
  118 to allow a lender to use existing methods for recognizing  interest income
  on an  impaired  loan and by  requiring  additional  disclosures  about  how a
  creditor recognizes interest income on an impaired loan.

  Under  SFAS  No.  114,  as  amended  by  SFAS  No.  118,   when  the  ultimate
  collectibility  of an  impaired  loan's  principal  is  in  doubt,  wholly  or
  partially,  all cash  receipts  are applied to  principal.  Once the  reported
  principal  balance has been reduced to zero,  future cash receipts are applied
  to interest income, to the extent that any interest has been foregone. Further
  cash  receipts are recorded as recoveries  of any amounts  previously  charged
  off.  When this doubt does not exist,  cash  receipts  are  applied  under the
  contractual  terms of the loan  agreement  first to  interest  income  then to
  principle.

  A loan is also  considered  impaired  if its terms are  modified in a troubled
  debt  restructuring.  For these  accruing  impaired  loans,  cash receipts are
  typically applied to principal and interest  receivable in accordance with the
  terms of the  restructured  loan  agreement.  Interest income is recognized on
  these loans using the accrual  method of  accounting.  As of December 31, 2002
  and 2001, the Bank had no impaired loans.

Non-performing assets
  Non-performing assets include real estate acquired through foreclosure or deed
  taken in lieu of  foreclosure,  and  loans on  non-accrual  status.  Loans are
  placed  on  non-accrual  status  when,  in  the  opinion  of  management,  the
  collection of additional  interest is questionable.  Thereafter no interest is
  taken into income  unless  received in cash or until such time as the borrower
  demonstrates the ability to pay principal and interest.

Real estate acquired in settlement of loans
  Real estate acquired through foreclosure is initially recorded at the lower of
  cost or estimated  fair value.  Subsequent to the date of  acquisition,  it is
  carried at the lower of cost or fair value,  adjusted  for net selling  costs.
  Fair values of real estate owned are reviewed  regularly  and  writedowns  are
  recorded when it is determined that the carry value of real estate exceeds the
  fair value less estimated  costs to sell. Cost relating to the development and
  improvement of such property are capitalized,  whereas those costs relating to
  holding the property are charged to expense.

Property and equipment
  Property  and  equipment  are stated at cost.  Major  repairs  are  charged to
  operations, while major improvements are capitalized. Depreciation is computed
  using the straight-line  method over the estimated useful lives of the related
  assets. Upon retirement, sale, or other disposition of property and equipment,
  the cost and accumulated  depreciation  are eliminated from the accounts,  and
  gain or loss is included in income from operations.

Securities sold under agreements to repurchase
   The Bank enters into sales of securities under agreements to repurchase.
   Fixed-coupon repurchase agreements are treated as financing, with the
   obligation to repurchase securities sold being reflected as a liability and
   the securities underlying the agreements remaining as an asset.



                                       38
<PAGE>



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued
         --------------------------------------------------------------------
Income taxes
  The financial  statements have been prepared on the accrual basis. When income
  and  expenses are  recognized  in different  periods for  financial  reporting
  purposes  versus for purposes of computing  income  taxes  currently  payable,
  deferred  taxes  are  provided  on such  temporary  differences.  The  Company
  accounts for income taxes in  accordance  with SFAS No. 109,  "Accounting  for
  Income Taxes".  Under SFAS No. 109,  deferred tax assets and  liabilities  are
  recognized for the expected  future tax  consequences of events that have been
  recognized in the consolidated  financial statements or tax returns.  Deferred
  tax assets and  liabilities  are measured using the enacted tax rates expected
  to apply to taxable income in the years in which those  temporary  differences
  are expected to be realized or settled.

Advertising and public relations expense
  Advertising,  promotional and other business  development  costs are generally
  expensed as incurred.  External costs incurred in producing media  advertising
  are  expensed  the first time the  advertising  takes  place.  External  costs
  relating  to direct  mailing  costs are  expensed  in the  period in which the
  direct mailings are sent.

Stock Based Compensation

  The  Company  has a  stock-based  employee  compensation  plan that is further
  described in Note 17. The Company  accounts for the plan under the recognition
  and measurement  principles of Accounting Principles Board ("APB") Opinion No.
  25, Accounting for Stock Issued to Employees, and related Interpretations.  No
  stock-based  employee  compensation  cost is reflected  in net income,  as all
  stock  options  granted  under these plans had an exercise  price equal to the
  market  value  of the  underlying  common  stock  on the  date of  grant.  The
  following  table  illustrates  the  effect on net income  (loss) and  earnings
  (loss)  per  share if the  Company  had  applied  the fair  value  recognition
  provisions of Financial  Accounting  Standards Board  ("FASB"),  SFAS No. 123,
  Accounting for Stock-Based Compensation, to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                                ----------------------------------------
                                                                   For the years ended December 31,
                                                                ----------------------------------------
                                                                       2002                  2001
                                                                -------------------    -----------------

<S>                                                             <C>                    <C>
   Net income (loss), as reported                               $       752,416        $     (119,178)
   Deduct:  Total stock-based employee
      compensation expense determined
      under fair value based method
      for all awards,  net of related tax effects                       (70,451)              (68,726)
                                                                -------------------    -----------------

   Pro forma net income (loss)                                  $       681,965        $     (187,904)
                                                                ===================    =================

   Earnings (loss) per common share:
      Basic - as reported                                       $           .65        $         (.10)
                                                                ===================    =================
      Basic - pro forma                                         $           .59        $         (.16)
                                                                ===================    =================

      Diluted - as reported                                     $           .64        $         (.10)
                                                                ===================    =================
      Diluted - pro-forma                                       $           .58        $         (.16)
                                                                ===================    =================
</TABLE>

  The fair value of the option grant is estimated on the date of grant using the
  Black-Scholes  option-pricing  model. The following  assumptions were used for
  grants:  expected volatility of 10% for 2002 and 2001, risk-free interest rate
  of 3.00% for 2002 and 2001, respectively, and expected lives of the options 10
  years and the assumed dividend rate was zero.



                                       39
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued
         --------------------------------------------------------------------

Statement of cash flows
  For purposes of reporting cash flows, cash and cash equivalents are defined as
  those amounts  included in the balance sheet captions "Cash and Due From Banks
  and Federal Funds Sold." Cash and cash equivalents  have an original  maturity
  of three months or less.

Reclassifications
  Certain  amounts,  previously  reported,  have been  reclassified to state all
  periods on a comparable  basis that had no effect on  shareholders'  equity or
  net income (loss).

Earnings (loss) per common share
  Basic  earnings  (loss)  per  common  share are  computed  on the basis of the
  weighted  average number of common shares  outstanding in accordance with SFAS
  No. 128,  "Earnings per Share".  Diluted  earnings  (loss) per common share is
  computed  using the  treasury  stock  method to  compute  the  effect of stock
  options on the weighted average number of common shares outstanding.

Recently issued accounting standards
  In June 2001, the FASB issued SFAS No. 143,  Accounting  for Asset  Retirement
  Obligations.  This statement requires companies to record the fair value of an
  asset retirement  obligation as a liability in the period in which it incurs a
  legal obligation  associated with the retirement of tangible long-lived assets
  that result from the acquisition,  construction, development and/or normal use
  of assets.  A corresponding  asset (which is depreciated  over the life of the
  asset) must also be recorded.  The  provisions of SFAS No. 143 were adopted by
  the  Company  on  January  1, 2003 with no impact on  financial  position  and
  results of operations.

  In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
  Disposal  of  Long-Lived   Assets,   which  supersedes  prior   pronouncements
  associated  with  impairment or disposal of long-lived  assets.  The statement
  establishes  methodologies  for assessing  impairment  of  long-lived  assets,
  including  assets to be disposed of by sale or by other means. The adoption of
  this standard had no impact on the financial position of the Company.

  In April 2002, The FASB issued SFAS No. 145, Rescission of FASB Statements No.
  4, 44, and 64, Amendment of FASB Statement No. 13, and Technical  Corrections.
  This  statement   rescinds  SFAS  No.  4,  Reporting  Gains  and  Losses  from
  Extinguishments  of Debt and  SFAS No.  64,  Extinguishments  of Debt  Made to
  Satisfy Sinking-Fund  Requirements.  This statement also rescinds SFAS No. 44,
  Accounting  for  Intangible  Assets of Motor  Carriers and amends SFAS No. 13,
  Accounting  for  Leases.  This new  statement  requires  gains and losses from
  extinguishment of debt to be classified as an extraordinary  item only if they
  meet  the  criteria  of  APB  Opinion  No.  30,   Reporting   the  Results  of
  Operations-Reporting  the Effects of Disposal  of a Segment of  Business,  and
  Extraordinary,  Unusual and Infrequently  Occurring  Events and  Transactions,
  which will  distinguish  transactions  that are part of an entity's  recurring
  operations from those that are unusual or infrequent or that meet the criteria
  for classification as an extraordinary item. The adoption of the provisions of
  SFAS No. 145 had no impact on the Company's  financial  position or results of
  operations



                                       40
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, Continued
         --------------------------------------------------------------------

  In June 2002, the FASB issued SFAS No. 146,  Accounting  for Costs  Associated
  with Exit or Disposal  Activities,  which addresses  financial  accounting and
  reporting for costs associated with exit or disposal  activities and nullifies
  Emerging  Issues Task Force (EITF) Issue No. 94-3,  Liability  Recognition for
  Certain  Employee  Termination  Benefits  and Other  Costs to Exit an Activity
  (including Certain Costs Incurred in a Restructuring).  This Statement applies
  to costs associated with specific exit activities and requires a liability for
  a cost  associated  with an exit or  disposal  activity to be  recognized  and
  measured  initially at its fair value in the period in which the  liability is
  incurred.  A liability for a cost associated with an exit or disposal activity
  is incurred when the  definition of a liability is met. The provisions of this
  statement  are effective  for exit or disposal  activities  that are initiated
  after December 31, 2002. The Company  adopted the provisions of this statement
  on  January  1, 2003  with no  impact on  financial  position  or  results  of
  operations.

  In  October  2002,  the FASB  issued  SFAS No.  147,  Acquisition  of  Certain
  Financial  Institutions  - an amendment of FASB  Statements No. 72 and 144 and
  FASB  Interpretation No. 9, which brings all business  combinations  involving
  financial institutions,  except mutual financial institutions,  into the scope
  of SFAS No. 141,  Business  Combinations.  This  statement  requires  that all
  acquisitions of financial institutions that meet the definition of a business,
  including  acquisitions  of part of a  financial  institution  that  meet  the
  definition of a business,  must be accounted  for in accordance  with SFAS No.
  141 and the related intangibles accounted for in accordance with SFAS No. 142.
  SFAS  No.  147  removes  such  acquisitions  from the  scope  of SFAS No.  72,
  Accounting for Certain  Acquisitions of Banking or Thrift  Institutions.  SFAS
  No. 147 also  amends SFAS No. 144 to include in its scope  long-term  customer
  relationship intangibles of financial institutions. SFAS No. 147 was effective
  upon issuance and had no impact on the Company's financial statements.

  In December  2002,  the FASB issued SFAS No. 148  Accounting  for  Stock-Based
  Compensation--Transition  and  Disclosure--an  amendment of FASB Statement No.
  123. This Statement amends FASB Statement No. 123,  Accounting for Stock-Based
  Compensation,  to provide  alternative  methods of transition  for a voluntary
  change to the fair value based method of accounting for  stock-based  employee
  compensation.  In addition,  this statement amends the disclosure requirements
  of  Statement  No. 123 to require  prominent  disclosures  in both  annual and
  interim  financial  statements  about the method of accounting for stock-based
  employee  compensation and the effect of the method used on reported  results.
  The Company adopted this standard effective December 31, 2002 and has included
  the required  disclosures in the footnotes to the financials.  The Company has
  not elected  the fair value  treatment  of  stock-based  compensation  and the
  adoption of this standard had no impact on its financial position.

  Other  accounting  standards  that have been issued or proposed by the FASB or
  other  standards-setting  bodies that do not require  adoption  until a future
  date are not expected to have a material impact on the consolidated  financial
  statements upon adoption.


NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
         ---------------------------------------

     The Bank is required  to maintain  average  reserve  balances,  computed by
applying prescribed percentages to its various types of deposits,  either at the
bank or on deposit with the Federal  Reserve Bank. At December 31, 2002 the bank
had $606,623 on deposit with the Federal Reserve Bank to meet this  requirement.
These required reserves for 2001 were met by vault cash.

NOTE 3 - FEDERAL FUNDS SOLD

     Bank cash reserves (Note 2) in excess of the required amount may be lent to
other banks on a daily basis. At December 31, 2002 and 2001,  federal funds sold
amounted to $41,736 and $100,841, respectively.



                                       41
<PAGE>





NOTE 4 - INVESTMENT SECURITIES
         --------------------

     The amortized costs and fair value of investment  securities  available for
sale are as follows:

<TABLE>
<CAPTION>
                                                                              December 31, 2002
                                                   ----------------------------------------------------------------------
                                                       Amortized               Gross Unrealized              Fair
                                                                        ------------------------------
                                                          Cost               Gains           Losses          Value
                                                   -------------------   --------------   ------------- -----------------
<S>                                                <C>                   <C>              <C>           <C>
Federal agencies                                   $      9,640,819      $    143,781     $       -     $      9,784,600
Mortgage-backed                                           4,727,533            80,057             -            4,807,590
                                                   -------------------   --------------   ------------- -----------------
        Total investment securities                $     14,368,352      $    223,838     $       -     $     14,592,190
                                                   ===================   ==============   ============= =================
</TABLE>

<TABLE>
<CAPTION>
                                                                             December 31, 2001
                                                   ----------------------------------------------------------------------
                                                       Amortized               Gross Unrealized              Fair
                                                                         ------------------------------
                                                          Cost               Gains           Losses          Value
                                                   -------------------   --------------   ------------- -----------------

<S>                                                <C>                   <C>              <C>           <C>
Federal agencies                                   $    17,459,968       $     193,595    $       -     $     17,653,563
Mortgage-backed                                            259,884                  13            -              259,897
                                                   -------------------   --------------   ------------- -----------------
        Total investment securities                $    17,719,852       $    193,608     $       -     $     17,913,460
                                                   ===================   ==============   ============= =================
</TABLE>

     Other  investments  at both  December  31, 2002 and 2001,  include  Federal
Reserve  Bank stock with cost of $255,000  and Federal Home Loan Bank stock with
cost of $650,000  at  December  31, 2002 and with a cost of $300,000 at December
31, 2001.

     The amortized  costs and fair values of  investment  securities at December
31, 2002 and 2001, by contractual  maturity,  are shown in the following  chart.
Expected  maturities may differ from contractual  maturities because issuers may
have the right to call or prepay the  obligations.  Based on the  comparison  of
investment  securities  coupon rates and the market interest rate as of December
31, 2002, the bank  anticipates  that between  $2,610,000 and $8,610,000 will be
called during the 2003 year.

<TABLE>
<CAPTION>
                                                            December 31, 2002                  December 31, 2001
                                                   ----------------------------------  ----------------------------------
                                                      Amortized            Fair           Amortized           Fair
                                                        Cost              Value              Cost             Value
                                                   ----------------   ---------------  ----------------- ----------------

<S>                                                      <C>               <C>                 <C>               <C>
     Due in less than one year                      $            -    $            -   $             -   $             -
     Due after one through three years                   8,020,819         8,156,500           759,884           785,678
     Due after three through five years                  1,620,000         1,628,100        12,839,968         2,943,744
     Due after five through ten years                    4,727,533         4,807,590         4,120,000         4,184,038
                                                   ----------------   ---------------  ----------------- ----------------
         Total investment securities                $   14,368,352    $   14,592,190   $    17,719,852   $    17,913,460
                                                   ================   ===============  ================= ================
</TABLE>

     No investment securities were sold in 2002 or 2001.  Accordingly,  no gains
or  losses  were  recorded.  At  December  31,  2002  and 2001  $14,244,440  and
$15,264,968,  respectively  of securities  were pledged as collateral for public
funds or  repurchase  agreements.  At December 31, 2001,  $695,000 of the Bank's
investment  securities were pledged as collateral for advances from FHLB, as set
forth in Note 9.



                                       42
<PAGE>


NOTE 5 - LOANS
         -----

     The composition of net loans by major loan category is as follows:

<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                 ------------------------------------------
                                                                                        2002                   2001
                                                                                 -------------------    -------------------
<S>                                                                                <C>                    <C>
     Real estate:
        Commercial
           Owner occupied                                                          $  22,653,311          $  16,532,696
           Non-owner occupied                                                         43,076,993             22,813,424
           Construction                                                                4,007,650              8,292,228
                                                                                 -------------------    -------------------
                                                                                      69,737,954             47,638,348
                                                                                 -------------------    -------------------
        Consumer
           Residential                                                                25,499,625             12,898,543
           Home equity                                                                18,069,407              8,937,054
           Construction                                                                4,199,848              3,972,206
                                                                                 -------------------    -------------------
                                                                                      47,768,880             25,807,803
                                                                                 -------------------    -------------------
                                                                                     117,506,834             73,446,151
                                                                                 -------------------    -------------------
     Commercial business                                                              28,192,407             20,529,004
     Consumer-other                                                                    4,590,552              2,812,703
     Deferred origination fees, net                                                     (386,632)              (255,990)
                                                                                 -------------------    -------------------
            Gross Loans                                                              149,903,161             96,531,868
     Less allowance for loan losses                                                   (1,824,149)            (1,192,247)
                                                                                 -------------------    -------------------
             Loans, net                                                            $ 148,079,012        $    95,339,621
                                                                                 ===================    ===================
</TABLE>

     At December 31, 2002,  there was $113,105 in non-accruing  loans.  Foregone
interest income on the non-accrual  loans in 2002 was  approximately  $4,400 and
was approximately $8,000 in 2001. At December 31, 2001 there was one residential
loan totaling $359,987 on non-accrual.

     At December 31,  certain of the Bank's first mortgage loans were pledged as
collateral  for advances from the Federal Home Loan Bank of Atlanta  (FHLB),  as
set forth in Note 9.

           The composition of gross loans by rate type is as follows:

                                                      December 31,
                                           --------------------------------
                                                  2002             2001
                                           --------------    --------------
     Variable rate loans                   $  107,554,638    $   60,864,324
     Fixed rate loans                          42,348,523        35,667,544
                                           --------------    --------------
                                           $  149,903,161    $   96,531,868
                                           ==============    ==============

     The   allowance  for  loan  losses  is  available  to  absorb  future  loan
charge-offs.  The  allowance  is increased  by  provisions  charged to operating
expenses  and by  recoveries  of loans  that were  previously  written-off.  The
allowance is decreased by the aggregate loan balances, if any, which were deemed
uncollectible during the year.

     Activity within the allowance for loan losses account follows:

<TABLE>
<CAPTION>
                                                                                            For the years ended
                                                                                               December 31,
                                                                                 ------------------------------------------
                                                                                        2002                   2000
                                                                                 --------------------   -------------------
<S>                                                                              <C>                    <C>
Balance, beginning of year                                                       $       1,192,247      $         600,000
Recoveries of loans previously charged against the allowance                                     -                      -
Provision for loan losses                                                                1,050,000                600,000
Loans charged against the allowance                                                       (418,098)                (7,753)
                                                                                 --------------------   -------------------

Balance, end of year                                                             $       1,824,149      $       1,192,247
                                                                                 ====================   ===================
</TABLE>



                                       43
<PAGE>



NOTE 6 - PROPERTY AND EQUIPMENT
         ----------------------

     Property and  equipment are stated at cost less  accumulated  depreciation.
Components of property and equipment included in the consolidated balance sheets
are as follows:

                                                         December 31,
                                              ----------------------------------
                                                   2002                2001
                                              --------------      --------------

Leasehold improvements                        $     352,770       $     332,528
Furniture and equipment                             753,945             698,977
Software                                            146,543             117,914
                                              --------------      --------------
                                                  1,253,258           1,149,419
Accumulated depreciation                           (467,316)           (258,658)
                                              --------------      --------------
      Total property and equipment            $     785,942       $     890,761
                                              ==============      ==============

     Leasehold  improvements  and furniture  and fixtures  include items for the
Company's main office.  The Company occupied its main office starting on January
16, 2001. The office is leased for twenty years (see note 11).

     Depreciation  expense  for the years ended  December  31, 2002 and 2001 was
$209,810 and $192,546, respectively.  Depreciation is charged to operations over
the estimated useful lives of the assets. The estimated useful lives and methods
of depreciation for the principal items follow:

Type of Asset                        Life in Years          Depreciation Method
-------------                        -------------          -------------------

Software                             3                      Straight-line
Furniture and equipment              5 to 7                 Straight-line
Leasehold improvements               5 to 40                Straight-line

NOTE 7 - DEPOSITS
         --------

           The following is a detail of the deposit accounts:

                                                     December 31,
                                          ------------------------------------
                                                2002                2001
                                          ------------------   ---------------

Non-interest bearing                      $   13,809,488       $   7,729,281
Interest bearing:
      NOW accounts                            15,377,708           8,295,046
      Money market accounts                   19,727,133          24,138,876
      Savings                                  1,773,957             255,292
      Time, less than $100,000                32,024,488          31,899,925
      Time, $100,000 and over                 50,850,496          20,381,590
                                          ------------------   ---------------
    Total deposits                        $  133,563,270       $  92,700,010
                                          ==================   ===============

     Interest  expense on time deposits greater than $100,000 was $1,316,693 and
$1,007,304 in the years ended December 31, 2002 and 2001, respectively.

     At December 31, 2002 the scheduled  maturities of  certificates  of deposit
are as follows:

          2003                                          $ 56,725,188
          2004                                            10,978,111
          2005                                             4,746,383
          2006 and after                                  10,425,302
                                                       --------------
                                                        $ 82,874,984
                                                       ==============

                                       44
<PAGE>

NOTE 8 - FEDERAL FUNDS PURCHASED AND REPURCHASE AGREEMENTS
         -------------------------------------------------

     At December  31, 2002 the bank had  $7,892,000  sales of  securities  under
agreements to repurchase  with brokers with a weighted rate of 1.38% that mature
in less than 90 days. These agreements are secured with approximately $8,000,000
of investment securities.  The securities under agreement to repurchase averaged
$4,349,076 during 2002, with $8,482,600 being the maximum amount  outstanding at
any month-end.

     At December  31, 2001 the bank had  $7,682,600  sales of  securities  under
agreements to repurchase  with brokers with a weighted rate of 1.96% that mature
in less than 90 days. These agreements are secured with approximately $8,000,000
of investment securities.  The securities under agreement to repurchase averaged
$1,335,382 during 2001, with $7,682,600 being the maximum amount  outstanding at
any month-end.

     At December 31, 2002 the bank had utilized  $1,215,000 of its $3,700,000 of
federal  funds  purchased  line of credit.  At  December  31,  2001 the bank had
utilized  $800,000 of its $2,800,000 of federal funds  purchased line of credit.
These  lines of credit  are  unsecured  and bear  interest  at the daily rate of
federal funds plus 25 basis points (1.50% at December 31, 2002).

NOTE 9 - FEDERAL HOME LOAN BANK ADVANCES
         -------------------------------

     At December 31, 2002 the bank had  $13,000,000  of advances  from the FHLB.
These  advances are secured with  approximately  $22,400,000  of first  mortgage
loans  and  stock  in the  FHLB.  Listed  below  is a  summary  of the  term and
maturities of the advances:

     o   The  maturity on  $5,000,000  of the advances  with a weighted  rate of
         1.63%  is July 16,  2004.  The FHLB has the  option  to  re-price  this
         advance as of April 16, 2003.
     o   The  maturity on  $5,000,000  of the advances  with a weighted  rate of
         1.56% is October 15,  2007.  The FHLB has the option to  re-price  this
         advance as of October 15, 2003.
     o   The  maturity on  $3,000,000  of the advances  with a weighted  rate of
         4.86% is August  24,  2011.  The FHLB has the option to  re-price  this
         advance as of August 24, 2006.

     At December 31, 2001 the bank had  $6,000,000  of advances from the FHLB of
Atlanta. These advances are secured by a combination of approximately $9,000,000
of first  mortgage  loans,  investment  securities  and stock in the  FHLB.  The
maturity on  $3,000,000  of the advances  with a weighted rate of 2.67% is March
27,  2002 and the  remaining  $3,000,000  with a  weighted  rate of 4.83%  has a
maturity of August 24, 2011. The FHLB has the option to re-price this advance as
of August 24, 2006.

NOTE 10 - NOTE PAYABLE
          ------------

     At December 31, 2002 the Company had a $2,500,000  revolving line of credit
with another bank with a maturity of June 30,  2003.  At December 31, 2002,  the
company had outstanding $2,500,000.  The Company used $2,375,000 of the proceeds
to increase  its  investment  in the Bank.  The  remaining  $125,000 was used to
establish a $125,000 escrow fund to be used to pay interest  payments.  The line
of credit bears  interest at a rate of prime minus 1.25%,  which at December 31,
2002  was  3.00%.  The  Company  has  pledged  all of the  stock  of the Bank as
collateral  for this  line of  credit.  The line of  credit  agreement  contains
various  covenants  related to net income and asset quality.  As of December 31,
2002, the Company believes it is in compliance with all covenants.

NOTE 11 - COMMITMENTS AND CONTINGENCIES
          -----------------------------

     The Company has entered into an employment agreement with its president and
chief executive  officer that includes a three year  compensation  term,  annual
bonus, incentive program, stock option plan and a one-year non-compete agreement
upon termination.

     The Company has entered  into an  agreement  with a data  processor  with a
remaining term of two years to provide ATM services, item processing and general
ledger  processing.  Components  of this  contract  include  monthly  charges of
approximately $20,000.



                                       45
<PAGE>



NOTE 11 - COMMITMENTS AND CONTINGENCIES, Continued
          ----------------------------------------

     The Bank may become party to litigation  and claims in the normal course of
business.  As of December 31,  2002,  management  believes  there is no material
litigation pending.

     The Bank has a twenty-year  lease on its main office building that began in
January 2001. The monthly rent for the year 2003 is $27,659.  The lease provides
for annual lease rate escalations based on cost of living adjustments.

     Future minimum lease payments under this operating  lease are summarized as
follows:

For the year ended December 31,
                  2003                                         $   331,912
                  2004                                             341,870
                  2005                                             352,126
                  2006                                             360,894
                  2007                                             369,880
                  Thereafter*                                    5,736,040
                                                               -------------
                                                               $ 7,492,722
                                                               =============

     *Amount is estimated based on an increase of 2.49 percent per year.  Actual
lease will be  adjusted  annually  by the cost of living  index as stated in the
Consumer Price Index.


NOTE 12 - INCOME TAXES
          ------------

     The  components of income tax expense for the years ended December 31, 2002
and 2001 were as follows:

                                                                December 31,
                                                        -----------------------
                                                            2002        2001
                                                        ----------   ----------

      Current income taxes:
        Federal                                         $  336,914   $       -
        State                                               35,000           -
                                                        ----------   ---------
            Total current tax expense                      371,914           -
      Deferred income tax benefit and
        change in valuation allowance                     (371,914)    (22,000)
                                                        ----------   ---------
               Income tax provision (benefit)           $        -   $ (22,000)
                                                        ==========   =========





                                       46
<PAGE>

NOTE 12 - INCOME TAXES, Continued
          -----------------------

The  following  is a summary of the items that caused  recorded  income taxes to
differ from taxes computed using the statutory tax rate:

<TABLE>
<CAPTION>
                                                                                             For the years ended
                                                                                                December 31,
                                                                                      ----------------------------------
                                                                                           2002               2001
                                                                                      ----------------   ---------------

<S>                                                                                   <C>                <C>
      Income tax expense (benefit) at federal statutory rate                          $      255,821     $     (48,001)
      Effect of state income taxes                                                            35,000                 -
      Change in valuation allowance                                                         (323,697)           24,602
      Other                                                                                   32,876             1,399
                                                                                      ----------------   ---------------

        Income tax benefit                                                            $            -     $     (22,000)
                                                                                      ================   ===============

</TABLE>

     The components of the deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                                                  December 31,
                                                                                      ----------------------------------
                                                                                           2002               2001
                                                                                      ----------------   ---------------

<S>                                                                                          <C>               <C>
      Deferred tax assets:
        Allowance for loan losses                                                            424,259           405,364
        Net deferred loan fees                                                               131,455            58,333
        Premise and equipment                                                                 12,497                 -
        Net deferred loan fees                                                                13,350                 -
                                                                                      ----------------   ---------------
                                                                                             581,560           463,697
        Valuation allowance                                                                  (80,000)         (403,697)
                                                                                      ----------------   ---------------
                                                                                             501,560            60,000
      Deferred tax liability
        Unrealized gain on securities available for sale                              $       76,105     $      65,826
        Other                                                                                 69,646                 -
                                                                                      ----------------   ---------------
                                                                                             145,751            65,826
                                                                                      ----------------   ---------------
               Net deferred tax asset (liability)                                     $      355,809     $      (5,826)
                                                                                      ================   ===============
</TABLE>

     The  current  taxes  payable  less the net  deferred  tax asset is included
accrued expenses for 2002 and included in other assets in 2001.


NOTE 13 - UNUSED LINES OF CREDIT
          ----------------------

     At  December  31,  2002,  the Bank had an unused line of credit to purchase
federal funds of  $2,485,000.  The line of credit is available on a one to seven
day basis for general  corporate  purposes of the Bank.  The lender has reserved
the right to withdraw  the line at their  option.  The Bank had a second line of
credit with the Federal Home Loan Bank to borrow  funds,  subject to a pledge of
qualified  collateral.  The Bank has collateral that would support approximately
$2,000,000 in borrowings.  At December 31, 2002, the Bank had a third  agreement
that  would  allow  the bank to  borrow  funds  based on the  level of  security
eligible  to be  pledged.  At  December  31,  2001,  the Bank  had an  available
borrowing base of approximately $2,200,000.



                                       47
<PAGE>


NOTE 14- RELATED PARTY TRANSACTIONS
         --------------------------

     Certain directors,  executive  officers,  and companies with which they are
affiliated,  are customers of and have banking transactions with the Bank in the
ordinary  course of business.  These loans were made on  substantially  the same
terms, including interest rates and collateral,  as those prevailing at the time
for comparable arms-length transactions.


     A summary of loan transactions  with directors,  including their affiliates
and executive officers is as follows:

                                            For the years ended December 31,
                                         ---------------------------------------
                                               2002                   2001
                                         -----------------     -----------------

    Balance, beginning of year           $       778,624       $       360,181

    New loans                                  5,267,212               813,990
    Less loan payments                        (3,216,878)             (395,547)
                                         -----------------     -----------------

    Balance, end of year                 $     2,828,958       $       778,624
                                         =================     =================

     Deposits by officers and directors and their related  interests at December
31, 2002 and 2001, were $116,656 and $146,735, respectively.

     The Bank has a lease on its main  office  building  with a director  of the
bank that began in 2001. The lease has a remaining term of eighteen years,  with
a $27,659 monthly payment for the next year. The Bank is of the opinion that the
lease payments represent a market cost that could have been obtained in an "arms
length" transaction.


NOTE 15 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK
          -------------------------------------------------

     In the ordinary course of business,  and to meet the financing needs of its
customers,  the  Company is a party to various  financial  instruments  with off
balance sheet risk. These financial  instruments,  which include  commitments to
extend  credit  and  standby  letters of credit,  involve,  to varying  degrees,
elements of credit and interest rate risk in excess of the amounts recognized in
the balance sheets. The contract amount of those instruments reflects the extent
of involvement the Company has in particular classes of financial instruments.

     The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial  instrument  for  commitments  to extend credit and
standby  letters of credit is  represented by the  contractual  amounts of those
instruments. The Company uses the same credit policies in making commitments and
conditional obligations as it does for on balance sheet instruments.

     Commitments  to extend credit are  agreements to lend to a customer as long
as there is no violation of any material condition  established in the contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require the payment of a fee. At December 31, 2002, unfunded commitments
to extend  credit were  $34,086,000,  of which  $2,103,000 is at fixed rates and
$31,983,000 is at variable rates. The Company  evaluates each customer's  credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Company  upon  extension  of credit,  is based on  management's
credit  evaluation of the borrower.  Collateral  varies but may include accounts
receivable,  inventory,  property,  plant  and  equipment,  and  commercial  and
residential real estate.

     At December 31,  2002,  there was a $877,000  commitment  under a letter of
credit. The credit risk involved in issuing letters of credit is essentially the
same as that involved in extending  loan  facilities  to  customers.  Collateral
varies but may include accounts  receivable,  inventory,  equipment,  marketable
securities  and  property.  Since most of the letters of credit are  expected to
expire without being drawn upon, they do not necessarily  represent  future cash
requirements.



                                       48
<PAGE>



NOTE 16 - EMPLOYEE BENEFIT PLAN
          ---------------------

     On January 1, 2000, the Company  adopted the Greenville  First  Bancshares,
Inc.  Profit Sharing and 401(k) Plan for the benefit of all eligible  employees.
The  Company  contributes  to the Plan  annually  upon  approval by the Board of
Directors.  Contributions  made to the Plan in 2002 and 2001 amounted to $36,000
and $33,285, respectively.

NOTE 17 - STOCK OPTIONS AND WARRANTS
          --------------------------

     On March 21, 2001, the Company  adopted a stock option plan for the benefit
of the  directors,  officers  and  employees.  The Board may grant up to 172,500
options at an option  price per share not less than the fair market value on the
date of grant.  The options  granted to officers and employees vest either at 20
percent  over five years or 33 percent over three years and expire 10 years from
the grant date.

     A  summary  of the  status  of the plan and  changes  for the  years  ended
December 31, are presented below:

<TABLE>
<CAPTION>
                                                                2002                                     2001
                                                --------------------------------------   -------------------------------------
                                                                         Weighted                               Weighted
                                                                         average                                 average
                                                     Shares           exercise price         Shares          exercise price
                                                ------------------   -----------------   ----------------   ------------------
<S>                                                   <C>            <C>                        <C>         <C>
Outstanding at beginning of year                      112,500        $          10.00           97,000      $        10.00
Granted                                                11,500                   11.35           15,500               10.00
Exercised                                                   -                       -                -                   -
Forfeited or expired                                        -                       -                -                   -
                                                ------------------   -----------------   ----------------   ------------------
Outstanding at end of year                            124,000        $          10.13          112,500      $        10.00
                                                ==================   =================   ================   ==================
Options exercisable at year-end                        54,833                                   24,833      $        10.00
                                                ==================                       ================   ==================
Shares available for grant                             48,500                                   60,000
                                                ==================                       ================
</TABLE>

     Upon completion of the 1999 stock offering,  the Company issued warrants to
each of its organizers to purchase up to an additional  129,950 shares of common
stock at $10 per share.  These warrants vest over a three-year period and expire
on October 27, 2009.

NOTE 18 - COMMON STOCK AND EARNINGS (LOSS) PER SHARE
          ------------------------------------------

     SFAS No. 128,  "Earnings per Share" requires that the Company present basic
and diluted net earnings  (loss) per common  share.  The assumed  conversion  of
stock options and warrants can create a difference between basic and diluted net
earnings (loss) per common share.  The weighted  average number of common shares
outstanding for basic earnings in 2002 was 1,150,000,  and the weighted  average
number of common shares  assumed  outstanding  in 2002 for diluted  earnings per
common share was 1,169,251.

     During  2001  all  stock  options  and  warrants  were   considered  to  be
anti-dilutive, the weighted average number of common shares outstanding for both
basic loss per share and  diluted  loss per common  share is the same.  Earnings
(loss) per share is  calculated  by dividing  net income  (loss) by the weighted
average  number of  common  shares  outstanding  for each  year  presented.  The
weighted  average  number of common  shares  outstanding  for basic net loss per
common share in 2001 was 1,150,000 shares.



                                       49
<PAGE>



NOTE 19 - REGULATORY MATTERS
          ------------------

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

     Quantitative  measures established by regulation to ensure capital adequacy
require the Bank to maintain  minimum amounts and ratios (set forth in the table
below)  of total  and Tier 1  capital  to  risk-weighted  assets,  and of Tier 1
capital to average assets.  Management  believes,  as of December 31, 2002, that
the Bank meets all capital adequacy requirements to which it is subject.

     As of December 31, 2002, the most recent  notification of the Office of the
Comptroller of the Currency  categorized the Bank as well capitalized  under the
regulatory  framework for prompt corrective  action.  There are no conditions or
events  since that  notification  that  management  believes  have  changed  the
institution's category. The Bank's actual capital amounts and ratios and minimum
regulatory amounts and ratios are presented as follows:
<TABLE>
<CAPTION>
                                                                                                      To be well capitalized
                                                                              For capital            under prompt corrective
                                                                           adequacy purposes            action provisions
                                                                       --------------------------   ---------------------------
                                                          Actual                Minimum                      Minimum
                                            -------------------------  --------------------------   ---------------------------
                                              Amount          Ratio       Amount         Ratio         Amount         Ratio
                                            ------------   ----------  --------------   ---------   -------------  ------------
                                                                          (amounts in $000)
<S>                                         <C>               <C>      <C>                 <C>      <C>               <C>
As of December 31, 2002
   Total Capital (to risk weighted assets)  $  14,116         10.3 %   $      10,921       8.0 %    $     13,651      10.0 %
   Tier 1 Capital (to risk weighted assets)    12,408          9.1             5,460       4.0             8,191       6.0
   Tier 1 Capital (to average assets)          12,408          7.5             6,639       4.0             8,298       5.0


As of December 31, 2001
   Total Capital (to risk weighted assets)  $  10,139         10.1 %   $       8,071       8.0 %    $     10,089      10.0 %
   Tier 1 Capital (to risk weighted assets)     8,947          8.9             4,036       4.0             6,053       6.0
   Tier 1 Capital (to average assets)           8,947          7.9             4,528       4.0             5,045       5.0

</TABLE>




NOTE 20 - DIVIDENDS

     There are no current plans to initiate payment of cash dividends and future
dividend  policy will depend on the Bank's and the Company's  earnings,  capital
requirements,  financial  condition and other factors considered relevant by the
Company's  Board of  Directors.  The Bank is  restricted  in its  ability to pay
dividends under the national banking laws and regulations of the OCC. Generally,
these  restrictions  require the Bank to pay dividends  derived  solely from net
profits.  Moreover,  OCC prior approval is required if dividends declared in any
calendar  year  exceed the Bank's  net  profit for that year  combined  with its
retained net profits for the preceding two years.




                                       50
<PAGE>






NOTE 21 - SELECTED QUARTERLY FINANCIAL DATA  (UNAUDITED)
          ----------------------------------------------

           Following is a summary of operations by quarter:

<TABLE>
<CAPTION>
                                                ---------------------------------------------------------------------------
2002                                                                              Quarters ended
                                                ---------------------------------------------------------------------------
                                                  March 31              June 30      September 30          December 31
                                                ---------------   ----------------   ------------------   -----------------

<S>                                             <C>               <C>                <C>                  <C>
Interest income                                 $   1,790,358     $     1,936,720    $      2,168,948     $     2,256,804
Interest expense                                      846,180             884,620             883,781             877,602
                                                ---------------   ----------------   ------------------   -----------------
     Net interest income                              944,178           1,052,100           1,285,167           1,379,202
Provision for loan losses                             200,000             220,000             300,000             330,000
Noninterest income                                    102,949             121,815             139,533             155,954
Noninterest expenses                                  804,314             832,790             865,064             876,314
                                                ---------------   ----------------   ------------------   -----------------
Income before provision for
  income taxes                                         42,813             121,125             259,636             328,842
Income tax expense                                          -                   -                   -                   -
                                                ---------------   ----------------   ------------------   -----------------
Net income                                      $      42,813     $       121,125    $        259,636     $       328,842
                                                ===============   ================   ==================   =================

Earnings per share
    Basic                                       $         .04     $           .11    $            .23     $           .29
                                                ===============   ================   ==================   =================
    Diluted                                     $         .04     $           .10    $            .22     $           .28
                                                ===============   ================   ==================   =================

Weighted average common shares
     Basic                                           1,150,000          1,150,000           1,150,000           1,150,000
                                                ===============   ================   ==================   =================
     Diluted                                         1,150,000          1,162,398           1,181,711           1,182,404
                                                ===============   ================   ==================   =================
</TABLE>





<TABLE>
<CAPTION>
                                                ---------------------------------------------------------------------------
2001                                                                                 Quarters ended
                                                ---------------------------------------------------------------------------
                                                  March 31              June 30      September 30          December 31
                                                ---------------   ----------------   ------------------   -----------------

<S>                                             <C>               <C>                <C>                  <C>
Interest income                                 $    1,412,535    $     1,512,779    $       1,626,552    $   1,758,388
Interest expense                                       800,497            834,746              852,437          865,261
                                                ---------------   ----------------   ------------------   -----------------

     Net interest income                               612,038            678,033              774,115          893,127
Provision for loan losses                              122,000            128,000              150,000          200,000
Noninterest income                                      44,853             60,026               84,187           94,925
Noninterest expenses                                   613,127            669,521              717,843          781,991
                                                ---------------   ----------------   ------------------   -----------------
Income (loss) before provision for
  income taxes                                        (78,236)            (59,462)              (9,541)           6,061
Income tax (benefit) expense                                -                   -              (17,000)          (5,000)
                                                ---------------   ----------------   ------------------   -----------------
Net income (loss)                               $     (78,236)    $       (59,462)   $           7,459    $      11,061
                                                ===============   ================   ==================   =================
Basic and diluted loss per common share         $        (.07)    $          (.05)   $             .01    $         .01
                                                ===============   ================   ==================   =================
Weighted average common shares-
     basic and diluted                              1,150,000           1,150,000            1,150,000        1,150,000
                                                ===============   ================   ==================   =================


</TABLE>





                                       51
<PAGE>


NOTE 22 - FAIR VALUE OF FINANCIAL INSTRUMENTS
          -----------------------------------

     SFAS No.  107,  "Disclosures  about  Fair Value of  Financial  Instruments"
requires disclosure of fair value information,  whether or not recognized in the
balance  sheets,  when it is practical to estimate the fair value.  SFAS No. 107
defines a financial  instrument as cash, evidence of an ownership interest in an
entity or  contractual  obligations  which require the exchange of cash or other
financial  instruments.   Certain  items  are  specifically  excluded  from  the
disclosure  requirements,  including  the Company's  common stock,  premises and
equipment and other assets and liabilities.

     Fair  value  approximates   carrying  value  for  the  following  financial
instruments due to the short-term  nature of the  instrument:  cash and due from
banks,  federal funds sold,  federal funds purchased,  note payable,  securities
sold under agreement to repurchase and official checks.

     Securities are valued using quoted fair market  prices.  Fair value for the
Company's  off-balance  sheet  financial  instruments is based on the discounted
present value of the estimated future cash flows.

     Fair value for variable  rate loans that reprice  frequently  and for loans
that mature in less than one year is based on the carrying value. Fair value for
fixed  rate  mortgage  loans,  personal  loans  and all other  loans  (primarily
commercial)  maturing after one year is based on the discounted present value of
the  estimated  future cash  flows.  Discount  rates used in these  computations
approximate  the rates currently  offered for similar loans of comparable  terms
and credit quality.

     Fair value for demand deposit accounts and  interest-bearing  accounts with
no fixed  maturity date is equal to the carrying  value.  Certificate of deposit
accounts and FHLB advances  with a maturity  within one year are valued at their
carrying  value.  The fair value of  certificate  of deposit  accounts  and FHLB
advances with a maturity after one year are estimated by discounting  cash flows
from expected maturities using current interest rates on similar instruments.

     The Company has used  management's best estimate of fair value based on the
above  assumptions.  Thus, the fair values presented may not be the amounts that
could be realized in an  immediate  sale or  settlement  of the  instrument.  In
addition,  any income  taxes or other  expenses,  which  would be incurred in an
actual sale or settlement,  are not taken into  consideration  in the fair value
presented.


     The estimated  fair values of the Company's  financial  instruments  are as
follows:
<TABLE>
<CAPTION>
                                                                                        December 31,
                                                              ------------------------------------------------------------------
                                                                          2002                              2001
                                                              ------------------------------  ----------------------------------
                                                                Carrying          Fair            Carrying            Fair
                                                                 Amount           Value            Amount             Value
                                                              -------------   --------------  -----------------   --------------
<S>                                                           <C>              <C>               <C>                <C>
Financial Assets:
    Cash and due from banks                                   $  4,429,290     $  4,429,290      $   2,882,115      $ 2,882,115
    Federal funds sold                                              41,736           41,736            100,841          100,841
    Investment securities                                       14,592,190       14,592,190         17,913,460       17,913,460
    Other investments                                              905,000          905,000            555,000          555,000
    Loans, net                                                 148,079,012      151,400,000         95,339,621       97,500,000

Financial Liabilities:
    Deposits                                                   133,563,270      134,400,000         92,700,010       93,100,000
    Official checks outstanding                                    889,270          889,270            891,129          891,129
    Federal funds purchased and repurchase agreements            9,107,000        9,107,000          8,482,600
                                                                                                                      8,482,600
    Note payable                                                 2,500,000        2,500,000                  -                -
    Federal Home Loan Bank advances                             13,000,000       13,548,000          6,000,000        6,050,000

Financial Instruments with Off Balance Sheet Risks
    Commitments to extend credit                                34,086,000       34,086,000         28,229,000       28,229,000
    Standby letter of credit                                       877,000          877,000            452,000          452,000
</TABLE>



                                       52
<PAGE>

NOTE 23 - PARENT COMPANY FINANCIAL INFORMATION
          ------------------------------------

     Following  is  condensed   financial   information   of  Greenville   First
Bancshares, Inc. (parent company only):


<TABLE>
<CAPTION>
                                                 Condensed Balance Sheets
                                                                                                December 31,
                                                                                   ----------------------------------------
                                                                                         2002                  2001
                                                                                   ------------------   -------------------
<S>                                                                                <C>                  <C>
Assets
Cash and cash equivalents                                                          $      177,052       $       385,388
Investment in Bank subsidiary                                                          12,556,107             9,075,193
                                                                                   ------------------   -------------------
         Total assets                                                              $   12,733,159       $     9,460,581
                                                                                   ==================   ===================

Liabilities and Shareholders' Equity
Accounts payable and accrued expenses                                              $        1,370    $            1,162
Note payable                                                                            2,500,000                     -
Shareholders' equity                                                                   10,231,789             9,459,419
                                                                                   ------------------   -------------------
         Total liabilities and shareholders' equity                                $   12,733,159       $     9,460,581
                                                                                   ==================   ===================
</TABLE>


<TABLE>
<CAPTION>
                                            Condensed Statements of Operations

                                                                                             For the years ended
                                                                                                December 31,
                                                                                   ----------------------------------------
                                                                                         2002                  2001
                                                                                   ------------------   -------------------
<S>                                                                                <C>                  <C>
Revenues

Interest income                                                                    $        3,772       $        49,655

Expenses

Interest expense                                                                           23,715
Other expense                                                                                   -                 1,162
                                                                                   ------------------   -------------------

         Total expenses                                                                    23,715                 1,162
                                                                                   ------------------   -------------------

Income (loss) before equity in undistributed
    net income (loss) of Bank subsidiary                                                  (19,943)               48,493

Equity in undistributed net income (loss) of Bank subsidiary                              772,359              (167,671)
                                                                                   ------------------   -------------------

         Net income (loss)                                                         $      752,416       $      (119,178)
                                                                                   ==================   ===================
</TABLE>


                                       53
<PAGE>



NOTE 23 - PARENT COMPANY FINANCIAL INFORMATION, Continued
          -----------------------------------------------

<TABLE>
<CAPTION>
                                           Condensed Statements of Cash Flows

                                                                                            For the years ended
                                                                                               December 31,
                                                                                   --------------------------------------
                                                                                         2002                 2001
                                                                                   ------------------   -----------------
<S>                                                                                <C>                  <C>
Operating Activities
    Net income (loss)                                                              $      752,416       $      (119,178)
    Adjustments to reconcile net income (loss) to net cash provided by (used in)
      operating activities Equity in undistributed net (income) loss of
         Bank subsidiary                                                                 (772,359)              167,671
      Increase in other liabilities                                                           208                 1,162
                                                                                   ------------------   -----------------
           Net cash provided by (used in) operating activities                            (19,735)               49,665
                                                                                   ------------------   -----------------

Financing Activities
    Proceeds from note payable                                                          2,500,000
                                                                                   ------------------   -----------------
    Investment in Bank subsidiary                                                      (2,688,601)             (900,000)
                                                                                   ------------------   -----------------
           Net cash used in financing activities                                         (188,601)             (900,000)
                                                                                   ------------------   -----------------
           Net decrease in cash and cash equivalents                                     (208,336)             (850,345)

      Cash and cash equivalents, beginning of year                                        385,388             1,235,733
                                                                                   ------------------   -----------------
      Cash and cash equivalents, end of year                                       $      177,052       $       385,388
                                                                                   ==================   =================

</TABLE>




                                       54
<PAGE>


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

         None.

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

     In  response  to this Item,  this  information  is  contained  in our Proxy
Statement for the Annual Meeting of  Shareholders to be held on May 15, 2002 and
is incorporated herein by reference.

Item 10. Executive Compensation
         ----------------------

     In  response  to this Item,  this  information  is  contained  in our Proxy
Statement for the Annual Meeting of  Shareholders to be held on May 15, 2002 and
is incorporated herein by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management
         --------------------------------------------------------------

     In  response  to this Item,  this  information  is  contained  in our Proxy
Statement for the Annual Meeting of  Shareholders to be held on May 15, 2002 and
is incorporated herein by reference.

Item 12. Certain Relationships and Related Transactions
         ----------------------------------------------

     In  response  to this Item,  the  information  required  by Item  201(d) is
contained in Item 5 of this report.  The  information  is contained in our Proxy
Statement for the Annual Meeting of  Shareholders  to be held on May 15, 2002 is
incorporated herein by reference.

Item 13. Exhibits, List and Reports on Form 8-K
         --------------------------------------

(a)  The following documents are filed as part of this report:

3.1. Articles of Incorporation, as amended (incorporated by reference to Exhibit
     3.1 of the Registration Statement on Form SB-2, File No. 333-83851).

3.2. Bylaws  (incorporated  by  reference  to  Exhibit  3.2 of the  Registration
     Statement on Form SB-2, File No. 333-83851).

4.1. See Exhibits 3.1 and 3.2 for  provisions in Greenville  First  Bancshares's
     Articles of Incorporation  and Bylaws defining the rights of holders of the
     common stock  (incorporated by reference to Exhibit 4.1 of the Registration
     Statement on Form SB-2, File No. 333-83851).

4.2. Form of certificate of common stock  (incorporated  by reference to Exhibit
     4.2 of the Registration Statement on Form SB-2, File No. 333-83851).

10.1.Employment   Agreement  dated  July  27,  1999  between   Greenville  First
     Bancshares and Art Seaver (incorporated by reference to Exhibit 10.1 of the
     Registration Statement on Form SB-2, File No. 333-83851).

10.2.Lease Agreement  incorporated by reference  between  Greenville  First Bank
     and Halton Properties,  LLC, formerly Cothran Properties, LLC (incorporated
     by reference to Exhibit 10.2 of Form 10-k filed on March 28, 2000).



                                       55
<PAGE>



10.3 Data Processing  Services  Agreement dated June 28, 1999 between Greenville
     First  Bancshares  and the Intercept  Group  (incorporated  by reference to
     Exhibit  10.3  of  the  Registration  Statement  on  Form  SB-2,  File  No.
     333-83851).

10.4 Form of Stock Warrant Agreement  (incorporated by reference to Exhibit 10.4
     of the Registration Statement on Form SB-2, File No. 333-83851).

10.5 Promissory Note dated February 22, 1999 from Greenville  First  Bancshares,
     Inc. in favor of John J. Meindl, Jr.  (incorporated by reference to Exhibit
     10.5 of the Registration Statement on Form SB-2, File No. 333-83851).

10.6 Standard Form of Agreement between  Greenville First  Bancshares,  Inc. and
     AMI  Architects  (incorporated  by  reference  to Exhibit 10.2 of Form 10-k
     filed on March 28, 2000).

21   Subsidiaries of our company

24   Power of Attorney (contained herein as part of the signature pages).


-------------------------

(b)  Reports on Form 8-K

     The  following  reports  were filed on Form 8-K  during the fourth  quarter
ended December 31, 2002.

99.1 The  Company  filed a Form 8-K on November  12,  2002 to disclose  that the
     Chief  Executive  Officer,  R. Arthur Seaver,  Jr. and the Chief  Financial
     Officer,  James M. Austin, III, each furnished to the SEC the certification
     required pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
     906 of the Sarbanes-Oxley Act of 2002.



Item 14. Controls and Procedures
         ------------------------

     Within  90 days  prior  to the  date  of this  report,  we  carried  out an
evaluation,  under the supervision and with the  participation  of our principal
executive officer and principal  financial officer,  of the effectiveness of the
design and operation of our disclosure  controls and  procedures.  Based on this
evaluation,  our principal  executive  officer and principal  financial  officer
concluded  that our  disclosure  controls and procedures are effective in timely
alerting  them to material  information  required to be included in our periodic
SEC reports.  The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future conditions, regardless of how remote.


     In  addition,  we reviewed our  internal  controls,  and there have been no
significant  changes in our  internal  controls or in other  factors  that could
significantly  affect  those  controls  subsequent  to the  date of  their  last
evaluation.

.................................................................................


                                       56
<PAGE>


                                   SIGNATURES


.................................................................................

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934 (the "Exchange Act"), the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                 GREENVILLE FIRST BANCSHARES, INC.


Date:   March  26, 2003          By: /s/ R. Arthur Seaver, Jr.
       ----------------             --------------------------------
                                    R. Arthur Seaver, Jr.
                                    President and Chief Executive Officer

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes  and  appoints R.  Arthur  Seaver,  Jr.,  his true and lawful
attorney-in-fact  and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all  amendments to this Annual Report on Form 10-KSB,  and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange  Commission,  granting unto  attorney-in-fact  and agent
full  power  and  authority  to do and  perform  each and  every  act and  thing
requisite  or necessary  to be done in and about the  premises,  as fully to all
intents and  purposes as he might or could do in person,  hereby  ratifying  and
confirming  all  that   attorney-in-fact   and  agent,   or  his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant in the capacities and on the
dates indicated.

Signature                          Title                            Date
---------                          -----                            ----

/s/ James M. Austin
-----------------------------
James M. Austin, III             Chief Financial Officer,       March 26, 2003
                                 Principal Financial and
                                 Accounting Officer

/s/ Andrew B. Cajka
-----------------------------
Andrew B. Cajka                   Director                      March 26, 2003


/s/ Mark A. Cothran
-----------------------------
Mark A. Cothran                   Director                      March 26, 2003


-----------------------------
Leighton M. Cubbage               Director                      March 26, 2003


/s/ David G. Ellison
-----------------------------
David G. Ellison                  Director                      March 26, 2003


/s/ Anne S. Ellefson
-----------------------------
Anne S. Ellefson                  Director                      March 26, 2003




                                       57
<PAGE>





-----------------------------
Tecumseh Hooper, Jr.              Director                      March 26, 2003




/s/ Rudolph G. Johnstone, III, M.D.
-----------------------------
Rudolph G. Johnstone, III, M.D.   Director                      March 26, 2003


/s/ Keith J. Marrero
-----------------------------
Keith J. Marrero                  Director                      March 26, 2003


/s/ James B. Orders
-----------------------------
James B. Orders, III              Director, Chairman            March 26, 2003


/s/ William B. Sturgis
-----------------------------
William B. Sturgis                Director                      March 26, 2003


/s/ R. Arthur Seaver, Jr.
-----------------------------
R. Arthur Seaver, Jr.             Director, Chief Executive     March 26, 2003
                                  Officer and President
                                  (principal executive officer)

/s/ Fred Gilmer
-----------------------------
Fred Gilmer, Jr.                  Director, Senior Vice-        March 26, 2003
                                  President



                                       58
<PAGE>


                                  EXHIBIT INDEX
                                  -------------

Exhibit
Number                     Description
------                     -----------

3.1. Articles of Incorporation, as amended (incorporated by reference to Exhibit
     3.1 of the Registration Statement on Form SB-2, File No. 333-83851).

3.2. Bylaws  (incorporated  by  reference  to  Exhibit  3.2 of the  Registration
     Statement on Form SB-2, File No. 333-83851).

4.1. See Exhibits 3.1 and 3.2 for  provisions in Greenville  First  Bancshares's
     Articles of Incorporation  and Bylaws defining the rights of holders of the
     common stock  (incorporated by reference to Exhibit 4.1 of the Registration
     Statement on Form SB-2, File No. 333-83851).

4.2. Form of certificate of common stock  (incorporated  by reference to Exhibit
     4.2 of the Registration Statement on Form SB-2, File No. 333-83851).

10.1.Employment   Agreement  dated  July  27,  1999  between   Greenville  First
     Bancshares and Art Seaver (incorporated by reference to Exhibit 10.1 of the
     Registration Statement on Form SB-2, File No. 333-83851).

10.2.Lease Agreement between Greenville First Bank and Halton  Properties,  LLC,
     formerly Cothran Properties, LLC (incorporated by reference to Exhibit 10.2
     of Form 10-k filed on March 28, 2000).

10.3 Data Processing  Services  Agreement dated June 28, 1999 between Greenville
     First  Bancshares  and the Intercept  Group  (incorporated  by reference to
     Exhibit  10.3  of  the  Registration  Statement  on  Form  SB-2,  File  No.
     333-83851).

10.4 Form of Stock Warrant Agreement  (incorporated by reference to Exhibit 10.4
     of the Registration Statement on Form SB-2, File No. 333-83851).

10.5 Promissory Note dated February 22, 1999 from Greenville  First  Bancshares,
     Inc. in favor of John J. Meindl, Jr.  (incorporated by reference to Exhibit
     10.5 of the Registration Statement on Form SB-2, File No. 333-83851).

10.7 Standard Form of Agreement between  Greenville First  Bancshares,  Inc. and
     AMI  Architects  (incorporated  by  reference  to Exhibit 10.2 of Form 10-k
     filed on March 28, 2000).

21   Subsidiaries of our company

24   Power of Attorney (contained herein as part of the signature pages).




                                       59