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, 2001.
                                       Or

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

                        Commission file number 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 loss for its most recent fiscal year was $119,178. As of
March 15, 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 $9,012,360. This calculation is based upon an estimate of the fair
market value of the Common Stock of $11.20 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        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.

     On October 26, 1999 we commenced our initial public offering and completed
the sale of 1,100,000 shares of our common stock at $10 per share and on
November 30, 1999, we sold 50,000 additional shares pursuant to the
underwriters' over-allotment option for a total of 1,150,000 shares of common
stock. The offering raised $10,646,700 net of underwriting discounts and
commissions. Our directors and executive officers purchased 266,900 shares of
common stock in this offering. Upon purchase of these shares, we issued stock
warrants to the organizers to purchase up to an additional 129,950 shares of
common stock. The warrants, which are represented by separate warrant
agreements, vest ratably over a three year period beginning on January 10, 2001
and will be exercisable in whole or part during the ten year period following
the grant date.

     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, the
bank has a self-imposed loan limit of $1.2 million, which represents
approximately 100% of our legal lending limit at December 31, 2001. 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, 2001, loans secured by
first or second mortgages on real estate made up 76% 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 are
            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, 2001, 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
which 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 to 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, 2001, the most recent date for which market data is
available, total deposits in the bank's primary service area were almost $5.4
billion, which represented a 2.3% deposit reduction from 2000. At June 30, 2001
the bank represented.1.4% of the market. Our plan over the next five years is to
grow our deposit base to $200 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, 2002, the bank had 25 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 which 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, 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.

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. The Act was signed into law by President Clinton 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.

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.

                                       6


<PAGE>


         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.

         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.


                                       7
<PAGE>


         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
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.



                                       8
<PAGE>



         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.

         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.


                                       9

<PAGE>




         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.

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.

                                       10

<PAGE>


         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;
         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.


                                       11


<PAGE>

         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.

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, 2002, there were 22 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 approximately 14,000 square feet of 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.



                                       12

<PAGE>


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 $11.20 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, for a
total of $11,500,000, were sold in the initial public offering and are
outstanding as of March 20, 2002. 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.


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


===================================================
           2001               High         Low
           ----               ----         ---
       First Quarter        $ 10.38     $  8.63
      Second Quarter          12.90        8.50
       Third Quarter          11.07       10.10
      Fourth Quarter          11.50       10.06

           2000               High         Low
           ----               ----         ---
       First Quarter        $ 10.50     $  7.00
      Second Quarter          10.00        7.00
       Third Quarter          11.00        9.00
      Fourth Quarter           9.63        8.50
===================================================


         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.



                                       13


<PAGE>


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



DISCUSSION OF FORWARD-LOOKING STATEMENTS

         Management's Discussion and Analysis of Financial Condition and Results
of Operations and other portions of this annual report contain certain
"forward-looking statements" concerning our future operations. Management
desires to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995 and is including this statement for the
express purpose of availing ourselves of protections of such safe harbor with
respect to all "forward-looking statements" contained in our Annual Report. We
have used "forward-looking statements" to describe future plans and strategies
including our expectations of our future financial results. Management's ability
to predict results or the effect of future plans or strategies is inherently
uncertain. Factors which could affect actual results include interest rate
trends, the general economic climate in our market area, the State of South
Carolina and the country as a whole, our ability to control costs and expenses,
our ability to efficiently incorporate acquisitions into our operations and our
ability to offer competitive products and pricing, manage loan delinquency
rates, and react to changes in federal and state regulation. These factors
should be considered in evaluating the "forward-looking statements," and undue
reliance should not be placed on such statements.


GENERAL

         The following is a discussion of our financial condition as of December
31, 2001 and the results of operations for the year ended December 31, 2001.
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.

         Until January 10, 2000, our principal activities related to our
organization, the conducting of our initial public offering, the pursuit of
approvals from the OCC for our application to charter the bank, the pursuit of
approvals from the FDIC for our application for insurance of the deposits of the
bank, hiring the appropriate personnel and implementing operating procedures.
We received approval from both the FDIC and the OCC on January 7, 2000. The
bank opened for business on January 10, 2000.


NATIONAL AND ECONOMIC EVENTS

         Nationally, during most of 2001, the United States experienced a
slowing economy following a tenth year of expansion. During the year, 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.

         Despite sharply lower short-term rates, stimulus to the economy has
been muted because the yield curve has steepened 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, an
economic stimulus plan is expected to be passed by Congress and further interest
rate cuts by the Federal Reserve are possible. We continue to believe that the
markets we serve generally perform better than national markets, even in times
of recession.

         Management believes that the economic impact of the terrorist attacks
of September 11, 2001 did not materially affect our operations during 2001. 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 2002.


                                       14

<PAGE>


INCOME STATEMENT REVIEW

Net Interest Income

         Net interest income, the largest component of our income, was
$2,957,313 in 2001 compared to $1,624,635 in 2000, or an increase of 82.0%. The
level of net interest income is determined by balances of earning assets and
successfully managing 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 2001 of $6,310,254 consisted of $5,186,555 on
loans, $963,087 in investments and $160,612 on federal funds sold. Interest
income for the year 2000 of $3,148,253 included $2,318,261 on loans, $441,655 on
investments and $388,337 on federal funds sold.

          Interest expense for 2001 of $3,352,941 consisted of $3,243,960
related to deposits and $108,981 related to borrowings. Interest expense of
$1,523,618 for the period ended December 31, 2000 related to deposits.

         The following table sets forth, for the years ended December 31, 2001
and 2000, 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,
                                                          2001                                       2000
                                                          ----                                       ----
                                            Average     Income/    Yield/            Average      Income     Yield/
                                            Balance    Expense      Rate             Balance     Expense      Rate
                                            -------    --------    ------            -------     -------     ------

<S>                                        <C>         <C>        <C>              <C>        <C>           <C>
   Federal funds sold                         $ 3,716     $  160     4.31%            $    6,059 $     388     6.40%
   Investment securities                       15,456        963     6.23%                 6,934       442     6.37%
   Loans                                       67,046      5,187     7.74%                23,798     2,318     9.74%
                                           --------------------------------           -------------------------------
        Total earning-assets                  $86,218     $6,310     7.32%            $  36,791  $  3,148      8.56%
                                           --------------------------------           -------------------------------

   NOW accounts                               $12,559     $  164     1.31%            $    7,410 $     234     3.16%
   Savings & money market                      19,588        675     3.45%                 9,267       513     5.54%
   Time deposits                               42,982      2,405     5.60%                11,553       777     6.72%
         Total interest-bearing deposits       75,129      3,244     4.32%                28,230     1,524     5.40%

   FHLB advance                                 1,858         74     3.98%                     -         -        -%
   Other borrowings                             1,333         35     2.63%                     -         -        -%

                                           --------------------------------           -------------------------------
        Total interest-bearing liabilities   $ 78,320    $ 3,353     4.28%            $  28,230  $  1,524      5.40%
                                           --------------------------------           -------------------------------

   Net interest spread                                               3.04%                                     3.16%
   Net interest income/margin                            $ 2,957     3.43%                       $  1,624      4.41%
   ==================================================================================================================

</TABLE>

         Our net interest spread was 3.04% for the year ended December 31, 2001
as compared to 3.16% for the year ended December 31, 2000. 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, 2001 was
3.43% as compared to 4.41% for the year ended December 31, 2000. During 2001,
earning assets averaged $86.2 million as compared to $36.8 million in 2000. The
net interest margin is calculated as net interest income divided by year-to-date
average earning assets.


                                       15

<PAGE>

         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.


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. Changes that are not solely attributable to either volume or rate
have been allocated to volume and rate on a prorated basis. As 2000 was our
first period of operations, we have only included the table containing the
changes between 2001 and 2000.
<TABLE>
<CAPTION>

          ===========================================================================================
                                                                        Change Related to
          Year Ended December 31, 2001
                   (Dollars in Thousands)
          ------------------------------------------------------------------------------------------
                                                              Volume        Rate       Net Change

<S>                                                           <C>          <C>          <C>
          EARNING ASSETS:
          Federal funds sold                                  $    (153)   $    (75)    $     (228)
          Investment securities                                      531         (10)           521
          Loans                                                    3,235        (366)         2,869
                                                               ---------    --------     ----------

                 Total earning assets                         $    3,613        (451)    $    3,162
                                                               ---------     --------    ----------

          INTEREST BEARING LIABILITIES
          Deposits                                            $    1,956    $   (236)    $    1,720
          FHLB advance                                                74           -             74
          Other borrowqings                                           35           -             35
                                                              ----------   ---------    -----------

                 Total interest bearing liabilities                2,065        (236)         1,829
                                                              ----------   ---------    -----------

                  Net interest income                         $    1,548   $    (215)   $     1,333
                                                              ==========   =========    ===========

          =========================================================================================
</TABLE>

Provision for Loan Losses

       Included in the losses for both of the periods ended December 31, 2001
and 2000 is a non-cash expense of $600,000 in each period related to the
provision for loan losses. The loan loss reserve was $1.2 million and $600,000
as of December 31, 2001 and 2000, respectively. The allowance for loan losses as
a percentage of gross loans was 1.24% at December 31, 2001 and 1.29% at December
31, 2000. 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 which 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, 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. There were no loans charged off during the year
ended December 31, 2000.

Noninterest Income and Expenses

         Noninterest income in 2001 was $283,991, an increase of 387% over
noninterest income of $58,348 in 2000. 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.

                                       16

<PAGE>

         We incurred general and administrative expenses of $2.8 million for the
year ended December 31, 2001 compared to $1.8 million for the 2000 year. The
$1.0 million additional general and administrative expenses resulted primarily
from the move into our new main office building and the additional staff hired
to handle the current and anticipated future growth in both loans and deposits.
Salaries and benefits in 2001 were $1.5 million, or an increase of $490
thousand. Salaries and benefits represented 53.2% of the total noninterest
expense. Salaries and benefits in 2000 were $991 thousand. The other significant
expense in 2001 was $526 thousand for occupancy cost. This expense increased
$243 thousand when comparing the year 2001 to the year 2000. This increase
relates primarily to the additional costs associated with the our permanent main
office building, compared to the lower cost of the temporary modular facility.
All other expenses increased only $267 thousand. This increase relates primarily
to $68 thousand additional marketing expenses and $162 thousand additional cost
for outside services. 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.

         A $22 thousand benefit for income taxes was recorded in 2001. A benefit
of $38 thousand was recognized in 2000.

BALANCE SHEET REVIEW

General
         At December 31, 2001, we had total assets of $118.6 million, consisting
principally of $95.3 million in loans, $7.9 million in investments and $2.9
million in cash and due from banks. Liabilities at December 31, 2001 totaled
$109.1 million, consisting principally of $92.7 million in deposits, $6.0
million in FHLB advances, and $8.5 million of short-term borrowings. At December
31, 2001, shareholders' equity was $9.5 million.

Investments
         At December 31, 2001, the $17.9 million of investment securities
portfolio represented approximately 15.1% of our total assets. We were invested
in U.S. Government agency securities and mortgage-backed securities with a fair
value of $17.9 million and an amortized cost of $17.7 for an unrealized gain of
$194 thousand.

         Contractual maturities and yields on our investments (all available for
sale) at December 31, 2001 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, 2001, the bank anticipates
that between $10.5 million and $14.5 million will be called during the 2002
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               ---         --- $     13,469       6.04%  $  4,184       6.08%   $   17,653      6.05%
   Mortgage-backed
   securities             ---         ---          260       2.70%         -          -           260      2.70%
                    ---------  ---------- ------------  ---------  ---------    -------   -----------   -------
   Total                  ---         --- $     13,729       5.98% $   4,184       6.08%  $    17,913      6.00%
                    =========  ========== ============  =========  =========    =======   ===========   =======

   ===============================================================================================================
</TABLE>


         At December 31, 2001, the $101 thousand of short-term investments in
federal funds sold on an overnight basis comprised .1% of total assets at
December 31, 2001, as compared to $3.9 million or 6.4% of total assets at
December 31, 2000.

                                       17

<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, 2001 and 2000 were $67.0 million and $23.8 million,
respectively. Total loans outstanding at December 31, 2001 and 2000 were $96.5
million and $46.6 million, respectively, before allowance for loan losses.

         The following table summarizes the composition of the loan portfolio at
December 31:
<TABLE>
<CAPTION>

======================================================================================================================
                                                               2001                                 2000
                                                               ----                                 ----
                                                     Amount            % of Total         Amount          % of Total
                                                     ------            ----------         ------          ----------
<S>                                           <C>                    <C>              <C>                  <C>
Real estate:
  Commercial
   Owner occupied                             $       16,532,696               17.13%   $     5,589,214          11.99%
   Non-owner occupied                                 22,813,424               23.63%        13,433,974          28.81%
   Construction                                        8,292,228                8.59%         2,422,314           5.20%
                                              ------------------    ----------------- ----------------- ---------------
      Total commercial real-estate                    47,638,348               49.35%        21,445,502          46.00%
                                              ------------------    ----------------- ----------------- ---------------

  Consumer
    Residential                                       12,898,543               13.36%         6,366,671          13.66%
    Home Equity                                        8,937,054                9.26%         4,695,377          10.07%
    Construction                                       3,972,206                4.11%         1,971,276           4.22%
                                              ------------------   -----------------  ----------------- ---------------
      Total consumer real-estate                      25,807,803               26.73%        13,033,324          27.95%
                                              ------------------   -----------------  ----------------- ---------------

      Total real-estate                               73,446,151               76.08%        34,478,826          73.95%
Commercial business                                   20,529,004               21.27%         9,283,022          19.91%
Consumer-other                                         2,812,703                2.91%         2,971,511           6.37%
Deferred origination fees, net                          (255,990)               (.26%)         (108,332)          (.23%)
                                              ------------------   -----------------  ----------------- ---------------
 Total gross loans, net of deferred fees              96,531,868              100.00%        46,625,027         100.00%
                                                                   =================                    ===============

Less--allowance for loan losses                       (1,192,247)                             (600,000)
                                              ------------------                      ----------------
 Total loans, net                             $       95,339,621                      $     46,025,027
                                              ==================                      ================
</TABLE>

         The principal component of our loan portfolio at year-end 2001 and 2000
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.


                                       18

<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, 2001 and 2000, the allowance for loan losses was $1.2
million and $600,000, respectively, or 1.24% of outstanding loans at December
31, 2001 and 1.29% at December 31, 2000, respectively. During the year ended
December 31, 2001, we charged off loans of $7,753. There were no loans charged
off during the year ended December 31, 2000.

         At December 31, 2001, nonaccrual loans represented .3% of total loss.
We had one residential loan of approximately $360 thousand that was on
nonaccrual status. We classified this loan during the third quarter of 2001.
There were no loans on nonaccrual status at December 31, 2000. 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, 2001 (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                $    18,207   $   2,320    $       2    $      20,529

              Real estate - construction      8,851       3,413            -           12,264

              Real estate - mortgage         37,167      23,227          532           60,926

              Consumer and other              2,183         630            -            2,813
                                           ---------  ---------   ----------    -------------

              Total loans               $    66,408   $  29,590   $      534    $      96,532
                                           =========  =========   ==========    =============

              Loans maturing after one year with:

              Fixed interest rates                                              $      11,688

              Floating interest rates                                           $      18,436
              ===============================================================================
</TABLE>


                                       19


<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. Management believes that
conditions in 2001 were favorable for deposit growth and that factors such as
the low returns on investments and mutual funds may have increased traditional
deposit inflows during 2001.

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

<TABLE>
<CAPTION>

     ===================================================================================================
                                                               2001                           2000
                                                               ----                           ----

<S>                                           <C>                       <C>         <C>              <C>
     Demand deposit accounts                  $          7,729          8.34%       $   3,088        6.18%
                                                                                                    13.28%
     NOW accounts                                        8,295          8.95%           6,637
     Money market accounts                              24,139         26.04%          12,613       25.23%
                                                                                                      .16%
     Savings accounts                                      255           .27%              80
     Time deposits less than $100,000                   31,900         34.41%          14,446       28.89%
     Time deposits of $100,000 or more                  20,382         21.99%          13,130       26.26%
                                                -----------------------------------------------------------

     Total deposits                           $         92,700        100.00%       $  49,994      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 $72.3 million and $36.9 million at December 31,
2001 and 2000, respectively. Our loan-to-deposit ratio was 103% and 92.1% at
year-end 2001 and 2000, respectively. The maturity distribution of our time
deposits of $100,000 or more at December 31, 2001 and 2000 is as follows:
<TABLE>
<CAPTION>

     =====================================================================================================
                                                        2001                       2000
                                                        ----                       ----
                                                              (Dollars in thousands)
<S>                                            <C>                                   <C>
     Three months or less                      $   7,929                             $        4,413

     Over three through twelve months              8,703                                      7,717

     Over twelve months                            3,750                                      1,000
                                               ----------------------------------------------------
     Total                                     $  20,382                             $       13,130
                                               ====================================================
</TABLE>

Borrowings

         At December 31, 2001 the bank had $6,000,000 of advances from the FHLB
of Atlanta. These advances are secured with 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, 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, 2001 the bank had utilized $800,000 of its
$2,800,000 of federal funds purchase line of credit. This line of credit is
unsecured and bears interest at the daily rate of federal funds plus 25 basis
points (5.00% at December 31, 2001).

             The bank had no other borrowings at December 31, 2000.

CAPITAL RESOURCES
         Total shareholders' equity amounted to $9,459,419 at December 31, 2001
and $9,474,980 at December 31, 2000. The decrease between 2000 and 2001
primarily resulted from the net loss incurred during 2001, partly offset by the
increase in unrealized gain on investment securities, net of tax.

                                       20


<PAGE>


           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 2001 and 2000. Since our inception, we have not paid
cash dividends.

                   ======================================================
                                                  2001         2000
                                                  ----         ----

                   Return on average assets       -0.1%        -1.6%

                   Return on average equity       -1.3%        -6.8%

                   Equity to assets ratio          8.0%        15.4%
                   ======================================================

         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%. The Federal Reserve guidelines also
contain an exemption from the capital requirements for bank holding companies
with less than $150 million in consolidated assets. Because we had less than
$150 million in assets, the company is not currently subject to these
guidelines. However, the bank falls under these rules as set per bank regulatory
agencies.

         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, 2001 and 2000. At December 31, 2001 and 2000, we
both were in compliance with each of the applicable regulatory capital
requirements and were considered to be "well capitalized" at the bank level.

  ==========================================================================
                                  2001                      2000
                         --------------------        -------------------

                           The           The           The          The
                         company         bank        company        bank
                         -------         ----        -------        ----

  Total risk-based capital    10.4%     10.1%          20.5%         18.0%

  Tier 1 risk-based capital    9.2%      8.9%          19.3%         16.8%

  Leverage capital             8.2%      7.9%          16.9%         14.7%
       =====================================================================

         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 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 two years. As of December 31, 2001, there were no significant firm
commitments outstanding for capital expenditures.


                                       21
<PAGE>




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.

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, 2001, unfunded
commitments to extend credit were $28,229,000, of which $4,965,000 is at fixed
rates and $23,264,000 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, 2001, there was a $452,000 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.

                                       22

<PAGE>



         Due to the fact that approximately 65% of our loans were variable rate
loans at December 31, 2001, we are currently asset sensitive over the majority
of 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.

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, 2001 and 2000, our liquid assets, consisting of cash
and due from banks and federal funds sold, amounted to $1,310,844 and
$8,984,505, representing 1.59% and 15.4% of total assets, respectively.
Investment securities at December 31, 2001 and 2000 amounted to $12,407,758 and
$8,022,471, representing 15.08% and 13.8% 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 the fourth quarter of 2001, 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. During the first quarter of 2002, the bank has increased
its net liquidity position by approximately $22 million. This resulted primarily
from increases in deposits, sales of participations in loans originated, and
identification of additional qualifying collateral that could be pledged to the
FHLB that allows for additional borrowing capacity. In addition, the bank
maintains federal funds purchased lines of credit with correspondent banks in
the amount of $2,800,000. 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 assumes that the bank's $300 million investment in FHLB
stock as well as certain securities and qualifying mortgages would be pledged to
secure any future borrowings. We believe that it could obtain additional
borrowing capacity from the FHLB by identifying additional qualifying collateral
that could be pledged

         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.

         The following table presents our rate sensitivity at each of the time
intervals indicated as of December 31, 2001. The table may not be indicative of
our rate sensitivity position at other points in time. In addition, the table's


                                       23
<PAGE>

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)

<S>                                <C>               <C>              <C>              <C>            <C>
Interest-earning assets:
  Federal funds sold               $          100  $       ---      $         ---    $       ---    $          100
  Investment securities                     9,232        4,037              4,645            ---            17,914
  Loans                                    62,788        3,928             29,536            535            96,787
                                    -------------   --------------   ---------------  -----------    --------------


Total earning assets               $       72,120  $     7,965      $     34,181     $       535     $      114,801
                                    -------------   --------------   ---------------  -----------    --------------

Interest-bearing liabilities:
  Money market and NOW             $       32,418  $       ---      $        ---      $       ---    $       32,418
  Regular savings                             255          ---               ---              ---               255
  Time deposits                            16,811       22,320            13,150              ---            52,281
  Federal funds purchased                     800          ---               ---              ---               800
  Repurchase Agreements                     7,683          ---               ---              ---             7,683
  FHLB advances                             3,000          ---               ---            3,000             6,000
                                    -------------   --------------   ---------------  -----------    --------------

Total interest-bearing
liabilities                        $       60,967  $    22,320      $     13,150      $     3,000    $       99,437
                                    -------------   --------------   ---------------  -----------    --------------


Period gap                         $       11,153  $   (14,355)     $     21,031      $    (2,465)   $       15,364
Cumulative gap                     $       11,153  $    (3,202)     $     17,829      $    15,364    $       15,364

Ratio of cumulative gap to
   total earning assets                      9.4%        (2.7)%             15.0%           13.0%
===================================================================================================================

</TABLE>

ACCOUNTING, REPORTING AND REGULATORY MATTERS

         On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations (SFAS 141), and No. 142, Goodwill and Other Intangible Assets (SFAS
142). SFAS Nos. 141 and 142 will change the accounting for business combinations
and goodwill in two significant ways. First, SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is prohibited.
Second, SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment-only approach. The application of these statements is
not expected to have a material impact on our financial statements.



                                       24
<PAGE>



         In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations (SFAS 143). SFAS 143 requires that obligations associated
with the retirement of tangible long-lived assets be recorded as a liability
when those obligations are incurred, with the amount of liability initially
measured at fair value. SFAS 143 will be effective for financial statements
beginning after June 15, 2002, though early adoption is encouraged. The
application of this statement is not expected to have a material impact on our
financial statements.

         In July 2001, the FASB issued SFAS No. 144, Accounting for Impairment
or Disposal of Long-Lived Assets (SFAS 144). SFAS 144 supersedes SFAS 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. SFAS 144 applies to all long-lived assets including discontinued
operations, and amends Accounting Principle Board of Opinion No. 30, Reporting
the Effect of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions. SFAS 144 requires that
long-lived assets that are to be disposed of by sale be measured at the lower of
book or fair value less cost to sell. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and its
provisions are generally expected to be applied prospectively. The application
of this statement is not expected to have a material impact on our financial
statements.

          In July 2001, the SEC issued Staff Accounting Bulletin (SAB) No. 102
Selected Loan Loss Allowance Methodology and Documentation Issues. This staff
accounting bulletin clearly defines the required development, documentation, and
application of a systematic methodology for determining allowances for loan and
lease losses in accordance with accounting principles generally accepted in the
United States of America. Management believes it is in compliance with the
provisions of SAB No. 102.

          Other accounting standards that have been issued or proposed by the
Financial Accounting Standards Board that do not require adoption until a future
date are not expected to have a material impact on the consolidated financial
statements upon adoption.



Item 7.  Financial Statements



                          INDEX TO FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000


Report of Independent Public Accountant...................................27

Consolidated Balance Sheets...............................................28

Consolidated Statements of Operations.....................................29

Consolidated Statements of Shareholder's Equity...........................30

Statements of Cash Flows..................................................31

Notes to Consolidated Financial Statements................................32



                                       25


<PAGE>








                        GREENVILLE FIRST BANCSHARES, INC.
                                 AND SUBSIDIARY


                   REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000





                                       26


<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, 2001 and
2000 and the related consolidated statements of operations, shareholders' equity
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, 2001 and
2000 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.





Elliott Davis, LLP
February 9, 2002
Greenville, South Carolina



                                       27

<PAGE>
<TABLE>
<CAPTION>


                 GREENVILLE FIRST BANCSHARES, INC. & SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS



                                                                                                   December 31,
                                                                                       -------------------------------------
                                                                                             2001                2000
                                                                                       -----------------   -----------------
                                                          Assets
<S>                                                                                      <C>                   <C>
    Cash and due from banks                                                              $    2,882,115        $ 2,931,372
    Federal funds sold                                                                          100,841          3,920,000
    Investment securities available for sale                                                 17,913,460          9,048,718
    Other investments, at cost                                                                  555,000            295,800
    Loans, net                                                                               95,339,621         46,025,027
    Accrued interest                                                                            840,448            541,820
    Property and equipment                                                                      890,761            616,621
    Other assets                                                                                 42,764             48,830
                                                                                      -----------------    ---------------
             Total assets                                                                  $118,565,010    $    61,428,188
                                                                                      =================    ===============

                                           Liabilities and Shareholders' Equity

Liabilities
    Deposits                                                                                $92,700,010    $    49,994,429
    Official checks outstanding                                                                 891,129          1,165,123
    Federal funds purchased and repurchase agreements                                         8,482,600                  -
    Federal Home Loan Bank advances                                                           6,000,000                  -
    Accrued interest payable                                                                    748,091            558,194
    Accounts payable                                                                              6,058              9,068
    Accrued expenses                                                                            277,703            226,394
                                                                                      -----------------    ---------------
         Total liabilities                                                                  109,105,591         51,953,208
                                                                                      -----------------    ---------------

Commitments and contingencies - Note 10

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                                                      127,779             24,162
    Retained deficit                                                                         (1,315,060 )       (1,195,882)
                                                                                      -----------------    ---------------
         Total shareholders' equity                                                           9,459,419          9,474,980
                                                                                      -----------------    ---------------
         Total liabilities and shareholders' equity                                       $ 118,565,010    $    61,428,188
                                                                                      =================    ===============


</TABLE>


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

                                       28

<PAGE>
<TABLE>
<CAPTION>
                 GREENVILLE FIRST BANCSHARES, INC. & SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                               For the years ended
                                                                                                   December 31,
                                                                                      --------------------------------------
                                                                                              2001                2000
                                                                                      ------------------  ------------------

<S>                                                                                       <C>             <C>
Interest income
    Loans                                                                                 $   5,186,555   $      2,318,261
    Investment securities                                                                       963,087            441,655
    Federal funds sold                                                                          160,612            388,337
                                                                                      -----------------   ----------------

         Total interest income                                                                6,310,254          3,148,253
Interest  expense
   Deposits                                                                                   3,243,960          1,523,618
   Borrowings                                                                                   108,981                  -
                                                                                      -----------------   ----------------
               Total interest expense                                                         3,352,941          1,523,618
                                                                                      -----------------   ----------------

           Net interest income before provision for loan losses                               2,957,313          1,624,635
   Provision for loan losses                                                                    600,000            600,000
                                                                                      -----------------   ----------------

           Net interest income after provision for loan losses                                2,357,313          1,024,635
                                                                                      -----------------   ----------------

Noninterest income
    Loan fee income                                                                              81,974             12,565
    Service fees on deposit accounts                                                             94,612             36,173
    Other income                                                                                107,405              9,610
                                                                                      -----------------   ----------------

         Total noninterest income                                                               283,991             58,348
                                                                                      -----------------   ----------------

Noninterest expenses
    Salaries and benefits                                                                     1,481,173            990,844
    Professional fees                                                                           127,416            148,157
    Marketing                                                                                   114,099             45,650
    Insurance                                                                                    62,927             22,303
    Occupancy                                                                                   526,301            283,562
    Other outside services                                                                      288,793            127,011
    Telephone                                                                                    20,663             19,946
    Other                                                                                       161,110            145,063
                                                                                      -----------------   ----------------
         Total noninterest expenses                                                           2,782,482          1,782,536
                                                                                      -----------------   ----------------

         Loss before income taxes benefit                                                      (141,178)          (699,553)
Income tax benefit                                                                               22,000             38,000
                                                                                      -----------------   ----------------

Net loss                                                                                    $  (119,178)  $       (661,553)
                                                                                      =================   ================

Basic and diluted loss per common share                                                     $      (.10)  $          (0.58)
                                                                                      =================   ================

Weighted average common shares outstanding, basic and diluted                                 1,150,000          1,150,000
                                                                                      =================   ================

</TABLE>


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

                                       29

<PAGE>

<TABLE>
<CAPTION>

                GREENVILLE FIRST BANCSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
                                                                               Accumu-
                                                                                lated
                                                                                other                            Total
                                       Common stock           Additional       compre-                           share-
                                ---------------------------     paid-in        hensive          Retained        holders'
                                  Shares        Amount          capital         income          deficit          equity
                                -----------  --------------  -------------- ---------------  ---------------  -------------

<S>                          <C>           <C>              <C>            <C>              <C>             <C>
   December 31, 1999             1,150,000   $     11,500     $10,635,200    $           -    $   (534,329)   $ 10,112,371

   Net loss                              -              -               -                -        (661,553)       (661,553)
   Comprehensive loss,
   net of tax
     Unrealized holding gain
     on securites available
     for sale                            -              -              -           24,162                -          24,162
                                                                                                              ------------

   Comprehensive loss                    -              -              -                -                -        (637,391)
                                -----------  -------------  -------------- ---------------  ---------------   ------------

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

</TABLE>

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


                                       30
<PAGE>
<TABLE>
<CAPTION>

                 GREENVILLE FIRST BANCSHARES, INC.AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                               For the years ended
                                                                                                   December 31,

                                                                                   --------------------------------------------
                                                                                          2001                    2000
                                                                                   --------------------   ---------------------
<S>                                                                                <C>                      <C>
Operating activities
    Net loss                                                                       $          (119,178)     $         (661,553)
    Adjustments to reconcile net loss to cash
      provided by operating activities:
      Provision for loan losses                                                                600,000                 600,000
      Depreciation and other amortization                                                      192,546                  66,112

      Accretion and amortization of securities
         discounts and premium, net                                                            (32,917)                (27,790)
      Increase in other assets, net                                                           (292,561)               (356,324)
      Increase (decrease) in other liabilities, net                                            (89,176)              1,929,457
                                                                                   --------------------   ---------------------
      Net cash provided by  operating activities                                               258,714               1,549,902
                                                                                   --------------------   ---------------------

Investing activities
    Increase (decrease) in cash realized from:
      Origination of loans, net                                                            (49,914,594)            (46,625,027)
      Purchase of property and equipment                                                      (466,686)               (571,541)
      Purchase of securities available for sale                                            (18,328,767)            (11,961,752)

      Payments and maturity of securities
         Available for sale                                                                  9,394,736              10,999,505
                                                                                   --------------------   ---------------------
           Net cash used for investing activities                                          (59,315,311)            (48,158,815)
                                                                                   --------------------   ---------------------

Financing activities
    Increase in deposits, net                                                               42,705,581              49,994,429
    Increase in short-term borrowings                                                        8,482,600                       -
    Increase in Federal Home Loan Bank advances                                              6,000,000                       -
                                                                                   --------------------   ---------------------

           Net cash provided by financing activities                                        57,188,181              49,994,429
                                                                                   --------------------   ---------------------
           Net increase (decrease) in cash and cash equivalents                             (1,868,416)              3,385,516



Cash and cash equivalents at beginning of  the year                                          4,851,372               1,465,856
                                                                                   --------------------   ---------------------
Cash and cash equivalents at end of the year                                       $         2,982,956    $          4,851,372
                                                                                   ====================   =====================

Supplemental information
    Cash paid for
      Interest paid                                                                $         3,163,044    $            965,424
                                                                                   ====================   =====================
     Income taxes paid                                                                               -                       -
                                                                                   ====================   =====================
Supplemental schedule of non-cash transaction
    Unrealized gain on securities, net of income taxes                             $           103,617    $             24,162
                                                                                   ====================   =====================
</TABLE>


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

                                       31

<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 financial statements and the
   reported amount of income and expenses during the reporting periods. Actual
   results could differ from those estimates.


Concentrations of credit risk
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.


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 which 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
       stockholders' equity (accumulated other comprehensive income (loss).

                                                                     (Continued)

                                       32

<PAGE>


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

2.     Held to maturity securities: These are investment securities which 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 which 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.

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.

   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.

   Under SFAS No. 114 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.

   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.

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.

                                       33

<PAGE>

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


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.

Organization costs
   Organization costs include incorporation, legal and consulting fees incurred
   in connection with establishing the Company. In accordance with Statement of
   Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities,"
   organization costs are expensed when incurred.

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.

Earnings (loss) per common share
   Basic loss per common share is computed on the basis of the weighted average
   number of common shares outstanding in accordance with SFAS No. 128,
   "Earnings per Share". The treasury stock method is used to compute the effect
   of stock options on the weighted average number of common shares outstanding
   for the diluted method. No dilution occurs under the treasury stock method as
   the exercise price of stock options equals or exceeds the market value of the
   stock.

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 loss.

                                       34


<PAGE>


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

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.

Recently issued accounting standards
   On July 20, 2001, the Financial Accounting Standard Board (FASB) issued SFAS
   No. 141, Business Combinations (SFAS 141), and number 142, Goodwill and Other
   Intangible Assets (SFAS 142). SFAS 141 and 142 will change the accounting for
   business combinations and goodwill in two significant ways. First, SFAS 141
   requires that the purchase method of accounting be used for all business
   combinations initiated after June 30, 2001. Use of the pooling-of-interests
   method is prohibited. Second, SFAS 142 changes the accounting for goodwill
   from an amortization method to an impairment-only approach. The application
   of these statements is not expected to have a material impact on the
   Company's financial statements.

   In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
   Obligations (SFAS 143). SFAS 143 requires that obligations associated with
   the retirement of tangible long-lived assets be recorded as a liability when
   those obligations are incurred, with the amount of liability initially
   measured at fair value. SFAS 143 will be effective for financial statements
   beginning after June 15, 2002, though early adoption is encouraged. The
   application of this statement is not expected to have a material impact on
   the Company's financial statements.

   In July 2001, the FASB issued SFAS No. 144, Accounting for Impairment or
   Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
   SFAS 144 applies to all long-lived assets including discontinued operations,
   and amends Accounting Principle Board of Opinion number 30, Reporting the
   Effect of Disposal of a Segment of a Business, and Extraordinary, Unusual and
   Infrequently Occurring Events and Transactions. SFAS 144 requires that
   long-lived assets that are to be disposed of by sale be measured at the lower
   of book or fair value less cost to sell. SFAS 144 is effective for financial
   statements issued for fiscal years beginning after December 15, 2001 and its
   provisions are generally expected to be applied prospectively. The
   application of this statement is not expected to have a material impact on
   the Company's financial statements.

   In July 2001, the SEC issued Staff Accounting Bulletin (SAB) No. 102 Selected
   Loan Loss Allowance Methodology and Documentation Issues. This staff
   accounting bulletin clearly defines the required development, documentation,
   and application of a systematic methodology for determining allowances for
   loan and lease losses in accordance with accounting principles generally
   accepted in the United States of America. The Company's management believes
   it is in compliance with the provisions of SAB No. 102.

   Other accounting standards that have been issued or proposed by the Financial
   Accounting Standards Board 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, 2001 and
2000 these required reserves were met by vault cash.


                                       35
<PAGE>


           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, 2001 and 2000 federal
funds sold amounted to $100,841 and $3,920,000, respectively.

NOTE 4 - INVESTMENT SECURITIES

           The amortized costs and fair value of investment securities available
for sale are as follows:
<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      $          -  $   17,91=3,460
                                                   ===============   =============    ============    ===============

                                                                          December 31, 2000
                                                   -----------------------------------------------------------------
                                                       Amortized           Gross unrealized                Fair
                                                          Cost           Gains           Losses            Value
                                                   ---------------   -------------    ------------   ---------------

Federal agencies                                   $     8,372,194   $      38,089    $          -   $     8,410,283
Mortgage-backed                                            639,915               -           1,480           638,435
                                                   ---------------   -------------    ------------   ---------------
        Total investment securities                $     9,012,109   $      38,089    $      1,480   $     9,048,718
                                                   ===============   =============    ============   ===============
</TABLE>


           Other investments at both December 31, 2001 and 2000, include Federal
Reserve Bank stock with cost of $255,000 and Federal Home Loan Bank stock with
cost of $300,000 at December 31, 2001 and with a cost of $40,800 at December 31,
2000. The Bank is required to own stock in the Federal Reserve Bank and Federal
Home Loan Bank as a member institution. No ready market exists for the stock and
it has no quoted market value. However, redemption of the stock has historically
been at par value.

           The amortized costs and fair values of investment securities at
December 31, 2001 and 2000, 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, 2001, the bank anticipates that between $10,520,000 and
$14,520,000 will be called during the 2002 year.
<TABLE>
<CAPTION>

                                                             December 31, 2001              December 31, 2000
                                                   ------------------------------- --------------------------------
                                                        Amortized                       Amortized
                                                           Cost        Fair value          Cost        Fair value
                                                   --------------   -------------  --------------    --------------
<S>                                                <C>              <C>            <C>               <C>
     Due in less than one year                     $            -   $           -  $    2,990,779    $   2,991,975
     Due after one through three years                    759,884         785,678       3,016,415        3,036,188
     Due after three through five years                12,839,968      12,943,744       2,004,915        2,020,555
     Due after five through ten years                   4,120,000       4,184,038       1,000,000        1,000,000
                                                   --------------   -------------  --------------    -------------
         Total investment securities               $   17,719,852   $  17,913,460  $    9,012,109   $    9,048,718
                                                   ==============   =============  ==============    =============
</TABLE>

           No investment securities were sold in 2001 or 2000. Accordingly, no
gains or losses were recorded. At December 31, 2001 and 2000 $15,959,968 and
$5,544,800, respectively of securities were pledged as collateral for public
funds or short-term borrowings. At December 31, 2001, certain of the Bank's
investment securities are pledged as collateral for other borrowed money, as set
forth in Note 8.


                                       36

<PAGE>
<TABLE>
<CAPTION>

NOTE 5 - LOANS

           The composition of net loans by major loan category is as follows:
                                                                                               December 31,
                                                                                 ----------------------------------
                                                                                     2001              2000
                                                                                 ------------      --------------
<S>                                                                               <C>              <C>
   Real estate:
        Commercial
           Owner occupied                                                          $ 16,532,696     $  5,589,214
           Non-owner occupied                                                        22,813,424       13,433,974
           Construction                                                               8,292,228        2,422,314
                                                                                 ---------------    ---------------
                                                                                     47,638,348       21,445,502
                                                                                 ---------------    ---------------
        Consumer
           Residential
                                                                                     12,898,543        6,366,671
           Home equity                                                                8,937,054        4,695,377
           Construction                                                               3,972,206        1,971,276
                                                                                 ---------------    ---------------
                                                                                     25,807,803       13,033,324
                                                                                 ---------------    ---------------
                                                                                     73,446,151       34,478,826
                                                                                 ---------------    ---------------

     Commercial business                                                             20,529,004        9,283,022
     Consumer-other                                                                   2,812,703        2,971,511
     Deferred origination fees, net                                                    (255,990)        (108,332)
                                                                                 ---------------    ---------------

            Gross Loans                                                              96,531,868       46,625,027
     Less allowance for loan losses                                                  (1,192,247)        (600,000)
                                                                                 ---------------    ---------------
             Loans, net                                                            $ 95,339,621     $ 46,025,027
                                                                                 ===============    ===============
</TABLE>

           At December 31, 2001, there was a $359,987 non-accruing residential
loan. Foregone interest income on the non-accrual loan in 2001 was approximately
$8,000. There were no non-accrued or impaired loans at December 31, 2000.

           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 8.

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

                                                 December 31,
                                   -----------------------------------------
                                          2001                  2000
                                   -------------------    ------------------
     Variable rate loans           $       60,864,324     $       31,923,745
     Fixed rate loans                      35,667,544             14,701,282
                                   ------------------     ------------------
                                   $       96,531,868     $       46,625,027
                                   ===================    ==================

           The allowance for possible 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 possible loan losses account
follows:
<TABLE>
<CAPTION>

                                                                                            For the years ended
                                                                                               December 31,
                                                                                 ----------------------------------------
                                                                                        2001                   2000
                                                                                 --------------------   -----------------
<S>                                                                              <C>                    <C>
Balance, beginning of year                                                       $          600,000     $               -
Recoveries of loans previously charged against the allowance                                      -                     -
Provision for loan losses                                                                   600,000               600,000
Loans charged against the allowance                                                          (7,753)                    -
                                                                                 ------------------     -----------------
Balance, end of year                                                             $        1,192,247     $         600,000
                                                                                 ==================     =================
</TABLE>


                                       37

<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,
                                     -----------------------------------------
                                            2001                  2000
                                     -------------------   -------------------

Leasehold improvements               $          332,528    $         146,232
Furniture and equipment                         698,977              440,476
Software                                        117,914               96,025
                                     -------------------   -------------------
Accumulated depreciation                      1,149,419              682,733
                                               (258,658)             (66,112)
                                     -------------------   -------------------
      Total property and equipment   $          890,761    $         616,621
                                     ===================   ===================

           Leasehold improvements and furniture and fixtures include items for
the Company's main office. The Company occupied its main office on January 16,
2001. The office is leased for twenty years (see note 9).

           Depreciation expense for the years ended December 31, 2001 and 2000
was $192,546 and $66,112, 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 and computer equipment        3                Straight-line
Furniture and equipment                5 to 7           Straight-line
Buildings and improvements             5 to 40          Straight-line

NOTE 7 - DEPOSITS

           The following is a detail of the deposit accounts:

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

Non-interest bearing                       $    7,729,281       $    3,087,715
Interest bearing:
      NOW accounts                              8,295,046            6,637,257
      Money market accounts                    24,138,876           12,613,368
      Savings                                     255,292               79,572
      Time, less than $100,000                 31,899,925           14,446,620
      Time, $100,000 and over                  20,381,590           13,129,897
                                           --------------       --------------
    Total deposits                         $   92,700,010       $   49,994,429
                                           ==============       ==============

           Interest expense on time deposits greater than $100,000 was
$1,007,304 and $360,130 in the years ended December 31, 2001 and 2000,
respectively.

           At December 31, 2001 the scheduled maturities of certificates of
deposit are as follows:

                      2002                        $       39,131,369
                      2003                                 9,330,674
                      2004                                 2,833,152
                      2005 and after                         986,320
                                                  -------------------
                                                  $       52,281,515
                                                  ===================


                                       38
<PAGE>


NOTE 8 - OTHER BORROWINGS

                  At December 31, 2001 the bank had $6,000,000 of advances from
the FHLB of Atlanta. These advances are secured with 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, 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, 2001 the bank had utilized $800,000 of its
$2,800,000 of federal funds purchase line of credit. This line of credit is
unsecured and bears interest at the daily rate of federal funds plus 25 basis
points (5.00% at December 31, 2001).

             The bank had no other borrowings at December 31, 2000.


NOTE 9 - 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 also entered into a thirty-six month operating lease
on an automobile that is used by the Company's president and chief executive
officer. The monthly payments are $620. At December 31, 2001, nine lease
payments remained.

           The Company has entered into an agreement with a data processor with
a remaining term of three years to provide ATM services, item processing and
general ledger processing. Components of this contract include monthly charges
of approximately $15,000.

           The Bank may become party to litigation and claims in the normal
course of business. As of December 31, 2001, 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 2002 is $26,854. 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,

                  2002                        $     322,248
                  2003                              331,912
                  2004                              341,870
                  2005                              352,126
                  2006                              360,894
                  Thereafter*                     6,105,920
                                              -------------
                                              $   7,814,970
                                              =============

           *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.


                                       39
<PAGE>


NOTE 10 - UNUSED LINES OF CREDIT

           At December 31, 2001, the Bank had an unused line of credit to
purchase federal funds of $2.0 million. 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 $1.6 million 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 a borrowing
base of approximately $3.2 million.


NOTE 11 - INCOME TAXES

           The Company had no currently taxable income for the years ended
December 31, 2001 or 2000. 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,
                                                                                    ------------------------------------
                                                                                          2001                2000
                                                                                    ------------------   ---------------

<S>                                                                                 <C>                   <C>
      Income tax benefit at federal statutory rate                                  $         (48,001)    $    (237,848)
      Change in valuation allowance                                                            24,602           197,423
      Other                                                                                     1,399             2,425
                                                                                    ------------------   ---------------
        Income tax benefit                                                          $         (22,000)    $     (38,000)
                                                                                    ==================   ===============

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

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

      Deferred tax liability
        Unrealized gain on securities available for sale                            $         65,826     $      12,447
                                                                                    ------------------   ---------------

      Deferred tax assets:
        Allowance for loan losses                                                             405,364           204,000
        Net deferred loan fees                                                                 58,333            38,000
        Net operating loss carryforward                                                             -           175,095
                                                                                    ------------------   ---------------
        Deferred tax asset before valuation allowance                                         463,697           417,095
        Valuation allowance                                                                  (403,697)         (379,095)
                                                                                    ------------------   ---------------
               Net deferred tax asset (liability)                                   $          (5,826)   $       25,553
                                                                                    ==================   ===============
</TABLE>


           The company has recorded a valuation allowance for a portion of the
deferred tax asset, as the realization of this asset is dependent on the
Company's ability to generate future taxable income during the periods in which
temporary differences become deductible. A significant portion of the change in
the valuation allowance relates to the tax effect of the change in the allowance
for loan losses. The net deferred asset is included in other assets, while the
net deferred liability is included in other accrued expenses.

           The company utilized all of its federal net operating loss carry
forwards during the year ended December 31, 2001.

                                       40


<PAGE>


NOTE 12- 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,
                                     -------------------------------------------
                                             2001                 2000
                                     -------------------- --------------------

    Balance, beginning of year       $           360,181   $                 -
    New loans                                    813,990              479,768
    Less loan payments                          (395,547)            (119,587)
                                     -------------------- --------------------
    Balance, end of year             $           778,624   $           360,181
                                     ==================== ====================

           Deposits by officers and directors and their related interests at
December 31, 2001 and 2000, were $146,735 and $171,926, respectively.

           The Bank has a lease on its main office building with a director of
the bank beginning in 2001. The lease has a remaining term of nineteen years,
with a $26,854 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 13 - 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, 2001, unfunded
commitments to extend credit were $28,229,000, of which $4,965,000 is at fixed
rates and $23,264,000 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, 2001, there was a $452,000 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.

                                       41



<PAGE>


NOTE 14 - 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 2001 and 2000 amounted to
$33,285 and $24,500, respectively.

NOTE 15 - 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. The Company has adopted the disclosure-only provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation". Accordingly, no
compensation cost has been recognized for the stock option plan. Had
compensation cost been determined based on the fair value at the grant date for
the above stock option awards consistent with the provisions of SFAS No. 123,
the Company's net loss and net loss per common share would have changed to the
pro forma amounts indicated below:

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

Net loss
      As reported                     $         (119,178)     $    (661,553)
      Pro forma                                 (187,904)          (727,454)
Basic net loss per common share
      As reported                                  (.10)               (.58)
      Pro forma                                    (.16)               (.63)

           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 2001 and 2000, risk-free
interest rate of 3.00% and 5.90% for 2001 and 2000, respectively, and expected
lives of the options 10 years and the assumed dividend rate was zero.

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

                                                                  2001                                     2000
                                                --------------------------------------   ------------------------------------
                                                                         Weighted                               Weighted
                                                                         average                                 average
                                                     Shares           exercise price         Shares          exercise price
                                                ------------------   -----------------   ----------------   -----------------

<S>                                              <C>           <C>                    <C>              <C>
Outstanding at beginning of year                       97,000     $          10.00                 -     $
Granted                                                15,500                10.00            97,000               10.00
Exercised                                                   -                    -                 -                   -
Forfeited or expired                                        -                    -                 -                   -
                                                ----------------  -----------------   ----------------   ----------------
Outstanding at end of year                            112,500     $          10.00            97,000      $        10.00
                                                ================  =================   ================   ================
Options exercisable at year-end                        24,667     $          10.00                 -                   -
                                                ================  =================   ================   ================
Shares available for grant                             60,000                                 75,500
                                                ================                       ================

</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.


                                       42
<PAGE>


NOTE 16 - COMMON STOCK AND LOSS PER SHARE

            SFAS No. 128, "Earnings per Share" requires that the Company present
basic and diluted net income (loss) per common share. The assumed conversion of
stock options and warrants can create a difference between basic and diluted net
income (loss) per common share. Since all stock options and warrants were
considered to be anti-dilutive, the weighted average number of common shares
outstanding for both basic net loss per share and diluted net loss per common
share is the same and diluted loss per share is not presented. Loss per share is
calculated by dividing net 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 was 1,150,000 shares in
2001 and 2000.


NOTE 17 - 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, 2001,
that the Bank meets all capital adequacy requirements to which it is subject.

           As of December 31, 2001, 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, 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              8,947       8.9             4,036       4.0             6,053       6.0
    assets)
    Tier 1 Capital (to average assets)            8,947       7.9             4,528       4.0             5,045       5.0

As of December 31, 2000
    Total Capital (to risk weighted assets) $     8,815      18.0 %    $      3,918       8.0 %    $      4,903      10.0 %
    Tier 1 Capital (to risk weighted              8,215      16.8             1,961       4.0             2,941       6.0
    assets)
    Tier 1 Capital (to average assets)            8,215      14.7             2,241       4.0             2,802       5.0

</TABLE>

NOTE 18 - 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.


                                       43

<PAGE>





NOTE 19 - SELECTED QUARTERLY FINANCIAL DATA

           Following is a summary of operations by quarter:

<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
                                                ---------------   ----------------   ------------------   -----------------
Loss before provision for
  income taxes                                        (78,236)            (59,462)              (9,541)         6,061
Income tax benefit                                          -                   -              (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
     Outstanding-basic and diluted                   1,150,000          1,150,000            1,150,000       1,150,000
                                                ===============   ================   ==================   =================





                                                ---------------------------------------------------------------------------
2000                                                                            Quarters ended
                                                ---------------------------------------------------------------------------

                                                    March 31            June 30      September 30          December 31
                                                ---------------   ----------------   ------------------   -----------------

Interest income                                 $      335,957    $      642,027     $     945,654        $    1,224,615
Interest expense                                       116,533           282,112           474,541               650,432
                                                ---------------   ----------------   ------------------   -----------------
     Net interest income                               219,424           359,915           471,113               574,183
Provision for loan losses                              100,000           180,000           150,000               170,000
Noninterest income                                       2,362             9,490            21,567                24,929
Noninterest expenses                                   395,905           428,906           454,995               502,730
                                                ---------------   ----------------   ------------------   -----------------
Loss before provision for
  income taxes                                        (274,119)         (239,501)         (112,315)              (73,618)
Income tax (benefit) expense                                 -           (74,000)                -                36,000
                                                ---------------   ----------------   ------------------   -----------------
Net loss                                         $    (274,119)    $    (165,501)     $   (112,315)       $     (109,618)
                                                ===============   ================   ==================   =================
Basic and diluted loss per common share          $        (.24)    $        (.14)     $       (.10)       $        (.10)
                                                ===============   ================   ==================   =================
Weighted average common shares
     Outstanding-basic and diluted                   1,150,000         1,150,000         1,150,000             1,150,000
                                                ===============   ================   ==================   =================
</TABLE>


<PAGE>


NOTE 20 -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 , due from
banks, federal funds sold., federal funds sold, securities sold under agreement
to repurchase and offical 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 maturing 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,
                                                              ------------------------------------------------------------------
                                                                          2001                              2000
                                                              ------------------------------  ----------------------------------
                                                                Carrying          Fair            Carrying            Fair
                                                                 Amount           value            amount             value
                                                              -------------   --------------  -----------------   --------------

<S>                                                        <C>             <C>             <C>                 <C>
    Cash and due from banks                                   $ 2,882,115     $ 2,882,115     $       931,372     $     931,372
    Federal funds sold                                            100,841         100,841           3,920,000         3,920,000
    Investment securities                                      17,913,460      17,913,460           9,048,718         9,048,718
    Other investments                                             555,000         555,000             295,800           295,800
    Loans, net                                                 95,339,621      97,500,000          46,025,027        46,300,000
Financial Liabilities:
    Deposits                                                   92,700,010      93,100,000          49,994,429        50,018,000
    Official checks outstanding                                   891,129         891,129           1,165,123         1,165,123
    Federal funds purchased and repurchase agreements            8,482,600        8,482,600                 -                 -
    Federal Home Loan Bank advances                              6,000,000        6,050,000                 -                 -

Financial Instruments with Off-balance Sheet Risks
    Commitments to extend credit                                28,229,000       28,229,000        18,431,819        18,431,819
    Standby letter of credit                                       452,000          452,000           234,063           234,063
</TABLE>


                                       45

<PAGE>






NOTE 21 - PARENT COMPANY FINANCIAL INFORMATION

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


                                                 Condensed Balance Sheets
                                                                                                December 31,
                                                                                   ----------------------------------------
                                                                                         2001                  2000
                                                                                   ------------------   -------------------


<S>                                                                                <C>                  <C>
Assets
Cash and cash equivalents                                                          $       385,388      $     1,235,733
Investment in Bank subsidiary                                                            9,075,193            8,239,247
                                                                                   ------------------   -------------------

         Total assets                                                              $     9,460,581      $     9,474,980
                                                                                   ==================   ===================

Liabilities and Shareholders' Equity
Accounts payable                                                                   $         1,162      $             -
Shareholders' equity                                                                     9,459,419            9,474,980
                                                                                   ------------------   -------------------

         Total liabilities and shareholders' equity                                $     9,460,581      $     9,474,980
                                                                                   ==================   ===================



                                            Condensed Statements of Operations

                                                                                             For the years ended
                                                                                                December 31,

                                                                                   ----------------------------------------
                                                                                            2001                  2000
                                                                                   ------------------   -------------------
Revenues

Interest income                                                                    $         49,655     $       116,205
Expenses

Other expenses                                                                               1,162                2,173
                                                                                   ------------------   -------------------
         Total expenses                                                                      1,162                2,173
                                                                                   ------------------   -------------------

Income before equity in undistributed
    net loss of Bank subsidiary                                                              48,493             114,032
Equity in undistributed net loss of Bank subsidiary                                        (167,671)           (775,585)
                                                                                   ------------------   -------------------
         Net loss                                                                  $       (119,178)     $     (661,553)
                                                                                   ==================   ===================


</TABLE>


                                       46
                                                                     (Continued)
<PAGE>
<TABLE>
<CAPTION>

NOTE 21 - PARENT COMPANY FINANCIAL INFORMATION, Continued


                       Condensed Statements of Cash Flows

                                                                                            For the years ended
                                                                                               December 31,
                                                                                   --------------------------------------
                                                                                         2001                 2000
                                                                                   ------------------   ----------------

<S>                                                                                <C>                      <C>
Operating Activities
    Net loss                                                                       $     (119,178)          $ (661,553)
    Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities
      Equity in undistributed net loss of
         Bank subsidiary                                                                  167,671              775,585
      (Decrease) increase in accounts payable                                               1,162              (29,322)
      Decrease in other assets                                                                  -              357,965
                                                                                   ------------------   ----------------
           Net cash provided by operating activities                                       49,655              442,675
                                                                                   ------------------   ----------------

Investing Activities
    Transfer of securities available for sale to bank subsidiary
                                                                                                -             8,317,872
                                                                                   ------------------   ----------------
           Net cash provided by investing activities                                            -             8,317,872
                                                                                   ------------------   ----------------
Financing Activities
    Investment in Bank subsidiary
                                                                                         (900,000)           (8,990,670)
                                                                                   ------------------   ----------------
           Net cash used in financing activities                                         (900,000)           (8,990,670)
                                                                                   ------------------   ----------------
           Net increase in cash and cash equivalents                                     (850,345)             (230,123)
      Cash and cash equivalents, beginning of year                                      1,235,733             1,465,856
                                                                                   ------------------   ----------------
      Cash and cash equivalents, end of year                                       $      385,388       $     1,235,733
                                                                                   ==================   ================


</TABLE>


                                       47

<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 contained in our Proxy
Statement for the Annual Meeting of Shareholders to be held on May 15, 2002 is
incorporated herein by reference.

Item 10.  Executive Compensation

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

Item 11.  Security Ownership of Certain Beneficial Owners and Management

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


Item 12.  Certain Relationships and Related Transactions

         In response to this Item, this information 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:


1.1      Form of Underwriting Agreement between Greenville First Bancshares and
         Wachovia Securities (incorporated by reference to Exhibit 1.1 of the
         Registration Statement on Form SB-2, File No. 333-83851).

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).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 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).


                                       48
<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).

10.7     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 the Company


(b)      Reports on Form 8-K

         We did not file any reports on Form 8-K during the fourth quarter of
2001.



                                       49

<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  28, 2002            By:  /s/ 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.
<TABLE>
<CAPTION>


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

<S>                                               <C>                                <C>
/s/ James M. Austin
--------------------------------------------
James M. Austin, III                                 Chief Financial Officer,           March 28, 2002
                                                     Principal Financial and
                                                     Accounting Officer

/s/ Andrew B. Cajka
--------------------------------------------
Andrew B. Cajka                                      Director                           March 28, 2002


/s/ Mark A. Cothran
--------------------------------------------
Mark A. Cothran                                      Director                           March 28, 2002


_______________
------------------------------------
Leighton M. Cubbage                                  Director                           March 28, 2002


/s/ David G. Ellison
--------------------------------------------
David G. Ellison                                     Director                           March 28, 2002


/s/ Anne S. Ellefson
--------------------------------------------
Anne S. Ellefson                                     Director                           March 28, 2002



                                       50

<PAGE>



/s/ Tecumseh Hooper
--------------------------------------------
Tecumseh Hooper, Jr.                                 Director                           March 28, 2002


/s/ Rudolph G. Johnstone, III, M.D.
-------------------------------------------
Rudolph G. Johnstone, III, M.D.                      Director                           March 28, 2002


/s/ Keith J. Marrero
--------------------------------------------
Keith J. Marrero                                     Director                           March 28, 2002


/s/ James B. Orders
--------------------------------------------
James B. Orders, III                                 Director, Chairman                 March 28, 2002


/s/ William B. Sturgis
--------------------------------------------
William B. Sturgis                                   Director                           March 28, 2002


/s/ R. Arthur Seaver
--------------------------------------------
R. Arthur Seaver, Jr.                                Director, Chief Executive          March 28, 2002
                                                     Officer and President
                                                     (principal executive officer)

/s/ Fred Gilmer
--------------------------------------------
Fred Gilmer, Jr.                                     Director, Senior Vice-             March 28, 2002
                                                     President
</TABLE>


                                       51

<PAGE>

                                  EXHIBIT INDEX

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

1.1      Form of Underwriting Agreement between Greenville First Bancshares and
         Wachovia Securities (incorporated by reference to Exhibit 1.1 of the
         Registration Statement on Form SB-2, File No. 333-83851).

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).

5.1.     Opinion Regarding Legality (incorporated by reference to Exhibit 5.1 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 the Company


                                       52