UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended June 30, 2002

                                       OR

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

                        For the Transition Period from to

                        Commission file number 333-83851

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

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

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

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

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



                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

      1,150,000 shares of common stock, $.01 par value per share, issued and
outstanding as of August 9, 2002.

      Transitional Small Business Disclosure Format (check one):  YES      NO  X
                                                                      --      --


<PAGE>




                        GREENVILLE FIRST BANCSHARES, INC.

                          PART I. FINANCIAL INFORMATION

      Item 1.      Financial Statements

         The financial statements of Greenville First Bancshares, Inc. and
Subsidiary are set forth in the following pages.




                                       2


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

                                                                                          June 30,         December 31,
                                                                                     -------------------------------------
                                                                                           2002                2001
                                                                                     -----------------   -----------------
                                                                                       (Unaudited)            (Audited)
                                                          Assets
<S>                                                                                         <C>            <C>
    Cash and due from banks                                                                 $ 3,749,807    $ 2,882,115
    Federal funds sold                                                                          842,446        100,841
    Investment securities available for sale                                                 15,431,865     17,913,460
    Other investments, at cost                                                                  555,000        555,000
    Loans, net                                                                              122,237,565     95,339,621
    Accrued interest                                                                            730,226        840,448
    Property and equipment                                                                      843,127        890,761
    Real estate owned                                                                           384,389              -
    Other assets                                                                                205,353         42,764
                                                                                      -----------------   ------------
             Total assets                                                                  $144,979,778   $118,565,010
                                                                                      =================   ============

                                           Liabilities and Shareholders' Equity

Liabilities
    Deposits                                                                               $123,734,695   $ 92,700,010
    Official checks outstanding                                                                 676,177        891,129
    Federal funds purchased and repurchase agreements                                         6,075,000      8,482,600
    Federal Home Loan Bank advances                                                           3,000,000      6,000,000
    Long-term note payable                                                                    1,000,000              -
    Accrued interest payable                                                                    604,979        748,091
    Accounts payable                                                                                  -          6,058
    Accrued expenses                                                                            253,906        277,703
                                                                                      -----------------   ------------
         Total liabilities                                                                  135,344,757    109,105,591
                                                                                      -----------------   ------------


Commitments and contingencies

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                                                      139,442        127,779
    Retained deficit                                                                         (1,151,121)    (1,315,060)
                                                                                      -----------------   ------------
         Total shareholders' equity                                                           9,635,021      9,459,419
                                                                                      -----------------   ------------
         Total liabilities and shareholders' equity                                       $ 144,979,778   $118,565,010
                                                                                      =================   ============

</TABLE>

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

                                       3

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

                                                                                           For the Three Months ended
                                                                                                     June 30,
                                                                                      --------------------------------------
                                                                                            2002                2001
                                                                                      ------------------  ------------------

<S>                                                                                        <C>              <C>
Interest  income
    Loans                                                                                  $  1,734,959     $    1,214,829
    Investment securities                                                                       188,250            243,373
    Federal funds sold                                                                           13,511             54,577
                                                                                      -----------------   ----------------
            Total interest income                                                             1,936,720          1,512,779

Interest  expense
   Deposits                                                                                     841,523            834,746
   Borrowings                                                                                    43,097                  -
                                                                                      -----------------   ----------------
                Total interest expense                                                          884,620            834,746
                                                                                      -----------------   ----------------

           Net interest income before provision for loan losses                               1,052,100            678,033
   Provision for loan losses                                                                    220,000            128,000
                                                                                      -----------------   ----------------
           Net interest income after provision for loan losses                                  832,100            550,033
                                                                                      -----------------   ----------------

Noninterest income
    Loan fee income                                                                              27,212             21,065
    Service fees on deposit accounts                                                             45,821             18,796
    Other income                                                                                 48,781             20,165
                                                                                      -----------------   ----------------
            Total noninterest income                                                            121,814             60,026
                                                                                      -----------------   ----------------

Noninterest expenses
    Salaries and benefits                                                                       430,024            366,818
    Professional fees                                                                            43,141             26,627
    Marketing                                                                                    37,786             29,571
    Insurance                                                                                    21,791             13,444
    Occupancy                                                                                   145,708            130,708
    Other outside services                                                                      109,628             63,939
    Telephone                                                                                     6,554              4,861
    Other                                                                                        38,156             33,553
                                                                                      -----------------   ----------------
            Total noninterest expenses                                                          832,788            669,521
                                                                                      -----------------   ----------------
            Income (loss) before income taxes                                                   121,126            (59,462)

Income tax                                                                                            -                  -
                                                                                      -----------------   ----------------
Net income (loss)                                                                            $  121,126         $  (59,462)
                                                                                      =================   ================

Income (loss) per common share:
    Basic                                                                                    $      .11         $     (.05)
                                                                                      =================   ================
    Diluted                                                                                  $      .10         $     (.05)
                                                                                      =================   ================

Weighted average common shares outstanding:

    Basic                                                                                     1,150,000          1,150,000
                                                                                      =================   ================
    Diluted                                                                                   1,162,398          1,150,000
                                                                                      =================   ================
</TABLE>

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

                                       4
<PAGE>
<TABLE>
<CAPTION>
                 GREENVILLE FIRST BANCSHARES, INC. & SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                                                                                            For the Six Months ended
                                                                                                     June 30,
                                                                                      --------------------------------------
                                                                                            2002                2001
                                                                                      ------------------  ------------------


<S>                                                                                     <C>                 <C>
Interest  income
    Loans                                                                               $     3,321,614     $    2,345,805
    Investment securities                                                                       369,403            462,747
    Federal funds sold                                                                           36,061            116,762
                                                                                      -----------------   ----------------
            Total interest income                                                             3,727,078          2,925,314
Interest expense
   Deposits                                                                                   1,611,120          1,635,243
   Borrowings                                                                                   119,680                  -
                                                                                      -----------------   ----------------
            Total interest expense                                                            1,730,800          1,635,243
                                                                                      -----------------   ----------------


           Net interest income before provision for loan losses                               1,996,278          1,290,071
   Provision for loan losses                                                                    420,000            250,000
                                                                                      -----------------   ----------------
           Net interest income after provision for loan losses                                1,576,278          1,040,071
                                                                                      -----------------   ----------------

Noninterest income
    Loan fee income                                                                              54,445             35,767
    Service fees on deposit accounts                                                             81,434             41,003
    Other income                                                                                 88,885             28,109
                                                                                      -----------------   ----------------
            Total noninterest income                                                            224,764            104,879
                                                                                      -----------------   ----------------

Noninterest expenses
    Salaries and benefits                                                                       861,547            693,552
    Professional fees                                                                            83,200             60,694
    Marketing                                                                                    62,184             51,375
    Insurance                                                                                    43,034             26,210
    Occupancy                                                                                   291,733            255,902
    Other outside services                                                                      203,527            108,178
    Telephone                                                                                    11,730             10,323
    Other                                                                                        80,148             76,414
                                                                                      -----------------   ----------------
            Total noninterest expenses                                                        1,637,103          1,282,648
                                                                                      -----------------   ----------------

            Income (loss) before income taxes                                                   163,939           (137,698)

Income tax                                                                                            -                  -
                                                                                      -----------------   ----------------
Net income (loss)                                                                            $  163,939         $ (137,698)
                                                                                      =================   ================

Income (loss) per common share:
    Basic                                                                                      $    .14           $   (.12)
                                                                                      =================   ================
    Diluted                                                                                    $    .14           $   (.12)
                                                                                      =================   ================

Weighted average common shares outstanding:

    Basic                                                                                     1,150,000          1,150,000
                                                                                      =================   ================
    Diluted                                                                                   1,156,199          1,150,000
                                                                                      =================   ================

</TABLE>

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

                                       5
<PAGE>

<TABLE>
<CAPTION>

                GREENVILLE FIRST BANCSHARES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)
                                                                               Accumu-
                                                                                lated
                                                                                other                            Total
                                                              Additional       compre-                           share-
                                       Common stock             paid-in        hensive          Retained        holders'
                                   Shares        Amount          capital         income          deficit          equity
                                -----------  --------------  -------------- ---------------  ---------------  -------------

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

   Net loss                              -             -               -                -         (137,698)      (137,698)

   Comprehensive loss,
   net of tax
     Unrealized holding gain
     on securities available
     for sale                            -              -              -           66,097               -          66,097
                                                                                                             ------------
   Comprehensive loss                    -              -              -                -               -         (71,601)
                                ----------  -------------  -------------  ---------------  --------------    ------------
   June 30, 2001                 1,150,000   $     11,500   $ 10,635,200   $       90,259   $  (1,333,580)   $  9,403,379
                                ==========  =============  =============  ===============  ==============    ============

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


   Net  income                           -              -              -                -         163,939         163,939
   Comprehensive loss, net of
   tax
      Change in unrealized
      holding gain on
      securities
      available for sale                 -              -              -           11,663               -          11,663
                                                                                                             ------------

   Comprehensive loss                    -              -              -                -               -         175,602
                                ----------  -------------  -------------  ---------------  --------------    ------------
   June 30, 2002                 1,150,000   $     11,500    $10,635,200  $       139,442     $(1,151,121)   $  9,635,021
                                ==========  =============  =============  ===============  ==============    ============


</TABLE>
    See notes to consolidated financial statements that are an integral part of
these consolidated statements.

                                       6

<PAGE>
<TABLE>
<CAPTION>

                 GREENVILLE FIRST BANCSHARES, INC.AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                                             For the six months ended
                                                                                                     June 30,
                                                                                   --------------------------------------------
                                                                                          2002                    2001
                                                                                   --------------------   ---------------------
<S>                                                                           <C>                        <C>
Operating activities
    Net income (loss)                                                                   $ 163,939          $   (137,698)
    Adjustments to reconcile net income (loss) to cash
      provided by (unused for) operating activities:
      Provision for loan losses                                                          420,000                250,000
      Depreciation and other amortization                                                101,369                 96,892
      Accretion and amortization of securities
         discounts and premium, net                                                       17,017                (40,809)
      Decrease (increase) in other assets, net                                           (73,769)              (145,508)
      Increase (decrease) in other liabilities, net                                     (395,425)              (500,089)
                                                                                 ---------------          -------------
           Net cash provided by (used for) operating activities
                                                                                         233,131               (477,212)
                                                                                         258,714              1,549,902
                                                                                 ---------------          -------------
Investing activities
    Increase (decrease) in cash realized from:
      Origination of loans, net                                                      (27,680,931)            (18,931,892)
      Purchase of property and equipment                                                 (53,736)               (455,863)
      Purchase of securities available for sale                                       (7,007,887)            (10,154,200)
      Payments and maturity of securities
         available for sale                                                            9,491,635               5,720,915
                                                                                 ---------------           -------------
           Net cash used for investing activities
                                                                                     (25,250,919)            (23,497,802)
                                                                                 ---------------           -------------

Financing activities
    Increase in deposits, net                                                         31,034,685              23,068,837
    Decrease in short-term borrowings                                                 (2,407,600)                      -
    Increase in other borrowings                                                       1,000,000                       -
    Decrease in Federal Home Loan Bank advances                                       (3,000,000)                      -
                                                                                 ---------------           -------------
           Net cash provided by financing activities                                  26,627,085              23,068,837
                                                                                 ---------------           -------------

           Net increase in cash and cash equivalents                                   1,609,297              (1,229,415)

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

Cash and cash equivalents at end of the year                                        $  4,592,253             $ 3,621,957
                                                                                 ===============           =============
Supplemental information
    Cash paid for
      Interest                                                                      $  1,873,912             $ 1,490,978
                                                                                 ===============           =============
      Income taxes                                                                             -                      -
                                                                                 ===============           =============
Supplemental schedule of non-cash transaction
    Foreclosure of  real estate                                                     $    362,987                      -
                                                                                 ===============           =============
    Unrealized gain on securities, net of income taxes                              $     11,663              $   66,097
                                                                                 ===============           =============
</TABLE>

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

                                       7
<PAGE>

                   GREENVILLE FIRST BANCSHARES AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Business and Basis of Presentation

Business activity and organization

         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 organized under the laws of the United States located in
Greenville County, South Carolina. The bank began operations on January 10,
2000.

         Until January 10, 2000, the company engaged in organizational and
pre-opening activities necessary to obtain regulatory approvals and to prepare
its subsidiary, the bank, to commence business as a financial institution. The
bank is primarily engaged in the business of accepting demand deposits and
savings deposits insured by the Federal Deposit Insurance Corporation, and
providing commercial, consumer and mortgage loans to the general public.

Basis of Presentation

         The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the six-month period
ended June 30, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
company's Form 10-KSB (Registration Number 333-83851) as filed with and declared
effective by the Securities and Exchange Commission.

Cash and Cash Equivalents

         For purposes of the Consolidated statement of Cash Flows, cash and
federal funds sold are included in "cash and cash equivalents". These assets
have contractual maturities of less than three months.

Note 2 - Long-term Note Payable

         At June 30, 2002 the Company had a $1.5 million revolving line of
credit with another bank with a maturity of May 17, 2004. At June 30, 2002 the
company had outstanding $1.0 million. The Company used $875,000 of the proceeds
to increase its investment in the Bank. The remaining $125,000 was used to
establish a $125,000 escrow fund to be used to pay interest payments. The line
of credit bears interest at a rate of prime minus 1.25%, which at June 30, 2002
was 3.50%. The Company has pledged the stock of the Bank as collateral for this
line of credit. The line of credit agreement contains various covenants related
to earnings and asset quality. As of June 30, 2002 the Company was in compliance
with all covenants.


                                       8
<PAGE>


Note 3 - Earnings per Share

         The following schedule reconciles the numerators and denominators of
the basic and diluted earnings per share computations for the three months and
six months ended June 30, 2002. Dilutive common shares arise from the
potentially dilutive effect of Greenville Bancshares, Inc.'s stock options and
warrants that are outstanding. The assumed conversion of stock options and
warrants can create a difference between basic and dilutive net income per
common share. As a result of the losses for the three months and six months
ended June 30, 2001, all stock options and warrants were considered to be
anti-dilutive. Therefore, the weighted average number of common shares
outstanding for both basic and diluted net loss per common share for the three
months and six months ended June 30, 2001 are the same.

<TABLE>
<CAPTION>

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

                                                               Three Month Ended             Six Month Ended
                                                                   June 30, 2002              June 30, 2002

<S>                                                                    <C>                         <C>
Basic Earnings Per Share
  Average common shares                                                1,150,000                   1,150,000
  Net income                                                            $121,126                    $163,939
  Earnings per share                                                        $.11                        $.14

Diluted Earnings Per Share
  Average common shares outstanding                                    1,150,000                   1,150,000
  Average dilutive common shares                                          12,398                       6,199
                                                                     ------------               -------------
  Adjusted average common shares                                       1,162,398                  1,156,1998
  Net income                                                            $121,126                    $163,939
  Earnings per share                                                        $.10                        $.14

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



                                       9

<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation.
         -----------------------------------------------------------------------



DISCUSSION OF FORWARD-LOOKING STATEMENTS

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

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

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

CRITICAL ACCOUNTING POLICIES

         We have adopted various accounting policies that govern the application
of accounting principles generally accepted in the United States in the
preparation of our financial statements. Our significant accounting policies are
described in the footnotes to the consolidated financial statements at December
31, 2001 as filed on our annual report on Form 10-KSB.

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

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


                                       10

<PAGE>


GENERAL

         The following is a discussion of our financial condition as of June 30,
2002 and the results of operations for the three months and six months ended
June 30, 2002. These comments should be read in conjunction with our
consolidated financial statements and accompanying consolidated footnotes
appearing in this report. The significant accounting policies are described
throughout the Management's discussion section of this document

NATIONAL AND ECONOMIC EVENTS

         Nationally, during most of 2001 and the first three months of 2002, the
United States experienced a slowing economy following a tenth year of expansion.
During this period, the economy was also affected by lower returns and
expectations of the stock markets. Economic data led the Federal Reserve to
begin an aggressive program of rate cutting, which moved the Federal Funds rate
down 11 times during 2001 for a total reduction of 475 basis points, bringing
the Federal Funds rate to its lowest level in 40 years. During the first two
quarters of 2002, the Federal Reserve did not adjust the Federal Funds rate.

         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,
many observers expect Congress to pass an economic stimulus plan. The Federal
Reserve has taken a neutral position related to future interest rate changes.
Many economists believe the Federal Reserve will begin increasing interest rate
in the first half of the 2003 year. No assurance can be given that the Federal
Reserve will take such action. We continue to believe that the markets we serve
generally perform better than national markets, even in times of recession.

         We believe that the economic impact of the terrorist attacks of
September 11, 2001 did not materially affect our operations. It is evident from
recent economic data that the U.S. economy was affected significantly by these
events. The extent and duration of the economic impact from the attacks are not
predictable but could affect consumer confidence and the financial activities of
retail and business customers. Prior to these events, many economists were
predicting that the U.S. had been in a recession. Official economic data
released in November 2001 confirms that the U.S. has been in a recession for
several months and it is likely that recovery will not occur until sometime
later in 2002 or beyond.

INCOME STATEMENT REVIEW

Comparison of the three months ended June 30, 2002 and the three months ended
June 30, 2001.

Net Interest Income

         Net interest income, the largest component of our income, was
$1,052,100 for the three months ended June 30, 2002 compared to $678,033 for the
same period in 2001, or an increase of 55.2%. The level of net interest income
is determined by the balances of earning assets and the managing of the net
interest margin. Changes in interest rates paid on assets and liabilities, the
rate of growth of the asset and liability base, the ratio of interest-earning
assets to interest-bearing liabilities, and management of the balance sheet's
interest rate sensitivity all factor into changes in net interest income.

          Interest income for the second quarter of 2002 was $1,936,720 and
consisted of $1,734,959 on loans, $188,250 in investments and $13,511 on federal
funds sold. Interest income for the same period in 2001 was $1,512,779 and
included $1,214,829 on loans, $243,373 on investments and $54,577 on federal
funds sold.


                                       11
<PAGE>


          Interest expense for the second quarter of 2002 was $884,620 and
consisted of $841,523 related to deposits and $43,097 related to borrowings. Our
interest expense of $834,746 during the second quarter of 2001 related solely to
deposits. Our interest expense increased $49,874, or 6.0%, while our average
deposits and borrowings increased from $56.1 million for the quarter ended June
30, 2001 to $127.1 million for the quarter ended June 30, 2002, an increase of
79.1%. The increase in our interest expense was proportionately less than the
increase in our deposits and borrowings because of the declining interest rate
environment.

         The following table sets forth, for the three months ended June 30,
2002 and 2001, information related to our average balance sheet and average
yields on assets and average costs of liabilities. We derived these yields by
dividing income or expense by the average balance of the corresponding assets or
liabilities. We derived average balances from the daily balances throughout the
periods indicated.
<TABLE>
<CAPTION>

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

                         Average Balances, Income and Expenses, and Rates (in $000's)

                                                              For the three months ended June 30,

                                                         2002                                     2001

                                            Average     Income/                  Average     Income     Yield/
                                            Balance    Expense        Rate       Balance    Expense      Rate
                                            -------    --------       ----       --------   -------     -----
<S>                                       <C>          <C>        <C>         <C>     <C>          <C>
  Federal funds sold                         $  3,220    $    14     1.74%      $ 4,533   $      55     4.87%
  Investment securities                        15,435        188     4.89%       14,534         243     6.71%
  Loans                                       114,706      1,735     6.07%       58,527       1,215     8.33%
                                          ---------------------------------      ------------------------------
       Total earning-assets                  $133,361    $ 1,937     5.83%      $77,594   $   1,513     7.82%
                                          ---------------------------------      ------------------------------
  NOW accounts                               $ 29,181    $    95     1.31%      $12,197   $      50     1.64%
  Savings & money market                       22,294         93     1.67%       18,025         174     3.87%
  Time deposits                                71,248        654     3.68%       40,767         611     6.01%
                                          ---------------------------------      ------------------------------
       Total interest-bearing deposits        122,723        842     2.75%       70,989         835     4.72%
  FHLB advances                                 3,000         36     4.81%            -           -        -%
  Other borrowings                              1,387          7     2.02%            -           -        -%
                                          ---------------------------------      ------------------------------
       Total interest-bearing liabilities    $127,110    $   885     2.79%      $70,989   $     835     4.72%
                                          ---------------------------------      ------------------------------
  Net interest spread                                                3.04%                              3.10%
  Net interest income/margin                 $  1,052                3.16%                $     678     3.50%

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

</TABLE>

         Our net interest spread was 3.04% for the three months ended June 30,
2002 as compared to 3.10% for the three months ended June 30, 2001. The net
interest spread is the difference between the yield we earn on our
interest-earning assets and the rate we pay on our interest-bearing liabilities.

         Our net interest margin for the period ended June 30, 2002 was 3.16% as
compared to 3.50% for the three months ended June 30, 2001. The net interest
margin is calculated as net interest income divided by year-to-date average
earning assets. Our net interest margin decreased because our assets repriced
downward faster than our liabilities.

         In pricing deposits, we considered our liquidity needs, the direction
and levels of interest rates and local market conditions.


                                       12

<PAGE>


Rate/Volume Analysis

         Net interest income can be analyzed in terms of the impact of changing
rates and changing volume. The following table sets forth the effect which the
varying levels of earning assets and interest-bearing liabilities and the
applicable rates have had on changes in net interest income for the periods
presented. Changes that are not solely attributable to either volume, rate or
rate/volume have been allocated to each category on a prorated basis.
<TABLE>
<CAPTION>

================================================== =======================================================
                                                                     Change Related to
Three months ended June 30, 2002
         (Dollars in Thousands)
-------------------------------------------------- -------------------------------------------------------
                                                     Volume         Rate         Rate/       Net Change
                                                                                 Volume

<S>                                                   <C>               <C>            <C>        <C>
  EARNING ASSETS:
  Federal funds sold                                  $    (8)          (47)           14         $  (41)
  Investment securities                                     15          (66)           (4)           (55)
  Loans                                                  1,167         (330)         (317)            520
                                                   -----------   ----------     ---------      ----------
       Total earning assets                           $  1,174         (443)         (307)   $       424
                                                   -----------   ----------     ---------      ----------

  INTEREST BEARING LIABILITIES
  Deposits                                            $    609         (348)         (254)   $          7
  FHLB advance                                              36            -             -              36
  Other borrowings                                           7            -             -               7
                                                   -----------   ----------     ---------      ----------
        Total interest bearing liabilities                 652         (348)         (254)             50
                                                   -----------   ----------     ---------      ----------
        Net interest income                           $    522          (95)          (53)   $        374
                                                   -----------   ----------     ---------      ----------
</TABLE>

         As the above table demonstrates, the change in our net interest income
is primarily due to the increase in our assets and liabilities. This increase is
partially offset by the decrease in the rates as a result of the significant
reduction in market rates over the last twelve months.


Provision for Loan Losses

         Included in the results of operations for the quarters ended June 30,
2002 and 2001 is a non-cash expense of $220,000 and $128,000, respectively,
related to the provision for loan losses. The loan loss reserve was $1,507,111
at June 30, 2002 and $1,192,247 at December 31, 2001. The allowance for loan
losses as a percentage of gross loans was 1.22% at June 30, 2002 and 1.24% at
December 31, 2001. The loan portfolio is periodically reviewed to evaluate the
outstanding loans and to measure both the performance of the portfolio and the
adequacy of the allowance for loan losses. For information about how we
determine the provision for loan losses, please see our discussion under
"Provision and Allowance for Loan Losses." For the three months ended June 30,
2002, we reported net charge-offs of $101,015. The significant portion of the
net charge-off relates to a $100,000 write-down on a non-accruing commercial
loan with a remaining carrying value of $410,000. There were no loans charged
off during the three months ended June 30, 2001.


Noninterest Income and Expenses

         Noninterest income in the second quarter of 2002 was $121,814, an
increase of 103% over noninterest income of $60,026 in the second quarter of
2001. This increase was primarily due to the increases in the volume of service
charges on deposits, increases in the volume of fees charged on ATM
transactions, and additional loan fees received on the origination of mortgage
loans that were sold.

                                       13
<PAGE>

         We incurred general and administrative expenses of $832,788 for the
three months ended June 30, 2002 compared to $669,521 for the same period in
2001. The $163,267 additional general and administrative expenses resulted
primarily from the move into our new main office building in 2001 and the
additional staff hired during the first six months of 2001 to handle the current
and anticipated future growth in both loans and deposits. Salaries and benefits
in second quarter 2002 were $430,024, or an increase of $63,206. Salaries and
benefits represented 51.67% of the total noninterest expense. Salaries and
benefits in second quarter 2001 were $366,818. All other expenses increased only
$100,061. This increase relates primarily to $45,689 additional cost for outside
services, $16,514 of added professional fees, and $15,000 of additional
occupancy expenses. The primary reason for the higher level of outside services
is the additional data processing expense associated with the higher level of
activity that resulted from the significant increases in both loans and
deposits. The significant portion of the increase in professional fees relates
to legal fees associated with loan collection efforts. The primary reason for
the increase in occupancy cost is that the bank increased the amount of square
footage that was being rented in the 2002 period. The significant portion of the
remaining increases are related to $8,215 additional marketing expense and
$8,347 of additional insurance expenses.

Comparison of the six months ended June 30, 2002 and the six months ended June
30, 2001.

Net Interest Income

         Net interest income, the largest component of our income, was
$1,996,278 for the six months ended June 30, 2002 compared to $1,290,071 for the
same period in 2001, or an increase of 54.7%. The level of net interest income
is determined by the balances of earning assets and managing of the net interest
margin. Changes in interest rates paid on assets and liabilities, the rate of
growth of the asset and liability base, the ratio of interest-earning assets to
interest-bearing liabilities, and management of the balance sheet's interest
rate sensitivity all factor into changes in net interest income.

          Interest income for the first six months of 2002 was $3,727,078 and
consisted of $3,321,614 on loans, $369,403 in investments and $36,061 on federal
funds sold. Interest income for the same period in 2001 was $2,925,314 and
included $2,345,805 on loans, $462,747 on investments and $116,762 on federal
funds sold.

          Interest expense for the first six months of 2002 was $1,730,800 and
consisted of $1,611,120 related to deposits and $119,680 related to borrowings.
Our interest expense of $1,635,243 during the first six months of 2001 related
solely to deposits. Our interest expense increased $95,557, or 5.8%, while our
average deposits and borrowings increased from $65.5 million for the six months
ended June 30, 2001 to $121.1 million for the six months ended June 30, 2002, an
increase of 84.8%. The increase in our interest expense was proportionately less
than the increase in our deposits and borrowings because of the declining
interest rate environment.


                                       14
<PAGE>


         The following table sets forth, for the six months ended June 30, 2002
and 2001, information related to our average balance sheet and average yields on
assets and average costs of liabilities. We derived these yields by dividing
income or expense by the average balance of the corresponding assets or
liabilities. We derived average balances from the daily balances throughout the
periods indicated.
<TABLE>
<CAPTION>


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

                         Average Balances, Income and Expenses, and Rates (in $000's)

                                                               For the six months ended June 30,

                                                         2002                                     2001
                                                        ------                                  ---------
                                            Average     Income/      Yield/      Average     Income     Yield/
                                            Balance    Expense        Rate       Balance    Expense      Rate
                                            -------    -------       ------      --------   -------     -----
<S>                                       <C>          <C>        <C>         <C>        <C>          <C>
  Federal funds sold                         $  4,105     $   36     1.77%      $ 4,533    $     117     5.20%
  Investment securities                        14,400        369     5.17%       13,757          462     6.77%
  Loans                                       109,691      3,322     6.11%       55,019        2,346     8.60%
                                          ---------------------------------      ------------------------------
       Total earning-assets                  $128,196    $ 3,727     5.86%       $  73,309 $  2,925      8.05%
                                          ---------------------------------      ------------------------------
  NOW accounts                               $ 24,551    $   142     1.17%       $  11,489 $     107     1.89%
  Savings & money market                       22,296        187     1.69%          16,617       368     4.46%
  Time deposits                                66,915      1,282     3.86%          37,442     1,160     6.25%
                                          ---------------------------------      ------------------------------
       Total interest-bearing deposits        113,762      1,611     2.86%          65,548     1,635     5.03%
  FHLB advances                                 4,425         86     3.92%               -         -        -%
  Other borrowings                              2,917         34     2.35%               -         -        -%
                                          ---------------------------------      ------------------------------
       Total interest-bearing liabilities    $121,104    $ 1,731     2.88%       $  65,548 $   1,635     5.03%
                                          ---------------------------------      ------------------------------
  Net interest spread                                                2.98%                               3.02%
  Net interest income/margin                             $ 1,996     3.14%                 $   1,290     3.55%
===============================================================================================================
</TABLE>


         Our net interest spread was 2.98% for the six months ended June 30,
2002 as compared to 3.02% for the six months ended June 30, 2001. The net
interest spread is the difference between the yield we earn on our
interest-earning assets and the rate we pay on our interest-bearing liabilities.

         Our net interest margin for the period ended June 30, 2002 was 3.14% as
compared to 3.55% for the six months ended June 30, 2001. The net interest
margin is calculated as net interest income divided by year-to-date average
earning assets. Our net interest margin decreased because our assets repriced
downward faster than our liabilities.

         In pricing deposits, we considered our liquidity needs, the direction
and levels of interest rates and local market conditions.


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, rate or
rate/volume have been allocated to each category on a prorated basis.

                                       15

<PAGE>
<TABLE>
<CAPTION>
                                                             Change Related to
Six months ended June 30, 2002
         (Dollars in Thousands)
-------------------------------------------------- -------------------------------------------------------
                                                     Volume         Rate         Rate/       Net Change
                                                                                 Volume
  EARNING ASSETS:
<S>                                                 <C>                 <C>             <C>  <C>
  Federal funds sold                                $    (4)            (85)            8    $       (81)
  Investment securities                                   22           (109)           (6)           (93)
    Loans                                              2,331           (680)         (675)           976
                                                   -------------------------------------------------------
       Total earning assets                         $  2,349           (874)         (673)   $       802
                                                   -------------------------------------------------------
  INTEREST BEARING LIABILITIES
  Deposits                                          $  1,203           (707)         (520)   $       (24)
  FHLB advance                                            86              -             -             86
  Other borrowings                                        34              -             -             34
                                                   -------------------------------------------------------
        Total interest bearing liabilities             1,323           (707)         (520)            96
                                                   -------------------------------------------------------
        Net interest income                         $  1,026           (167)         (153)   $       706
                                                   -------------------------------------------------------
</TABLE>


         As the above table demonstrates, the change in our net interest income
is primarily due to the increase in our assets and liabilities. This increase is
partially offset by the decrease in the rates as a result of the significant
reduction in market rates over the last twelve months.

Provision for Loan Losses

         Included in the results of operations for the six months ended June 30,
2002 and 2001 is a non-cash expense of $420,000 and $250,000, respectively,
related to the provision for loan losses. The loan loss reserve was $1,507,111
at June 30, 2002 and $1,192,247 at December 31, 2001. The allowance for loan
losses as a percentage of gross loans was 1.22% at June 30, 2002 and 1.24% at
December 31, 2001. The loan portfolio is periodically reviewed to evaluate the
outstanding loans and to measure both the performance of the portfolio and the
adequacy of the allowance for loan losses. For information about how we
determine the provision for loan losses, please see our discussion under
"Provision and Allowance for Loan Losses." For the six months ended June 30,
2002, we reported net charge-offs of $105,136. The significant portion of the
net charge-off relates to a $100,000 write-down on a non-accruing commercial
loan with a remaining carrying value of $410,000. There were no loans charged
off during the six months ended June 30, 2001.


Noninterest Income and Expenses

         Noninterest income in the first six months of 2002 was $224,764, an
increase of 114% over noninterest income of $104,879 in the first six months of
2001. This increase was primarily due to the increases in the volume of service
charges on deposits, increases in the volume of fees charged on ATM
transactions, and additional loan fees received on the origination of mortgage
loans that were sold.

         We incurred general and administrative expenses of $1,637,103 for the
six months ended June 30, 2002 compared to $1,282,648 for the same period in
2001. The $354,455 additional general and administrative expenses resulted
primarily from the move into our new main office building in 2001 and the
additional staff hired during the first six months of 2001 to handle the current
and anticipated future growth in both loans and deposits. Salaries and benefits
in first six months were $861,547, or an increase of $167,995. Salaries and
benefits represented 55.6% of the total noninterest expense. The salary and
benefits expense for the second quarter of 2002 was $1,499 less than the amount
recorded in the first quarter of 2002. Salaries and benefits in first six months
of 2001 were $693,552. All other expenses increased only $186,460. This increase
relates primarily to $95,349 additional cost for outside services, $22,506 of
added professional fees, and $35,831 of additional occupancy expenses. The
primary reason for


                                       16
<PAGE>

the higher level of outside services is the additional data processing expense
associated with the higher level of activity that resulted from the significant
increases in both loans and deposits. The significant portion of the increase in
professional fees relates to legal fees associated with loan collection efforts.
The primary reason for the increase in occupancy cost is that the bank increased
the amount of square footage that was being rented in the 2002 period. The
significant portion of the remaining increases are related to $10,809 additional
marketing expense and $16,824 of additional insurance expenses.

BALANCE SHEET REVIEW

General

         At June 30, 2002, we had total assets of $145.0 million, consisting
principally of $122.2 million in loans, $16.8 million in investments and $3.7
million in cash and due from banks. Liabilities at June 30, 2002 totaled $135.3
million, consisting principally of $123.7 million in deposits and $10.1 million
in FHLB advances and other borrowings. At June 30, 2002, shareholders' equity
was $9.6 million.

Investments

         At June 30, 2002, the $15.4 million of investment securities portfolio
available for sale represented approximately 10.6% of our total assets. We were
invested in U.S. Government agency securities, mortgage-backed securities and
federal funds with a fair value of $15.6 million and an amortized cost of $15.2
for an unrealized gain of $212,772.

         Contractual maturities and yields on our investments (all available for
sale) at June 30, 2002 are shown in the following table (dollars in thousands).
Expected maturities may differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties. Based on the comparison of investment securities coupon rates and the
market interest rate as of June 30, 2002, the bank anticipates that between $4.0
million and $10.0 million may be called during the twelve months ending June 30,
2003.
<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          ---       ---   $     12,769       4.75%  $   1,658      6.05% $   14,427      4.88%
    agencies

  Mortgage-backed       ---       ---             6        3.96%        999      6.00% $    1,005      5.92%
    securities
                    --------------------- -----------------------  ------------------ ---------------------
   Total                ---       ---   $     12,775       4.75%  $   2,657      6.03% $    15,432     5.02%
                    ===================== ======================= =================== =====================
</TABLE>

         At June 30, 2002, the $842,446 of short-term investments in federal
funds sold on an overnight basis comprised .58% of total assets at June 30,
2002, as compared to $100,841 or .1% of total assets at December 31, 2001.


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
six months ended June 30, 2002 and 2001 were $109.7 million and $55.0 million,
respectively. Total loans outstanding at June 30, 2002 and December 31, 2001
were $123.7 million and $96.5 million, respectively, before allowance for loan
losses.

                                       17
<PAGE>

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

=========================================================================================================
                                             June 30, 2002                      December 31, 2001
                                             --------------                     -----------------
                                        Amount          % of Total           Amount           % of Total
                                        ------          ----------           ------           ----------
<S>                                 <C>                    <C>       <C>                 <C>
Real estate:
  Commercial
   Owner occupied                   $ 19,247,244               15.55%  $       16,532,696     17.13%
   Non-owner occupied                 33,172,581               26.81%          22,813,424     23.63%
   Construction                        7,557,793                6.11%           8,292,228      8.59%
                                   ---------------------------------------------------------------------
                                      59,977,618               48.47%          47,638,348     49.35%
                                   ---------------------------------------------------------------------
  Consumer
    Residential                       16,116,416               13.02%          12,898,543     13.36%
    Home Equity                       12,941,147               10.46%           8,937,054      9.26%
    Construction                       6,611,967                5.35%           3,972,206      4.11%
                                    ---------------------------------------------------------------------
                                      35,669,530               28.83%          25,807,803     26.73%
                                    ---------------------------------------------------------------------
 Total real-estate                    95,647,148               77.30%          73,446,151     76.08%

Commercial business                   24,995,681               20.19%          20,529,004     21.27%
Consumer-other
                                       3,461,393                2.80%           2,812,703      2.91%
Deferred origination fees, net
                                        (359,546)               (.29%)           (255,990)     (.26%)
                                    ---------------------------------------------------------------------
                                      123,744,676              100.00%          96,531,868   100.00%
                                                        =============                      ============
Less allowance for loan
  Losses                               (1,507,111)                              (1,192,247)
                                    --------------                             -----------

      Total loans, net              $ 122,237,565                              $ 95,339,621
                                    ==============                             ============
</TABLE>

         The principal component of our loan portfolio at June 30, 2002 and at
December 31, 2001 was loans secured by real estate mortgages. Due to the short
time the portfolio has existed, the current mix of loans may not be indicative
of the ongoing portfolio mix. Management will attempt to maintain a relatively
diversified loan portfolio to help reduce the risk inherent in concentration of
collateral.

Provision and Allowance for Loan Losses

         We have developed policies and procedures for evaluating the overall
quality of our credit portfolio and the timely identification of potential
credit problems.

         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 increase the allowance periodically by additional
provisions for loan losses. We charge recognized losses to the allowance and add
subsequent recoveries back to the allowance.

         Our evaluation is inherently subjective as it requires estimates that
are susceptible to significant change. In addition, regulatory agencies
periodically review our allowance for loan losses as part of their examination
process, and they may require us to record additions to the allowance based on
their judgment about information available to them at the time of their
examinations. Our losses will undoubtedly vary from our estimates, and there is
a possibility that charge-offs in future periods will exceed the allowance for
loan losses as estimated at any point in time.

                                       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. We have engaged an
independent consultant to review the loan files on a test basis, to verify that
the lenders have properly graded each loan. 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 June 30, 2002 and at December 31, 2001, the allowance for loan
losses was $1.5 million and $1.2 million, respectively, or 1.22% of outstanding
loans at June 30, 2002 and 1.24% at December 31, 2001, respectively. During the
six months ended June 30, 2002, we charged off loans of $105,136. There were no
loans charged off during the six months ended June 30, 2001.

         At June 30, 2002, nonaccrual loans represented .33% of total loans. We
had one commercial business loan of approximately $410,000 that was on
nonaccrual status. We classified this loan and put it on non-accrual status
during the first quarter of 2002. There was only one loan on nonaccrual status
at December 31, 2001. During the first quarter of 2002, the bank obtained
ownership through foreclosure procedures on the residental construction loan
that was on nonaccrual status at December 31, 2001. At June 30, 2002, the bank
carried this asset as real estate owned with a carrying value of approximately
$384,000. The bank is in the process of completing the construction of this
home. The bank carries all real estate acquired through foreclosure at the lower
of cost or market value.

         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.


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 June 30, 2002 (dollars in
thousands):
<TABLE>
<CAPTION>

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

                                                       After one but
                                              One year  Within five         After
                                               or less     Years          five years      Total
                                               -------  ------------      ----------     --------
<S>                                    <C>           <C>            <C>            <C>
          Commercial                      $  12,642     $      12,323  $           2  $   24,967
          Real estate - construction          6,777             6,902            421      14,100
          Real estate-  mortgage             11,712            67,519          2,038      81,269
          Consumer and other                  1,719             1,435            255       3,409
                                           ------------   ------------  -------------  -------------
              Total loans                 $  32,850     $      88,179  $       2,716  $  123,745
                                           ============   ============  =============  =============


          Loans maturing after one year with:
            Fixed interest rates                                                      $   22,724
            Floating interest rates                                                   $   68,171

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

                                       19

<PAGE>


Deposits and Other Interest-Bearing Liabilities

         Our primary sources of funds for loans and investments are our
deposits, advances from the 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. We believe that
conditions in 2002 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 2002.

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

<TABLE>
<CAPTION>

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

                                                        June 30, 2002                  December 31, 2001
                                                        -------------                  -----------------

<S>                                           <C>                 <C>          <C>                <C>
  Demand deposit accounts                        $     8,919         7.21%        $     7,729        8.34%
  NOW accounts                                        21,341        17.25%              8,295        8.95%
  Money market accounts                               22,147        17.90%             24,139       26.04%
  Savings accounts                                       418          .34%                255         .27%
  Time deposits less than $100,000                    31,655        25.58%             31,900       34.41%
  Time deposits of $100,000 or more                   39,265        31.72%             20,382       21.99%
                                                  ----------- -------------        ------------   ---------
     Total deposits                              $   123,745       100.00%        $    92,700      100.00%
                                                  =========== =============        =============  =========
</TABLE>

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

         Core deposits, which traditionally 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 $79.7 million and $72.3 million at
March 31, 2002 and December 31, 2001, respectively. Our loan-to-deposit ratio
was 98.8% and 102.8% at June 30, 2002 and December 31, 2001, respectively.

         The significant portion of the increase in time deposits over $100,000
relates to deposits that were obtained outside of our local market. The
maturites on these deposits range from three months to five years. These
deposits were obtained at rates that were either comparable or lower than rates
paid in the local market. The long term CDs were obtained to "lock in" long term
funding at low interest rates. The short-term deposits were used to fund a
significant increase in loan demand. Generally, we do not plan to renew these
short-term deposits.

         The maturity distribution of our time deposits of $100,000 or more is
as follows:
<TABLE>
<CAPTION>

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

                                                   June 30, 2002        December 31, 2001
                                                   -------------        -----------------
                                                            (Dollars in thousands)

<S>                                              <C>                             <C>
     Three months or less                        $   10,217                      $      7,929
     Over three through twelve months                19,225                             8,703
     Over twelve months                               9,823                             3,750
                                               --------------------- -------------------------
     Total                                       $   39,265                      $     20,382
                                               ===================== =========================
</TABLE>


Borrowings

         At June 30, 2002 the bank had $3.0 million of advances from the FHLB of
Atlanta. These advances are secured with approximately $9.0 million of first
mortgage loans, investment securities and stock in the FHLB. The advance of $3.0
million 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 June 30, 2002 the bank had $6.1 million of repurchase agreements
from a brokerage firm. The repurchase agreements are secured with approximately
$6.1 million of investment securities. The repurchase agreements mature within
90-days with a weighted average rate of 1.90%.


                                       20
<PAGE>

         At June 30, 2002 the Company had a $1.5 million revolving line of
credit with another bank with a maturity of May 17, 2004. At June 30, 2002 the
company had outstanding $1.0 million. The Company used $875,000 of the proceeds
to increase its investment in the Bank. The remaining $125,000 was used to
establish a $125,000 escrow fund to be used to pay interest payments. The line
of credit bears interest at a rate of prime minus 1.25%, which at June 30, 2002
was 3.50%. The Company has pledged the stock of the Bank as collateral for this
line of credit. The line of credit agreement contains various covenants related
to earnings and asset quality. As of June 30, 2002 the Company was in compliance
with all covenants.

         At June 30, 2002 the bank had an unused $2.8 million of federal funds
line of credit. This line of credit is unsecured and bears interest at the daily
rate of federal funds plus 25 basis points (2.00% at June 30, 2002). At June 30,
2002, the bank also had an unused $4.0 million line of credit with a brokerage
firm, secured by $4.0 million of investment securities. This line of credit
bears market interest rates based on the maturities of the various repurchase
agreements. At June 30, 2002 the bank had assets pledged with the FHLB that
would allow the bank to obtain $6.0 million of additional advances. The rate of
the future advances will vary based on current market conditions and the length
of the maturity of the advances obtained.


CAPITAL RESOURCES

         Total shareholders' equity amounted to $9.6 million at June 30, 2002
and $9.5 million at December 31, 2001. The increase during the six months ended
June 30, 2002 resulted from $163,939 of net income and $11,663 increase in the
unrealized gains on investment securities.

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

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

                                                  June 30,      December 31,
                                                    2002           2001

                     Return on average assets        .25%         - .11%

                     Return on average equity        3.48%        - .83%

                     Equity to assets ratio          6.65%        12.95%

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

         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


                                       21

<PAGE>

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.

         The bank is 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 June 30, 2002 and December 31, 2001. At June 30, 2002 and
December 31, 2001, we both were in compliance with each of the applicable
regulatory capital requirements and the Bank was considered to be "well
capitalized."


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

                                       June 30, 2002          December 31, 2001
                                       -------------         ------------------
                                     Company      Bank         Company      Bank

          Total risk-based capital     9.5%     10.2%           10.4%     10.1%
          Tier 1 risk-based            8.2%      9.0%            9.2%      8.9%
          capital
          Leverage capital             6.9%      7.5%            8.2%      8.2%

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


      Our objective is to maintain the capital levels such that the bank will
continue to be considered well capitalized. The company has a $500,000 unused
line of credit with another bank whereby the loan proceeds can be used by the
company to increase the bank's capital position. 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 June 30, 2002,
there were no significant firm commitments outstanding for capital expenditures.


EFFECT OF INFLATION AND CHANGING PRICES

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

         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 manage 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 June 30, 2002, unfunded
commitments to extend credit were $29.5 million, of which approximately $5.9
million is at fixed rates and $23.6 million is at variable rates. The
significant portion of the unfunded commitments relates to

                                       22
<PAGE>

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 June 30, 2002, there was a $565,000 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 result in liquidity needs
or other commitments that we believe are likely to 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. We actively
monitor and manage our 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.

         Because approximately 75% of our loans are variable rate loans at June
30, 2002, we are currently asset sensitive over 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.


                                       23
<PAGE>


         At June 30, 2002 and December 31, 2001, our liquid assets, consisting
of cash, due from banks and federal funds sold, amounted to $4.6 million and
$3.0 million, representing 3.2% and 2.51% of total assets, respectively.
Investment securities at June 30, 2002 and December 31, 2001 amounted to $16.0
million and $18.5 million, representing 11.03% and 15.58% 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, 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 increased its
net liquidity position by approximately $22 million. This resulted primarily
from increases in deposits, sales of participations in loan originations, and
identification of additional qualifying collateral that was pledged to the FHLB
that allows for additional borrowing capacity. During the second quarter of
2002, the bank utilized a portion of the excess liquidity, by using proceeds
from the short-term advances from the FHLB and short-term repurchase agreements
from brokerage firms to fund the significant portion of the loan production
during the second quarter. By utilizing the various short-term sources of
funding, the bank was able to reduce its level of interest sensitivity while
obtaining low cost funds. The bank is 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 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 at June 30, 2002 that is
currently available from the FHLB based on the amount of collateral pledged is
approximately $6.0 million. In addition, the bank maintains a federal funds
purchased line of credit with a correspondent bank in the amount of $2.8
million. The line of credit with the correspondent bank was unused. We have also
obtained a $10.0 million line of credit that is available from a brokerage firm
that holds $10.0 million of investment securities as collateral. As of June 30,
2002, the bank had utilized approximately $6.1 million of the brokerage firm's
line of credit.

         We believe that our existing stable base of core deposits, borrowings
from the FHLB, and short-term repurchase agreements will enable us to
successfully meet our liquidity needs for the foreseeable future.

         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 at least 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.


                                       24

<PAGE>

         The following table presents our rate sensitivity at each of the time
intervals indicated as of June 30, 2002. The table may not be indicative of our
rate sensitivity position at other points in time. In addition, the table's
maturity distribution may differ from the contractual maturities of the earning
assets and interest bearing liabilities presented due to consideration of
prepayment speeds under various interest rate change scenarios in the
application of the interest rate sensitivity methods described above.
<TABLE>
<CAPTION>

============================================================================================================
                                  Within     After three but       After one but        After
                                   three      within twelve         within five         five
                                  months          months               years            years         Total
                                  ------          ------               -----            -----         -----
                                                      (Dollars in thousands)

<S>                           <C>              <C>               <C>                 <C>        <C>
  Interest-earning assets:
   Federal funds sold         $          842   $         -       $            -      $       -  $       842
   Investment securities               4,120           264               10,689            361       15,434
   Loans                              92,184         3,650               27,102            758      123,694
                               --------------   ---------------   -----------------   ---------- -----------

   Total earning assets       $       97,146   $     3,914       $       37,791      $   1,119  $   139,970
                               --------------   ---------------   -----------------   ---------- -----------
 Interest-bearing
liabilities:

   Money market and NOW       $       43,363   $         -       $            -      $       -  $    43,363
   Regular savings                       418             -                    -              -          418
   Time deposits                      17,365        34,260               19,271              -       70,896
   Other borrowings                    1,000             -                    -              -        1,000
   Repurchase Agreements               6,075             -                    -              -        6,075
   FHLB advances                           -             -                    -          3,000        3,000
                               --------------   ---------------   -----------------   ---------- -----------
  Total interest-bearing
    liabilities               $       68,221   $    34,260       $       19,271      $   3,000  $   124,752
                               --------------   ---------------   -----------------   ---------- -----------

  Period gap                  $       28,925   $   (30,346)      $       18,520      $  (1,881) $    15,218

  Cumulative gap              $       28,925   $    (1,421)      $       17,099      $  15,218  $    15,218

  Ratio of cumulative gap to
    total earning assets                20.7%         (1.0)%               12.2%          10.9%
============================================================================================================
</TABLE>

ACCOUNTING, REPORTING AND REGULATORY MATTERS

          Accounting standards have been issued or proposed by the Financial
Accounting Standards Board and are not required to be adopted until a future
date, are not expected to have a material impact on the consolidated financial
statements upon adoption.

                                       25

<PAGE>

                           PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

           There are no material pending legal proceedings to which the Company
           is a party or of which any of its property is the subject.

Item 2.    Changes in Securities

           Not applicable

Item 3.    Defaults Upon Senior Securities

           Not applicable

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

           At the company's annual meeting of shareholders held May 15, 2002,
the election of four members of the board of directors as Class III directors
for a three-year term was the only matter submitted to a vote of security
holders during the six months ended June 30, 2002.

         Our board of directors is divided into three classes with each class to
be nearly equal in number as possible. The three classes of directors are to
have staggered terms, so that the terms of only approximately one-third of the
board members will expire at each annual meeting of meeting of shareholders. The
current Class I directors are Mark A. Cothran, Rudolph G. Johnsonstone, III,
M.D., Keith J. Marrero, and R. Arthur Seaver, Jr. The current Class II directors
are Leighton M. Cubbage, David G. Ellison, James B. Orders, and William B.
Sturgis. The current Class III directors are Andrew B. Cajka, Anne S. Ellefson,
Fred Gilmer, Jr. and Tecumseh Hooper, Jr.

         The previous terms of the Class III directors expired at the Annual
Meeting. Each of the four current Class III directors was nominated for election
and stood for election at the Annual Meeting on May 15, 2002 for a three-year
term. The number of votes for the election of the Class II directors were as
follows: For Mr. Cajka - 911,887; for Ms. Ellefson - 911,887; for Mr. Gilmer -
851,787; and for Mr. Hooper - 911,877. The number of votes against the directors
were as follows: Mr. Cajka - 500; Ms. Ellefson - 500; Mr. Gilmer -60,600; and
Mr. Hooper -500. No shareholders voted to abstain.

           Since a plurality of the votes were attained for the directors that
stood for re-election, the approval of the Class III directors to serve a
three-year term, expiring at the 2005 annual meeting of shareholders was
recorded in our minute book from the annual meeting of shareholders. There were
no other matters voted on by the company's shareholders at our annual meeting
held on May 15, 2002.

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

           (a)  Exhibits

                  None

           (b)  Reports on Form 8-K

                  None


                                       26
<PAGE>

                                   SIGNATURES


      Pursuant to the requirements of 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: August 12, 2002
                                         /s/  R. Arther Seaver, Jr.
                                         ---------------------------------------
                                         R. Arthur Seaver, Jr.
                                         Chief Executive Officer



                                         /s/ James M. Austin, III
                                         ---------------------------------------
                                         James M. Austin, III
                                         Chief Financial Officer


                                       27