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 March 31, 2003

                                       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 May 9, 2003.

      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



                                                                          March 31,         December 31,
                                                                        ---------------   -----------------
                                                                            2003                2002
                                                                        ---------------   -----------------
                                                                        (Unaudited)            (Audited)
<S>                                                                      <C>                 <C>
                                     Assets
    Cash and due from banks                                              $   4,315,961       $   4,429,290
    Federal funds sold                                                       8,237,469              41,736
    Investment securities available for sale                                 5,440,101          14,592,190
    Other investments, at cost                                               1,705,000             905,000
    Loans, net                                                             157,753,883         148,079,012
    Accrued interest                                                           565,367             730,028
    Property and equipment                                                     773,667             785,942
    Other real estate owned                                                    625,316             524,625
    Other assets                                                               587,111             269,840
                                                                         -------------       -------------

             Total assets                                                $ 180,003,875       $ 170,357,663
                                                                         =============       =============

                  Liabilities and Shareholders' Equity

Liabilities
    Deposits                                                              $137,097,154       $133,563,270
    Official checks outstanding                                              1,265,670            889,270
    Federal funds purchased and repurchase agreements                        1,953,000          9,107,000
    Federal Home Loan Bank advances                                         25,500,000         13,000,000
    Note payable                                                             3,000,000          2,500,000
    Accrued interest payable                                                   608,124            606,072
    Accounts payable and accrued expenses                                      188,984            460,262
                                                                         -------------       -------------

         Total liabilities                                                 169,612,932        160,125,874
                                                                         -------------       -------------

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                                     139,960            147,733
    Retained deficit                                                          (395,717)          (562,644)
                                                                         -------------       -------------

         Total shareholders' equity                                         10,390,943         10,231,789
                                                                         -------------       -------------

         Total liabilities and shareholders' equity                      $ 180,003,875       $ 170,357,663
                                                                         =============       =============
</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 INCOMES
                                   (Unaudited)

                                                                                             For the Three Months Ended
                                                                                                      March 31,
                                                                                         -----------------------------------
                                                                                             2003                2002
                                                                                         --------------     ----------------

<S>                                                                                       <C>                 <C>
Interest  income
    Loans                                                                                 $ 2,087,996         $ 1,586,655
    Investment securities                                                                     136,544             181,153
    Federal funds sold                                                                          6,489              22,550
                                                                                          -----------         -----------

        Total interest income                                                               2,231,029           1,790,358
Interest  expense
    Deposits                                                                                  729,480             769,597
    Borrowings                                                                                162,470              76,583
                                                                                          -----------         -----------

        Total interest expense                                                                891,950             846,180
                                                                                          -----------         -----------

        Net interest income before provision for loan losses                                1,339,079             944,178
    Provision for loan losses                                                                 300,000             200,000
                                                                                          -----------         -----------

        Net interest income after provision for loan losses                                 1,039,079             744,178
                                                                                          -----------         -----------

Noninterest income
    Loan fee income                                                                            44,354              27,233
    Service fees on deposit accounts                                                           59,729              35,613
    Other income                                                                               43,070              40,104
                                                                                          -----------         -----------

        Total noninterest income                                                              147,153             102,950
                                                                                          -----------         -----------

Noninterest expenses
    Salaries and benefits                                                                     479,278             431,523
    Professional fees                                                                          33,601              40,059
    Marketing                                                                                  35,349              24,398
    Insurance                                                                                  26,685              21,243
    Occupancy                                                                                 161,397             146,025
    Data processing and related costs                                                         133,057              93,899
    Telephone                                                                                   5,470               5,176
    Other                                                                                      42,161              41,992
                                                                                          -----------         -----------

        Total noninterest expenses                                                            916,998             804,315
                                                                                          -----------         -----------

        Income before income taxes                                                            269,234              42,813

Income tax expense                                                                            102,307                   -
                                                                                          -----------         -----------

Net income                                                                                $   166,927         $    42,813
                                                                                          ===========         ===========

Income  per common share:
    Basic                                                                                 $       .15         $       .04
                                                                                          ===========         ===========
    Diluted                                                                               $       .14         $       .04
                                                                                          ===========         ===========

Weighted average common shares outstanding:
    Basic                                                                                   1,150,000           1,150,000
                                                                                          ===========         ===========
    Diluted                                                                                 1,222,702           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. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)



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

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

   Net income                            -             -               -                 -           42,813         42,813

   Comprehensive income
   (loss), net of tax
     Unrealized holding gain
     on securities available
     for sale                            -             -               -           (81,892)               -        (81,892)
                                                                                                              ------------

   Comprehensive income                  -             -               -                 -                -        (39,079)
                                ----------   -----------     -----------    --------------   ---------------  ------------

   March 31, 2002                1,150,000   $    11,500     $10,635,200    $       45,887   $    (1,272,247) $  9,420,340
                                ==========   ===========     ===========    ==============   ===============  ============



   December 31, 2002             1,150,000   $    11,500     $10,635,200    $      147,333   $      (562,644) $ 10,231,789

   Net  income                           -             -               -                 -           166,927       166,927

   Comprehensive income, net
   of tax
      Change in unrealized
      holding gain on securities
      available for sale                 -             -               -            (7,773)                -        (7,773)
                                                                                                              ------------

   Comprehensive income                  -             -               -                 -                 -       159,154
                                ----------   -----------     -----------    --------------   ---------------  ------------

   March 31, 2003                1,150,000   $    11,500     $10,635,200    $      139,960   $      (395,717) $ 10,390,943
                                ==========   ===========     ===========    ==============   ===============  ============
</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 CASH FLOWS
                                   (Unaudited)

                                                                                            For the Three Months Ended
                                                                                                     March 31,
                                                                                   --------------------------------------------
                                                                                          2003                    2002
                                                                                   --------------------   ---------------------

<S>                                                                                   <C>                      <C>
Operating activities
    Net income                                                                        $    166,927             $     42,813
    Adjustments to reconcile net income to cash
      provided by (used for) operating activities:
      Provision for loan losses                                                            300,000                  200,000
      Depreciation and other amortization                                                   34,982                   50,169
      Accretion and amortization of securities
         discounts and premium, net                                                         26,192                   11,637
      Decrease (increase) in other assets, net                                            (253,301)                 110,682
      Increase (decrease) in other liabilities, net                                        111,180                  384,436
                                                                                      ------------             ------------
           Net cash provided by operating activities                                       385,980                  799,737
                                                                                      ------------             ------------

Investing activities
    Increase (decrease) in cash realized from:
      Origination of loans, net                                                         (9,974,871)             (13,582,804)
      Purchase of property and equipment                                                   (22,707)                 (22,926)
      Purchase of securities available for sale                                           (800,000)              (6,000,000)
      Payments and maturity of securities'
         available for sale                                                              9,114,118                9,297,207
                                                                                      ------------             ------------
           Net cash used for investing activities                                       (1,683,460)             (10,308,523)
                                                                                      ------------             ------------

Financing activities
    Increase in deposits, net                                                            3,533,884               26,366,032
    Decrease in short-term borrowings                                                   (7,154,000)              (8,482,600)
    Increase in other borrowings                                                           500,000                        -
    Increase (decrease) in Federal Home Loan Bank advances                              12,500,000               (3,000,000)
                                                                                      ------------             ------------
           Net cash provided by financing activities                                     9,379,884               14,883,432
                                                                                      ------------             ------------
           Net increase in cash and cash equivalents                                     8,082,404                5,374,646

Cash and cash equivalents at beginning of  the year                                      4,471,026                2,982,956
                                                                                      ------------             ------------

Cash and cash equivalents at end of the year                                          $ 12,553,430             $  8,357,602
                                                                                      ============             ============

Supplemental information
    Cash paid for
      Interest                                                                        $    889,898             $  1,105,396
                                                                                      ============             ============
      Income taxes                                                                    $    382,302                        -
                                                                                      ============             ============

Supplemental schedule of non-cash transaction
    Foreclosure of  real estate                                                       $          -             $    362,987
                                                                                      ============             ============
    Unrealized gain on securities, net of income taxes                               $      (7,773)            $    (81,892)
                                                                                      ============             ============
</TABLE>

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



                                       6
<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.

         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  three-month
period ended March 31, 2003 are not  necessarily  indicative of the results that
may be expected for the year ending December 31, 2003. 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 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 - Note Payable

         At March 31,  2003,  the company had a $3.5 million  revolving  line of
credit with another  bank with a maturity of March 20, 2004.  At March 31, 2003,
the company had outstanding $3.0 million. The company used $2.5 million to repay
a similar line of credit and $500,000 to increase  its  investment  in the bank.
The line of credit  bears  interest at a rate of  three-month  libor plus 2.00%,
which at March 31, 2003 was 3.30%. 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 March 31, 2003,
the company was in compliance with all covenants.

Note 3 - Stock Based Compensation

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


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                               For the Three Months ended March 31,
                                                            --------------------------------------------
                                                                 2003                          2002
                                                            ---------------                -------------

<S>                                                         <C>                            <C>
   Net income, as reported                                  $     166,927                  $      42,813
   Deduct:  Total stock-based employee
      compensation expense determined
      under fair value based method
      for all awards,  net of related tax effects
                                                                  (19,613)                       (17,613)
                                                            -------------                  -------------

   Pro forma net income                                     $     141,927                 $       25,200
                                                            ==============                ==============

   Earnings  per common share:
      Basic - as reported                                   $         .15                  $         .04
                                                            =============                  =============
      Basic - pro forma                                     $         .12                  $         .02
                                                            =============                  =============

      Diluted - as reported                                 $         .14                  $         .04
                                                            =============                  =============
      Diluted - pro-forma                                   $         .11                  $         .04
                                                            =============                  =============
</TABLE>


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


Note 4 - Earnings per Share

         The following  schedule  reconciles the numerators and  denominators of
the basic and diluted earnings per share computations for the three months ended
March 31,  2003 and 2002.  Dilutive  common  shares  arise from the  potentially
dilutive  effect of  Greenville  First  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.


                                                Three Months       Three Months
                                                   Ended               Ended
                                               March 31, 2003     March 31, 2002
                                               --------------     --------------
Basic Earnings Per Share
  Average common shares                            1,150,000          1,150,000
  Net income                                       $ 166,927           $ 42,813
  Earnings per share                               $     .15           $    .04

Diluted Earnings Per Share
  Average common shares outstanding                1,150,000          1,150,000
  Average dilutive common shares                      72,702                  -
                                                  ----------         ----------
  Adjusted average common shares                   1,222,702          1,150,000
  Net income                                       $ 166,927           $ 42,813
  Earnings per share                               $     .14           $    .04





                                       8
<PAGE>



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


DISCUSSION OF FORWARD-LOOKING STATEMENTS

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

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

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

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

     o   the level of allowance for loan loss;

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

     o   the rates of loan growth;

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

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

     o   changes occurring in business conditions and inflation;

     o   changes in technology;

     o   changes in monetary and tax policies;

     o   changes in the securities markets; and

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


CRITICAL ACCOUNTING POLICIES

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

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


                                       9
<PAGE>

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.


GENERAL

         The following is a discussion  of our  financial  condition as of March
31,  2003 and the results of  operations  for the three  months  ended March 31,
2003.  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, the first quarter of 2003 and during most of 2002 and 2001,
the  United  States  experienced  a  slowing  economy  following  ten  years  of
expansion.  During this period,  the economy was also  affected by lower returns
and expectations of the stock markets.  Economic data led the Federal Reserve to
begin an aggressive program of rate cutting,  which moved the Federal Funds rate
down 11 times during 2001 for a total  reduction of 475 basis  points,  bringing
the  Federal  Funds  rate to its  lowest  level in 40 years.  During  the fourth
quarter of 2002,  the Federal  Reserve  adjusted the Federal  Funds rate down an
additional  50 basis  points.  During  the first  quarter of 2003,  the  Federal
Reserve left Federal Funds rates unchanged.

         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.  Many
economists  believe the Federal Reserve will begin increasing  interest rates in
2004. 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.

INCOME STATEMENT REVIEW

Comparison of the three months ended March 31, 2003 and the three months ended
March 31, 2002.

Net Interest Income

         Net  interest  income,   the  largest  component  of  our  income,  was
$1,339,079  for the three months  ended March 31, 2003  compared to $944,178 for
the same  period in 2002,  or an increase  of 41.8%.  The level of net  interest
income is  determined  by the  balances of earning  assets and  interest-bearing
liabilities  combined with the bank's management of the net interest margin. The
following  events  affect the changes in net  interest  income:  interest  rates
earned on assets  and paid on  liabilities,  the rate of growth of the asset and
liability  base,  the  ratio  of  interest-earning  assets  to  interest-bearing
liabilities,   and  the  management  of  the  balance   sheet's   interest  rate
sensitivity.

         Interest  income  for the  first  quarter  of 2003 was  $2,231,029  and
consisted of $2,087,996 on loans,  $136,544 in investments and $6,489 on federal
funds  sold.  Interest  income for the same  period in 2002 was  $1,790,358  and
included  $1,586,655 on loans,  $181,153 on  investments  and $22,550 on federal
funds sold.



                                       10
<PAGE>

         Interest  expense  for the  first  quarter  of 2003  was  $891,950  and
consisted of $729,480  related to deposits and $162,470  related to  borrowings.
Our interest  expense of $846,180  during the first quarter of 2002 consisted of
$769,597  related to deposits and $76,583  related to  borrowings.  Our interest
expense  increased  $45,770,  or 5.4%, while our average deposits and borrowings
increased  from $115.0  million  for the quarter  ended March 31, 2002 to $163.9
million for the quarter ended March 31, 2003, an increase of 42.5%. 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 March 31,
2003 and 2002, information related to our average balance sheet and average
yields on assets and average costs of liabilities. We derived these yields by
dividing annualized 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.


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

<TABLE>
<CAPTION>
                                                             For the Three Months Ended March 31,
                                                            2003                                  2002
                                                            ----                                  ----
                                            Average    Income       Yield/       Average    Income      Yield/
                                            Balance    Expense       Rate        Balance    Expense      Rate
                                            -------    -------       ----        -------    -------      ----

<S>                                         <C>        <C>           <C>        <C>         <C>          <C>
  Federal funds sold                        $  2,351   $     7       1.21%      $  5,000    $    22      1.78%
  Investment securities                       13,773       136       4.00%        13,353        181      5.50%
  Loans                                      154,242     2,088       5.49%       104,620      1,587      6.15%
                                            --------   -------       ----       --------    -------      ----
       Total earning-assets                  170,366     2,231       5.31%       122,973      1,790      5.90%
                                                       -------                              -------
  Non-interest earning assets                  6,206                               5,825
                                            --------                            --------
       Total assets                         $176,572                            $128,798
                                            ========                            ========

  NOW accounts                              $ 27,584   $    32        .47%      $ 19,870    $    48       .98%
  Savings & money market                      20,500        33        .65%        22,299         94      1.71%
  Time deposits                               84,764       664       3.18%        62,534        628      4.07%
                                            --------   -------       ----       --------    -------      ----
       Total interest-bearing deposits       132,848       729       2.23%       104,703        770      2.98%
  FHLB advances                               21,167       118       2.26%         5,867         49      3.39%
  Other borrowings                             9,704        45       1.88%         4,465         27      2.45%
                                            --------   -------       ----       --------    -------      ----
       Total interest-bearing liabilities    163,719       892       2.21%       115,035        846      2.98%
                                                       -------                              -------
  Non-interest bearing liabilities             2,354                               4,311
  Shareholders'equity                         10,499                               9,452
                                            --------                            --------
Total liabilities and shareholders'equity   $176,572                            $128,798
                                            ========                            ========

  Net interest spread                                               3.10%                                2.92%
  Net interest income/margin                           $ 1,339      3.19%                   $   944      3.11%
                                                       =======                              =======
</TABLE>


         Our net interest  spread was 3.10% for the three months ended March 31,
2003 as compared to 2.92% for the three  months  ended March 31,  2002.  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 quarter ended March 31, 2003 was 3.19%
as compared to 3.11% for the three months ended March 31, 2002. The net interest
margin is calculated as the annualized net interest  income divided by quarterly
average earning assets.

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




                                       11
<PAGE>

         Rate/Volume Analysis

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


<TABLE>
<CAPTION>
                                                       Three months ended March 31,
                            ------------------------------------------------------------------------------------
                                           2003 vs 2002                              2002 vs 2001
                            ------------------------------------------------------------------------------------
                                   Increase (Decrease) Due to                Increase (Decrease) Due to
                            ------------------------------------------------------------------------------------
                                                   Rate/                                     Rate/
                             Volume      Rate     Volume     Total      Volume     Rate      Volume     Total
                            ------------------------------------------------------------------------------------

<S>                         <C>          <C>       <C>       <C>        <C>        <C>        <C>        <C>
Interest income
  Loans                     $     753      (171)      (81)       501      1,193      (359)      (379)       455
  Investment securities             6       (49)       (2)       (45)        10       (46)        (2)       (38)
  Federal funds sold              (12)       (7)        4        (15)         6      (42)         (4)       (40)
                            ------------------------------------------------------------------------------------
   Total interest income          747      (227)      (79)       441      1,209      (447)      (385)       377
                            ------------------------------------------------------------------------------------

Interest expense
  Deposits                        207      (195)      (53)       (41)       604      (361)      (273)       (30)
  FHLB advances                   128       (16)      (43)        69         49         -          -         49
  Other borrowings                 32        (6)       (8)        18         27         -          -         27
                            ------------------------------------------------------------------------------------
   Total interest expense         367      (217)     (104)        46        680      (361)      (273)        46
                            ------------------------------------------------------------------------------------

Net interest income         $     380       (10)       25        395        529       (86)      (112)       331
                            ====================================================================================
</TABLE>


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

Provision for Loan Losses

         Included in the results of operations  for the quarters ended March 31,
2003 and 2002 is a non-cash  expense of  $300,000  and  $200,000,  respectively,
related to the provision for loan losses.  The loan loss reserve was  $2,119,180
at March 31, 2003 and  $1,824,149  at December 31, 2002.  The allowance for loan
losses as a  percentage  of gross loans was 1.33% at March 31, 2003 and 1.22% at
December 31, 2002. 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 March 31,
2003 and 2002, we reported net  charge-offs of $4,969 and $4,121,  respectively.
These net charge-offs  relate to consumer loans and credit lines associated with
customer checking accounts.


Noninterest Income and Expenses

         Noninterest  income  in the  first  quarter  of 2003 was  $147,153,  an
increase of 42.9% over  noninterest  income of $102,950 in the first  quarter of
2002.  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.



                                       12
<PAGE>


         We incurred  general and  administrative  expenses of $916,998  for the
three  months  ended March 31, 2003  compared to $804,315 for the same period in
2002.  The $112,683  increase in general and  administrative  expenses  resulted
primarily from additional data processing  costs and the additional  staff hired
to handle the  increases  in both loans and  deposits.  Salaries and benefits in
first  quarter  2003 were  $479,278,  or an increase of  $47,755.  Salaries  and
benefits  represented  52.3% of the  total  noninterest  expense.  Salaries  and
benefits in first quarter 2002 were $431,523.  All other expenses increased only
$64,928.  This increase relates primarily to $39,158  additional data processing
and related costs,  $10,951 increase in marketing cost and $15,372 of additional
occupancy expenses.

BALANCE SHEET REVIEW

General

         At March 31, 2003,  we had total assets of $180.0  million,  consisting
principally  of $157.8 million in loans,  $15.4 million in investments  and $4.3
million in cash and due from banks. Liabilities at March 31, 2003 totaled $169.6
million,  consisting principally of $137.1 million in deposits, $25.5 million in
FHLB  advances  and  $5.0  million  in other  borrowings.  At  March  31,  2003,
shareholders' equity was $10.4 million.

Investments

         At March 31, 2003, the $5.4 million of investment  securities portfolio
available  for sale  represented  approximately  3.0% of our  total  assets.  We
invested in U.S.  Government  agency securities and  mortgage-backed  securities
with a fair  value  of  $5.4  million  and an  amortized  cost of  $15.2  for an
unrealized gain of $212,060.

         Contractual maturities and yields on our investments (all available for
sale) at March 31, 2003 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.

<TABLE>
<CAPTION>
                                        After one but
                      Within             Within five              Over
                     one year    Yield      Years       Yield   Five years   Yield      Total      Yield
                     --------    -----      -----       -----   ----------   -----      -----      -----

<S>                  <C>          <C>     <C>            <C>     <C>         <C>            <C>        <C>
U.S.Government
   agencies          $     -         -    $    1,126     5.29%   $       -        -      $ 1,126    5.29%

  Mortgage-backed
    securities             -         -             -        -        4,314     4.71%       4,314    4.71%
                     -------      ----    ----------     ----    ---------     ----      -------    ----
   Total                   -         -    $    1,126     5.29%   $   4,314     4.71%     $ 5,440    4.83%
                     =================    ===================    ==================      ===============
</TABLE>

         At March 31,  2003,  the $8.2  million  of  short-term  investments  in
federal  funds sold on an  overnight  basis  comprised  4.58% of total assets at
March 31, 2003, as compared to $41,736, or .02%, of total assets at December 31,
2002. As a result of a $6.0 million investment  security being called at the end
of March 2003,  the bank had a lower than normal level of investment  securities
at March 31, 2003 and a higher than normal level of federal funds sold.

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
three  months  ended  March 31,  2003 and 2002 were  $154.2  million  and $104.6
million,  respectively.  Total loans  outstanding at March 31, 2003 and December
31, 2002 were $159.9 million and $149.9 million, respectively,  before allowance
for loan losses.



                                       13
<PAGE>

         The following table summarizes the composition of the loan portfolio:


<TABLE>
<CAPTION>
                                              March 31, 2003                     December 31, 2002
                                        Amount          Percentage           Amount           Percentage
<S>                                 <C>                  <C>              <C>                   <C>
Real estate:
  Commercial
   Owner occupied                   $  30,885,899        19.32%           $  22,653,311         15.11%
   Non-owner occupied                  42,344,576        26.49%              43,076,993         28.74%
   Construction                         3,352,359         2.09%               4,007,650          2.67%
                                    -------------       ------            -------------        ------
                                       76,584,834        47.90%              69,737,954         46.52%
                                    -------------       ------            -------------        ------

  Consumer
    Residential                        24,113,906        15.08%              25,499,625         17.01%
    Home Equity                        19,548,679        12.23%              18,069,407         12.05%
    Construction                        4,044,378         2.53%               4,199,848          2.80%
                                    -------------       -------           -------------        ------
                                       47,706,963        29.84%              47,768,880         31.86%
                                    -------------       ------            -------------        ------

      Total real-estate               124,291,797        77.74%             117,506,834         78.39%

Commercial business                    31,035,880        19.41%              28,192,407         18.81%
Consumer-other                          4,949,566         3.10%               4,590,552          3.06%
Deferred origination fees, net           (404,180)        (.25%)               (386,632)         (.26%)
                                    -------------       ------            -------------        ------
                                      159,883,063       100.00%             149,903,161        100.00%
                                                        ======                                 ======
Less allowance for loan
  Losses                               (2,119,180)                           (1,824,149)
                                    -------------                         -------------

      Total loans, net              $ 157,753,883                         $ 148,079,012
                                    =============                         =============
</TABLE>

         The principal  component of our loan portfolio at March 31, 2003 and at
December 31, 2002 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  by  expensing  a
provision  for  loan  losses  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.



                                       14
<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 March 31, 2003 and at December  31,  2002,  the  allowance  for loan
losses was $2.1 million and $1.8 million,  respectively, or 1.33% of outstanding
loans at March 31, 2003 and 1.22% at December 31, 2002, respectively. During the
three months  ended March 31, 2003 and 2002,  we charged off loans of $4,969 and
$4,121, respectively.

         At March 31, 2003, nonaccrual loans totaled $284,078, which represented
..18% of total loans. Included in the $284,078 are nonaccrual commercial loans of
$268,814 and consumer  loans of $15,264.  During the first quarter of 2002,  the
bank  obtained  ownership  through  foreclosure  procedures  on the  residential
construction  loan that was on nonaccrual  status at December 31, 2001. At March
31, 2003, the bank carried this asset as real estate owned with a carrying value
of  approximately  $625,316.  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 March  31,  2003  (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                      $  16,955       $    14,004      $     55    $   31,014

          Real estate - construction          3,842             2,367         1,188         7,397

          Real estate-  mortgage             15,789            98,036         2,683       116,508

          Consumer and other                  2,319             2,326           309         4,954
                                          ---------       -----------      --------    ----------
              Total loans                 $  38,905       $   116,733      $  4,235    $  159,873
                                          =========       ===========      ========    ==========


          Loans maturing after one year with:
            Fixed interest rates                                                       $   29,032
            Floating interest rates                                                    $   91,936
</TABLE>




                                       15
<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.  We
believe  that  conditions  in 2003 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 2003.

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

<TABLE>
<CAPTION>
                                                        March 31, 2003             December 31, 2002
                                                        --------------             -----------------

<S>                                                <C>                <C>         <C>               <C>
  Demand deposit accounts                          $  15,126          11.03%      $  13,809         10.34%
  NOW accounts                                        15,063          10.99%         15,378         11.51%
  Money market accounts                               18,296          13.35%         19,727         14.77%
  Savings accounts                                     2,139           1.56%          1,774          1.33%
  Time deposits less than $100,000                    32,165          25.70%         32,024         23.98%
  Time deposits of $100,000 or more                   54,308          37.37%         50,851         38.07%
                                                   ---------         ------       ---------        ------
     Total deposits                                $ 137,097         100.00%      $ 133,563        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 $85.9 million and $82.7 million at
March 31, 2003 and December 31, 2002,  respectively.  Our loan-to-deposit  ratio
was 115.07% and 110.87% at March 31, 2003 and December 31, 2002, respectively.

         A significant  portion of the time  deposits  over  $100,000  relate 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>
                                                   March 31, 2003       December 31, 2002
                                                   --------------       -----------------
                                                           (Dollars in thousands)
                                                            --------------------
<S>                                                 <C>                      <C>
     Three months or less                           $  8,448                 $ 13,226
     Over three through six months                    13,304                    9,155
     Over six through twelve months                   15,101                   10,391
     Over twelve months                               17,455                   18,079
                                                    --------                 --------
     Total                                          $ 54,308                 $ 50,851
                                                    ========                 ========
</TABLE>

Borrowings

         At March 31, 2003, the bank had $1,953,000 sales of securities under an
agreement to  repurchase  with brokers with a weighted rate of 1.33% that mature
in less than 30 days. This agreement is secured with approximately $2,000,000 of
investment securities.


                                       16
<PAGE>

         At March 31, 2003,  the bank had two unused f federal  funds  purchased
line of credit  totaling  $6,700,000.  These lines of credit are  unsecured  and
bears interest at the daily rate of federal funds plus 25 basis points (1.50% at
March 31, 2003).

         At March 31, 2003, the bank had  $25,500,000 of advances from the FHLB.
These  advances are secured with  approximately  $37,000,000  of first  mortgage
loans and the bank's  stock in the FHLB.  The bank had  collateral  available to
borrow an additional  $11,500,000  advances at March 31, 2003. Listed below is a
summary of the term and maturities of the advances:

o    The maturity on $5,000,000 of the advances with a weighted rate of 1.63% is
     July 16, 2004. The FHLB has the option to re-price this advance as of April
     16, 2003.

o    The maturity on $7,500,000 of the advances with a weighted rate of 1.21% is
     March 10,  2006.  The FHLB has the option to  re-price  this  advance as of
     March 10, 2004.

o    The maturity on $5,000,000 of the advances with a weighted rate of 1.56% is
     October 15,  2007.  The FHLB has the option to re-price  this advance as of
     October 15, 2003.

o    The maturity on $3,000,000 of the advances with a weighted rate of 4.86% is
     August 24,  2011.  The FHLB has the option to re-price  this  advance as of
     August 24, 2006.

o    The maturity on $5,000,000 of the advances with a weighted rate of 3.36% is
     January 30,  2013.  The FHLB has the option to re-price  this advance as of
     January 30, 2008.

         At March 31,  2003,  the company  had a  $3,500,000  revolving  line of
credit with another  bank with a maturity of June 20,  2004.  At March 31, 2003,
the company had $3,000,000  outstanding on this line of credit. The company used
$2,500,000  of the  proceeds  to repay a line of credit  with  another  bank and
$500,000  to  increase  its  investment  in the bank.  The line of credit  bears
interest at a rate of the three-month libor rate plus 200 basis points, which at
March 31,  2003 was 3.30%.  The company has pledged all of the stock of the bank
as collateral  for this line of credit.  The line of credit  agreement  contains
various covenants related to net income and asset quality. As of March 31, 2003,
the company believes it is in compliance with all covenants.



CAPITAL RESOURCES

         Total shareholders'  equity amounted to $10.4 million at March 31, 2003
and $10.2  million at December  31, 2002.  The increase  during the three months
ended March 31, 2003  resulted  from  $166,927  of net income  partly  offset by
$7,773 decrease 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.


                                     March 31,    December 31,
                                     ---------    ------------
                                       2003           2002
                                       ----           ----

        Return on average assets        .38%            .5%

        Return on average equity       6.45%           7.7%

        Equity to assets ratio         5.85%           8.0%




                                       17
<PAGE>

         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%.

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

         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 March 31, 2003 and December  31, 2002.  At March 31, 2003 and
December 31, 2002, both the company and the bank were in compliance with each of
the applicable regulatory capital requirements and the bank was considered to be
"well capitalized."

                                    March 31, 2003         December 31, 2002
                                    --------------         -----------------
                                    Company   Bank         Company     Bank
                                    -------   ----         -------     ----
     Total risk-based capital         8.3%    10.3%          8.6%      10.3%
     Tier 1 risk-based capital        7.0%     9.0%          7.4%       9.1%
     Leverage capital                 6.8%     7.4%          6.1%       7.5%

         Our objective is to maintain the capital levels such that the bank will
continue to be  considered  well  capitalized.  Depending  on the timing of when
additional  capital is  obtained,  we may be  required to limit the level of the
bank's  growth that has been  experienced  in the past three years.  In April of
2003, we committed to participate in a pooled trust preferred debt offering.  We
anticipate  receiving $6.0 million in additional capital for the bank in June of
2003 if the offering is successful.  We anticipate that the significant  portion
of the $6.0 million will qualify as regulatory capital. We can give no assurance
that the  offering  will be  completed,  nor that the  capital  will  qualify as
regulatory capital.

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



                                       18
<PAGE>

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 March 31,  2003,  unfunded
commitments to extend credit were $36.2  million,  of which  approximately  $9.0
million  is at  fixed  rates  and  $27.2  million  is  at  variable  rates.  The
significant portion of the unfunded commitments relates to consumer equity lines
of  credit.  The bank  anticipates,  based on  historical  experience,  that the
significant  portion  of these  lines of  credit  will not be  funded.  The bank
evaluates each customer's credit worthiness on a case-by-case  basis. The amount
of  collateral  obtained,  if deemed  necessary  by the bank upon  extension  of
credit, is based on management's  credit evaluation of the borrower.  Collateral
varies but may  include  accounts  receivable,  inventory,  property,  plant and
equipment, and commercial and residential real estate.

         At March 31, 2003,  there was a $757,000  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 76% of our loans are variable rate loans at March
31,  2003,  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.



                                       19
<PAGE>

LIQUIDITY & INTEREST RATE SENSITIVITY

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

         At March 31, 2003 and December 31, 2002, our liquid assets,  consisting
of cash,  due from banks and federal  funds sold,  amounted to $12.6 million and
$4.5  million,  representing  7.0%  and  2.6%  of  total  assets,  respectively.
Investment  securities  at March 31, 2003 and December 31, 2002 amounted to $7.1
million  and  $15.5  million,  representing  4.0%  and  9.1%  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 2003, we have utilized proceeds
from the short-term advances from the FHLB and short-term  repurchase agreements
from brokerage firms, proceeds from sales of participations in loans originated,
and an increase in  deposits  to fund the  significant  portion of the 2003 loan
production. By utilizing the various short-term sources of funding, we have been
able to reduce the bank's 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 and commercial mortgage
loans, and stock of the FHLB owned by the bank is pledged to secure any advances
from the FHLB. The unused borrowing capacity at March 31, 2003 that is currently
available  from  the  FHLB  based  on  the  amount  of  collateral   pledged  is
approximately $11.5 million.  In addition,  the bank maintains two federal funds
purchased line of credit with a correspondent  bank,  totaling $6.7 million.  At
March 31, 2003, the unused  portion of the lines was $6.7 million.  We have also
obtained a $10.0 million line of credit that is available  from a brokerage firm
based on the amount of collateral  held by the firm. At March 31, 2003, the firm
held $4.0 million of investment securities as collateral.  As of March 31, 2003,
the bank had utilized approximately $2.0 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.




                                       20
<PAGE>


         The following  table presents our rate  sensitivity at each of the time
intervals indicated as of March 31, 2003. 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
                                  ------          ------               -----            -----      -----

<S>                              <C>           <C>                <C>                 <C>          <C>
                                                             (Dollars in thousands)
  Interest-earning assets:
   Federal funds sold            $   8,237     $         -        $         -         $       -    $  8,237
   Investment securities               450           1,340              2,856               794       5,440
   Loans                           121,596           6,363             31,556               358     159,873
                                 ---------     -----------        -----------         ---------    --------

   Total earning assets          $ 130,283     $     7,703        $    34,412         $   1,152   $ 173,550
                                 ---------     -----------        -----------         ---------   ---------

 Interest-bearing liabilities:
   Money market and NOW          $  33,859     $         -        $        -          $       -   $  33,859
   Regular savings                   2,139               -                 -                  -       2,139
   Time deposit                     16,325          41,634            28,015                  -      85,974
   Other borrowings                  3,000               -                 -                  -       3,000
   Repurchase Agreements             1,953               -                 -                  -       1,953
   FHLB advances                     5,000          12,500             8,000                  -      25,500
                                 ---------     -----------        -----------         ---------   ---------

  Total interest-bearing

    liabilities                  $  62,276     $    54,134        $    36,015         $       -   $ 152,425
                                 ---------     -----------        -----------         ---------   ---------

  Period gap                     $  68,007     $   (46,431)       $    (1,603)        $   1,152   $  21,125

  Cumulative gap                 $  68,007     $    21,576        $    19,973         $  21,125   $  21,125

  Ratio of cumulative gap to
    total earning assets              39.2%           12.4%              11.5%             12.2%
</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  and are  not  expected  to  have a  material  impact  on the  consolidated
financial statements upon adoption.

Item 3. Controls and Procedures

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



                                       21
<PAGE>

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


                           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

           None

Item 5.    Other Information

           None

Item 6.    Exhibits and Reports on Form 8-K

      (a) Exhibits: See Exhibit Index attached hereto.

          Exhibit        Description
          -------        -----------

         99.1      Certification Pursuant to 18 U.S.C. Section 1350, as
                   Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                   Act of 2002.

      (b) Reports on Form 8-K

          The following reports were filed on Form 8-K during the first quarter
          ended March 31, 2003.

             The company filed a Form 8-K on March 28, 2003 to disclose that the
             Chief  Executive  Officer,  R.  Arthur  Seaver,  Jr.  and the Chief
             Financial Officer,  James M. Austin, III, each furnished to the SEC
             the certification  required pursuant to 18 U.S.C.  Section 1350, as
             adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




                                       22
<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: May 12,  2003                   /s/  R. Arther Seaver, Jr.
                                    --------------------------------------
                                    R. Arthur Seaver, Jr.
                                    Chief Executive Officer



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





                                       23
<PAGE>


                                CEO Certification

I, R. Arthur Seaver, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Greenville First
Bancshares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiary, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:    May 12, 2003               By: /s/ R. Arthur Seaver, Jr.
                                       -----------------------------------
                                       R. Arthur Seaver, Jr. President and
                                       Chief Executive Officer



                                       24
<PAGE>



                                CFO Certification

I, James M. Austin, III, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Greenville First
Bancshares, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiary, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.


Date:    May 12, 2003               By: /s/ James M. Austin, III
                                       -----------------------------------
                                       James M. Austin, III
                                       Chief Financial Officer






                                       25
<PAGE>



                                INDEX TO EXHIBITS

Exhibit
Number       Description

99.1         Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
             Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




                                       26