As filed with the Securities and Exchange Commission on August 2, 2005

Registration No. 333-            

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Greene County Bancshares, Inc.

(Exact name of registrant as specified in its charter)

100 North Main Street

Greeneville, Tennessee 37743-4992

(423) 639-5111

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

R. Stan Puckett

Greene County Bancshares, Inc.

100 North Main Street

Greeneville, Tennessee 37743-4992

(423) 639-5111

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

      Approximate Date of Commencement of Proposed Sale to the Public: As soon as practicable after the effective date of this Registration Statement.

      If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.     o

      If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.     o

      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o ______________

      If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o ________

      If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.     o

CALCULATION OF REGISTRATION FEE

      The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED AUGUST 2, 2005

PRELIMINARY PROSPECTUS

1,500,000 Shares

Common Stock

         We are offering 1,500,000 shares of our common stock, par value $2.00 per share. The public offering price is $           per share.

      Our common stock is currently quoted and traded on The Nasdaq National Market under the symbol “GCBS.” The last reported sale price of our common stock on The Nasdaq National Market on August 1, 2005 was $28.80 per share.

       Investing in our common stock involves risks. See “Risk Factors” beginning on page 8 to read about factors you should consider before you make your investment decision.

      Neither the Securities and Exchange Commission nor any state securities commission or other regulatory agency has approved or disapproved of these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

      These securities are not savings accounts, deposit accounts or other obligations of our banking subsidiary and are not insured or guaranteed by the Federal Deposit Insurance Corporation’s Bank Insurance Fund, Savings Association Insurance Fund, or any other governmental agency.

      We have granted the underwriters an option to purchase up to 225,000 additional shares of common stock to cover over-allotments, if any. The underwriters may exercise this option at any time within 30 days after the offering.

      The underwriters expect to deliver the shares to purchasers on or about                     , 2005.

Keefe, Bruyette & Woods

The date of this prospectus is                     , 2005

(INSIDE COVER WILL

INCLUDE MAP OF

BRANCH LOCATIONS)

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

      You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different or additional information. We are not, and the underwriters are not, making an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus. Unless otherwise indicated, all information in this prospectus assumes that the underwriters will not exercise their option to purchase additional common stock to cover over-allotments.

      No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to those jurisdictions.

      In this prospectus we rely on and refer to information and statistics regarding the banking industry and the Tennessee banking market. We obtained this market data from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

      As used in this prospectus the terms “we”, “us” and “our” refer to Greene County Bancshares, Inc. and its subsidiaries on a consolidated basis (unless the context indicates another meaning) and the terms the “Bank”, the “bank”, or “our bank” means Greene County Bank (unless the context indicates another meaning).

	•	increased our total consolidated assets from $789.1 million to $1.37 billion;
	•	increased our total consolidated deposits from $648.6 million to $1.15 billion;
	•	increased our total consolidated net loans, including loans held for sale, from $657.1 million to $1.14 billion; and
	•	expanded our banking branch network from 27 locations to 43 locations including the addition of twelve branches in Middle Tennessee and one branch in the Knoxville metro area since November 2003.

	•	Deliver Community Banking at the Local Level. We believe customers still want to do business with a community bank. We emphasize to our employees the importance of delivering superior customer service and seeking opportunities to strengthen relationships both with customers and in the communities we serve. While we operate under one bank subsidiary, we have 17 bank brands with a distinct local brand in almost every county in which we operate along with a regional executive for each bank brand. Our organizational structure and branding strategy allows us to emphasize local decision making and accountability consistent with our community banking philosophy.
	•	Capitalize on Organic Growth Opportunities. Due to the recent consolidation of financial institutions in our markets, we believe there is a significant opportunity for a community-focused bank to provide a full range of financial services to small and middle-market commercial and retail customers. In addition, consolidation has dislocated experienced and talented management and lending personnel. As a result, we believe we have a substantial opportunity to attract experienced management personnel, loan officers and banking customers both within our current markets and in potential new markets in which we might expand.
	•	Grow Through De Novo Branching. We seek expansion into the attractive, fast-growing markets within or near the Nashville and Knoxville metropolitan areas. We have opened two de novo branches in the Nashville market since November 2004 and opened our first branch in Knoxville in 2003. We plan to open an additional de novo branch in each of the Nashville and Knoxville markets in the next 12 months.
	•	Pursue Select Bank Acquisitions and Branch Purchases. We are focused on expansion opportunities in markets with favorable growth characteristics and in which we have identified experienced bankers to help execute our strategy. Since 2003, we have successfully integrated a whole bank acquisition and an acquisition of three branches.
	•	Increase Core Profitability. We believe as we grow our franchise, we will be able to take advantage of the economies of scale typically enjoyed by larger organizations. We believe that the investments we have made in our branch network and technology infrastructure are sufficient to support a much larger organization, and therefore we believe increases in our expense base going forward should be lower than our proportional increase in assets and revenues. We believe the effect of these trends going forward should improve our profitability over time.

Common stock offered		1,500,000 shares (1,725,000 shares if the underwriters exercise their over-allotment option in full)
Common stock outstanding after this offering		9,151,016 shares (9,376,016 shares if the underwriters exercise their over-allotment option in full)
Use of proceeds		We intend to contribute approximately $35 million of the net proceeds of this offering to our bank subsidiary to provide capital for its acquisition of five branches in Clarksville, Tennessee from Old National Bank. The remainder of the net proceeds will be used for general corporate purposes including, among other things, to support the bank’s internal growth and capital needs.
Dividends		Historically, we have paid quarterly dividends and a special dividend in the fourth quarter of each year. We paid a quarterly dividend for each of the quarters ended March 31, 2005 and June 30, 2005 of $0.12 per share, or $0.48 per share on an annualized basis, not including any special dividend. We intend to continue paying dividends, but the payment of dividends in the future will depend upon a number of factors. We cannot give you any assurance that we will continue to pay dividends or that the amount of future dividends will not be reduced.
Nasdaq National Market symbol		GCBS

			At and for the
			Six Months Ended
											At and for the Years Ended December 31,
			June 30,				June 30,
			2005				2004				2004				2003				2002				2001				2000
			(Unaudited)
			(Dollars in thousands, except per share data)
Summary of Operations:
Total interest income			$	39,438			$	31,799			$	65,076			$	56,737			$	59,929			$	67,964			$	67,696
Total interest expense				12,039				7,936				16,058				15,914				18,680				28,463				29,143
Net interest income				27,399				23,863				49,018				40,823				41,249				39,501				38,553
Provision for loan losses				(2,682	)			(2,685	)			(5,836	)			(5,775	)			(7,065	)			(5,959	)			(8,009	)
Net interest income after provision for loan losses				24,717				21,178				43,182				35,048				34,184				33,542				30,544
Noninterest income:
	Investment securities gains			—				—				—				—				46				—				—
	Other income			6,639				6,164				13,028				11,588				10,484				9,593				6,568
Noninterest expense				(20,697	)			(17,525	)			(36,983	)			(30,618	)			(29,199	)			(28,665	)			(29,393	)
Income before income taxes				10,659				9,817				19,227				16,018				15,515				14,470				7,719
Income tax expense				(4,010	)			(3,690	)			(7,219	)			(5,781	)			(5,702	)			(5,047	)			(2,206	)
Net income			$	6,649			$	6,127			$	12,008			$	10,237			$	9,813			$	9,423			$	5,513
Per Share Data:(1)
Net income, basic			$	0.87			$	0.80			$	1.57			$	1.48			$	1.44			$	1.38			$	0.81
Net income, assuming dilution			$	0.86			$	0.79			$	1.55			$	1.47			$	1.43			$	1.38			$	0.80
Dividends declared			$	0.24			$	0.24			$	0.61			$	0.59			$	0.58			$	0.56			$	0.55
Book value			$	14.83			$	13.80			$	14.22			$	13.31			$	10.94			$	10.06			$	9.24
Tangible book value			$	11.78			$	11.10			$	11.12			$	10.57			$	10.53			$	9.64			$	9.01

		At and for the
		Six Months Ended
										At and for the Years Ended December 31,
		June 30,				June 30,
		2005				2004				2004				2003				2002				2001				2000
		(Unaudited)
		(Dollars in thousands, except per share data)
Financial Condition Data:
Assets		$	1,374,194			$	1,125,002			$	1,233,403			$	1,108,522			$	899,396			$	811,612			$	789,117
Loans, net(2)			1,142,821				972,956				1,032,297				941,207				744,317				679,271				657,065
Cash and investments			96,455				70,173				76,637				80,910				61,980				57,470				76,816
Federal funds sold			46,516				2,412				39,921				5,254				39,493				25,621				8,130
Deposits			1,148,434				884,014				988,022				907,115				719,323				653,913				648,641
FHLB advances and notes payable			70,509				96,662				85,222				63,030				82,359				67,978				59,949
Subordinated debentures			13,403				10,310				10,310				10,310				—				—				—
Federal funds purchased and repurchase agreements			16,426				14,532				13,868				12,896				10,038				10,375				4,713
Shareholders’ equity			113,486				105,509				108,718				101,935				74,595				68,627				63,010
Tangible shareholders’ equity			90,167				84,848				85,023				80,965				71,799				65,721				61,413
Selected Financial Ratios:
Interest rate spread			4.34	%			4.48	%			4.53	%			4.59	%			4.99	%			4.98	%			5.18	%
Net interest margin(3)			4.61	%			4.69	%			4.75	%			4.83	%			5.29	%			5.41	%			5.67	%
Selected Performance Ratios:
Return on average assets			1.02	%			1.09	%			1.06	%			1.12	%			1.17	%			1.20	%			0.75	%
Return on average equity			11.86	%			11.69	%			11.23	%			12.59	%			13.40	%			13.96	%			8.58	%
Return on average tangible equity			15.01	%			14.59	%			13.95	%			13.38	%			13.93	%			14.30	%			8.82	%
Average equity to average assets			8.60	%			9.33	%			9.47	%			8.87	%			8.72	%			8.59	%			8.78	%
Dividend payout ratio			27.63	%			29.98	%			38.86	%			41.20	%			40.31	%			40.53	%			68.22	%
Efficiency Ratio(4)			60.8	%			58.4	%			59.6	%			58.4	%			56.4	%			58.4	%			65.1	%
Asset Quality Ratios:
Ratio of nonperforming assets to total assets			0.69	%			0.84	%			0.69	%			0.79	%			1.48	%			1.22	%			0.96	%
Ratio of allowance for loan losses to nonperforming assets			177.74	%			158.23	%			185.56	%			166.35	%			94.24	%			112.89	%			154.83	%
Ratio of allowance for loan losses to total loans, net of unearned income			1.46	%			1.51	%			1.50	%			1.53	%			1.68	%			1.64	%			1.76	%
Capital Ratios:
Tier 1 leverage ratio(5)			7.9	%			8.7	%			8.5	%			8.4	%			8.3	%			8.2	%			7.9	%
Tier 1 risk-based capital			8.9	%			9.9	%			9.2	%			9.6	%			9.7	%			9.9	%			9.8	%
Total risk-based capital			10.2	%			11.2	%			10.5	%			10.9	%			10.9	%			11.1	%			11.1	%
Other Data:
Banking Locations			43				38				43				40				32				30				27
Full-time equivalent employees			487				458				474				451				386				372				388

(1)	Amounts have been restated to reflect the effect of our five-for-one stock split effected May 2001.
(2)	Includes loans held for sale.
(3)	Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets less the interest rate paid on interest bearing liabilities.
(4)	Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income.
(5)	Tier 1 leverage ratio is defined as Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.

	•	“Tangible book value per share” is defined as total equity reduced by recorded goodwill and other intangible assets divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of a company. For companies such as ours that have engaged in business combinations, purchase accounting can result in the recording of significant amounts of goodwill related to such transactions.
	•	“Tangible shareholders’ equity” is shareholders’ equity less goodwill and other intangible assets.
	•	“Return on average tangible equity” is defined as annualized earnings for the period divided by average equity reduced by average goodwill and other intangible assets.

		At and for the
		Six Months Ended
		June 30
										At and for the Years Ended December 31,
		June 30,				June 30,
		2005				2004				2004				2003				2002				2001				2000
Book value per common share		$	14.83			$	13.80			$	14.22			$	13.31			$	10.94			$	10.06			$	9.24
Effect of intangible assets per share		$	(3.05	)		$	(2.70	)		$	(3.10	)		$	(2.74	)		$	(0.41	)		$	(0.42	)		$	(0.23	)
Tangible book value per share		$	11.78			$	11.10			$	11.12			$	10.57			$	10.53			$	9.64			$	9.01
Return on average equity			11.86	%			11.69	%			11.23	%			12.59	%			13.40	%			13.96	%			8.58	%
Effect of intangible assets			3.15	%			2.90	%			2.72	%			0.79	%			0.53	%			0.34	%			0.24	%
Return on average tangible equity			15.01	%			14.59	%			13.95	%			13.38	%			13.93	%			14.30	%			8.82	%

RISK FACTORS

      An investment in our common stock involves risks. You should carefully consider the risks described below in conjunction with the other information in this prospectus and information incorporated by reference in this prospectus, including our consolidated financial statements and related notes, before investing in our common stock. If any of the following risks or other risks which have not been identified or which we may believe are immaterial or unlikely, actually occur, our business, financial condition and results of operations could be harmed. This could cause the price of our stock to decline, and you may lose part or all of your investment. This prospectus contains forward-looking statements that involve risks and uncertainties, including statements about our future plans, objectives, intentions and expectations. Many factors, including those described below, could cause actual results to differ materially from those discussed in forward-looking statements.

Risks Related to Our Business

      We intend to continue pursuing a significant growth strategy for our business through acquisitions and de novo branching. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in growth stages of development, including the following:

      Operating Results. There is no assurance that existing offices or future offices will maintain or achieve deposit levels, loan balances or other operating results necessary to avoid losses or produce profits. Our growth and de novo branching strategy necessarily entails growth in overhead expenses as we routinely add new offices and staff. Our historical results may not be indicative of future results or results that may be achieved as we continue to increase the number and concentration of our branch offices. Should any new location be unprofitable or marginally profitable, or should any existing location experience a decline in profitability or incur losses, the adverse effect on our results of operations and financial condition could be more significant than would be the case for a larger company.

      Development of Offices. There are considerable costs involved in opening branches and new branches generally do not generate sufficient revenues to offset their costs until they have been in operation for at least a year or more. Accordingly, our new de novo branches can be expected to negatively impact our earnings for some period of time until the branches reach certain economies of scale. Our expenses could be further increased if we encounter delays in the opening of any of our new de novo branches. We may be unable to accomplish future expansion plans due to lack of available satisfactory sites, difficulties in acquiring such sites, increased expenses or loss of potential sites due to complexities associated with zoning and permitting processes, higher than anticipated acquisition costs or other factors. Finally, we have no assurance our new de novo branches or acquired branches will be successful even after they have been established or acquired, as the case may be.

      Expansion into New Markets. Much of our recent growth has been focused in the highly competitive Nashville and Knoxville metropolitan markets. The customer demographics and financial services offerings in these markets are unlike those found in the East Tennessee markets that we have historically served. In the Nashville and Knoxville markets we face competition from a wide array of financial institutions, including much larger, well-established financial institutions. Our expansion into

these new markets may be unsuccessful if we are unable to meet customer demands or compete effectively with the financial institutions operating in these markets.

      Regulatory and Economic Factors. Our growth and expansion plans may be adversely affected by a number of regulatory and economic developments or other events. Failure to obtain required regulatory approvals, changes in laws and regulations or other regulatory developments and changes in prevailing economic conditions or other unanticipated events may prevent or adversely affect our continued growth and expansion. Such factors may cause us to alter our growth and expansion plans or slow or halt the growth and expansion process, which may prevent us from entering certain target markets or allow competitors to gain or retain market share in our existing or expected markets.

      Failure to successfully address these issues could have a material adverse effect on our business, future prospects, financial condition or results of operations, and could adversely affect our ability to successfully implement our business strategy. Also, if our growth occurs more slowly than anticipated or declines, our operating results could be materially adversely affected.

      Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. We could sustain losses if we incorrectly assess the creditworthiness of our borrowers or fail to detect or respond to deterioration in asset quality in a timely manner. Problems with asset quality could cause our interest income and net interest margin to decrease and our provisions for loan losses to increase, which could adversely affect our results of operations and financial condition.

      The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the value and marketability of the collateral for the loan. Management maintains an allowance for loan losses based upon, among other things, historical experience, an evaluation of economic conditions and regular reviews of delinquencies and loan portfolio quality. Based upon such factors, management makes various assumptions and judgments about the ultimate collectibility of the loan portfolio and provides an allowance for loan losses based upon a percentage of the outstanding balances and takes a charge against earnings with respect to specific loans when their ultimate collectibility is considered questionable. If management’s assumptions and judgments prove to be incorrect and the allowance for loan losses is inadequate to absorb losses, or if the bank regulatory authorities require the bank to increase the allowance for loan losses as a part of their examination process, the bank’s earnings and capital could be significantly and adversely affected.

      We rely on the dividends from our bank subsidiary as our primary sources of funds. The primary source of funds of our bank subsidiary are customer deposits and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions. Accordingly, we may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include Federal Home Loan Bank advances and federal funds lines of credit from correspondent banks. While we believe that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands, particularly if we continue to grow and experience increasing loan demand. We

may be required to slow or discontinue loan growth, capital expenditures or other investments or liquidate assets should such sources not be adequate.

      The banking business is highly competitive and we experience competition in each of our markets from many other financial institutions. We compete with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other community banks and super-regional, national and international financial institutions that operate offices in our primary market areas and elsewhere. Many of our competitors are well-established, larger financial institutions that have greater resources and lending limits and a lower cost of funds than we have.

      Additionally, we face competition from de novo community banks, including those with senior management who were previously affiliated with other local or regional banks or those controlled by investor groups with strong local business and community ties. These de novo community banks may offer higher deposit rates or lower cost loans in an effort to attract our customers, and may attempt to hire our management and employees.

      We compete with these other financial institutions both in attracting deposits and in making loans. In addition, we have to attract our customer base from other existing financial institutions and from new residents. This competition has made it more difficult for us to make new loans and at times has forced us to offer higher deposit rates. Price competition for loans and deposits might result in our earning less interest on our loans and paying more interest on our deposits, which reduces our net interest income. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to successfully compete with an array of financial institutions in our market areas.

      From time to time we may engage in additional de novo branch expansion as well as the acquisition of other financial institutions or parts of those institutions, including our pending acquisition of five branches in Clarksville, Tennessee from Old National Bank. We may also consider and enter into new lines of business or offer new products or services. In addition, we may receive future inquiries and have discussions with potential acquirors of us. Acquisitions and mergers involve a number of risks, including:

      We may incur substantial costs to expand, and we can give no assurance such expansion will result in the level of profits we seek. There can be no assurance that integration efforts for any future mergers or acquisitions will be successful. Also, we may issue equity securities, including common stock and securities convertible into shares of our common stock in connection with future acquisitions, which could cause ownership and economic dilution to our current shareholders and to investors purchasing common stock in this offering. There is no assurance that, following any future mergers or acquisitions, our integration efforts will be successful or our company, after giving effect to the acquisition, will achieve profits comparable to or better than our historical experience.

      Our success significantly depends upon the growth in population, income levels, deposits and housing starts in our market areas. If the communities in which we operate do not grow or if prevailing economic conditions locally or nationally are unfavorable, our business may not succeed. Adverse economic conditions in our specific market area could reduce our growth rate, affect the ability of our customers to repay their loans to us and generally affect our financial condition and results of operations. We are less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies. Moreover, we cannot give any assurance we will benefit from any market growth or favorable economic conditions in our primary market areas if they do occur.

      Any adverse market or economic conditions in the state of Tennessee may disproportionately increase the risk that our borrowers will be unable to timely make their loan payments. In addition, the market value of the real estate securing loans as collateral could be adversely affected by unfavorable changes in market and economic conditions. As of June 30, 2005, approximately 75.9% of our loans held for investment were secured by real estate. Of this amount, approximately 41.0% were commercial real estate loans, 32.4% were residential real estate loans and 26.6% were construction and development loans. Any sustained period of increased payment delinquencies, foreclosures or losses caused by adverse market or economic conditions in the state of Tennessee could adversely affect the value of our assets, our revenues, results of operations and financial condition.

      Changes in interest rates may affect our level of interest income, the primary component of our gross revenue, as well as the level of our interest expense. Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and the policies of various governmental and regulatory authorities. In a period of rising interest rates, our interest expense could increase in different amounts and at different rates while the interest that we earn on our assets may not change in the same amounts or at the same rates. Accordingly, increases in interest rates could decrease our net interest income. Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings.

      We depend substantially on the strategies and management services of R. Stan Puckett, our Chairman of the Board and Chief Executive Officer. Although we have entered into an employment agreement with him, the loss of the services of Mr. Puckett could have a material adverse effect on our business, results of operations and financial condition. We are also dependent on certain other key officers who have important customer relationships or are instrumental to our operations. Changes in key personnel and their responsibilities may be disruptive to our business and could have a material adverse effect on our business, financial condition and results of operations.

      We believe that our future results will also depend in part upon our attracting and retaining highly skilled and qualified management and sales and marketing personnel, particularly in those areas where we may open new branches. Competition for such personnel is intense, and we cannot assure you that we will be successful in attracting or retaining such personnel.

      We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various federal and state agencies including the Board of Governors of the Federal Reserve, the FDIC and the Tennessee Department of Financial Institutions. Our regulatory compliance is costly and restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capitalization guidelines established by our regulators, which require us to maintain adequate capital to support our growth.

      The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.

      The Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the Securities and Exchange Commission and Nasdaq that are now applicable to us, have increased the scope, complexity and cost of corporate governance, reporting and disclosure practices. As a result, we have experienced, and may continue to experience, greater compliance costs.

      We may not be able to sustain our historical rate of growth or may not even be able to grow our business at all. In addition, our recent and rapid growth may distort some of our historical financial ratios and statistics. In the future, we may not have the benefit of several recently favorable factors, such as a generally stable interest rate environment, a strong residential mortgage market, or the ability to find suitable expansion opportunities. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. If we experience a significant decrease in our historical rate of growth, our results of operations and financial condition may be adversely affected due to a high percentage of our operating costs being fixed expenses.

      As a Tennessee corporation, we are subject to various legislative acts which impose restrictions on and require compliance with procedures designed to protect shareholders against unfair or coercive mergers and acquisitions. These statutes may delay or prevent offers to acquire us and increase the difficulty of consummating any such offers, even if the acquisition of us would be in our shareholders’ best interests. Our amended and restated charter also contains provisions which may make it difficult for another entity to acquire us without the approval of a majority of the disinterested directors on our board of directors.

      As of July 18, 2005, directors and executive officers beneficially owned approximately 14.85% of our common stock. Agreements with our senior management also provide for significant payments under certain circumstances following a change in control. These compensation arrangements, together with the common stock and option ownership of our board of directors and management, could make it difficult or expensive to obtain majority support for shareholder proposals or potential acquisition proposals of us that our directors and officers oppose.

      We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that our capital resources following this offering, and after giving effect to our proposed acquisition of five bank branches in Clarksville, Tennessee, will satisfy our capital requirements for the foreseeable future. We may at some point, however, need to raise additional capital to support our continued growth.

      Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial performance. Accordingly, we cannot assure you of our ability to raise additional capital if needed on terms acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired.

      We may not be able to immediately deploy all of the capital raised in the offering. Investing the offering proceeds in securities until we are able to deploy the proceeds will provide lower margins than we generally earn on loans, potentially adversely affecting shareholder returns, including earnings per share, return on assets and return on equity.

      The banking industry and the ability to deliver financial services is becoming more dependent on technological advancement, such as the ability to process loan applications over the Internet, accept electronic signatures, provide process status updates instantly and on-line banking capabilities and other customer expected conveniences that are cost efficient to our business processes. As these technologies are improved in the future, we may, in order to remain competitive, be required to make significant capital expenditures.

Risks Related to An Investment in Our Common Stock

      The trading volume in our common stock on The Nasdaq National Market has been relatively low when compared with larger companies listed on The Nasdaq National Market or the stock exchanges. The average daily trading volume of our shares on The Nasdaq National Market during 2004 was approximately 6,900 shares. Thinly traded stocks such as ours can be more volatile than stocks trading in an active public market. We cannot say with any certainty that a more active and liquid trading market for our common stock will develop or be sustained after this offering. Because of this, our shareholders may not be able to sell their shares at the volumes, prices, or times that they desire.

      We cannot predict the effect, if any, that future sales of our common stock in the market, or availability of shares of our common stock for sale in the market, will have on the market price of our common stock. We, therefore, can give no assurance sales of substantial amounts of our common stock in the market, or the potential for large amounts of sales in the market, would not cause the price of our common stock to decline or impair our ability to raise capital through sales of our common stock. Upon completion of this offering, we expect to have approximately 9,151,016 shares of common stock outstanding (or 9,376,016 shares of common stock outstanding if the underwriters exercise their over-allotment option in full).

      The market price of our common stock may fluctuate in the future, and these fluctuations may be unrelated to our performance. General market price declines or overall market volatility in the future could adversely affect the price of our common stock, and the current market price may not be indicative of future market prices.

      In order to maintain our capital at desired or regulatorily-required levels, or to fund future growth, our board of directors may decide from time to time to issue additional shares of common stock, or securities convertible into, exchangeable for or representing rights to acquire shares of our common stock. We may sell these shares at prices below the public offering price of the shares offered by this prospectus, and the sale of these shares may significantly dilute your ownership interest as a shareholder and the per share book value of our common stock. New investors in the future may also have rights, preferences and privileges senior to our current shareholders which may adversely impact our current shareholders.

      The price per share at which we sell the common stock may be more or less than the market price of our common stock on the date the stock offering is consummated. If the actual purchase price is less than the market price for the shares of common stock, some purchasers in the stock offering may be inclined to immediately sell shares of common stock to attempt to realize a profit. Any such sales, depending on the volume and timing could cause the market price of our common stock to decline. Additionally, because stock prices generally fluctuate over time, there is no assurance purchasers of common stock in the offering will be able to sell shares after the offering at a price equal to or greater than the actual purchase price. Purchasers should consider these possibilities in determining whether to purchase shares of common stock and the timing of any sale of shares of common stock.

      We derive our income solely from dividends on the shares of common stock of our banking subsidiary, Greene County Bank. Our bank’s ability to declare and pay dividends is limited by its obligations to maintain sufficient capital and by other general restrictions on its dividends that are applicable to banks that are regulated by the FDIC. In addition, the Federal Reserve may impose restrictions on our ability to pay dividends on our common stock. As a result, we cannot assure you that we will declare or pay dividends on shares of our common stock in the future.

      We intend to contribute approximately $35 million of the net proceeds of this offering to our bank subsidiary to provide capital for its acquisition of five branches located in Clarksville, Tennessee. The remainder of the net proceeds will be used for general corporate purposes, including, among other things, to support the bank’s internal growth and capital needs. Our failure to apply the remaining funds effectively could reduce our ability to earn profits.

      We have supported our continued growth through the issuance of trust preferred securities from a special purpose trust and accompanying junior subordinated debentures. At June 30, 2005, we had outstanding trust preferred securities and accompanying junior subordinated debentures totaling $13.4 million. Payments of the principal and interest on the trust preferred securities of this trust are conditionally guaranteed by us. Further, the accompanying junior subordinated debentures we issued to the trust are senior to our shares of common stock. As a result, we must make payments on the junior subordinated

debentures before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made on our common stock. We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, which are based on assumptions and estimates and describe our future plans, strategies and expectations, are generally identifiable by the use of the words “anticipate,” “will,” “believe,” “may,” “could,” “would,” “should,” “estimate,” “expect,” “intend,” “seek,” or similar expressions. These forward-looking statements may address, among other things, our business plans, objectives or goal for future operations or expansion, the anticipated effects of the offering of the securities hereunder, our forecasted revenues, earnings, assets or other measures of performance, or estimates of risks and future costs and benefits. Although these statements reflect our good faith belief based on current expectations, estimates and projections, they are subject to risks, uncertainties and assumptions and are not guarantees of future performance. Important factors that could cause actual results to differ materially from the forward-looking statements we make or incorporate by reference in this prospectus are described in the section entitled “Risk Factors” and these factors include, but are not limited to:

      If one or more of these risks or uncertainties materialize, or if any of our underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from future results, performance or achievements expressed or implied by these forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this section. We do not intend to and assume no responsibility for updating or revising any forward-looking statements contained in or incorporated by reference into this prospectus, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

      We estimate that our net proceeds from our sale of the shares of common stock we are offering will be approximately $          , or approximately $           million if the underwriters’ over-allotment option is exercised in full, in each case after deducting estimated underwriting discounts and commissions and the estimated offering expenses payable by us assuming a public offering price of $           per share.

      We intend to contribute approximately $35 million of the net proceeds from this offering to our bank subsidiary to provide capital for its acquisition of five branches in Clarksville, Tennessee from Old National Bank. The remainder of the net proceeds will be used for general corporate purposes, including, among other things, to support the bank’s internal growth and capital needs. Pending these uses, the net proceeds will be invested by us in a variety of short-term assets, including federal funds, interest-bearing deposits in other banks and similar investments.

CAPITALIZATION

      The following table sets forth our capitalization and certain capital ratios as of June 30, 2005. Our capitalization is presented on an actual basis and on an as adjusted basis to reflect the sale of 1,500,000 shares of our common stock in this offering and our receipt of $           million in estimated net proceeds from this offering, assuming a public offering price of $           per share and after deducting the underwriting discount and estimated expenses of the offering.

PRICE RANGE OF OUR COMMON STOCK AND DIVIDEND INFORMATION

      Our common stock is traded on The Nasdaq National Market under the symbol “GCBS.” The following table sets forth for the period indicated the high and low sales price of our common stock as reported by The Nasdaq National Market and the dividends declared per share on our common stock.

      On August 1, 2005, the last reported sale price for our common stock on The Nasdaq National Market System was $28.80 per share. The trading in our common stock has been limited and occurred at varying prices and may not have created an active market for our common stock. The prices at which trades occurred may not be representative of the actual value of our common stock. At July 28, 2005, we had approximately 2,034 shareholders of record and approximately 850 beneficial owners.

      Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends. Historically, we have paid quarterly cash dividends on our common stock, and our board of directors presently intends to continue to pay regular quarterly cash dividends. Our ability to pay dividends to our shareholders in the future will depend on our earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, our ability to service any equity or debt obligations senior to our common stock, including our outstanding trust preferred securities and accompanying junior subordinated debentures, and other factors deemed relevant by our board of directors. In order to pay dividends to shareholders, we must receive cash dividends from our bank. As a result, our ability to pay future dividends will depend upon the earnings of our bank, its financial condition and its need for funds.

      Moreover, there are a number of federal and state banking policies and regulations that restrict our bank’s ability to pay dividends. In particular, because our bank is a depository institution and its deposits are insured by the FDIC, it may not pay dividends or distribute capital assets if it is in default on any assessment due to the FDIC. Also, the bank is subject to regulations which impose certain minimum capital requirements that affect the amount of cash available for distribution to us. Lastly, under Federal Reserve policy, we are required to maintain adequate regulatory capital, are expected to serve as a source of financial strength to our bank and to commit resources to support the bank. These policies and regulations may have the effect of reducing or eliminating the amount of dividends that we can declare and pay to our shareholders in the future.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

Overview

      All dollar amounts, other than per share amounts, presented in this discussion are in thousands.

      Our results of operations for the year 2004 compared to 2003 reflected a 17.30% increase in net income and a 5.44% increase in earnings per share, assuming dilution, resulting primarily from a significant increase in net interest income, offset, in part, by substantial increases in noninterest expense. The increase in net interest income, reflecting higher average loan balances, and increases in noninterest expense, result principally from our expansion initiatives in late 2003 and throughout 2004.

      Our results of operations for the year 2004 compared to 2003 also indicated further margin compression reflective of competitive loan and deposit pricing, as well as the controlled growth in higher-yielding subprime loans in our bank’s subsidiaries. This margin compression was offset by the increase in average loan balances and the related increase in interest income resulting principally from our acquisition of Independent Bankshares Corporation, or IBC, in late 2003.

      Our results of operations for the second quarter and the six-month period ended June 30, 2005, compared to the same periods in 2004, reflected an increase in interest income due primarily to loan growth as a result of our expansion initiatives, offset, in part, by an increase in interest expense as a result of increased deposit levels resulting from our expansion efforts and competitive deposit pricing pressures.

      The increase in net interest income was also offset, in part, by an increase in noninterest expense which was reflective of our expansion efforts into Middle Tennessee and our branch expansion in our Knoxville, Tennessee market as well as expenses associated with the establishment of our High Performance Checking Program. Noninterest income also increased for both the three and six months ended June 30, 2005 as compared to the comparable periods in 2004 as a result of increased deposit service charges and Non-Sufficient Funds, or NSF, fees resulting from our expansion efforts and recently-introduced High Performance Checking Program.

      Our net interest margin for the quarter and six months ended June 30, 2005 continued to experience compression as a result of deposit pricing pressures that we continued to experience as we aggressively attempted to generate deposits to support our loan growth and as deposit growth outpaced loan growth for the six months ended June 30, 2005 following the implementation of our High Performance Checking Program. Our net interest margin also experienced compression as a result of our competitive pricing of our loans, particularly in our Middle Tennessee market, and our emphasis on originating more traditional loans while controlling the growth of our higher-yielding subprime loans at our non-bank subsidiaries. We believe that if interest rates remain stable we will continue to experience compression in our net interest margin for the remainder of 2005 as a result of loan and deposit pricing pressures but that if interest rates continue to rise, based on our current mix of interest-earning assets and interest-bearing liabilities, we believe our net interest margin will begin to increase.

      At June 30, 2005, we had total consolidated assets of approximately $1,374,000, total consolidated deposits of approximately $1,148,000, total consolidated net loans, net of unearned income and allowance for loan losses, of approximately $1,142,000, and total consolidated shareholders’ equity of approximately $113,500. Our annualized return on average shareholders’ equity for the three and six months ended June 30, 2005, was 13.11% and 11.86%, respectively and our return on average total assets for the same periods was 1.11% and 1.02%, respectively. We expect that our total assets, total consolidated deposits, total consolidated net loans and total shareholders’ equity will continue to increase over the remainder of 2005 as a result of our expansion efforts, including our branch expansion in Middle Tennessee and our anticipated acquisition of the five bank branches in Clarksville, Tennessee from Old National Bank, which is expected to close in the fourth quarter of 2005.

Critical Accounting Policies and Estimates

      Our consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods.

      Management continually evaluates our accounting policies and estimates we use to prepare the consolidated financial statements. In general, management’s estimates are based on historical experience, information from regulators and third party professionals and various assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

      We believe our critical accounting policies and estimates include the valuation of the allowance for loan losses and the fair value of financial instruments and other accounts. Based on management’s calculation, an allowance of $16,880, or 1.46%, of total loans, net of unearned interest, was an adequate estimate of losses within the loan portfolio as of June 30, 2005. This estimate resulted in a provision for loan losses on the income statement of $1,060 and $2,682, respectively, for the three and six months ended June 30, 2005. If the mix and amount of future charge-off percentages differ significantly from those assumptions used by management in making its determination, the allowance for loan losses and provision for loan losses on the income statement could be materially affected. For further discussion of the allowance for loan losses and a detailed description of the methodology management uses in determining the adequacy of the allowance, see “Business — Lending Activities — Allowance for Loan Losses”, and “Results of Operations — Provision for Loan Losses”.

      The consolidated financial statements include certain accounting and disclosures that require management to make estimates about fair values. Estimates of fair value are used in the accounting for securities available for sale, loans held for sale, goodwill, other intangible assets, and acquisition purchase accounting adjustments. Estimates of fair values are used in disclosures regarding securities held to maturity, stock compensation, commitments, and the fair values of financial instruments. Fair values are estimated using relevant market information and other assumptions such as interest rates, credit risk, prepayments and other factors. The fair values of financial instruments are subject to change as influenced by market conditions.

Results of Operations

      Net Income. Net income for the three months ended June 30, 2005 was $3,714 as compared to $3,275 for the same period in 2004. This increase of $439, or 13.40%, resulted primarily from a $2,089, or 17.43%, increase in net interest income reflecting principally increased volume of interest-earning assets arising primarily from our expansion initiatives and related growth in the loan portfolio. Offsetting this increase was a $1,848, or 21.55%, increase in total noninterest expense from $8,574 for the three months ended June 30, 2004 to $10,422 for the same period of 2005. This increase is also primarily attributable to our expansion initiatives, as discussed above.

      Net income for the six months ended June 30, 2005 was $6,649 as compared to $6,127 for the same period in 2004. The increase of $522, or 8.52%, reflects substantially the same trends that existed during the quarter ended June 30, 2005.

      Net Interest Income. The largest source of our earnings is net interest income, which is the difference between interest income on interest-earning assets and interest paid on deposits and other interest-bearing liabilities. The primary factors which affect net interest income are changes in volume and yields of interest-earning assets and interest-bearing liabilities, which are affected in part by management’s responses to changes in interest rates through asset/liability management. During the three months ended

June 30, 2005, net interest income was $14,072 as compared to $11,983 for the same period in 2004, representing an increase of 17.43%. While our average balances of interest-earning assets increased more than the average balances of interest-bearing liabilities in the three months ended June 30, 2005, as compared to the same quarter in 2004, thus enhancing net interest income, such increase was offset, in part, by the smaller increase in yield on these interest-earning assets as compared to the cost of interest-bearing liabilities. Nevertheless, we experienced a substantial increase in net interest income, as noted above, in the three months ended June 30, 2005 as compared to the same quarter in 2004. Our net interest margin decreased to 4.57% for the three months ended June 30, 2005 as compared to 4.69% for the same period in 2004, and declined 24 basis points from the 4.81% net interest margin for the three months ended December 31, 2004. Our net interest margin also declined for the six months ended June 30, 2005, falling to 4.61% when compared to 4.69% for the same period in 2004. In order to fund our strong loan growth, we have pursued aggressive deposit rates throughout all our markets, resulting in margin compression that is not expected to abate in the near term despite our asset-sensitive interest rate risk position. In addition, management has been controlling the growth of higher-yielding subprime loans in our bank’s subsidiaries and focusing on increasing the balances of our traditional commercial, commercial real estate and residential real estate loans, thus reducing the percentage of subprime loans in our portfolio. This trend in the loan mix also constrains the increases in loan yields during a rising interest rate environment notwithstanding our asset-sensitive balance sheet. Nevertheless, if interest rates continue to increase, based on our current mix of interest-earning assets and interest-bearing liabilities, we believe our net interest margin will begin to increase over the course of the remainder of 2005. Further, in view of our asset-sensitive position, management anticipates declines in net interest margin if product mixes remain relatively unchanged and interest rates reverse their upward trend and begin to decline. In addition, even if interest rates remain stable, our net interest margin could decline due to competitive pressures related to both loan and deposit pricing.

      For the six months ended June 30, 2005, net interest income increased by $3,536, or 14.82%, to $27,399 from $23,863 for the same period in 2004, and the same trends outlined above with respect to the three months ended June 30, 2005 were observed.

      The following tables set forth certain information relating to our consolidated average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and average cost of liabilities for the periods indicated. These yields and costs are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented.

      Provision for Loan Losses. During the three and six months ended June 30, 2005, loan charge-offs were $1,281 and $2,481, respectively, and recoveries of charged-off loans were $537 and $958, respectively. Our provision for loan losses decreased by $102, or 8.78%, and $3, or 0.11%, to $1,060 and $2,682 for the three and six months ended June 30, 2005, respectively, as compared to $1,162 and $2,685 for the same periods in 2004. Our allowance for loan losses increased by $1,159 to $16,880 at June 30, 2005 from $15,721 at December 31, 2004, with the ratio of the allowance for loan losses to total loans, net of unearned income, declining to 1.46% at June 30, 2005 from 1.50% and 1.51% at December 31, 2004 and June 30, 2004, respectively. As of June 30, 2005, indicators of credit quality, as discussed below, are mixed compared to December 31, 2004 but generally improved compared to June 30, 2004. Management continually evaluates our credit policies and procedures for effective risks and controls management. Our trend in asset quality improvement is attributable to improved underwriting policies and management controls. Management believes our asset quality indicators are sustainable within the current economic environment. The ratio of allowance for loan losses to nonperforming assets was 177.74%, 185.56% and 158.23% at June 30, 2005, December 31, 2004 and June 30, 2004, respectively, and the ratio of nonperforming assets to total assets was 0.69%, 0.69% and 0.84% at June 30, 2005, December 31, 2004 and June 30, 2004, respectively. The ratio of nonperforming loans to total loans, excluding loans held for sale, was 0.62%, 0.66% and 0.59% at June 30, 2005, December 31, 2004 and June 30, 2004, respectively. Within the bank, our largest subsidiary, the ratio of nonperforming assets to total assets was 0.64%, 0.61% and 0.74% at June 30, 2005, December 31, 2004 and June 30, 2004, respectively.

      Our annualized net charge-offs for the six months ended June 30, 2005 were $3,046 compared to actual net charge-offs of $5,042 for the year ended December 31, 2004. Annualized net charge-offs as a percentage of average loans improved from 0.48% for the six months ended June 30, 2004 to 0.27% for the six months ended June 30, 2005. Net charge-offs as a percentage of average loans were 0.51% for the year ended December 31, 2004. Within the bank, annualized net charge-offs as a percentage of average loans fell from 0.29% for the six months ended June 30, 2004 to 0.16% for the same period in 2005. Net charge-offs within the bank as a percentage of average loans were 0.35% for the year ended December 31, 2004. Annualized net charge-offs in the bank for the six months ended June 30, 2005 were $1,716 compared to actual net charge-offs of $3,418 for the year ended December 31, 2004. Annualized net charge-offs in Superior Financial for the six months ended June 30, 2005 were $497 compared to actual net charge-offs of $525 for the year ended December 31, 2004. Annualized net charge-offs in GCB Acceptance for the six months ended June 30, 2005 were $833 compared to actual net charge-offs of $1,099 for the year ended December 31, 2004. At this point, management believes that total charge-offs for 2005 in Superior Financial and GBC Acceptance will slightly improve compared to 2004 charge-offs based on asset quality trends.

      Based on our allowance for loan loss calculation and review of the loan portfolio, management believes the allowance for loan losses is adequate at June 30, 2005. Management anticipates that the provision for loan losses during the third quarter of 2005 will be consistent with the second quarter of 2005 and also anticipates that the provision for loan losses for the entire year of 2005 may be less than the provision for 2004 if indicators of credit quality remain stabilized. However, the provision for loan losses could increase for the entire year of 2005, as compared to 2004, if our loan growth continues at the rate experienced through the six months ended June 30, 2005.

      Noninterest Income. Income that is not related to interest-earning assets, consisting primarily of service charges, commissions and fees, has become an important supplement to our traditional method of earning income through interest rate spreads.

      Total noninterest income for the three and six months ended June 30, 2005 was $3,463 and $6,639 as compared to $3,070 and $6,164, respectively, for the same periods in 2004. Service charges, commissions and fees remain the largest component of total noninterest income and increased from $2,518 and $4,913 for the three and six months, respectively, ended June 30, 2004 to $2,836 and $4,978, respectively, for the same periods in 2005. This increase primarily reflects additional service charges and NSF fees from deposit-related products stemming primarily from increased volume as a result of our High Performance Checking Program introduced in the first quarter of 2005 and also our expansion efforts. We believe that

noninterest income will continue to improve over the second half of 2005 when compared to prior comparable periods as a result of the increased volume in deposits resulting from our expansion efforts and our new High Performance Checking Program. In addition, other noninterest income increased by $75 and $410 to $627 and $1,661 for the three and six months ended June 30, 2005, respectively, from $552 and $1,251 for the same periods in 2004. This increase for the six months ended June 30, 2005 is primarily attributable to increased fees of $195 from the sale of mutual funds and annuities and $99 from the sale of our interest in an ATM network vendor.

      Noninterest Expense. Control of noninterest expense also is an important aspect in enhancing income. Noninterest expense includes personnel, occupancy, and other expenses such as data processing, printing and supplies, legal and professional fees, postage, FDIC assessment, etc. Total noninterest expense was $10,422 and $20,697 for the three and six months ended June 30, 2005 compared to $8,574 and $17,525 for the same periods in 2004. The $1,848, or 21.55%, increase in total noninterest expense for the three months ended June 30, 2005 compared to the same period of 2004 principally reflects increases in all expense categories primarily as a result of our expansion program as well as costs of $384 associated with our High Performance Checking Program, which we expect will continue for the remainder of 2005. This program is designed to generate significant numbers and balances of core transaction accounts.

      Similarly, the $3,172 or 18.10%, increase in total noninterest expense for the six months ended June 30, 2005 compared to the same period in 2004 reflects substantially the same trends that existed during the quarter ended June 30, 2005.

      Personnel costs are the primary element of our noninterest expenses. For the three and six months ended June 30, 2005, salaries and benefits represented $5,099, or 48.93%, and $10,344, or 49.98%, respectively, of total noninterest expense. This was an increase of $635, or 14.22%, and $1,173, or 12.79%, respectively, from the $4,464 and $9,171 for the three and six months ended June 30, 2004. Including bank branches and non-bank office locations, we had 53 locations at June 30, 2005 and at December 31, 2004, as compared to 49 at June 30, 2004, and the number of full-time equivalent employees increased 6.33% from 458 at June 30, 2004 to 487 at June 30, 2005. These increases in personnel costs, number of branches and employees are primarily the result of our expansion initiative and are expected to increase for the remainder of 2005 with our continued expansion efforts in Middle Tennessee and Knoxville and as a result of the bank’s proposed acquisition of five Clarksville, Tennessee branches from Old National Bank.

      Primarily as a result of this overall increase in noninterest expense, our efficiency ratio was negatively affected, as the ratio increased from 58.36% at June 30, 2004 to 60.81% at June 30, 2005. The efficiency ratio illustrates how much it cost us to generate revenue. For example, it cost us 60.81 cents to generate one dollar of revenue for the six months ended June 30, 2005 as compared to 58.36 cents for the six months ended June 30, 2004. We believe that our efficiency ratio will continue to be negatively impacted for the remainder of 2005 as a result of our continued expansion efforts.

      Income Taxes. The effective income tax rate for the three and six months ended June 30, 2005 was 38.64% and 37.63%, respectively, compared to 38.41% and 37.59% for the same periods in 2004.

      Net Income. Net income for 2004 was $12,008, an increase of $1,771, or 17.30%, as compared to net income of $10,237 for 2003. The increase is primarily attributable to an increase in net interest income of $8,195, or 20.07%, to $49,018 in 2004 from $40,823 in 2003 and resulted principally from higher average balances of loans. In addition, total noninterest income increased by $1,440, or 12.43%, to $13,028 in 2004 from $11,588 in 2003. The increase in noninterest income can be primarily attributed to a significant gain on the sale of OREO property, the gain on the sale of our credit card portfolio and higher fee income associated with additional volume of deposit-related activity. Offsetting, in part, these positive effects on net income was an increase in noninterest expense of $6,365, or 20.79%, to $36,983 in 2004 from $30,618 in 2003. The increase in noninterest expense resulted principally from our growth strategy reflected in the first full year of operations in Sumner and Rutherford Counties, Tennessee, resulting from our acquisition

of Gallatin-based IBC in November, 2003, as well as the de novo branching initiative into Davidson County, Tennessee and the NBC transaction in Lawrence County, Tennessee, both of which occurred in the fourth quarter of 2004.

      Net income for 2003 was $10,237 an increase of $424, or 4.32%, as compared to net income of $9,813 for 2002. The increase is primarily attributable to an increase in noninterest income of $1,058, or 10.05%, to $11,588 in 2003 from $10,530 in 2002 and a reduction of $1,290, or 18.26%, in the provision for loan losses to $5,775 in 2003 from $7,065 in 2002. Offsetting, in part, these positive effects on net income was an increase in noninterest expense of $1,419, or 4.86%, to $30,618 in 2003 from $29,199 in 2002. The increase in noninterest income resulted primarily from fees related to deposit products, as well as additional income from our mortgage division. The reduction in the provision for loan losses resulted primarily from the decrease in our nonperforming assets during and as of the year ended December 31, 2003 as a result of improving credit quality in our bank and Superior Financial Services. The increase in noninterest expense resulted principally from increases in communication/data transmission expenses, charges related to credit cards and various expenses related to collections and repossessions. As discussed in “Business — Greene County Bank” below, we completed our acquisition of Gallatin-based IBC in November, 2003. As the acquisition was consummated quite late in the year, it did not have a material effect on our earnings for the year ended December 31, 2003.

      Net Interest Income. The largest source of earnings for us is net interest income, which is the difference between interest income on interest earning assets and interest paid on deposits and other interest bearing liabilities. The primary factors that affect net interest income are changes in volume and yields of earning assets and interest bearing liabilities, which are affected in part by management’s responses to changes in interest rates through asset/liability management. During 2004, net interest income was $49,018 as compared to $40,823 in 2003, an increase of 20.07%. We experienced good growth in average balances of interest-earning assets, with average total interest-earning assets increasing by $186,148, or 22.02%, to $1,031,640 in 2004 from $845,492 in 2003. Most of the growth occurred in loans, with average loan balances increasing by $185,947, or 23.21%, to $986,806 in 2004 from $800,859 in 2003. Average balances of most other interest-earning assets increased slightly. Average balances of total interest-bearing liabilities also increased in 2004 from 2003, with average total deposit balances increasing by $137,305, or 20.64%, to $802,506 in 2004 from $665,201 in 2003, as we emphasized various types of deposits as a loan funding source. The NBC transaction, which closed on December 10, 2004 and in which we acquired approximately $28,000 in loans and $69,000 in deposits, occurred sufficiently late in the year so that it had an immaterial effect on average balances of loans and deposits. All of the increase in net interest income in 2004 compared to 2003 related to the full-year effect of the late-2003 IBC acquisition, increased loan volume resulting primarily from our organic loan growth, our 2004 initiative into Davidson County, Tennessee, as well as the late-2004 NBC transaction.

      Beginning in the second half of 2004, the Federal Open Market Committee, or FOMC, embarked upon a program to increase short-term interest rates at, according to the FOMC’s statements, a “pace that is likely to be measured.” As of December 31, 2004, the FOMC had increased short-term interest rates by 100 basis points. While we continue to maintain an interest rate risk position which is asset sensitive, a situation in which rate-sensitive assets reprice quicker than rate-sensitive liabilities, the FOMC’s commencement of increases in short-term interest rates in mid-2004 was not sufficient to compensate us for significant and sustained reductions in short-term interest rates beginning in early 2001, and we were unable to achieve upward momentum in the repricing of our major interest-earning assets. Our aggressive loan pricing in order to obtain market share in new markets and increase share in existing markets further exacerbated this situation. In addition, management has been controlling the growth of higher-yielding subprime loans in the bank’s subsidiaries and focusing on increasing the balances of its traditional commercial, commercial real estate and residential real estate loans, thus reducing the percentage of subprime loans in our portfolio. This trend in the loan portfolio mix also places pressure on loan yields. Consequently, our yield on average loans declined to 6.44% in 2004 from 6.92% in 2003, and our net interest margin declined to 4.75% in 2004 from 4.83% in 2003. This decline represents the sixth consecutive year of net interest margin declines. Our net interest margin for the fourth quarter of 2004 was

4.81% compared to 4.82% and 4.69% for the third and second quarters of 2004, respectively. While management is cautiously optimistic that our net interest margin has stabilized and that further increases in short-term interest rates will enhance net interest margin, management notes that recent and intense competitive pressures with respect to deposit pricing have placed significant stress on our net interest margin. Further, in view of our asset-sensitive position, management anticipates declines in net interest margin if product mixes remain relatively unchanged and interest rates reverse their upward trend and begin to decline. In addition, even if interest rates remain stable, our net interest margin could decline slightly due to competitive pressures related to both loan and deposit pricing.

      During 2003, net interest income was $40,823 as compared to $41,249 in 2002, a decrease of 1.03%. We experienced good growth in average balances of interest-earning assets, with average total interest-earning assets increasing by $65,514, or 8.40%, to $845,492 in 2003 from $779,978 in 2002. All of the growth occurred in loans, with average loan balances increasing by $85,412, or 11.94%, to $800,859 in 2003 from $715,447 in 2002. Average balances of other interest-earning assets declined, as we elected to channel some of our liquidity into higher-yielding loans. Average balances of total interest-bearing liabilities also increased in 2003 from 2002, with average total deposit balances increasing by $52,039, or 8.49%, to $665,201 in 2003 from $613,162 in 2002, as we emphasized various types of deposits as a loan funding source. The increase in average balances of interest-earning assets, offset, in part, by such increase in average balances of interest-bearing liabilities, would have increased net interest income significantly had our net interest margin not continued to decline. However, due to the continued decline in short-term market rates during 2003 and our aggressive loan pricing in order to obtain market share in new markets and increase share in existing markets, our yield on average loans declined to 6.92% in 2003 from 8.09% in 2002. Further, due to our asset sensitivity, a situation in which rate-sensitive assets reprice quicker than rate-sensitive liabilities, resulting in net interest margin compression in a declining rate environment, our net interest margin declined to 4.83% in 2003 from 5.29% in 2002, representing the fifth consecutive year of net interest margin declines.

      Average Balances, Interest Rates and Yields. Net interest income is affected by (i) the difference between yields earned on interest earning assets and rates paid on interest bearing liabilities (“interest rate spread”) and (ii) the relative amounts of interest earning assets and interest bearing liabilities. Our interest rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. When the total of interest earning assets approximates or exceeds the total of interest bearing liabilities, any positive interest rate spread will generate net interest income. An indication of the effectiveness of an institution’s net interest income management is its “net yield on interest earning assets,” which is net interest income divided by average interest-earning assets.

      The following table sets forth certain information relating to our consolidated average interest earning assets and interest bearing liabilities and reflects the average yield on assets and average cost of liabilities for the periods indicated. These yields and costs are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented.