**PRESS RELEASE**

Contact:
- -------
David Ritter
(703) 390-0344

                        GREATER ATLANTIC FINANCIAL CORP.
                   ANNOUNCES FILING OF DEMAND FOR ARBITRATION

         Reston, Virginia - September 8, 2006. Greater Atlantic Financial Corp.
(Nasdaq: GAFC) (the "Company"), the holding company for Greater Atlantic Bank
(the "Bank"), announced today that a Demand for Arbitration Before the American
Arbitration Association has been filed against the Company, the Bank, Greater
Atlantic Mortgage Corporation ("GAMC"), and Carroll E. Amos, President and Chief
Executive of the Company and the Bank.

         The Demand for Arbitration has been filed by Stamm Mortgage Management,
Inc. ("Stamm Mortgage") and T. Mark Stamm, President of Stamm Mortgage in
connection with the Management Agreement among Stamm Mortgage, the Bank, and
GAMC that governed the management of GAMC by Stamm Mortgage before the Bank
terminated GAMC's operations earlier this year, as previously disclosed, and
certain aspects of the Company's public disclosures of that event.

         The Demand for Arbitration alleges three counts: rescission, breach of
contract, and defamation. As against the Bank and GAMC, Stamm Mortgage alleges
that the Management Agreement is unenforceable and should be rescinded,
requiring the Bank and GAMC, jointly and severally, to return $1.77 million that
Stamm Mortgage paid to the Bank and GAMC under the Management Agreement. As an
alternative to rescission, Stamm Mortgage alleges that the Bank and GAMC
breached the Management Agreement by terminating it contrary to its terms,
resulting in $9.6 million in lost profits to Stamm Mortgage. Stamm Mortgage and
Mr. Stamm both allege that the Company, the Bank, GMAC, and Mr. Amos, acting in
his official capacity, defamed Stamm Mortgage and Mr. Stamm through certain
public statements made in press releases and in public securities filings by the
Company and seek $1.0 million in compensatory damages and $350,000 in punitive
damages.

         The Company, on behalf of itself, the Bank, GAMC, and Mr. Amos,
believes all alleged claims are without merit and intends to defend vigorously
against them.

         Greater Atlantic Financial Corp. conducts its business operations
through its wholly owned subsidiary, Greater Atlantic Bank. The Bank offers
traditional banking services to customers through six branches located in
Rockville and Pasadena, Maryland, and Front Royal, New Market, Reston and South
Riding, Virginia.






         PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
FEDERAL SECURITIES LAWS. THESE STATEMENTS ARE NOT HISTORICAL FACTS, BUT
STATEMENTS BASED ON THE COMPANY'S CURRENT EXPECTATIONS REGARDING ITS BUSINESS
STRATEGIES AND THEIR INTENDED RESULTS AND ITS FUTURE PERFORMANCE.
FORWARD-LOOKING STATEMENTS ARE PRECEDED BY TERMS SUCH AS "EXPECTS," "BELIEVES,"
"ANTICIPATES," "INTENDS" AND SIMILAR EXPRESSIONS.

FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. NUMEROUS
RISKS AND UNCERTAINTIES COULD CAUSE OR CONTRIBUTE TO THE COMPANY'S ACTUAL
RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM THOSE
EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE
OR CONTRIBUTE TO THESE DIFFERENCES INCLUDE, WITHOUT LIMITATION, GENERAL ECONOMIC
CONDITIONS, INCLUDING CHANGES IN MARKET INTEREST RATES AND CHANGES IN MONETARY
AND FISCAL POLICIES OF THE FEDERAL GOVERNMENT; LEGISLATIVE AND REGULATORY
CHANGES; AND OTHER FACTORS DISCLOSED PERIODICALLY IN THE COMPANY'S FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION.

BECAUSE OF THE RISKS AND UNCERTAINTIES INHERENT IN FORWARD-LOOKING STATEMENTS,
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THEM, WHETHER INCLUDED IN
THIS REPORT OR MADE ELSEWHERE FROM TIME TO TIME BY THE COMPANY OR ON ITS BEHALF.
THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.