U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-QSB
Mark One

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

          For the quarterly period ended   JUNE 30, 2005
                                         ------------------

[ ]  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:  333-10909

                               Forsyth Bancshares, Inc.
       -----------------------------------------------------------------------
         (Exact name of small business issuer as specified in its charter)

            Georgia                                              58-2231953
-------------------------------                              -------------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

             651 VETERANS MEMORIAL BOULEVARD, CUMMING, GEORGIA 30040
             -------------------------------------------------------
                    (Address of principal executive offices)

                                 (770) 886-9500
                                 --------------
                           (Issuer's telephone number)

                                         N/A
            ------------------------------------------------------------------
          (Former name, former address and former fiscal year, if changed since
                                  last report)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that  the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes  X    No
    ----     ----


State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 1, 2005:      1,858,000; no par value.

Transitional Small Business Disclosure Format  Yes       No  X
                                                   ----     ----


<PAGE>
<TABLE>
<CAPTION>
                        FORSYTH BANCSHARES, INC. AND SUBSIDIARY



--------------------------------------------------------------------------------------

                                         INDEX
                                         -----

                                                                                  PAGE
                                                                                  ----
<S>                                                                               <C>
PART I.    FINANCIAL INFORMATION

           ITEM 1.  FINANCIAL STATEMENTS

             CONSOLIDATED BALANCE SHEET - JUNE 30, 2005 . . . . . . . . . . . . .    3

             CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
               INCOME - THREE MONTHS ENDED JUNE 30, 2005 AND 2004
               AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004. . . . . . . . . . . .    4

             CONSOLIDATED STATEMENT OF CASH FLOWS - SIX
               MONTHS ENDED JUNE 30, 2005 AND 2004. . . . . . . . . . . . . . . .    5

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . .    6

           ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . .    9

           ITEM 3.  CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . .   16


PART II.   OTHER INFORMATION

           ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . 17-18

           ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . .  18

           SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

                          ITEM 1.  FINANCIAL STATEMENTS

                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2005
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


                             ASSETS
                             ------
<S>                                                      <C>
Cash and due from banks                                  $  3,123
Interest-bearing deposits in banks                            236
Federal funds sold                                         17,865
Securities available-for-sale, at fair value               17,890
Restricted equity securities                                  330

Loans                                                     109,956
Less allowance for loan losses                              1,363
                                                         ---------
      Loans, net                                          108,593
                                                         ---------

Premises and equipment                                      7,265
Other assets                                                1,475
                                                         ---------

      TOTAL ASSETS                                       $156,777
                                                         =========


              LIABILITIES AND STOCKHOLDERS' EQUITY
              ------------------------------------

DEPOSITS
  Noninterest-bearing                                    $ 19,090
  Interest-bearing                                        121,075
                                                         ---------
      TOTAL DEPOSITS                                      140,165
Other borrowings                                            1,849
Other liabilities                                             399
                                                         ---------
      TOTAL LIABILITIES                                   142,413
                                                         ---------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Common stock, no par value; 10,000,000
    shares authorized, 1,858,000 issued and outstanding    10,194
  Retained earnings                                         4,237
  Accumulated other comprehensive income                      (67)
                                                         ---------
      TOTAL STOCKHOLDERS' EQUITY                           14,364
                                                         ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $156,777
                                                         =========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                  FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                                     CONSOLIDATED STATEMENTS OF INCOME
                                         AND COMPREHENSIVE INCOME
                                 THREE MONTHS ENDED JUNE 30, 2005 AND 2004
                                AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                                (UNAUDITED)
                                          (DOLLARS IN THOUSANDS,
                                          EXCEPT PER SHARE DATA)


                                                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                   JUNE 30,                    JUNE 30,
                                                           -------------------------  --------------------------
                                                               2005         2004          2005          2004
                                                           -----------  ------------  ------------  ------------
<S>                                                        <C>          <C>           <C>           <C>
INTEREST INCOME
  Loans                                                    $     1,834  $     1,386   $     3,548   $     2,731
  Taxable securities                                               197          137           386           311
  Nontaxable securities                                             10           15            21            29
  Deposits in banks                                                  3            2             8             3
  Federal funds sold                                                28            6            62            12
                                                           -----------  ------------  ------------  ------------
      TOTAL INTEREST INCOME                                      2,072        1,546         4,025         3,086
                                                           -----------  ------------  ------------  ------------

INTEREST EXPENSE
  Deposits                                                         701          370         1,314           734
  Other borrowings                                                   5            2             6             3
                                                           -----------  ------------  ------------  ------------
      TOTAL INTEREST EXPENSE                                       706          372         1,320           737
                                                           -----------  ------------  ------------  ------------

      NET INTEREST INCOME                                        1,366        1,174         2,705         2,349
PROVISION FOR LOAN LOSSES                                           53           32            96            60
                                                           -----------  ------------  ------------  ------------
      NET INTEREST INCOME AFTER
        PROVISION FOR LOAN LOSSES                                1,313        1,142         2,609         2,289
                                                           -----------  ------------  ------------  ------------

OTHER INCOME
  Service charges on deposit accounts                               78           69           142           139
  Gains on sales of securities available-for-sale                    2            4             2            26
  Other operating income                                           145          154           274           277
                                                           -----------  ------------  ------------  ------------
      TOTAL OTHER INCOME                                           225          227           418           442
                                                           -----------  ------------  ------------  ------------

OTHER EXPENSES
  Salaries and other employee benefits                             625          557         1,238         1,082
  Occupancy and equipment expenses                                 152          122           302           247
  Other operating expenses                                         406          303           754           586
                                                           -----------  ------------  ------------  ------------
      TOTAL OTHER EXPENSES                                       1,183          982         2,294         1,915
                                                           -----------  ------------  ------------  ------------

      INCOME  BEFORE INCOME TAXES                                  355          387           733           816

INCOME TAX EXPENSE                                                 137          137           271           290
                                                           -----------  ------------  ------------  ------------

      NET INCOME                                                   218          250           462           526
                                                           -----------  ------------  ------------  ------------

OTHER COMPREHENSIVE INCOME (LOSS)
  Unrealized gains (losses) on securities
    available-for-sale arising during period, net of tax            92         (198)          (97)         (162)
                                                           -----------  ------------  ------------  ------------

      COMPREHENSIVE INCOME                                 $       310  $        52   $       365   $       364
                                                           ===========  ============  ============  ============

BASIC EARNINGS PER SHARE                                   $      0.12  $      0.14   $      0.25   $      0.29
                                                           ===========  ============  ============  ============

DILUTED EARNINGS PER SHARE                                 $      0.12  $      0.14   $      0.24   $      0.29
                                                           ===========  ============  ============  ============

CASH DIVIDENDS PER SHARE                                   $         -  $         -   $         -   $         -
                                                           ===========  ============  ============  ============
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        4
<PAGE>
<TABLE>
<CAPTION>
                      FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                      SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                    (UNAUDITED)
                               (DOLLARS IN THOUSANDS)


                                                                  2005       2004
                                                                ---------  --------
<S>                                                             <C>        <C>
OPERATING ACTIVITIES
  Net income                                                    $    462   $   526
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation                                                     184       155
    Provision for loan losses                                         96        60
    Writedown on other real estate owned                              39         -
    Gain on sales of securities available-for-sale                    (2)      (26)
    Net other operating activities                                   (15)     (101)
                                                                ---------  --------

        Net cash provided by operating activities                    764       614
                                                                ---------  --------

INVESTING ACTIVITIES
  Purchases of securities available-for-sale                      (9,082)        -
  Proceeds from maturities of securities available-for-sale        1,474     2,612
  Proceeds from sales of securities available-for-sale             7,556     6,734
  (Purchase)redemption of restricted equity securities               (89)       52
  Net (increase)decrease in interest-bearing deposits in banks        34       (58)
  Net increase in federal funds sold                             (11,775)   (6,231)
  Net increase in loans                                           (6,317)   (3,641)
  Purchase of premises and equipment                                 (18)   (1,408)
                                                                ---------  --------

        Net cash used in investing activities                    (18,217)   (1,940)
                                                                ---------  --------

FINANCING ACTIVITIES
  Net increase in deposits                                        17,764       679
  Net increase in other borrowings                                 1,339       101
  Proceeds from exercise of stock options                              -       272
                                                                ---------  --------

        Net cash provided by financing activities                 19,103     1,052
                                                                ---------  --------

Net increase(decrease) in cash and due from banks                  1,650      (274)

Cash and due from banks at beginning of period                     1,473     3,617
                                                                ---------  --------

Cash and due from banks at end of period                        $  3,123   $ 3,343
                                                                =========  ========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        5
<PAGE>
                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1.   BASIS OF PRESENTATION

          The  consolidated  financial  information for Forsyth Bancshares, Inc.
          (the  "Company")  included  herein  is  unaudited;  however,  such
          information  reflects  all  adjustments  (consisting  solely of normal
          recurring  adjustments)  which  are,  in  the  opinion  of management,
          necessary  for  a  fair  statement  of results for the interim period.

          The  results  of  operations for the three and six month periods ended
          June  30,  2005  are  not  necessarily indicative of the results to be
          expected  for  the  full  year.


NOTE 2.   STOCK COMPENSATION PLANS

          At  June  30,  2005,  the  Company  has  two  stock-based  employee
          compensation  plans.  The  Company  accounts for those plans under the
          recognition  and  measurement  principles  of  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  options granted under those plans had an exercise price equal
          to  the market value of the underlying 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 SFAS Statement No. 123, Accounting for Stock-Based Compensation, to
          stock-based  employee  compensation.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED JUNE 30,
                                                           ----------------------------
                                                                2005           2004
                                                           -------------  -------------
<S>                                                        <C>            <C>
          Net income, as reported                          $         218  $         250
          Deduct: Total stock-based employee compensation
              expense determined under fair value based
              method for all awards, net of tax                        0              0
                                                           -------------  -------------
          Pro forma net income                             $         218  $         250
                                                           =============  =============
          Earnings per share:
            Basic - as reported                            $         .12  $         .14
                                                           =============  =============
            Basic - pro forma                              $         .12  $         .14
                                                           =============  =============
            Diluted - as reported                          $         .12  $         .14
                                                           =============  =============
            Diluted - pro forma                            $         .12  $         .14
                                                           =============  =============
</TABLE>


                                        6
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 2.   STOCK COMPENSATION PLANS (CONTINUED)

<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED JUNE 30,
                                                           --------------------------
                                                               2005          2004
                                                           ------------  ------------
<S>                                                        <C>           <C>
          Net income, as reported                          $        462  $        526
          Deduct: Total stock-based employee compensation
              expense determined under fair value based
              method for all awards, net of tax                       0             0
                                                           ------------  ------------
          Pro forma net income                             $        462  $        526
                                                           ============  ============
          Earnings per share:
            Basic - as reported                            $       0.25  $       0.29
                                                           ============  ============
            Basic - pro forma                              $       0.25  $       0.29
                                                           ============  ============
            Diluted - as reported                          $       0.24  $       0.29
                                                           ============  ============
            Diluted - pro forma                            $       0.24  $       0.29
                                                           ============  ============
</TABLE>

NOTE 3.   EARNINGS PER SHARE

          Presented below is a summary of the components used to calculate basic
          and  diluted  earnings  per  common  share.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED JUNE 30,
                                                            ----------------------------
                                                                2005          2004
                                                            ----------------------------
<S>                                                         <C>            <C>
            Basic Earnings Per Share:
              Weighted average common shares outstanding        1,858,000      1,844,253
                                                            =============  =============

              Net income                                    $         218  $         250
                                                            =============  =============

              Basic earnings  per share                     $        0.12  $        0.14
                                                            =============  =============

            Diluted Earnings Per Share:
              Weighted average common shares outstanding        1,858,000      1,844,253
              Net effect of the assumed exercise of stock
                options based on the treasury stock method
                using average market prices for the year           28,865            490
                                                            -------------  -------------
              Total weighted average common shares and
                common stock equivalents outstanding            1,886,865      1,844,743
                                                            =============  =============

            Net income                                      $         218  $         250
                                                            =============  =============

            Diluted earnings per share                               0.12           0.14
                                                            =============  =============
</TABLE>


                                        7
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 3.     EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED JUNE 30,
                                                              --------------------------
                                                                  2005          2004
                                                              --------------------------
<S>                                                           <C>           <C>
              Basic Earnings Per Share:
                Weighted average common shares outstanding       1,858,000     1,835,022
                                                              ============  ============

                Net income                                    $        462  $        526
                                                              ============  ============

                Basic earnings  per share                     $       0.25  $       0.29
                                                              ============  ============

              Diluted Earnings Per Share:
                Weighted average common shares outstanding       1,858,000     1,835,022
                Net effect of the assumed exercise of stock
                  options based on the treasury stock method
                  using average market prices for the year          28,865           490
                                                              ------------  ------------
                Total weighted average common shares and
                  common stock equivalents outstanding           1,886,865     1,835,512
                                                              ============  ============

              Net income                                      $        462  $        526
                                                              ============  ============

              Diluted earnings per share                      $       0.24  $       0.29
                                                              ============  ============
</TABLE>


NOTE  4.  CURRENT ACCOUNTING DEVELOPMENTS

In  December  2004,  the  FASB  published  Statement  No.  123  (revised  2004),
"Share-Based  Payment"  ("FAS  123(R)"  or the "Statement"). FAS 123(R) requires
that  the  compensation  cost  relating  to  share-based  payment  transactions,
including  grants  of  employee  stock  options,  be  recognized  in  financial
statements.  That cost will be measured based on the fair value of the equity or
liability  instruments  issued.  FAS  123(R)  covers a wide range of share-based
compensation  arrangements  including  stock  options,  restricted  share plans,
performance-based awards, share appreciation rights, and employee share purchase
plans.  FAS  123(R)  is  a replacement of FASB Statement No. 123, Accounting for
Stock-Based  Compensation,  and  supersedes  APB  Opinion No. 25, Accounting for
Stock  Issued  to  Employees,  and  its  related interpretive guidance (APB 25).

The  effect  of the Statement will be to require entities to measure the cost of
employee services received in exchange for stock options based on the grant-date
fair  value of the award, and to recognize the cost over the period the employee
is  required  to  provide services for the award. FAS 123(R) permits entities to
use  any  option-pricing  model  that  meets  the  fair  value  objective in the
Statement.

The  Company  will  be  required  to apply FAS 123(R) as of the beginning of its
first interim period that begins after December 15, 2005, which will be the year
ending  December  31,  2006.


                                        8
<PAGE>
FAS 123(R) allows two methods for determining the effects of the transition: the
modified  prospective transition method and the modified retrospective method of
transition.  Under  the  modified prospective transition method, an entity would
use  the  fair  value  based  accounting method for all employee awards granted,
modified,  or  settled  after  the  effective  date.  As  of the effective date,
compensation  cost  related to the nonvested portion of awards outstanding as of
that  date  would  be  based  on  the  grant-date  fair value of those awards as
calculated  under  the  original  provisions  of  Statement No. 123; that is, an
entity  would  not  remeasure the grant-date fair value estimate of the unvested
portion  of  awards granted prior to the effective date. An entity will have the
further  option to either apply the Statement to only the quarters in the period
of  adoption  and  subsequent periods, or apply the Statement to all quarters in
the  fiscal  year  of  adoption.  Under  the  modified  retrospective  method of
transition, an entity would revise its previously issued financial statements to
recognize  employee  compensation cost for prior periods presented in accordance
with  the  original  provisions  of  Statement  No.  123.

Although  it  has  not  yet  completed  its study of the transition methods, the
Company believes it will elect the modified prospective transition method. Under
this  method, the Company estimates that the adoption of FAS 123(R) will require
the Company to record approximately $37,000 of stock compensation expense in the
year  ended December 31, 2006 related to employee options issued and outstanding
at June 30, 2005. The impact of this Statement on the Company in fiscal 2006 and
beyond  will  depend  upon  various  factors,  among  them  being  our  future
compensation  strategy.  The pro forma compensation costs presented in the table
above  and  in  prior  filings  for  the  Company  have  been calculated using a
Black-Scholes  option  pricing  model and may not be indicative of amounts which
should  be  expected  in  future  years. No decisions have been made as to which
option-pricing  model  is  most  appropriate  for the Company for future awards.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

The  following  is  management's  discussion and analysis of certain significant
factors  which  have  affected  the  financial position and operating results of
Forsyth  Bancshares,  Inc. and its bank subsidiary, The Citizens Bank of Forsyth
County  (the  "Bank"),  during  the  periods  included  in  the  accompanying
consolidated  financial  statements.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements made herein under the caption "Management's Discussion
and  Analysis  of  Financial  Condition  and Results of Operations" ("MD&A") are
forward-looking  statements  for  purposes  of  the  Securities  Act of 1933, as
amended  (the  "Securities  Act")  and  the  Securities Exchange Act of 1934, as
amended  (the  "Exchange Act"), and as such may involve known and unknown risks,
uncertainties  and other factors which may cause the actual results, performance
or  achievements  of  Forsyth  Bancshares,  Inc. to be materially different from
future  results,  performance  or  achievements  expressed  or  implied  by such
forward-looking  statements.  Such forward looking statements include statements
using  words  such as "may," "will," "anticipate," "should," "would," "believe,"
"contemplate,"  "expect,"  "estimate,"  "continue,"  "may,"  "intend,"  or other
similar  words  and  expressions  of  the  future. Our actual results may differ
significantly  from  the results we discuss in these forward-looking statements.

These  forward-looking statements involve risks and uncertainties and may not be
realized due to a variety of factors, including, without limitation: the effects
of  future  economic  conditions;  governmental monetary and fiscal policies, as
well  as  legislative  and  regulatory changes; the risks of changes in interest
rates  on  the level and composition of deposits, loan demand, and the values of
loan  collateral,  securities,  and  other  interest-sensitive  assets  and
liabilities;


                                        9
<PAGE>
interest  rate  risks;  the  effects of competition from other commercial banks,
thrifts,  mortgage  banking  firms,  consumer  finance companies, credit unions,
securities  brokerage  firms, insurance companies, money market and other mutual
funds  and  other  financial  institutions  operating  in  our  market  area and
elsewhere,  including  institutions  operating  regionally,  nationally,  and
internationally,  together  with  such competitors offering banking products and
services  by  mail,  telephone,  computer,  and  the  Internet.

CRITICAL ACCOUNTING POLICIES

We  have  adopted  various  accounting  policies which 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, 2004
as  filed  on  our  annual  report  on  Form  10-KSB.

Certain  accounting policies involve significant judgments and assumptions by us
which  have  a  material  impact  on  the  carrying  value of certain assets and
liabilities.  We  consider  these  accounting policies to be critical accounting
policies.  The  judgments  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 judgments and assumptions we make,
actual  results could differ from these judgments and estimates which 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 judgments 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.


LIQUIDITY AND CAPITAL RESOURCES

We  consider  our  liquidity  to  be adequate to meet operating and loan funding
requirements at June 30, 2005. At June 30, 2005, the liquidity ratio (i.e. cash,
short-term  assets  and marketable assets divided by deposits) was approximately
21.33%  and  the  loan  to  deposit  ratio  was approximately 78.4%. As the loan
portfolio  grows, we will continue to monitor the liquidity and make adjustments
as  deemed  necessary.  Investing  our  available  funds in loans and other high
yielding  securities  will  increase  earnings  potential.

Requirements  by banking regulators include the monitoring of risk-based capital
guidelines  for  banks  and  holding companies that are designed to make capital
requirements  more sensitive to differences in risk profiles and account for off
balance  sheet  items. We exceed the regulatory minimums on capital requirements
and  ratios.  However,  as we continue to grow and the loan portfolio increases,
these  ratios  should adjust downward. Management will monitor these amounts and
ratios  on  a  continuous basis. The minimum capital requirements and the actual
capital  ratios  on  a  consolidated  and  bank-only  basis  are  as  follows:

<TABLE>
<CAPTION>
                                                      ACTUAL
                                           ----------------------------   REGULATORY
                                                                            MINIMUM
                                           CONSOLIDATED       BANK        REQUIREMENT
                                           -------------  -------------  -------------
<S>                                        <C>            <C>            <C>
               Leverage capital ratios            10.07%          8.42%          4.00%
               Risk-based capital ratios:
                 Tier I capital                   11.46           9.60           4.00
                 Total capital                    12.54          10.70           8.00
</TABLE>


                                       10
<PAGE>
OFF-BALANCE SHEET RISK

We  are  a  party  to  financial  instruments with off-balance sheet risk in the
normal  course  of  business to meet the financing needs of our customers. These
financial  instruments  include commitments to extend credit and standby letters
of credit. Such commitments involve, to varying degrees, elements of credit risk
and interest rate risk in excess of the amount recognized in the balance sheets.

Our exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit and standby letters of
credit is represented by the contractual amount of those instruments. We use the
same  credit policies in making commitments and conditional obligations as we do
for  on-balance  sheet  instruments. A summary of our commitments is as follows:

<TABLE>
<CAPTION>
                                                    JUNE 30,
                                                      2005
                                             ----------------------
                                             (Dollars in Thousands)
<S>                                          <C>
               Commitments to extend credit  $               18,845
               Letters of credit                                854
                                             ----------------------
                                             $               19,699
                                             ======================
</TABLE>

Commitments  to  extend  credit  are agreements to lend to a customer as long as
there  is  no violation of any condition established in the contract. Since many
of  the  commitments  are expected to expire without being drawn upon, the total
commitment  amounts  do  not necessarily represent future cash requirements. The
amount  of  collateral  obtained,  if  deemed  necessary by us upon extension of
credit,  is  based  on  our  credit  evaluation  of  the  customer.

Standby  letters of credit are conditional commitments issued by us to guarantee
the  performance  of  a  customer  to a third party. Those letters of credit are
primarily  issued  to  support  public  and  private borrowing arrangements. The
credit  risk  involved  in  issuing letters of credit is essentially the same as
that  involved  in  extending  loans  to  customers.  Collateral  is required in
instances  which  we  deem  necessary.


                                       11
<PAGE>
FINANCIAL CONDITION

Following is a summary of our balance sheets for the periods indicated:

<TABLE>
<CAPTION>
                                                        JUNE 30,     DECEMBER 31,
                                                         2005           2004
                                                   ---------------  ---------------
                                                        (Dollars in Thousands)
                                                   --------------------------------
<S>                                                <C>              <C>
               Cash and due from banks             $         3,123  $        1,473
               Interest-bearing deposits in banks              236             270
               Federal funds sold                           17,865           6,090
               Securities                                   18,220          18,234
               Loans, net                                  108,593         102,372
               Premises and equipment                        7,265           7,431
               Other assets                                  1,475           1,326
                                                   ---------------  ---------------
                                                   $       156,777  $      137,196
                                                   ===============  ===============

               Deposits                            $       140,165  $      122,401
               Other borrowings                              1,849             510
               Other liabilities                               399             286
               Stockholders' equity                         14,364          13,999
                                                   ---------------  ---------------
                                                   $       156,777  $      137,196
                                                   ===============  ===============
</TABLE>

Total  assets  increased  by  14.27%  for  the first six months of 2005. Deposit
growth of $17,764,000 and an increase in other borrowings of $1,339,000 has been
used  to fund loan growth of $6,221,000, increase cash by $1,650,000 and federal
funds  sold by $11,775,000. Our loan to deposit ratio has decreased to 78.45% as
of  June 30, 2005 as compared to 84.67% as of December 31, 2004. The decrease is
due  to  deposits  growing  at a faster rate than loans. CD's over $100,000 have
increased  by  approximately $8.8 million since December 31, 2004 due in part to
the  acquisition of a $3 million public fund deposit with a term of one year and
a  rate  of  4.1%.  As  of  June  30, 2005 public funds deposits with one entity
totaled  $11  million.  We  also received a $4.5 million deposit during the last
week  of  the  quarter and the bank does not expect to retain these funds. Other
borrowings  increased  due  to a $1.3 million advance from the Federal Home Loan
Bank  of Atlanta to fund a long-term loan. Our current federal funds, investment
securities  and  continued  deposit growth should provide the funds for expected
loan growth in the future. Stockholders' equity has increased by $365,000 due to
net income of $462,000, and decreases of unrealized gains on sales of securities
available-for-sale,  net  of  tax,  of  $97,000.


                                       12
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004 AND FOR
THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004

Following is a summary of our operations for the periods indicated.

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED
                                                    JUNE 30,
                                               2005          2004
                                          -------------  -------------
                                             (Dollars in Thousands)
                                          ----------------------------
<S>                                       <C>          <C>
               Interest income            $       2,072  $       1,546
               Interest expense                     706            372
                                          -------------  -------------
               Net interest income                1,366          1,174
               Provision for loan losses             53             32
               Other income                         225            227
               Other expense                      1,183            982
                                          -------------  -------------
               Pretax income                        355            387
               Income taxes                         137            137
                                          -------------  -------------
               Net income                 $         218  $         250
                                          =============  =============
</TABLE>

<TABLE>
<CAPTION>
                                               SIX MONTHS ENDED
                                                   JUNE 30,
                                              2005           2004
                                          -------------  -------------
                                             (Dollars in Thousands)
                                          ----------------------------
<S>                                       <C>          <C>
               Interest income            $       4,025  $       3,086
               Interest expense                   1,320            737
                                          -------------  -------------
               Net interest income                2,705          2,349
               Provision for loan losses             96             60
               Other income                         418            442
               Other expense                      2,294          1,915
                                          -------------  -------------
               Pretax income                        733            816
               Income taxes                         271            290
                                          -------------  -------------
               Net income                 $         462  $         526
                                          =============  =============
</TABLE>

Our  net  interest  income has increased by $192,000 and $356,000 for the second
quarter  and  first  six  months  of 2005, respectively, as compared to the same
periods in 2004. Our net interest margin decreased to 4.12% during the first six
months  of  2005 as compared to 4.40% for the first six months of 2004. Interest
income  and  expense  are both higher due to a combination of increased footings
and  higher  interest  rates.  The  intensifying  competition and recent rise in
interest rates has pushed our cost of funds to 2.41% for the first six months of
2005  as  compared  to  1.68%  for  the  first  six  months  of  2004.


                                       13
<PAGE>
The  provision  for  loan losses increased by $21,000 and $36,000 for the second
quarter  and the first six months of 2005, respectively, as compared to the same
periods  in  2004. We incurred net charge-offs of $3,000 in the first six months
of  2005  as compared to $24,000 in the first six months of 2004. Based upon our
evaluation of the loan portfolio, we believe the allowance for loan losses to be
adequate  to  absorb losses on existing loans that may become uncollectible. Our
evaluation  considers  significant  factors relative to the credit risk and loss
exposure  in  the  loan  portfolio,  including  past  due  and classified loans,
historical  experience,  underlying  collateral  values,  and  current  economic
conditions  that  may  affect the borrower's ability to repay. The allowance for
loan  losses is evaluated by segmenting the loan portfolio into unclassified and
classified  loans.  An allowance percentage is applied to the unclassified loans
to  establish  a  general  allowance  for  loan losses. The allowance percentage
determined  is  based  upon  our  experience  specifically  and  the  historical
experience  of  the  banking industry generally. The classified loans, including
impaired  loans,  are  analyzed  individually  in  order to establish a specific
allowance  for  loan  losses.  The total of these allowances are compared to the
minimum  allowance  level  range  in  accordance with internal policy, (1.20% to
1.30% of total loans outstanding), with the greater amount being recorded as the
allowance  for  loan  losses.

Information  with respect to nonaccrual, past due and restructured loans at June
30,  2005  and  2004  is  as  follows:

<TABLE>
<CAPTION>
                                                                                  JUNE 30,
                                                                        ----------------------------
                                                                            2005           2004
                                                                        -------------  -------------
                                                                            (Dollars in Thousands)
                                                                        ----------------------------
<S>                                                                     <C>            <C>
Nonaccrual loans                                                        $          66  $           0
Loans contractually past due ninety days or more as to interest
  or principal payments and still accruing                                          0              0
Restructured loans                                                                  0              0
Potential problem loans                                                            20             49
Interest income that would have been recorded on nonaccrual
  and restructured loans under original terms                                       0              0
Interest income that was recorded on nonaccrual and restructured loans              0              0
</TABLE>


Potential  problem loans are defined as loans about which we have serious doubts
as  to  the  ability  of  the borrower to comply with the present loan repayment
terms  and which may cause the loan to be placed on nonaccrual status, to become
past  due  more  than  ninety  days,  or  to  be  restructured.

It  is  our  policy  to  discontinue the accrual of interest income when, in the
opinion  of  management, collection of interest becomes doubtful. This status is
accorded interest when (1) there is a significant deterioration in the financial
condition  of  the  borrower and full repayment of principal and interest is not
expected  and  (2)  the principal or interest is more than ninety days past due,
unless  the  loan  is  both  well-secured  and  in  the  process  of collection.


                                       14
<PAGE>
Loans  classified  for  regulatory  purposes  as loss, doubtful, substandard, or
special  mention that have not been included in the table above do not represent
or  result from trends or uncertainties which management reasonably expects will
materially  impact  future  operating  results,  liquidity or capital resources.
These  classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the  ability  of  such  borrowers  to  comply  with  the  loan  repayment terms.

Information  regarding  certain  loans  and allowance for loan loss data through
June  30,  2005  and  2004  is  as  follows:

<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED
                                                                            JUNE 30,
                                                                   ---------------------------
                                                                       2005          2004
                                                                   ------------  -------------
                                                                     (Dollars in Thousands)
                                                                   ---------------------------
<S>                                                                <C>           <C>
Average amount of loans outstanding                                $   105,539   $     84,439
                                                                   ============  =============

Balance of allowance for loan losses at beginning of period        $     1,270   $      1,033
                                                                   ------------  -------------

Loans charged off
  Commercial and financial                                         $        (0)  $         (8)
  Real estate mortgage                                                      (0)            (0)
  Installment                                                               (4)           (22)
                                                                   ------------  -------------
                                                                            (4)           (30)
                                                                   ------------  -------------

Loans recovered
  Commercial and financial                                                   0              4
  Real estate mortgage                                                       0              0
  Installment                                                                1              2
                                                                   ------------  -------------
                                                                             1              6
                                                                   ------------  -------------

Net charge-offs                                                             (3)           (24)
                                                                   ------------  -------------

Additions to allowance charged to operating expense during period           96             60
                                                                   ------------  -------------

Balance of allowance for loan losses at end of period              $     1,363   $      1,069
                                                                   ============  =============

Ratio of net loans charged off during the period to
  average loans outstanding                                               0.01%          0.03%
                                                                   ============  =============
</TABLE>

Other  income  has decreased by $2,000 and $24,000 during the second quarter and
first six months of 2005, respectively, as compared to the same periods in 2004.
The  decrease  for  the  first  six  months  is due to decreased gain on sale of
securities.


                                       15
<PAGE>
Other  expenses increased by $201,000 and $379,000 during the second quarter and
first  six months of 2005, respectively, as compared to the same periods in 2004
due  to  increased  salaries  and  employee  benefits  of  $68,000 and $156,000,
respectively,  increased occupancy expense of $30,000 and $55,000, respectively,
and  increased  other operating expenses of $103,000 and $168,000, respectively.
Salaries  and  other  employee benefits increased due to annual salary increases
and  the  hiring  of additional staff. Occupancy and equipment expense increased
due  to  the Free Home office opening in November 2004. Other operating expenses
increased due to the additional expense of promoting and operating a new branch;
a  one-time  write  down  in  the second quarter of $39,000 on other real estate
owned  to reflect the sales price in a new contract on the property; an increase
in  directors'  fees of $15,000 and $20,000, respectively, due to an increase in
fees  paid to directors as specified in the Director Compensation section of the
2005 Proxy Statement; and an increase in accounting and audit fees of $5,000 and
$28,000, respectively, due to costs associated with compliance of Section 404 of
the  Sarbanes-Oxley  Act.

The  provision  for  income  taxes was $271,000 for the first six months of 2005
(effective  tax rate of 37%) as compared to $290,000 for the first six months of
2004  (effective  tax  rate  of  35.5%).

Overall,  net income has decreased by $32,000 for the second quarter and $64,000
for  the first six months of 2005, respectively, as compared to the same periods
in  2004.  The  decrease  in  net  income is due to the increase in non-interest
expense  offset  by  the  increase  in  net  interest  income.

We  are  not  aware of any known trends, events or uncertainties, other than the
effect  of  events  as  described  above,  that will have or that are reasonably
likely  to  have  a  material  effect  on  its  liquidity,  capital resources or
operations.  We  are  also  not  aware  of  any  current  recommendations by the
regulatory  authorities  which,  if  they  were  implemented, would have such an
effect.


ITEM  3.  CONTROLS AND PROCEDURES

As  of  the  end  of  the  period  covered  by  this  report,  we carried out an
evaluation,  under  the  supervision  and  with  the  participation of our Chief
Executive  Officer  and the Chief Financial Officer, of the design and operation
of  our  disclosure controls and procedures. Based on this evaluation, our Chief
Executive and Chief Financial Officer concluded that our disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
that  we  are  required  to disclose in the reports we file under the Securities
Exchange  Act  of 1934, within the time periods specified in the SEC's rules and
forms.  Our  Chief  Executive Officer and Chief Financial Officer also concluded
that  our  disclosure  controls  and procedures are effective in timely alerting
them  to material information relating to our company required to be included in
our  periodic  SEC  filings.  In  connection  with  the new rules, we are in the
process  of  further  reviewing  and  documenting  our  disclosure  controls and
procedures,  including  our  internal  controls  and  procedures  for  financial
reporting,  and  may  from  time  to time make changes designed to enhance their
effectiveness and to ensure that our systems evolve with our business.

There  have  been  no  changes in our internal controls or in other factors that
could  significantly  affect  internal  controls  subsequent to the date of this
evaluation.


                                       16
<PAGE>
                           PART II - OTHER INFORMATION



ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          (a)  The Annual Meeting of Shareholders was held on May 17, 2005.

          (b)  The  following  directors were elected for a term of one year and
               until  a  successor  is  duly  qualified  and  elected:

               Catherine M. Amos
               Jeffrey S. Bagley
               Danny M. Bennett
               Michael P. Bennett
               Bryan L. Bettis
               Talmadge W. Bolton
               Thomas L. Bower, III
               Charles R. Castleberry
               Charles D. Ingram
               Herbert A. Lang, Jr.
               John P. McGruder
               James J. Myers
               Timothy M. Perry
               Danny L. Reid
               Charles R. Smith
               Wyatt L. Willingham
               Jerry M. Wood

          (c)  The  following  matters  were  voted  on  at  the  meeting as was
               previously  identified  in  the Proxy materials forwarded to each
               shareholder.  The shares represented at the meeting (1,130,803 or
               60.86%)  voted  as  follows:

               1.   Proposal to elect the 17 individuals nominated by management
                    as  Directors.

<TABLE>
<CAPTION>
                 Director            For     Against  Abstain
          ----------------------  ---------  -------  -------
<S>                               <C>        <C>      <C>
          Catherine M. Amos       1,130,803        0        0
          Jeffrey S. Bagley       1,130,803        0        0
          Danny M. Bennett        1,130,803        0        0
          Michael P. Bennett      1,130,803        0        0
          Bryan L. Bettis         1,130,803        0        0
          Talmadge W. Bolton      1,130,803        0        0
          Thomas L. Bower, III    1,130,803        0        0
          Charles R. Castleberry  1,130,803        0        0
</TABLE>


                                       17
<PAGE>
                           PART II - OTHER INFORMATION


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)

<TABLE>
<CAPTION>
                Director           For     Against  Abstain
          --------------------  ---------  -------  -------
<S>                             <C>        <C>      <C>
          Charles D. Ingram     1,130,803        0        0
          Herbert A. Lang, Jr.  1,130,803        0        0
          John P. McGruder      1,130,803        0        0
          James J. Myers        1,130,803        0        0
          Timothy M. Perry      1,122,803        0    8,000
          Danny L. Reid         1,130,803        0        0
          Charles R. Smith      1,130,803        0        0
          Wyatt L. Willingham   1,130,803        0        0
          Jerry M. Wood         1,130,803        0        0
</TABLE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits.

               31.1      Certification  of the Chief Executive Officer, Pursuant
                         to  Rule 13a-14(a) under the Securities Exchange Act of
                         1934,  as  amended.

               31.2      Certification  of the Chief Financial Officer, Pursuant
                         to  Rule 13a-14(a) under the Securities Exchange Act of
                         1934,  as  amended.

               32        Certification  of the Chief Executive Officer and Chief
                         Financial  Officer, Pursuant to 18 U.S.C. Section 1350,
                         as  Adopted  Pursuant  to  Section  906  of  the
                         Sarbanes-Oxley  Act  of  2003.

          (b)  Reports on Form 8-K.

               None.


                                       18
<PAGE>
                                   SIGNATURES



          In  accordance  with  the  requirements  of  the  Exchange  Act,  the
registrant  caused  this  report  to be signed on its behalf by the undersigned,
thereunto  duly  authorized.


                              FORSYTH BANCSHARES, INC.
                                      (Registrant)



DATE: August 12, 2005           BY:  /s/ Timothy M. Perry
      ---------------               -------------------------------
                                     Timothy M. Perry, President and C.E.O.
                                     (Principal Executive Officer)


DATE: August 12, 2005           BY:  /s/ Timothy D. Foreman
      ---------------               -------------------------------
                                     Timothy D. Foreman, Vice President,
                                     Secretary and Treasurer
                                     (Principal Financial and Accounting
                                     Officer)


                                       19