<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
Mark One

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

        For the quarterly period ended      SEPTEMBER 30, 1999
                                      ----------------------------

[   ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             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.)


         501 TRI-COUNTY PLAZA, HIGHWAYS 9 AND 20, 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 [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes [ ] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 1, 1999:     800,000; no par value.

Transitional Small Business Disclosure Format (Check One)  Yes [  ]  No  [  X ]




<PAGE>   2


                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY

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

                                      INDEX

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

                  ITEM 1.  FINANCIAL STATEMENTS

                     CONSOLIDATED BALANCE SHEET - SEPTEMBER 30, 1999......................................................3

                     CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
                         INCOME (LOSS) - THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                         AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998................................................4

                     CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE
                       MONTHS ENDED SEPTEMBER 30, 1999 AND 1998...........................................................5

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

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................................7


PART II.          OTHER INFORMATION

                  ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................16

                  ITEM 5 - OTHER INFORMATION.............................................................................16

                  ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K..............................................................16

                  SIGNATURES.............................................................................................17
</TABLE>


                                       2
<PAGE>   3

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1999
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


                                  ASSETS
<TABLE>
<S>                                                                        <C>
Cash and due from banks                                                    $ 1,127
Federal funds sold                                                           1,450
Securities available-for-sale, at fair value                                21,497
Securities held-to-maturity, fair value of $940                                944

Loans                                                                       35,908
Less allowance for loan losses                                                 451
                                                                           -------
          Loans, net                                                        35,457
                                                                           -------

Premises and equipment                                                         967
Other assets                                                                 1,113
                                                                           -------

          Total assets                                                     $62,555
                                                                           =======


                   Liabilities and Stockholders' Equity

Deposits
    Noninterest-bearing demand                                             $ 6,462
    Interest-bearing demand                                                 13,701
    Savings                                                                    891
    Time                                                                    33,371
                                                                           -------
          Total deposits                                                    54,425
Other liabilities                                                              377
                                                                           -------
          Total liabilities                                                 54,802
                                                                           -------

Commitments and contingent liabilities

Stockholders' equity
    Common stock, no par value                                               7,960
    Retained earnings                                                          280
    Accumulated other comprehensive loss                                      (487)
                                                                           -------
          Total stockholders' equity                                         7,753
                                                                           -------

          Total liabilities and stockholders' equity                       $62,555
                                                                           =======
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       3
<PAGE>   4
                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                        CONSOLIDATED STATEMENTS OF INCOME
                         AND COMPREHENSIVE INCOME (LOSS)
                 THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS,
                             EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                        Three Months Ended        Nine Months Ended
                                                            SEPTEMBER 30,           SEPTEMBER 30,
                                                       ----------------------   -----------------------
                                                         1999         1998        1999           1998
                                                       --------     --------     --------     --------
<S>                                                    <C>          <C>          <C>          <C>
Interest income
    Loans                                              $    836     $    705     $  2,241     $  1,855
    Taxable securities                                      319          305          989          848
    Nontaxable securities                                    20           --           45           --
    Federal funds sold                                        9           25          122           68
                                                       --------     --------     --------     --------
              Total interest income                       1,184        1,035        3,397        2,771
                                                       --------     --------     --------     --------

Interest expense on deposits                                526          516        1,630        1,366
                                                       --------     --------     --------     --------

              Net interest income                           658          519        1,767        1,405
Provision for loan losses                                    94           25          130          125
                                                       --------     --------     --------     --------
              Net interest income after
                 provision for loan losses                  564          494        1,637        1,280
                                                       --------     --------     --------     --------

Other income
    Service charges on deposit accounts                      25           18           75           55
    Gain on sales of securities available-for-sale            7           --            7           --
    Other operating income                                    3           10           22           29
                                                       --------     --------     --------     --------
              Total other income                             35           28          104           84
                                                       --------     --------     --------     --------

Other expenses
    Salaries and other employee benefits                    207          170          578          513
    Occupancy and equipment expenses                         73           65          211          190
    Other operating expenses                                176          115          463          321
                                                       --------     --------     --------     --------
              Total other expenses                          456          350        1,252        1,024
                                                       --------     --------     --------     --------

              Income  before income taxes                   143          172          489          340

Income tax expense                                           61           --          184           --
                                                       --------     --------     --------     --------

              Net income                                     82          172          305          340
                                                       --------     --------     --------     --------

Other comprehensive income (loss), net of tax
    Unrealized gains (losses) on securities
      available-for-sale arising during period             (125)         169         (563)         147
                                                       --------     --------     --------     --------

              Comprehensive income (loss)              $    (43)     $   341     $   (258)    $    487
                                                       ========      =======     ========     ========

Basic and diluted earnings per common share            $   0.10      $  0.22     $   0.38     $   0.43
                                                       ========      =======     ========     ========

Weighted average shares outstanding
  (basic and diluted)                                   800,000      800,000      800,000      800,000
                                                       ========      =======     ========     ========

Cash dividends per share of common stock               $     --      $    --     $     --     $     --
                                                       ========      =======     ========     ========
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                        4

<PAGE>   5


                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                        1999           1998
                                                                       ------          -------
<S>                                                                    <C>             <C>
OPERATING ACTIVITIES
    Net income                                                         $  305          $   340
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation and amortization                                      95               35
        Provision for loan losses                                         130              121
        Gain on sales of securities available-for-sale                     (7)              --
        Other operating activities                                       (107)            (343)
                                                                       ------          -------

              Net cash provided by operating activities                   416              153
                                                                       ------          -------

INVESTING ACTIVITIES
    Purchases of securities available-for-sale and
         held-to-maturity                                              (5,416)          (4,595)
    Proceeds from maturities of securities available-for-sale
         and held-to-maturity                                           1,340               --
    Proceeds from sales of securities available-for-sale                2,250               --
    Net decrease in Federal funds sold                                  6,730               --
    Net increase in loans                                              (8,412)          (9,963)
    Purchase of premises and equipment                                   (119)             (41)
                                                                       ------          -------

              Net cash used in investing activities                    (3,627)         (14,599)
                                                                       ------          -------

FINANCING ACTIVITIES
    Net increase in deposits                                            3,012           14,999
                                                                       ------          -------

              Net cash provided by financing activities                 3,012           14,999
                                                                       ------          -------

Net increase (decrease) in cash and due from banks                       (199)            (553)

Cash and due from banks at beginning of period                          1,326            3,797
                                                                       ------          -------

Cash and due from banks at end of period                               $1,127          $ 4,350
                                                                       ======          =======
</TABLE>



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       5
<PAGE>   6




                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)




NOTE 1.  BASIS OF PRESENTATION

         The consolidated financial information 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 nine month period ended September 30,
         1999 are not necessarily indicative of the results to be expected for
         the full year.


NOTE 2.  CURRENT ACCOUNTING DEVELOPMENTS

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
         133, "Accounting for Derivative Instruments and Hedging Activities".
         The effective date of this statement has been deferred by SFAS No. 137
         until fiscal years beginning after June 15, 2000. However, the
         statement permits early adoption as of the beginning of any fiscal
         quarter after its issuance. Forsyth Bancshares, Inc. ("the Company")
         expects to adopt this statement effective January 1, 2001. SFAS No. 133
         requires the Company to recognize all derivatives as either assets or
         liabilities in the balance sheet at fair value. For derivatives that
         are not designated as hedges, the gain or loss must be recognized in
         earnings in the period of change. For derivatives that are designated
         as hedges, changes in the fair value of the hedged assets, liabilities,
         or firm commitments must be recognized in earnings or recognized in
         other comprehensive income until the hedged item is recognized in
         earnings, depending on the nature of the hedge. The ineffective portion
         of a derivative's change in fair value must be recognized in earnings
         immediately. Management has not yet determined what effect the adoption
         of SFAS No. 133 will have on the Company's earnings or financial
         position.

         There are no other recent accounting pronouncements that have had, or
         are expected to have, a material effect on the Company's financial
         statements.


                                       6
<PAGE>   7


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 the Company and its bank subsidiary, The Citizens
         Bank of Forsyth County (the "Bank"), during the periods included in the
         accompanying consolidated financial statements.

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

         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 the Company 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; 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 the Company's 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;
         the possible effects of the Year 2000 issues on the Company.



                                       7
<PAGE>   8


         Management's current assessment and estimates with respect to the
         Company's Year 2000 compliance efforts and the impact of Year 2000
         issues on the Company's business and operations have been included in
         the MD&A. Various factors could cause actual plans and results to
         differ materially from those contemplated by such assessments,
         estimates and forward-looking statements, many of which are beyond the
         control of the Company. Some of these factors include, but are not
         limited to, representations by the Company's vendors and
         counterparties, technological advances, economic considerations, and
         consumer perceptions. The Company's Year 2000 compliance program is an
         ongoing process involving continual evaluation and may be subject to
         change in response to new developments.



                                       8
<PAGE>   9


LIQUIDITY AND CAPITAL RESOURCES

Management considers the Company's liquidity to be adequate to meet operating
and loan funding requirements at September 30, 1999. At September 30, 1999, the
liquidity ratio (i.e. cash, short-term assets and marketable assets divided by
deposits and short term liabilities) for the Bank was approximately 46% and the
loan to deposit ratio was approximately 66%. As the portfolio grows, management
will continue to monitor the liquidity of the Bank and the Company and make
adjustments as deemed necessary. Investing the Bank's available funds in loans
and other high yielding interest securities will increase the Bank's earning
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. The Bank and the Company exceed the regulatory minimums on
capital requirements and ratios. However, as the Company and the Bank 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 for the Company and
the Bank are as follows:

<TABLE>
<CAPTION>

                                                                               ACTUAL
                                                                    -----------------------------
                                                                                    THE CITIZENS
                                                                       FORSYTH         BANK OF
                                                                     BANCSHARES        FORSYTH        REGULATORY
                                                                        INC.           COUNTY        REQUIREMENT
                                                                    --------------  -------------  ---------------
                         <S>                                        <C>             <C>             <C>
                         Leverage capital ratios                         13.46%          11.47%            4.00%
                         Risk-based capital ratios:
                            Tier I capital                               20.35           17.44             4.00
                            Total capital                                21.46           18.57             8.00

</TABLE>

FINANCIAL CONDITION

Following is a summary of the Company's balance sheets for the periods
indicated:

<TABLE>
<CAPTION>
                                                 SEPTEMBER 30,   DECEMBER 31,
                                                      1999          1998             INCREASE (DECREASE)
                                                --------------  -------------   ---------------------------
                                                                                  AMOUNT           PERCENT
                                                                                ---------         ----------
                                                            (DOLLARS IN THOUSANDS)
                                                ------------------------------------------
<S>                                             <C>             <C>             <C>               <C>
Cash and due from banks                         $     1,127     $     1,326     $     (199)        (15.01)%
Federal funds sold                                    1,450           8,180         (6,730)        (82.27)
Securities                                           22,441          21,460            981           4.57
Loans                                                35,457          27,175          8,282          30.48
Premises and equipment                                  967             943             24           2.55
Other assets                                          1,113             673            440          65.38
                                                -----------     -----------     ----------
                                                $    62,555     $    59,757     $    2,798           4.68
                                                ===========     ===========     ==========

Deposits                                        $    54,425     $    51,412     $    3,013           5.86%
Other liabilities                                       377             334             43          12.87
Stockholders' equity                                  7,753           8,011           (258)         (3.22)
                                                -----------     -----------     ----------
                                                $    62,555     $    59,757     $    2,798           4.68
                                                ===========     ===========     ==========
</TABLE>


                                       9
<PAGE>   10

As indicated in the above table, the Company's total assets grew at a rate of
4.68%. Deposit growth of $3,013,000 and a shift from Federal funds sold funded
new loans of $8,282,000 and an increase in securities of $981,000. Stockholders'
equity has decreased by $258,000 due to net income of $305,000 being offset by
an increase in unrealized losses on securities available-for-sale, net of tax,
of $563,000. The most significant decline in the securities portfolio was for
longer-term U.S. agencies and corporations, the fair value of which are $463,000
below amortized cost.



                                       10
<PAGE>   11



RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

Following is a summary of the Company's operations for the periods indicated.


<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                         1999            1998          INCREASE (DECREASE)
                                                     ------------     -----------     -----------------------
                                                         (DOLLARS IN THOUSANDS)         AMOUNT      PERCENT
                                                     ----------------------------     ---------    ----------
<S>                                                  <C>              <C>             <C>          <C>
Interest income                                      $     1,184      $     1,035      $    149         14.40%
Interest expense                                             526              516            10          1.94
                                                     -----------      -----------     ---------
Net interest income                                          658              519           139         26.78
Provision for loan losses                                     94               25            69        276.00
Other income                                                  35               28             7         25.00
Other expense                                                456              350           106         30.29
                                                     -----------      -----------     ---------
Pretax income                                                143              172           (29)       (16.86)
Income taxes                                                  61               --            61            --
                                                     -----------      -----------     ---------
Net income                                           $        82      $       172     $     (90)       (52.33)
                                                     ===========      ===========     =========

<CAPTION>

                                                            NINE MONTHS ENDED
                                                              SEPTEMBER 30,
                                                         1999            1998          INCREASE (DECREASE)
                                                     -----------     -----------    -----------------------
                                                        (DOLLARS IN THOUSANDS)       AMOUNT        PERCENT
                                                     -----------  --------------    ---------    ----------
<S>                                                  <C>             <C>            <C>          <C>
Interest income                                      $    3,397      $     2,771    $    626         22.59%
Interest expense                                          1,630            1,366         264         19.33
                                                     ----------      -----------    --------
Net interest income                                       1,767            1,405         362         25.77
Provision for loan losses                                   130              125           5          4.00
Other income                                                104               84          20         23.81
Other expense                                             1,252            1,024         228         22.27
                                                     ----------      -----------    --------
Pretax income                                               489              340         149         43.82
Income taxes                                                184                -         184            --
                                                     ----------      -----------    --------
Net income                                           $      305      $       340    $    (35)       (10.29)
                                                     ==========      ===========    ========
</TABLE>

As indicated in the above table, the Company's net interest income has increased
by $139,000 and $362,000 for the third quarter and first nine months of 1999,
respectively, over prior periods. The Company's net interest margin decreased to
3.99% during the first nine months of 1999 as compared to 4.16% for the previous
year. The increase in net interest income is due primarily to the increased
volume of average interest-earning assets. The decrease in the net interest
margin is due to an increase in securities and Federal funds sold as components
of average interest-earning assets and a decrease in the yield on average
interest-earning assets to 7.66% during the first nine months of 1999 as
compared to 8.23% for the previous year.


                                       11
<PAGE>   12


The provision for loan losses was $94,000 and $130,000 for the third quarter and
first nine months in 1999, respectively, as compared to $25,000 and $125,000 for
the same periods in 1998. This increase is due primarily to loan growth and
$39,000 in net charge-offs in 1999 as compared to $4,000 in 1998. The Company's
allowance for loan losses amounted to 1.26% at September 30, 1999 as compared to
1.31% at December 31, 1998. The allowance for loan losses is maintained at a
level that is considered appropriate by management to adequately cover all known
and inherent risks in the loan portfolio. Management's evaluation of the loan
portfolio includes a continuing review of loan loss experience, current economic
conditions which may affect the borrower's ability to repay and the underlying
collateral value.

Information with respect to nonaccrual, past due and restructured loans at
September 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>

                                                                                    SEPTEMBER 30,
                                                                             -----------------------------
                                                                                1999              1998
                                                                             -------------   -------------
                                                                                (DOLLARS IN THOUSANDS)
                                                                             -----------------------------
<S>                                                                          <C>             <C>
Nonaccrual loans                                                             $         26    $         --
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                                             2               2
Restructured loans                                                                     --              --
Loans, now current about which there are serious doubts as to the
   ability of the borrower to comply with loan repayment terms                         --              --
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                                          2              --
Interest income that was recorded on nonaccrual and restructured loans                 --              --
</TABLE>


It is the policy of the Bank to discontinue the accrual of interest income when,
in the opinion of management, collection of such interest becomes doubtful. This
status is accorded such 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.

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.



                                       12
<PAGE>   13



Information regarding certain loans and allowance for loan loss data through
September 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                           -------------------------
                                                                            1999               1998
                                                                           -------           -------
                                                                            (DOLLARS IN THOUSANDS)
                                                                           -------------------------
<S>                                                                        <C>               <C>
Average amount of loans outstanding                                        $31,171           $19,425
                                                                           =======           =======

Balance of allowance for loan losses at beginning of period                $   360           $   235
                                                                           -------           -------

Loans charged off
   Commercial and financial                                                $    40           $    --
   Real estate mortgage                                                         --                --
   Instalment                                                                    1                 4
                                                                           -------           -------
                                                                                41                 4
                                                                           -------           -------

Loans recovered
   Commercial and financial                                                     --                --
   Real estate mortgage                                                         --                --
   Instalment                                                                    2                --
                                                                           -------           -------
                                                                                 2                --
                                                                           -------           -------

Net charge-offs (recoveries)                                                    39                 4
                                                                           -------           -------

Additions to allowance charged to operating expense during period              130               125
                                                                           -------           -------

Balance of allowance for loan losses at end of period                      $   451           $   356
                                                                           =======           =======

Ratio of net loans charged off during the period to
   average loans outstanding                                                  0.13%             0.02%
                                                                           =======           =======
</TABLE>

Other income has increased during the third quarter and first nine months of
1999 as compared to the same periods in 1998 by $7,000 and $20,000,
respectively, due to increased service charges and other miscellaneous fees.

Other expenses increased during the third quarter and first nine months of 1999
as compared to the same periods in 1998 by $106,000 and $228,000, respectively,
due primarily to increased other operating expenses and increased salaries and
benefits. The increase in other operating expenses is primarily due to increased
data processing and professional fees.

The Company's provision for income taxes was $61,000 and $184,000, respectively,
for the third quarter and first nine months of 1999, or an effective tax rate of
37%. Because the Company had accumulated deficits as of September 30, 1998, no
income tax provision was recorded during the first nine months of 1998.


                                       13
<PAGE>   14




THE YEAR 2000 ISSUE

The Year 2000 issue is the result of potential problems with computer systems or
any equipment with computer chips that use dates that have been sorted as two
digits rather than four (e.g., "99" for 1999). On January 1, 2000, any clock or
date recording mechanism, including date sensitive software, which uses only two
digits to represent the year may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in system failures or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, send invoices or perform similar
tasks.

For a bank, Year 2000 problems could have a material adverse effect if interest
accruals for loans and deposits are not calculated properly. A system crash
could result in a disruption of business which in turn could cause the bank to
lose a significant portion of its customer base, either of which could result in
material adverse consequences for the Company.

At the Company, preparation for Year 2000 challenges is a top priority. The
Company has chosen to address the Year 2000 problems by forming a project team
consisting of select personnel. The project manager is the chief financial
officer, who reports to the Executive Committee and Board. The project team has
been charged with the responsibility of assessing the problem and overseeing
corrective action, as well as testing the Year 2000 readiness of all equipment,
software, and applications after upgrades have been made. The Bank's senior
management continue to oversee the extensive Year 2000 project with the intent
to minimize any disruption in service to customers and to preserve customer
confidence in us. The Company has committed the people and the resources we
believe are necessary to prepare for the millennium change. The Company has
progressed through the awareness, assessment, renovation, and validation phases.

The Company has distinguished between critical and non critical systems.
Mission-critical systems have priority attention. These systems are: core
processing system, both hardware and software, teller processing system and
items processing. Automated new accounts and loan document preparation software,
ATM processing, local area network and personal computers have been designated
as mission-necessary and have also been given appropriate attention. All
personal computers and the local area network have been tested and certified by
an outside firm to be Year 2000 compliant. The Company upgraded to a new core
processing system and an outside service provider which was installed on January
22, 1999. The validation of all mission critical systems was completed as of
June 30, 1999.

Since the Company relies on other outside vendors for many services such as
electricity, phone service, water, gas, bond accounting, accounts payable, and
other related forms, correspondence has been sent to each of these vendors
requesting information regarding their Year 2000 readiness. Correspondence with
vendors continues to be obtained and evaluated.

Due to the critical nature of the core processing system, the Company has
established a Business Resumption Contingency Plan to accommodate the new
systems recently installed and has adopted the contingency plan of the outside
provider, the InterCept Group. The Company's contingency plans were
substantially complete at September 30, 1999 and accommodate disruption of
service due to power outage, system failure, and other Year 2000 issues. Written
policies and procedures have been established and reviewed for adequacy by a
third party consultant.


                                       14
<PAGE>   15


After the assessment phase, the Board of Directors approved a budget of $125,000
to address the Year 2000 issues, consisting mainly of new hardware and software
systems. This budget is subject to continuous review and amendment. Management
does not expect the cost of remediation to vary significantly from the present
budget. As of September 30, 1999, approximately $79,000 of costs had been
incurred by the Company with respect to Year 2000 issues.

It is the goal of the Company to make sure that customers are protected from any
Year 2000 problems and to provide customers with accurate and timely information
about the Year 2000 problem as well as its progress towards compliance. The
Company has provided numerous informational brochures and letters to its
customers. This will be a continued concentration throughout 1999.

Loan customers could also experience business interruptions which could affect
their ability to repay debts owed to the Company resulting in adverse bank
performance. Action has been taken by the Company's senior lending officer to
evaluate the current commercial relationships and is continuing with the
assessment of each new commercial relationship. Management and the Board of the
Company realize that due to many factors, consumers may withdraw extra amounts
of money which could result in a liquidity issue for the Company. The Company
has provided for additional liquidity sources for Year 2000 and the liquidity
policy of the Company continues to be reviewed to accommodate this issue. This
will be closely monitored throughout the remainder of 1999, with extra emphasis
placed during the month of December.

In addition to assessing the Company's information technology system and the
risks of customer credit relationships, the Company has also assessed its
electronic equipment, such as building security, environmental systems and other
devices which contain embedded electronic circuits. With regard to these
non-information technology systems, the Company believes that it is
substantially compliant as of September 30, 1999.

The Company presently believes that, with modifications to its computer systems
and conversions to new systems, the Year 2000 issue will not pose significant
operational problems for the Company or have a material adverse effect on future
operating results. However, absolute assurance cannot be given that: (1) the
modifications and conversions will remedy all deficiencies, (2) failure of any
of the Company's systems will not have a material impact on operations, or (3)
failure of any other companies' systems with whom the Company conducts business
will not have a material impact on operations.

The costs of the Year 2000 project and the date which the Company plans to
complete the Year 2000 modifications are based upon management's best estimates,
which were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. There can be no guarantee that these estimates will be achieved
and actual results could differ materially from those plans. Specific factors
that might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.


                                       15


<PAGE>   16


                           PART II - OTHER INFORMATION





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

                          None.


ITEM 5.  OTHER INFORMATION

                          None.


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

         (a)     Exhibits.

                 27. Financial Data Schedule, (for SEC use only).

         (b)     Reports on Form 8-K.

                 A report on Form 8-K was filed on August 27, 1999 in
                 which the Company announced the resignation of David
                 H. Denton as President and Chief Executive Officer of
                 the Company with Executive Vice President Jimmy S.
                 Fagan assuming the roles on an interim basis.

                 On October 6, 1999, Timothy M. Perry was named
                 permanent President and Chief Executive Officer of the
                 Company.



                                       16
<PAGE>   17


                                   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)



<TABLE>
<S>                                 <C>
DATE:  November 12, 1999            BY:  /s/ Timothy M. Perry
                                         ------------------------------------------------------
                                         Timothy M. Perry, President and C.E.O.
                                         (Principal Executive Officer)


DATE:  November 12, 1999            BY:  /s/ Holly R. Hunt
                                         ------------------------------------------------------
                                         Holly R. Hunt, Vice President, Secretary and Treasurer
                                         (Principal Financial and Accounting Officer)
</TABLE>



                                      17