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      SEPTEMBER 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
    ---

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).  Yes         No  X
                                            ---       ---

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of
November 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 - SEPTEMBER 30, 2005 . . . . . . . . . . .   3

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

             CONSOLIDATED STATEMENT OF CASH FLOWS - NINE
               MONTHS ENDED SEPTEMBER 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 6 - EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . .  17

           SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

                          ITEM 1.  FINANCIAL STATEMENTS

                     FORSYTH BANCSHARES, INC. AND SUBSIDIARY

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


                         ASSETS
                         ------
<S>                                                      <C>
Cash and due from banks                                  $  2,776
Interest-bearing deposits in banks                            228
Federal funds sold                                          9,581
Securities available-for-sale, at fair value               23,502
Restricted equity securities                                  330

Loans                                                     116,603
Less allowance for loan losses                              1,440
                                                         ---------
      Loans, net                                          115,163
                                                         ---------

Premises and equipment                                      7,172
Other assets                                                1,313
                                                         ---------

      TOTAL ASSETS                                       $160,065
                                                         =========

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

DEPOSITS
  Noninterest-bearing                                    $ 19,316
  Interest-bearing                                        123,974
                                                         ---------
      TOTAL DEPOSITS                                      143,290
Other borrowings                                            1,712
Other liabilities                                             426
                                                         ---------
      TOTAL LIABILITIES                                   145,428
                                                         ---------

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                                         4,564
  Accumulated other comprehensive loss                       (121)
                                                         ---------
      TOTAL STOCKHOLDERS' EQUITY                           14,637
                                                         ---------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $160,065
                                                         =========
</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 SEPTEMBER 30, 2005 AND 2004
                                AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                                   (UNAUDITED)
                                             (DOLLARS IN THOUSANDS,
                                             EXCEPT PER SHARE DATA)

                                                               THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                  SEPTEMBER 30,               SEPTEMBER 30,
                                                           --------------------------  --------------------------
                                                               2005          2004          2005          2004
                                                           ------------  ------------  ------------  ------------
<S>                                                        <C>           <C>           <C>            <C>
INTEREST INCOME
  Loans                                                    $     2,099   $      1,472  $     5,647   $     4,203
  Taxable securities                                               206            142          592           453
  Nontaxable securities                                              2             14           23            43
  Deposits in banks                                                  8              2           16             5
  Federal funds sold                                                88             24          150            36
                                                           ------------  ------------  ------------  ------------
      TOTAL INTEREST INCOME                                      2,403          1,654        6,428         4,740
                                                           ------------  ------------  ------------  ------------

INTEREST EXPENSE
  Deposits                                                         877            461        2,191         1,195
  Other borrowings                                                  18              -           24             3
                                                           ------------  ------------  ------------  ------------
      TOTAL INTEREST EXPENSE                                       895            461        2,215         1,198
                                                           ------------  ------------  ------------  ------------

      NET INTEREST INCOME                                        1,508          1,193        4,213         3,542
PROVISION FOR LOAN LOSSES                                           77             78          173           138
                                                           ------------  ------------  ------------  ------------
      NET INTEREST INCOME AFTER
        PROVISION FOR LOAN LOSSES                                1,431          1,115        4,040         3,404
                                                           ------------  ------------  ------------  ------------

OTHER INCOME
  Service charges on deposit accounts                               69             71          211           210
  Gains on sales of securities available-for-sale                    -              -            2            26
  Other operating income                                           179            129          453           406
                                                           ------------  ------------  ------------  ------------
      TOTAL OTHER INCOME                                           248            200          666           642
                                                           ------------  ------------  ------------  ------------

OTHER EXPENSES
  Salaries and other employee benefits                             648            551        1,886         1,633
  Occupancy and equipment expenses                                 151            130          453           377
  Other operating expenses                                         373            325        1,127           911
                                                           ------------  ------------  ------------  ------------
      TOTAL OTHER EXPENSES                                       1,172          1,006        3,466         2,921
                                                           ------------  ------------  ------------  ------------

      INCOME  BEFORE INCOME TAXES                                  507            309        1,240         1,125

INCOME TAX EXPENSE                                                 180            109          451           399
                                                           ------------  ------------  ------------  ------------

      NET INCOME                                                   327            200          789           726
                                                           ------------  ------------  ------------  ------------

OTHER COMPREHENSIVE INCOME (LOSS)
  Unrealized gains (losses) on securities
    available-for-sale arising during period, net of tax           (54)           118         (151)          (44)
                                                           ------------  ------------  ------------  ------------

      COMPREHENSIVE INCOME                                 $       273   $        318  $       638   $       682
                                                           ============  ============  ============  ============

BASIC EARNINGS PER SHARE                                   $      0.18   $       0.11  $      0.42   $      0.39
                                                           ============  ============  ============  ============

DILUTED EARNINGS PER SHARE                                 $      0.17   $       0.11  $      0.42   $      0.39
                                                           ============  ============  ============  ============

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
                    NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
                                     (UNAUDITED)
                                (DOLLARS IN THOUSANDS)

                                                                   2005       2004
                                                                 ---------  ---------
<S>                                                              <C>        <C>
OPERATING ACTIVITIES
  Net income                                                     $    789   $    726
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation                                                      277        234
    Provision for loan losses                                         173        138
    Gain on sales of securities available-for-sale                     (2)       (26)
    Gain on sale on equipment                                           -         (5)
    Writedown of other real estate owned                               71         37
    Net other operating activities                                    175       (188)
                                                                 ---------  ---------

      Net cash provided by operating activities                     1,483        916
                                                                 ---------  ---------

INVESTING ACTIVITIES
  Purchases of securities available-for-sale                      (15,412)    (5,454)
  Proceeds from maturities of securities available-for-sale         2,105      3,220
  Proceeds from sales of securities available-for-sale              7,556      6,734
  Redemption (purchase) of restricted equity securities               (89)        52
  Net (increase) decrease in interest-bearing deposits in banks        42        (60)
  Net (increase) decrease in federal funds sold                    (3,491)     3,055
  Net increase in loans                                           (12,964)   (12,042)
  Proceeds from sale of equipment                                       -         11
  Purchase of premises and equipment                                  (18)    (1,804)
                                                                 ---------  ---------

      Net cash used in investing activities                       (22,271)    (6,288)
                                                                 ---------  ---------

FINANCING ACTIVITIES
  Net increase in deposits                                         20,889      5,024
  Net increase (decrease) in other borrowings                       1,202        (59)
  Proceeds from exercise of stock options                               -        280
                                                                 ---------  ---------

      Net cash provided by financing activities                    22,091      5,245
                                                                 ---------  ---------

Net increase (decrease) in cash and due from banks                  1,303       (127)

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

Cash and due from banks at end of period                         $  2,776   $  3,490
                                                                 =========  =========
</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 nine month periods ended
          September 30, 2005 are not necessarily indicative of the results to be
          expected  for  the  full  year.


NOTE  2.  STOCK COMPENSATION PLANS

          At  September  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
                                                                   SEPTEMBER 30,
                                                           ----------------------------
                                                               2005           2004
                                                           -------------  -------------
<S>                                                        <C>            <C>
          Net income, as reported                          $         327  $         200
          Deduct: Total stock-based employee compensation
              expense determined under fair value based
              method for all awards, net of tax                        6              0
                                                           -------------  -------------
          Pro forma net income                             $         321  $         200
                                                           =============  =============
          Earnings per share:
            Basic - as reported                            $        0.18  $        0.11
                                                           =============  =============
            Basic - pro forma                              $        0.17  $        0.11
                                                           =============  =============
            Diluted - as reported                          $        0.17  $        0.11
                                                           =============  =============
            Diluted - pro forma                            $        0.17  $        0.11
                                                           =============  =============
</TABLE>


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


NOTE  2.  STOCK COMPENSATION PLANS (CONTINUED)

<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                           ----------------------------
                                                               2005           2004
                                                           -------------  -------------
<S>                                                        <C>            <C>
          Net income, as reported                          $         789  $         726
          Deduct: Total stock-based employee compensation
              expense determined under fair value based
              method for all awards, net of tax                        6              0
                                                           -------------  -------------
          Pro forma net income                             $         783  $         726
                                                           =============  =============
          Earnings per share:
            Basic - as reported                            $        0.42  $        0.39
                                                           =============  =============
            Basic - pro forma                              $        0.42  $        0.39
                                                           =============  =============
            Diluted - as reported                          $        0.42  $        0.39
                                                           =============  =============
            Diluted - pro forma                            $        0.41  $        0.39
                                                           =============  =============
</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
                                                                  SEPTEMBER 30,
                                                          ----------------------------
                                                               2005          2004
                                                          ----------------------------
<S>                                                       <C>            <C>

          Basic Earnings Per Share:
            Weighted average common shares outstanding        1,858,000      1,857,609
                                                          =============  =============

            Net income                                    $     327,000  $     200,000
                                                          =============  =============

            Basic earnings  per share                     $        0.18  $        0.11
                                                          =============  =============

          Diluted Earnings Per Share:
            Weighted average common shares outstanding        1,858,000      1,857,609
            Net effect of the assumed exercise of stock
              options based on the treasury stock method
              using average market prices for the year           28,865            486
                                                          -------------  -------------
            Total weighted average common shares and
              common stock equivalents outstanding            1,886,865      1,858,095
                                                          =============  =============
            Net income                                    $     327,000  $     200,000
                                                          =============  =============

            Diluted earnings per share                    $        0.17  $        0.11
                                                          =============  =============
</TABLE>


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


NOTE  3.  EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                                                NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                          ----------------------------
                                                              2005           2004
                                                          ----------------------------
<S>                                                       <C>            <C>

          Basic Earnings Per Share:
            Weighted average common shares outstanding        1,858,000      1,842,606
                                                          =============  =============

            Net income                                    $     789,000  $     726,000
                                                          =============  =============

            Basic earnings  per share                     $        0.42  $        0.39
                                                          =============  =============

          Diluted Earnings Per Share:
            Weighted average common shares outstanding        1,858,000      1,842,606
            Net effect of the assumed exercise of stock
              options based on the treasury stock method
              using average market prices for the year           28,865            486
                                                          -------------  -------------
            Total weighted average common shares and
              common stock equivalents outstanding            1,886,865      1,843,092
                                                          =============  =============

            Net income                                    $     789,000  $     726,000
                                                          =============  =============

            Diluted earnings per share                    $        0.42  $        0.39
                                                          =============  =============
</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.


                                        8
<PAGE>
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.

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  September 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,"  "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.

RECENT DEVELOPMENTS

On  August  30,  2005,  the Company filed a preliminary Proxy Statement with the
Securities  and Exchange Commission concerning the Company's intent to amend its
articles  of  incorporation  to  provide  for the reclassification of our common
stock  held  by shareholders who are the record holders of 1,000 or fewer shares
of  common  stock  into  shares  of  preferred stock.  The primary effect of the
reclassification  will be to reduce our total number of record holders of common
stock to below 300.  Upon regulatory and shareholder approval, we will terminate
the  registration  of  our  common  stock  under  federal  securities  law.

The  principal  reasons  for  effecting  the  reclassification are the estimated
direct  and  indirect  cost  savings  of approximately $235,000 per year that we
expect to experience as a result of the deregistration of our common stock under
the  Securities  Act.

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  adequate  to  meet  operating  and  loan  funding
requirements  at September 30, 2005.  At September 30, 2005, the liquidity ratio
(i.e.  cash,  short-term  assets  and marketable assets divided by deposits) was
approximately  18.5% and the loan to deposit ratio was approximately 81.38%.  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


                                       10
<PAGE>
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             9.31%          7.82%          4.00%
               Risk-based capital ratios:
                 Tier I capital                   11.15           9.38           4.00
                 Total capital                    12.24          10.48           8.00
</TABLE>

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>
                                                   SEPTEMBER 30,
                                                       2005
                                              ----------------------
<S>                                           <C>
                                              (Dollars in Thousands)
                                              ----------------------
               Commitments to extend credit   $               22,116
               Letters of credit                                 845
                                              ----------------------
                                              $               22,961
                                              ======================
</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>
                                              SEPTEMBER 30,  DECEMBER 31,
                                                  2005           2004
                                              -------------  -------------
                                                (DOLLARS IN THOUSANDS)
                                              ----------------------------
<S>                                           <C>            <C>
          Cash and due from banks             $       2,776  $       1,473
          Interest-bearing deposits in banks            228            270
          Federal funds sold                          9,581          6,090
          Securities                                 23,832         18,234
          Loans, net                                115,163        102,372
          Premises and equipment                      7,172          7,431
          Other assets                                1,313          1,326
                                              -------------  -------------
                                              $     160,065  $     137,196
                                              =============  =============

          Deposits                            $     143,290  $     122,401
          Other borrowings                            1,712            510
          Other liabilities                             426            286
          Stockholders' equity                       14,637         13,999
                                              -------------  -------------
                                              $     160,065  $     137,196
                                              =============  ==============
</TABLE>

Our total assets grew by 16.7% for the first nine months of 2005. Deposit growth
of  $20,889,000  and  an increase of other borrowings of $1,202,000 were used to
fund  loan  growth  of  $12,961,000,  and  increases  in  federal  funds sold of
$3,491,000,  investment  securities  of  $5,598,000 and cash of $1,303,000.  Our
loan  to  deposit  ratio  has decreased to 81.38% from 84.67% as of December 31,
2004.  The  decrease is due to deposits growing at a faster rate than loans.  As
of September 30, 2005 public funds deposits with one entity totaled $11 million.
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 sold,
securities  and anticipated deposit growth should provide the funds for expected
loan  demand  in the future.  Stockholders' equity has increased by $638,000 due
to  net  income  of  $789,000  and  increases of unrealized losses of securities
available-for-sale, net of tax, of $151,000.


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

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

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED
                                             SEPTEMBER 30,
                                         2005           2004
                                     -------------  -------------
                                        (DOLLARS IN THOUSANDS)
                                     ----------------------------
<S>                                  <C>            <C>
          Interest income            $       2,403  $       1,654
          Interest expense                     895            461
                                     -------------  -------------
          Net interest income                1,508          1,193
          Provision for loan losses             77             78
          Other income                         248            200
          Other expense                      1,172          1,006
                                     -------------  -------------
          Pretax income                        507            309
          Income taxes                         180            109
                                     -------------  -------------
          Net income                 $         327  $         200
                                     =============  =============
</TABLE>


<TABLE>
<CAPTION>
                                           NINE MONTHS ENDED
                                             SEPTEMBER 30,
                                         2005           2004
                                     -------------  -------------
                                         (DOLLARS IN THOUSANDS)
                                     ----------------------------
<S>                                  <C>            <C>
          Interest income            $       6,428  $       4,740
          Interest expense                   2,215          1,198
                                     -------------  -------------
          Net interest income                4,213          3,542
          Provision for loan losses            173            138
          Other income                         666            642
          Other expense                      3,466          2,921
                                     -------------  -------------
          Pretax income                      1,240          1,125
          Income taxes                         451            399
                                     -------------  -------------
          Net income                 $         789  $         726
                                     =============  =============
</TABLE>

Our  net  interest  income  has increased by $315,000 and $671,000 for the third
quarter  and  first  nine  months of 2005, respectively, as compared to the same
periods  in  2004.  Our  net interest margin decreased to 4.09% during the first
nine months of 2005 as compared to 4.29% for the first nine months of 2004.  The
quarterly  increase  in  interest  expense  is  due  to increased competition to
attract  and retain deposits and the recent rate increases.  The competition for
deposits  may  slow  our  earnings  growth  in  the  future.


                                       13
<PAGE>
The  provision for loan losses decreased by $1,000 for the third quarter of 2005
and  increased  by  $35,000 for the first nine months of 2005 as compared to the
same  periods  in 2004.  We incurred net charge-offs of $3,000 in the first nine
months  of  2005 as compared to $21,000 in the first nine 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
September  30,  2005  and  2004  is  as  follows:

<TABLE>
<CAPTION>
                                                                               SEPTEMBER 30,
                                                                        ----------------------------
                                                                            2005           2004
                                                                        -------------  -------------
                                                                           (DOLLARS IN THOUSANDS)
                                                                        ----------------------------
<S>                                                                     <C>            <C>
Nonaccrual loans                                                        $          38  $          21
Loans contractually past due ninety days or more as to interest
  or principal payments and still accruing
Restructured loans                                                                  0              0
Potential problem loans                                                             0              0
Interest income that would have been recorded on nonaccrual
  and restructured loans under original terms                                       1              1
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
September  30,  2005  and  2004  is  as  follows:

<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED
                                                                         SEPTEMBER 30,
                                                                   ------------------------
                                                                      2005         2004
                                                                   -----------  -----------
                                                                    (DOLLARS IN THOUSANDS)
                                                                   ------------------------
<S>                                                                <C>          <C>
Average amount of loans outstanding                                $  108,923   $   86,453
                                                                   ===========  ===========

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

Loans charged off
  Commercial and financial                                         $      (16)  $       (8)
  Real estate mortgage                                                      0            0
  Installment                                                               0          (22)
                                                                   -----------  -----------
                                                                          (16)         (30)
                                                                   -----------  -----------

Loans recovered
  Commercial and financial                                                 13            4
  Real estate mortgage                                                      0            0
  Installment                                                               0            5
                                                                   -----------  -----------
                                                                           13            9
                                                                   -----------  -----------

Net charge-offs                                                            (3)         (21)
                                                                   -----------  -----------

Additions to allowance charged to operating expense during period         173          138
                                                                   -----------  -----------

Balance of allowance for loan losses at end of period              $    1,440   $    1,150
                                                                   ===========  ===========

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

Other  income  has increased by $48,000 and $24,000 during the third quarter and
first  nine  months  of  2005,  respectively, as compared to the same periods in
2004.  The  quarterly  increase  is  due primarily to increases in mortgage loan
origination fees of $41,000 and other customer service fees of $5,000.  The nine
month increase is due to increases in mortgage loan origination fees of $22,000,
other  customer service fees of $16,000, and other income of $9,000, offset by a
decrease  in  gains  on  sales  of securities of $24,000.  The increase in other
customer  service  fees  is  due  primarily to an increase in ATM/debit card fee
income.


                                       15
<PAGE>
Other  expenses  increased by $166,000 and $545,000 during the third quarter and
first  nine  months  of  2005,  respectively, as compared to the same periods in
2004.  The  increases  are due to increases in salaries and employee benefits of
$97,000  and  $253,000,  respectively, occupancy expense of $21,000 and $76,000,
respectively, and other operating expense of $48,000 and $216,000, respectively.
Salaries and employee benefits have increased due to annual salary increases and
additional  employees  hired  to  staff  the Free Home office. Occupancy expense
increased  due  to  the  opening of the Free Home office in November 2004. Other
operating  expenses  increased  due  to  the additional expense of promoting and
operating  a  new  branch;  write  down of $33,000 and $71,000, respectively, on
other  real  estate  owned;  and  an  increase in directors' fees of $14,000 and
$34,000, respectively, due to an increase in fees paid to directors as specified
in  the  Director  Compensation  of  the  2005  Proxy  Statement.

The  provision  for  income taxes was $451,000 for the first nine months of 2005
(effective tax rate of 36%) as compared to $399,000 for the first nine months of
2004  (effective  tax  rate  of  35%).

Overall,  net income has increased by $127,000 and $63,000 for the third quarter
and the first nine months of 2005, respectively, as compared to the same periods
in  2004.  The  increases  are  due  to increased net interest income, offset by
higher  other  expenses.

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  significant  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  6.  EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits.

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

               31.2      Certification  of the Chief Financial Officer, Pursuant
                         to  Rule 13a-14(c) 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  2002.

          (b)  Reports on Form 8-K.

               On  September  29,  2005,  the Company filed a Form 8-K to report
               that  Thomas L. Bower, III resigned from the position of director
               of  Forsyth  Bancshares,  Inc.  effective  September  26,  2005.


                                       17
<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: November 10, 2005              BY:  /s/ Timothy M. Perry
      -----------------                  ---------------------------------------
                                         Timothy M. Perry, President and C.E.O.
                                         (Principal Executive Officer)


DATE: November 10, 2005              BY:  /s/ Timothy D. Foreman
      -----------------                  ---------------------------------------
                                         Timothy D. Foreman, Vice President,
                                         Secretary and Treasurer
                                         (Principal Financial and
                                         Accounting Officer)


                                       18