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

FORM 10-QSB

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
| 
|  |  | For the quarterly period ended March 31, 2002                                           
| 
|o |  | 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
incorporation or organization) |  | (IRS Employer
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
   o

State the number of shares outstanding of each of the issuers classes of
common equity, as of
May 1, 2002: 800,000; no par value.

Transitional Small Business Disclosure Format
   
Yes   o   No
   x





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TABLE OF CONTENTS



|                                        |                                                                                               |                                                                                                                   |  |  |  |  |  | 
|--------------------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION         
|                                        | ITEM 1. FINANCIAL STATEMENTS                                                                 
|FORSYTH BANCSHARES, INC. AND SUBSIDIARY
|                                        |                                                                                               | CONSOLIDATED BALANCE SHEET MARCH 31, 2002 (Unaudited)                                                            
|                                        |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2002 AND 2001 (Unaudited)
|                                        |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 AND 2001 (Unaudited)                     
|                                        |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                       
|                                        | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II  OTHER INFORMATION            
|                                        | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                 
|                                        | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                    
|                                        | SIGNATURES                                                                                   



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FORSYTH BANCSHARES, INC. AND SUBSIDIARY






INDEX

|         |  |                                                                                               |                                                                                                         |    |     
|-------- |  | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | -- | ----
|         |  |                                                                                               |                                                                                                         |    | Page
|         |  |                                                                                               |                                                                                                         |    |     
|PART I.  |  | FINANCIAL INFORMATION                                                                         |                                                                                                         |   
|         |  | Item 1. Financial Statements                                                                  |                                                                                                         |   
|         |  |                                                                                               | Consolidated Balance Sheet  March 31, 2002                                                             |    | 3   
|         |  |                                                                                               | Consolidated Statements of Income and Comprehensive Income  Three Months Ended March 31, 2002 and 2001 |    | 4   
|         |  |                                                                                               | Consolidated Statements of Cash Flows  Three Months Ended March 31, 2002 and 2001                      |    | 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                                  |                                                                                                         | 13
|         |  | Item 6  Exhibits and Reports on Form 8-K                                                     |                                                                                                         | 13
|         |  | Signatures                                                                                    |                                                                                                         | 14





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##### Table of Contents






PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




FORSYTH BANCSHARES, INC. AND SUBSIDIARY




CONSOLIDATED BALANCE SHEET
MARCH 31, 2002
(Unaudited)

|                                                |                                                                                          |                                      |                                            |        |   |                        |  | 
|----------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | ------ | - | ---------------------- |  | 
|                                                |                                                                                          |                                      |                                            |        |   | (Dollars in Thousands)
|                                                |                                                                                          |                                      |                                            | Assets |   |                        |  | 
|Cash and due from banks                         |                                                                                          | $                                    | 1,654                                      |       
|Interest-bearing deposits in banks              |                                                                                          |                                      | 183                                        |       
|Federal funds sold                              |                                                                                          |                                      | 6,767                                      |       
|Securities available-for-sale, at fair value    |                                                                                          |                                      | 18,852                                     |       
|Securities held-to-maturity, fair value of $220 |                                                                                          |                                      | 215                                        |       
|Restricted equity securities                    |                                                                                          |                                      | 206                                        |       
|Loans                                           |                                                                                          |                                      | 60,721                                     |       
|Less allowance for loan losses                  |                                                                                          |                                      | 772                                        |       
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Loans, net                                 |        |   | 59,949                 | 
|                                                |                                                                                          |                                      |                                            |       
|Premises and equipment                          |                                                                                          |                                      | 3,127                                      |       
|Other assets                                    |                                                                                          |                                      | 948                                        |       
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Total assets                               |        | $ | 91,901                 | 
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          | Liabilities and Stockholders Equity |                                            |        |   |                       
|Deposits                                        |                                                                                          |                                      |                                            |       
|                                                | Noninterest-bearing                                                                      |                                      | $                                          | 10,269 |  
|                                                | Interest-bearing                                                                         |                                      |                                            | 71,628 |  
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Total deposits                             |        |   | 81,897                 | 
|Securities sold under repurchase agreements     |                                                                                          |                                      | 104                                        |       
|Other liabilities                               |                                                                                          |                                      | 407                                        |       
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Total liabilities                          |        |   | 82,408                 | 
|                                                |                                                                                          |                                      |                                            |       
|Commitments and contingencies                   |                                                                                          |                                      |                                            |       
|Stockholders equity                            |                                                                                          |                                      |                                            |       
|                                                | Common stock, no par value; 10,000,000 shares
authorized, 800,000 issued and outstanding |                                      |                                            | 7,960  |  
|                                                | Retained earnings                                                                        |                                      |                                            | 1,479  |  
|                                                | Accumulated other comprehensive income                                                   |                                      |                                            | 54     |  
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Total stockholders equity                 |        |   | 9,493                  | 
|                                                |                                                                                          |                                      |                                            |       
|                                                |                                                                                          |                                      | Total liabilities and stockholders equity |        | $ | 91,901                 | 
|                                                |                                                                                          |                                      |                                            |       

See Notes to Consolidated Financial Statements.

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FORSYTH BANCSHARES, INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)

|                                              |                                                                                              |                                                     |      |                        |       |      |      |       |       | 
|--------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------- | ---- | ---------------------- | ----- | ---- | ---- | ----- | ----- | 
|                                              |                                                                                              |                                                     |      | (Dollars in Thousands,
|                                              |                                                                                              |                                                     |      | Except Per Share Data)
|                                              |                                                                                              |                                                     |      |                       
|                                              |                                                                                              |                                                     |      | 2002                   |       | 2001
|                                              |                                                                                              |                                                     |      |                        |       |     
|Interest income                               |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              | Loans                                                                                        |                                                     | $    | 1,165                  |       |      | $    | 1,250 |      
|                                              | Taxable securities                                                                           |                                                     |      | 227                    |       |      |      | 310   |      
|                                              | Nontaxable securities                                                                        |                                                     |      | 14                     |       |      |      | 20    |      
|                                              | Federal funds sold                                                                           |                                                     |      | 24                     |       |      |      | 83    |      
|                                              | Interest-bearing deposits in banks                                                           |                                                     |      | 3                      |       |      |      | 5     |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Total interest income                               |      |                        | 1,433 |      |      |       | 1,668 | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Interest expense                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              | Deposits                                                                                     |                                                     |      | 554                    |       |      |      | 940   |      
|                                              | Other borrowings                                                                             |                                                     |      | 1                      |       |      |      |      |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Total interest expense                              |      |                        | 555   |      |      |       | 940   | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Net interest income                                 |      |                        | 878   |      |      |       | 728   | 
|Provision for loan losses                     |                                                                                              |                                                     | 40   |                        |       |      | 55   |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Net interest income after provision for loan losses |      |                        | 838   |      |      |       | 673   | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Other income                                  |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              | Service charges on deposit accounts                                                          |                                                     |      | 65                     |       |      |      | 51    |      
|                                              | Gains on sales of securities available-for-sale                                              |                                                     |      | 5                      |       |      |      | 3     |      
|                                              | Other operating income                                                                       |                                                     |      | 170                    |       |      |      | 17    |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Total other income                                  |      |                        | 240   |      |      |       | 71    | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Other expenses                                |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              | Salaries and other employee benefits                                                         |                                                     |      | 479                    |       |      |      | 335   |      
|                                              | Occupancy and equipment expenses                                                             |                                                     |      | 124                    |       |      |      | 114   |      
|                                              | Other operating expenses                                                                     |                                                     |      | 246                    |       |      |      | 196   |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Total other expenses                                |      |                        | 849   |      |      |       | 645   | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Income before income taxes                          |      |                        | 229   |      |      |       | 99    | 
|Income tax expense                            |                                                                                              |                                                     | 77   |                        |       |      | 33   |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Net income                                          |      |                        | 152   |      |      |       | 66    | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Other comprehensive income (loss), net of tax |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              | Unrealized gains (losses) on securities available-for-sale
arising during period, net of tax |                                                     |      | (110                   | )     |      |      | 199   |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|                                              |                                                                                              | Comprehensive income                                |      | $                      | 42    |      |      | $     | 265   | 
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Basic and diluted earnings per share          |                                                                                              | $                                                   | 0.19 |                        |       | $    | 0.08 |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      
|Cash dividends per share                      |                                                                                              | $                                                   |     |                        |       | $    |     |      
|                                              |                                                                                              |                                                     |      |                        |       |      |      |      

See Notes to Consolidated Financial Statements.

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FORSYTH BANCSHARES, INC. AND SUBSIDIARY




CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(Unaudited)

|                                               |                                                                                   |                                                |                                           |        |                        |        |       |        |     |        |  
|---------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | ------ | ---------------------- | ------ | ----- | ------ | --- | ------ | -
|                                               |                                                                                   |                                                |                                           |        | (Dollars in Thousands)
|                                               |                                                                                   |                                                |                                           |        | 2002                   |        | 2001 
|                                               |                                                                                   |                                                |                                           |        |                        |        |      
|OPERATING ACTIVITIES                           |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               | Net income                                                                        |                                                | $                                         | 152    |                        |        | $     | 66     |    
|                                               | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                |                                           |        |                        |        |       |        |    
|                                               |                                                                                   | Depreciation                                   |                                           |        | 62                     |        |       |        | 58  |       
|                                               |                                                                                   | Provision for loan losses                      |                                           |        | 40                     |        |       |        | 55  |       
|                                               |                                                                                   | Gain on sales of securities available-for-sale |                                           |        | (5                     | )      |       |        | (3  | )     
|                                               |                                                                                   | Net other operating activities                 |                                           |        | 105                    |        |       |        | (26 | )     
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               |                                                                                   |                                                | Net cash provided by operating activities |        |                        | 354    |       |        |     | 150    |  
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|INVESTING ACTIVITIES                           |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               | Net (increase) decrease in interest-bearing deposits in banks                     |                                                |                                           | 3      |                        |        |       | (4     | )  
|                                               | Purchases of securities available-for-sale                                        |                                                |                                           | (6,871 | )                      |        |       | (4,000 | )  
|                                               | Proceeds from maturities of securities available-for-sale                         |                                                |                                           | 1,399  |                        |        |       | 5,351  |    
|                                               | Proceeds from sales of securities available-for-sale                              |                                                |                                           | 2,356  |                        |        |       | 1,503  |    
|                                               | Proceeds from maturities of securities held-to-maturity                           |                                                |                                           | 38     |                        |        |       | 515    |    
|                                               | Purchases of restricted equity securities                                         |                                                |                                           | (6     | )                      |        |       | (14    | )  
|                                               | Net (increase) decrease in federal funds sold                                     |                                                |                                           | 599    |                        |        |       | (7,181 | )  
|                                               | Net increase in loans                                                             |                                                |                                           | (74    | )                      |        |       | (2,999 | )  
|                                               | Purchase of premises and equipment                                                |                                                |                                           | (141   | )                      |        |       | (229   | )  
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               |                                                                                   |                                                | Net cash used in investing activities     |        |                        | (2,697 | )     |        |     | (7,058 | )
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|FINANCING ACTIVITIES                           |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               | Net increase in deposits                                                          |                                                |                                           | 1,112  |                        |        |       | 6,205  |    
|                                               | Net increase in securities sold under repurchase agreements                       |                                                |                                           | 104    |                        |        |       |       |    
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|                                               |                                                                                   |                                                | Net cash provided by financing activities |        |                        | 1,216  |       |        |     | 6,205  |  
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|Net decrease in cash and due from banks        |                                                                                   |                                                | (1,127                                    | )      |                        |        | (703  | )     
|Cash and due from banks at beginning of period |                                                                                   |                                                | 2,781                                     |        |                        |        | 2,575 |       
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       
|Cash and due from banks at end of period       |                                                                                   | $                                              | 1,654                                     |        |                        | $      | 1,872 |       
|                                               |                                                                                   |                                                |                                           |        |                        |        |       |       

See Notes to Consolidated Financial Statements.

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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 month period ended March 31,
2002 are not necessarily indicative of the results to be expected
for the full year.                                                                                                                                                                          
|       
|NOTE 2. |  | CURRENT ACCOUNTING DEVELOPMENTS                                                                                                                                                                                                                                                                                                    
|       
|        |  | There are no recent accounting pronouncements that have had, or are
expected to have, a material effect on the Companys financial
statements.                                                                                                                                                                                     

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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, 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 the 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 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.

Liquidity and Capital Resources

We consider our liquidity to be adequate to meet operating and loan funding
requirements at March 31, 2002. At March 31, 2002, the liquidity ratio (i.e.
cash, short-term assets and marketable assets divided by deposits) was
approximately 34% and the loan to deposit ratio was approximately 74%. As the
loan portfolio grows, we will continue to monitor liquidity and make
adjustments as deemed necessary. Investing our available funds in loans and
other high yielding interest securities will increase earnings potential.

Requirements by banking regulators include the monitoring of risk-based capital
guidelines for banks and holding companies that are designed to make capital
requirements more sensitive to differences in risk profiles and account for off
balance sheet items. We exceed the regulatory minimums on capital requirements
and ratios. However, as we continue to grow and the loan portfolio increases,
these ratios should adjust downward. We 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:

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|                           |  |              |       |            |  |             |       |   |  |  |      |  
|-------------------------- |  | ------------ | ----- | ---------- |  | ----------- | ----- | - |  |  | ---- | -
|                           |  | Actual       |       | Minimum   
|                           |  |              |       | Regulatory
|                           |  | Consolidated |       | Bank       |  | Requirement
|                           |  |              |       |            |  |            
|Leverage capital ratios    |  |              | 10.46 | %          |  |             | 8.67  | % |  |  | 4.00 | %
|Risk-based capital ratios: |  |              |       |            |  |             |       |   |  |  |      |  
|Tier I capital             |  |              | 13.27 |            |  |             | 11.03 |   |  |  | 4.00 |  
|Total capital              |  |              | 14.36 |            |  |             | 12.13 |   |  |  | 8.00 |  

Financial Condition

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

|                                            |  |                        |        |              |  |   |        | 
|------------------------------------------- |  | ---------------------- | ------ | ------------ |  | - | ------ | 
|                                            |  | March 31,              |        | December 31,
|                                            |  | 2002                   |        | 2001        
|                                            |  |                        |        |             
|                                            |  | (Dollars in Thousands)
|                                            |  |                        |       
|Cash and due from banks                     |  | $                      | 1,654  |              |  | $ | 2,781  | 
|Interest-bearing deposits in banks          |  |                        | 183    |              |  |   | 186    | 
|Federal funds sold                          |  |                        | 6,767  |              |  |   | 7,366  | 
|Securities                                  |  |                        | 19,273 |              |  |   | 16,362 | 
|Loans, net                                  |  |                        | 59,949 |              |  |   | 59,916 | 
|Premises and equipment                      |  |                        | 3,127  |              |  |   | 3,048  | 
|Other assets                                |  |                        | 948    |              |  |   | 927    | 
|                                            |  |                        |        |              |  |   |        | 
|                                            |  | $                      | 91,901 |              |  | $ | 90,586 | 
|                                            |  |                        |        |              |  |   |        | 
|Deposits                                    |  | $                      | 81,897 |              |  | $ | 80,785 | 
|Securities sold under repurchase agreements |  |                        | 104    |              |  |   |       | 
|Other liabilities                           |  |                        | 407    |              |  |   | 350    | 
|Stockholders equity                        |  |                        | 9,493  |              |  |   | 9,451  | 
|                                            |  |                        |        |              |  |   |        | 
|                                            |  | $                      | 91,901 |              |  | $ | 90,586 | 
|                                            |  |                        |        |              |  |   |        | 

Our total assets grew at a relatively stagnant rate of 1.45% for the first
quarter of 2002. Deposit growth of $1,112,000 coupled with decreases in
federal funds sold and cash positions totaling $1,729,000 was invested in
securities. Our loan to deposit ratio has remained steady since December 31,
2001, holding in the 74-75% range. Our current federal funds and securities
balances should provide the funds for expected loan growth in the future.
Stockholders equity has increased by $42,000 due to net income of $152,000 and
decreases of unrealized gains on securities available-for-sale, net of tax, of
$110,000.

We are in process of building new main office facilities to replace the leased
facilities we currently occupy. At March 31, 2002, we had approximately $2.3
million of commitments for capital expenditures to complete the construction
process.

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Results of Operations For The Three Months Ended March 31, 2002 and 2001

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

|                          |  |                        |       |      |  |   |       | 
|------------------------- |  | ---------------------- | ----- | ---- |  | - | ----- | 
|                          |  | Three Months Ended    
|                          |  | March 31,             
|                          |  |                       
|                          |  | 2002                   |       | 2001
|                          |  |                        |       |     
|                          |  | (Dollars in Thousands)
|Interest income           |  | $                      | 1,433 |      |  | $ | 1,668 | 
|Interest expense          |  |                        | 555   |      |  |   | 940   | 
|                          |  |                        |       |      |  |   |       | 
|Net interest income       |  |                        | 878   |      |  |   | 728   | 
|Provision for loan losses |  |                        | 40    |      |  |   | 55    | 
|Other income              |  |                        | 240   |      |  |   | 71    | 
|Other expense             |  |                        | 849   |      |  |   | 645   | 
|                          |  |                        |       |      |  |   |       | 
|Pretax income             |  |                        | 229   |      |  |   | 99    | 
|Income taxes              |  |                        | 77    |      |  |   | 33    | 
|                          |  |                        |       |      |  |   |       | 
|Net income                |  | $                      | 152   |      |  | $ | 66    | 
|                          |  |                        |       |      |  |   |       | 

Our net interest income has increased by $150,000 during the first quarter of
2002 as compared to the same period in 2001. Our net interest margin increased
to 4.18% during the first quarter of 2002 as compared to 3.71% for the first
quarter of 2001 and 3.84% for the entire year of 2001. The increases in net
interest income and the net interest margin are due primarily to the repricing
of our interest-bearing liabilities at lower rates.

The provision for loan losses decreased by $15,000 in the first quarter of 2002
when compared to the same period in 2001. This decrease is due primarily to a
lower rate of loan growth and our assessment of inherent risk in the loan
portfolio. We incurred net charge-offs of $24,000 in the first quarter of 2002
as compared to $15,000 in the first quarter of 2001. 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

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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
March 31, 2002 and 2001 is as follows:

|                                                                                                         |  |                        |    |      |  |   |    | 
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | -- | ---- |  | - | -- | 
|                                                                                                         |  | March 31,             
|                                                                                                         |  |                       
|                                                                                                         |  | 2002                   |    | 2001
|                                                                                                         |  |                        |    |     
|                                                                                                         |  | (Dollars in Thousands)
|                                                                                                         |  |                       
|Nonaccrual loans                                                                                         |  | $                      | 11 |      |  | $ | 14 | 
|Loans contractually past due ninety days or more as to interest
or principal payments and still accruing |  |                        | 0  |      |  |   | 80 | 
|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  | 

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 such 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.

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.

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Information regarding certain loans and allowance for loan loss data through
March 31, 2002 and 2001 is as follows:

|                                                                              |                          |   |                        |    |      |   |        |    | 
|----------------------------------------------------------------------------- | ------------------------ | - | ---------------------- | -- | ---- | - | ------ | -- | 
|                                                                              |                          |   | Three Months Ended    
|                                                                              |                          |   | March 31,             
|                                                                              |                          |   |                       
|                                                                              |                          |   | 2002                   |    | 2001
|                                                                              |                          |   |                        |    |     
|                                                                              |                          |   | (Dollars in Thousands)
|Average amount of loans outstanding                                           |                          | $ | 60,388                 |    |      | $ | 49,868 |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Balance of allowance for loan losses at beginning of period                   |                          | $ | 756                    |    |      | $ | 604    |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Loans charged off                                                             |                          |   |                        |    |      |   |        |   
|                                                                              | Commercial and financial |   |                        | 20 |      |   |        |   | 
|                                                                              | Real estate mortgage     |   |                        |   |      |   |        |   | 
|                                                                              | Installment              |   |                        | 10 |      |   |        | 15 | 
|                                                                              |                          |   |                        |    |      |   |        |   
|                                                                              |                          |   | 30                     |    |      |   | 15     |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Loans recovered                                                               |                          |   |                        |    |      |   |        |   
|                                                                              | Commercial and financial |   |                        |   |      |   |        |   | 
|                                                                              | Real estate mortgage     |   |                        |   |      |   |        |   | 
|                                                                              | Installment              |   |                        | 6  |      |   |        |   | 
|                                                                              |                          |   |                        |    |      |   |        |   
|                                                                              |                          |   | 6                      |    |      |   |       |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Net charge-offs                                                               |                          |   | 24                     |    |      |   | 15     |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Additions to allowance charged to operating expense during period             |                          |   | 40                     |    |      |   | 55     |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Balance of allowance for loan losses at end of period                         |                          | $ | 772                    |    |      | $ | 644    |   
|                                                                              |                          |   |                        |    |      |   |        |   
|Ratio of net loans charged off during the period to
average loans outstanding |                          |   | .04                    | %  |      |   | .03    | % 
|                                                                              |                          |   |                        |    |      |   |        |   

Other income has increased by $169,000 during the first quarter of 2002 as
compared to the same period in 2001 due to increased service charges on deposit
accounts of $14,000 and to increased mortgage loan origination fees of
$144,000. We commenced mortgage loan origination activities in the second
quarter of 2001.

Other expenses increased by $204,000 during the first quarter of 2002 as
compared to the same period in 2001 due primarily to increased salaries and
employee benefits of $144,000 and operating expenses of $50,000. Salaries and
employee benefits have increased due to an increase in the number of full time
equivalent employees to 33 as of March 31, 2002 from 28 as of March 31, 2001
and to other annual salary increases. Other operating expenses have increased
due the overall growth of the Bank.

Our provision for income taxes was $77,000 for the first quarter of 2002
(effective tax rate of 34%) as compared to $33,000 for the first quarter of
2001 (effective tax rate of 33%). The increase in amount is due to higher pre
tax income in 2002.

Overall, net income has increased by $86,000 during the first quarter of 2002
as compared to the same period in 2001 due primarily to higher net interest
income and increased other operating income.

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

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PART II  OTHER INFORMATION




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

None.




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

|    |  |                     
|--- |  | --------------------
|(a) |  | Exhibits.           
|   
|    |  | None.               
|   
|(b) |  | Reports on Form 8-K.
|   
|    |  | None.               

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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: |  | May 10, 2002 |  | BY:     
/s/  Timothy M. Perry                                       
|      |  |              |  |                                                                      
|      |  |              |  | Timothy M. Perry, President and C.E.O.                               
|      |  |              |  | (Principal Executive Officer)                                        
|     
|DATE: |  | May 10, 2002 |  | BY:     /s/  Deborah F. McLeod                                       
|      |  |              |  |                                                                      
|      |  |              |  | Deborah F. McLeod, Vice President,
           Secretary and Treasurer
|      |  |              |  | (Principal Financial and Accounting Officer)                         

13