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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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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, 2003



| ̈ | TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the transition period from
 to



Commission File Number: 000-25227



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Capitol City Bancshares, Inc.

(Exact name of small business issuer as specified in its charter)



|Georgia                                                        |  | 58-2452995                       
|-------------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



562 Lee Street,
S.W., Atlanta, Georgia 30310

(Address of principal executive offices)



(404) 752-6067

(Issuers telephone number)



N/A

(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No ̈



State the number of shares outstanding of each of the issuers classes
of common equity, as of November 1, 2002: 532,088; $6 par value



Transitional Small Business Disclosure Format (Check One)  Yes ̈No  x



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INDEX



|                              |  |                                                                                                                                      |  | Page
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Part I. Financial Information |  |                                                                                                                                     
|                              |  |                                                                                                                                     
|Item 1.                       |  | Financial Statements (unaudited)                                                                                                     |  |     
|                              |  |                                                                                                                                     
|                              |  | Condensed Consolidated Balance Sheet as of September 30, 2003                                                                        |  | 3   
|                              |  |                                                                                                                                     
|                              |  | Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2003 and 2002 |  | 4   
|                              |  |                                                                                                                                     
|                              |  | Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 2003 and 2002                                |  | 5   
|                              |  |                                                                                                                                     
|                              |  | Notes to Condensed Consolidated Financial Statements                                                                                 |  | 6   
|                              |  |                                                                                                                                     
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                |  | 8   
|                              |  |                                                                                                                                     
|Item 3.                       |  | Controls and Procedures                                                                                                              |  | 13  
|                              | 
|Part II Other Information     |  | 14                                                                                                                                  
|                              |  |                                                                                                                                     
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                                     |  | 14  
|                              | 
|Signatures                    |  | 15                                                                                                                                  
|                              | 
|Certifications                |  |                                                                                                                                     



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PART IFINANCIAL INFORMATION



ITEM I.    FINANCIAL STATEMENTS



CAPITOL CITY BANCSHARES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2003

(Unaudited)



|Assets                                                                                        |  |   |            
|--------------------------------------------------------------------------------------------- |  | - | -----------
|Cash and due from banks                                                                       |  | $ | 2,572,145  
|Interest bearing deposits in banks                                                            |  |   | 81,762     
|Federal funds sold                                                                            |  |   | 7,296,000  
|Securities available-for-sale, at fair value                                                  |  |   | 29,068,655 
|Restricted equity securities, at cost                                                         |  |   | 117,800    
|Loans                                                                                         |  |   | 86,420,427 
|Less allowance for loan losses                                                                |  |   | 1,081,212  
|                                                                                              |  |   |            
|Loans, net                                                                                    |  |   | 85,339,215 
|                                                                                              |  |   |            
|Premises and equipment                                                                        |  |   | 5,190,040  
|Other assets                                                                                  |  |   | 1,618,782  
|                                                                                              |  |   |            
|Total assets                                                                                  |  | $ | 131,284,399
|                                                                                              |  |   |            
|                                                                                              | 
|Liabilities and Stockholders Equity                                                          |  |   |            
|Deposits                                                                                      |  |   |            
|Noninterest-bearing                                                                           |  | $ | 23,117,340 
|Interest-bearing                                                                              |  |   | 91,816,642 
|                                                                                              |  |   |            
|Total deposits                                                                                |  |   | 114,933,982
|Securities sold under repurchase agreements                                                   |  |   | 1,112,000  
|Other liabilities                                                                             |  |   | 1,006,362  
|Note payable                                                                                  |  |   | 370,500    
|Company guaranteed trust preferred securities                                                 |  |   | 3,300,000  
|                                                                                              |  |   |            
|Total liabilities                                                                             |  |   | 120,722,844
|                                                                                              |  |   |            
|Stockholders equity                                                                          |  |   |            
|Common stock, par value $6; 5,000,000 shares authorized;532,088 shares issued and outstanding |  |   | 3,192,528  
|Capital surplus                                                                               |  |   | 2,128,352  
|Retained earnings                                                                             |  |   | 4,723,789  
|Accumulated other comprehensive income                                                        |  |   | 516,886    
|                                                                                              |  |   |            
|Total stockholders equity                                                                    |  |   | 10,561,555 
|                                                                                              |  |   |            
|Total liabilities and stockholders equity                                                    |  | $ | 131,284,399
|                                                                                              |  |   |            



The accompanying notes
are an integral part of these condensed consolidated financial statements.



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CAPITOL CITY BANCSHARES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2003 AND 2002

(Unaudited)



|                                                                                                       |  | Three Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,
|------------------------------------------------------------------------------------------------------ |  | ------------------------------- | --------- | ------------------------------
|                                                                                                       |  | 2003                            |           |                               
|Interest income                                                                                        |  |                                 |           |                               
|Loans, including fees                                                                                  |  | $                               | 1,677,953 |                               
|Taxable securities                                                                                     |  |                                 | 119,677   |                               
|Nontaxable securities                                                                                  |  |                                 | 129,029   |                               
|Federal funds sold                                                                                     |  |                                 | 5,338     |                               
|                                                                                                       |  |                                 |           |                               
|Total interest income                                                                                  |  |                                 | 1,931,997 |                               
|                                                                                                       |  |                                 |           |                               
|Interest expense                                                                                       |  |                                 |           |                               
|Deposits                                                                                               |  |                                 | 587,202   |                               
|Other borrowings                                                                                       |  |                                 | 51,760    |                               
|                                                                                                       |  |                                 |           |                               
|                                                                                                       |  |                                 | 638,962   |                               
|                                                                                                       |  |                                 |           |                               
|Net interest income                                                                                    |  |                                 | 1,293,035 |                               
|Provision for loan losses                                                                              |  |                                 | 108,467   |                               
|                                                                                                       |  |                                 |           |                               
|Net interest income after provision for loan losses                                                    |  |                                 | 1,184,568 |                               
|                                                                                                       |  |                                 |           |                               
|Other income                                                                                           |  |                                 |           |                               
|Service charges on deposit accounts                                                                    |  |                                 | 553,321   |                               
|Other fees and commissions                                                                             |  |                                 | (429      | )                             
|Other operating income                                                                                 |  |                                 | 63,925    |                               
|                                                                                                       |  |                                 |           |                               
|Total other income                                                                                     |  |                                 | 616,817   |                               
|                                                                                                       |  |                                 |           |                               
|Other expenses                                                                                         |  |                                 |           |                               
|Salaries and employee benefits                                                                         |  |                                 | 613,178   |                               
|Occupancy and equipment expenses                                                                       |  |                                 | 165,135   |                               
|Other operating expenses                                                                               |  |                                 | 558,289   |                               
|                                                                                                       |  |                                 |           |                               
|Total other expenses                                                                                   |  |                                 | 1,336,602 |                               
|                                                                                                       |  |                                 |           |                               
|Net income before income taxes                                                                         |  |                                 | 464,783   |                               
|Income tax expense                                                                                     |  |                                 | 142,199   |                               
|                                                                                                       |  |                                 |           |                               
|Net income                                                                                             |  |                                 | 322,584   |                               
|                                                                                                       |  |                                 |           |                               
|Other comprehensive income (loss)                                                                      |  |                                 |           |                               
|Unrealized gains (losses) on securities available-for-sale arising during period, net of tax (benefit) |  |                                 | (260,362  | )                             
|                                                                                                       |  |                                 |           |                               
|Comprehensive income                                                                                   |  | $                               | 62,222    |                               
|                                                                                                       |  |                                 |           |                               
|Basic earnings per share                                                                               |  | $                               | 0.61      |                               
|                                                                                                       |  |                                 |           |                               
|Diluted earnings per share                                                                             |  | $                               | 0.57      |                               
|                                                                                                       |  |                                 |           |                               
|Cash dividends declared per share                                                                      |  | $                               |          |                               
|                                                                                                       |  |                                 |           |                               



The accompanying notes
are an integral part of these consolidated financial statements.



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CAPITOL CITY BANCSHARES, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND
2002

(Unaudited)



|                                                                                  |  | 2003 |             |   | 2002 |  
|--------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | -
|OPERATING ACTIVITIES                                                              |  |      |             |   |      |  
|Net income                                                                        |  | $    | 945,700     |   |      | $
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |             |   |      |  
|Depreciation                                                                      |  |      | 229,928     |   |      |  
|Provision for loan losses                                                         |  |      | 319,467     |   |      |  
|Loss on sale of equipment                                                         |  |      | 29,694      |   |      |  
|Net other operating activities                                                    |  |      | (280,285    | ) |      |  
|                                                                                  |  |      |             |   |      |  
|Net cash provided by operating activities                                         |  |      | 1,244,504   |   |      |  
|                                                                                  |  |      |             |   |      |  
|                                                                                  |  |     
|INVESTING ACTIVITIES                                                              |  |      |             |   |      |  
|Purchases of securities available-for-sale                                        |  |      | (7,999,863  | ) |      |  
|Proceeds from maturities of securities available-for-sale                         |  |      | 13,092,472  |   |      |  
|Purchase of restricted equity securities                                          |  |      | (300        | ) |      |  
|Net increase in interest-bearing deposits                                         |  |      | (2,682      | ) |      |  
|Net increase in federal funds sold                                                |  |      | (5,464,000  | ) |      |  
|Net increase in loans                                                             |  |      | (21,099,263 | ) |      |  
|Proceeds from sale of other real estate                                           |  |      | 526,283     |   |      |  
|Purchase of premises and equipment                                                |  |      | (1,185,278  | ) |      |  
|Proceeds from sale of equipment                                                   |  |      | 10,595      |   |      |  
|                                                                                  |  |      |             |   |      |  
|Net cash used in investing activities                                             |  |      | (22,122,036 | ) |      |  
|                                                                                  |  |      |             |   |      |  
|                                                                                  |  |     
|FINANCING ACTIVITIES                                                              |  |      |             |   |      |  
|Net increase in deposits                                                          |  |      | 17,302,253  |   |      |  
|Net decrease in securities sold under repurchase agreement                        |  |      | (388,000    | ) |      |  
|Proceeds from issuance of trust preferred securities                              |  |      | 3,300,000   |   |      |  
|Advances from notes payable                                                       |  |      | 120,000     |   |      |  
|Payment of dividends                                                              |  |      | (79,813     | ) |      |  
|                                                                                  |  |      |             |   |      |  
|Net cash provided by financing activities                                         |  |      | 20,254,440  |   |      |  
|                                                                                  |  |      |             |   |      |  
|Net decrease in cash and due from banks                                           |  |      | (623,092    | ) |      |  
|Cash and due from banks, beginning of period                                      |  |      | 3,195,237   |   |      |  
|                                                                                  |  |      |             |   |      |  
|Cash and due from banks, end of period                                            |  | $    | 2,572,145   |   |      | $
|                                                                                  |  |      |             |   |      |  





The accompanying notes are an integral part of these consolidated financial statements.



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CAPITOL CITY BANCSHARES, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1. BASIS OF PRESENTATION



The consolidated financial information included for Capitol City Bancshares, Inc. (the
Company), Capitol City Bank & Trust Company (the Bank) and Capitol City Home Loans (the Mortgage Company) 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 periods.



The results of operations for the three and nine month periods ended September 30, 2003 are not necessarily indicative of the results to be expected for the full year.



NOTE 2. EARNINGS PER SHARE



Presented below is a summary of the components used to calculate basic and diluted earnings
per share for the three and nine months ended September 30, 2003 and 2002.



|                                                                                                                                     |  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ------- | ------------------------------
|                                                                                                                                     |  | 2003                            |         | 2002                          
|Net income                                                                                                                           |  | $                               | 322,584 |                               
|                                                                                                                                     |  |                                 |         |                               
|Weighted average common shares outstanding                                                                                           |  |                                 | 532,088 |                               
|Net effect of the assumed exercise of stock options based on the treasury stock method using the average market price for the
period |  |                                 | 31,566  |                               
|                                                                                                                                     |  |                                 |         |                               
|Total weighted average common shares and common stock equivalents outstanding                                                        |  |                                 | 563,054 |                               
|                                                                                                                                     |  |                                 |         |                               
|Diluted earnings per common share                                                                                                    |  | $                               | 0.57    |                               
|                                                                                                                                     |  |                                 |         |                               



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3. STOCK COMPENSATION PLAN



At September 30, 2003, the Company has a stock-based compensation plan. The Company accounts
for this plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based compensation cost is reflected in net income, as all options granted
under this plan 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.



|                                                                                                                                            |  | Nine Months EndedJune 30,
|------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------
|                                                                                                                                            |  | 2003                     
|Net income, as reported                                                                                                                     |  | $                        
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related
tax effects |  |                          
|                                                                                                                                            |  |                          
|Pro forma net income                                                                                                                        |  | $                        
|                                                                                                                                            |  |                          
|Earnings per share:                                                                                                                         |  |                          
|Basic - as reported                                                                                                                         |  | $                        
|                                                                                                                                            |  |                          
|Basic - pro forma                                                                                                                           |  | $                        
|                                                                                                                                            |  |                          
|Diluted - as reported                                                                                                                       |  | $                        
|                                                                                                                                            |  |                          
|Diluted - pro forma                                                                                                                         |  | $                        
|                                                                                                                                            |  |                          



NOTE 4. RECENT DEVELOPMENTS



In November 2002, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The interpretation addresses the disclosures to be
made by a guarantor in its interim and annual financial statements about its obligations under guarantees. The interpretation also clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee,
for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of the interpretation are to be applied to guarantees issued or modified after December 31, 2002. As of September
30, 2003, the interpretation has not had a material effect on the financial condition or results of operations, and there are no guarantees required to be disclosed.



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CAPITOL CITY BANCSHARES, INC. AND SUBSIDIARY



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 our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements.



FORWARD-LOOKING STATEMENTS



This quarterly report contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies, and our expectations.
These forward-looking statements are generally identified by use of the words believe, expect, intend, anticipate, estimate, project, or similar expressions. Our ability to
predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations include, but are not limited to, changes in interest rates, general economic conditions,
legislation and regulation, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of our loan and investment portfolios, demand for loan products,
deposit flows, competition, demand for financial services in our market area, and accounting principles and guidelines. You should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on
such statements. We will not publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or
unanticipated events.



FINANCIAL CONDITION



Total assets increased $21.2 million from $110.1 million to $131.3 million, or 19.3% for the
nine months ended September 30, 2003. The growth continues to be funded primarily by increases in total deposits, which increased by $17.3 million accompanied by the issuance of $3,300,000 in guaranteed trust preferred securities. The net increase
in total assets for the nine months ended September 30, 2003 consisted primarily of an increase of $20.1 million in total loans, an increase in federal funds sold of $5.5 million, and an increase of $915,000 in premises and equipment offset by a
decrease in securities available-for-sale of $5.3 million. The increase in premises and equipment reflects the start on construction on our Savannah, Georgia branch. The loan to deposit ratio at September 30, 2003 was 75% compared to 68% at December
31, 2002. The increase in the loan to deposit ratio as compared to December 2002 is due to total loans increasing by $20.1 million compared to increases in total deposits of $17.3 million. The increase in other assets includes $184,000 of foreclosed
other real estate owned that was transferred from loans. These assets are carried at their fair market value.



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Stockholders equity increased by $711,000 for the nine months ended September 30, 2003. This net increase consists
of net income of $946,000 less dividends declared and paid of $80,000 and a decrease in unrealized gains on securities, net of tax, of $155,000.



LIQUIDITY



Liquidity management involves the matching of the cash flow requirements of customer withdrawals of funds and the funding of loan originations, and the ability of our subsidiary bank to meet those requirements.
Management monitors and maintains appropriate levels of liquidity so that maturities of assets and deposit growth are such that adequate funds are provided to meet estimated customer withdrawals and loan requests.



At September 30, 2003, the Banks liquidity ratio was considered satisfactory in
relation to regulatory guidelines and internal target ratios. The liquidity ratio was 30.50% at September 30, 2003.



REGULATORY CAPITAL REQUIREMENTS



Banking regulations require us to maintain minimum capital levels in relation to assets. At September 30, 2003, the Banks capital ratios were considered well
capitalized based on regulatory minimum capital requirements. The minimum capital requirements and the actual capital ratios for the Bank at September 30, 2003 are as follows:



|                          |  | Bank  |   |  | RegulatoryMinimumRequirement |  
|------------------------- |  | ----- | - |  | ---------------------------- | -
|Leverage Capital Ratio    |  | 10.82 | % |  | 4.00                         | %
|Risk-Based Capital Ratios |  |       |   |  |                              |  
|Core Capital              |  | 11.61 | % |  | 4.00                         | %
|Total Capital             |  | 12.48 | % |  | 8.00                         | %



During the second quarter of 2003, we
injected additional capital into the Bank from the proceeds of the Trust Preferred Securities offering which returned our capital ratios to well capitalized.



We are in the process of opening our Savannah, Georgia branch. The estimated cost to complete the branch, including furnishings, is approximately $885,000.



We are not aware of any other recommendations by the regulatory authorities, events or trends
which, if they were to be implemented, would have a material effect on our liquidity, capital resources, or operations.



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RESULTS OF OPERATIONS



Three and Nine Months Ended September 30, 2003 and 2002



Net Interest Income. Net interest income increased by $174,000 and $526,000 for the three and nine month periods ended September 30, 2003, respectively, compared
to the same periods in 2002. The increase in net interest income for both periods ended September 30, 2003 is attributable to an increase in earning assets of $26.6 million as compared to September 30, 2002 combined with the spread maintained
between the rates earned on interest-earning assets and the rates paid on interest bearing liabilities. Loans increased during this period by $26.4 million, which generally provides the greater yields to the Company. During this same period, total
deposits increased by $26.1 million, which included an increase of $25.5 million in interest-bearing deposits and an increase of $535,035 in non-interest bearing deposits. The overall net increase in net interest income is based on the spread
between rates earned on interest-earning assets and rates paid on interest-bearing liabilities.



The net interest margin decreased to 4.21% at September 30, 2003 as compared to 5.14% at September 30, 2002. The yield on interest-earning assets decreased to 6.64% or 69 basis points from September 30, 2002 to
September 30, 2003. The rate paid on interest-bearing liabilities decreased to 2.76% or 57 basis points for the same period. These decreases reflect the continued adjustment in rates as the prime rate declined over the past two years.



Provision for Loan Losses. The provision for loan losses is based on managements
evaluation of the economic environment, the history of charged off loans and recoveries, size and composition of the loan portfolio, nonperforming and past due loans, and other aspects of the loan portfolio. We review the allowance for loan loss on
a quarterly basis and make provisions as necessary. A provision of $319,000 was made during the three and nine month periods ending September 30, 2003 based upon this evaluation process as compared to $50,000 for the nine month period in 2002. The
allowance for loan loss as a percentage of total loans was 1.25% at September 30, 2003 and 1.33% at September 30, 2002. The total nonperforming loans at September 30, 2003 increased to $1.7 million compared to $1.1 million at September 30, 2002 .
Loans past due 90 days or more and still accruing interest decreased by $154,000 as compared to the same period in 2002. Net charge-offs for the nine months ended September 30, 2003 increased by $277,000 as compared to the same period in 2002.
Management believes the allowance for loan loss at September 30, 2003 is adequate to meet any anticipated future losses in the loan portfolio. The increase in the provision in 2003 as compared to 2002 reflects the increase in net charge-offs for the
nine months ended September 30, 2003.



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At September 30, 2003 and 2002, nonaccrual, past due, and restructured loans were as follows:



|                                                                                                         |  | September 30,2003      |       | September 30,2002
|-------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----- | -----------------
|                                                                                                         |  | (Dollars in thousands)
|Total nonaccruing loans                                                                                  |  | $                      | 1,722 |                  
|Loans contractually past due ninety days or more as to interest or principal payments and still accruing |  |                        | 300   |                  
|Restructured loans                                                                                       |  |                        |      |                  



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 such interest when (1) there is a significant deterioration in the financial condition of the borrower and full
repayment of principal and interest is not expected or (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. Accrual of interest on such loans is resumed when, in
managements judgment, the collection of interest and principal becomes probable.



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 for the nine months ended September 30, 2003 and
2002 is as follows:



|                                                                              |  | Nine Months EndedSeptember 30, |       
|----------------------------------------------------------------------------- |  | ------------------------------ | ------
|                                                                              |  | 2003                           |       
|                                                                              |  | (Dollars in thousands)         |       
|Average amount of loans outstanding for the period                            |  | $                              | 75,984
|                                                                              |  |                                |       
|Balance of allowance for loan losses at beginning of period                   |  | $                              | 1,059 
|                                                                              |  |                                |       
|Loans charged off                                                             |  |                                |       
|Commercial                                                                    |  |                                | (165  
|Real estate                                                                   |  |                                | (104  
|Installment                                                                   |  |                                | (121  
|                                                                              |  |                                |       
|                                                                              |  |                                | (390  
|                                                                              |  |                                |       
|Loans recovered                                                               |  |                                |       
|Commercial                                                                    |  |                                | 11    
|Real estate                                                                   |  |                                | 41    
|Installment                                                                   |  |                                | 41    
|                                                                              |  |                                |       
|                                                                              |  |                                | 93    
|                                                                              |  |                                |       
|Net charge-offs                                                               |  |                                | (297  
|                                                                              |  |                                |       
|Additions to allowance charged to operating expense during period             |  |                                | 319   
|                                                                              |  |                                |       
|Balance of allowance for loan losses at end of period                         |  |                                | 1,082 
|                                                                              |  |                                |       
|Ratio of net loans charged-off during the period to average loans outstanding |  |                                | 0.39  
|                                                                              |  |                                |       



Other Income. Other income
increased by $133,000 and $351,000 for the three and nine months ended September 30, 2003, respectively, compared to the same periods in 2002. The most significant difference which affected both periods was increases of $99,000 and $283,000 in
service charges on deposit accounts for the three and nine month periods in 2003, respectively. Other operating income increased $57,000 and $121,000 for the three and nine months ended September 30, 2003 due to an increase in mortgage origination
income of $50,000 for the periods.



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Other Expenses. Other expenses increased by $129,000 and $588,000 for the three and nine months ended September
30, 2003 as compared to the same period in 2002. The most significant increases in 2003 are increases of $54,000 and $282,000 in salaries and employee benefits for the three and nine months ended September 30, 2003. During the same periods,
occupancy expenses increased by $10,000 and $96,000, respectively; and other operating expenses increased by $65,000 and $588,000, respectively. The increase in salaries and employee benefits for both the three and nine month periods represent
normal increases in salaries and an increase in the number of employees. At September 30, 2003, the number of full-time equivalent employees was 58 compared to 57 at September 30, 2002. The increase in occupancy and equipment expenses reflects the
cost of maintaining and updating the banks computer system, maintenance of premises and equipment, and increased depreciation expense associated with the banks new operations center. The increases in other operating expense include
increases in expenses directly related to increased activity in both loans and deposits and expenses related to marketing, advertising, and director fees.



Income Taxes. Income tax expense increased by $46,000 and $9,000 for the three and nine months ended September 30, 2003 as compared to 2002. The effective tax rate
for 2003 and 2002 was 27%. The effective tax rate is less than the statutory tax rate due to nontaxable interest income on securities.



Net Income. Net income increased by $74,000 and $10,000 for the three and nine months ended September 30, 2003 as compared to the same periods in 2002. The primary
reason for the increase in net income for the three and nine months ended September 30, 2003 as compared to the same period in 2001 is attributable to the increase in net interest income.



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 Officer 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.



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PART IIOther Information



Item 6. Exhibits and Reports on Form 8-K.



(a) Exhibits.



|Exhibit |  |                                                         
|------- |  | --------------------------------------------------------
|        | 
|31.1    |  | Section 302 Certification of Principal Executive Officer
|31.2    |  | Section 302 Certification of Principal Financial Officer
|32.1    |  | Section 906 Certification of Principal Executive Officer
|32.2    |  | Section 906 Certification of Principal Financial Officer



(b)
Reports on Form 8-K.



None.



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SIGNATURES



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



|                           |  |  |  | CAPITOL CITY BANCSHARES, INC.                 
|-------------------------- |  |  |  | ----------------------------------------------
|                           |  | 
|Date:    November 14, 2003 |  |  |  | /s/ George G. Andrews                         
|                           |  |  | 
|                           |  |  |  | George G. Andrews President and Director      
|                           |  | 
|Date:    November 14, 2003 |  |  |  | /s/ Kevin M. Sharpe                           
|                           |  |  | 
|                           |  |  |  | Kevin M. Sharpe Vice President and Comptroller



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