<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

(Mark One)
[X]  Annual report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

            For fiscal year ended DECEMBER 31, 1999

[ ]  Transition report under Section 13 or 15(d) of the Securities Exchange
     Act of 1934

            For the transition period from             to
                                           -----------    ------------

            Commission file number       000-24137

                            GATEWAY BANCSHARES, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

           GEORGIA                                              58-2202210
-------------------------------                             -------------------
(State or Other Jurisdiction of                              (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

5102 ALABAMA HIGHWAY, P.O. BOX 129, RINGGOLD, GEORGIA              30736
-----------------------------------------------------            ----------
      (Address of Principal Executive Offices)                   (Zip Code)

                                (706) - 965-5500
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK, PAR
                                                             VALUE $5.00

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 past 90 days. Yes [X] No  [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year:  $6,761,125

Aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days: $8,488,100
AS OF FEBRUARY 25, 2000

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 679,048 AS OF MARCH 24,
2000

         Transitional Small Business Disclosure format (check one):
Yes [ ] No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders for the fiscal year ended December
31, 1999 are incorporated by reference into Part II. Portions of the Proxy
Statement for the Annual Meeting of Shareholders, scheduled to be held April 20,
2000, are incorporated by reference into Part III.

<PAGE>   2



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
<S>                                                                                                                <C>
PART I...........................................................................................................    1
    ITEM 1.   DESCRIPTION OF BUSINESS............................................................................    1
    ITEM 2.   DESCRIPTION OF PROPERTIES..........................................................................   18
    ITEM 3.   LEGAL PROCEEDINGS..................................................................................   19
    ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................   19
PART II..........................................................................................................   19
    ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................   19
    ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............   20
    ITEM 7.   FINANCIAL STATEMENTS...............................................................................   20
    ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...............   20
PART III.........................................................................................................   20
    ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT..................................................   20
    ITEM 10.  EXECUTIVE COMPENSATION.............................................................................   21
    ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....................................   21
    ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................................................   21
    ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 10-KSB.........................................................   22
</TABLE>


                                        i
<PAGE>   3




                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

                                   THE COMPANY

            Gateway Bancshares, Inc. (the "Company") was incorporated as a
Georgia business corporation on October 3, 1995, to serve as a bank holding
company for Gateway Bank & Trust (the "Bank"). The Bank began operations in
April 1997 and is the sole subsidiary of the Company.

            The Company's principal business is the ownership and management of
the Bank. The Company was organized to facilitate the Bank's ability to serve
its customers' requirements for financial services. The holding company
structure provides flexibility for expansion of the Company's banking business
through the possible acquisition of other financial institutions and the
provision of additional capital to the Bank. For example, we may assist the Bank
in maintaining its required capital ratios by borrowing money and contributing
the proceeds of that debt to the Bank as primary capital.

                                    THE BANK

GENERAL

            The Bank was chartered as a Georgia bank on December 11, 1995 and
began business on April 21, 1997 as a full-service commercial bank. The Bank's
lending services include consumer loans to individuals, commercial loans to
small- to medium-sized businesses and real estate-related loans. The bank offers
a board array of competitively priced deposit services such as regular checking,
interest checking, savings accounts and various types of certificates of
deposit. To complement its lending and deposit services, the Bank also provides
official bank checks and money orders, MasterCard and Visa credit cards, ATM
cards, safe deposit boxes, traveler's checks, bank-by-mail, bank-by-telephone,
direct deposit of payroll and Social Security checks, U.S. Savings Bonds, wire
transfer of funds and a night depository.

PHILOSOPHY

            The Bank's philosophy is to emphasize prompt and responsive personal
service to residents of, and small- to medium-sized businesses located in
Ringgold, Georgia, as well as other communities located in Catoosa County. We
believe this philosophy helps the Bank to attract customers and acquire market
share controlled by other financial institutions in the Bank's market area. We
believe that the Bank offers residents in Catoosa and surrounding counties the
benefits associated with a locally owned and managed bank. The Bank's active
call program allows its officers and directors to promote the Bank by personally
describing the products, services and philosophy of the Bank to both existing
customers and new business prospects. In addition, both the Chief Executive
Officer and Chief Financial Officer of the Bank have substantial banking
experience in Catoosa County, which facilitates the Bank's efforts to provide
products and services designed to meet the needs of the Bank's customer base.
The Bank's directors are active members of the business communities in Ringgold
and around Catoosa County, and their continued active community involvement
provides them with an opportunity to promote the Bank and its products and
services.

MARKET AREA AND COMPETITION

            The Bank is located in Ringgold, Georgia. The Bank draws a majority
of its business from its primary market area, Catoosa County, Georgia. The Bank
also focuses its marketing efforts on the


                                       1

<PAGE>   4

adjacent counties of Walker and Whitfield in Georgia and Hamilton County in
Tennessee. The Bank competes for deposits and loan customers with other
financial institutions whose resources are equal to or greater than those
available to the Bank and the Company. According to information provided by the
FDIC, as of June 30, 1999, Catoosa County was served by six commercial banks and
two savings associations with a total of 13 offices. The total deposits within
Catoosa County for these institutions were $566 million as of June 30, 1999. The
information provided by the FDIC indicates that the Bank's deposit market share
in Catoosa County was 12.45% as of June 30, 1999. We believe our local ownership
and management as well as our focus on personalized service helps us to compete
with the other institutions in our market area.

LOAN PORTFOLIO

            LENDING POLICY. The Bank was established to support Catoosa County
and the immediately-surrounding counties of Walker and Whitfield in Georgia and
Hamilton County in Tennessee. Consequently, the Bank aggressively seeks
creditworthy loans within a limited geographic area. The Bank's primary lending
functions include consumer loans to individuals and commercial loans to small-
and medium-sized businesses and professional concerns. In addition, the Bank
makes real estate-related loans, including construction loans for residential
and commercial properties, and primary and secondary mortgage loans for the
acquisition or improvement of personal residences. The Bank's policy is to avoid
concentrations of loans to a single industry or based on a single type of
collateral.

            REAL ESTATE LOANS. The Bank's real estate loans consist primarily of
single-family residential construction loans for one-to-four unit family
structures. The Bank requires a first lien position on the land associated with
the construction project and will offer these loans to professional building
contractors and homeowners. Loan disbursements require on-site inspections to
assure the project is on budget and that the loan proceeds are being used for
the construction project and not being diverted to another project. The
loan-to-value ratio for such loans is predominantly 75% of the lower of the
as-built appraised value or project cost, and may be a maximum of 80% if the
loan is amortized. Loans for construction can present a high degree of risk to
the lender, depending upon, among other things, whether the builder can sell the
home to a buyer, whether the buyer can obtain permanent financing, whether the
transaction produces income in the interim and the nature of changing economic
conditions.

            CONSUMER LOANS. The Bank's consumer loans consist primarily of
installment loans to individuals for personal, family and household purposes,
including loans for automobiles, home improvements and investments. Risks
associated with consumer loans include, but are not limited to, fraud,
deteriorated or non-existing collateral, general economic downturn and customer
financial problems.

            COMMERCIAL LOANS. The Bank's commercial lending is directed
principally toward small- to medium-sized businesses whose demand for funds fall
within the legal lending limits of the Bank. This category of loans includes
loans made to individual, partnership or corporate borrowers, and obtained for a
variety of business purposes including providing funds for working capital,
equipment, property expansion and inventory. Risks associated with these loans
can be significant and include, but are not limited to, fraud, bankruptcy,
economic downturn, deteriorated or non-existing collateral and changes in
interest rates.

            INVESTMENTS. In addition to loans, the Bank makes other investments
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States, other taxable securities and other
obligations of states and municipalities. During fiscal year 1999, average
investment securities comprised approximately 29.6% of the Bank's total average
assets, with average net loans


                                       2
<PAGE>   5

comprising approximately 64.3% of the Bank's average total assets. The Bank also
engages in Federal funds transactions with its principal correspondent banks and
anticipates it will primarily act as a net seller of funds. The sale of Federal
funds amounts to a short-term loan from the Bank to another bank.

         DEPOSITS. The Bank offers a wide range of commercial and consumer
deposit accounts, including checking accounts, money market accounts, a variety
of certificates of deposit, and individual retirement accounts. The primary
sources of deposits are residents of, and businesses and their employees located
in, Catoosa County, and to a lesser extent, Walker County and Whitfield County
in Georgia and Hamilton County in Tennessee. Deposits are obtained through
personal solicitation by the Bank's officers and directors, direct mail
solicitations and advertisements published in the local media. To attract
deposits the Bank offers a broad line of competitively priced deposit products
and services. The Bank's deposit-related services include ATM cards, direct
deposit, bank-by-mail, bank-by-telephone, wire transfer of funds and a night
depository.

         ASSET AND LIABILITY MANAGEMENT. The objective of the Bank's assets and
liabilities management is to provide a satisfactory and consistent level of
profitability within the framework of established cash, loan, investment,
borrowing and capital policies. Certain Bank officers are responsible for
developing and monitoring policies and procedures that ensure acceptable
composition of the asset/liability mix. Management's overall philosophy is to
support asset growth primarily through growth of core deposits, which include
deposits of all categories made by individuals, partnerships and corporations.
Management seeks to invest the largest portion of the Bank's assets in
consumer/installment, commercial and construction loans.

         The Bank's asset/liability mix is monitored to control
interest-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on the Bank's earnings.

                                    EMPLOYEES

         At December 31, 1999, the Company and its subsidiary employed 24
full-time employees and two part-time employees. The Company considers its
relationship with its employees to be excellent.

                        SELECTED STATISTICAL INFORMATION

         The following tables set forth certain statistical information and
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations incorporated by reference in this
Report and the Company's consolidated financial statements and notes thereto
also incorporated by reference in this Report. The average statistical data
presented in this report are generally based on daily average balances.

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST RATES AND
INTEREST DIFFERENTIAL

         The table below shows, for the periods indicated, the daily average
balances outstanding for the major categories of interest earning assets and
interest bearing liabilities, and the average interest rate earned or paid on
these assets or liabilities. The yields were calculated by dividing income or
expense by the average balance of the corresponding assets or liabilities.


                                       3
<PAGE>   6



           AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND YIELDS/RATES
                     TAXABLE EQUIVALENT BASIS (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31, 1999       Year Ended December 31, 1998
                                                      ----------------------------       ----------------------------
                                                      AVERAGE    INCOME/    YIELD/       Average    Income/    Yield/
                                                      BALANCE    EXPENSE    RATE         Balance    Expense    Rate
                                                      --------   -------    ------       --------   --------   ------
<S>                                                   <C>        <C>        <C>          <C>        <C>        <C>
ASSET
   Earning assets:
     Loans, net of unearned income (1)                $ 51,119   $ 4,866     9.52%       $ 27,335   $  3,014   11.03%
     Investment Securities:
        Taxable                                         23,373     1,439     6.16%         19,630      1,241    6.32%
        Tax-exempt                                         148         7     4.73%            -0-        -0-     -0-%
                                                      --------   -------     ----        --------   --------   -----
          Total investment securities                   23,521     1,446     6.15%         19,630      1,241    6.32%
     Federal funds sold                                    608       311     5.10%          1,605         99    6.17%
                                                      --------   -------     ----        --------   --------   -----
            Total interest-earning assets (2)           75,248     6,343     8.43%         48,570      4,354    8.96%
                                                                 -------     ----                   --------   -----
   Non interest-earning assets:
     Cash and due from banks                             2,070                              1,992
     Premises and equipment                              1,784                              1,707
     Accrued interest and other assets                     929                                621
     Allowance for loan losses                            (536)                              (268)
                                                      --------                           --------

TOTAL ASSETS                                          $ 79,495                           $ 52,622
                                                      ========                           ========
LIABILITIES AND SHAREHOLDERS' EQUITY
   Interest-bearing liabilities:
     Demand deposits                                  $  8,261       283     3.43%       $  7,702        288    3.74%
     Savings deposits                                   15,064       685     4.55%          6,635        332    5.00%
     Time deposits                                      41,688     2,353     5.64%         26,957      1,646    6.11%
                                                      --------   -------     ----        --------   --------   -----
                                                        65,013     3,321     5.11%         41,294      2,266    5.49%
     Other short-term borrowings                         1,833       103     5.62%          1,109         61    5.50%
                                                      --------   -------     ----        --------   --------   -----
            Total interest-bearing liabilities          66,846     3,424     5.12%         42,403      2,327    5.49%
                                                                 -------     ----                   --------   -----

   Non interest-bearing liabilities:
     Demand deposits                                     5,963                              3,506
     Accrued interest and other liabilities                494                                239
     Shareholders' equity                                6,192                              6,474
                                                      --------                           --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $ 79,495                           $ 52,622
                                                      ========                           ========

NET INTEREST INCOME/ NET INTEREST SPREAD                           2,919     3.31%                     2,027    3.47%
                                                                 -------     ----                   --------   -----

NET YIELD ON EARNING ASSETS                                                  3.88%                              4.17%
                                                                             ====                              =====
Taxable equivalent adjustment:
     Loans                                                           -0-                                 -0-
     Investment securities                                            16                                 -0-
                                                                 -------                             -------
        Total taxable equivalent adjustment                           16                                 -0-
                                                                 -------                             -------
NET INTEREST INCOME                                              $ 2,935                             $ 2,027
                                                                 =======                             =======
</TABLE>

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

(1)      Average loans include nonaccrual loans. All loans and deposits are
         domestic.
(2)      Tax equivalent adjustments have been based on an assumed tax rate of 34
         percent, and do not give effect to the disallowance for federal income
         tax purpose of interest expense related to certain tax-exempt earning
         assets.
                                       4

<PAGE>   7

            The following table sets forth, for the years ended December 31,
1999 and 1998, a summary of the changes in interest income and interest expense
resulting from changes in interest rates and in changes in the volume of earning
assets and interest-bearing liabilities, segregated by category. The change due
to volume is calculated by multiplying the change in volume by the prior year's
rate. The change due to rate is calculated by multiplying the change in rate by
the prior year's volume. The change attributable to both volume and rate is
calculated by multiplying the change in volume by the change in rate. Figures
are presented on a taxable equivalent basis.

                         RATE/ VOLUME VARIANCE ANALYSIS


<TABLE>
<CAPTION>
                                                  CHANGE                        INTEREST                 VARIANCE (1)
                                AVERAGE VOLUME   IN VOLUME    AVERAGE RATE   INCOME/EXPENSES  VARIANCE   ATTRIBUTED TO
                               ----------------  ----------   ------------   ---------------  ---------  --------------
                                 1999     1998   1999-1998    1999   1998     1999     1998   1999-1998  VOLUME   RATE
                               -------  -------  ----------   ----   -----   ------   ------  ---------  ------  ------
                                                                    (in Thousands)
<S>                            <C>      <C>      <C>          <C>    <C>     <C>      <C>     <C>        <C>     <C>
Earning Assets:
Loans, net of unearned
   income                      $51,119  $27,335  $   23,784   9.52%  11.03%  $4,866   $3,014  $  1,852   $2,264  $ (412)
Investment Securities:
   Taxable                      23,373   19,630       3,743   6.16%   6.32%   1,439    1,241       198      232     (34)
   Tax exempt                      148      -0-         148   4.73%    -0-%       7      -0-         7        7     -0-
                               -------  -------  ----------   ----   -----   ------   ------  --------   ------  ------
   Total investment
      securities                23,521   19,630       3,891   6.15%   6.32%   1,446    1,241       205      239     (34)
Federal funds sold                 608    1,605        (997)  5.10%   6.17%      31       99       (68)      51    (119)
                               -------  -------  ----------   ----   -----   ------   ------  --------   ------  ------

   Total Earning Assets        $75,248  $48,570  $   26,678   8.43%   8.96%   6,343    4,354     1,989    2,554    (565)
                               =======  =======  ==========   ====   =====   ------   ------  --------   ------  ------

Interest-bearing liabilities:
Deposits:
   Demand                      $ 8,261  $ 7,702  $      559   3.43%   3.74%     283      288        (5)      19     (24)
   Savings                      15,064    6,635       8,429   4.55%   5.00%     685      332       353      384     (31)
   Time                         41,688   26,957      14,731   5.64%   6.11%   2,353    1,646       707      831    (124)
                               -------  -------  ----------   ----   -----   ------   ------  --------   ------  ------
   Total interest-bearing
    deposits                    65,013   41,294      23,719   5.11%   5.49%   3,321    2,266     1,055    1,234    (179)

Other short-term borrowings      1,833    1,109         724   5.62%   5.50%     103       61        42       41       1
                               -------  -------  ----------   ----   -----   ------   ------  --------   ------  ------

   Total Interest-bearing
   Liabilities                 $66,846  $42,403  $   24,443   5.12%   5.49%   3,424    2,327     1,097    1,275    (178)
                               =======  =======  ==========   ----   -----   ------   ------  --------   ------  ------

Net interest income/ net
   interest spread                                            3.31%   3.47%  $2,919   $2,027  $    892   $1,279  $ (387)
                                                              ====   =====   ======   ======  ========   ======  ======

Net yield on earning assets                                   3.88%   4.17%
                                                              ====   =====

Net cost of funds                                             4.55%   4.79%
                                                              ====   =====
</TABLE>

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

(1)      The change in interest due to both rate and volume has been allocated
         to volume and rate changes in proportion to the relationship of the
         absolute dollar amounts of the change in each.


                                       5

<PAGE>   8


INVESTMENT PORTFOLIO

         The carrying amount of investment securities at the end of the year is
set forth in the following table.

                              INVESTMENT PORTFOLIO

<TABLE>
<CAPTION>
                                                       DECEMBER 31,
                                                   --------------------
                                                     1999        1998
                                                   -------      -------
                                                      (in Thousands)
<S>                                                <C>          <C>
SECURITIES AVAILABLE FOR SALE:
     U.S. Government agencies                      $ 5,670      $12,332
     Municipal securities                            9,865       12,195
     Equity securities - Federal Home Loan Bank        711          118
                                                   -------      -------
                                                   $16,246      $24,645
                                                   =======      =======

SECURITIES HELD TO MATURITY:
     U.S. Government agencies                      $ 4,505      $ 7,513
     Mortgage backed securities                        225           50
                                                   -------      -------
                                                   $ 4,730      $ 7,563
                                                   =======      =======
</TABLE>


         Average taxable securities were 99 percent of the portfolio in 1999
which reflects management's intent to maximize investment yields until the
Company reaches a level of cumulative profitability.

         The maturities and weighted average yields of the investments in the
1999 portfolio of investment securities are presented below. The average
maturity of the investment portfolio is 11.36 with an average yield of 6.17
percent.

<TABLE>
<CAPTION>
                                                            INVESTMENT PORTFOLIO MATURITY SCHEDULE
                                 --------------------------------------------------------------------------------------
                                                                          MATURING
                                 --------------------------------------------------------------------------------------
                                         Within             After One But           After Five But           After
                                        One Year          Within Five Years        Within Ten Years        Ten Years
                                 --------------------     ------------------      ------------------    ---------------
                                   Amount       Yield     Amount       Yield      Amount       Yield    Amount    Yield
<S>                              <C>          <C>        <C>         <C>          <C>          <C>      <C>       <C>
                                                                        (in Thousands)
SECURITIES AVAILABLE FOR SALE:
   U.S. Government agencies      $    -0-       0.00%    $    236      5.21%     $ 5,434       6.15%    $   -0-   0.00%
   Mortgage-backed securities         -0-       0.00%       4,153      5.97%       4,117       6.30%      1,595   6.66%
   Equity securities - FHLB           711       6.76%         -0-      0.00%         -0-        -0-%        -0-   0.00%
                                 --------     ------     --------    ------     --------    -------      ------   ----
                                 $    711       6.76%    $  4,389      5.89%     $ 9,551       6.21%    $ 1,595   6.66%
                                 ========     ======     ========    ======     ========    =======      ======   ====
SECURITIES HELD TO MATURITY:
U.S. Government agencies         $  1,003       6.00%    $  1,002      5.99%     $ 2,500       6.37%    $   -0-   0.00
Municipal securities                  -0-       0.00%         -0-      0.00%         -0-       0.00%        225   4.75%
                                 --------     ------     --------    ------     --------    -------      ------   ----
                                 $  1,003       6.00%    $  1,002      5.99%     $ 2,500       6.37%    $   225   4.75%
                                 ========     ======     ========    ======     ========    =======     =======   ====
</TABLE>

         There were no securities held by the Company, whose aggregate value on
December 31, 1999 exceeded ten percent of the Company's shareholders' equity at
that date.

------------------------------------
(1)      Securities which are payable from and secured by the same source of
         revenue or taxing authority are considered to be securities of a single
         issuer. Securities of the U. S. Government and U. S. Government
         agencies and corporations are not included.

                                       6

<PAGE>   9


LOAN PORTFOLIO

         The following table shows the classification of loans by major category
at December 31, 1999 and 1998.

                                 TYPES OF LOANS

<TABLE>
<CAPTION>
                                           DECEMBER 31, 1999        December 31, 1998
                                          --------------------    ----------------------
                                                      PERCENT                   Percent
                                           AMOUNT     OF TOTAL     Amount       of Total
                                          --------    --------    --------      --------
                                              (in Thousands)           (in Thousands)
<S>                                      <C>          <C>         <C>           <C>
Commercial, financial and
            agricultural                 $  15,330      24.5%     $  10,600         29.1%
Real estate - construction                   7,222      11.5%         4,161         11.4%
Real estate - other                         31,372      50.1%        15,136         41.5%
Consumer                                     8,576      13.8%         6,431         17.6%
Other loans                                     64       0.1%           136          0.4%
                                         ---------    ------      ---------     --------
                                            62,564     100.0%        36,464        100.0%
                                                      ======                    ========
Less: allowance for loan losses               (701)                    (366)
                                         ---------                ---------

Net loans                                $  61,863                $  36,098
                                         =========                =========
</TABLE>

            The Company has intentionally avoided the growing national market in
loans to finance leveraged buy-outs, participating in no nationally syndicated
leveraged buy-out loans. Concurrently, it has avoided exposure to lesser
developed country ("LDC") debt, having no LDC loans in its portfolio.

         The following table provides maturities of certain loan classifications
at December 31, 1999 and 1998 and an analysis of these loans maturing in over
one year.

              SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>
                                                                                  RATE STRUCTURE FOR LOANS
                                           MATURITY                                MATURING OVER ONE YEAR
                              ------------------------------------              ----------------------------
                                           OVER ONE
                                             YEAR                               PREDETERMINED    FLOATING OR
                              ONE YEAR     THROUGH      OVER FIVE                 INTEREST       ADJUSTABLE
                              OR LESS     FIVE YEARS      YEARS       TOTAL         RATE            RATE
                              --------    ----------    ---------    -------    -------------    -----------
<S>                           <C>         <C>           <C>          <C>        <C>              <C>
                                                            (in Thousands)
Commercial, financial
     and agricultural ....... $ 10,498    $    4,805    $      27    $15,330    $       5,654    $ 9,676

Real estate - construction...    7,206            16          -0-      7,222            2,971      4,251
                              --------    ----------    ---------    -------    -------------    -------

                              $ 17,704    $    4,821    $      27    $22,552    $       8,625    $13,927
                              ========    ==========    =========    =======    =============    =======
</TABLE>

                                       7

<PAGE>   10

NONPERFORMING ASSETS

            The following table presents information concerning outstanding
balances of nonperforming assets at December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                  1999      1998
                                                -------    ------
                                                  (in Thousands)

<S>                                             <C>        <C>
Nonaccruing loans                               $   145    $  -0-
Loans past due 90 days or more                       39       -0-
Restructured loans                                  -0-       -0-
                                                -------    ------
Total nonperforming loans                           184       -0-
Nonaccruing securities                              -0-       -0-
Other real estate                                   138       -0-
                                                -------    ------
Total nonperforming assets                      $   322    $  -0-
                                                =======    ======

Ratios:
Loan loss allowance to
  total nonperforming assets                      2.177     24.40
                                                =======    ======
Total nonperforming loans to total
  loans (net of unearned interest)               0.0029    0.0004
                                                =======    ======
Total nonperforming assets
  to total assets                                0.0036    0.0002
                                                =======    ======
</TABLE>

            It is the general policy of the Company to stop accruing interest
income and place the recognition of interest on a cash basis when any
commercial, industrial or real estate loan is past due as to principal or
interest and the ultimate collection of either is in doubt. Accrual of interest
income on consumer installment loans is suspended when any payment of principal
or interest, or both, is more than ninety days delinquent. When a loan is placed
on a nonaccrual basis any interest previously accrued but not collected is
reversed against current income unless the collateral for the loan is sufficient
to cover the accrued interest or a guarantor assures payment of interest.

         There has been no significant impact on the Company's financial
statements as a result of the provisions of Statement of Financial Accounting
Standards No. 114, Accounting by Creditors for Impairment of a Loan, or
Statement of Accounting Standards No. 118, Accounting by Creditors for
Impairment of a Loan Income Recognition and Disclosures.

PROVISION FOR LOAN LOSSES, NET CHARGE-OFFS AND ALLOWANCE FOR LOAN LOSSES

            The provision for loan losses, which is charged to operations, is
based on the growth of the loan portfolio, the amount of net loan losses
incurred and management's estimation of potential future losses based on an
evaluation of the risk in the loan portfolio. Management believes that the
$701,234 in the allowance for loan losses at December 31, 1999 (1.12% total net
outstanding loans at that date) was adequate to absorb known risks in the
portfolio based upon the Company's historical experience. No assurance can be
given, however, that increased loan volume, adverse economic conditions or other
circumstances will not result in increased losses in the Company's loan
portfolio.


                                       8

<PAGE>   11

            The following table sets forth certain information with respect to
the Company's loans, net of unearned income, and the allowance for loan losses
for the years ended December 31, 1999 and 1998.

                         SUMMARY OF LOAN LOSS EXPERIENCE

<TABLE>
<CAPTION>
                                                           1999           1998
                                                         -------        -------
                                                             (in Thousands)
<S>                                                      <C>            <C>
Allowance for loan losses at beginning of year           $   366        $   170

Total loans charged off - consumer loans                     114             39
Recoveries on loans previously charged off                   -0-            -0-
Net loans charged off                                        114             39

Provision for loan losses                                    449            235
                                                         -------        -------

Allowance for loan losses at end of period               $   701        $   366
                                                         =======        =======

Loans, net of unearned income, at end of period          $62,564        $36,464
                                                         =======        =======

Average loans, net of unearned income,
        outstanding for the period                       $51,119        $27,335
                                                         =======        =======

Ratios:
     Allowance at end of period to loans, net of
        unearned income                                     1.12%          1.00%
     Allowance at end of period to average loans,
        net of unearned income                              1.37%          1.34%
     Net charge-offs to average loans, net of
        unearned income                                     0.22%          0.14%
     Net charge-offs to allowance at end of period         16.26%         10.66%
     Recoveries to prior year charge-offs                   0.00%          0.00%
</TABLE>

            In assessing adequacy, management relies predominantly on its
ongoing review of the loan portfolio, which is undertaken both to ascertain
whether there are probable losses which must be charged off and to assess the
risk characteristics of the portfolio in the aggregate. This review takes into
consideration the judgments of the responsible lending officers and senior
management, and also those of bank regulatory agencies that review the loan
portfolio as part of the regular bank examination process.

In evaluating the allowance, management also considers the loan loss experience
of Gateway Bancshares, Inc. & Subsidiary, the amount of past due and
nonperforming loans, current and anticipated economic conditions, lender
requirements and other appropriate information.


                                       9
<PAGE>   12


PROVISION FOR LOAN LOSSES, NET CHARGE-OFFS AND ALLOWANCE FOR LOAN LOSSES--
CONCLUDED

         Management allocated the reserve for loan losses to specific loan
classes as follows:

                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES


<TABLE>
<CAPTION>
                                           DECEMBER 31, 1999       December 31, 1998
                                         ---------------------    --------------------
                                                      PERCENT                 Percent
                                           AMOUNT     OF TOTAL     Amount     Of Total
                                          --------    --------    --------    --------
<S>                                       <C>         <C>         <C>         <C>
                                              (in Thousands)          (in Thousands)
Domestic loans (1):
   Commercial, financial and
     agricultural ......................  $    373        53.2%   $    110        30.0%
   Real estate - construction and other        220        31.4%         66        18.1%
   Consumer.............................       108        15.4%        190        51.9%
                                          --------    --------    --------    --------
                                          $    701       100.0%   $    366       100.0%
                                          ========    ========    ========    ========
</TABLE>

(1)   The Company had no foreign loans.


DEPOSITS

            The Company's primary source of funds is derived from its deposits.
Continued enhancement of existing products and emphasis upon better customer
service fuels the growth in the deposit base. Emphasis has been placed upon
attracting consumer deposits. It is the Company's intent to expand its consumer
base in order to continue to fund asset growth.

         The average amounts of and the average rate paid on each of the
following categories of deposits for the years ended December 31, 1999 and 1998
are as follows:

<TABLE>
<CAPTION>
                                               1999                1998
                                         ---------------     -----------------
                                                    (in Thousands)
                                         AMOUNT     RATE     Amount       Rate
                                        --------    ----    --------      ----
<S>                                     <C>        <C>      <C>          <C>
Non Interest-bearing demand deposits    $  5,963    -0-%    $  3,506      -0-%
                                        --------            --------

Demand                                     8,261   3.43%       7,702     3.74%
Savings                                   15,064   4.55%       6,635     5.00%
Time deposits                             41,688   5.64%      26,957     6.11%
                                        --------            --------
     Total Interest-bearing deposits      65,013   5.11%      41,294     5.49%
                                        --------            --------

       Total Average Deposits           $ 70,976   4.68%    $ 44,800     5.06%
                                        ========            ========
</TABLE>


                                       10

<PAGE>   13

DEPOSITS - CONCLUDED

            The two categories of lowest cost deposits comprised the following
percentages of total deposits during 1999: average noninterest-bearing demand
deposits - 8.4 percent; and average interest-bearing demand deposits - 11.6
percent. Of total time deposits, approximately 47.2 percent were large
denomination certificates of deposit. The maturities of the time certificates of
deposit and other time deposits of $100,000 or more issued by the Company at
December 31, 1999 are summarized in the table below.


                        MATURITIES OF LARGE TIME DEPOSITS

<TABLE>
<CAPTION>
                                                 TIME CERTIFICATES
                                                    OF DEPOSIT
                                                 -----------------
                                                  (in Thousands)
<S>                                              <C>
Three months or less                               $     5,166
Over three through six months                            6,307
Over six through twelve months                           3,204
Over twelve months                                       6,118
                                                   -----------
       Total                                       $    20,795
                                                   ===========
</TABLE>


RETURN ON EQUITY AND ASSETS

            The following table summarizes certain financial ratios for the
Company for the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                1999        1998
                                              --------    --------
<S>                                           <C>         <C>
Return on average assets                        0.64%       0.44%
Return on average equity                        8.16%       4.10%
Dividend payout ratio                           0.00%       0.00%
Average equity to average assets ratio          7.79%      10.78%
</TABLE>



                                       11
<PAGE>   14





                           SUPERVISION AND REGULATION

         Both the Company and the Bank are subject to extensive state and
federal banking regulations that impose restrictions on and provide for general
regulatory oversight of our operations. These laws are generally intended to
protect depositors and not shareholders. The following discussion describes the
material elements of the regulatory framework that applies to us.

THE COMPANY

         Since the Company owns all of the capital stock of the Bank, it is a
bank holding company under the federal Bank Holding Company Act of 1956. As a
result, the Company is primarily subject to the supervision, examination, and
reporting requirements of the Bank Holding Company Act and the regulations of
the Federal Reserve.

         ACQUISITIONS OF BANKS. The Bank Holding Company Act requires every bank
holding company to obtain the Federal Reserve's prior approval before:

         -        Acquiring direct or indirect ownership or control of any
                  voting shares of any bank if, after the acquisition, the bank
                  holding company will directly or indirectly own or control
                  more than 5% of the bank's voting shares;

         -        Acquiring all or substantially all of the assets of any bank;
                  or

         -        Merging or consolidating with any other bank holding company.

         Under the Bank Holding Company Act, an adequately capitalized and
adequately managed bank holding company located in Georgia may purchase a bank
located outside of Georgia. Conversely, an adequately capitalized and adequately
managed bank holding company located outside of Georgia may purchase a bank
located inside Georgia. In each case, however, restrictions may be placed on the
acquisition of a bank which has only been in existence for a limited amount of
time or an acquisition which may result in specified concentrations of deposits.

         CHANGE IN BANK CONTROL. Subject to various exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with related
regulations, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person or a company acquires 10% or more, but less than 25%, of any class
of voting securities and either the bank holding company has registered
securities under Section 12 of the Securities Act of 1934, or no other person
owns a greater percentage of that class of voting securities immediately after
the transaction.

         PERMITTED ACTIVITIES. Under the Bank Holding Company Act, a bank
holding company, which has not qualified or elected to become a financial
holding company is generally prohibited from engaging in or acquiring direct or
indirect control of more than 5% of the voting shares of any company engaged in
nonbanking activities unless prior to the enactment of the Gramm-Leach-Bliley
Act the Federal Reserve found those activities to be so closely related to
banking as to be a proper incident to the business of banking. Activities that
the Federal Reserve has found to be so closely related to banking to be a proper
incident to the business of banking include:


                                       12

<PAGE>   15

         -        factoring accounts receivable,
         -        acquiring or servicing loans,
         -        leasing personal property,
         -        conducting discount securities brokerage activities,
         -        performing selected data processing services,
         -        acting as agent or broker in selling credit life insurance and
                  other types of insurance in connection with credit
                  transactions, and
         -        performing selected insurance underwriting activities.

Despite prior approval, the Federal Reserve may order a bank holding company or
its subsidiaries to terminate any of these activities or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the bank holding company's continued ownership, activity or control
constitutes a serious risk to the financial safety, soundness, or stability of
any of its bank subsidiaries.

            On November 12, 1999 President Clinton signed the Gramm-Leach-Bliley
Act, which amends the Bank Holding Company Act and greatly expand the activities
in which bank holding companies and affiliates of banks are permitted to engage.
The Gramm-Leach-Bliley Act eliminates many federal and state law barriers to
affiliations among banks and securities firms, insurance companies, and other
financial service providers. The provisions of the Gramm-Leach-Bliley Act
relating to permitted activities of bank holding companies and affiliates of
banks became effective on March 11, 2000.

            Generally, if the Company qualifies and elects to become a financial
holding company, it may engage in activities that are financial in nature or
incidental or complementary to a financial activity. Activities that the
Gramm-Leach-Bliley Act expressly lists as financial in nature include insurance
activities, providing financial, investment and advisory services, underwriting
securities and limited merchant banking activities.

            To qualify to become a financial holding company, the Bank and any
other depository institution subsidiary of the Company must be well capitalized
and well managed and must have a Community Reinvestment Act rating of at least
satisfactory. Additionally, the Company must file an election with the Federal
Reserve to become a financial holding company and must provide the Federal
Reserve with 30 days written notice prior to engaging in a permitted financial
activity. Although we are eligible to elect to become a financial holding
company, we currently have no plans to make such an election.

            SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy,
bank holding companies are expected to act as a source of financial strength
for, and to commit resources to support, their depository institution
subsidiaries. This support may be required at times when, without this Federal
Reserve policy, the bank holding company might not be inclined to provide it. In
addition, any capital loans by a bank holding company to a bank will be repaid
only after its deposits and other indebtedness are repaid in full. In the event
of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.

THE BANK

            The Bank is a commercial bank chartered under the laws of the State
of Georgia. Accordingly, the FDIC and the Georgia Department of Banking and
Finance regularly examine the operations of the Bank and have the authority to
approve or disapprove mergers, the establishment of branches, and similar
corporate actions. Both regulatory agencies also have the power to prevent the
continuance or


                                       13

<PAGE>   16

development of unsafe or unsound banking practices or other violations of law.
Additionally, the Bank's deposits are insured by the FDIC to the maximum extent
provided by law. The Bank is also subject to numerous state and federal statutes
and regulations that affect its business, activities and operations, and it is
supervised and examined by one or more state or federal bank regulatory
agencies.

            PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation
Improvement Act of 1991 establishes a system of prompt corrective action to
resolve the problems of undercapitalized financial institutions. Under this
system, federal banking regulators have established five capital categories,
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, in which all institutions are
placed. The federal banking agencies have also specified by regulation the
relevant capital levels for each of the other categories. At December 31, 1999,
we qualified for the adequately capitalized category.

            Federal banking regulators are required to take some mandatory
supervisory actions and are authorized to take other discretionary actions with
respect to institutions in the three undercapitalized categories. The severity
of the action depends upon the capital category in which the institution is
placed. Generally, subject to a narrow exception, the banking regulator must
appoint a receiver or conservator for an institution that is critically
undercapitalized. An institution in any of the undercapitalized categories is
required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. A bank holding company must guarantee that a subsidiary
depository institution meets its capital restoration plan up to the lesser of 5%
of an undercapitalized subsidiary's assets or the amount required to meet
regulatory capital requirements. An undercapitalized institution is also
generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches or engaging in any new line of business,
except under an accepted capital restoration plan or with FDIC approval. The
Federal Reserve regulations also establish procedures for downgrading an
institution to a lower capital category based on supervisory factors other than
capital.

            FDIC INSURANCE ASSESSMENTS. The FDIC has adopted a risk-based
assessment system for determining an insured depository institutions' insurance
assessment rate. The system that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. An
institution is placed into one of three capital categories: (1) well
capitalized; (2) adequately capitalized; and (3) undercapitalized. These three
categories are substantially similar to the prompt corrective action categories
described above, with the "undercapitalized" category including institutions
that are undercapitalized, significantly undercapitalized and critically
undercapitalized. The FDIC also assigns an institution to one of three
supervisory subgroups based on a supervisory evaluation that the institution's
primary federal regulator provides to the FDIC and information that the FDIC
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds. Assessments range from 0 to 27 cents per
$100 of deposits, depending on the institution's capital group and supervisory
subgroup. In addition, the FDIC imposes assessments to help pay off the $780
million in annual interest payments on the $8 billion Financing Corporation
bonds issued in the late 1980s as part of the government rescue of the thrift
industry. This assessment rate is adjusted quarterly and ranged from 1.16 cents
to 1.22 cents per $100 of deposits in 1999.

            The FDIC may terminate its insurance of deposits if it finds that
the institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.

            COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires
the appropriate federal regulator, in connection with their examinations of
financial institutions within their jurisdiction,

                                       14

<PAGE>   17

to evaluate the record of each financial institution in meeting the credit needs
of its local community, including low and moderate-income neighborhoods. The
appropriate federal regulator considers these factors in evaluating mergers,
acquisitions, and applications to open a branch or facility. Failure to
adequately meet these criteria could impose additional requirements and
limitations on the Bank. Under the Gramm-Leach-Bliley Act, banks with aggregate
assets of not more than $250 million are subject to a Community Reinvestment Act
examination only once every 60 months if the bank receives an outstanding
rating, once every 48 months if it receives a satisfactory rating and as needed
if the rating is less than satisfactory. Additionally, under the
Gramm-Leach-Bliley Act, banks are required to publicly disclose the terms of
various Community Reinvestment Act-related agreements.

         OTHER REGULATIONS. Interest and other charges collected or contracted
for by the Bank are subject to state usury laws and federal laws concerning
interest rates. The Bank's loan operations are also subject to federal laws
applicable to credit transactions, such as:

         -        The federal Truth-In-Lending Act, governing disclosures of
                  credit terms to consumer borrowers;

         -        The Home Mortgage Disclosure Act of 1975, requiring financial
                  institutions to provide information to enable the public and
                  public officials to determine whether a financial institution
                  is fulfilling its obligation to help meet the housing needs of
                  the community it serves;

         -        The Equal Credit Opportunity Act, prohibiting discrimination
                  on the basis of race, creed or other prohibited factors in
                  extending credit;

         -        The Fair Credit Reporting Act of 1978, governing the use and
                  provision of information to credit reporting agencies;

         -        The Fair Debt Collection Act, governing the manner in which
                  consumer debts may be collected by collection agencies; and

         -        The rules and regulations of the various federal agencies
                  charged with the responsibility of implementing these federal
                  laws.

The deposit operations of the Bank are subject to:

         -        The Right to Financial Privacy Act, which imposes a duty to
                  maintain confidentiality of consumer financial records and
                  prescribes procedures for complying with administrative
                  subpoenas of financial records; and

         -        The Electronic Funds Transfer Act and Regulation E issued by
                  the Federal Reserve to implement that act, which governs
                  automatic deposits to and withdrawals from deposit accounts
                  and customers' rights and liabilities arising from the use of
                  automated teller machines and other electronic banking
                  services.

CAPITAL ADEQUACY

         The Company and the Bank are required to comply with the capital
adequacy standards established by the Federal Reserve, in the case of the
Company, and FDIC and Georgia Department of


                                       15

<PAGE>   18

Banking and Finance, in the case of the Bank. The Federal Reserve has
established a risk-based and a leverage measure of capital adequacy for bank
holding companies that is substantially similar to that adopted by the FDIC for
banks under its jurisdiction.

         The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items, such as letters of credit and unfunded loan commitments, are assigned to
broad risk categories, each with appropriate risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.

         The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. Total capital consists of two components, Tier 1 Capital and Tier
2 Capital. Tier 1 Capital generally consists of common shareholders' equity,
minority interests in the equity accounts of consolidated subsidiaries,
qualifying noncumulative perpetual preferred stock, and a limited amount of
qualifying cumulative perpetual preferred stock, less goodwill and other
specified intangible assets. Tier 1 Capital must equal at least 4% of
risk-weighted assets. Tier 2 Capital generally consists of subordinated debt,
other preferred stock and hybrid capital and a limited amount of loan loss
reserves. The total amount of Tier 2 Capital is limited to 100% of Tier 1
Capital. At December 31, 1999, our consolidated ratio of total capital to
risk-weighted assets was 9.60% and our consolidated ratio of Tier 1 Capital to
risk-weighted assets was 8.64%.

         In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and other specified
intangible assets, of 3% for bank holding companies that meet certain specified
criteria, including having the highest regulatory rating and implementing the
Federal Reserve's risk-based capital measure for market risk. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 4%. At December 31, 1999, our consolidated leverage ratio was 7.21%. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. The Federal Reserve considers the leverage ratio and other
indicators of capital strength in evaluating proposals for expansion or new
activities.


         Failure to meet capital guidelines could subject a bank or bank holding
company to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on
accepting brokered deposits, and certain other restrictions on its business. As
described above, substantial additional restrictions can be imposed on
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."

PAYMENT OF DIVIDENDS

         The Company is a legal entity separate and distinct from the Bank. The
principal source of the Company's cash flow, including cash flow to pay
dividends to its shareholders, is dividends that the Bank pays to it. Statutory
and regulatory limitations apply to the Bank's payment of dividends to the
Company as well as to the Company's payment of dividends to its shareholders.

         If, in the opinion of the federal banking regulator, the Bank were
engaged in or about to engage in an unsafe or unsound practice, the federal
banking regulator could require, after notice and a hearing,


                                       16

<PAGE>   19

that it cease and desist from its practice. The federal banking agencies have
indicated that paying dividends that deplete a depository institution's capital
base to an inadequate level would be an unsafe and unsound banking practice.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. Moreover, the
federal agencies have issued policy statements that provide that bank holding
companies and insured banks should generally only pay dividends out of current
operating earnings. See "--Prompt Corrective Action" above.

         The Georgia Department of Banking and Finance also regulates the Bank's
dividend payments and must approve dividend payments that would exceed 50% of
the Bank's net income for the prior year. Our payment of dividends may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.

         At December 31, 1999, the Bank was able to pay approximately $252,569
in dividends to the Company without prior regulatory approval.

RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES

         The Company and the Bank are subject to the provisions of Section 23A
of the Federal Reserve Act. Section 23A places limits on the amount of:

         -        loans or extensions of credit to affiliates;

         -        investment in affiliates;

         -        the purchase of assets from affiliates, except for real and
                  personal property exempted by the Federal Reserve;

         -        loans or extensions of credit to third parties collateralized
                  by the securities or obligations of affiliates; and

         -        any guarantee, acceptance or letter of credit issued on behalf
                  of an affiliate.

         The aggregate of all of the above transactions is limited in amount, as
to any one affiliate, to 10% of a bank's capital and surplus and, as to all
affiliates combined, to 20% of a bank's capital and surplus. In addition to the
limitation on the amount of these transactions, each of the above transactions
must also meet specified collateral requirements. The Company must also comply
with certain provisions designed to avoid the taking of low-quality assets.

         The Company and the Bank are also subject to the provisions of Section
23B of the Federal Reserve Act which, among other things, prohibits an
institution from engaging in the above transactions with affiliates unless the
transactions are on terms substantially the same, or at least as favorable to
the institution or its subsidiaries, as those prevailing at the time for
comparable transactions with nonaffiliated companies.

         The Bank is also subject to restrictions on extensions of credit to its
executive officers, directors, certain principal shareholders and their related
interests. These extensions of credit (1) must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for


                                       17

<PAGE>   20

comparable transactions with third parties, and (2) must not involve more than
the normal risk of repayment or present other unfavorable features.

PRIVACY

         The Gramm-Leach-Bliley Act also contains provisions regarding consumer
privacy. These provisions require financial institutions to disclose their
policy for collecting and protecting confidential information. Customers
generally may prevent financial institutions from sharing personal financial
information with nonaffiliated third parties except for third parties that
market the institutions' own products and services. Additionally, financial
institutions generally may not disclose consumer account numbers to any
nonaffiliated third party for use in telemarketing, direct mail marketing or
other marketing through electronic mail to the consumer.

PROPOSED LEGISLATION AND REGULATORY ACTION

         New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot predict whether
or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.

EFFECT OF GOVERNMENTAL MONETARY POLICES

         Our earnings are affected by domestic economic conditions and the
monetary and fiscal policies of the United States government and its agencies.
The Federal Reserve Bank's monetary policies have had, and are likely to
continue to have, an important impact on the operating results of commercial
banks through its power to implement national monetary policy in order, among
other things, to curb inflation or combat a recession. The monetary policies of
the Federal Reserve Board have major effects upon the levels of bank loans,
investments and deposits through its open market operating in United States
government securities and through its regulation of the discount rate on
borrowings of member banks and the reserve requirements against member bank
deposits. It is not possible to predict the nature or impact of future changes
in monetary and fiscal policies.

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company's corporate office and the Bank are located at 5102 Alabama
Highway, Ringgold, Georgia. The property is leased by the Bank.

         On August 9, 1995, the organizers of the Company entered into a Ground
Lease (the "Lease Agreement") to lease vacant property located at 5102 Alabama
Highway for 20 years with options to renew the lease for additional 10 years
thereafter. The maximum term is fifty years but may be limited to forty years
under specified circumstances. The annual rental for the first three years of
the lease term was $20,480. Annual rent for the fourth and subsequent year was,
and will be, increased each year by the increase in the Consumer Price Index as
set forth in The Wall Street Journal or other nationally recognized publication.
The annual rent for 1999 was $22,891.

         A director of the Company is a co-owner of the property. In the opinion
of the organizers, the terms of this Lease Agreement are at least as favorable
to the Company as terms available from unrelated third parties.


                                       18

<PAGE>   21

         The Bank building is a two-story building consisting of 12,000 square
feet. The building contains six teller stations and four drive-through stations.

         Other than normal real estate commercial lending activities of the
Bank, the Company generally does not invest in real estate, interests in real
estate, real estate mortgages, or securities of or interests in persons
primarily engaged in real estate activities.

ITEM 3.  LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which the Company is
a party or of which any of its properties are subject; nor are there material
proceedings known to the Company to be contemplated by any governmental
authority; nor are there material proceedings known to the Company, pending or
contemplated, in which any director, officer or affiliate or any principal
security holder of the Company or any associate of any of the foregoing, is a
party or has an interest adverse to the Company.

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

       None.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The response to this Item is partially included in the Company's Annual
Report to Shareholders at page 37 and is incorporated herein by reference.

         The Company has not sold any unregistered shares of its Common Stock,
$5.00 par value, during fiscal years 1999, 1998, or 1997.

         On March 18, 1999, the Company granted options to purchase 171,850
shares of its Common Stock, $5.00 par value, to selected officers and directors
of the Company and the Bank as compensation for their services. Each of the
options vests in equal 20% annual increments beginning on March 18, 2000 and has
a maximum term of ten years. The exercise price of each of the options is $12.00
per share. Since the options were only granted to officers and directors, the
option grants did not involve a public offering, and therefore were exempt from
registration under Section 4(2) of the Securities Act of 1933.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

         The response to this Item is included in the Company's Annual Report to
Shareholders under the heading, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," at pages 1 through 11, and is
incorporated herein by reference.

                                       19

<PAGE>   22

ITEM 7.  FINANCIAL STATEMENTS

         The following financial statements are included in the Company's Annual
Report to Shareholders at pages 13 through 36, and are incorporated herein by
reference.

         Independent Auditors' Report

         Financial Statements

         Consolidated Statements of Financial Condition as of December 31, 1999
         and 1998

         Consolidated Statements of Income for the years ended December 31,
         1999, 1998 and 1997

         Consolidated Statements of changes in Shareholders' Equity for the
         years ended December 31, 1999, 1998 and 1997

         Consolidated Statements of Cash Flows for the years ended December 31,
         1999, 1998 and 1997

         Notes to Consolidated Financial Statements


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

       Not Applicable.


                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The responses to this Item are included in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held April 20, 2000,
under the following headings, and are incorporated herein by reference.

         Proposal One: Election of Directors - Director Nominees," at page 3;

         "Executive Officers," at page 4;

         "Section 16(a) Beneficial Ownership Reporting Compliance," at page 9.

ITEM 10. EXECUTIVE COMPENSATION

         The responses to this Item are included in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held April 20, 2000,
under the heading, "Compensation," at pages 5 through 6, and are incorporated
herein by reference.

                                      20

<PAGE>   23


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The responses to this Item are included in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held April 20, 2000,
under the headings, "Security Ownership of Certain Beneficial Owners," at pages
7 through 8, and are incorporated herein by reference.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The responses to this Item are included in the Company's Proxy
Statement for the Annual Meeting of Shareholders to be held April 20, 2000,
under the headings, "Certain Relationships and Related Transactions," at page 9,
and "Compensation," at pages 5 through 6, and are incorporated herein by
reference.


                                       21

<PAGE>   24

ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K

     (a)  Exhibits

<TABLE>
<CAPTION>
           Exhibit
           Number       Exhibit
           -------      -------
           <S>          <C>
            3.1         Articles of Incorporation. (1)

            3.2         Bylaws. (1)

            4.1         Instruments Defining the Rights of Security Holders. See
                        Articles of Incorporation at Exhibit 3.1 hereto and
                        Bylaws at Exhibit 3.2 hereto.

            10.1        Ground Lease Agreement by and between Gateway
                        Bancshares, Inc. and Ringgold Mining and Manufacturing
                        Company, dated as of May 1, 1996. (2)

            10.3        Gateway Bancshares, Inc. 1999 Stock Option Plan. (3)

            13.1        Gateway Bancshares, Inc. 1999 Annual Report to
                        Shareholders. Except with respect to those portions
                        specifically incorporated by reference into this Report,
                        the Company's 1999 Annual Report to Shareholders is not
                        deemed to be filed as part of this Report.

            21.1        Subsidiaries of Gateway Bancshares, Inc. (4)

            24.1        Power of Attorney (appears on the signature pages to
                        this Annual Report on 10-KSB).

            27.1        Financial Data Schedule (for SEC use only).
</TABLE>

     (b)  Reports on Form 8-K filed in the fourth quarter of 1999:   None


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

(1)   Incorporated herein by reference to exhibit of same number in the
      Company's Registration Statement on Form SB-2, Registration No. 33-80855,
      filed December 20, 1995.

(2)   Incorporated herein by reference to exhibit of same number in the
      Company's Quarterly Report on Form 10-QSB for the quarter ended September
      30, 1996.

(3)   Incorporated herein by reference to Appendix A of the Company's Proxy
      Statement for the Meeting of Shareholders to be held on April 15, 1999,
      filed under cover of Schedule 14A.

(4)   Incorporated herein by reference to exhibit of same number in the
      Company's Annual Report on Form 10-KSB for the year ended December 31,
      1997.


                                       22


<PAGE>   25


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                      GATEWAY BANCSHARES, INC.


                                      By:    /s/ Robert G. Peck
                                         --------------------------------------
                                          Robert G. Peck
                                          President and Chief Executive Officer


                                      Date:   March 24, 2000



                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on the
signature page to this Report constitutes and appoints Robert G. Peck and Harle
B. Green, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place, and stead, in any and all capacities, to sign any and all amendments to
this Report, and to file the same, with all exhibits hereto, and other documents
in connection herewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                              Title                                   Date
---------                             -------                                --------
<S>                                 <C>                                     <C>

/s/ Jack Joseph Babb                Director                                March 24, 2000
----------------------------
Jack Joseph Babb


/s/ William H.H. Clark              Director                                March 24, 2000
----------------------------
William H.H. Clark
</TABLE>




                                     23

<PAGE>   26

<TABLE>
<S>                                 <C>                                     <C>

/s/ Patricia Yvonne Cochran         Director                                March 24, 2000
----------------------------
Patricia Yvonne Cochran

/s/ Jeannette Wilson Dupree         Director                                March 24, 2000
----------------------------
Jeannette Wilson Dupree


/s/ Harle B. Green                  Director, Chief Financial               March 24, 2000
----------------------------        Officer (Principal Financial
Harle B. Green                      And Accounting Officer)


/s/ Walter Lee Jackson              Director                                March 24, 2000
----------------------------
Walter Lee Jackson


/s/ Ernest Kresch                   Director                                March 24, 2000
----------------------------
Ernest Kresch


/s/ Robert G. Peck                  Director, President                     March 24, 2000
----------------------------
Robert G. Peck                      Chief Executive Officer


                                    Director
----------------------------
James Arthell Gray, Sr.
</TABLE>


                                       24
<PAGE>   27


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
             Exhibit
             Number         Exhibit
             -------        -------
             <S>            <C>
              3.1           Articles of Incorporation. (1)

              3.2           Bylaws. (1)

              4.1           Instruments Defining the Rights of Security Holders.
                            See Articles of Incorporation at Exhibit 3.1 hereto
                            and Bylaws at Exhibit 3.2 hereto.

              10.1          Ground Lease Agreement by and between Gateway
                            Bancshares, Inc. and Ringgold Mining and
                            Manufacturing Company, dated as of May 1, 1996. (2)

              10.3          Gateway Bancshares, Inc. 1999 Stock Option Plan. (3)

              13.1          Gateway Bancshares, Inc. 1999 Annual Report to
                            Shareholders. Except with respect to those portions
                            specifically incorporated by reference into this
                            Report, the Company's 1999 Annual Report to
                            Shareholders is not deemed to be filed as part of
                            this Report.

              21.1          Subsidiaries of Gateway Bancshares, Inc. (4)

              24.1          Power of Attorney (appears on the signature pages to
                            this Annual Report on 10-KSB).

              27.1          Financial Data Schedule (for SEC use only).
</TABLE>


(1)   Incorporated herein by reference to exhibit of same number in the
      Company's Registration Statement on Form SB-2, Registration No. 33-80855,
      filed December 20, 1995.

(2)   Incorporated herein by reference to exhibit of same number in the
      Company's Quarterly Report on Form 10-QSB for the quarter ended September
      30, 1996.

(3)   Incorporated herein by reference to Appendix A to the Company's Proxy
      Statement for the Meeting of Shareholders to be held on April 15, 1999,
      filed under cover of Schedule 14A.

(4)   Incorporated herein by reference to exhibit of same number in the
      Company's Annual Report on Form 10-KSB for the year ended December 31,
      1997.