Exhibit 13.1


                           GATEWAY  BANCSHARES,  INC.

                                FINANCIAL  REVIEW

                                      2000




<PAGE>
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

The  Annual  Report,  including  the  Management's Discussion and Analysis which
follows,  contains  forward-looking  statements  in  addition  to  historical
information,  including,  but  not  limited to statements regarding Management's
beliefs,  current  expectations,  estimates  and projections about the financial
services  industry,  the economy, and about the Company and the Bank in general.
Such  forward-looking statements are subject to certain factors that could cause
actual  results  to  differ  materially  from  historical results or anticipated
events,  trends  or  results.  These factors include, but are not limited to (i)
increased  competition with other financial institutions, (ii) lack of sustained
growth  in  the  economy in Catoosa County, (iii) rapid fluctuations in interest
rates,  (iv) the inability of the Bank to maintain regulatory capital standards,
and  (v) changes in the legislative and regulatory environment.  These and other
factors  affecting  the  Company's  future  performance  are further detailed in
publicly  available  reports  filed  from  time  to time by the Company with the
Securities  and Exchange Commission, such as the Company's Annual Report on Form
10-KSB  for  the  year  ended  December  31,  2000  (the  2000  10-KSB).

The  purpose  of  the following discussion is to address information relating to
the financial condition and results of operations of the Company that may not be
readily  apparent  from  a  review  of the consolidated financial statements and
notes thereto, which are included in this Annual Report.  This discussion should
be  read  in conjunction with information provided in the Company's consolidated
financial  statements  and  accompanying  footnotes;  and  with  the statistical
information appearing in the 2000 10-KSB under the caption "Selected Statistical
Information."  Unless  otherwise noted, the discussion of net interest income in
this  financial  review is presented on a taxable equivalent basis to facilitate
performance  comparisons  among  various  taxable  and  tax-exempt  assets.

SUMMARY

Substantially  all  of  the  operations  of  the  Company  are  conducted by its
wholly-owned  subsidiary,  Gateway  Bank  &  Trust (the Bank).  Accordingly, the
following  discussion  relates  primarily  to the Bank.  The Company's principal
market  areas  are located in the Catoosa County, Georgia and surrounding areas.
Management  believes that the economy of the area in which the Company serves is
healthy  and  expanding,  but  not  at  a  pace  that  threatens  stability.

Jobs  are  created  in  significant  proportion in the manufacture of tufted and
durable goods, as well as in retail and service sectors.  Counties served by the
Company had unemployment of 2.5% compared to the average 3.4% experienced in the
entire  state  of  Georgia.  Catoosa  County is centrally located for employment
opportunities  being  situated  on the I-75 corridor between Chattanooga, TN and
Dalton,  GA.  The  majority  of  the  area's residents work in Tennessee while a
smaller  number  are  employed  in adjacent counties.  In the Company's markets,
population growth over the last five years has surpassed the rate for the state.
The  current  economic  prospects  in  the  Company's  markets are good, and the
Company  attempts  to  assist  those  prospects by returning the deposits of its
customers  to  the  communities  from  which  they  come  in  the form of loans.


                                     Page 1
<PAGE>
EARNINGS

The Company's net income of $831,509 for 2000 represents an increase of $326,372
over  the  Company's net income in 1999 of $505,137.  The increase in net income
relates to the growth in the Bank's deposit and loan base during 2000.  Earnings
per  share  was  $1.22  in  2000  compared  with  $0.74  in  1999.

RESULTS  OF  OPERATIONS

NET  INTEREST  INCOME

Net  interest  income  is  the  principal  source  of  a financial institution's
earnings stream and represents the difference or spread between interest and fee
income  generated  from earning assets and the interest expense paid on deposits
and  borrowed  funds.  Fluctuations  in interest rates as well as volume and mix
changes in earning assets and interest-bearing liabilities materially impact net
interest  income.  (All  discussions in this section assume a taxable equivalent
basis  unless  otherwise noted.)  Net interest income was $3,677,006 in 2000, as
compared  to $2,920,123 in 1999, representing an increase of $756,883, or 25.9%.
This  increase was caused primarily by the growth of the Bank's deposit base and
loan portfolio.  Interest and fees on loans increased from $4,866,731 in 1999 to
$6,728,931  in  2000  (an  increase  of  38.3%).

Interest  earned  on securities decreased $36,442 (2.5%) from $1,445,488 in 1999
to  $1,409,046  in  2000.  The  decrease  is  due primarily to a decrease in the
average value of securities.  During 2000 a larger portion of the Bank's earning
assets  were  in  loans  and  federal  funds  sold, and a smaller portion was in
securities.

The  trend  in  net  interest income is also evaluated in terms of average rates
using  the  net  interest margin and the interest rate spread.  The net interest
margin,  or  the  net  yield  on  earning  assets, is computed by dividing fully
taxable  equivalent  net  interest income by average earning assets.  This ratio
represents  the difference between the average yield returned on average earning
assets and the average rate paid for funds used to support those earning assets,
including  both  interest-bearing  and  noninterest-bearing  sources.  The  net
interest  margin for 2000 was 4.05% compared with a net interest margin of 3.88%
in 1999.  This increase was primarily due to the growth of the loan portfolio in
proportion  to  the Bank's total assets.  Loans generally provide a higher yield
than  other  interest-earning  assets.

The  interest  rate  spread measures the difference between the average yield on
earning  assets  and the average rate paid on interest-bearing sources of funds.
The  interest rate spread eliminates the impact of noninterest-bearing funds and
gives a more direct perspective to the effect of market interest rate movements.
The  net interest spread for 2000 was 3.53% compared to a net interest spread of
3.31%  in  1999.

The  following  tabulation  presents  certain  net  interest income data without
modification  for  assumed  tax  equivalency:

                                       2000   1999
                                       -----  -----

Rate earned on earnings assets         9.03%  8.43%
Rate paid on borrowed funds            5.50%  5.12%
Interest rate spread                   3.53%  3.31%
Net yield on earnings assets           4.05%  3.88%


                                     Page 2
<PAGE>
INTEREST  EXPENSE

Total  interest  expense  increased  $1,096,525 (32%) from $3,423,500 in 1999 to
$4,520,025 in 2000.  This increase was the combined effect of an increase in the
average  balance  of interest bearing deposits from approximately $65,013,000 in
1999  to  approximately  $79,659,000 in 2000 and an increase in the average rate
paid  on  deposits  from  5.11%  in  1999 to 5.42% in 2000.  The effect of these
changes  increased  the  interest  expense  on  interest-bearing  deposits  from
$3,320,842  in  1999  to  $4,317,165  in  2000.

NONINTEREST  INCOME

Noninterest  income  for  2000  and  1999  totaled  $560,133  and  $417,502,
respectively.  These  amounts  are  primarily  from  service  charges on deposit
accounts,  mortgage  loan  fees  and  fees on services to customers. Noninterest
income  increased  primarily  due to the effects of growth in the Bank's deposit
base.

                               2000      1999
                             --------  --------

Service charge on deposits   $304,546  $213,572
Mortgage loan fees            124,463   140,086
Investment securities gains         -     9,618
Other                         131,124    54,226
                             --------  --------

                             $560,133  $417,502
                             ========  ========

NONINTEREST  EXPENSES

Noninterest  expenses  totaled  $2,606,670  in  2000  and  $2,089,727  in  1999.
Salaries  and  benefits increased $345,751 (33.9%) to $1,364,535, which reflects
the  increased  staffing  to accommodate the Bank's new branch and growth in the
Bank's  loans  and  deposits.  Occupancy  expense  increased $20,073 (18.6%) and
furniture  and  equipment  expense  increased  $4,791  (3.2%)  due  to increased
depreciation  and  maintenance  costs,  some  of which relate to the new branch.
Printing  and  supplies  costs  increased  $50,572  (59.5%)  as  a result of the
documents  needed  for  the  new branch.  Data processing fees increased $56,994
(26.1%),  and  postage costs increased $4,997 (9.1%) due to the increased volume
of transactions from the growth of deposits and loans of the Bank.  Professional
and regulatory fees decreased $21,901 (10.2%) due to a decline in legal services
needed  by  the  Bank.

<TABLE>
<CAPTION>
                                     2000        1999
                                  ----------  ----------
<S>                               <C>         <C>
Salaries and employee benefits    $1,364,535  $1,018,784
Occupancy expenses                   127,776     107,703
Furniture and equipment expense      154,297     149,506
Advertising and marketing             62,709      55,576
Data processing                      275,244     218,250
Postage, freight and express          60,108      55,111
Printing and supplies                135,601      85,029
Professional and regulatory fees     192,581     214,482
Other                                233,819     185,286
                                  ----------  ----------

                                  $2,606,670  $2,089,727
                                  ==========  ==========
</TABLE>


                                     Page 3
<PAGE>
INCOME  TAXES

The  Company  attempts  to  maximize its net income through active tax planning.
The  Company  has utilized all net operating losses incurred during the start-up
period  and  is  subject  to  federal  and  state income taxes.  A more detailed
explanation  of  income  tax  expense  is  included in the accompanying Notes to
Consolidated  Financial  Statements.

FINANCIAL  CONDITION

EARNING  ASSETS

Average  earning  assets  in  2000  were  approximately  $90,794,000 or 94.7% of
average total assets compared to $75,248,000 or 94.7% of average total assets in
1999.  The  mix  of  average earning assets comprised the following percentages:

                     2000    1999
                    ------  ------

Federal funds sold    1.0%    0.8%
Securities           24.1%   31.3%
Loans                74.9%   67.9%
                    ------  ------

                    100.0%  100.0%
                    ======  ======

The  mix  of  average  earning  assets reflects management's attempt to maximize
interest  income  while  maintaining  acceptable  levels  of  risk.

LOANS

Loans  made  up the largest component of the Bank's earning assets.  At December
31, 2000, the Bank's total loans were $72,363,307 compared to $62,564,092 at the
end  of  1999.  In  2000  average net loans represented 74.9% of average earning
assets  and  70.9% of average total assets, compared to 67.9% of average earning
assets  and  64.3%  of  average total assets in 1999.  This was the result of an
increase  in loan demand in the Bank's market area, combined with an increase in
the  Bank's  market  share of loans.  The ratio of total loans to total deposits
decreased  from  77.1%  at  December  31,  1999,  to 74.6% at December 31, 2000.

The  Bank has no loans to finance leveraged buy-outs.  In addition, the Bank has
avoided  exposure  to lesser developed countries (LDC) debt, having no LDC loans
in  its  portfolio.


                                     Page 4
<PAGE>
NONPERFORMING  ASSETS

The  following  table  presents  information  concerning outstanding balances of
nonperforming  assets  at  December  31,  2000  and  1999  (in  thousands):

<TABLE>
<CAPTION>
                                                     2000     1999
                                                    -------  -------
<S>                                                 <C>      <C>
Nonaccruing loans                                   $    94  $   145

Loans past due 90 days or more                          202       39

Restructured loans                                        -        -
                                                    -------  -------

Total nonperforming loans                               296      184

Other real estate                                       138      138
                                                    -------  -------

Total nonperforming assets                          $   434  $   322
                                                    =======  =======

Ratios:

Loan loss allowance to total nonperforming assets    2.1429   2.1777
                                                    =======  =======

Total nonperforming loans to total loans
  (net of unearned interest)                         0.0041   0.0029
                                                    =======  =======

Total nonperforming assets to total assets           0.0040   0.0036
                                                    =======  =======
</TABLE>

The  Company  stops  accruing  interest income and recognizes 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 Financial
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 $930,473 in the
allowance  for  loan  losses  at  December 31, 2000 (1.29% 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.

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,  2000  and  1999.


                                     Page 5
<PAGE>
<TABLE>
<CAPTION>
                             SUMMARY OF LOAN LOSS EXPERIENCE

                                                                        2000      1999
                                                                      --------  --------
                                                                    (amounts in thousands)
<S>                                                                   <C>       <C>
Balance, beginning of period                                          $   701   $   366

Total loans charged off                                                  (127)     (114)
Recoveries on loans previously charged off                                  1         -
                                                                      --------  --------

Net loans charged off                                                    (126)     (114)
                                                                      --------  --------

Provision for loan losses                                                 355       449
                                                                      --------  --------

Balance, end of period                                                $   930   $   701
                                                                      ========  ========

Loans, net of unearned income, at end of period                       $72,363   $62,564
                                                                      ========  ========

Average loans, net of unearned income                                 $68,003   $51,119
                                                                      ========  ========

Ratios:

Allowance at end of period to loans, net of unearned income              1.29%     1.12%

Allowance at end of period to average loans, net of unearned income      1.37%     1.37%

Net charge-offs to average loans, net of unearned income                 0.19%     0.22%

Net charge-offs to allowance at end of period                           13.55%    16.26%

Recoveries to prior year charge-offs                                     0.88%     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  the  Company  and  the Bank, the amount of past due and nonperforming loans,
current  and  anticipated  economic  conditions,  lender  requirements and other
appropriate  information.

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

<TABLE>
<CAPTION>
                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

                                         December 31,2000    December 31, 1999
                                        ------------------  ------------------
                                                 Percent              Percent
                                        Amount   of Total   Amount   of Total
                                        -------  ---------  -------  ---------
<S>                                     <C>      <C>        <C>      <C>

Domestic loans (1):
  Commercial and industrial             $   540      58.1%  $   373      53.2%
  Real estate - construction and other      158      17.0%      220      31.4%
  Consumer                                  232      24.9%      108      15.4%
                                        -------  ---------  -------  ---------

                                        $   930     100.0%  $   701     100.0%
                                        =======  =========  =======  =========
<FN>
(1)  The  Company  had  no  foreign  loans.
</TABLE>


                                     Page 6
<PAGE>
SECURITIES  AND  FEDERAL  FUNDS  SOLD

The  Bank  has classified its securities as either available for sale or held to
maturity,  depending on whether the Bank has the intent and ability to hold such
securities  to  maturity.  At  December  31,  2000,  $20,469,637  of  the Bank's
securities  were  classified  as  available for sale, compared to $16,014,879 at
year-end  1999.  Securities  classified  as  held to maturity were $4,724,788 at
December  31,  2000,  as  compared  to  $4,729,974  at  year-end  1999.

The  purchase of the Federal Home Loan Bank stock is required in order to become
a  member  of  the  Federal Home Loan Bank and participate in available lines of
credit.  These  investments  were $260,000 at December 31, 2000, and $230,800 at
year-end  1999.

The  composition  of  the  Company's securities portfolio reflects the Company's
investment strategy of maximizing portfolio yields subject to risk and liquidity
considerations.  The primary objectives of the Company's investment strategy are
to  maintain  an  appropriate level of liquidity and provide a tool to assist in
controlling  the  Company's  interest  rate  position  while  at  the  same time
producing  adequate  levels  of  interest  income.  For securities classified as
available-for-sale  and  held-to-maturity,  it  is  the  intention  to hold such
securities  for  the  foreseeable  future.  Management  of  the  maturity of the
portfolio  is  necessary to provide liquidity and to control interest rate risk.
During  2000  gross  investment  securities  sales  were approximately $686,000,
representing  3.1%  of  the average portfolio for the year.  There were no gains
associated  with the sales, while losses totaled $4,912, accounting for 0.19% of
noninterest  expenses.  Gross  unrealized  gains  in  the  portfolio amounted to
$18,360,  and  unrealized  losses amounted to $245,105 at year-end 2000.  During
1999,  gross  investment  securities  sales  were approximately $5.4 million and
maturities  and  calls  were  $6.1  million,  representing  23.1%  and  25.9%,
respectively,  of the average portfolio for the year.  Gains associated with the
sales  were  $9,618,  accounting  for  2.3%  of noninterest income, while losses
totaled  $8,466,  accounting for 0.40% of noninterest expense.  Gross unrealized
losses  were  $1,122,640 at year-end 1999.  There were no gross unrealized gains
at  December  31,  1999.

Mortgaged-backed  securities  have  varying  degrees  of  risk  of impairment of
principal,  as  opposed to U.S. Treasury and U.S. government agency obligations,
which  are  considered  to  contain  virtually  no  default or prepayment risks.
Impairment  risk  is  primarily  associated  with  accelerated  prepayments,
particularly  with  respect  to  longer  maturities  purchased  at a premium and
interest-only  strip  securities.  The  Bank's  purchase  of  mortgage-backed
securities  during  2000  did not include securities with these characteristics.
The  recoverability  of  the  Bank's investment in mortgage-backed securities is
reviewed  periodically,  and if necessary, appropriate adjustments would be made
to  income  for  impaired  values.

Management  maintains  federal  funds  sold as a tool in managing its daily cash
needs. Federal funds sold increased from $600,000 at year-end 1999 to $4,080,000
at  year-end  2000.  Average  federal  funds  sold  for  2000  was approximately
$868,000  or  1.0%  of  average  earning  assets,  compared  with  approximately
$608,000  or  0.8%  of average earning assets for 1999.  The increase in average
federal  funds sold reflects an emphasis by management on improving liquidity in
order  to  adequately  fund  the  Bank's  expanding  loan  portfolio.


                                     Page 7
<PAGE>
DEPOSITS

The  Bank's  primary source of funds is derived from deposits of Bank customers.
Average  deposits  increased  20.6%  from  approximately  $70,976,000 in 1999 to
approximately  $85,618,000  in  2000.  At December 31, 2000, total deposits were
$96,977,285,  of  which $89,682,342 (92.5%) were interest-bearing and $7,294,943
(7.5%)  were  noninterest-bearing.  At  year-end  1999,  total  deposits  were
$81,144,347,  of  which $75,104,608 (92.6%) were interest-bearing and $6,039,739
(7.4%) were noninterest-bearing.  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.  The Bank plans to
expand  its  consumer  base at its new branch in order to continue to fund asset
growth.

SHAREHOLDERS'  EQUITY

Shareholders' equity increased $1,287,422 from December 31, 1999 to December 31,
2000,  due  to  net  earnings of $831,509 and a decrease in unrealized losses on
securities  available  for  sale  of  $455,913,  net  of  deferred  taxes.

LIQUIDITY  AND  CAPITAL  RESOURCES

LIQUIDITY  MANAGEMENT

Liquidity  is defined as the ability of a company to convert assets into cash or
cash  equivalents  without  significant  loss.  Liquidity  management  involves
maintaining  the Company's ability to meet the day-to-day cash flow requirements
of  the  Banks' customers, whether they are depositors wishing to withdraw funds
or  borrowers  requiring  funds  to  meet  their  credit  needs.  Without proper
liquidity  management,  the  Company  would  not  be able to perform the primary
function  of  a financial intermediary and would, therefore, not be able to meet
the  production  and  growth  needs  of  the  communities  it  serves.

The  primary function of assets and liabilities management is not only to assure
adequate  liquidity  in  order for the Company to meet the needs of its customer
base,  but  to maintain an appropriate balance between interest-sensitive assets
and  interest-sensitive  liabilities  so  that  the  Company  can  also meet the
investment  requirements  of  its shareholders.  Daily monitoring of the sources
and  uses  of  funds  is  necessary to maintain an acceptable cash position that
meets  both requirements.  In a banking environment, both assets and liabilities
are  considered  sources of liquidity funding and both are, therefore, monitored
on  a  daily  basis.

The asset portion of the balance sheet provides liquidity primarily through loan
principal  repayments or sales of securities.  Construction loans and commercial
and industrial loans that mature in one year or less equaled approximately $21.1
million  or  29.2%  of  the  total  loan  portfolio  at  December  31, 2000, and
securities  maturing  in  one  year or less equaled $4.5 million or 17.9% of the
portfolio.  Other  sources  of  liquidity include short-term investments such as
federal  funds  sold.

The  liability  portion  of the balance sheet provides liquidity through various
customers' interest-bearing and noninterest-bearing deposit accounts.  Funds are
also available through the purchase of federal funds from other commercial banks
from an available line of up to $4.5 million.  Liquidity management involves the
daily  monitoring  of  the  sources  and uses of funds to maintain an acceptable
company  cash  position.


                                     Page 8
<PAGE>
In  an  effort to maintain and improve its liquidity position, the Bank became a
member  of  the  Federal  Home Loan Bank of Atlanta in 1998.  As a member of the
Federal  Home  Loan  Bank,  the  Bank  is  able to improve its ability to manage
liquidity  and  reduce  interest  rate  risk by having a funding source to match
longer  term  loans.  The  Bank  has received a credit line of up to $8,906,000.
The  Bank  has  drawn $2,000,000 from the available credit with the Federal Home
Loan  Bank.  See  the  Notes  to  Consolidated  Financial  Statements herein for
additional  information.

CAPITAL  RESOURCES

A strong capital position is vital to the continued profitability of the Company
because  it  promotes  depositor  and  investor  confidence and provides a solid
foundation  for future growth of the organization.  The Company has provided the
majority  of  its capital requirements through the proceeds of its initial stock
offering  in  1997  and  the  retention  of  earnings.  In addition, the Company
injected  $1,000,000  of  additional  capital  in  the  Bank  in  June  2000.

Bank regulatory authorities are placing increased emphasis on the maintenance of
adequate  capital.  In  1990,  new  risk-based  capital  requirements  became
effective.  The  guidelines  take into consideration risk factors, as defined by
regulators,  associated  with  various categories of assets, both on and off the
balance sheet.  Under the guidelines, capital strength is measured in two tiers,
which  are  used  in  conjunction  with  risk-adjusted  assets  to determine the
risk-based  capital ratios.  The Bank's Tier I capital, which consists of common
equity,  amounted  to  $8.7  million  at  December  31,  2000.  Tier  II capital
components  include  supplemental  capital  components such as the allowance for
loan  losses.  Tier I capital plus the Tier II capital components is referred to
as  Total  Risk-based  capital  and  was  $9.6  million  at  year-end 2000.  The
percentage  ratios,  as  calculated under the guidelines were 9.2% and 10.2% for
Tier  I  and  Total  Risk-based  capital,  respectively, at year-end 2000.  Both
levels  currently  exceed  the  minimum  ratios  of  4%  and  8%,  respectively.

Another  important  indicator of capital adequacy in the banking industry is the
leverage  ratio.  The  leverage  ratio is defined as the ratio the Bank's Tier I
capital  minus specific intangible assets to total average assets minus specific
intangible  assets.  The Bank's leverage ratios as of December 31, 2000 exceeded
the  regulatory  minimum  requirements which are generally 3% plus an additional
cushion  of  at  least 100-200 basis points depending on risk profiles and other
factors.

The table below illustrates the Bank's regulatory capital ratios at December 31,
2000  and  1999  under  the  year-end  2000  requirements.

<TABLE>
<CAPTION>
                                                                      2000      1999
                                                                    --------  --------
<S>                                                                 <C>       <C>

Tier I Capital                                                      $ 8,698   $ 6,252
Tier II Capital                                                         930       701
                                                                    --------  --------

Total Qualifying Capital                                            $ 9,628   $ 6,953
                                                                    ========  ========

Risk Adjusted Total Assets (including off-balance sheet exposures)  $94,456   $72,406
                                                                    ========  ========

Tier I Risk-Based Capital Ratio                                         9.2%      8.6%

Total Risk-Based Capital Ratio                                         10.2%      9.6%

Leverage Ratio                                                          8.5%      7.2%
</TABLE>


                                     Page 9
<PAGE>
INTEREST  RATE  SENSITIVITY  MANAGEMENT

Interest  rate sensitivity is a function of the repricing characteristics of the
Company's  portfolio of assets and liabilities.  These repricing characteristics
are the time frames within which the interest-bearing assets and liabilities are
subject to change in interest rates either at replacement or maturity during the
life  of the instruments.  Sensitivity is measured as the difference between the
volume  of  assets  and  liabilities in the Company's current portfolio that are
subject  to  repricing  in  future  time  periods.  The differences are known as
interest  sensitivity gaps and are usually calculated separately for segments of
time  ranging  from  zero  to thirty days, thirty-one to ninety days, ninety-one
days  to  one  year, one year to five years, over five years and on a cumulative
basis.  The  following tables show interest sensitivity gaps for these different
intervals  as  of  December  31,  2000.

<TABLE>
<CAPTION>
                               INTEREST RATE SENSITIVITY ANALYSIS


                                        0-30     31-90    91-365       1-5     Over 5
                                        Days      Days     Days       Years     Years    Total
                                      --------  -------  ---------  ---------  -------  --------
                                                            (in thousands)
<S>                                   <C>       <C>      <C>        <C>        <C>      <C>
Interest-earning assets (1)
---------------------------
Loans                                 $ 3,577   $33,376  $  2,812   $ 31,682   $   916  $ 72,363
Securities:
   Taxable                                  -         -     4,475      6,068    14,426    24,969
   Tax exempt                               -         -         -          -       225       225
Federal funds sold                      4,080         -         -          -         -     4,080
                                      --------  -------  ---------  ---------  -------  --------
                                        7,657    33,376     7,287     37,750    15,567   101,637
                                      --------  -------  ---------  ---------  -------  --------
Interest-bearing liabilities (2)(3)
-----------------------------------
Demand deposits                         4,791     4,791     4,791          -         -    14,373
Money market accounts                   2,576     2,577     2,577          -         -     7,730
Savings deposits                        2,622     2,623     2,623          -         -     7,868
Time deposits                           6,109    10,511    36,975     13,411         -    67,006
Long-term borrowings                        -         -         -      2,000     1,000     3,000
                                      --------  -------  ---------  ---------  -------  --------
                                       16,098    20,502    46,966     15,411     1,000    99,977
                                      --------  -------  ---------  ---------  -------  --------

Interest sensitivity gap              $(8,441)  $12,874  $(39,679)  $ 22,339   $14,567  $  1,660
                                      ========  =======  =========  =========  =======  ========

Cumulative interest sensitivity gap   $(8,441)  $ 4,433  $(35,246)  $(12,907)  $ 1,660
                                      ========  =======  =========  =========  =======

Ratio of interest-earning assets to
   interest-bearing liabilities          2.45       .48      1.63        .16     15.57
                                      ========  =======  =========  =========  =======
Cumulative ratio                          .48      1.12       .58        .87      1.02
                                      ========  =======  =========  =========  =======

Ratio of cumulative gap to total
   to interest-bearing assets            (.08)      .04      (.35)      (.13)      .02
                                      ========  =======  =========  =========  =======
<FN>
________________________
(1)  Excludes  nonaccrual  loans  and  securities.
(2)  Excludes  matured certificates which have not been redeemed by the customer
     and  on  which  no  interest  is  accruing.
(3)  Demand  and savings deposits and other short term borrowings are assumed to
     be  subject  to  movement  into  other deposit instruments in equal amounts
     during  the  0-30  day  period,  the  31-90  day period, and the 91-365 day
     period.
</TABLE>


                                    Page 10
<PAGE>
The  above  table  indicates  that  in  a  rising interest rate environment, the
Company's  earnings  may  be  adversely  affected in the 0-365 day periods where
liabilities  will  reprice  faster than assets.  As seen in the preceding table,
for  the  first  30  days  of  repricing  opportunity  there  is  an  excess  of
interest-bearing liabilities over interest-earnings assets of approximately $8.4
million.  For  the  first  365 days, interest-bearing liabilities exceed earning
assets  by  $35.2  million.  During  this  one  year  time  frame,  83.6% of all
interest-bearing  liabilities  will  reprice  compared  to  47.5%  of  all
interest-earning  assets.  Changes  in  the  mix of earning assets or supporting
liabilities  can  either  increase  or  decrease the net interest margin without
affecting  interest  rate  sensitivity.  In  addition,  the interest rate spread
between  an  asset and its supporting liability can vary significantly while the
timing  of  repricing for both the asset and the liability remain the same, thus
impacting  net  interest  income.  It should be noted, therefore, that a matched
interest-sensitive  position  by  itself  will  not  ensure maximum net interest
income.  Management  continually  evaluates  the  condition  of the economy, the
pattern  of market interest rates and other economic data to determine the types
of investments that should be made and at what maturities.  Using this analysis,
management establishes calculated interest sensitivity gap positions to maximize
net  interest  income  based  upon anticipated movements in the general level of
interest  rates.

INFLATION  AND  CHANGING  PRICES

A  Bank's  asset and liability structure is significantly different from that of
an industrial company in that substantially all assets and liabilities of a bank
are  monetary  in  nature.  Management  believes  the  impact  of  inflation  on
financial  results  depends  upon  the  Bank's  ability  to  react to changes in
interest  rates  and  by  such  reaction  to  reduce  the inflationary impact on
performance. Interest rates do not necessarily move in the same direction, or at
the  same  magnitude,  as  the prices of other goods and services.  As discussed
previously,  management  seeks  to  manage  the  relationship  between
interest-sensitive  assets  and  liabilities  in  order  to protect against wide
interest  rate  fluctuations,  including  those  resulting  from  inflation.

Various  information  shown  elsewhere  in this Annual Report will assist in the
understanding  of  how well the Bank is positioned to react to changing interest
rates  and  inflationary  trends.  In  particular,  the  summary of net interest
income,  the  maturity  distribution,  the  composition of the loan and security
portfolios and the data on the interest sensitivity of loans and deposits should
be  considered.

CONCLUSION

The  Bank  has  experienced  constant  growth since its opening in 1997.  It has
increased  its customer base, as shown by the continued increase in deposits and
loans  during 2000.  While management remains optimistic about the prospects for
continued  growth  and profitability, management does not anticipate that growth
will  be  at the level experienced during the Bank's initial years of operation.
No assurance can be given that the Bank will continue to grow and be profitable.

The  foregoing  is  a  forward-looking  statement  which  reflects  significant
assumptions  and subjective judgments believed by management to be reasonable as
of  the  date  of  this  Annual  Report.  It  does  not constitute a forecast or
prediction  of  actual results, and actual performance and financial results may
differ  materially  from  those  anticipated  due  to  a  variety  of  factors.


                                    Page 11
<PAGE>
       MANAGEMENT'S STATEMENT OF RESPONSIBILITY FOR FINANCIAL INFORMATION

                     Gateway Bancshares, Inc. and Subsidiary


The management of Gateway Bancshares, Inc. and subsidiary is responsible for the
preparation,  integrity,  and  objectivity  of the financial statements, related
financial  data,  and  other  information  in  this Annual Report. The financial
statements  are  prepared  in  accordance  with  generally  accepted  accounting
principles and include amounts based on management's best estimates and judgment
where  appropriate.  Financial  information  appearing  throughout  this  Annual
Report  is  consistent  with  the  financial  statements.

In  meeting  its  responsibility  both  for  the integrity and fairness of these
statements  and  information,  management  depends on the accounting systems and
related  internal  accounting  controls  that are designed to provide reasonable
assurances  that (i) transactions are authorized and recorded in accordance with
established  procedures,  (ii)  assets  are  safeguarded  and  (iii)  proper and
reliable  records  are  maintained.

The concept of reasonable assurance is based on the recognition that the cost of
internal control systems should not exceed the related benefits.  As an integral
part  of  internal  control  systems,  the Company, through its audit committee,
utilizes  internal  auditors who monitor compliance and assess the effectiveness
of  internal  control  systems  and  coordinate  audit  coverage of all areas of
operations.

The  responsibility of the Company's independent certified public accountants is
limited  to  an  expression of their opinion as to the fairness of the financial
statements  presented.  Their  opinion  is  based  on  an  audit  conducted  in
accordance  with  generally  accepted  auditing  standards as described in their
report.

The  Board of Directors is responsible for ensuring that both management and the
independent  certified  public  accountants  fulfill  their  respective
responsibilities  with  regard to the financial statements.  The Audit Committee
meets  periodically  with  both  management and the independent certified public
accountants  to  assure  that  each  is  carrying out its responsibilities.  The
independent  certified public accountants have full and free access to the Audit
Committee  and  the  Board of Directors and may meet with them, with and without
management  being  present, to discuss auditing and financial reporting matters.

On  April  20,  2000,  the  Company  dismissed  its  existing independent public
accounting  firm, Land & Associates, P.C., CPAs ("Land & Associates"), and hired
Hazlett,  Lewis & Bieter, PLLC to serve as its principal accountant to audit the
Company's  financial  statements  for  the fiscal year-ending December 31, 2000.
Neither  of Land & Associates' reports on the Company's financial statements for
the  years  ended  December  31,  1998 or 1999 contained an adverse opinion or a
disclaimer  of  opinion  or  was  qualified or modified as to uncertainty, audit
scope  or  accounting  principles.  The change of accountants was recommended by
the  audit committee and approved by the Board of Directors.  The Company had no
disagreements  with Land & Associates during any of the years ended December 31,
1998  or  1999  or  during  the  interim  period through April 20, 2000 (date of
change) on any matter of accounting principles or practices, financial statement
disclosure  or  auditing  scope or procedure that would have caused that firm to
make reference to the subject disagreement if it had not been resolved to Land &
Associates'  satisfaction.


                                    Page 12
<PAGE>
                   GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                 INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS




                                                                          Page
                                                                          ----

REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS                    14

FINANCIAL  STATEMENTS

     Consolidated  balance  sheets                                         15
     Consolidated  statements  of  income                                  16
     Consolidated  statements  of  changes  in  stockholders'  equity      17
     Consolidated  statements  of  cash  flows                             18
     Notes  to  consolidated  financial  statements                       19-33


                                    Page 13
<PAGE>
               Report of Independent Certified Public Accountants
               --------------------------------------------------




To the Stockholders  and
  Board of Directors
Gateway Bancshares, Inc.
Ringgold,  Georgia

     We  have  audited  the  accompanying  consolidated balance sheet of Gateway
Bancshares,  Inc.  and  subsidiary  as  of  December  31,  2000, and the related
consolidated  statements  of  income,  changes in stockholders' equity, and cash
flows  for  the  year  then  ended.  These  financial  statements  are  the
responsibility  of  the  Bank's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based on our audit.  The consolidated
financial  statements  of Gateway Bancshares, Inc. and subsidiary as of December
31,  1999,  were audited by other auditors whose report dated February 14, 2000,
expressed  an  unqualified  opinion  on  those  statements.

     We  conducted  our  audit  in  accordance  with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audit  provides  a  reasonable  basis  for  our opinion.

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects, the financial position of Gateway
Bancshares,  Inc.  and  subsidiary  as  of December 31, 2000, and the results of
their operations and their cash flows for the year then ended in conformity with
generally  accepted  accounting  principles.



/s/ Haglett, Lewis & Bieter, PLLC.

Chattanooga,  Tennessee
January  17,  2001


                                    Page 14
<PAGE>
<TABLE>
<CAPTION>
                   GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                          CONSOLIDATED  BALANCE  SHEETS
                           December 31, 2000 and 1999

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

                                                         2000           1999
                                                     -------------  ------------
<S>                                                  <C>            <C>
      ASSETS

Cash and due from banks                              $  3,098,996   $ 2,378,535
Federal funds sold                                      4,080,000       600,000
                                                     -------------  ------------

      Total cash and cash equivalents                   7,178,996     2,978,535

Securities available for sale                          20,469,637    16,014,879
Securities held to maturity                             4,724,788     4,729,974
Federal Home Loan Bank stock, at cost                     260,000       230,800
Loans, net of allowance for loan losses of $930,473
  in 2000 and $701,234 in 1999                         71,432,834    61,862,858
Premises and equipment                                  3,126,038     1,956,568
Accrued interest receivable                               944,475       780,543
Other assets                                              437,868       545,417
                                                     -------------  ------------

      Total assets                                   $108,574,636   $89,099,574
                                                     =============  ============

      LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
  Noninterest-bearing demand deposits                $  7,294,943   $ 6,039,739
  NOW accounts                                          7,078,122     7,051,862
  Money market accounts                                 7,730,117     1,764,128
  Savings deposits                                      7,868,556    10,919,377
  Time deposits                                        67,005,547    55,369,241
                                                     -------------  ------------

      Total deposits                                   96,977,285    81,144,347

Note payable                                            1,000,000             -
Federal Home Loan Bank advances                         2,000,000     1,000,000
Accrued interest payable                                  559,284       363,948
Other liabilities                                         235,755        76,389
                                                     -------------  ------------

      Total liabilities                               100,772,324    82,584,684
                                                     -------------  ------------

Stockholders' equity:
  Common stock, $5 par value; 10,000,000 shares
    authorized; 679,048 shares outstanding              3,395,240     3,395,240
  Additional paid-in capital                            3,357,637     3,357,637
  Retained earnings                                     1,163,149       331,640
  Accumulated other comprehensive income                 (113,714)     (569,627)
                                                     -------------  ------------

      Total stockholders' equity                        7,802,312     6,514,890
                                                     -------------  ------------

      Total liabilities and stockholders' equity     $108,574,636   $89,099,574
                                                     =============  ============
</TABLE>

The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                    Page 15
<PAGE>
<TABLE>
<CAPTION>
                   GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                      CONSOLIDATED  STATEMENTS  OF  INCOME
                     Years Ended December 31, 2000 and 1999

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

                                                            2000        1999
                                                         ----------  -----------
<S>                                                      <C>         <C>
INTEREST INCOME
  Loans                                                  $6,728,931  $4,866,731
  Securities                                              1,409,046   1,445,488
  Other                                                      59,054      31,404
                                                         ----------  -----------

    Total interest income                                 8,197,031   6,343,623

INTEREST EXPENSE                                          4,520,025   3,423,500
                                                         ----------  -----------

    Net interest income                                   3,677,006   2,920,123

Provision for loan losses                                   355,500     449,000
                                                         ----------  -----------

    Net interest income after provision for loan losses   3,321,506   2,471,123
                                                         ----------  -----------

NONINTEREST INCOME
  Service charges                                           304,546     213,572
  Other noninterest income                                  255,587     203,930
                                                         ----------  -----------

    Total noninterest income                                560,133     417,502
                                                         ----------  -----------

NONINTEREST EXPENSES
  Salaries and employee benefits                          1,364,535   1,018,784
  Occupancy expense                                         127,776     107,703
  Other operating expenses                                1,114,359     963,240
                                                         ----------  -----------

    Total noninterest expenses                            2,606,670   2,089,727
                                                         ----------  -----------

Cumulative effect of change in accounting
  principle, net of income tax effect                             -     (24,592)
                                                         ----------  -----------

    Income before income taxes                            1,274,969     774,306

Income taxes                                                443,460     269,169
                                                         ----------  -----------

    Net income                                           $  831,509  $  505,137
                                                         ==========  ===========

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

  Net income per share                                   $     1.22  $     0.74

  Basic weighted average shares outstanding                 679,048     679,048

  Diluted earnings per common share                      $     1.22  $     0.74

  Diluted weighted average shares outstanding               680,222     680,079
</TABLE>

The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                    Page 16
<PAGE>
<TABLE>
<CAPTION>
                                       GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                             CONSOLIDATED  STATEMENTS  OF  CHANGES  IN  STOCKHOLDERS'  EQUITY
                                          Years Ended December 31, 2000 and l999

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

                                                                                                               Accumulated
                                                                 Total                  Additional  Retained      Other
                                               Comprehensive  Stockholders'  Common      Paid-in    Earnings  Comprehensive
                                                   Income       Equity       Stock       Capital    (Deficit)    Income
                                                 -----------  -----------  ----------  -----------  ----------  ---------
<S>                                              <C>          <C>          <C>         <C>          <C>         <C>
BALANCE, December 31, 1998                       $6,586,617   $3,395,240   $3,357,637  $ (173,497)  $   7,237

  Comprehensive income:
    Net income                                   $  505,137      505,137            -           -     505,137          -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on
         securities available for sale, net of
         reclassification adjustment               (576,864)    (576,864)           -           -           -   (576,864)
                                                 -----------  -----------  ----------  -----------  ----------  ---------

    Total comprehensive income (loss)            $  (71,727)
                                                 ===========


BALANCE, December 31, 1999                                     6,514,890    3,395,240   3,357,637     331,640   (569,627)

  Comprehensive income:
    Net income                                   $  831,509      831,509            -           -     831,509          -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on
         securities available for sale, net of
         reclassification adjustment                455,913      455,913            -           -           -    455,913
                                                 -----------  -----------  ----------  -----------  ----------  ---------
         reclassification adjustment
    Total comprehensive income                   $1,287,422
                                                 ===========


BALANCE, December 31, 2000                                    $7,802,312   $3,395,240   $3,357,637  $1,163,149 $(113,714)
                                                             ===========   ==========   ==========  ========== ==========
</TABLE>

The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                    Page 17
<PAGE>
<TABLE>
<CAPTION>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                     CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
                      Years Ended December 31, 2000 and 1999

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

                                                          2000           1999
                                                      -------------  -------------
<S>                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                          $    831,509   $    505,137
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation                                         149,761        174,210
      Provision for loan losses                            355,500        449,000
      Deferred income taxes                                (15,040)        13,169
      Net amortization (accretion) on securities            29,453         (1,071)
      Change in operating assets and liabilities:
        Accrued interest receivable                       (163,932)      (101,773)
        Other assets                                      (107,363)       (12,020)
        Accrued interest payable                           195,336         86,953
        Other liabilities                                  159,366       (165,907)
                                                      -------------  -------------

          Net cash provided by operating activities      1,434,590        947,698
                                                      -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of securities available for sale             (5,800,297)    (3,369,356)
  Purchase of securities held to maturity                        -       (337,106)
  Purchase of Federal Home Loan Bank stock                 (29,200)             -
  Proceeds from security transactions:
    Securities available for sale                        2,007,137     11,565,876
    Securities held to maturity                                  -      2,500,937
  Net increase in loans                                 (9,925,476)   (26,352,388)
  Purchase of premises and equipment                    (1,319,231)      (399,003)
                                                      -------------  -------------

          Net cash used in investing activities        (15,067,067)   (16,391,040)
                                                      -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in deposits                              15,832,938     12,308,975
  Advances from Federal Home Loan Bank                   3,000,000              -
  Repayment of advances from Federal Home Loan Bank     (2,000,000)             -
  Proceeds from note payable                             1,000,000              -
                                                      -------------  -------------

          Net cash provided by financing activities     17,832,938     12,308,975
                                                      -------------  -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     4,200,461     (3,134,367)

CASH AND CASH EQUIVALENTS, beginning of year             2,978,535      6,112,902
                                                      -------------  -------------

CASH AND CASH EQUIVALENTS, end of year                $  7,178,996   $  2,978,535
                                                      =============  =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the year for:
    Interest                                          $  4,335,024   $  3,336,547
    Income taxes                                           534,338        256,000
                                                      =============  =============
</TABLE>

The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                    Page 18
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 1.   Summary  of  Significant  Accounting  Policies

          The  accounting  and  reporting  policies  of the Company conform with
          generally  accepted  accounting  principles  and  practices within the
          banking  industry.  The  policies  that  materially  affect  financial
          position  and  results  of  operations  are  summarized  as  follows:

          Nature  of  operations:

          Gateway  Bancshares, Inc. (the Company) is a bank holding company that
          owns  100  percent  of  the outstanding common stock of Gateway Bank &
          Trust (the Bank). The Bank provides a variety of financial services to
          individuals  and  corporate  customers  through  its  two locations in
          Ringgold  and  Fort  Oglethorpe,  Georgia.  The Bank's primary deposit
          products  are  interest-bearing  checking accounts and certificates of
          deposit. Its primary lending products are commercial, residential, and
          consumer  loans.

          Principles  of  consolidation:

          The  consolidated  financial  statements  include  the accounts of the
          Company  and  its  wholly-owned  subsidiary. All material intercompany
          accounts  and  transactions  have  been  eliminated  in consolidation.

          Use  of  estimates:

          The  preparation  of financial statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of  assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date  of the financial statements and the reported amounts of revenues
          and  expenses during the reporting period. Actual results could differ
          from  those  estimates.

          Material  estimates  that  are particularly susceptible to significant
          change  relate  to  the  determination  of the allowance for losses on
          loans  and  the  valuation  of real estate acquired in connection with
          foreclosures  or  in  satisfaction  of  loans.  In connection with the
          determination  of  the  allowances  for losses on loans and foreclosed
          real estate, management obtains independent appraisals for significant
          properties.


          While  management  uses  available  information to recognize losses on
          loans  and  foreclosed real estate, future additions to the allowances
          may  be  necessary  based  on changes in local economic conditions. In
          addition,  regulatory  agencies,  as  an  integral  part  of  their
          examination  process,  periodically  review  the Bank's allowances for
          losses  on loans and foreclosed real estate. Such agencies may require
          the  Bank  to  recognize  additions  to  the allowances based on their
          judgments  about  information  available  to them at the time of their
          examination.  Because of these factors, it is reasonably possible that
          the  allowances  for  losses  on  loans and foreclosed real estate may
          change  materially  in  the  near  term.

          Cash  and  cash  equivalents:

          For  purposes  of  reporting  cash  flows,  cash  and cash equivalents
          include  cash on hand, amounts due from banks, and federal funds sold.


                                    Page 19
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 1.   Summary  of  Significant  Accounting  Policies  (continued)

          Securities  available  for  sale:

          Securities available for sale consist of bonds, notes, debentures, and
          certain equity securities. Unrealized holding gains and losses, net of
          tax,  on securities available for sale are reported as a net amount in
          a separate component of stockholders' equity until realized. Gains and
          losses  on  the  sale  of securities available for sale are determined
          using  the  specific-identification method. Premiums and discounts are
          recognized  in  interest  income  using  the  interest method over the
          period  to  maturity.

          Securities  held  to  maturity:

          Bonds, notes and debentures for which the Bank has the positive intent
          and  ability  to  hold  to maturity are reported at cost, adjusted for
          premiums  and  discounts  that are recognized in interest income using
          the  interest  method  over  the  period  to  maturity.

          Loans:

          Loans  are stated at unpaid principal balances, less the allowance for
          loan  losses  and  net  deferred  loan  fees.

          Loans  are placed on nonaccrual when a loan is specifically determined
          to  be  impaired.  Interest  income  generally  is  not  recognized on
          specific  impaired  loans  unless  the  likelihood  of further loss is
          remote.  Interest  income on other nonaccrual loans is recognized only
          to  the  extent  of  interest  payments  received.

          The  allowance  for  loan  losses  is  maintained at a level which, in
          management's judgment, is adequate to absorb credit losses inherent in
          the  loan  portfolio.  The  amount  of  the  allowance  is  based  on
          management's  evaluation  of the collectibility of the loan portfolio,
          including  the  nature of the portfolio, credit concentrations, trends
          in  historical  loss experience, specific impaired loans, and economic
          conditions.  Allowances  for  impaired  loans are generally determined
          based  on  collateral  values  or  the present value of estimated cash
          flows.  The  allowance  is  increased  by a provision for loan losses,
          which  is  charged  to  expense,  and  reduced  by charge-offs, net of
          recoveries.

          Premises  and  equipment:

          Premises  and  equipment  are  stated  at  cost,  less  accumulated
          depreciation.  Depreciation  is  computed  using  the  straight-line
          depreciation  method  and  accelerated  depreciation  methods for both
          financial  statement  purposes  and  income tax purposes. Premises are
          depreciated  over 20 to 50 years and furniture, fixtures and equipment
          are  depreciated  over  3  to  20  years.

          Additions  and  major  renewals  and  betterments  are capitalized and
          depreciated  over  their estimated useful lives. Repairs, maintenance,
          and  minor renewals are charged to operating expense as incurred. When
          property is replaced or otherwise disposed of, the cost of such assets
          and  the  related  accumulated  depreciation  are  removed  from  the
          accounts.  The  gain  or loss, if any, is recorded in the statement of
          income.


                                    Page 20
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note  1.  Summary  of  Significant  Accounting  Policies  (continued)

          Foreclosed  real  estate:

          Real  estate  properties  acquired  through,  or  in  lieu  of,  loan
          foreclosure  are  initially  recorded  at  fair  value  at the date of
          foreclosure  establishing  a  new  cost  basis.  After  foreclosure,
          valuations  are  periodically  performed  by  management  and the real
          estate  is  carried  at  the lower of (1) cost or (2) fair value minus
          estimated  costs  to  sell.  Revenue  and expenses from operations and
          additions  to  the  valuation  allowance  are  included in the loss on
          foreclosed  real  estate.  Foreclosed  assets  are  not  depreciated.

          Stock  options:

          The  Company accounts for its stock option plan in accordance with the
          provisions  of Accounting Principles Board Opinion No. 25, "Accounting
          for  Stock Issued to Employees," and related interpretations. As such,
          compensation  expense  would  be recorded on the date of grant only if
          the current market price of the underlying stock exceeded the exercise
          price.  The  Company  has  adopted  the  disclosure-only provisions of
          Statement  of  Financial Accounting Standards No. 123, "Accounting for
          Stock-Based  Compensation."


          Earnings  per  common  share:

          Earnings  per common share are calculated on the basis of the weighted
          average  number  of  common  shares  outstanding.

          Deferred  income  taxes:

          Deferred tax assets and liabilities are reflected at currently enacted
          income  tax  rates  applicable to the period during which the deferred
          tax  assets  or liabilities are expected to be realized or settled. As
          changes  in  tax  laws  or  rates are enacted, deferred tax assets and
          liabilities  are  adjusted  through  the  provision  for income taxes.

          Reclassifications:

          Certain  amounts  in  the  1999  financial  statements  have  been
          reclassified  to  conform  to  the  presentation in the 2000 financial
          statements.

          New  Accounting  Standards:

          The Financial Accounting Standards Board has issued Statement No. 133,
          "Accounting  for  Derivative  Instruments  and  Hedging  Activities,"
          effective  for  fiscal  years  beginning  after  June  15,  2000. This
          statement  requires  derivative  instruments,  including  certain
          derivative  instruments embedded in other contracts, to be recorded at
          fair  value  as  either  an asset or a liability. The adoption of this
          statement  is  not  expected  to  have  an  impact  on  the  Company's
          consolidated  financial  statements.


                                    Page 21
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note  2.  Securities

          Securities  have  been  classified  in  the balance sheet according to
          management's intent as either held to maturity or securities available
          for  sale.  The  amortized  cost  and  approximate  market  value  of
          securities  at  December  31,  2000  and  1999,  are  as  follows:

<TABLE>
<CAPTION>
                                                            2000
                                    ---------------------------------------------------
                                                    Gross        Gross
                                     Amortized   Unrealized    Unrealized     Market
                                       Cost         Gains        Losses        Value
                                    -----------  -----------  ------------  -----------
<S>                                 <C>          <C>          <C>           <C>
Securities available for sale:
  Securities of U.S. Government
    agencies and corporations       $11,346,352  $    14,455  $  (106,963)  $11,253,844

  Mortgage-backed securities          8,450,031            -      (73,129)    8,376,902

  Other securities                      845,549            -       (6,658)      838,891
                                    -----------  -----------  ------------  -----------

                                    $20,641,932  $    14,455  $  (186,750)  $20,469,637
                                    ===========  ===========  ============  ===========

Securities held to maturity:
  Securities of U.S. Government
    agencies and corporations       $ 4,499,708  $     3,905  $   (57,288)  $ 4,446,325

  Municipal securities                  225,080            -       (1,067)      224,013
                                    -----------  -----------  ------------  -----------

                                    $ 4,724,788  $     3,905  $   (58,355)  $ 4,670,338
                                    ===========  ===========  ============  ===========

                                                            1999
                                    ---------------------------------------------------
                                                    Gross        Gross
                                     Amortized   Unrealized    Unrealized     Market
                                       Cost         Gains        Losses        Value
                                    -----------  -----------  ------------  -----------

Securities available for sale:
  Securities of U.S. Government
    agencies and corporations       $ 6,037,984  $         -  $  (368,815)  $ 5,669,169

  Mortgage-backed securities         10,339,966            -     (473,631)    9,866,335

  Other securities                      500,000            -      (20,625)      479,375
                                    -----------  -----------  ------------  -----------

                                    $16,877,950  $         -  $  (863,071)  $16,014,879
                                    ===========  ===========  ============  ===========

Securities held to maturity:
  Securities of U.S. Government
    agencies and corporations       $ 4,505,225  $         -  $  (245,070)  $ 4,260,155

  Municipal securities                  224,749            -      (14,499)      210,250
                                    -----------  -----------  ------------  -----------

                                    $ 4,729,974  $         -  $  (259,569)  $ 4,470,405
                                    ===========  ===========  ============  ===========
</TABLE>


                                    Page 22
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note  2.  Securities  (continued)

          The  amortized  cost  and  market  value of securities at December 31,
          2000,  by  contractual  maturity, are shown below. Expected maturities
          will differ from contractual maturities because borrowers may have the
          right to call or prepay obligations with or without call or prepayment
          penalties.

<TABLE>
<CAPTION>
                                 Securities                 Securities
                            Available for  Sale         Held  to  Maturity
                           ------------------------  -----------------------
                            Carrying     Estimated    Carrying    Estimated
                             Amount     Fair Value     Amount    Fair Value
                           -----------  -----------  ----------  -----------
<S>                        <C>          <C>          <C>         <C>

  Due in one year or less  $ 4,461,082  $ 4,475,061  $        -  $         -
  Due after one year to
    Five years               3,607,895    3,567,141   2,500,563    2,491,250
  Due from five years to
    Ten years                4,402,457    4,325,323   1,999,145    1,955,075
  Due after ten years        8,170,498    8,102,112     225,080      224,013
                           -----------  -----------  ----------  -----------

                           $20,641,932  $20,469,637  $4,724,788  $ 4,670,338
                           ===========  ===========  ==========  ===========
</TABLE>

          Proceeds from sales of securities were $685,730 in 2000 and $5,440,748
          in  1999.  There  were no gross gains in 2000. In 1999, gross gains of
          $9,618 were realized on those sales. Gross losses realized were $4,912
          in  2000  and  $8,466  in  1999.

          Securities  with  a  book  value  of  approximately  $6,561,000  and
          $8,868,000  at  December 31, 2000 and 1999, respectively, were pledged
          to  secure  various  deposits.

Note  3.  Loans  and  Allowance  for  Loan  Losses

          A  summary  of  transactions  in the allowance for loan losses for the
          years  ended  December  31,  2000  and  1999,  is  as  follows:

<TABLE>
<CAPTION>
                                               2000        1999
                                            ----------  ----------
<S>                                         <C>         <C>

  Balance, beginning of year                $ 701,234   $ 366,158
    Provision charged to operating expense    355,500     449,000
    Recoveries of loans charged off               829          93
    Loans charged off                        (127,090)   (114,017)
                                            ----------  ----------

  Balance, end of year                      $ 930,473   $ 701,234
                                            ==========  ==========
</TABLE>


                                    Page 23
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 3.   Loans  and  Allowance  for  Loan  Losses  (continued)

          At  December  31,  2000  and  1999,  the  Bank's  loans consist of the
          following  (in  thousands):

<TABLE>
<CAPTION>
                                      2000      1999
                                    --------  --------
<S>                                 <C>       <C>
  Commercial and industrial loans   $21,142   $15,064
  Real estate loans - construction    7,310     7,222
  Real estate loans - other          34,308    31,638
  Consumer                            9,602     8,576
  Other                                   1        64
                                    --------  --------

    Total loans                      72,363    62,564

  Less - Allowance for loan losses     (930)     (701)
                                    --------  --------

  Net loans                         $71,433   $61,863
                                    ========  ========
</TABLE>

          The  Bank's  only  significant concentration of credit at December 31,
          2000,  occurred  in  real  estate  loans,  which totaled approximately
          $41,618,000. While real estate loans accounted for 58 percent of total
          loans,  these  loans  were  primarily  residential  mortgage  loans,
          commercial loans secured by commercial properties, and consumer loans.
          A  minor  portion  of  these  loans  were  for  construction,  land
          acquisition,  and  development.  All  real estate loans are secured by
          properties  located  in  Georgia  and  Tennessee.

          In  the  normal  course of business, the Bank makes loans to directors
          and  executive  officers  of the Bank on substantially the same terms,
          including  interest  rates  and collateral, as those prevailing at the
          time  for  comparable  transactions  with  other  borrowers.  Loans to
          directors  and  executive  officers totaled $1,260,069 at December 31,
          2000.

          At December 31, 2000 and 1999, loans that were specifically classified
          as  impaired  were  insignificant  in  relation  to  the  Bank's  loan
          portfolio.

Note 4.   Premises  and  Equipment

          A  summary of premises and equipment at December 31, 2000 and 1999, is
          as  follows:

<TABLE>
<CAPTION>
                                           2000         1999
                                        -----------  -----------
<S>                                     <C>          <C>
  Land                                  $  310,664   $        -
  Buildings and leasehold improvements   2,075,546    1,139,784
  Furniture, fixtures and equipment      1,149,307      741,097
  Vehicles                                  69,023       68,997
  Construction in progress                       -      351,587
                                        -----------  -----------
                                         3,604,540    2,301,465
  Accumulated depreciation                (478,502)    (344,897)
                                        -----------  -----------

                                        $3,126,038   $1,956,568
                                        ===========  ===========
</TABLE>


                                    Page 24
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 5.   Note  Payable

          During  2000 the Company obtained a $1,000,000 loan from Gilmer County
          Bank. The proceeds of this note were used to inject additional capital
          in  the  Bank.  This  note requires quarterly interest payments at the
          prime interest rate less one-half percent. Principal is due in full on
          September  20,  2002. The note is secured by 600,000 shares of Gateway
          Bank  &  Trust  common  stock.

Note  6.  Federal  Home  Loan  Bank  Advances

          At  December  31,  2000  and 1999, Federal Home Loan Bank advances are
          secured  by  single-family  first  mortgage  loans  and consist of the
          following:

<TABLE>
<CAPTION>
                                                   2000        1999
                                                ----------  ----------
<S>                                             <C>         <C>
  Advances requiring monthly interest payments
    at 5.72%, maturing January 13, 2003         $1,000,000  $1,000,000
  Advances requiring monthly interest payments
    at 6.09%, maturing September 15, 2010        1,000,000           -
                                                ----------  ----------

                                                $2,000,000  $1,000,000
                                                ==========  ==========
</TABLE>

Note  7.  Other  Operating  Expenses

          Other  operating  expenses  for  the years ended December 31, 2000 and
          1999,  consist  of  the  following:

<TABLE>
<CAPTION>
                                       2000       1999
                                    ----------  --------
<S>                                 <C>         <C>

  Advertising and marketing         $   62,709  $ 55,576
  Data processing                      275,244   218,250
  Furniture and equipment expense      154,297   107,243
  Postage, freight, and express         60,108    55,111
  Printing and supplies                135,601    85,029
  Professional and regulatory fees     192,581   214,482
  Other                                233,819   227,549
                                    ----------  --------

    Total other operating expenses  $1,114,359  $963,240
                                    ==========  ========
</TABLE>


                                    Page 25
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note  8.  Income  Taxes

          The  provision  for  income  taxes  in  the consolidated statements of
          income  for  the  years ended December 31, 2000 and 1999, includes the
          following:

<TABLE>
<CAPTION>
                                      2000       1999
                                    ---------  --------
<S>                                 <C>        <C>

  Current tax expense:
    Federal                         $420,800   $256,000
    State                             37,700          -
  Deferred income taxes (benefit):
    Federal                          (13,457)    13,169
    State                             (1,583)         -
                                    ---------  --------

  Provision for income taxes        $443,460   $269,169
                                    =========  ========
</TABLE>

          The  income tax provision is different than the expected tax provision
          computed  by  multiplying  income before income taxes by the statutory
          federal  income  tax  rates.  The  reasons  for this difference are as
          follows:

<TABLE>
<CAPTION>
                                                       2000       1999
                                                     ---------  ---------
<S>                                                  <C>        <C>

  Expected tax at statutory rates                    $433,500   $263,264
  Increase (decrease) resulting from tax effect of:
    Tax-exempt interest on obligations
      of states and political subdivisions             (2,800)    (4,675)
    State income taxes, net of federal benefit         24,850          -
    Other                                             (12,090)    10,580
                                                     ---------  ---------

  Provision for income taxes                         $443,460   $269,169
                                                     =========  =========
</TABLE>

          The  components  of  the  Company's  deferred  income  tax  assets and
          liabilities  at  December  31,  2000  and  1999,  are  as  follows:

<TABLE>
<CAPTION>
                                        2000        1999
                                     ----------  ----------
<S>                                  <C>         <C>

  Deferred tax assets:
    Allowance for loan losses        $ 266,350   $ 210,069
    Unrealized losses on securities     58,580     293,444
    Other                                7,275       9,455
                                     ----------  ----------

      Total deferred tax assets        332,205     512,968

  Deferred tax liabilities:
    Accumulated depreciation          (110,567)   (108,296)
                                     ----------  ----------

  Net deferred tax assets            $ 221,638   $ 404,672
                                     ==========  ==========
</TABLE>


                                    Page 26
<PAGE>
Exhibit 13.1

                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note  9.  Time  Deposits

          The  aggregate amount of time deposits in denominations of $100,000 or
          more  was  approximately $21,714,000 at December 31, 2000. At December
          31,  2000,  the  scheduled maturities of time deposits are as follows:


                    2001          $53,594,539
                    2002 - 2003    13,298,931
                    2004 - 2008       112,077
                                  -----------

                                   67,005,547
                                 ============

Note 10.  Financial  Instruments  With  Off-Balance-Sheet  Risk

          The  Bank  is  a party to financial instruments with off-balance-sheet
          risk  in  the normal course of business to meet the financing needs of
          its customers. These financial instruments include various commitments
          to  extend  credit  and  standby  letters of credit. These instruments
          expose the Bank to varying degrees of credit and interest rate risk in
          excess  of the amount recognized in the accompanying balance sheet. To
          manage  this  risk,  the  Bank  uses  the same management policies and
          procedures for financial instruments with off-balance-sheet risk as it
          does  for financial instruments whose risk is reflected on the balance
          sheet.

          The  credit  risk  of  all  financial instruments varies based on many
          factors,  including  the  value  of collateral held and other security
          arrangements.  To  mitigate credit risk, the Bank generally determines
          the need for specific covenant, guarantee, and collateral requirements
          on a case-by-case basis, depending on the customer's creditworthiness.
          The  amount  and  type of collateral held to reduce credit risk varies
          but  may  include  real  estate,  machinery, equipment, inventory, and
          accounts  receivable  as  well  as cash on deposit, stocks, bonds, and
          other  marketable  securities  that  are  generally held in the Bank's
          possession. This collateral is valued and inspected on a regular basis
          to  ensure  both  its  existence  and  adequacy.  The  Bank  requests
          additional  collateral  when  appropriate.

          At  December 31, 2000, commitments under standby letters of credit and
          undisbursed  loan commitments aggregated $9,278,000. The Bank's credit
          exposure  for  these  financial  instruments  is  represented by their
          contractual  amounts. The Bank does not anticipate any material losses
          as  a  result  of  the commitments under standby letters of credit and
          undisbursed  loan  commitments.

Note 11.  Contingencies

          The  Bank  is  involved in certain claims arising from normal business
          activities. Management believes that those claims are without merit or
          that  the  ultimate  liability,  if  any, resulting from them will not
          materially  affect  the  Bank's  financial  position.


                                    Page 27
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 12.  Liquidity  and  Capital  Resources

          The  Company's  primary source of funds with which to pay principal or
          interest  on  its  indebtedness  is  the receipt of dividends from its
          subsidiary  bank.  Banking  regulations  limit the amount of dividends
          that  the Bank may pay without prior approval of the Bank's regulatory
          agency.

Note 13.  Employee  Benefit  Plan

          The Bank has a 401(k) employee benefit plan covering substantially all
          employees  who  have completed one year of service and are 18 years of
          age or older. The annual contribution is discretionary and was $52,500
          in  2000  and  $24,000  in  1999.

Note 14.  Stock  Option  Plan

          The  Company  has a stock option plan that provides for both incentive
          stock  options  and  nonqualified stock options. The maximum number of
          shares  that can be sold or optioned under the plan is 200,000 shares.
          In  the  case of incentive stock options, the purchase price shall not
          be  less than 100 percent (110 percent for persons owning more than 10
          percent  of the Company's outstanding common stock) of the fair market
          value  of  the  common  stock  on  the  date  of grant. In the case of
          nonqualified  stock  options, the purchase price may be equal to, less
          than,  or  more  than the fair market value of the common stock on the
          date  of grant. At December 31, 2000, all options have been granted at
          an  exercise  price  of  $12  per  share, the fair market value of the
          shares  at  the  date  of  grant.  If not exercised, such options will
          expire  in  2009.  A summary of activity in the Company's stock option
          plan  for  the  years ended December 31, 2000 and 1999, is as follows:

<TABLE>
<CAPTION>
                                              Number
                                            of Shares
                                            ----------
<S>                                         <C>

     Shares outstanding, December 31, 1998          -

        Stock options granted                 171,850
                                            ----------

     Shares outstanding, December 31, 1999    171,850

        Stock options forfeited                (5,000)
                                            ----------

     Shares outstanding, December 31, 2000    166,850
                                            ==========
</TABLE>

          Under the plan, options to purchase common stock shares vest beginning
          one  year  from  the  grant  date on an equal incremental basis over a
          period  of  five  years.  At  December 31, 2000, the number of options
          exercisable  is  33,370.


                                    Page 28
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 14.  Stock  Option  Plan  (continued)

          The  Company  has  not  recognized  any  compensation  cost  for stock
          options.  If  the  Company  had  used  the  fair value based method of
          accounting  for  its  stock option plan, as prescribed by Statement of
          Financial Accounting Standards No. 123, the Company's net income would
          have  been  reduced  to  the  pro-forma  amounts  indicated  below:

<TABLE>
<CAPTION>
                                          2000      1999
                                        --------  --------
<S>                                     <C>       <C>

  Net income
    As reported                         $831,509  $505,137
    Pro forma                           $822,592  $496,631

  Earnings per share
    As reported                         $   1.22  $   0.74
    Pro forma                           $   1.21  $   0.73

  Earnings per share assuming dilution
    As reported                         $   1.22  $   0.74
    Pro forma                           $   1.21  $   0.73
</TABLE>

Note 15.  Other  Comprehensive  Income

          Other  comprehensive income consists of unrealized gains and losses on
          securities available for sale. A summary of other comprehensive income
          and  the related tax effects for the years ended December 31, 2000 and
          1999,  is  as  follows:

<TABLE>
<CAPTION>
                                                                Tax
                                                Before-Tax   (Expense)    Net-of-Tax
                                                  Amount      Benefit       Amount
                                               ------------  ----------  ------------
<S>                                            <C>           <C>         <C>
  Year ended December 31, 2000:
    Unrealized holding gains and losses
      arising during the period                $   685,865   $(232,997)  $   452,868

    Less reclassification adjustment for
      losses realized in net income                 (4,912)      1,867        (3,045)
                                               ------------  ----------  ------------

                                               $   690,777   $(234,864)  $   455,913
                                               ============  ==========  ============

  Year ended December 31, 1999:
    Unrealized holding gains and losses
      arising during the period                $  (929,274)  $ 353,124   $  (576,150)

    Less reclassification adjustment for
      gains realized in net income                   1,152        (438)          714
                                               ------------  ----------  ------------

                                               $  (930,426)  $ 353,562   $  (576,864)
                                               ============  ==========  ============
</TABLE>


                                    Page 29
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 16.  Regulatory  Matters

          The  Bank  is  subject  to  various  regulatory  capital  requirements
          administered  by  the  federal  and state banking agencies. Failure to
          meet  minimum capital requirements can initiate certain mandatory--and
          possibly  additional  discretionary--actions  by  regulators  that, if
          undertaken,  could  have  a  direct  material  effect  on  the  Bank's
          financial  statements.  Under  capital  adequacy  guidelines  and  the
          regulatory  framework for prompt corrective action, the Bank must meet
          specific  capital guidelines that involve quantitative measures of the
          Bank's  assets,  liabilities,  and  certain off-balance-sheet items as
          calculated  under  regulatory accounting practices. The Bank's capital
          amounts  and  classification are also subject to qualitative judgments
          by  the  regulators  about  components,  risk  weightings,  and  other
          factors.

          Quantitative  measures  established  by  regulation  to ensure capital
          adequacy  require the Bank to maintain minimum amounts and ratios (set
          forth  in  the table below) of total and Tier I capital (as defined in
          the  regulations)  to risk-weighted assets (as defined), and of Tier I
          capital  (as  defined)  to  average  assets  (as  defined). Management
          believes,  as  of  December  31, 2000, that the Bank meets all capital
          adequacy  requirements  to  which  it  is  subject.

          As of December 31, 2000, the Bank had not received formal notification
          of  the  Bank's  status  under  the  regulatory  framework  for prompt
          corrective  action.  To  be  categorized as well-capitalized, the Bank
          must  maintain minimum total risk-based, Tier I risk-based, and Tier I
          leverage ratios as set forth in the following table. The Bank's actual
          capital  amounts  and  ratios  are also presented in the table. Dollar
          amounts  are  presented  in  thousands.

<TABLE>
<CAPTION>
                                                                   To  be  Well
                                                                 Capitalized Under
                                                 For  Capital    Prompt Corrective
                                    Actual     Adequacy Purposes Action Provisions
                               ---------------  ---------------  ---------------
                               Amount   Ratio   Amount   Ratio   Amount   Ratio
                               -------  ------  -------  ------  -------  ------
<S>                            <C>      <C>     <C>      <C>     <C>      <C>
At December 31, 2000:
  Total capital
    (to risk-weighted assets)  $ 9,628   10.2%  $ 7,556    8.0%  $ 9,446   10.0%
  Tier I capital
    (to risk-weighted assets)    8,698    9.2%    3,778    4.0%    5,667    6.0%
  Tier I capital
    (to average assets)          8,698    8.5%    4,087    4.0%    5,109    5.0%

At December 31, 1999:
  Total capital
    (to risk-weighted assets)  $ 6,953    9.6%  $ 5,792    8.0%    7,241   10.0%
  Tier I capital
    (to risk-weighted assets)    6,252    8.6%    2,896    4.0%    4,344    6.0%
  Tier I capital
    (to average assets)          6,252    7.2%    3,471    4.0%    4,338    5.0%
</TABLE>


                                    Page 30
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 17.  Fair  Value  of  Financial  Instruments

          Fair  value  estimates  are made at a specific point in time, based on
          relevant  market  information  about  the  financial instrument. These
          estimates  do  not  reflect  any premium or discount that could result
          from  offering  for  sale  at one time the Bank's entire holdings of a
          particular  financial  instrument.  Because  no  market  exists  for a
          significant  portion  of  the Bank's financial instruments, fair value
          estimates  are  based  on  judgments  regarding  future  expected loss
          experience,  current  economic  conditions,  risk  characteristics  of
          various  financial instruments, and other factors. These estimates are
          subjective  in  nature; involve uncertainties and matters of judgment;
          and,  therefore,  cannot  be  determined  with  precision.  Changes in
          assumptions  could  significantly  affect  the  estimates.

          Fair  value  estimates  are  based  on  existing financial instruments
          without  attempting  to  estimate  the  value  of  anticipated  future
          business  and  the  value  of  assets  and  liabilities  that  are not
          considered  financial  instruments.  The  following  methods  and
          assumptions  were  used  to  estimate  the fair value of each class of
          financial  instruments:


          Cash  and  cash  equivalents:

          For  cash  and  cash  equivalents, the carrying amount is a reasonable
          estimate  of  fair  value.

          Securities:

          The  fair  value  of  securities  is  estimated  based  on  bid prices
          published  in  financial  newspapers  or  bid quotations received from
          securities dealers. The carrying value of Federal Home Loan Bank stock
          approximates  fair  value  based  on  the redemption provisions of the
          Federal  Home  Loan  Bank.

          Loans:


          The  fair  value  of loans is calculated by discounting scheduled cash
          flows  through  the estimated maturity using estimated market discount
          rates,  adjusted  for credit risk and servicing costs. The estimate of
          maturity  is  based  on historical experience with repayments for each
          loan  classification,  modified,  as  required,  by an estimate of the
          effect  of  current  economic  and  lending  conditions.

          Deposits:

          The  fair  value  of  deposits  with  no  stated  maturity,  such  as
          noninterest-bearing  demand deposits and NOW, savings and money market
          accounts,  is  equal  to the amount payable on demand at the reporting
          date. The fair value of time deposits is based on the discounted value
          of  contractual  cash  flows. The discount rate is estimated using the
          rates  currently offered for deposits of similar remaining maturities.

          Note  payable  and  Federal  Home  Loan  Bank  advances:

          Rates  currently available to the Bank for debt with similar terms and
          remaining  maturities  are used to estimate the fair value of existing
          debt.


                                    Page 31
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 17.  Fair  Value  of  Financial  Instruments  (continued)

          The  carrying  amount and estimated fair value of the Bank's financial
          instruments  at  December  31,  2000,  are  as follows (in thousands):

<TABLE>
<CAPTION>
                                       Carrying    Estimated
                                        Amount    Fair Value
                                       ---------  -----------
<S>                                    <C>        <C>
Assets:
  Cash and cash equivalents            $   3,099  $     3,099
  Federal funds sold                       4,080        4,080
  Securities                              25,194       25,140
  Federal Home Loan Bank stock               260          260
  Loans, net                              71,433       71,083

Liabilities:
  Noninterest-bearing demand deposits      7,295        7,295
  NOW accounts                             7,078        7,078
  Savings and money market accounts       15,599       15,599
  Time deposits                           67,006       67,089
  Note payable                             1,000        1,000
  Federal Home Loan Bank advances          2,000        2,000
</TABLE>


Note 18.  Lease  Obligations

          The  Bank  leases  the  ground on which its main office is built. Rent
          expenses  were  $23,758 in 2000 and $23,426 in 1999. The 20-year lease
          requires  the  Bank  to  pay annual rent as adjusted by inflation. The
          Bank  has  three  options  to  renew  the  lease for 10 years for each
          option.  Future  minimum  rentals  under  the  lease  agreement  are:


                              2001           $ 22,290
                              2002             22,290
                              2003             22,290
                              2004             22,290
                              2005             22,290
                              Thereafter      222,900
                                             --------

                                              334,350
                                             ========


Note 19.  Change  in  Accounting  Principle

          In  April  1998 the American Institute of Certified Public Accountants
          issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
          Activities."  This statement required the costs of start-up activities
          to  be expensed as incurred. Any previously-capitalized start-up costs
          were  also to be expensed. The Company adopted this statement in 1999.
          The  adjustment  from  this  change is accounted for as the cumulative
          effect  of  a  change  in  accounting principle, net of the income tax
          effect.


                                    Page 32
<PAGE>
                    GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY

                   NOTES  TO  CONSOLIDATED  FINANCIAL STATEMENTS
                            December 31, 2000 and 1999

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

Note 20.  Condensed  Parent  Information

<TABLE>
<CAPTION>
                                  BALANCE  SHEETS
--------------------------------------------------------------------------------

                                                                                    2000         1999
                                                                                 -----------  -----------
<S>                                                                              <C>          <C>
ASSETS
  Cash                                                                           $  219,930   $  255,760
  Investment in subsidiary                                                        8,583,909    6,252,369
  Other assets                                                                       27,041       15,314
                                                                                 -----------  -----------

    Total assets                                                                 $8,830,880   $6,523,443
                                                                                 ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Note payable                                                                   $1,000,000   $        -
  Other liabilities                                                                  28,568        8,553
                                                                                 -----------  -----------
    Total liabilities                                                             1,028,568        8,553
  Stockholders' equity                                                            7,802,312    6,514,890
                                                                                 -----------  -----------

    Total liabilities and stockholders' equity                                   $8,830,880   $6,523,443
                                                                                 ===========  ===========

                               STATEMENTS OF INCOME
-------------------------------------------------------------------------------
INCOME
  Interest income                                                                $   10,336   $   10,868
                                                                                 -----------  -----------

EXPENSES
  Other operating expenses                                                           81,494       42,755
                                                                                 -----------  -----------
Loss before equity in undistributed earnings of subsidiary                          (71,158)     (31,887)

Equity in undistributed earnings of subsidiary                                      875,627      526,524

Income tax benefits                                                                  27,040       10,500
                                                                                 -----------  -----------

    Net income                                                                   $  831,509   $  505,137
                                                                                 ===========  ===========

                              STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                     $  831,509   $  505,137
  Adjustments to reconcile net income to net cash used in operating activities:
    Amortization                                                                          -        6,422
    Equity in undistributed income of subsidiary                                   (875,627)    (526,524)
    Other                                                                             8,288       (5,120)
                                                                                 -----------  -----------

        Net cash used in operating activities                                       (35,830)     (20,085)
                                                                                 -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in subsidiary                                                        1,000,000            -
                                                                                 -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from note payable                                                      1,000,000            -
                                                                                 -----------  -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                           (35,830)     (20,085)

CASH AND CASH EQUIVALENTS, beginning of year                                        255,760      275,845
                                                                                 -----------  -----------

CASH AND CASH EQUIVALENTS, end of year                                           $  219,930   $  255,760
                                                                                 ===========  ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid (received) during the year for:
    Interest on notes payable                                                    $   23,932   $        -
    Income taxes                                                                    (27,388)           -
                                                                                 ===========  ===========
</TABLE>


                                    Page 33
<PAGE>
CORPORATE  INFORMATION

There is no established trading market for the Company's Shares, which have been
traded inactively in private transactions. Therefore, no reliable information is
available  as  to  trades  of shares of the Company's common stock, or as to the
prices  at  which  such  shares have traded. Management has reviewed the limited
information  available  as to the ranges at which shares of the Company's common
stock have sold. The following data regarding shares is provided for information
purposes  only,  and  should not be viewed as indicative of the actual or market
value  of  shares  of  the  Company's  common  stock.

<TABLE>
<CAPTION>
                  Estimated Price Range Per Share
                  ------------------------------
                       2000             1999
                  --------------  --------------
                   High    Low     High    Low
                  ------  ------  ------  ------
<S>               <C>     <C>     <C>     <C>
  First Quarter   $12.50  $12.50  $18.00  $12.00
  Second Quarter   12.00   12.00   18.00   12.50
  Third Quarter    12.50   12.00   12.50   12.50
  Fourth Quarter   12.00   12.00   12.50   12.00
</TABLE>

The  Company's Common Stock was held by approximately 655 shareholders of record
at  December  31,  2000.

DIVIDENDS

The  Bank  is  subject to restrictions on the payment of dividends under Georgia
law and the regulations of the Department of Banking and Finance. The Company is
also  subject  to  limits  on payment of dividends by the rules, regulations and
policies  of  federal  banking  authorities.  No assurance can be given that any
dividends  will  be  declared by the Company in the future, or if declared, what
the  amount  should be or whether such dividends would continue. Future dividend
policy will depend on the Bank's earnings, capital position, financial condition
and  other  factors.  The  Company  has  not  paid  any  dividends  to  date.

FORM  10-KSB

A  copy  of  the  Company's  2000  Annual  Report on Form 10-KSB, filed with the
Securities  and  Exchange  Commission,  is  available  at  no  charge  to  each
shareholder  upon  written  request  to:

Jeff  Hensley
Gateway  Bancshares,  Inc.
5102  Alabama  Highway
Ringgold,  Georgia  30736


General  Counsel
Powell, Goldstein, Frazer & Murphy LLP
Atlanta,  Georgia


Independent  Auditors
Hazlett, Lewis & Bieter, PLLC
Chattanooga,  Tennessee


                                    Page 34
<PAGE>