U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB

                                   (MARK ONE)
     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE
                                   ACT OF 1934

                     FOR FISCAL YEAR ENDED DECEMBER 31, 2002

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

              FOR THE TRANSITION PERIOD FROM _________ TO _________

               COMMISSION FILE NUMBER          000-24137

                            GATEWAY BANCSHARES, INC.

                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

           GEORGIA                                               58-2202210
-------------------------------                              -------------------
(STATE OR OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)

5102 ALABAMA HIGHWAY, P.O. BOX 129, RINGGOLD, GEORGIA               30736
------------------------------------------------------------      ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                          (ZIP CODE)

                                (706) - 965-5500
                ------------------------------------------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

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

Check  whether the issuer: (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for past 90 days.  Yes [X] No [ ]

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

State issuer's revenues for its most recent fiscal year:  $9,077,575

Aggregate  market  value  of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days: $7,142,702
AS  OF  FEBRUARY  28,  2003

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as of the latest practicable date. 681,758 AS OF MARCH 15, 2003

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

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Shareholders for the fiscal year ended December
31,  2002  are  incorporated  by  reference  into Part II. Portions of the Proxy
Statement for the Annual Meeting of Shareholders, scheduled to be held April 17,
2003, are incorporated by reference into Part III.


<PAGE>
<TABLE>
<CAPTION>
                                            TABLE OF CONTENTS


                                                                                                    PAGE
<S>                                                                                                 <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
    ITEM 1.  DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
    ITEM 2.  DESCRIPTION OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    22
    ITEM 3.  LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    22
    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . .    22
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23
    ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . .    23
    ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    23
    ITEM 7.  FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    23
    ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.    23
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    24
    ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
             COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT . . . . . . . . . . . . . . . . . .    24
    ITEM 10  EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    24
    ITEM 11  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. . . . . . . . . . . .    24
    ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . . . .    24
    ITEM 13. EXHIBITS AND REPORTS ON FORM 10-KSB . . . . . . . . . . . . . . . . . . . . . . . . .    25
</TABLE>


                                        i
<PAGE>
                                     PART I


ITEM 1.   DESCRIPTION OF BUSINESS


                                  THE COMPANY

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

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


                                    THE BANK


GENERAL

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


PHILOSOPHY

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


MARKET  AREA  AND  COMPETITION

The  Bank's  main  office  is located in Ringgold, Georgia. During 2000 the Bank
opened  a  branch  in Fort Oglethorpe, Georgia. The Bank draws a majority of its
business  from  its  primary market area, Catoosa County, Georgia. The Bank also
focuses  its  marketing efforts on the adjacent counties of Walker and Whitfield
in  Georgia and Hamilton County in Tennessee. The Bank competes for deposits and
loan customers with other financial institutions whose resources are equal to or
greater  than  those  available  to  the  Bank  and  the  Company.  According to
information provided by the FDIC, as of June 30, 2002, Catoosa County was served
by  eight commercial banks with a total of 14 offices. The total deposits within
Catoosa County for these institutions were $632 million as of June 30, 2002. The
information  provided by the FDIC indicates that the Bank's deposit market share
in  Catoosa County was 16.8% as of June 30, 2002. We believe our local ownership
and  management as well as our focus on personalized service helps us to compete
with  the  other  institutions  in  our  market  area.


                                        1
<PAGE>
LOAN  PORTFOLIO

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

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

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

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

INVESTMENTS

     In  addition  to  loans,  the  Bank  makes  other  investments primarily in
obligations  of  the United States or obligations guaranteed as to principal and
interest  by  the  United  States,  securities  of  U.S. agencies, other taxable
securities  and  other  obligations  of states and municipalities. During fiscal
year  2002,  average  investment securities comprised approximately 23.7% of the
Bank's  total  average  assets,  with average net loans comprising approximately
68.3% of the Bank's average total assets. The Bank also engages in federal funds
transactions  with  its  principal  correspondent  banks and anticipates it will
primarily  act  as a net seller of funds. The sale of federal funds amounts to a
short-term  loan  from  the  Bank  to  another  bank.

DEPOSITS

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

ASSET  AND  LIABILITY  MANAGEMENT

     The objective of the Bank's assets and liabilities management is to provide
a  satisfactory  and  consistent  level of profitability within the framework of
established cash, loan, investment, borrowing and capital policies. Certain Bank
officers  are  responsible for developing and monitoring policies and procedures


                                        2
<PAGE>
that  ensure  acceptable  composition  of  the asset/liability mix. Management's
overall  philosophy  is to support asset growth primarily through growth of core
deposits,  which  include  deposits  of  all  categories  made  by  individuals,
partnerships and corporations. Management seeks to invest the largest portion of
the  Bank's  assets  in consumer/installment, commercial and construction loans.

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


                                    EMPLOYEES

At  December  31,  2002,  the  Company  and its subsidiary employed 36 full-time
employees and 9 part-time employees. The Company considers its relationship with
its  employees  to  be  excellent.


                        SELECTED STATISTICAL INFORMATION

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

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

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

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

<TABLE>
<CAPTION>
                                                  Year Ended December 31, 2002  Year Ended December 31, 2001
                                                  ----------------------------  ----------------------------
                                                   Average   Income/   Yield/    Average   Income/   Yield/
                                                   Balance   Expense    Rate     Balance   Expense    Rate
                                                  ---------  --------  -------  ---------  --------  -------
<S>                                               <C>        <C>       <C>      <C>        <C>       <C>
ASSETS
  Interest-earning assets:
    Loans, net of unearned income(1)              $ 82,598   $  6,399    7.75%  $ 76,263   $  6,835    8.96%
    Investment securities:
      Taxable                                       26,220      1,055    4.02%    23,875      1,309    5.48%
      Non-taxable(2)                                 2,516         97    3.86%       417         18    4.32%
                                                  ---------  --------  -------  ---------  --------  -------
        Total investment securities                 28,736      1,152    4.01%    24,292      1,327    5.46%
    Fed funds sold                                   2,838         46    1.62%     2,921        125    4.28%
                                                  ---------  --------  -------  ---------  --------  -------
        Total interest-earning assets              114,172      7,597    6.65%   103,476      8,287    8.01%
                                                             --------  -------             --------  -------
  Non interest-earning assets:
    Cash and due from banks                          3,537                         3,424
    Premises and equipment                           3,121                         3,255
    Accrued interest and other assets                1,142                         1,902
    Allowance for loan losses                       (1,111)                         (959)
                                                  ---------                     ---------

Total assets                                      $120,861                      $111,098
                                                  =========                     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest-bearing liabilities:
    Demand deposits                               $ 26,015   $    373    1.43%  $ 20,348   $    573    2.82%
    Savings deposits                                16,585        431    2.60%    15,147        650    4.29%
    Time deposits                                   53,458      1,948    3.64%    54,794      3,245    5.92%
                                                  ---------  --------  -------  ---------  --------  -------
                                                    96,058      2,752    2.86%    90,289      4,468    4.95%
    Other short-term borrowings                      4,136        194    4.69%     3,005        169    5.62%
                                                  ---------  --------  -------  ---------  --------  -------
        Total interest-bearing liabilities         100,194      2,946    2.94%    93,294      4,637    4.97%
                                                             --------  -------             --------  -------

  Non interest-bearing liabilities:
    Demand deposits                                  9,900                         8,117
    Accrued interest and other liabilities             619                           590
  Stockholders' equity                              10,148                         9,097
                                                  ---------                     ---------

Total liabilities and stockholders' equity        $120,861                      $111,098
                                                  =========                     =========

Net interest income/net interest spread                         4,651    3.71%                3,650    3.04%
                                                             --------  -------             --------  -------

Taxable equivalent adjustment:
  Loans                                                             -                             -
  Investment securities                                            50                             9
                                                             --------                      --------
    Total taxable equivalent adjustment                            50                             9
                                                             --------                      --------
Net interest income/net yield on earning assets              $  4,701    4.12%             $  3,659    3.54%
                                                             ========  =======             ========  =======
</TABLE>


                                        3
<PAGE>
(1)  Average  loans  include  nonaccrual  loans.  All  loans  and  deposits  are
     domestic.
(2)  Tax  equivalent  adjustments  have  been based on an assumed tax rate of 34
     percent,  and do not give effect to the disallowance for federal income tax
     purpose  of  interest expense related to certain tax-exempt earning assets.

The  following table sets forth, for the years ended December 31, 2002 and 2001,
a  summary of the changes in interest income and interest expense resulting from
changes  in  interest  rates  and in changes in the volume of earning assets and
interest-bearing  liabilities,  segregated by category. The change due to volume
is  calculated by multiplying the change in volume by the prior year's rate. The
change  due to rate is calculated by multiplying the change in rate by the prior
year's  volume. The change attributable to both volume and rate is calculated by
multiplying the change in volume by the change in rate. Figures are presented on
a taxable equivalent basis.

                         RATE/ VOLUME VARIANCE ANALYSIS

<TABLE>
<CAPTION>
                                                                    Change                         Interest
                                               Average Volume      in Volume    Average Rate    Income/Expenses    Variance
                                            --------------------  -----------  ----------------  --------------  -----------
                                              2002       2001      2002-2001    2002     2001     2002    2001    2002-2001
                                            ---------  ---------  -----------  -------  -------  ------  ------  -----------
<S>                                         <C>        <C>        <C>          <C>      <C>      <C>     <C>     <C>
Interest-earning assets:
   Loans, net of unearned income(1)         $ 82,598   $ 76,263   $    6,335     7.75%    8.96%  $6,399  $6,835  $     (436)
   Investment securities:
     Taxable                                  26,220     23,875        2,345     4.02%    5.48%   1,055   1,309        (254)
     Non-taxable(2)                            2,516        417        2,099     3.86%    4.32%      97      18          79
                                            ---------  ---------  -----------  -------  -------  ------  ------  -----------
       Total investment securities            28,736     24,292        4,444     4.01%    5.46%   1,152   1,327        (175)
     Fed funds sold                            2,838      2,921          (83)    1.62%    4.28%      46     125         (79)
                                            ---------  ---------  -----------  -------  -------  ------  ------  -----------

       Total interest-earning assets        $114,172   $103,476   $   10,696     6.65%    8.01%   7,597   8,287        (690)
                                            =========  =========  ===========  =======  =======  ------  ------  -----------

Interest-earning liabilities:
   Deposits:
     Demand                                 $ 26,015   $ 20,348   $    5,667     1.43%    2.82%     373     573        (200)
     Savings                                  16,585     15,147        1,438     2.60%    4.29%     431     650        (219)
     Time                                     53,458     54,794       (1,336)    3.64%    5.92%   1,948   3,245      (1,297)
                                            ---------  ---------  -----------  -------  -------  ------  ------  -----------
       Total interest-earning deposits        96,058     90,289        5,769     2.86%    4.95%   2,752   4,468      (1,716)
   Other short-term borrowings                 4,136      3,005        1,131     4.69%    5.62%     194     169          25
                                            ---------  ---------  -----------  -------  -------  ------  ------  -----------

       Total interest-bearing liabilities   $100,194   $ 93,294   $    6,900     2.94%    4.97%   2,946   4,637      (1,691)
                                            =========  =========  ===========  -------  -------  ------  ------  -----------

Net interest income/net interest spread                                          3.71%   3.04%   $4,651  $3,650  $     1,001
                                                                               =======  =======  ======  ======  ===========

Net yield on earning assets                                                      4.12%   3.54%
                                                                               =======  =======


                                               Variance (1)
                                               Attributed To
                                            ------------------
                                             Volume     Rate
                                            --------  --------
<S>                                         <C>       <C>
Interest-earning assets:
   Loans, net of unearned income(1)         $   537   $  (973)
   Investment securities:
     Taxable                                    120      (374)
     Non-taxable(2)                              81        (2)
                                            --------  --------
       Total investment securities              201      (376)
     Fed funds sold                              (4)      (75)
                                            --------  --------

       Total interest-earning assets            734    (1,424)
                                            --------  --------

Interest-earning liabilities:
   Deposits:
     Demand                                     132      (332)
     Savings                                     57      (276)
     Time                                       (77)   (1,220)
                                            --------  --------
       Total interest-earning deposits          112    (1,828)
   Other short-term borrowings                   56       (31)
                                            --------  --------

       Total interest-bearing liabilities       168    (1,859)
                                            --------  --------

Net interest income/net interest spread     $    566  $   435
                                            ========  ========

Net yield on earning assets
</TABLE>


                                        4
<PAGE>
(1)  The  change  in  interest due to both rate and volume has been allocated to
     volume  and  rate changes in proportion to the relationship of the absolute
     dollar  amounts  of  the  change  in  each.


INVESTMENT  PORTFOLIO

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


                              INVESTMENT PORTFOLIO

<TABLE>
<CAPTION>
                                   December 31,
                                 ----------------
                                  2002     2001
                                 -------  -------
                                  (in thousands)
<S>                              <C>      <C>
Securities available for sale:
   U.S. Government agencies      $ 7,493  $13,489
   Mortgage-backed securities     15,257    9,444
   Municipal securities            3,554    1,994
   Corporate debt securities       2,548    2,064
   Other securities                  522      505
                                 -------  -------
                                 $29,374  $27,496
                                 =======  =======
</TABLE>


                                        5
<PAGE>
Average  taxable  securities  were  91  percent  of  the portfolio in 2002 which
reflects  management's  intent  to  maximize  investment  yields.

The  maturities  and  weighted  average  yields  of  the investments in the 2002
portfolio  of  investment  securities  are  presented  below.

<TABLE>
<CAPTION>
                                               Investment Portfolio Maturity Schedule
                                 ------------------------------------------------------------------
                                                              Maturing
                                 ------------------------------------------------------------------
                                                   After One But     After Five
                                     Within         Within Five      Within Ten          After
                                    One Year       Years Within       Ten Years        Ten Years
                                 ---------------  ---------------  ---------------  ---------------
                                 Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield
                                 -------  ------  -------  ------  -------  ------  -------  ------
                                                        (in thousands)
<S>                              <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
Securities available for sale:
   U.S. Government agencies      $ 4,299   4.69%  $ 3,194   4.50%  $     -   0.00%  $     -   0.00%
   Mortgage-backed securities          -   0.00%    3,860   3.30%    3,722   3.86%    7,675   3.76%
   Municipal securities                -   0.00%    2,327   4.44%    1,227   5.88%        -   0.00%
   Corporate debt securities       2,548   4.69%        -   0.00%        -   0.00%        -   0.00%
   Other securities                    -   0.00%        -   0.00%        -   0.00%      522   5.79%
                                 -------  ------  -------  ------  -------  ------  -------  ------
                                 $ 6,847   4.69%  $ 9,381   3.98%  $ 4,949   4.36%  $ 8,197   3.89%
                                 =======  ======  =======  ======  =======  ======  =======  ======

   Total available for sale      $29,374   4.19%
                                 =======  ======
</TABLE>


                                        6
<PAGE>
There  were no securities held by the Company, whose aggregate value on December
31,  2002  exceeded  ten  percent  of the Company's shareholders' equity at that
date.

LOAN PORTFOLIO

The  following  table  shows  the  classification  of loans by major category at
December  31,  2002  and  2001.

                                 TYPES OF LOANS

<TABLE>
<CAPTION>
                                    December 31, 2002    December 31, 2001
                                  --------------------  -------------------
                                   Percent    Percent
                                   Amount    of Total    Amount   of Total
                                  ---------  ---------  --------  ---------
                                              (in thousands)
<S>                               <C>        <C>        <C>       <C>
Commercial and industrial         $ 29,849       31.8%  $25,517       32.1%
Real estate-construction             9,033        9.6%    6,976        8.8%
Real estate-other                   44,669       47.6%   37,783       47.5%
Consumer                            10,251       10.9%    9,267       11.6%
Other loans                             95        0.1%       73        0.1%
                                  ---------  ---------  --------  ---------
                                    93,897      100.0%   79,616      100.0%
                                             =========            =========
Less: allowance for loan losses     (1,291)                (996)
                                  ---------             --------

Net loans                         $ 92,606              $78,620
                                  =========             ========
</TABLE>


                                        7
<PAGE>
The  Company  has  no  loans  to  finance  leveraged buy-outs.  In addition, the
Company  has  avoided exposure to lesser developed country (LDC) debt, having no
LDC  loans  in  its  portfolio.

The  following  table  provides  maturities  of  certain loan classifications at
December  31,  2002 and 2001 and an analysis of these loans maturing in over one
year.

              SELECTED LOAN MATURITY AND INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>
                                                                                 Rate Structure for Loans
                                               Maturity                           Maturing Over One Year
                            --------------------------------------------------  --------------------------
                                         Over One
                                           Year                                 Predetermined  Floating or
                            One Year      Through       Over Five                Interest      Adjustable
                             or Less     Five Years       Years        Total       Rate           Rate
                            ---------  --------------  ------------  ---------  -------------  -----------
                                                       (in thousands)
<S>                         <C>        <C>             <C>           <C>        <C>            <C>
 Commercial and industrial  $  15,922  $       13,889  $         38  $  29,849  $       7,436  $     6,491

 Real estate-construction       8,719             314             -      9,033            168          146
                            ---------  --------------  ------------  ---------  -------------  -----------

                            $  24,641  $       14,203  $         38  $  38,882  $       7,604  $     6,637
                            =========  ==============  ============  =========  =============  ===========
</TABLE>


                                        8
<PAGE>
NONPERFORMING ASSETS

The  following  table  presents  information  concerning outstanding balances of
nonperforming  assets  at  December  31,  2002  and  2001.

<TABLE>
<CAPTION>
                                      2002     2001
                                     -------  -------
                                      (in thousands)
<S>                                  <C>      <C>
Nonaccruing loans                    $   111  $   101
Loans past due 90 days or more           185      151
Restructured loans                         -        -
                                     -------  -------
Total nonperforming loans                296      252
Other real estate                        212      117
                                     -------  -------
Total nonperforming assets           $   508  $   369
                                     =======  =======

Ratios:
Loan loss allowance to
  total nonperforming assets          2.5413   2.6992
                                     =======  =======
Total nonperforming loans to total
  loans (net of unearned interest)    0.0032   0.0032
                                     =======  =======
Total nonperforming assets
  to total assets                     0.0036   0.0029
                                     =======  =======
</TABLE>


                                        9
<PAGE>
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 $1,291,097 in the
allowance  for  loan losses at December 31, 2002 (1.37% of 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,  2002  and  2001.


                         SUMMARY OF LOAN LOSS EXPERIENCE


<TABLE>
<CAPTION>
                                                   2002      2001
                                                 --------  --------
                                                   (in thousands)
<S>                                              <C>       <C>
Allowance for loans losses at beginning of year  $   996   $   930

Total loans charged off:
  Commercial and industrial                          (39)     (298)
  Real estate                                          -       (24)
  Consumer                                          (110)     (100)

Recoveries on loans previously charged off             8         3
                                                 --------  --------
Net loans charged off                               (141)     (419)
                                                 --------  --------

Provision for loan losses                            436       485
                                                 --------  --------

Allowance for loan losses at end of  period      $ 1,291   $   996
                                                 ========  ========

Loans, net of unearned income, at end of period  $93,897   $79,616
                                                 ========  ========

Average loans, net of unearned income,
  outstanding for the period                     $82,598   $76,263
                                                 ========  ========

Ratios:
  Allowance at end of period to loans, net of
    unearned income                                 1.37%     1.25%
  Allowance at end of period to average loans,
    net of unearned income                          1.56%     1.31%
  Net charge-offs to average loans, net of
    unearned income                                 0.17%     0.55%
  Net charg-offs to allowance at end of period     10.92%    42.07%
  Recoveries to prior year charge-offs              1.91%     2.38%
</TABLE>


                                       10
<PAGE>
In  assessing adequacy, management relies predominantly on its ongoing review of
the  loan  portfolio,  which  is  undertaken both to ascertain whether there are
probable losses which must be charged off and to assess the risk characteristics
of  the  portfolio  in  the  aggregate. This review takes into consideration the
judgments  of  the  responsible lending officers and senior management, and also
those  of bank regulatory agencies that review the loan portfolio as part of the
regular  bank  examination  process.

In  evaluating the allowance, management also considers the loan loss experience
of  Gateway  Bancshares,  Inc.  and  subsidiary,  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:


                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                          Year Ended          Year Ended
                                       December 31, 2002      December 31,
                                      -------------------  ------------------
                                                 Percent             Percent
                                       Amount   of Total   Amount   of Total
                                      --------  ---------  -------  ---------
                                               (amounts in thousands)
<S>                                   <C>       <C>        <C>      <C>

Domestic Loans (1):

  Commercial and industrial           $    822      63.7%  $   609      61.1%
  Real estate-construction and other       196      15.2%      154      15.5%
  Consumer                                 273      21.1%      233      23.4%
                                      --------  ---------  -------  ---------

                                      $  1,291     100.0%  $   996     100.0%
                                      ========  =========  =======  =========
</TABLE>


                                       11
<PAGE>
(1)  The Company had no foreign loans.


DEPOSITS

The  Company's  primary  source of funds is derived from its deposits. Continued
enhancement of existing products and emphasis upon better customer service fuels
the  growth  in  the  deposit  base.  Emphasis  has  been placed upon attracting
consumer  deposits. The Fort Oglethorpe branch opened in 2000, and the Company's
intends  to  expand its consumer base in order to continue to fund asset growth.

The  average  amounts  of  and  the  average  rate paid on each of the following
categories  of  deposits  for  the years ended December 31, 2002 and 2001 are as
follows:

<TABLE>
<CAPTION>
                                             2002             2001
                                      ------------------  --------------
                                            (amounts in thousands)

                                      Average             Average
                                       Amount     Rate    Amount   Rate
                                      --------  --------  -------  -----
<S>                                   <C>       <C>       <C>      <C>
Noninterest-bearing demand deposits   $  9,900     0.00%  $ 8,117  0.00%
                                      --------            -------

Demand deposits                         26,015     1.43%   20,348  2.82%
Savings deposits                        16,585     2.60%   15,147  4.29%
Time deposits                           53,458     3.64%   54,794  5.92%
                                      --------            -------

   Total interest-bearing deposits      96,058     2.86%   90,289  4.95%
                                      --------            -------

   Total average deposits             $105,958     2.59%  $98,406  4.54%
                                      ========            =======
</TABLE>


                                       12
<PAGE>
The  two  categories of lowest cost deposits comprised the following percentages
of total deposits during 2001: average noninterest-bearing demand deposits - 9.3
percent;  and  average interest-bearing demand deposits - 24.5 percent. Of total
time  deposits,  approximately 32.6 percent were large denomination certificates
of  deposit.  The  maturities of the time certificates of deposit and other time
deposits  of  $100,000  or  more  issued by the Company at December 31, 2002 are
summarized  in  the  table  below.

                        MATURITIES OF LARGE TIME DEPOSITS

                                                     Time
                                                   Deposits
                                                ---------------
                                                (in thousands)

Three months or less                            $         5,873
Over three through six months                             2,934
Over six through twelve months                            2,836
Over twelve months                                        9,012
                                                ---------------
  Total                                         $        20,655
                                                ===============


                                       13
<PAGE>
RETURN ON EQUITY AND ASSETS

The  following table summarizes certain financial ratios for the Company for the
years ended December 31, 2002 and 2001.

                                         2002   2001
                                        ------  -----

Return on average assets                 1.04%  0.63%
Return on average equity                13.14%  8.50%
Dividend payout ratio                    0.00%  0.00%
Average equity to average assets ratio   7.90%  7.43%



                                       14
<PAGE>
                           SUPERVISION AND REGULATION

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

THE  COMPANY

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

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

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

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

     -    merging  or  consolidating  with  any  other  bank  holding  company.

     Additionally,  the  Bank  Holding  Company  Act  provides  that the Federal
Reserve  may not approve any of these transactions if it would result in or tend
to  create a monopoly or, substantially lessen competition or otherwise function
as  a  restraint  of  trade,  unless the anticompetitive effects of the proposed
transaction  are  clearly  outweighed  by  the  public  interest  in meeting the
convenience  and  needs  of  the community to be served.  The Federal Reserve is
also  required  to  consider  the  financial and managerial resources and future
prospects  of the bank holding companies and banks concerned and the convenience
and needs of the community to be served.  The Federal Reserve's consideration of
financial  resources  generally  focuses on capital adequacy, which is discussed
below.

     Under  the  Bank  Holding  Company  Act,  if  adequately  capitalized  and
adequately  managed,  the  Company  or any other bank holding company located in
Georgia  may  purchase  a  bank  located  outside  of  Georgia.  Conversely,  an
adequately  capitalized  and  adequately  managed  bank  holding company located
outside  of  Georgia  may purchase a bank located inside Georgia.  In each case,
however,  restrictions  may be placed on the acquisition of a bank that has only
been  in  existence  for  a  limited  amount of time or will result in specified
concentrations  of  deposits.  For example, Georgia law prohibits a bank holding
company  from  acquiring  control  of  a  financial institution until the target
financial  institution  has been incorporated for three years.  Because the Bank
has  been incorporated for more than three years, this limitation does not apply
to  the  Company  or  the  Bank.

     CHANGE  IN  BANK  CONTROL.  Subject to various exceptions, the Bank Holding
Company  Act  and  the  Change  in  Bank  Control  Act,  together  with  related
regulations,  require  Federal  Reserve  approval prior to any person or company
acquiring "control" of a bank holding company.  Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company.  Control is rebuttably presumed to exist
if  a person or company acquires 10% or more, but less than 25%, of any class of
voting  securities  and  either:

     -    the bank holding company has registered securities under Section 12 of
          the  Securities  Act  of  1934;  or

     -    no  other  person  owns  a  greater percentage of that class of voting
          securities  immediately  after  the  transaction.


                                       15
<PAGE>
Our  common  stock is registered under the Securities Exchange Act of 1934.  The
regulations  provide  a  procedure  for  challenge  of  the  rebuttable  control
presumption.

     PERMITTED  ACTIVITIES.  Generally,  bank  holding  companies are prohibited
under  the  Bank  Holding  Company  Act  from engaging in or acquiring direct or
indirect  control of more than 5% of the voting shares of any company engaged in
any  activity  other  than:

     -    banking  or  managing  or  controlling  banks;  and

     -    an  activity  that  the  Federal  Reserve  determines to be so closely
          related  to  banking  as  to  be  a proper incident to the business of
          banking.

     Activities  that  the Federal Reserve has found to be so closely related to
banking  as  to  be  a
proper  incident  to  the  business  of  banking  include:

     -    factoring accounts receivable;

     -    making, acquiring, brokering or servicing loans and usual related
          activities;

     -    leasing personal or real property;

     -    operating a non-bank depository institution, such as a savings
          association;

     -    trust  company  functions;

     -    financial  and  investment  advisory  activities;

     -    conducting  discount  securities  brokerage  activities;

     -    underwriting  and  dealing  in government obligations and money market
          instruments;

     -    providing  specified  management consulting and counseling activities;

     -    performing  selected  data  processing  services and support services;

     -    acting  as  agent or broker in selling credit life insurance and other
          types  of  insurance  in  connection  with  credit  transactions;  and

     -    performing  selected  insurance  underwriting  activities.

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

     A  bank  holding  company  that  qualifies and elects to become a financial
holding  company  is  permitted  to  engage  in activities that are financial in
nature  or  incidental or complementary to financial activity.  The Bank Holding
Company  Act  expressly  lists  the following activities as financial in nature:

     -    lending,  trust  and  other  banking  activities;

     -    insuring,  guaranteeing,  or  indemnifying  against  loss  or harm, or
          providing  and  issuing  annuities, and acting as principal, agent, or
          broker  for  these  purposes,  in  any  state;

     -    providing  financial,  investment,  or  advisory  services;


                                       16
<PAGE>
     -    issuing  or  selling  instruments  representing  interests in pools of
          assets  permissible  for  a  bank  to  hold  directly;

     -    underwriting,  dealing  in  or  making  a  market  in  securities;

     -    other  activities  that  the  Federal  Reserve  may determine to be so
          closely related to banking or managing or controlling banks as to be a
          proper  incident  to  managing  or  controlling  banks;

     -    foreign  activities  permitted  outside  of  the  United States if the
          Federal  Reserve  has  determined  them to be usual in connection with
          banking  operations  abroad;

     -    merchant  banking  through  securities  or  insurance  affiliates; and

     -    insurance  company  portfolio  investments.

     To  qualify  to  become a financial holding company, the Bank and any other
depository  institution  subsidiary  of the Company must be well capitalized and
well  managed  and  must  have  a  Community Reinvestment Act rating of at least
"satisfactory."  Additionally,  the  Company  must  file  an  election  with the
Federal  Reserve  to  become  a  financial  holding company and must provide the
Federal  Reserve  with  30 days' written notice prior to engaging in a permitted
financial  activity.  While  the  Company  meets  the  qualification  standards
applicable to financial holding companies, the Company has not elected to become
a  financial  holding  company  at  this  time.

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

THE BANK

     Since  the  Bank is a commercial bank chartered under the laws of the State
of  Georgia,  it  is  primarily  subject  to  the  supervision,  examination and
reporting  requirements  of  the  FDIC and the Georgia Department of Banking and
Finance.  The  FDIC  and  Georgia  Department  of  Banking and Finance regularly
examine  the  Bank's  operations and have the authority to approve or disapprove
mergers,  the  establishment  of  branches  and similar corporate actions.  Both
regulatory  agencies have the power to prevent the continuance or development of
unsafe  or  unsound banking practices or other violations of law.  Additionally,
the  Bank's  deposits  are insured by the FDIC to the maximum extent provided by
law.  The  Bank  is  also  subject  to  numerous  state and federal statutes and
regulations  that  affect  its  business,  activities  and  operations.

     BRANCHING.  Under  current  Georgia  law,  the Bank may open branch offices
throughout  Georgia with the prior approval of the Georgia Department of Banking
and  Finance.  In addition, with prior regulatory approval, the Bank may acquire
branches  of existing banks located in Georgia.  The Bank and any other national
or  state-chartered bank generally may branch across state lines by merging with
banks  in  other states if allowed by the applicable states' laws.  Georgia law,
with  limited exceptions, currently permits branching across state lines through
interstate  mergers.

     Under  the  Federal  Deposit  Insurance  Act, states may "opt-in" and allow
out-of-state  banks  to  branch  into their state by establishing a new start-up
branch  in  the  state.  Currently,  Georgia has not opted-in to this provision.
Therefore,  interstate  merger  is  the only method through which a bank located
outside  of Georgia may branch into Georgia.  This provides a limited barrier of
entry  into  the  Georgia  banking  market,  which protects us from an important
segment  of  potential competition.  However, because Georgia has elected not to
opt-in,  our  ability to establish a new start-up branch in another state may be
limited.  Many  states  that have elected to opt-in have done so on a reciprocal
basis,  meaning  that  an  out-of-state bank may establish a new start-up branch
only  if  their  home  state  has  also  elected to opt-in.  Consequently, until


                                       17
<PAGE>
Georgia changes its election, the only way we will be able to branch into states
that  have  elected  to  opt-in on a reciprocal basis will be through interstate
merger.

     PROMPT  CORRECTIVE  ACTION.  The  Federal  Deposit  Insurance  Corporation
Improvement  Act  of  1991  establishes  a system of prompt corrective action to
resolve  the  problems  of  undercapitalized financial institutions.  Under this
system,  the federal banking regulators have established five capital categories
-  well  capitalized,  adequately  capitalized,  undercapitalized, significantly
undercapitalized and critically undercapitalized - in which all institutions are
placed.  The  federal  banking  agencies  have  also specified by regulation the
relevant capital levels for each of the other categories.  At December 31, 2001,
we  qualified  for  the  "well  capitalized"  category.

     Federal  banking  regulators  are  required  to  take  various  mandatory
supervisory  actions and are authorized to take other discretionary actions with
respect  to institutions in the three undercapitalized categories.  The severity
of  the  action  depends  upon  the capital category in which the institution is
placed.  Generally,  subject  to  a narrow exception, the banking regulator must
appoint  a  receiver  or  conservator  for  an  institution  that  is critically
undercapitalized.

     An  institution  in  any  of the undercapitalized categories is required to
submit an acceptable capital restoration plan to its appropriate federal banking
agency.  A  bank  holding  company  must  guarantee that a subsidiary depository
institution  meets its capital restoration plan, subject to various limitations.
The  controlling holding company's obligation to fund a capital restoration plan
is limited to the lesser of 5% of an undercapitalized subsidiary's assets at the
time  it  became  undercapitalized  or  the  amount  required to meet regulatory
capital  requirements.  An  undercapitalized  institution  is  also  generally
prohibited  from  increasing  its  average  total  assets,  making acquisitions,
establishing  any branches or engaging in any new line of business, except under
an  accepted  capital  restoration  plan or with FDIC approval.  The regulations
also  establish  procedures  for  downgrading  an institution to a lower capital
category  based  on  supervisory  factors  other  than  capital.

     FDIC  INSURANCE  ASSESSMENTS.  The FDIC has adopted a risk-based assessment
system  for  insured  depository  institutions that takes into account the risks
attributable  to  different  categories  and  concentrations  of  assets  and
liabilities.  The  system  assigns  an  institution  to  one  of  three  capital
categories:  (1)  well  capitalized;  (2)  adequately  capitalized;  and  (3)
undercapitalized.  These  three  categories  are  substantially  similar  to the
prompt corrective action categories described above, with the "undercapitalized"
category  including  institutions  that  are  undercapitalized,  significantly
undercapitalized,  and  critically undercapitalized for prompt corrective action
purposes.  The  FDIC  also  assigns  an  institution to one of three supervisory
subgroups  based  on  a  supervisory  evaluation  that the institution's primary
federal  regulator provides to the FDIC and information that the FDIC determines
to  be  relevant  to the institution's financial condition and the risk posed to
the  deposit  insurance funds.  Assessments range from 0 to 27 cents per $100 of
deposits, depending on the institution's capital group and supervisory subgroup.
In  addition,  the  FDIC imposes assessments to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation bonds issued in
the  late  1980s  as part of the government rescue of the thrift industry.  This
assessment  rate  is  adjusted  quarterly  and  is set at 1.68 cents per $100 of
deposits  for  the  first  quarter  of  2003.

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

     COMMUNITY  REINVESTMENT ACT.  The Community Reinvestment Act requires that,
in  connection  with  examinations  of  financial  institutions  within  their
respective  jurisdictions,  the  Federal  Reserve or the FDIC shall evaluate the
record  of  each  financial institution in meeting the credit needs of its local
community,  including  low  and  moderate-income neighborhoods.  These facts are
also  considered in evaluating mergers, acquisitions, and applications to open a
branch  or  facility.  Failure  to  adequately  meet these criteria could impose
additional  requirements and limitations on the Bank and the Company.  Since our
aggregate  assets  are  not more than $250 million, under the Gramm-Leach-Bliley
Act,  we are subject to a Community Reinvestment Act examination only once every
60  months  if  we  receive  an "outstanding" rating, once every 48 months if we
receive  a  "satisfactory"  rating  and  as  needed  if our rating is "less than
satisfactory."  Additionally,  we  must  publicly  disclose the terms of various
Community  Reinvestment  Act-related  agreements.


                                       18
<PAGE>
     OTHER  REGULATIONS.  Interest and other charges collected or contracted for
by the Bank are subject to state usury laws and federal laws concerning interest
rates.  For  example, under the Soldiers' and Sailors' Civil Relief Act of 1940,
a lender is generally prohibited from charging an annual interest rate in excess
of  6%  on any obligation for which the borrower is a person on active duty with
the  United  States  military.

     The  Bank's  loan operations are also subject to federal laws applicable to
credit  transactions,  such  as:

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

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

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

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

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

     -    Soldiers'  and  Sailors'  Civil  Relief  Act  of  1940,  governing the
          repayment  terms  of,  and  property  rights  underlying,  secured
          obligations  of  persons  in  military  service;  and

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

     In  addition  to  the  federal and state laws noted above, the Georgia Fair
Lending  Act  ("GFLA")  imposes restrictions and procedural requirements on most
mortgage loans made in Georgia, including home equity loans and lines of credit.
GFLA  became  effective  on  October  1,  2002 and was amended on March 7, 2003.
While  selected  provisions  of  GFLA  apply  regardless of the interest rate or
charges  on  the loan, the majority of the requirements apply only to "high cost
home  loans,"  as  defined  by  GFLA.

The deposit operations of the Bank are subject to:

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

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

CAPITAL  ADEQUACY

     The  Company  and the Bank are required to comply with the capital adequacy
standards  established  by  the Federal Reserve, in the case of the Company, and
the FDIC and Georgia Department of Banking and Finance, in the case of the Bank.
The  Federal  Reserve  has  established  a  risk-based and a leverage measure of
capital  adequacy  for bank holding companies.  Since the Company's consolidated
total  assets  are  less  than $150 million, under the Federal Reserve's capital


                                       19
<PAGE>
guidelines, our capital adequacy is measured on a bank-only basis, as opposed to
a  consolidated  basis.  The  Bank  is  also  subject to risk-based and leverage
capital  requirements  adopted  by  the FDIC, which are substantially similar to
those  adopted  by  the  Federal  Reserve  for  bank  holding  companies.

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

     The  minimum  guideline  for  the  ratio  of total capital to risk-weighted
assets is 8%.  Total capital consists of two components, Tier 1 Capital and Tier
2  Capital.  Tier  1  Capital generally consists of common shareholders' equity,
minority  interests  in  the  equity  accounts  of  consolidated  subsidiaries,
qualifying  noncumulative  perpetual  preferred  stock,  and a limited amount of
qualifying  cumulative perpetual preferred stock and trust preferred securities,
less  goodwill and other specified intangible assets.  Tier 1 Capital must equal
at  least  4%  of  risk-weighted  assets.  Tier  2 Capital generally consists of
subordinated debt, other preferred stock and hybrid capital and a limited amount
of loan loss reserves.  The total amount of Tier 2 Capital is limited to 100% of
Tier  1  Capital.  At  December  31,  2002  our  ratio  of  total  capital  to
risk-weighted  assets was 11.2% and our ratio of Tier 1 Capital to risk-weighted
assets  was  10.0%.

     In  addition,  the  Federal  Reserve has established minimum leverage ratio
guidelines  for  bank holding companies.  These guidelines provide for a minimum
ratio  of  Tier  1  Capital to average assets, less goodwill and other specified
intangible  assets,  of  3%  for  bank  holding  companies  that  meet specified
criteria,  including  having  the highest regulatory rating and implementing the
Federal  Reserve's  risk-based  capital measure for market risk.  All other bank
holding  companies  generally  are  required  to maintain a leverage ratio of at
least  4%.  At  December  31, 2002, our leverage ratio was 8.3%.  The guidelines
also  provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without reliance on intangible assets.  The
Federal  Reserve  considers  the  leverage ratio and other indicators of capital
strength  in  evaluating  proposals  for  expansion  or  new  activities.

     The  Bank  and  the  Company  are  also  both  subject  to leverage capital
guidelines  issued  by  the  Georgia  Department  of  Banking and Finance, which
provide  for minimum ratios of Tier 1 capital to total assets.  These guidelines
are substantially similar to those adopted by the Federal Reserve in the case of
the  Company  and  those  adopted  by  the  FDIC  in  the  case  of  the  Bank.

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

PAYMENT  OF  DIVIDENDS

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

     If,  in the opinion of the federal banking regulator, the Bank were engaged
in  or  about  to  engage  in an unsafe or unsound practice, the federal banking
regulator  could  require,  after notice and a hearing, that it cease and desist
from  its  practice.  The  federal  banking  agencies have indicated that paying
dividends  that deplete a depository institution's capital base to an inadequate
level  would  be  an  unsafe  and  unsound  banking practice.  Under the Federal
Deposit  Insurance Corporation Improvement Act of 1991, a depository institution


                                       20
<PAGE>
may not pay any dividend if payment would cause it to become undercapitalized or
if  it  already is undercapitalized.  Moreover, the federal agencies have issued
policy  statements  that  provide  that bank holding companies and insured banks
should  generally  only  pay  dividends  out of current operating earnings.  See
"-Prompt  Corrective  Action"  above.

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

     At  December  31,  2002, the Bank was able to pay approximately $687,792 in
dividends to the Company without prior regulatory approval.

RESTRICTIONS  ON  TRANSACTIONS  WITH  AFFILIATES

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

     -    a  bank's  loans  or  extensions  of  credit  to  affiliates;

     -    a  bank's  investment  in  affiliates;

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

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

     -    a bank's guarantee, acceptance or letter of credit issued on behalf of
          an  affiliate.

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

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

     The  Bank  is  also  subject to restrictions on extensions of credit to its
executive  officers,  directors,  principal  shareholders  and  their  related
interests.  These  extensions  of  credit  (1) must be made on substantially the
same  terms, including interest rates and collateral, as those prevailing at the
time  for  comparable  transactions with third parties, and (2) must not involve
more  than  the  normal risk of repayment or present other unfavorable features.

PRIVACY
-------

     Financial  institutions  are  required  to  disclose  their  policies  for
collecting  and  protecting  confidential  information.  Customers generally may
prevent  financial  institutions  from  sharing  nonpublic  personal  financial
information  with nonaffiliated third parties except under narrow circumstances,
such  as  the  processing  of transactions requested by the consumer or when the
financial  institution  is  jointly  sponsoring  a  product  or  service  with a
nonaffiliated  third  party.  Additionally, financial institutions generally may
not  disclose  consumer account numbers to any nonaffiliated third party for use
in telemarketing, direct mail marketing or other marketing to consumers.


                                       21
<PAGE>
ANTI-TERRORISM  LEGISLATION

     In  the  wake  of the tragic events of September 11th, on October 26, 2001,
the  President  signed  the  Uniting  and  Strengthening  America  by  Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of  2001.  Under  the  USA  PATRIOT  Act,  financial institutions are subject to
prohibitions  against specified financial transactions and account relationships
as  well  as  enhanced due diligence and "know your customer" standards in their
dealings  with  foreign  financial  institutions  and  foreign  customers.  For
example, the enhanced due diligence policies, procedures, and controls generally
require  financial  institutions  to  take  reasonable  steps:

     -    to conduct enhanced scrutiny of account relationships to guard against
          money  laundering  and  report  any  suspicious  transaction;

     -    to ascertain the identity of the nominal and beneficial owners of, and
          the  source  of  funds deposited into, each account as needed to guard
          against  money  laundering  and  report  any  suspicious transactions;

     -    to  ascertain  for  any  foreign  bank,  the  shares  of which are not
          publicly  traded,  the identity of the owners of the foreign bank, and
          the  nature  and  extent of the ownership interest of each such owner;
          and

     -    to  ascertain whether any foreign bank provides correspondent accounts
          to other foreign banks and, if so, the identity of those foreign banks
          and  related  due  diligence  information.

     Under the USA PATRIOT Act, financial institutions must establish anti-money
laundering  programs.  The  USA  PATRIOT  Act  sets  forth minimum standards for
these  programs,  including:

     -    the development of internal policies, procedures, and controls;

     -    the designation of a compliance officer;

     -    an ongoing employee training program; and

     -    an independent audit function to test the programs.

     Pursuant  to  the  mandate  of  the  USA  PATRIOT Act, the Secretary of the
Treasury  issued  regulations  effective  April 24, 2002 applicable to financial
institutions.  Because  all  federally  insured  depository  institutions  are
required  to have anti-money laundering programs, the regulations provide that a
financial  institution  which is subject to regulation by a "federal functional"
is  in  compliance  with  the  regulations  if it complies with the rules of its
primary  federal  regulator  governing  the  establishment  and  maintenance  of
anti-money  laundering  programs.

     Under  the  Authority of the USA PATRIOT Act, the Secretary of the Treasury
adopted  rules  on September 26, 2002 increasing the cooperation and information
sharing  between  financial  institutions,  regulators  and  law  enforcement
authorities  regarding  individuals,  entities  and organizations engaged in, or
reasonably  suspected  based on credible evidence of engaging in, terrorist acts
or money laundering activities.  Under the new rules, a financial institution is
required  to:

     -    expeditiously  search its records to determine whether it maintains or
          has  maintained  accounts, or engaged in transactions with individuals
          or  entities,  listed  in  a request submitted by the Financial Crimes
          Enforcement  Network  ("FinCEN");

     -    notify  FinCEN  if  an  account  or  transaction  is  identified;

     -    designate  a  contact  person  to  receive  information  requests;

     -    limit  use  of  information  provided  by  FinCEN to: (1) reporting to
          FinCEN, (2) determining whether to establish or maintain an account or
          engage in a transaction and (3) assisting the financial institution in
          complying  with  the  Bank  Secrecy  Act;  and


                                       22
<PAGE>
     -    maintain  adequate  procedures  to  protect  the  security  and
          confidentiality  of  FinCEN  requests.

     Under  the  new  rules,  a financial institution may also share information
regarding  individuals,  entities,  organizations  and countries for purposes of
identifying  and,  where  appropriate, reporting activities that it suspects may
involve  possible  terrorist  activity  or  money  laundering.  Such
information-sharing  is  protected  under  a  safe  harbor  if  the  financial
institution:

-    notifies  FinCEN  of  its intention to share information, even when sharing
     with  an  affiliated  financial  institution;

-    takes  reasonable  steps  to  verify  that, prior to sharing, the financial
     institution  or association of financial institutions with which it intends
     to  share  information  has  submitted  a  notice  to  FinCEN;

-    limits  the use of shared information to identifying and reporting on money
     laundering  or  terrorist  activities,  determining whether to establish or
     maintain  an  account  or  engage  in  a  transaction,  or  assisting it in
     complying  with  the  Bank  Security  Act;  and

-    maintains  adequate  procedures to protect the security and confidentiality
     of  the  information.

     Any  financial institution complying with these rules will not be deemed to
have  violated  the  privacy  requirements  discussed  above.

     The Secretary of the Treasury also adopted a new rule on September 26, 2002
intended  to  prevent  money  laundering  and  terrorist  financing  through
correspondent  accounts  maintained  by U.S. financial institutions on behalf of
foreign  banks.  Under  the  new  rule,  financial  institutions:

-    are  prohibited  from  providing  correspondent  accounts  to foreign shell
     banks;

-    are  required  to  obtain a certification from foreign banks for which they
     maintain  a  correspondent  account stating the foreign bank is not a shell
     bank and that it will not permit a foreign shell bank to have access to the
     U.S.  account;

-    must  maintain  records identifying the owner of the foreign bank for which
     they  may  maintain  a  correspondent  account  and its agent in the Unites
     States  designated  to  accept  services  of  legal  process;

-    must  terminate correspondent accounts of foreign banks that fail to comply
     with  or  fail to contest a lawful request of the Secretary of the Treasury
     or  the  Attorney General of the United States, after being notified by the
     Secretary  or  Attorney  General.

     The  new  rule  applies to correspondent accounts established after October
28,  2002.

PROPOSED  LEGISLATION  AND  REGULATORY  ACTION

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

EFFECT  OF  GOVERNMENTAL  MONETARY  POLICES

     Our  earnings are affected by domestic economic conditions and the monetary
and  fiscal  policies  of  the  United  States government and its agencies.  The
Federal Reserve Bank's monetary policies have had, and are likely to continue to
have,  an  important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to
curb  inflation  or  combat  a  recession.  The monetary policies of the Federal
Reserve  affect  the  levels of bank loans, investments and deposits through its
control over the issuance of United States government securities, its regulation
of  the  discount rate applicable to member banks and its influence over reserve
requirements to which member banks are subject.  We cannot predict the nature or
impact  of  future  changes  in  monetary  and  fiscal  policies.


                                       23
<PAGE>
ITEM 2.   DESCRIPTION OF PROPERTIES

The  Company's  corporate  office and the Bank's main office are located at 5102
Alabama  Highway,  Ringgold,  Georgia. The main office property is leased by the
Bank.  In  2000  the  Bank  opened  a  branch  office located at 769 Battlefield
Parkway,  Fort Oglethorpe, Georgia. The Fort Oglethorpe property is owned by the
Bank.

In  1995  the  organizers  of  the  Company  leased the property located at 5102
Alabama  Highway  for 20 years with options to renew the lease for additional 10
years  thereafter.  The  maximum term is fifty years but may be limited to forty
years  under specified circumstances. The annual rent increases each year by the
increase  in the Consumer Price Index as set forth in The Wall Street Journal or
other  nationally  recognized publication. The annual rent for 2002 was $24,994.

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

The  main office in Ringgold is a two-story building consisting of 12,000 square
feet.  The  Fort  Oglethorpe  branch is a one-story building consisting of 4,200
square  feet.

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

ITEM 3.   LEGAL PROCEEDINGS

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

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

None.


                                       24
<PAGE>
                                    PART II


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

The  response  to this Item is partially included in the Company's Annual Report
to  Shareholders  at  page  36  and  is  incorporated  herein  by  reference.

The  Company has not sold any unregistered shares of its Common Stock, $5.00 par
value,  during  2002  or  2001.

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

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

ITEM 7.   FINANCIAL STATEMENTS

The  following  financial statements are included in the Company's Annual Report
to  Shareholders  at  pages  13  through  35,  and  are  incorporated  herein by
reference.

     Report  of  Independent  Certified  Public  Accountants

     Financial  Statements

          Consolidated Balance Sheets as of December 31, 2002 and 2001

          Consolidated Statements of Income for the years ended December 31,
          2002 and 2001

          Consolidated Statements of Changes in Stockholders' Equity for the
          years ended December 31, 2002 and 2001

          Consolidated Statements of Cash Flows for the years ended December 31,
          2002 and 2001

          Notes to Consolidated Financial Statements


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

Not  Applicable.


                                       25
<PAGE>
                                    PART III

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

The responses to this Item are included in the Company's Proxy Statement for the
Annual  Meeting  of  Shareholders to be held April 17, 2003, under the following
headings,  and  are  incorporated  herein  by  reference.

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

     "Executive Officers," at page 5;

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


ITEM 10.   EXECUTIVE COMPENSATION

The responses to this Item are included in the Company's Proxy Statement for the
Annual  Meeting  of  Shareholders  to be held April 17, 2003, under the heading,
"Compensation,"  at pages 5 through 6, and are incorporated herein by reference.


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Certain responses to this Item are included in the Company's Proxy Statement for
the  Annual Meeting of Shareholders to be held April 17, 2003 under the heading,
"Security  Ownership  of  Certain  Beneficial Owners and Management," at pages 7
through  8,  and  are  incorporated  herein  by  reference.

GATEWAY BANCSHARES, INC. 1999 STOCK OPTION PLAN INFORMATION

  The  following  table  sets  forth  information regarding the number of shares
subject  to  options  issued  and reserved for future issuance under the Gateway
Bancshares,  Inc.  1999  Stock  Option  Plan.  The Company does not maintain any
other  equity  compensation  plan.

<TABLE>
<CAPTION>
                                                                                   NUMBER OF SHARES
                                              NUMBER OF                                REMAINING
                                           SECURITIES TO BE                      AVAILABLE FOR FUTURE
                                             ISSUED UPON      WEIGHTED-AVERAGE    ISSUANCE UNDER THE
                                             EXERCISE OF     EXERCISE PRICE OF      PLAN (EXCLUDES
                                             OUTSTANDING        OUTSTANDING           OUTSTANDING
                                               OPTIONS            OPTIONS              OPTIONS)
------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                 <C>

Equity compensation plans approved by               166,300  $            12.08                 33,700
security holders

Equity compensation plans not approved by                 0                 N/A                      0
security holders

Total                                               166,300  $            12.08                 33,700
</TABLE>


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The responses to this Item are included in the Company's Proxy Statement for the
Annual  Meeting  of  Shareholders to be held April 17, 2003, under the headings,
"Certain Relationships and Related Transactions," at page 9, and "Compensation,"
at  pages  5  through  6,  and  are  incorporated  herein  by  reference.


                                       26
<PAGE>
ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

<TABLE>
<CAPTION>
     Exhibit
     Number   Exhibit
     -------  -------
<C>           <S>

         3.1  Articles of Incorporation. (1)

         3.2  Bylaws. (1)

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

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

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

        10.4  Loan and Stock Purchase Agreement by and between
              Gateway Bancshares, Inc. and Gilmer County Bank dated
              June 20, 2000. (4)

        10.5  Supplemental Executive Retirement Benefit Agreement


        13.1  Gateway Bancshares, Inc. 2002 Annual Report to
              Shareholders. Except with respect to those portions
              specifically incorporated by reference into this Report,
              the Company's 2002 Annual Report to Shareholders is not
              deemed to be filed as part of this Report.

        21.1  Subsidiaries of Gateway Bancshares, Inc. (5)

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

        99.1  Certification Pursuant to 18 U.S.C. Section 1350 as
              Adopted Pursuant to Section 906 of Sarbanes-Oxley Act
              Of 2002
</TABLE>

(b)  Reports on Form 8-K filed in the fourth quarter of 2002: None


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

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

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

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

(4)  Incorporated herein by reference to exhibit 10.1 in the Company's Quarterly
     Report  on  Form  10-QSB  for  the  quarter  ended  June  30,  2000.

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


                                       27
<PAGE>
ITEM 14.   CONTROLS AND PROCEDURES

Pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002, and as a date within
90 days prior to the date of this report (the "Evaluation Date"), our management
,  including  our  Chief Executive Officer and Chief Financial Officer, reviewed
the  effectiveness  and  design  of our disclosure controls and procedures under
Exchange  Act  Rules  13a-14  and  15d-14. Based upon that evaluation, our Chief
Executive  Officer  and  Chief Financial Officer, concluded that such disclosure
controls  and  procedures  are  adequate  to  ensure  that  material information
relating to the Company, including its consolidated subsidiary, that is required
to  be  included  in  its  periodic  filings  with  the  Securities and Exchange
Commission,  is timely made known to them.  There were no significant changes in
internal  controls,  or  to  management's knowledge, in other factors that could
significantly  affect those internal controls subsequent to the Evaluation Date,
and there has been no corrective action with respect to significant deficiencies
or  material  weaknesses.


                                   SIGNATURES

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


                                       GATEWAY BANCSHARES, INC.

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

                                           Date: March 15, 2003


                                POWER OF ATTORNEY

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

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


Signature                                Title                   Date
---------                                -----                   ----

/s/ Jack Joseph Babb         Director                       March 15, 2003
---------------------------
Jack Joseph Babb


                             Director                       March 15, 2003
---------------------------
William H.H. Clark


/s/ Jeannette Wilson Dupree  Director                       March 15, 2003
---------------------------
Jeannette Wilson Dupree


/s/ Harle B. Green           Director, Chief Financial      March 15, 2003
---------------------------  Officer (Principal Financial
Harle B. Green               And Accounting Officer)


                                       28
<PAGE>
                             Director                       March 15, 2003
---------------------------
Ernest Kresch


/s/ Robert G. Peck           Director, President            March 15, 2003
---------------------------  Chief Executive Officer
Robert G. Peck

/s/ Danny Ray Jackson        Director                       March 15, 2003
---------------------------
Danny Ray Jackson

                             Director                       March 15, 2003
---------------------------
James Arthell Gray, Sr.




                                       29
<PAGE>
<TABLE>
<CAPTION>
                                  EXHIBIT INDEX


        Exhibit
        Number   Exhibit
        -------  -------
<C>              <S>

            3.1  Articles of Incorporation. (1)

            3.2  Bylaws. (1)

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

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

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

           10.4  Loan and Stock Purchase Agreement by and between
                 Gateway Bancshares, Inc. and Gilmer County Bank dated
                 June 20, 2000. (4)

           10.5  Supplemental Executive Retirement Benefit Agreements


           13.1  Gateway Bancshares, Inc. 2002 Annual Report to
                 Shareholders. Except with respect to those portions
                 specifically incorporated by reference into this
                 Report, the Company's 2002 Annual Report to
                 Shareholders is not deemed to be filed as part of
                 this Report.

           21.1  Subsidiaries of Gateway Bancshares, Inc. (5)

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

           99.1  Certification Pursuant to 18 U.S.C. Section 1350 as
                 Adopted Pursuant to Section 906 of Sarbanes-Oxley Act
                 Of 2002

                 Supplemental Executive Retirement Benefit Agreements
</TABLE>

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

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

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

(4)  Incorporated herein by reference to exhibit 10.1 in the Company's Quarterly
     Report  on  Form  10-QSB  for  the  quarter  ended  June  30,  2000.

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


<PAGE>
                                 CERTIFICATIONS

I, Robert G. Peck, certify that:

     1.   I  have  reviewed  this  annual  report  on  Form  10-KSB  of  Gateway
          Bancshares,  Inc.  and  Subsidiary.

     2.   Based  on my knowledge, this annual report does not contain any untrue
          statement  of  a  material  fact  or  omit  to  state  a material fact
          necessary  to  make the statements made, in light of the circumstances
          under  which such statements were made, not misleading with respect to
          the  period  covered  by  this  annual  report;

     3.   Based  on  my knowledge, the financial statements, and other financial
          information  included  in  this  annual  report, fairly present in all
          material  respects  the financial condition, results of operations and
          cash  flows of the registrant as of, and for, the periods presented in
          this  annual  report;

     4.   The  registrant's  other  certifying officer and I are responsible for
          establishing  and  maintaining  disclosure controls and procedures (as
          defined  in  Exchange  Act Rules 13a-14 and 15d-14) for the registrant
          and  have:

          a)   designed  such  disclosure controls and procedures to ensure that
               material  information  relating  to the registrant, including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual  report  is  being  prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's  disclosure
               controls  and procedures as of a date within 90 days prior to the
               filing  date  of  this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness  of the disclosure controls and procedures based on
               our  evaluation  as  of  the  Evaluation  Date;

     5.   The  registrant's other certifying officer and I have disclosed, based
          on  our  most  recent evaluation, to the registrant's auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing  the  equivalent  functions):

          a)   all  significant  deficiencies  in  the  design  or  operation of
               internal  controls  which could adversely affect the registrant's
               ability  to  record, process, summarize and report financial data
               and  have  identified  for the registrant's auditors any material
               weaknesses  in  internal  controls;  and

          b)   any  fraud,  whether or not material, that involves management or
               other  employees  who have a significant role in the registrant's
               internal  controls;  and

     6.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  there  were  significant  changes in internal
          controls  or in other factors that could significantly affect internal
          controls  subsequent  to  the  date  of  our  most  recent evaluation,
          including  any  corrective  actions  with  regard  to  significant
          deficiencies  and  material  weaknesses.


                                            /s/ Robert G. Peck
                                            ------------------
                                            Robert G. Peck
                                            President and CEO
          March 15, 2003


<PAGE>
                                 CERTIFICATIONS

I, Harle B. Green, certify that:

     1.   I  have  reviewed  this  annual  report  on  Form  10-KSB  of  Gateway
          Bancshares,  Inc.  and  Subsidiary.

     2.   Based  on my knowledge, this annual report does not contain any untrue
          statement  of  a  material  fact  or  omit  to  state  a material fact
          necessary  to  make the statements made, in light of the circumstances
          under  which such statements were made, not misleading with respect to
          the  period  covered  by  this  annual  report;

     3.   Based  on  my knowledge, the financial statements, and other financial
          information  included  in  this  annual  report, fairly present in all
          material  respects  the financial condition, results of operations and
          cash  flows of the registrant as of, and for, the periods presented in
          this  annual  report;

     4.   The  registrant's  other  certifying officer and I are responsible for
          establishing  and  maintaining  disclosure controls and procedures (as
          defined  in  Exchange  Act Rules 13a-14 and 15d-14) for the registrant
          and  have:

          a)   designed  such  disclosure controls and procedures to ensure that
               material  information  relating  to the registrant, including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual  report  is  being  prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's  disclosure
               controls  and procedures as of a date within 90 days prior to the
               filing  date  of  this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness  of the disclosure controls and procedures based on
               our  evaluation  as  of  the  Evaluation  Date;

     5.   The  registrant's other certifying officer and I have disclosed, based
          on  our  most  recent evaluation, to the registrant's auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing  the  equivalent  functions):

          a)   all  significant  deficiencies  in  the  design  or  operation of
               internal  controls  which could adversely affect the registrant's
               ability  to  record, process, summarize and report financial data
               and  have  identified  for the registrant's auditors any material
               weaknesses  in  internal  controls;  and

          b)   any  fraud,  whether or not material, that involves management or
               other  employees  who have a significant role in the registrant's
               internal  controls;  and

     7.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  there  were  significant  changes in internal
          controls  or in other factors that could significantly affect internal
          controls  subsequent  to  the  date  of  our  most  recent evaluation,
          including  any  corrective  actions  with  regard  to  significant
          deficiencies  and  material  weaknesses.

                                      /s/ Harle B. Green
                                      ------------------
                                        Harle B. Green
                                        Chairman and CFO
          March 15, 2003


<PAGE>