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

                                   FORM 10-QSB


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

           For the quarterly period ended     June 30, 2005
                                         ------------------------

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

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

                        Commission File Number: 000-30273

                           Chestatee Bancshares, Inc.
    ------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

Georgia                                                               58-2535333
-------------------------------                             --------------------
(State or other jurisdiction of                                    (IRS Employer
incorporation or organization)                               Identification No.)

                   6639 Highway 53 East, Dawsonville, Georgia
    ------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (706) 216-2265
    ------------------------------------------------------------------------
                           (Issuer's telephone number)

                                       N/A
    ------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 5, 2005: 3,123,000; no par value.

Transitional Small Business Disclosure Format   Yes           No  X
                                                   -----        -----
<Page>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES


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

                                      INDEX
                                      -----

                                                                            Page

PART I.      FINANCIAL INFORMATION

             ITEM 1.  Financial Statements

             Consolidated Balance Sheet - June 30, 2005........................3

             Consolidated Statement of Income Three and Six Months
                        Ended June 30, 2005 and 2004...........................4

             Consolidated Statement of Comprehensive Income
                      Six Months Ended June 30, 2005 and 2004..................5

             Consolidated Statements of Cash Flows -
                      Six Months Ended June 30, 2005 and 2004..................7

             Notes to Consolidated Financial Statements........................8

             ITEM 2.      Management's Discussion and Analysis of
                          Financial Condition and Results of Operations.......12

             ITEM 3.      Controls and Procedures.............................20


PART II.     OTHER INFORMATION

             ITEM 1.      Legal Proceedings...................................21

             ITEM 6.      Exhibits and Reports on Form 8-K....................22

             Signatures.......................................................23

             Certifications...................................................24


<Page>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES
                         PART I - FINANCIAL INFORMATION

  ITEM 1.     FINANCIAL STATEMENTS

                           CONSOLIDATED BALANCE SHEET
                                AT JUNE 30, 2005
                                   (Unaudited)

                                      Assets
                                      ------

Cash and due from banks                                           $   4,227,476
Interest-bearing deposits in banks                                    6,240,745
Federal funds sold                                                   12,494,000
Securities available-for-sale, at fair value                         30,029,427
Restricted equity securities, at cost                                 1,473,200

Loans                                                               198,419,010
Less allowance for loan losses                                        3,646,964
                                                                  -------------
          Loans, net                                                194,772,046
                                                                  -------------

Premises and equipment, net                                           7,738,368
Other assets                                                          3,554,916
                                                                  -------------

          Total assets                                            $ 260,530,178
                                                                  =============


                       Liabilities and Stockholders' Equity

Deposits
    Noninterest-bearing                                           $  21,425,927
    Interest-bearing                                                193,639,175
                                                                  -------------
          Total deposits                                            215,065,102
Other borrowings                                                     20,350,000
Other liabilities                                                     1,081,149
                                                                  -------------
          Total liabilities                                         236,496,251
                                                                  -------------

Commitments and contingencies

Stockholders' equity
    Common stock, no par value; 20,000,000 shares
      authorized; 3,123,000 shares issued and outstanding            21,554,341
    Retained earnings                                                 2,713,959
    Accumulated other comprehensive income (loss)                      (234,373)
                                                                  -------------
          Total stockholders' equity                                 24,033,927
                                                                  -------------

          Total liabilities and stockholders' equity              $ 260,530,178
                                                                  =============


                 See Notes to Consolidated Financial Statements

                                       3
<Page>
                  CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
            THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (Unaudited)

<Table>
<Caption>
                                                      Three Months                 Six Months
                                                         Ended                        Ended
                                                        June 30                      June 30
                                              -----------    -----------    -----------   -----------
                                                  2005           2004           2005         2004
                                              -----------    -----------    -----------   -----------
<S>                                           <C>            <C>            <C>           <C>
Interest income
    Loans                                     $ 3,471,854    $ 2,770,394    $ 6,728,289   $ 5,554,492
    Taxable Securities                            243,862        246,421        474,736       525,845
    Nontaxable Securities                          14,247          7,370         30,711        14,740
    Federal funds sold                            173,171         33,945        315,580        43,353
    Interest-bearing deposits in banks             41,720          4,773         79,078        15,216
                                              -----------    -----------    -----------   -----------
              Total interest income             3,944,854      3,062,903      7,628,394     6,153,646
                                              -----------    -----------    -----------   -----------

Interest expense
    Deposits                                    1,289,977        794,661      2,445,044     1,590,399
    Other borrowings                              134,742        149,878        257,608       291,281
                                              -----------    -----------    -----------   -----------
              Total interest expense            1,424,719        944,539      2,702,652     1,881,680
                                              -----------    -----------    -----------   -----------

              Net interest income               2,520,135      2,118,364      4,925,742     4,271,966
Provision for loan losses                          49,675         64,975         97,243       316,582
                                              -----------    -----------    -----------   -----------
              Net interest income after
                provision for loan losses       2,470,460      2,053,389      4,828,499     3,955,384
                                              -----------    -----------    -----------   -----------

Other income
      Service charges and fees                    242,468        199,083        474,865       403,547
      Gains (Losses) on sales of securities       (21,488)             -        (51,712)            -
            available for sale
      Other operating income                       86,034         89,272        173,322       184,816
                                              -----------    -----------    -----------   -----------
              Total other income                  307,014        288,355        596,475       588,363
                                              -----------    -----------    -----------   -----------
</Table>

                                       4
<Page>
                  CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
            THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (Unaudited)

<Table>
<Caption>
                                                      Three Months              Six Months
                                                         Ended                    Ended
                                                        June 30                  June 30
                                               -----------------------   -----------------------
                                                   2005        2004         2005         2004

<S>                                               <C>          <C>        <C>          <C>
Other expenses
    Salaries and employee benefits                986,734      886,326    2,000,189    1,789,239
    Occupancy and equipment expenses              269,079      250,150      499,890      501,982
    Other operating expenses                      573,034      600,688    1,151,584    1,139,648
                                               ----------   ----------   ----------   ----------
              Total other expenses              1,828,847    1,737,164    3,651,663    3,430,869
                                               ----------   ----------   ----------   ----------

              Net income before income taxes      948,627      604,580    1,773,311    1,112,878

Income tax expense                                334,800      219,187      623,564      402,226
                                               ----------   ----------   ----------   ----------

              Net income                          613,827      385,393    1,149,747      710,652
                                               ----------   ----------   ----------   ----------

Basic earnings per share                       $     0.20         0.12   $     0.37   $     0.23
                                               ==========   ==========   ==========   ==========

Diluted earnings per share                     $     0.19   $     0.12   $     0.36   $     0.23
                                               ==========   ==========   ==========   ==========

Cash dividends per share                                                 $     --     $     --
                                               ==========   ==========   ==========   ==========
</Table>


                 See Notes to Consolidated Financial Statements

                                       5
<Page>
                  CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                     SIX MONTHS ENDED JUNE 30, 2005 AND 2004

<Table>
<Caption>
                                                                            2005           2004
                                                                        -----------    -----------

<S>                                                                     <C>            <C>
Net income                                                              $ 1,149,747    $   710,652

Other comprehensive income (loss):
        Unrealized holding gains on securities
           available-for-sale arising during period, net of
           tax of $57,143 and $148,571 respectively                         (88,510)      (371,398)

       Reclassification adjustment for losses realized in net income,
           net of tax benefits of $18,099                                    33,613           --
                                                                        -----------    -----------

Other comprehensive income (loss)                                           (54,897)      (371,398)
                                                                        -----------    -----------

Comprehensive income                                                    $ 1,094,850    $   339,254
                                                                        ===========    ===========
</Table>


                 See Notes to Consolidated Financial Statements





                                       6
<Page>
                  CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    SIX MONTHS ENDED JUNE 30, 2005 AND 2004
                                   (Unaudited)
<Table>
<Caption>
                                                                        2005           2004
                                                                   ------------    ------------
<S>                                                                <C>                  <C>
OPERATING ACTIVITIES
    Net income                                                     $  1,149,747         710,652
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                    266,747         265,637
        Provision for loan losses                                        97,243         316,582
        Loss on sales on securities                                      51,712            --
        Decrease in interest receivable                                  97,532          83,055
        Increase in interest payable                                     75,614          15,358
        Other operating activities                                     (120,318)      1,557,504
                                                                   ------------    ------------

              Net cash provided by operating activities               1,618,277       2,948,788
                                                                   ------------    ------------

INVESTING ACTIVITIES
    Net decrease in interest-bearing deposits in banks                  109,557         986,659
    Net increase in federal funds sold                               (8,403,000)     (6,808,000)
    Purchases of securities available-for-sale                       (6,990,216)     (5,494,702)
    Proceeds from maturities of securities available-for-sale         2,848,538       7,211,021
    Proceeds from sales of securities available-for-sale              3,950,357               -
    Net increase (decrease) in loans                                 (1,046,001)     (8,666,235)
    Proceeds from sales of premises and equipment                         3,161               -
    Purchase of premises and equipment                                 (104,386)        (70,281)
                                                                   ------------    ------------

              Net cash used in investing activities                  (9,631,990)    (12,841,538)
                                                                   ------------    ------------

FINANCING ACTIVITIES
    Net increase in deposits                                         14,671,261       4,885,472
    Proceeds from other borrowings                                            -       5,500,000
    Payments on other borrowings                                     (5,850,000)              -
                                                                   ------------    ------------
              Net cash provided by financing activities               8,821,261      10,385,472
                                                                   ------------    ------------

Net increase (decrease) in cash and due from banks                      807,548         492,722

Cash and due from banks, beginning of period                          3,419,928       3,688,806
                                                                   ------------    ------------

Cash and due from banks, end of period                             $  4,227,476       4,181,528
                                                                   ============    ============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid for:
          Interest                                                 $  2,627,038         929,181

          Income taxes                                             $    815,452         270,000

    Principal balances of loans transferred to other real estate   $          -               -

    Financed sales of other real estate owned                      $          -               -
</Table>

                 See Notes to Consolidated Financial Statements

                                       7
<Page>
NOTE 1.  BASIS OF PRESENTATION

         The consolidated financial information included herein is unaudited;
         however, such information reflects all adjustments (consisting solely
         of normal recurring adjustments) which are, in the opinion of
         management, necessary for a fair statement of results for the interim
         period.

         The results of operations for the period ended June 30, 2005 are not
         necessarily indicative of the results to be expected for the full year.


NOTE 2.  STOCK COMPENSATION PLANS

         At June 30, 2005, the Company has two stock-based employee compensation
         plans. The Company accounts for those plans under the recognition and
         measurement principles of APB Opinion No. 25, Accounting for Stock
         Issued to Employees, and related Interpretations. No stock-based
         employee compensation cost is reflected in net income (loss), as all
         options granted under those plans had an exercise price equal to the
         market value of the underlying stock on the date of grant. The Company
         also has remaining options outstanding that were granted to certain
         executive officers under employee agreements. The following table
         illustrates the effect on net income (loss) and earnings (losses) per
         share if the Company had applied the fair value recognition provisions
         of SFAS Statement No. 123, Accounting for Stock-Based Compensation, to
         stock-based employee compensation.

                                                     Three Months Ended June 30,
                                                     ---------------------------
                                                        2005            2004
                                                     ----------      -----------

Net income, as reported                              $  613,827      $   385,393
Deduct: Total stock-based employee compensation
      expense determined under fair value based
      method for all awards                                   -                -
                                                     ----------      -----------
Pro forma net income                                 $  613,827      $   385,393
                                                     ==========      ===========
Earnings per share:
   Basic - as reported                               $      .20      $       .12
                                                     ==========      ===========
   Basic - pro forma                                 $      .20      $       .12
                                                     ==========      ===========
   Diluted - as reported                             $      .19      $       .12
                                                     ==========      ===========
   Diluted - pro forma                               $      .19      $       .12
                                                     ==========      ===========

                                       8
<Page>
                                                    Six Months Ended June 30,
                                                  -----------------------------
                                                      2005             2004
                                                  ------------      -----------

Net income, as reported                           $  1,149,747      $  710,652
Deduct: Total stock-based employee compensation
      expense determined under fair value based
      method for all awards                             26,954           21,352
                                                  ------------      -----------
Pro forma net income                              $  1,122,793      $   689,300
                                                  ============      ===========
Earnings per share:
   Basic - as reported                            $        .37      $       .23
                                                  ============      ===========
   Basic - pro forma                              $        .36      $       .22
                                                  ============      ===========
   Diluted - as reported                          $        .36      $       .23
                                                  ============      ===========
   Diluted - pro forma                            $        .35      $       .22
                                                  ============      ===========


NOTE 3.  EARNINGS PER SHARE

         Presented below is a summary of the components used to calculate basic
         and diluted earnings per common share.

                                                   Three Months Ended June 30,
                                                   ----------------------------
                                                       2005           2004
                                                   ----------        ----------

Basic Earnings Per Share:
   Weighted average common shares outstanding       3,123,000         3,106,000
                                                   ==========        ==========

   Net income                                      $  613,827        $  385,393
                                                   ==========        ==========

   Basic earnings per share                        $      .20        $      .12
                                                   ==========        ==========

Diluted Earnings Per Share:

   Weighted average common shares outstanding       3,123,000         3,106,000
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year         36,076
                                                   ----------        ----------
   Total weighted average common shares and
      common stock equivalents outstanding          3,159,076         3,106,000
                                                   ==========        ==========

   Net income                                      $  613,827        $  385,393
                                                   ==========        ==========

   Diluted earnings per share                      $      .19        $      .12
                                                   ==========        ==========



                                       9
<Page>
                                                   Six Months Ended June 30,
                                                   -------------------------
                                                     2005            2004
                                                   ----------     ----------

Basic Earnings Per Share:
   Weighted average common shares outstanding       3,123,000      3,106,000
                                                   ==========     ==========

   Net income                                      $1,149,747     $  710,652
                                                   ==========     ==========

   Basic earnings per share                        $      .37     $      .23
                                                   ==========     ==========

Diluted Earnings Per Share:


   Weighted average common shares outstanding       3,123,000      3,106,000

   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year         36,076              0

                                                   ----------     ----------
   Total weighted average common shares and
      common stock equivalents outstanding          3,159,076      3,106,000
                                                   ==========     ==========

   Net income                                      $1,149,747     $  710,652
                                                   ==========     ==========

   Diluted earnings per share                      $      .36     $      .23
                                                   ==========     ==========


                                       10
<Page>
NOTE 4.  CURRENT ACCOUNTING DEVELOPMENTS

         There are recent accounting pronouncements that have had, or are
         expected to have, a material effect on the Company's financial
         statements. In December 2004, the Financial Accounting Standards Board
         (FASB) issued Statement No. 123R, Share-Based Payment, a revision of
         FASB Statement No. 123, Accounting for Stock-Based Compensation. This
         Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to
         Employees, and its related implementation guidance. This Statement
         establishes standards for the accounting for transactions in which an
         entity exchanges its equity instruments for goods or services. It also
         addresses transactions in which an entity incurs liabilities in
         exchange for goods or services that are based on the fair value of the
         entity's equity instruments or that may be settled by the issuance of
         those equity instruments. This Statement focuses primarily on
         accounting for transactions in which an entity obtains employee
         services in share-based payment transactions such as the issuance of
         stock options in exchange for employee services. This Statement
         requires a public entity to measure the cost of employee services
         received in exchange for an award of equity instruments based on the
         grant-date fair value of the award (with limited exceptions). That cost
         will be recognized over the period during which an employee is required
         to provide service in exchange for the award - the requisite service
         period (usually the vesting period). The Company has elected to
         continue with the accounting methodology of Opinion No. 25 until
         periods beginning after December 31, 2005.



                                       11
<Page>
ITEM 2.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations

The following is management's discussion and analysis of certain significant
factors which have affected the financial position and operating results of
Chestatee Bancshares, Inc. and its bank subsidiary, Chestatee State Bank, and
its non-bank subsidiaries, Chestatee Financial Services, Inc. and Chestatee
Residential Mortgage, Inc., during the period included in the accompanying
consolidated financial statements.

Forward Looking Statements

Certain of the statements made herein under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" ("MD&A") are
forward-looking statements for purposes of the Securities Act of 1933, as
amended (the "Securities Act") and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Such forward looking statements include statements using the words
such as "may," "will," "anticipate," "should," "would," "believe,"
"contemplate," "expect," "estimate," "continue," "may," "intend," or other
similar words and expressions of the future. Our actual results may differ
significantly from the results we discuss in these forward-looking statements.

These forward-looking statements involve risks and uncertainties and may not be
realized due to a variety of factors, including, without limitation: the effects
of future economic conditions; governmental monetary and fiscal policies, as
well as legislative and regulatory changes; the risks of changes in interest
rates on the level and composition of deposits, loan demand, and the values of
loan collateral, securities, and other interest-sensitive assets and
liabilities; interest rate risks; the effects of competition from other
commercial banks, thrifts, mortgage banking firms, consumer finance companies,
credit unions, securities brokerage firms, insurance companies, money market and
other mutual funds and other financial institutions operating in our market area
and elsewhere, including institutions operating regionally, nationally, and
internationally, together with such competitors offering banking products and
services by mail, telephone, computer, and the Internet.

Critical Accounting Policies

We have adopted various accounting policies which govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described
in the footnotes to the consolidated financial statements at December 31, 2004
as filed on our annual report on Form 10-KSB.

                                       12
<Page>
Certain accounting policies involve significant judgments and assumptions by us
which have a material impact on the carrying value of certain assets and
liabilities. We consider these accounting policies to be critical accounting
policies. The judgments and assumptions we use are based on historical
experience and other factors, which we believe to be reasonable under the
circumstances. Because of the nature of the judgments and assumptions we make,
actual results could differ from these judgments and estimates which could have
a material impact on our carrying values of assets and liabilities and our
results of operations.

We believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
consolidated financial statements. Refer to the portion of this discussion that
addresses our allowance for loan losses for a description of our processes and
methodology for determining our allowance for loan losses.

Liquidity and Capital Resources

We monitor our liquidity resources on an ongoing basis. Our liquidity is also
monitored on a periodic basis by State and Federal regulatory authorities. As of
June 30, 2005, our liquidity, as determined under guidelines established by
regulatory authorities and internal policy, was satisfactory.

At June 30, 2005, our capital ratios were adequate based on regulatory minimum
capital requirements. The minimum capital requirements and the actual capital
ratios on a consolidated and bank-only basis are as follows:

                                              Actual
                                      ------------------------
                                                                       Minimum
                                                                      Regulatory
                                   Consolidated         Bank         Requirement
                                   ------------       --------       -----------

     Leverage capital ratios            9.03 %          8.83 %          4.00 %
     Risk-based capital ratios:
        Core capital                   11.13           10.88            4.00
        Total capital                  12.38           12.13            8.00

These ratios may decline as asset growth continues, but are expected to exceed
the minimum regulatory requirements. Future earnings and proceeds from our stock
offerings will assist in keeping these ratios at satisfactory levels.

Off-Balance Sheet Risk

We are a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of our customers. These
financial instruments include commitments to extend credit and standby letters
of credit. Such commitments involve, to varying degrees, elements of credit risk
and interest rate risk in excess of the amount recognized in the balance sheets.


                                       13
<Page>
Our exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit and standby letters of
credit is represented by the contractual amount of those instruments. We use the
same credit policies in making commitments and conditional obligations as we do
for on-balance sheet instruments. A summary of our commitments is as follows:


                                                         June 30, 2005
                                                      ----------------------
                                                      (Dollars in thousands)

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

    Commitments to extend credit                      $             37,933
    Letters of credit                                                1,289
                                                      ----------------------
                                                      $             39,222
                                                      ======================

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Since many
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
amount of collateral obtained, if deemed necessary by us upon extension of
credit, is based on our credit evaluation of the customer.

Standby letters of credit are conditional commitments issued by us to guarantee
the performance of a customer to a third party. Those letters of credit are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loans to customers. Collateral is required in
instances which we deem necessary.




                                       14
<Page>
Financial Condition

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

                                      June 30,      December 31,
                                        2005            2004
                                     --------------------------
                                      (Dollars in Thousands)
                                     --------------------------

Cash and due from banks              $  4,227         $  3,420
Interest-bearing deposits in banks      6,241            6,350
Federal funds sold                     12,494            4,091
Securities                             30,029           31,470
Loans, net                            194,772          193,823
Premises and equipment                  7,738            7,904
Other assets                            5,029            3,590
                                     --------         --------
                                     $260,530         $250,648
                                     ========         ========

Deposits                             $215,065         $200,394
Other borrowings                       20,350           26,200
Other liabilities                       1,081            1,115
Stockholders' equity                   24,034           22,939
                                     --------         --------
                                     $260,530         $250,648
                                     ========         ========

Our total assets grew by 4% for the Six Months ended June 30, 2005. Deposit
growth of $14.7 million was used to reduce other borrowings by $5.9 million and
invested in loans and fed funds. Our ratio of gross loans to deposits and other
borrowings was 84.1% at June 30, 2005 and 87.1% at December 31, 2004. Our total
equity increased by $1.1 million due to year-to-date net income of $1.1 million.



                                       15
<Page>
Results of Operations For The Three   Ended June 30, 2005 and 2004

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

                                Three Months Ended
                                      June 30,
                            ------------------------
                             2005              2004
                            ------            ------
                             (Dollars in Thousands)
                            ------------------------

Interest income             $3,945            $3,063

Interest expense             1,425               945
                            ------            ------

Net interest income          2,520             2,118

Provision for loan losses       50                65

Other income                   307               288

Other expense                1,828             1,737
                            ------            ------

Pretax income                  949               604

Income taxes                   335               219
                            ------            ------

Net income                  $  614            $  385
                            ======            ======



                                 Six Months Ended
                                    June 30,
                            ------------------------
                             2005              2004
                            ------            ------
                             (Dollars in Thousands)
                            ------------------------

Interest income             $7,628            $6,154

Interest expense             2,702             1,882
                            ------            ------

Net interest income          4,926             4,272

Provision for loan losses       97               317

Other income                   596               588

Other expense                3,652             3,430
                            ------            ------

Pretax income                1,773             1,113

Income taxes                   623               402
                            ------            ------

Net income                  $1,150            $  711
                            ======            ======

                                       16
<Page>
Our net interest income increased by $402,000 and $654,000 for the three months
and six months ended June 30, 2005, respectively, as compared to the same period
in 2004. Our net interest margin was 3.91% during the six months ended June 30,
2005 as compared to 3.88% for the six months ended June 30, 2004 and 3.90 % for
the entire year of 2004. The increase in net interest income is due primarily to
the increased volume of average loans and investment securities outstanding
coupled with increases in the Prime Lending Rate. The net interest margin has
remained relatively stable. Yields earned on loans have increased to 7.02% in
the first six months of 2005 as compared to 6.38% in the first six months of
2004. Our cost of funds increased to 2.25% in the first six months of 2005 as
compared to 1.96% in the first six months of 2004. The increase in cost of funds
also reflects the impact of interest rate increases over the past twelve months.

The provision for loan losses was $50,000 and $97,000 for the three months and
six months ended June 30, 2005. These provisions are a decrease from the
comparable periods in 2004 by $15,000 and $219,000. The reduction in provision
expense is reflective of improved asset quality.

Nonaccrual loans of $641,000 at June 30, 2005 consist of $439,000 of commercial
loans and $202,000 of real estate loans. Loans past due ninety days or more and
still accruing interest of $92,000 at June 30, 2005 consists of $53,000 of
commercial loans, $25,000 of credit card loans and other consumer loans of
$14,000. These loans were identified through our loan evaluation process and
have been properly considered in the determination of the allowance for loan
losses. Management believes that the $3,647,000 in the allowance for loan losses
at June 30, 2005, or 1.84% of total net outstanding loans, is adequate to absorb
known risks in the portfolio. No assurance can be given, however, that increased
loan volume, and adverse economic conditions or other circumstances will not
result in increased losses in our loan portfolio.

Information with respect to nonaccrual, past due, restructured, and potential
problem loans at June 30, 2005 and 2004 is as follows:


<Table>
<Caption>
                                                                         June 30,
                                                                  ----------------------
                                                                   2005           2004
                                                                  ----------------------
                                                                  (Dollars in Thousands)
                                                                  ----------------------
<S>                                                               <C>           <C>
Nonaccrual loans                                                  $  641        $1,038
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                           92           256
Restructured loans                                                     -             -
Potential problem loans                                                -         1,294
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                        36           126
Interest income that was recorded on nonaccrual and                    -             -
   restructured loans
</Table>

                                       17
<Page>
Potential problem loans are defined as loans about which we have serious doubts
as to the ability of the borrower to comply with the present loan repayment
terms and which may cause the loan to be placed on nonaccrual status, to become
past due more than ninety days, or to be restructured.

It is our policy to discontinue the accrual of interest income when, in the
opinion of management, collection of such interest becomes doubtful. This status
is accorded interest when (1) there is a significant deterioration in the
financial condition of the borrower and full repayment of principal and interest
is not expected and (2) the principal or interest is more than ninety days past
due, unless the loan is both well-secured and in the process of collection.

Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
Management is not aware of any information that causes it to have serious doubts
as to the ability of borrowers to comply with the loan repayment terms.




                                       18
<Page>
Information regarding certain loans and allowance for loan loss data through
June 30, 2005 and 2004 is as follows:

<Table>
<Caption>
                                                                      Six Months Ended
                                                                          June 30,
                                                                    --------------------
                                                                     2005         2004
                                                                    --------    --------
                                                                    (Dollars in Thousands)
                                                                    ---------------------
<S>                                                                 <C>         <C>
Average amount of loans outstanding                                 $193,402    $174,004
                                                                    ========    ========

Balance of allowance for loan losses at beginning of period            3,620       3,163
                                                                    --------    --------

Loans charged off
   Commercial and financial                                                -          26
   Real estate mortgage                                                   35          49
   Installment                                                            73          77
                                                                    --------    --------
                                                                         108         152
                                                                    --------    --------
Loans recovered
   Commercial and financial                                                -           1
   Real estate mortgage                                                    3           1
   Installment                                                            35          17
                                                                    --------    --------
                                                                          38          19
                                                                    --------    --------

Net charge-offs                                                           70         133
                                                                    --------    --------

Additions to allowance charged to operating expense during period         97         317
                                                                    --------    --------

Balance of allowance for loan losses at end of period               $  3,647    $  3,347
                                                                    ========    ========

Ratio of net loans charged off during the period to
   average loans outstanding                                             .04%        .08%
                                                                    ========    ========
</Table>

The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Management's evaluation of the loan portfolio includes a
loan classification program. Under the program, as each loan is made, we assign
a loan grade. Each loan grade is assigned an allowance percentage determined
based on our experience specifically and the historical experience of the
banking industry generally. Loan classifications are then subject to periodic
review by the responsible lending officers and by senior management based upon
their judgment, our loan loss experience, current economic conditions that may
affect the borrower's ability to repay, lender requirements, the underlying
collateral value of the loans and other appropriate information. Management
relies predominantly on this ongoing review of the loan portfolio to assess the
risk characteristics of the portfolio in the aggregate and to determine
adjustments, if any, to our allowance for loan losses. Based upon this ongoing
review, we may identify loans that could be impaired. A loan is considered
impaired when it is probable that we will be unable to collect all principal and
interest due in accordance with the contractual terms of the loan agreement.
When we identify a loan as impaired, the allowance for loan losses is increased
if we determine that the amount of impairment is in excess of the allowance
determined under our loan classification program. We maintain an allowance for
loan losses of no less than 1.0% of outstanding loans at all times.

                                       19
<Page>
Other income increased by $19,000 and $8,000 for the three months and six months
ended June 30, 2005, respectively, as compared to the same period in 2004. The
increases in other income are due to increased service charges and fees which
were partially offset by increased losses on sales of securities available for
sale.

Other expenses increased by $91,000 and $222,000 for the three months and six
months ended June 30, 2005, respectively, as compared to the same period in
2004. Salaries and employee benefits increased by $211,000, equipment and
occupancy expenses decreased by $2,000, and other operating expenses increased
by $13,000. Salaries and employee benefits have increased due to increased
benefits expenses and annual salary increases. The increase of $13,000 in other
operating expenses was due to general increases throughout the other operating
expense categories.

We have recorded income tax expense of $623,000 for the Six Months ended June
30, 2005. The rate of tax as a percentage of pretax income was 35.2%.

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

ITEM 3.  Controls and Procedures

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and the Chief Financial Officer, of the design and operation
of our disclosure controls and procedures. Based on this evaluation, our Chief
Executive and Chief Financial Officer concluded that our disclosure controls and
procedures are effective for gathering, analyzing and disclosing the information
that we are required to disclose in the reports we file under the Securities
Exchange Act of 1934, within the time periods specified in the SEC's rules and
forms. Our Chief Executive Officer and Chief Financial Officer also concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information relating to our Company required to be included in
our periodic SEC filings. In connection with the new rules, we are in the
process of further reviewing and documenting our disclosure controls and
procedures, including our internal controls and procedures for financial
reporting, and may from time to time make changes designed to enhance their
effectiveness and to ensure that our systems evolve with our business.

There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of this evaluation.




                                       20
<Page>
                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

Management is not aware of any material pending legal proceedings to which the
Company, the Bank, Chestatee Financial or Chestatee Mortgage are a party or to
which any of their property is subject, other than ordinary routine legal
proceedings incidental to our business.

ITEM 4.  Submission Of Matters To A Vote Of Security Holders

     (a)  The annual meeting of the stockholders of the Company was held on May
          10, 2005. There were no shares represented at the meeting in person
          and 1,777,915 represented by proxy, for a total of 1,777,915 shares,
          representing 56.93% of the total issued and outstanding shares of the
          Company. Based upon the Report of the Inspector, and pursuant to
          Section 2.5 of the Company's Bylaws, a quorum was deemed present at
          the meeting.

     (b)  The following directors were elected to serve until the next annual
          meeting of the Company in the 2006 calendar year as follows:

          --------------------------------------------------------
          Director                      For               Against
          --------------------------------------------------------

          R. Millard Bowen           1,754,315           23,600.00
          Marcus C. Byrd, Jr.        1,754,315           23,600.00
          Glennon C. Grogan          1,747,315           30,600.00
          James H. Grogan            1,747,115           30,800.00
          Andrew M. Head             1,752,315           25,600.00
          J. Philip Hester, Sr.      1,728,815           49,100.00
          Bruce T. Howard            1,753,715           24,200.00
          David E. Johnson           1,754,315           23,600.00
          W. Alan McRae              1,754,315           23,600.00
          Kim Mills                  1,754,315           23,600.00
          Russell M. Wallace         1,727,315           50,600.00

          No shares abstained. The number of shares voting in favor of the
          nominees represented at least 97.15% of the total number of shares
          represented at the meeting and entitled to vote upon the proposal.
          Consequently, the nominees were approved by the shareholders of the
          Company.


                                       21
<Page>
     (c)  In addition to the election of directors, the Company also considered
          approval of Mauldin & Jenkins, LLC as the Company's independent public
          accountants for the year ended December 31, 2005. Of the 1,777,915
          represented at the meeting, 1,775,315 shares were voted in favor of
          the ratification of Mauldin & Jenkins, LLC as the independent public
          accountants for fiscal year 2005, 2,200 shares were voted against the
          ratification of Mauldin & Jenkins, LLC as the independent public
          accountants for fiscal year 2005; and 400 shares abstained. The number
          of shares voting in favor of the ratification of Mauldin & Jenkins,
          LLC as the independent public accountants for fiscal year 2005
          represented 99.97% of the total number of shares represented at the
          Meeting and entitled to vote upon the proposal. Mauldin & Jenkins, LLC
          was therefore ratified as the independent public accountants for
          fiscal year 2005.

     (d)  Finally, the shareholders considered increasing the number of shares
          of the Corporation's stock that may be acquired under the
          Corporation's 2000 Employee Stock Option Plan from 100,000 shares to
          200,000 as previously adopted by the Board of Directors of the
          Corporation. Of the 1,777,915 represented at the meeting, 1,672,145
          shares were voted in favor of the increase in the number of shares,
          97,120 shares were voted against the increase in the number of shares;
          and 8,650 shares abstained. The number of shares voting in favor of
          increasing the number of shares of the Corporation's stock that may be
          acquired under the Corporation's 2000 Employee Stock Option Plan from
          100,000 shares to 200,000 represented 94.05% of the total number of
          shares represented at the Meeting and entitled to vote upon the
          proposal. Thus, the increase in the number of shares of the
          Corporation's stock that may be acquired under the Corporation's 2000
          Employee Stock Option Plan from 100,000 shares to 200,000 was
          ratified.

ITEM 6.  Exhibits And Reports On Form 8-K

         (a) Exhibits.

         Number      Description

         31.1        Rules 13a-14(a) and 15d-14(a) Certifications for CEO
         31.2        Rules 13a-14(a) and 15d-14(a) Certifications for CFO
         32          Certifications of CEO and CFO Pursuant to 18 U.S.C. Section
                     1350, as Adopted Pursuant to Section 906 of the
                     Sarbanes-Oxley Act of 2002

         (b)   Reports on Form 8-K.

               None.


                                       22
<Page>
                                   SIGNATURES



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

                           CHESTATEE BANCSHARES, INC.
                                  (Registrant)



DATE: August 15, 2005       BY: /s/ J. Philip Hester, Sr.
      ---------------           ------------------------------------------------
                                    J. Philip Hester, Sr., President and C.E.O.
                                    (Principal Executive Officer)


DATE: August 15, 2005        BY: /s/ Deborah F. McLeod
      ---------------            -----------------------------------------------
                                    Deborah F. McLeod, C.F.O. and Treasurer
                                    (Principal Financial and Accounting Officer)




                                       23