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      March 31, 2003

[ ]   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 May 1, 2003: 3,100,000; 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 - March 31, 2003.......................3

             Consolidated Statements of Income and Comprehensive Income
              Three Months Ended March 31, 2003 and 2002.......................4

             Consolidated Statements of Cash Flows -
              Three Months Ended March 31, 2003 and 2002.......................6

             Notes to Consolidated Financial Statements........................7

          Item 2.  Management's Discussion and Analysis of
                        Financial Condition and Results of Operations..........9

          Item 3.  Controls and Procedures....................................16


PART II.  OTHER INFORMATION

          Item 1 - Legal Proceedings..........................................17

          Item 2 - Changes in Securities and Use of Proceeds..................17

          Item 4 - Submission of Matters to a Vote of Security Holders........18

          Item 6 - Exhibits and Reports on Form 8-K...........................18

          Signatures..........................................................19

          Certifications......................................................20

                                       2
<PAGE>
                         PART I - FINANCIAL INFORMATION
ITEM I.     FINANCIAL STATEMENTS

                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2003
                                   (Unaudited)

                                     Assets
                                     ------

Cash and due from banks                                     $  4,208,070
Interest-bearing deposits in banks                             1,379,405
Federal funds sold                                            20,714,000
Securities available-for-sale, at fair value                   9,181,649
Restricted equity securities                                     742,500

Loans                                                        149,908,506
Less allowance for loan losses                                 2,294,832
                                                            ------------
          Loans, net                                         147,613,674
                                                            ------------

Premises and equipment                                         6,383,689
Other assets                                                   2,548,277
                                                            ------------

          Total assets                                      $192,771,264
                                                            ============

                      Liabilities and Stockholders' Equity

Deposits
    Noninterest-bearing                                     $ 15,492,463
    Interest-bearing                                         139,440,737
                                                            ------------
          Total deposits                                     154,933,200
Other borrowings                                              14,850,000
Other liabilities                                                831,815
                                                            ------------
          Total liabilities                                  170,615,015
                                                            ------------

Commitments and contingencies

Stockholders' equity
    Common stock, no par value; 20,000,000 shares
      authorized; 3,100,000 shares issued and outstanding     21,361,813
    Retained earnings                                            740,218
    Accumulated other comprehensive income                        54,218
                                                            ------------
          Total stockholders' equity                          22,156,249
          Total liabilities and stockholders' equity        $192,771,264

See Notes to Consolidated Financial Statements.

                                       3
<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                   THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      Three Months
                                                                           Ended
                                                                         March 31,
                                                                -----------    -----------
                                                                    2003           2002
                                                                -----------    -----------
<S>                                                             <C>              <C>
Interest income
    Loans                                                       $ 2,642,635      2,276,734
    Taxable securities                                              107,058         31,186
    Federal funds sold                                               36,851         64,773
    Interest-bearing deposits in banks                                9,374         12,453
                                                                -----------    -----------
              Total interest income                               2,795,918      2,385,146
                                                                -----------    -----------

Interest expense
    Deposits                                                        924,553      1,051,418
    Other borrowings                                                 92,753         88,988
                                                                -----------    -----------
              Total interest expense                              1,017,306      1,140,406
                                                                -----------    -----------

              Net interest income                                 1,778,612      1,244,740
Provision for loan losses                                           177,314        134,129
                                                                -----------    -----------
              Net interest income after
                provision for loan losses                         1,601,298      1,110,611
                                                                -----------    -----------

Other income
      Service charges and fees                                      185,987        128,177
      Other operating income                                         96,758         59,888
                                                                -----------    -----------
              Total other income                                    282,745        188,065
                                                                -----------    -----------

Other expenses
    Salaries and employee benefits                                  815,850        653,008
    Occupancy and equipment expenses                                281,905        163,076
    Other operating expenses                                        472,919        428,421
                                                                -----------    -----------
              Total other expenses                                1,570,674      1,244,505
                                                                -----------    -----------

              Net income before income taxes                        313,369         54,171

Income tax expense                                                  113,494         19,085
                                                                -----------    -----------

              Net income                                            199,875         35,086
                                                                -----------    -----------
</TABLE>


                                       4
<PAGE>
<TABLE>
<S>                                                                  <C>           <C>
Other comprehensive loss:
     Unrealized losses on securities
         available-for-sale arising during period, net of tax        (5,963)       (32,620)
                                                                -----------    -----------

Comprehensive income                                            $   193,912    $     2,466
                                                                ===========    ===========

Basic earnings per share                                        $      0.07    $      0.02
                                                                ===========    ===========

Diluted earnings per share                                      $      0.07    $      0.02
                                                                ===========    ===========

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

See Notes to Consolidated Financial Statements.

                                       5
<PAGE>
                            CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                             THREE MONTHS ENDED MARCH 31, 2003 AND 2002
                                            (Unaudited)

<TABLE>
<CAPTION>
                                                                        2003           2002
                                                                   ------------    ------------
<S>                                                                <C>             <C>
OPERATING ACTIVITIES
    Net income                                                     $    199,875    $     35,086

    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                    172,319          73,592
        Provision for loan losses                                       177,314         134,129
        Increase in interest receivable                                 128,581         (22,032)
        Increase (decrease) in interest payable                         (11,350)         24,097
        Other operating activities                                     (392,277)        (95,953)
                                                                   ------------    ------------

              Net cash provided by operating activities                 274,462         148,919
                                                                   ------------    ------------

INVESTING ACTIVITIES
    Net increase in interest-bearing deposits in banks                  (50,864)     (3,468,378)

    Net (increase) decrease in federal funds sold                   (14,768,000)      8,755,000

    Purchases of securities available-for-sale                       (5,192,880)     (8,976,367)

    Proceeds from maturities of securities available-for-sale        10,470,299            --
    Proceeds from maturities of securities held-to-maturity             399,940            --
    Net increase in loans                                            (7,505,898)    (10,647,814)

    Purchase of premises and equipment                                 (490,527)       (313,109)
                                                                   ------------    ------------

              Net cash used in investing activities                 (17,137,930)    (14,650,668)
                                                                   ------------    ------------

FINANCING ACTIVITIES
    Net increase in deposits                                         11,212,319       7,382,812

    Net proceeds from (repayments of) other borrowings                4,600,000
    Net increase in subscription deposits
                                                                           --         3,495,630
    Proceeds from sale of common stock                                1,743,100       2,250,000
    Stock issue costs                                                      --           (57,156)
                                                                   ------------    ------------

              Net cash provided by financing activities              17,555,419      13,071,286
                                                                   ------------    ------------

Net increase (decrease) in cash and due from banks                      691,951      (1,430,463)


Cash and due from banks, beginning of period                          3,516,119       3,479,452
                                                                   ------------    ------------

Cash and due from banks, end of period                             $  4,208,070    $  2,048,989
                                                                   ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid for:
          Interest                                                 $  1,028,656    $  1,116,309


          Income taxes                                             $    479,426    $       --

    Principal balances of loans transferred to other real estate   $          0    $       --


    Financed sales of other real estate owned                      $          0    $       --
</TABLE>

See Notes to Consolidated Financial Statements.

                                       6
<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


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 March 31, 2003 are not
         necessarily indicative of the results to be expected for the full year.

NOTE 2.  STOCK COMPENSATION PLANS

         At March 31, 2003, 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,
         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 and earnings per share if
         the Company had applied the fair value recognition provisions of SFAS
         Statement No. 123, Accounting for Stock-Based Compensation, to
         stock-based employee compensation.

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                          2003       2002
                                                       ---------   --------

Net income, as reported                                $ 199,875   $ 35,086
Deduct: Total stock-based employee compensation
   expense determined under fair value based
   method for all awards, net of related tax effects   22,871       --
                                                       ---------   --------
Pro forma net income                                   $ 177,004   $ 35,086
                                                       =========   ========
Earnings per share:
   Basic - as reported                                 $     .07   $   .02
                                                       =========   ========
   Basic - pro forma                                   $     .06   $   .02
                                                       =========   ========
   Diluted - as reported                               $     .07   $   .02
                                                       =========   ========
   Diluted - pro forma                                 $     .06   $   .02
                                                       =========   ========

                                       7
<PAGE>

                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 3.  STOCK OFFERINGS

         As of March 24, 2003, the Company completed an offering of its common
         stock, selling 250,000 shares (75,690 shares in 2002 and 174,310 shares
         in 2003) at a price of $10.00 per share.

         As of March 31, 2002, the Company was in process of selling 350,000
         shares of common stock at a price of $10.00 per share. Proceeds
         totaling $3,495,630 representing the sale of 349,563 shares were
         included in the March 31, 2002 balance sheet in interest-bearing
         deposits in banks with a corresponding amount reported as subscription
         deposits.

         In a previous offering, the Company sold 600,000 shares of its common
         stock (225,000 shares in 2002 and 375,000 shares in 2001) at a price of
         $10.00 per share.


NOTE 4.  CURRENT ACCOUNTING DEVELOPMENTS

         There are no recent accounting pronouncements that have had, or are
         expected to have, a material effect on the Company's financial
         statements.


                                       8
<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 nonbank 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, 2002
as filed on our annual report on Form 10-KSB.

                                       9
<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
March 31, 2003, our liquidity, as determined under guidelines established by
regulatory authorities and internal policy, was satisfactory.

At March 31, 2003, 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             12.01 %          11.87 %            4.00 %
Risk-based capital ratios:
   Core capital                     13.50            13.33              4.00
   Total capital                    14.75            14.58              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.

                                       10
<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:


                                               March 31, 2003
                                           ----------------------
                                           (dollars in thousands)
                                           ----------------------

  Commitments to extend credit                 $   28,995
  Letters of credit                                 1,569
                                               ------------
                                               $   30,564
                                               ============

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.

                                       11
<PAGE>
Financial Condition

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

                                            March 31,    December 31,
                                              2003           2002
                                          ----------     -----------
                                            (Dollars in Thousands)
                                          --------------------------

Cash and due from banks                   $    4,208      $    3,516
Interest-bearing deposits in banks             1,379           1,329
Federal funds sold                            20,714           5,946
Securities                                     9,924          15,612
Loans, net                                   147,614         140,285
Premises and equipment                         6,384           6,065
Other assets                                   2,548           2,660
                                          -----------     -----------
                                          $  192,771      $  175,413
                                          ===========     ===========

Deposits                                  $  154,933      $  143,721
Other borrowings                              14,850          10,250
Other liabilities                                832           1,223
Stockholders' equity                          22,156          20,219
                                          -----------     -----------
                                          $  192,771      $  175,413
                                          ===========     ===========

Our total assets grew by 10% for the first quarter of 2003. Deposit growth of
$11.2 million and proceeds from the sale of common stock of $1.7 million was
primarily invested in loans. Our ratio of loans to deposits and other borrowings
has decreased to 88% at March 31, 2003 from 92% at December 31, 2002, as deposit
growth outpaced loan growth during the first quarter. Our total equity increased
by approximately $1.9 million, consisting of year-to-date net income of
$200,000, proceeds from the sale of common stock of $1.7 million, and decreased
unrealized gains on securities available-for-sale, net of tax, of $6,000.

                                       12
<PAGE>
Results of Operations For The Three Months Ended March 31, 2003 and 2002

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

                                       Three Months Ended
                                            March 31,
                                      ---------------------
                                         2003        2002
                                      ---------    --------
                                      (Dollars in Thousands)
                                      ---------------------

Interest income                       $  2,796     $  2,385

Interest expense                         1,017        1,140
                                      ---------    ---------

Net interest income                      1,779        1,245

Provision for loan losses                  177          134

Other income                               282          188

Other expense                            1,571        1,245
                                      ---------    ---------

Pretax income                              313           54

Income taxes                               113           19
                                      ---------    ---------

Net income                            $    200     $     35
                                      =========    =========

Our net interest income has increased by $534,000 during the first quarter of
2003 as compared to the same period in 2002. Our net interest margin increased
to 4.14% during the first quarter of 2003 as compared to 3.60% during the first
quarter of 2002 and to 4.03% for the entire year of 2002. The increase in net
interest income is due primarily to the increased volume of average loans
outstanding. The increase in net interest margin is largely due to fixed rate
time deposits that have matured and repriced to a lower rate over the past
twelve months. Yields earned on loans have decreased to 7.28% in the first
quarter of 2003 as compared to 7.70% in the first quarter of 2002. The cost of
funds has decreased as well, as deposits have been able to be repriced as they
have matured. Our cost of funds decreased to 2.81% in the first quarter of 2003
as compared to 3.79% in the first quarter of 2002.

The provision for loan losses increased by $43,000 in the first quarter of 2003
as compared to the same period in 2002. The amounts provided are due to loan
growth, increased net loan charge-offs, increased nonaccrual, past due and
potential problem loans and to our assessment of the inherent risk in the
portfolio. Nonaccrual loans of $309,000 at March 31, 2003 consist of $165,000 of
commercial loans, $84,000 of real estate loans and $60,000 of other consumer
loans. Loans past due ninety days or more and still accruing interest of

                                       13
<PAGE>
$100,000 at March 31, 2003 consists of real estate loans of $49,000 and other
consumer loans of $51,000. Potential problem loans consist of one commercial
loan. 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 approximately $2.3 million in the allowance for
loan losses at March 31, 2003, or 1.53% 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 March 31, 2003 and 2002 is as follows:

<TABLE>
<CAPTION>
                                                                          March 31,
                                                                 -------------------------
                                                                    2003           2002
                                                                 -------------------------
                                                                   (Dollars in Thousands)
                                                                 -------------------------
<S>                                                               <C>              <C>
Nonaccrual loans                                                  $  309           $1,077
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                          100              113
Restructured loans                                                    -                -
Potential problem loans                                            1,909              106
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                        25               18
Interest income that was recorded on nonaccrual and                   -                -
   restructured loans
</TABLE>

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.

                                       14
<PAGE>
Information regarding certain loans and allowance for loan loss data through
March 31, 2003 and 2002 is as follows:

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           March 31,
                                                                    ----------------------
                                                                       2003        2002
                                                                    ---------    ---------
                                                                     (Dollars in Thousands)
                                                                    ----------------------

<S>                                                                 <C>          <C>
Average amount of loans outstanding                                 $ 147,303    $ 118,288
                                                                    =========    =========

Balance of allowance for loan losses at beginning of period         $   2,126    $   1,252
                                                                    ---------    ---------

Loans charged off
   Commercial and financial                                              --           --
   Real estate mortgage                                                  --           --
   Installment                                                              8         --
                                                                    ---------    ---------
                                                                            8         --
                                                                    ---------    ---------

Loans recovered
   Commercial and financial                                              --           --
   Real estate mortgage                                                  --           --
   Installment                                                           --              1
                                                                    ---------    ---------
                                                                         --              1
                                                                    ---------    ---------

Net charge-offs (recoveries)                                                8           (1)
                                                                    ---------    ---------

Additions to allowance charged to operating expense during period         177          134
                                                                    ---------    ---------

Balance of allowance for loan losses at end of period               $   2,295    $   1,387
                                                                    =========    =========

Ratio of net loans charged off during the period to
   average loans outstanding                                              .01%          -%
                                                                    =========    =========
</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 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
borrowers' 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,

                                       15
<PAGE>
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.

Other income has increased in the first quarter of 2003 as compared to the same
period in 2002 by $94,000, due primarily to increased service charges on deposit
accounts of $58,000 and gain on sale of loans of $20,000.

Other expenses increased in the first quarter of 2003 as compared to the same
period in 2002 by $326,000, due to increased salaries and employee benefits of
$163,000, increased equipment and occupancy expenses of $118,000, and increased
other operating expenses of $45,000. Salaries and employee benefits have
increased due to an increase in the number of full time equivalent employees to
65 at March 31, 2003 from 60 at March 31, 2002 and to other annual salary
increases. The increase in the number of employees is due to hiring additional
officers to staff a new branch scheduled to open in May, 2003 and to our overall
growth. The increases in equipment and occupancy expenses and other operating
expenses are due to our overall growth.

We have recorded income tax expense of $113,000 in the first quarter of 2003 as
compared to $19,000 in the first quarter of 2002. The rate of tax as a
percentage of pretax income was 36% and 35%, respectively.

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

Based upon an evaluation of our disclosure controls and procedures within ninety
days prior to the filing of this quarterly report pursuant to Rule 13a-14 of the
Exchange Act, under the supervision and with the participation of management,
our President and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company required to be included in the
Company's Exchange Act filings. There have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation.

                                       16
<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1.  Legal Proceedings

The Bank brought an action on March 5, 2001 in the Superior Court for Dawson
County, State of Georgia, against Terri and Woody Reece to recover amounts due
following default on a promissory note. The Bank seeks to recover the balance
due of $66,205, plus interest. The Reeces, husband and wife, filed an answer on
April 9, 2001 denying owing any money to the Bank. In addition, the Reeces filed
a counterclaim against the Bank for deliberate and intentional infliction of
emotional distress for a sum not less than $1 million and for unstipulated
punitive damages. The Bank denies any wrongdoing and prevailed on both the suit
on the promissory note and the dismissal of the counterclaim on summary
judgment. The Reeces appealed, that appeal rejected and the original holding
affirmed by the Georgia Court of Appeals. The Reeces have subsequently filed an
appeal with the Georgia Supreme Court. That appeal is pending.


Management is not aware of any other 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 2.  Changes in Securites and Use of Proceeds

The Company offered, on a best efforts basis, 250,000 shares of its no par value
common stock at an aggregate offering price of $2.5 million pursuant to a
registration statement on Form SB-2 (Commission No. 333-100154) declared
effective October 25, 2002. We disclose the following information in connection
with the offering pursuant to Rule 463 of the Securities Act of 1933, as
amended:

     (a)   The offering period for the shares commenced on or about October 25,
2002 and ended when all of the shares of the common stock were sold on March 24,
2003. The Company during the pendency of the offering sold 250,000 shares at $10
per share (75,690 shares in 2002 and 174,310 shares in 2003) for an aggregate
offering price of $2.5 million.

     (b)   Our officers offered and sold the shares without the assistance of an
underwriter and for no additional compensation.

     (c)   From October 25, 2002 until March 24, 2003, the effective date of the
registration statement until the end of the reporting period, the amount of
expenses incurred by the Company in connection with the issuance and
distribution common stock is, based upon reasonable estimates as follow:

                                       17
<PAGE>
           underwriting discounts and commissions............................$ 0
           finders' fees.....................................................$ 0
           expenses paid to or for underwriterrs.............................$ 0
           other expenses...............................................$ 33,845

           Total expenses...............................................$ 33,845

There were no selling shareholders and no expenses incurred on behalf of any
selling shareholders. None of the expenses of the offering constitute direct or
indirect payments to directors, officers or general partners, or associates
thereof, persons owning 10% or more of any class of securities or any affiliates
of the Company.

     (d)  The net proceeds to the Company of the offering after deducting the
expenses listed above is $2,466,155.

     (e)  From October 25, 2002 through March 31, 2003, the Company has applied
the $2,466,155 net proceeds from the offering to investments in short term
securities pending use for the Bank's loan portfolio and other growth and
expansion of the Bank in the foreseeable future. None of the uses of the
proceeds of the offering constitute direct or indirect payments to directors,
officers or general partners, or associates thereof, persons owning 10% or more
of any class of securities or any affiliates of the Company.


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

No matters were submitted to a vote of the shareholders of the Company as of
March 31, 2003.

ITEM 6.  Exhibits And Reports On Form 8-K

         (a)  Exhibits.

              99.1  Certification 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.

                                       18
<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:  May 14, 2003                BY: /s/ J. Philip Hester, Sr.
       ------------                    -------------------------
                                   J. Philip Hester, Sr., President and C.E.O.
                                   (Principal Executive Officer)


DATE:  May 14, 2003                BY: /s/ Deborah F. McLeod
       ------------                    -------------------------
                                   Deborah F. McLeod, C.F.O. and Treasurer
                                   (Principal Financial and Accounting Officer)

                                       19
<PAGE>
                                 CERTIFICATIONS

           (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
                             15 U.S.C. Section 78m)

I, J. Philip Hester, Sr., President and Chief Executive Officer of Chestatee
Bancshares, Inc., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Chestatee
         Bancshares, Inc. for the period ended March 31, 2003.

2.       Based on my knowledge, this quarterly 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 quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly 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 quarterly 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 subsidiary, is made known to us by others within
                that entity, particularly during the period in which this
                quarterly 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 of this quarterly report (the "Evaluation Date"); and

         c.     presented in this quarterly 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:

         a.     all significant deficiencies in the design or operation of
                internal controls which could adversely affect the registrant's

                                       20
<PAGE>
                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
         quarterly 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.




Date:  May 14, 2003                /s/ J. Philip Hester, Sr.
       ------------                -------------------------
                                   J. Philip Hester, Sr., President and CEO
                                   (Principal Executive Officer)


                                       21
<PAGE>
                                 CERTIFICATIONS

           (Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
                             15 U.S.C. Section 78m)

I, Deborah F. McLeod, Chief Financial Officer and Treasurer of Chestatee
Bancshares, Inc., certify that:

1.       I have reviewed this quarterly report on Form 10-QSB of Chestatee
         Bancshares, Inc. for the period ended March 31, 2003.

2.       Based on my knowledge, this quarterly 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 quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly 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 quarterly 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 subsidiary, is made known to us by others within
                that entity, particularly during the period in which this
                quarterly 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 of this quarterly report (the "Evaluation Date"); and

         c.     presented in this quarterly 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:

         a.     all significant deficiencies in the design or operation of
                internal controls which could adversely affect the registrant's

                                       22
<PAGE>
                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
         quarterly 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.




Date:  May 14, 2003                 /s/ Deborah F. McLeod
       ------------                 ---------------------
                                    Deborah F. McLeod, CFO and Treasurer
                                    (Principal Financial and Accounting Officer)

                                       23