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 September 30, 2007
                                               ------------------

[   ]   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 30534
               ---------------------------------------------------
                    (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 November 13, 2007: 3,468,281; 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 - September 30, 2007                  3

            Consolidated Statement of Income Three months and
               Nine months Ended September 30, 2007 and 2006                 4

            Consolidated Statement of Comprehensive Income
               Three months and Nine months Ended
               September 30, 2007 and 2006                                   5

            Consolidated Statements of Cash Flows - Nine months
               Ended September 30, 2007 and 2006                             6

            Notes to Consolidated Financial Statements                       7

            ITEM 2.  Management's Discussion and Analysis of
                     Financial Condition and Results of Operations          10

            ITEM 3.  Controls and Procedures                                18


PART II.    OTHER INFORMATION

            ITEM 1.  Legal Proceedings                                      19

            ITEM 2.  Unregistered Sales of Equity Securities and
                     Use of Proceeds                                        19

            ITEM 3.  Defaults Upon Senior Securities                        19

            ITEM 4.  Submission of Matters to a Vote of Security Holders    19

            ITEM 5.  Other Information                                      19

            ITEM 6.  Exhibits and Reports on Form 8-K                       20

            Signatures                                                      21

            Certifications                                                  22




<PAGE>

                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                         PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2007

                                     Assets
                                     ------

Cash and due from banks                                           $   4,542,109
Interest-bearing deposits in banks                                    1,747,960
Federal funds sold                                                   13,941,000
Securities available-for-sale, at fair value                         21,933,770
Restricted equity securities, at cost                                   753,100
Loans                                                               265,809,702
Less allowance for loan losses                                        4,526,395
                                                                  -------------
          Loans, net                                                261,283,307
                                                                  -------------

Premises and equipment, net                                           7,023,421
Other assets                                                          6,409,618
                                                                  -------------

          Total assets                                            $ 317,634,285
                                                                  =============


                      Liabilities and Stockholders' Equity
                      ------------------------------------

Deposits
    Noninterest-bearing                                           $  23,614,068
    Interest-bearing                                                256,766,205
                                                                  -------------
          Total deposits                                            280,380,273

Other borrowings                                                      4,750,000
Other liabilities                                                     1,986,338
                                                                  -------------
          Total liabilities                                         287,116,611
                                                                  -------------

Commitments and contingencies

Stockholders' equity
    Common stock, no par value; 20,000,000 shares
      authorized; 3,468,281 shares issued and
      outstanding                                                    25,160,879
    Retained earnings                                                 5,445,232
    Accumulated other comprehensive loss                                (88,437)
                                                                  -------------
          Total stockholders' equity                                 30,517,674
                                                                  -------------

          Total liabilities and stockholders' equity              $ 317,634,285
                                                                  =============


                 See Notes to Consolidated Financial Statements

                                       3
<PAGE>
<TABLE>
<CAPTION>


                        CONSOLIDATED STATEMENTS OF INCOME
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


                                             Three months ended,              Nine months ended,
                                         September 30,  September 30,   September 30,   September 30,
                                         ------------   -------------   -------------   -------------
                                              2007          2006             2007          2006
                                         ------------   -------------   -------------   -------------
<S>                                      <C>            <C>             <C>             <C>
Interest income
   Loans                                 $  5,943,859   $   5,018,324   $  17,729,549   $  14,040,100
   Taxable Securities                         191,025         213,645         543,537         663,038
   Nontaxable Securities                       13,465          13,050          39,566          39,151
   Federal funds sold                         217,738         188,533         544,100         464,356
   Interest-bearing deposits in banks          16,050          57,714          40,816         154,238
                                         ------------   -------------   -------------   -------------
           Total interest income            6,382,137       5,491,266      18,897,568      15,360,883
                                         ------------   -------------   -------------   -------------

Interest expense
   Deposits                                 3,116,582       2,248,311       8,835,157       5,785,047
   Other borrowings                            55,880          60,984         183,253         200,138
                                         ------------   -------------   -------------   -------------
           Total interest expense           3,172,462       2,309,295       9,018,410       5,985,185
                                         ------------   -------------   -------------   -------------

           Net interest income              3,209,675       3,181,971       9,879,158       9,375,698
Provision for loan losses                     367,116         225,536         883,706         816,753
                                         ------------   -------------   -------------   -------------
           Net interest income after
             provision for loan losses      2,842,559       2,956,435       8,995,452       8,558,945
                                         ------------   -------------   -------------   -------------

Other income
      Service charges and fees                185,215         194,398         561,955         595,246
      Other operating income                   56,978          48,011         150,744         139,233
                                         ------------   -------------   -------------   -------------
             Total other income               242,193         242,409         712,699         734,479
                                         ------------   -------------   -------------   -------------

Other expenses
    Salaries and employee benefits          1,160,513       1,062,156       3,715,701       3,399,248
    Occupancy and equipment
       expenses                               178,020         221,065         621,815         723,928
    Other operating expenses                  664,029         652,873       1,823,773       1,803,798
                                         ------------   -------------   -------------   -------------
             Total other expenses           2,002,562       1,936,094       6,161,289       5,926,974
                                         ------------   -------------   -------------   -------------

             Net income before income
               taxes                        1,082,190       1,262,750       3,546,862       3,366,450

Income tax expense                            398,229         460,611       1,316,682       1,227,903
                                         ------------   -------------   -------------   -------------

              Net income                      683,961         802,139       2,230,180       2,138,547
                                         ============   =============   =============   =============

Basic earnings per share                 $       0.20   $        0.23   $        0.65   $        0.62
                                         ============   =============   =============   =============

Diluted earnings per share               $       0.19   $        0.22   $        0.62   $        0.60
                                         ============   =============   =============   =============

Cash dividends per share                 $       0.06   $        0.06   $        0.06   $        0.06
                                         ============   =============   =============   =============
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       4

<PAGE>
<TABLE>
<CAPTION>
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006


                                              Three months ended        Nine months ended,
                                                 September 30              September 30
                                           ----------------------    -----------------------
                                               2007         2006        2007         2006
                                           ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>
Net income                                 $  683,961   $  802,139   $2,230,180   $2,138,547

Other comprehensive income:
        Unrealized holding gains on
          securities available-for-sale
          arising during the three and
          nine month period,  net of tax       94,064      133,052      114,165      102,098
                                           ----------   ----------   ----------   ----------

Other comprehensive income                     94,064      133,052      114,165      102,098
                                           ----------   ----------   ----------   ----------

Comprehensive income                       $  778,025   $  935,191   $2,344,345   $2,240,645
                                           ==========   ==========   ==========   ==========
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       5
<PAGE>
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

                                                                          Nine months ended
                                                                             September 30,
                                                                      ----------------------------
                                                                          2007            2006
                                                                      ------------    ------------
<S>                                                                   <C>             <C>
OPERATING ACTIVITIES
    Net income                                                        $  2,230,180    $  2,138,547
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                       321,171         657,267
        Provision for loan losses                                          883,706         816,753
        Amortization and accretion of securities                           126,838         135,210
        Stock-based compensation expense                                   138,011          70,785
        Increase in interest receivable                                   (300,496)        (73,717)
        Increase in interest payable                                       108,824         228,468
        Net other operating activities                                    (287,388)        171,554
                                                                      ------------    ------------

              Net cash provided by operating activities                  3,220,846       4,144,867
                                                                      ------------    ------------

INVESTING ACTIVITIES
    Net increase in interest-bearing deposits in banks                    (999,543)     (1,056,933)
    Net increase in federal funds sold                                  (1,348,000)     (3,642,000)
    Proceeds from maturities and calls of securities
       available-for-sale                                                9,505,048       5,174,328
    Purchase of securities available for sale                          (11,512,156)             --
    Net decrease in restricted equity securities                            71,500         115,400
    Net increase in loans                                              (14,262,877)    (26,296,146)
    Proceeds from sales of premises and equipment                               --          10,218
    Purchase of premises and equipment                                     (48,517)       (474,608)
                                                                      ------------    ------------


              Net cash used in investing activities                    (18,594,545)    (26,169,741)
                                                                      ------------    ------------

FINANCING ACTIVITIES
    Net increase in deposits                                            17,875,990      29,168,710
    Payments on other borrowings                                        (2,250,000)     (7,750,000)
    Cash dividends paid on common stock                                   (413,554)       (206,777)
    Net proceeds from common stock issued                                  160,000          10,000
                                                                      ------------    ------------
              Net cash provided by financing activities                 15,372,436      21,221,933
                                                                      ------------    ------------

Net decrease in cash and due from banks                                     (1,263)       (802,941)

Cash and due from banks, beginning of period                             4,543,372       4,811,307
                                                                      ------------    ------------

Cash and due from banks, end of period                                $  4,542,109    $  4,008,366
                                                                      ============    ============

Supplemental Disclosure of Cash Flow Information:
  Principal balance of loans transferred to other real estate owned   $  1,178,097    $         --
</TABLE>


                 See Notes to Consolidated Financial Statements

                                       6

<PAGE>
                   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 nine month period ended September
        30, 2007 are not necessarily indicative of the results to be expected
        for the full year.


NOTE 2.  STOCK COMPENSATION PLANS

         At September 30, 2007, the Company has two stock-based compensation
         plans which include certain employees and directors. The Company
         accounts for these plans under FASB Statement No. 123(R), Share-Based
         Payment, using the modified-prospective-transition method. Under that
         transition method, compensation cost recognized includes: (a)
         compensation cost for all share-based payments granted prior to, but
         not yet vested as of January 1, 2006, based on the grant date fair
         value estimated in accordance with the original provisions of
         Statement 123, and (b) compensation cost for all share-based payments
         granted subsequent to January 1, 2006, based on the grant-date fair
         value estimated in accordance with the provisions of Statement 123(R).

         At September 30, 2007, there was approximately $158,979 of
         unrecognized compensation cost related to stock-based payments, which
         is expected to be recognized over a weighted-average period of 2.5
         years. Stock based compensation expense recognized in earnings totaled
         $138,011 and $70,785 as of September 30, 2007 and 2006, respectively.



                                       7
<PAGE>

NOTE 3.  EARNINGS PER SHARE

         Presented below is a summary of the components used to calculate basic
         and diluted earnings per common share for the three month and nine
         month periods ended September 30, 2007 and 2006.

                                                           Three Months Ended
                                                              September 30,
                                                        ------------------------
                                                            2007         2006
                                                        ----------    ----------
Basic Earnings Per Share:
   Weighted average common shares outstanding            3,458,058     3,447,381
                                                        ==========    ==========

   Net income                                           $  683,961    $  802,139
                                                        ==========    ==========

   Basic earnings per share                             $      .20    $      .23
                                                        ==========    ==========

Diluted Earnings Per Share:
   Weighted average common shares outstanding            3,458,058     3,447,381
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year             123,721       124,594
                                                        ----------    ----------
   Total weighted average common shares and
      common stock equivalents outstanding               3,581,779     3,571,975
                                                        ==========    ==========
   Net income                                           $  683,961    $  802,139
                                                        ==========    ==========
   Diluted earnings per share                           $      .19    $      .22
                                                        ==========    ==========



                                                           Nine months Ended
                                                               September 30,
                                                        ------------------------
                                                           2007          2006
                                                        ----------    ----------
Basic Earnings Per Share:
   Weighted average common shares outstanding            3,450,929     3,446,603
                                                        ==========    ==========

   Net income                                           $2,230,180    $2,138,547
                                                        ==========    ==========
   Basic earnings per share                             $      .65    $      .62
                                                        ==========    ==========

Diluted Earnings Per Share:
   Weighted average common shares outstanding            3,450,929     3,446,603
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year             150,099       106,867
                                                        ----------    ----------
   Total weighted average common shares and
      common stock equivalents outstanding               3,601,028     3,553,470
                                                        ==========    ==========
   Net income                                           $2,230,180    $2,138,547
                                                        ==========    ==========
   Diluted earnings per share                           $      .62    $      .60
                                                        ==========    ==========
                                       8

<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 4.   CURRENT ACCOUNTING DEVELOPMENTS

          In September 2006, the FASB issued SFAS No. 157, "Fair Value
          Measurements." SFAS No. 157 defines fair value, establishes a
          framework for measuring fair value in generally accepted accounting
          principles (GAAP), and expands disclosures about fair value
          measurements. This statement does not require any new fair value
          measurements, but applies under other accounting pronouncements, the
          Board having previously concluded in those accounting pronouncements
          that fair value is the relevant measurement attribute. The provisions
          of this statement are effective for financial statements issued for
          fiscal years beginning after November 15, 2007, and interim periods
          within those fiscal years. The Company has not chosen to early adopt
          this standard.

          In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
          for Financial Assets and Financial Liabilities." SFAS No. 159 permits
          entities to make an irrevocable election, at specified election dates,
          to measure eligible financial instruments and certain other items at
          fair value. This statement also establishes presentation and
          disclosure requirements designed to facilitate comparisons between
          entities that choose different measurement attributes for similar
          types of assets and liabilities. The provisions of this statement are
          effective as of the beginning of the first fiscal year that begins
          after November 15, 2007. The Company has not chosen to early adopt
          this statement.



                                       9

<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" are
forward-looking statements for purposes of the Securities Act of 1933, as
amended 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, 2006
as filed in our annual report on Form 10-KSB. We continuously evaluate the
impact, if any, adopted accounting policies will have on our financial reporting
and disclosures.


                                       10
<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
September 30, 2007, our liquidity, as determined under guidelines established by
regulatory authorities and internal policy, was satisfactory.

At September 30, 2007, 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             9.55 %      9.28 %         4.00 %
     Risk-based capital ratios:
        Core capital                    10.37       10.07           4.00
        Total capital                   11.62       11.32           8.00


These ratios may decline as asset growth continues, but are expected to exceed
the minimum regulatory requirements. Future earnings 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.


                                       11
<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:


                                                 September 30, 2007
                                                 --------------------
                                                (Dollars in thousands)
                                                 --------------------

     Commitments to extend credit                $           48,445
     Letters of credit                                        1,365
                                                 --------------------
                                                 $           49,810
                                                 ====================

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.

                                       12

<PAGE>

Financial Condition

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

                                              September 30,      December 31,
                                                   2007             2006
                                           -----------------   ----------------
                                                  (Dollars in Thousands)
                                           ------------------------------------

Cash and due from banks                    $          4,542    $         4,543
Interest-bearing deposits in banks                    1,748                748
Federal funds sold                                   13,941             12,593
Securities                                           22,687             20,695
Loans, net                                          261,283            249,082
Premises and equipment                                7,023              7,296
Other assets                                          6,410              4,718
                                           -----------------   ----------------
                                           $        317,634    $       299,675
                                           =================   ================

Deposits                                   $        280,380    $       262,504
Other borrowings                                      4,750              7,000
Other liabilities                                     1,986              2,089
Stockholders' equity                                 30,518             28,082
                                           -----------------   ----------------
                                           $        317,634    $       299,675
                                           =================   ================

Our total assets grew by 6.0% for the nine months ended September 30, 2007.
Deposit growth of $17.9 million and cash flows from securities of $9.5 million
funded increases of $1.3 million in federal funds sold and $1 million in
interest bearing deposits, $11.5 million of security purchases, $14 million in
loans and reduced other borrowings by $2.2 million. Our ratio of gross loans to
deposits and other borrowings was 93% at September 30, 2007 and 94% at December
31, 2006. Our total equity increased by $2.4 million due to year-to-date net
income of $2.2 million, stock based compensation of $138,000, $160,000 in stock
options exercised, net unrealized gains on securities of $114,000, offset by
dividends to shareholders of $207,000.

On June 22, 2007, we declared a cash dividend of $0.06 per share, payable on
July 5, 2007, to shareholders of record on June 22, 2007.



                                       13
<PAGE>



Results of Operations for the Three months and Nine months Ended
September 30, 2007 and 2006

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

                                         Three months Ended
                                             September 30,
                                      ----------------------------
                                         2007              2006
                                      -------------   ------------
                                         (Dollars in Thousands)
                                      ----------------------------
Interest income                       $      6,382    $      5,491

Interest expense                             3,172           2,309
                                      -------------   -------------

Net interest income                          3,210           3,182

Provision for loan losses                      367             225

Other income                                   242             242

Other expense                                2,003           1,936
                                      -------------   -------------
Pretax income                                1,082           1,263

Income taxes                                   398             461
                                      -------------   -------------

Net income                            $        684    $        802
                                      =============   =============

                                           Nine months Ended
                                             September 30,
                                      ----------------------------
                                         2007              2006
                                      -------------   ------------
                                         (Dollars in Thousands)
                                      ----------------------------
Interest income                       $     18,897    $     15,361

Interest expense                             9,018           5,985
                                      -------------   -------------

Net interest income                          9,879           9,376

Provision for loan losses                      884             817

Other income                                   713             734

Other expense                                6,161           5,927
                                      -------------   -------------
Pretax income                                3,547           3,366

Income taxes                                 1,317           1,228
                                      -------------   -------------

Net income                            $      2,230    $      2,138
                                      =============   =============


                                       14
<PAGE>
Our net interest income increased by $28,000 and $503,000 for the three months
and nine months ended September 30, 2007, respectively, as compared to the same
period in 2006. Our net interest margin was 4.38% during the nine months ended
September 30, 2007 as compared to 4.93% for the nine months ended September 30,
2006 and 4.88% for the entire year of 2006. The decrease in net interest margin
is due primarily to the repricing of liabilities and increased rate competition
in our local area markets. Yields earned on loans have increased slightly to
8.86% in the first nine months of 2007 as compared to 8.85% in the nine months
of 2006. Our cost of funds increased to 4.25% in the first nine months of 2007
as compared to 3.76% in the first nine months of 2006 and 3.50% for the entire
year of 2006. The increase in cost of funds also reflects the impact of
repricing of liabilities and increased competition for deposits.

The provision for loan losses was $884,000 for the nine months ended September
30, 2007. The provision for the nine months ended September 30, 2007 increased
$67,000 over the same period in 2006.

Nonaccrual loans of $1,014,000 at September 30, 2007 consist of $487,000 of
commercial loans, $413,000 of one-four family residential loans, $100,000 of
nonfarm nonresidential loans and $14,000 of consumer loans. Loans past due
ninety days or more and still accruing interest of $341,000 at September 30,
2007 consisted of $302,000 of construction loans and $39,000 of consumer and
other loans. 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 $4,526,000 in the allowance for loan losses
at September 30, 2007, or 1.70% of total net outstanding loans, is adequate to
absorb known risks in the portfolio. However, no assurance can be given 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 September 30, 2007 and 2006 is as follows:
<TABLE>
<CAPTION>
                                                                       September 30,
                                                                  ----------------------
                                                                     2007         2006
                                                                  ----------------------
                                                                  (Dollars in Thousands)
                                                                  ----------------------
<S>                                                               <C>          <C>
Nonaccrual loans                                                  $    1,014   $   2,068
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                              341         290
Restructured loans                                                       749          --
Potential problem loans                                                5,159          --
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                           159         108
Interest income that was recorded on nonaccrual and                       --          --
   restructured loans
</TABLE>

                                       15

<PAGE>
Nonaccrual loans at September 30, 2007 decreased by $1.1 million from the same
period in 2006. This reduction was largely attributable to management's decision
in 2006 to designate a $1.4 million commercial and financial loan as nonaccrual
although the creditor had made all required payments in full and in a timely
manner. This credit, which is participated among several banks, was restructured
in late 2006 and resulted in write-downs for all banks involved. The restructure
(see table above) resulted in a write-down of $389,000 for the Company during
2006.

Loans contractually past due ninety days or more at September 30, 2007 increased
by $51,000 from the same period in 2006.

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.

At September 30, 2007 management believed that four loans totaling $5.2 million
would meet the criteria to be categorized as potential problem loans. The loans
are to builders or developers who have suffered from the economic downturn in
the real estate market. Based on analysis of current market conditions, the
Bank's reserves for these credits, and the current value of collateral securing
the loans, management currently believes that the risk of material loss is not
significant. A further deterioration in the economy could impact management's
assessment of the level of risk involved in these credits. Management will
continue to monitor and evaluate all factors and act appropriately. Of the $5.2
million, $4.3 million is to a single borrower to develop a residential
subdivision, $450,000 consists of two loans to a builder for residential homes,
and the remaining $395,000 is a loan to a developer for a residential
subdivision.

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.


                                       16
<PAGE>



Information regarding certain loans and allowance for loan loss data through
September 30, 2007 and 2006 is as follows:

                                                           Nine months Ended
                                                             September 30,
                                                        ----------------------
                                                           2007         2006
                                                        ---------    ---------
                                                        (Dollars in Thousands)
                                                        ----------------------

Average amount of loans outstanding                     $ 271,692    $ 212,200
                                                        =========    =========

Balance of allowance for loan losses at
   beginning of period                                      3,734        4,111
                                                        ---------    ---------

Loans charged off
   Commercial and industrial                                   --        1,020
   Real estate mortgage                                       112           13
   Installment                                                 36          100
                                                        ---------    ---------
                                                              148        1,133
                                                        ---------    ---------
Loans recovered
   Commercial and industrial                                   35           --
   Real estate mortgage                                        --           --
   Installment                                                 21           14
                                                        ---------    ---------
                                                               56           14
                                                        ---------    ---------

Net charge-offs                                                92        1,119
                                                        ---------    ---------

Additions to allowance charged to operating expense
    during the period                                         884          817
                                                        ---------    ---------

Balance of allowance for loan losses at end of period   $   4,526    $   3,809
                                                        =========    =========

Ratio of net loans charged off during the period to
   average loans outstanding                                  .03%         .53%
                                                        =========    =========

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
reviews by the responsible lending officers, internal loan review which is
performed by a third party, regulators, external auditors, and 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.


                                       17
<PAGE>
Other income decreased by $21,000 for the nine months ended September 30, 2007,
respectively, as compared to the same period in 2006. A decrease in service
charge income of $33,000 for the nine months ended September 30, 2007 as
compared to same period 2006 is largely due to increased competition for
deposits in our local areas. Increases were seen in other areas of other income.

Other expenses increased $234,000 for the nine months ended September 30, 2007,
as compared to the same period in 2006. Salaries and employee benefits increased
by $316,000, occupancy and equipment expense decreased $102,000 and small
increases were seen in other operating expense. Salaries and employee benefits
have increased due to increased expense associated with the stock option plans
discussed in Note 2 to the financial statements and annual salary increases.

We have recorded income tax expense of $1,317,000 for the nine months ended
September 30, 2007. The rate of tax as a percentage of pretax income was 37.1%
as compared to 36.5% for the same period in 2006.

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 Exchange Act,
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 materially affect internal controls subsequent to the date
of this evaluation.



                                       18
<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 Services or Chestatee Residential
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.  Unregistered Sales of Equity Securities and Use of Proceeds

         None

ITEM 3.  Defaults Upon Senior Securities

         None

ITEM 4.  Submission of Matters to a Vote of Security Holders

         None

ITEM 5.  Other Information

         None






                                       19
<PAGE>



ITEM 6.  Exhibits And Reports On Form 8-K

(a)  Exhibits.

    Number      Description
   ------      -----------

    3(i)       Articles of Incorporation*

    3(ii)      Bylaws*

    31.1       Certification Of Chief Executive Officer

    31.2       Certification Of Chief Financial Officer

    32.1       Certifications of CEO Pursuant to 18 U.S.C. Section 1350, as
               Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

    32.2       Certifications of 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.



* Incorporated by reference to the Company's Annual Report on Form 10-KSB filed
March 29, 2000.


                                       20
<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:    November 13, 2007
         ------------------     BY: /s/ J. Philip Hester, Sr.
                                    ------------------------------------------
                                    J. Philip Hester, Sr., President and CEO
                                    (Principal Executive Officer)

DATE:    November 13, 2007
         ------------------     BY: /s/ Deborah F. McLeod
                                    ------------------------------------------
                                    Deborah F. McLeod, CFO and Treasurer
                                    (Principal Financial and Accounting Officer)




                                       21
<PAGE>