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, 2001
                                                 --------------------------

[ ]    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 November 1, 2001: 1,900,000; no par value common stock.

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, 2001......................3

         Consolidated Statements of Operations and Comprehensive Income
                  (Loss) - Three Months Ended September 30, 2001 and 2000
                  and Nine Months Ended September 30, 2001 and 2000...........4

         Consolidated Statements of Cash Flows -
                  Nine Months Ended September 30, 2001 and 2000 ..............5

         Notes to Consolidated Financial Statements...........................6

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations............7-13


PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings..........................................14

         Item 4.  Submission of Matters to a Vote of Security Holders........14

         Item 6.  Exhibits and Reports on Form 8-K...........................14

         Signatures..........................................................15

<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2001
                                   (Unaudited)
<TABLE>
<CAPTION>
                       Assets
                       ------
<S>                                                                 <C>
Cash and due from banks                                             $  2,488,434
Interest-bearing deposits in banks                                       311,836
Securities available-for-sale, at fair value                           1,674,575
Securities held-to-maturity, fair value of $403,000                      388,299
Federal funds sold                                                     1,030,000
Loans                                                                102,844,129
Less allowance for loan losses                                         1,029,255
                                                                    ------------
          Loans, net                                                 101,814,874
                                                                    ------------
Premises and equipment
                                                                       4,295,339
Other assets                                                           1,297,984
                                                                    ------------

          Total assets                                              $113,301,341
                                                                    ============
         Liabilities and Stockholders' Equity
         ------------------------------------

Deposits
    Noninterest-bearing                                             $ 10,433,343
    Interest-bearing                                                  92,867,092
                                                                    ------------
          Total deposits                                             103,300,435
Other liabilities                                                        379,664
                                                                    ------------
          Total liabilities                                          103,680,099
                                                                    ------------
Commitments and contingencies

Stockholders' equity
    Common stock, no par value; 20,000,000 shares
      authorized; 1,900,000 shares issued and outstanding              9,482,364
    Retained earnings                                                    133,614
    Accumulated other comprehensive income                                 5,264
                                                                    ------------
          Total stockholders' equity                                   9,621,242
                                                                    ------------
          Total liabilities and stockholders' equity                $113,301,341
</TABLE>

                 See Notes to Consolidated Financial Statements

                                       3
<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
               THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND
                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                   Three Months                 Nine Months
                                                      Ended                       Ended
                                                   September 30,               September 30,
                                            -----------   ------------   -----------   -----------
                                                2001           2000          2001          2000
                                            -----------   ------------   -----------   -----------
<S>                                         <C>            <C>           <C>           <C>
Interest income
    Loans                                   $ 2,139,486    $ 1,542,224   $ 6,027,292   $ 3,993,171
    Taxable securities                           36,169         64,667       116,542       161,617
    Federal funds sold                           23,735         67,849       140,037       163,370
    Interest-bearing deposits in banks            7,575           --          13,371          --
                                            -----------    -----------   -----------   -----------
              Total interest income           2,206,965      6,297,242     4,318,158     1,674,740
                                            -----------    -----------   -----------   -----------
Interest expense
    Deposits                                  1,166,585      3,254,370     1,907,269       768,525
    Other borrowings                               --            1,200         1,004         1,200
                                            -----------    -----------   -----------   -----------
              Total interest expense          1,166,585      3,255,374     1,908,469       769,725
                                            -----------    -----------   -----------   -----------

              Net interest income             1,040,380      3,041,868     2,409,689       905,015
Provision for loan losses                       134,755         57,500       306,610       198,519
                                            -----------    -----------   -----------   -----------
              Net interest income after
                provision for loan losses     2,735,258      2,211,170       905,625       847,515
                                            -----------    -----------   -----------   -----------
Other income
      Service charges and fees                  113,245         75,471       292,773       203,765
      Other operating income                     29,523         22,019        93,657        93,837
                                            -----------    -----------   -----------   -----------
              Total other income                142,768         97,490       386,430       297,602
                                            -----------    -----------   -----------   -----------
Other expenses
    Salaries and employee benefits            1,436,369        519,456       330,075       895,684
    Occupancy and equipment expenses            181,752         95,064       425,444       271,462
    Other operating expenses                  1,214,865        432,416       279,099       798,471
                                            -----------    -----------   -----------   -----------
              Total other expenses            1,133,624      3,076,678     1,965,617       704,238
                                            -----------    -----------   -----------   -----------

Net income (loss) before income taxes           (85,231)       240,767        45,010       543,155
Income tax expense (benefits)                   (50,358)        49,075        15,303        49,076
                                            -----------    -----------   -----------   -----------
              Net income (loss)                 (34,873)       191,692        29,707       494,079
                                            -----------    -----------   -----------   -----------
Other comprehensive income :
     Unrealized gains on securities
available-for-sale arising during period          2,364          8,406         6,399         7,608
                                            -----------    -----------   -----------   -----------

Comprehensive income (loss)                 $   (32,509)   $   200,098   $    36,106   $   501,687
                                            ===========    ===========   ===========   ===========

Basic and diluted earnings (losses)
   per share                                $     (0.02)   $      0.10   $      0.02   $      0.26
                                            ===========    ===========   ===========   ===========

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

                 See Notes to Consolidated Financial Statements

                                       4
<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                     2001            2000
                                                                ------------    ------------
<S>                                                             <C>             <C>
OPERATING ACTIVITIES
    Net income                                                  $     29,707    $    494,079
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                 180,975         118,229
        Provision for loan losses                                    306,610         198,519
        Loss on sale of other real estate owned                         --             4,538
        Increase in interest receivable                             (113,548)       (321,653)
        Increase (decrease) in interest payable                      (16,643)        135,553
        Other operating activities                                  (340,547)         15,835
                                                                ------------    ------------

              Net cash provided by operating activities               46,554         645,100
                                                                ------------    ------------

INVESTING ACTIVITIES
    Net increase in interest-bearing deposits in banks              (311,836)        (12,740)
    Net (increase) decrease in federal funds sold                  1,700,000      (2,870,000)
    Purchases of securities available-for-sale                    (1,571,000)     (2,828,205)
    Proceeds from maturities of securities available-for-sale      2,146,287       1,191,282
    Proceeds from maturities of securities held-to-maturity        1,011,016       1,506,683
    Net increase in loans                                        (35,792,083)    (19,825,944)
    Purchase of premises and equipment                              (844,840)       (200,882)
    Proceeds from sale of other real estate                             --           246,788
                                                                ------------    ------------

              Net cash used in investing activities              (33,662,456)    (22,793,018)
                                                                ------------    ------------

FINANCING ACTIVITIES
    Net increase in deposits                                       31,122,342      23,082,313
    Proceeds from other borrowings                                     20,000          50,000
    Repayment of other borrowings                                    (70,000)           --
                                                                ------------    ------------

              Net cash provided by financing activities           31,072,342      23,132,313
                                                                ------------    ------------

Net increase (decrease) in cash and due from banks                (2,543,560)        984,395

Cash and due from banks, beginning of period                       5,031,994       2,264,288
                                                                ------------    ------------

Cash and due from banks, end of period                          $  2,488,434    $  3,248,683
                                                                ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid for:                                              $  3,272,017    $  1,772,916
          Interest

          Income taxes                                          $    288,394    $     40,554
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       5
<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 periods.

                  The results of operations for the three and nine month periods
                  ended September 30, 2001 is not necessarily indicative of the
                  results to be expected for the full year.


NOTE 2.  CURRENT ACCOUNTING DEVELOPMENTS

                  In June 1998, the Financial Accounting Standards Board issued
                  SFAS No. 133, "Accounting for Derivative Instruments and
                  Hedging Activities". The effective date of this statement has
                  been deferred by SFAS No. 137 until fiscal years beginning
                  after June 15, 2000. However, the statement permitted early
                  adoption as of the beginning of any fiscal quarter after June
                  15,2000. The Company adopted this statement effective January
                  1, 2001. SFAS No. 133 requires the Company to recognize all
                  derivatives as either assets or liabilities in the balance
                  sheet at fair value. For derivatives that are not designated
                  as hedges, the gain or loss must be recognized in earnings in
                  the period of change. For derivatives that are designated as
                  hedges, changes in the fair value of the hedged assets,
                  liabilities, or firm commitments must be recognized in
                  earnings or recognized in other comprehensive income until the
                  hedged item is recognized in earnings, depending on the nature
                  of the hedge. The ineffective portion of a derivative's change
                  in fair value must be recognized in earnings immediately. The
                  effect of the adoption of SFAS No. 133 was not material to the
                  Company's earnings or financial position.

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

<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES


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 the Company 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 Bank 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.

<PAGE>
Liquidity and Capital Resources

                  Liquidity management involves the matching of cash flow
                  requirements of deposit withdrawals, customers' credit needs,
                  and our operational needs with our ability to raise funds for
                  these cash flow requirements. We meet liquidity requirements
                  primarily through deposit growth, management of short-term
                  investments and maturities and repayments of loans and
                  securities. We have access to sources of funds other than
                  deposits, such as federal funds line of credit with
                  correspondent banks and other borrowing arrangements with the
                  Federal Home Loan Bank. We also have the ability to meet
                  liquidity requirements by selling securities
                  available-for-sale and selling participations in loans that we
                  generate. Liquidity is monitored on a periodic basis to insure
                  we have the ability and sources available to meet our funding
                  requirements. Loan growth in the third quarter surpassed
                  deposit growth by over $6 million. Subsequent to September 30,
                  2001, we borrowed $4.6 million from the Federal Home Loan Bank
                  to meet the increased loan demand. As of September 30, 2001,
                  we consider our liquidity to be adequate to meet our funding
                  requirements.

                  At September 30, 2001, 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
                                   ---------------------------
                                                                   Regulatory
                                                                     Minimum
                                   Consolidated        Bank        Requirement
                                   ------------     ----------     -----------

    Leverage capital ratios           8.75%            8.69 %         4.00 %
    Risk-based capital ratios:
    Core capital                      9.56             9.50           4.00
    Total capital                    10.58            10.52           8.00

                  At this time, our capital ratios are adequate. However, we
                  believe that, due to our locations and related market area, we
                  will continue to grow at double-digit annual growth rates.
                  Because of the continued growth, we believe that it is prudent
                  to raise additional capital through an offering of our common
                  stock. Currently, we are seeking to raise between $3 million
                  and $6 million from an offering of our common stock.

<PAGE>
Financial Condition

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

<TABLE>
<CAPTION>
                                    September 30,        December 31,
                                       2001                 2000
                                     --------             --------
                                          (Dollars in Thousands)
                                     -----------------------------

<S>                                  <C>                  <C>
Cash and due from banks              $  2,488             $  5,032
Interest-bearing deposits in banks        312                 --
Federal funds sold                      1,030                2,730
Securities                              2,063                3,639
Loans, net                            101,815               66,329
Premises and equipment                  4,295                3,632
Other assets                            1,298                1,068
                                     --------             --------
                                     $113,301             $ 82,430
                                     ========             ========

Deposits                             $103,300             $ 72,178
Other borrowings                            0                   50
Other liabilities                         380                  617
Stockholders' equity                    9,621                9,585
                                     --------             --------
                                     $113,301             $ 82,430
                                     ========             ========
</TABLE>


                  Our total assets grew at a rate of 37% for the first nine
                  months of 2001. Deposit growth of $31,122,000, coupled with
                  lower federal funds and cash balances have been invested in
                  loans. Our loan to deposit ratio has increased significantly
                  to 99.55% at September 30, 2001 from 92.92% at December 31,
                  2000, indicating continued strong loan demand in our primary
                  market area of Dawson County, Georgia. As discussed
                  previously, subsequent to September 30, 2001, we received
                  additional funding in the amount of $4,600,000 from the
                  Federal Home Loan Bank. These advances provide us with the
                  ability to fund increased loan demand. Our total equity has
                  increased by $36,000 due to net income of $30,000 and
                  increases in unrealized gains on securities
                  available-for-sale, net of tax, of $6,000.

                  We opened a new branch location in May of 2001 in the
                  Foothills community of neighboring Pickens County. This
                  geographic expansion should provide for continued growth.

<PAGE>
Results of Operations For The Three and Nine Months Ended September 30, 2001
and 2000

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

<TABLE>
<CAPTION>
                                   Three Months Ended
                                     September 30,
                               --------------------------
                                2001               2000
                               -------            -------
<S>                            <C>                <C>
Interest income                $ 2,207            $ 1,675
Interest expense                 1,167                770
                               -------            -------
Net interest income              1,040                905
Provision for loan losses          135                 57
Other income                       143                 97
Other expense                    1,133                704
                               -------            -------
                               -------            -------
Pretax income (loss)               (85)               241
Income tax expense (benefit)       (50)                49
                               -------            -------
Net income (loss)              $   (35)           $   192
                               =======            =======
</TABLE>

<TABLE>
<CAPTION>
                                     Nine Months Ended
                                      September 30,
                               --------------------------
                                 2001               2000
                               -------            -------
<S>                            <C>                <C>
Interest income                $ 6,297            $ 4,318
Interest expense                 3,255              1,908
                               -------            -------
Net interest income              3,042              2,410
Provision for loan losses          307                199
Other income                       387                298
Other expense                    3,077              1,966
                               -------            -------
Pretax income                       45                543
Income tax expense                  15                 49
                               -------            -------
Net income                     $    30            $   494
                               =======            =======
</TABLE>

                   Our net interest income has increased by $135,000 and
                   $632,000 for the third quarter and first nine months of
                   2001, respectively, as compared to the same periods in 2000.
                   Our net interest margin decreased to 4.46% during the first
                   nine months of 2001 as compared to 5.55% during the first
                   nine months of 2000 and 5.45% for the entire year of 2000.
                   The increase in net interest income is due primarily to the
                   increased volume of average loans. The decrease in net
                   interest margin is due primarily to continued pressures on
                   the rates that we can earn on our interest-earning assets.
                   The prime rate has been lowered ten times to date in 2001 to
                   5.00%. Each reduction in the prime rate immediately lowers
                   the rates we earn on variable rate loans. Overnight federal
                   funds balances put pressure on the rates we earn on fixed
                   rate loans as well. We have been able to offset some of the
                   decrease in our net interest margin by lowering the rates we
                   pay on our interest-bearing liabilities. As deposits mature
                   and are repriced, we expect to see our net interest margin
                   increase. If the prime rate continues to drop, however, it
                   would have a further negative impact on our net interest
                   margin.

<PAGE>
                  The provision for loan losses was $135,000 and $307,000 during
                  the third quarter and first nine months of 2001, respectively,
                  as compared to $57,000 and $199,000 for the same periods in
                  2000. The amounts provided are due primarily to loan growth,
                  increased nonaccrual and past due loans, and to our assessment
                  of the inherent risk in the loan portfolio. The allowance for
                  loan losses as a percentage of total loans amounted to 1.00%
                  at September 30, 2001 as compared to 1.10% at December 31,
                  2000. 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. Our
                  evaluation of the loan portfolio includes a continuing review
                  of loan loss experience, current economic conditions which may
                  affect the borrower's ability to repay and the underlying
                  collateral value.

Information with respect to nonaccrual, past due and restructured loans is as
follows:

<TABLE>
<CAPTION>
                                                                             September 30,
                                                                         ----------------------
                                                                         2001            2000
                                                                         ----------------------
                                                                         (Dollars in Thousands)
                                                                         ----------------------

<S>                                                                      <C>             <C>
Nonaccrual loans                                                         $ 161           $  -
Loans contractually past due ninety days or more as to
Interest or principal payments and still accruing                          135              2
Restructured loans                                                          -               -
Loans, now current about which there are serious doubts
as to the ability of the borrower to comply with loan repayment terms       -               -
Interest income that would have been recorded on
nonaccrual and restructured loans under original terms                     17               -
Interest income that was recorded on nonaccrual and restructured loans      -               -
</TABLE>

                  It is our policy to discontinue the accrual of interest income
                  when, in the opinion of management, collection of 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. These classified loans do not represent
                  material credits about which we are aware of any information
                  which causes management to have serious doubts as to the
                  ability of such borrowers to comply with the loan repayment
                  terms.

<PAGE>
Information regarding certain loans and allowance for loan loss data is as
follows:

<TABLE>
<CAPTION>
                                                                        Nine Months Ended
                                                                          September 30,
                                                                    -----------------------
                                                                      2001            2000
                                                                    -------         -------
                                                                     (Dollars in Thousands)
                                                                    -----------------------

<S>                                                                 <C>             <C>
Average amount of loans outstanding                                 $84,050         $50,687
                                                                    =======         =======

Balance of allowance for loan losses at beginning of period         $   737         $   397
                                                                    -------         -------

Loans charged off
   Commercial and financial                                            --              --
   Real estate mortgage                                                --                 8
   Installment                                                           15            --
                                                                    -------         -------
                                                                         15               8
                                                                    -------         -------

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

Net charge-offs                                                          15               8
                                                                    -------         -------

Additions to allowance charged to operating expense during period       307             199
                                                                    -------         -------

Balance of allowance for loan losses at end of period               $ 1,029         $   588
                                                                    =======         =======

Ratio of net loans charged off during the period to
   Average loans outstanding                                            .02%            .02%
                                                                    =======         =======
</TABLE>

                  Other income has increased by $46,000 and $89,000 for the
                  third quarter and first nine months of 2001, respectively, as
                  compared to the same periods in 2000. Increased service
                  charges on deposit accounts associated with overall deposit
                  growth are the primary factor in the increase.

                  Other expenses have increased by $429,000 and $1,111,000 for
                  the third quarter and first nine months of 2001, respectively,
                  as compared to the same periods in 2000. Salaries and employee
                  benefits have increased due to an increase in the number of
                  full time equivalent employees to 53 at September 30, 2001
                  from 33 at September 30, 2000 and to normal salary increases.
                  The increase in the number of employees has been necessary in
                  order to staff the Foothills branch as well as to serve our
                  overall growth. Occupancy and equipment expenses have
                  increased due to increased depreciation, rental, and
                  maintenance costs associated with our additional branches.
                  Other operating expenses have increased due to increased
                  advertising and marketing, communications, postage, office
                  supplies, and computer processing costs, all associated with
                  our overall growth.

<PAGE>
                  We have recorded income tax expense of $15,000, or 34% of
                  pretax income, for the first nine months of 2001 as compared
                  to $49,000, or 9%, for the same period in 2000. The lower rate
                  in 2000 was due to the recognition of deferred tax assets
                  previously accorded a valuation allowance.

                  Overall, net income has decreased by $227,000 and $464,000
                  during the third quarter and first nine months of 2001,
                  respectively, as compared to the same periods in 2000 due
                  primarily to lower than expected net interest income,
                  increased provisions for loan losses, and increased operating
                  expenses associated with our growth.

                  In the first quarter of 2001, we began offering investment and
                  financial services through Chestatee Financial Services, Inc.
                  and residential mortgage services through Chestatee
                  Residential Mortgage Services, Inc. The effect on the results
                  of operations from these new activities was not significant
                  for the first nine months of 2001.

                  The terrorist attacks that occurred in New York City and
                  Washington, D.C. on September 11, 2001 and the United States'
                  subsequent response to these events have resulted in a general
                  economic slowdown that may adversely affect our banking
                  business. Economic slowdowns or recessions in our primary
                  market area of Dawson County, Georgia may be accompanied by
                  reduced demand for credit, decreasing interest margins and
                  declining real estate values, which may in turn result in a
                  decrease in net earnings and an increased possibility of
                  potential loan losses in the event of default. Any sustained
                  period of decreased economic activity, increased
                  delinquencies, foreclosures or losses could limit our growth
                  and negatively effect our results of operations. We cannot
                  predict the extent, duration of these events or effect upon
                  our business and operations. We will, however, closely monitor
                  the effect of these events upon our business and make
                  adjustments to our business strategy as deemed necessary.

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

<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

                  Our subsidiary, Chestatee State Bank, brought an action on
                  March 5, 2001 in the Superior Court for Dawson County against
                  Terri Reece and Woody Reece to recover amounts due following
                  default on a promissory note. We sought 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 us. In addition, the Reeces have
                  filed a counterclaim against us for deliberate and intentional
                  infliction of emotional distress for a sum not less than $1
                  million and for unstipulated punitive damages.

                  Chestatee State Bank is not required to and has not filed an
                  answer to this counterclaim. However, we intend to pursue our
                  claims against the Reeces and vigorously defend any claim of
                  wrongdoing by us. We have filed a motion for summary judgment
                  seeking dismissal of the counterclaim. The suit is presently
                  pending.


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

                  None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits

                           None

                  (b)      Reports on Form 8-K

                           None

<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 14, 2001         BY: /s/ J. Philip Hester, Sr.
      -----------------             -------------------------------------------
                                    J. Philip Hester, Sr., President and C.E.O.
                                    (Principal Executive Officer)


DATE: November 14, 2001         BY: /s/ Robert W. Coile
      -----------------             --------------------------------------------
                                    Robert W. Coile, C.F.O. and Treasurer
                                    (Principal Financial and Accounting Officer