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      March 31, 2005
                                                  --------------------

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

       For the transition period from __________________to_______________

                        Commission File Number: 000-30273

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

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

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

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

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

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of May 2, 2005: 3,123,000; no par value.

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

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

                                      INDEX
                                      -----

                                                                            Page
                                                                            ----

PART I.    FINANCIAL INFORMATION

           ITEM 1.      Financial Statements

           Consolidated Balance Sheet - March 31, 2005.........................3

           Consolidated Statements of Income and Comprehensive Income (Loss)
                    Three Months Ended March 31, 2005 and 2004.................4

           Consolidated Statements of Cash Flows -
                    Three months Ended March 31, 2005 and 2004.................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...............................17


PART II.   OTHER INFORMATION

           ITEM 1.      Legal Proceedings.....................................18

           ITEM 4.      Submission Of Matters To A Vote Of Security Holders...18

           ITEM 5.      Other Information.....................................18

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

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

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


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.       Financial Statements

                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                AT MARCH 31, 2005
                                   (Unaudited)

                                     Assets
                                     ------

Cash and due from banks                                           $   3,388,603
Interest-bearing deposits in banks                                    5,199,515
Federal funds sold                                                   26,659,000
Securities available-for-sale, at fair value                         30,532,374
Restricted equity securities, at cost                                 1,473,200

Loans                                                               195,709,227
Less allowance for loan losses                                        3,613,113
                                                                  -------------
          Loans, net                                                192,096,114
                                                                  -------------

Premises and equipment, net                                           7,868,260
Other assets                                                          3,522,165
                                                                  -------------

          Total assets                                            $ 270,739,231
                                                                  =============


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

Deposits
    Noninterest-bearing                                           $  22,142,808
    Interest-bearing                                                202,430,019
                                                                  -------------
          Total deposits                                            224,572,827
Other borrowings                                                     21,600,000
Other liabilities                                                     1,211,497
                                                                  -------------
          Total liabilities                                         247,384,324
                                                                  -------------

Commitments and contingencies

Stockholders' equity
    Common stock, no par value; 20,000,000 shares
      authorized; 3,123,000 shares issued and outstanding            21,554,341
    Retained earnings                                                 2,100,132
    Accumulated other comprehensive income                             (299,566)
                                                                  -------------
          Total stockholders' equity                                 23,354,907
                                                                  -------------

          Total liabilities and stockholders' equity              $ 270,739,231
                                                                  =============

                 See Notes to Consolidated Financial Statements

                                       3
<PAGE>
                   CHESTATEE BANCSHARES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                   THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months
                                                                    Ended
                                                                  March 31
                                                         --------------------------
                                                             2005           2004
                                                         -----------    -----------
<S>                                                      <C>            <C>
Interest income
    Loans                                                $ 3,256,435    $ 2,784,098
    Taxable Securities                                       230,874        286,794
    Nontaxable Securities                                     16,464              -
    Federal funds sold                                       142,409          9,408
    Interest-bearing deposits in banks                        37,358         10,443
                                                         -----------    -----------
              Total interest income                        3,683,540      3,090,743
                                                         -----------    -----------

Interest expense
    Deposits                                               1,155,067        795,738
    Other borrowings                                         122,866        141,403
                                                         -----------    -----------
              Total interest expense                       1,277,933        937,141
                                                         -----------    -----------

              Net interest income                          2,405,607      2,153,602
Provision for loan losses                                     47,568        251,607
                                                         -----------    -----------
              Net interest income after
                provision for loan losses                  2,358,039      1,901,995
                                                         -----------    -----------

Other income
      Service charges and fees                               232,397        204,464
      Losses on sales of securities available for sale       (30,224)             -
      Other operating income                                  87,288         95,544
                                                         -----------    -----------
              Total other income                             289,461        300,008
                                                         -----------    -----------

Other expenses
    Salaries and employee benefits                         1,013,455        902,913
    Occupancy and equipment expenses                         230,811        251,832
    Other operating expenses                                 578,550        538,960
                                                         -----------    -----------

              Total other expenses                         1,822,816      1,693,705
                                                         -----------    -----------

              Net income before income taxes                 824,684        508,298

Income tax expense                                           288,764        183,039
                                                         -----------    -----------

              Net income                                     535,920        325,259
                                                         -----------    -----------

Basic earnings per share                                 $      0.17    $      0.10
                                                         ===========    ===========

                                                         $      0.17    $      0.10
                                                         ===========    ===========

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

                 See Notes to Consolidated Financial Statements

                                       4
<PAGE>
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                           AT MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                           2005        2004
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
Net income                                                              $ 535,920    $ 325,259
Other comprehensive income (loss):
        Unrealized holding gains on securities
           available-for-sale arising during period, net of
           tax of $75,242 and $148,571 respectively                      (139,736)     244,996

       Reclassification adjustment for losses realized in net income,
           net of tax benefits of $10,578                                  19,646           -
                                                                        ---------    ---------

Other comprehensive income (loss)                                        (120,090)     244,996
                                                                        ---------    ---------

Comprehensive income                                                    $ 415,830    $ 570,255
                                                                        =========    =========
</TABLE>



                 See Notes to Consolidated Financial Statements

                                       5
<PAGE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2005 AND 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         2005           2004
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
OPERATING ACTIVITIES
    Net income                                                      $    535,920    $    325,259
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                     132,944         133,329
        Provision for loan losses                                         47,568         251,607
       Decrease in interest receivable                                   182,678         143,007
        Increase (decrease) in interest payable                           57,461          (3,295)
        Other operating activities                                        15,323         438,215
                                                                    ------------    ------------

              Net cash provided by operating activities                  971,894       1,288,122
                                                                    ------------    ------------

INVESTING ACTIVITIES
    Net (increase) decrease in interest-bearing deposits in banks      1,150,787        (463,853)
    Net increase in federal funds sold                               (22,568,000)       (429,000)
    Purchases of securities available-for-sale                        (3,935,943)     (1,808,984)
    Proceeds from maturities of securities available-for-sale          1,193,408       3,298,911
    Proceeds from sales of securities available-for-sale               1,995,251               -
    Net increase (decrease) in loans                                   1,679,606      (9,463,411)
    Purchase of premises and equipment                                   (97,314)        (30,138)
                                                                    ------------    ------------

              Net cash used in investing activities                  (20,582,205)     (8,896,475)
                                                                    ------------    ------------

FINANCING ACTIVITIES
    Net increase in deposits                                          24,178,986       3,750,389
    Net proceeds (repayments) from other borrowings                   (4,600,000)      5,500,000
                                                                    ------------    ------------

              Net cash provided by financing activities               19,578,986       9,250,389
                                                                    ------------    ------------

Net increase (decrease) in cash and due from banks                       (31,325)      1,642,036

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

Cash and due from banks, end of period                              $  3,388,603    $  5,330,842
                                                                    ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Cash paid for:
          Interest                                                  $  1,220,472    $    940,436

          Income taxes                                              $    138,925    $          -

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

    Financed sales of other real estate owned                       $          -    $     70,029
</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 period ended March 31, 2005 are not
         necessarily indicative of the results to be expected for the full year.


NOTE 2.  STOCK COMPENSATION PLANS

         At March 31, 2005, the Company has two stock-based employee
         compensation plans. The Company accounts for those plans under the
         recognition and measurement principles of APB Opinion No. 25,
         Accounting for Stock Issued to Employees, and related Interpretations.
         No stock-based employee compensation cost is reflected in net income
         (loss), as all options granted under those plans had an exercise price
         equal to the market value of the underlying stock on the date of grant.
         The Company also has remaining options outstanding that were granted to
         certain executive officers under employee agreements. The following
         table illustrates the effect on net income (loss) and earnings (losses)
         per share if the Company had applied the fair value recognition
         provisions of SFAS Statement No. 123, Accounting for Stock-Based
         Compensation, to stock-based employee compensation.

                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                        2005           2004
                                                      ---------     ---------

   Net income, as reported                            $ 535,920     $ 325,259
   Deduct: Total stock-based employee compensation
         expense determined under fair value based
         method for all awards                           26,954        21,352
                                                      -----------   ---------
   Pro forma net income                               $ 508,966     $ 303,907
                                                      ===========   =========
   Earnings per share:
      Basic - as reported                             $     .17     $     .10
                                                      ===========   =========
      Basic - pro forma                               $     .16     $     .10
                                                      ===========   =========
      Diluted - as reported                           $     .17     $     .10
                                                      ===========   =========
      Diluted - pro forma                             $     .16     $     .09
                                                      ===========   =========

                                       7
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 3.  EARNINGS (LOSSES) PER SHARE

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



                                                    Three Months Ended March 31,
                                                    ----------------------------
                                                          2005           2004
                                                    -------------   -----------

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

   Net income                                       $   535,920     $   325,259
                                                    ===========     ===========

   Basic earnings per share                         $       .17     $       .10
                                                    ===========     ===========

Diluted Earnings Per Share:
   Weighted average common shares outstanding         3,123,000       3,106,000
   Net effect of the assumed exercise of stock
      options based on the treasury stock method
      using average market prices for the year           46,576          49,576
                                                    -----------     -----------
   Total weighted average common shares and
      common stock equivalents outstanding            3,169,576       3,155,576
                                                    ===========     ===========

   Net income                                       $   535,920     $   325,259
                                                    ===========     ===========

   Diluted earnings per share                       $       .17     $       .10
                                                    ===========     ===========


                                       8
<PAGE>
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 4.  CURRENT ACCOUNTING DEVELOPMENTS

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



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

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

Critical Accounting Policies

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


                                       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
March 31, 2005, our liquidity, as determined under guidelines established by
regulatory authorities and internal policy, was satisfactory.

At March 31, 2005, our capital ratios were adequate based on regulatory minimum
capital requirements. The minimum capital requirements and the actual capital
ratios on a consolidated and bank-only basis are as follows:

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

     Leverage capital ratios              8.96 %           8.74 %       4.00 %
     Risk-based capital ratios:
        Core capital                     10.90            10.64         4.00
        Total capital                    12.15            11.90         8.00

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

Off-Balance Sheet Risk

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

                                       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:


                                                     March 31, 2005
                                                 ----------------------
                                                 (Dollars in thousands)

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

    Commitments to extend credit                 $             34,552
    Letters of credit                                           1,398
                                                 ----------------------
                                                 $             35,950
                                                 ======================

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:

                                                     March 31,  December 31,
                                                       2005        2004
                                                    ----------  ------------
                                                     Dollars in Thousands)
                                                    ------------------------

Cash and due from banks                             $    3,389   $    3,420
Interest-bearing deposits in banks                       5,199        6,350
Federal funds sold                                      26,659        4,091
Securities                                              32,006       31,470
Loans, net                                             192,096      193,823
Premises and equipment                                   7,868        7,904
Other assets                                             3,522        3,590
                                                    ----------   ----------
                                                    $  270,739   $  250,648
                                                    ==========   ==========

Deposits                                            $  224,573   $  200,394
Other borrowings                                        21,600       26,200
Other liabilities                                        1,211        1,115
Stockholders' equity                                    23,355       22,939
                                                    ----------   ----------
                                                    $  270,739   $  250,648
                                                    ==========   ==========

Our total assets grew by 8% for the three months ended March 31, 2005. Deposit
growth of $24.2 million was used to reduce other borrowings by $4.6 million and
invested in securities and fed funds. Our ratio of gross loans to deposits and
other borrowings was 79.5% at March 31, 2005 and 87.1% at December 31, 2004. Our
total equity increased by $416,000, consisting of year-to-date net income of
$536,000 which was partially offset by an increase in unrealized losses on
securities available-for-sale, net of tax of $120,000.



                                       13
<PAGE>
Results of Operations For The Three Months Ended March 31, 2005 and 2004

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

                                                  Three Months Ended
                                                       March 31,
                                              ------------------------
                                                2005              2004
                                              -------           -------
                                                (Dollars in Thousands)
                                              -------------------------

Interest income                                $3,684            $3,091

Interest expense                                1,278               937
                                               ------            ------

Net interest income                             2,406             2,154

Provision for loan losses                          48               252

Other income                                      289               300

Other expense                                   1,822             1,694
                                               ------            ------

Pretax income                                     825               508

Income taxes                                      289               183
                                               ------            ------

Net income                                     $  536            $  325
                                               ======            ======

Our net interest income increased by $211,000 for the three months ended March
31, 2005 as compared to the same period in 2004. Our net interest margin was
3.88% during the three months ended March 31, 2005 as compared to 4.01% for the
three months ended March 31, 2004 and to 3.90 % for the entire year of 2004. The
increase in net interest income is due primarily to the increased volume of
average loans and investment securities outstanding coupled with increases in
the Prime Lending Rate. The decrease in net interest margin is due to a lowered
loan to deposit mix and increased competition in our local market. Yields earned
on loans have increased to 6.90% in the first three months of 2005 as compared
to 6.43% in the first three months of 2004. Our cost of funds increased to 2.16
% in the first three months of 2005 as compared to 1.98% in the first three
months of 2004. The increase in cost of funds also reflects the impact of
interest rate increases over the past twelve months.

The provision for loan losses was $48,000 for the three months ended March 31,
2005. The provision is a decrease from the comparable period 2004 by $204,000.
The reduction in provision expense is reflective of improved asset quality.


                                       14
<PAGE>
Nonaccrual loans of $648,000 at March 31, 2005 consist of $439,000 of commercial
loans, $208,000 of real estate loans and $1,000 of other consumer loans. Loans
past due ninety days or more and still accruing interest of $7,000 at March 31,
2005 consists of other consumer loans of $7,000. These loans were identified
through our loan evaluation process and have been properly considered in the
determination of the allowance for loan losses. Management believes that the
$3,613,000 in the allowance for loan losses at March 31, 2005, or 1.85% of total
net outstanding loans, is adequate to absorb known risks in the portfolio. No
assurance can be given, however, that increased loan volume, and adverse
economic conditions or other circumstances will not result in increased losses
in our loan portfolio.

Information with respect to nonaccrual, past due, restructured, and potential
problem loans at March 31, 2005 and 2004 is as follows:

<TABLE>
<CAPTION>
                                                                              March 31,
                                                                       ----------------------
                                                                        2005           2004
                                                                       ----------------------
                                                                       (Dollars in Thousands)
                                                                       ----------------------
<S>                                                                    <C>           <C>
Nonaccrual loans                                                       $  648        $  1,309
Loans contractually past due ninety days or more as to interest
   or principal payments and still accruing                                 7             425
Restructured loans                                                          -               -
Potential problem loans                                                     -           1,213
Interest income that would have been recorded on nonaccrual
   and restructured loans under original terms                             25             116
Interest income that was recorded on nonaccrual and                         -               -
   restructured loans
</TABLE>

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

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

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

                                       15
<PAGE>
Information regarding certain loans and allowance for loan loss data through
March 31, 2005 and 2004 is as follows:

<TABLE>
<CAPTION>
                                                                     Three months Ended
                                                                         March 31,
                                                                   ----------------------
                                                                      2005        2004
                                                                   ---------   ----------
                                                                   (Dollars in Thousands)
                                                                   ----------------------
<S>                                                                 <C>         <C>
Average amount of loans outstanding                                 $191,320    $172,993
                                                                    ========    ========

Balance of allowance for loan losses at beginning of period            3,620       3,163
                                                                    --------    --------
Loans charged off
   Commercial and financial                                                -          27
   Real estate mortgage                                                    -           -
   Installment                                                            61          21
                                                                    --------    --------
                                                                          61          48
                                                                    --------    --------
Loans recovered
   Commercial and financial                                                -           1
   Real estate mortgage                                                    -           1
   Installment                                                             6           1
                                                                    --------    --------
                                                                           6           3
                                                                    --------    --------

Net charge-offs                                                           55          42
                                                                    --------    --------

Additions to allowance charged to operating expense during period         48         252
                                                                    --------    --------

Balance of allowance for loan losses at end of period               $  3,613    $  3,373
                                                                    ========    ========

Ratio of net loans charged off during the period to
   average loans outstanding                                             .03%        .02%
                                                                    ========    ========
</TABLE>

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

                                       16
<PAGE>
Other income has decreased by $11,000 for the three months ended March 31, 2005
as compared to the same period in 2004. The decrease in other income is due to
losses on sales of securities available for sale of $30,000 which were offset by
increases in service charges of $28,000 and credit card fees of $14,000 coupled
with a decrease in gain on sale of other real estate of $34,000. The remaining
increase is spread throughout various categories.

Other expenses increased by $129,000 for the three months ended March 31, 2005
as compared to the same period in 2004. Salaries and employee benefits increased
by $110,000, equipment and occupancy expenses decreased by $21,000, and other
operating expenses increased by $70,000. Salaries and employee benefits have
increased due to increased benefits expenses and annual salary increases. The
increase of $70,000 in other operating expenses was due to general increases in
most other operating expense categories.

We have recorded income tax expense of $289,000 for the three months ended March
31, 2005. The rate of tax as a percentage of pretax income was 35%.

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


ITEM 3.  Controls and Procedures

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

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


                                       17
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

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

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

No matter was submitted to a vote of security holders in the first quarter of
2005.


ITEM 5.  Other Information

None


ITEM 6.  Exhibits And Reports On Form 8-K

         (a) Exhibits.

         Number    Description

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

         (b) Reports on Form 8-K.

             None


                                       18
<PAGE>
                                   SIGNATURES


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

                           CHESTATEE BANCSHARES, INC.
                                  (Registrant)



DATE: May 13, 2005              BY: /s/J. Philip Hester, Sr.
      ------------                  -------------------------------------------
                                    J. Philip Hester, Sr., President and C.E.O.
                                    (Principal Executive Officer)


DATE: May 13, 2005              BY: /s/Deborah F. McLeod
      ------------                  --------------------------------------------
                                    Deborah F. McLeod, C.F.O. and Treasurer
                                    (Principal Financial and Accounting Officer)




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