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, 2004

     [ ]  Transition report under Section 13 or 15(d) of the Exchange Act for
          the transition period from _____ to _____

                        Commission file number: 000-24137


                            GATEWAY BANCSHARES, INC.
        (Exact name of small business issuer as specified in its charter)


                  Georgia                           58-2202210
          (State of Incorporation)     (I.R.S. Employer Identification No.)


                              5102 Alabama Highway
                            Ringgold, Georgia  30736
                    (Address of principal executive offices)


                                 (706) 965-5500
                (Issuer's telephone number, including area code)



Check  whether  the  issuer  (1)  has  filed all reports required to be filed by
Section  13  or  15(d) of the Securities Exchange Act of 1934 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  the  latest  practicable  date:

               Class
               -----

     Common Stock, $5.00 par value              652,638 as of May 7, 2004


Transitional Small Business Disclosure Format:       Yes [   ]  No [ X ]


<PAGE>
                            GATEWAY BANCSHARES, INC.

                           March 31, 2004 Form 10-QSB

                                TABLE OF CONTENTS


                                                                        Page No.
                                                                        --------

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements (unaudited)

          Consolidated Balance Sheets . . . . . . . . . . . . . . . .      3

          Consolidated Statements of Income . . . . . . . . . . . . .      4

          Consolidated Statement of Changes in Stockholders' Equity .      5

          Consolidated Statements of Cash Flows . . . . . . . . . . .      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 . . . . . . . . . . . . . . . . . .     16

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . .     16

Item 2.   Changes in Securities and Use of Proceeds . . . . . . . . .     16

Item 3.   Defaults Upon Senior Securities . . . . . . . . . . . . . .     16

Item 4.   Submission of Matters to a Vote of Security Holders . . . .     17

Item 5.   Other Information . . . . . . . . . . . . . . . . . . . . .     17

Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .     17

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     18

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

                                    * * * * *


                                      -2-
<PAGE>

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                                  CONSOLIDATED BALANCE SHEETS

                                                               March 31, 2004    December 31,
                                                                (unaudited)         2003
                                                              ----------------  --------------
<S>                                                           <C>               <C>
ASSETS
  Cash and due from banks                                     $     6,030,950   $   8,989,083
  Federal funds sold                                                        -       4,340,000
  Securities available-for-sale                                    28,359,860      33,692,972
  Federal Home Loan Bank stock, at cost                               345,000         298,200
  Loans                                                           123,219,383     118,557,379
  Allowance for loan losses                                        (1,731,866)     (1,664,578)
                                                              ----------------  --------------
  Net loans                                                       121,487,517     116,892,801

  Premises and equipment, net                                       2,949,440       2,956,709
  Accrued interest receivable                                         794,759         772,900
  Other assets                                                      1,341,341       1,375,060
                                                              ----------------  --------------

      Total assets                                            $   161,308,867   $ 169,317,725
                                                              ================  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                       $    14,088,773   $  12,308,701
    Interest-bearing                                              123,692,375     135,772,401
                                                              ----------------  --------------

      Total deposits                                              137,781,148     148,081,102

  Long-term borrowings:
    Federal Home Loan Bank advances                                 2,500,000       2,500,000
    Long-term obligations                                           3,609,000       3,609,000
  Federal funds purchased and securities sold under
    agreements to repurchase                                        5,040,884       3,206,203
  Accrued interest payable                                            210,069         261,288
  Other liabilities                                                   356,790         500,767
                                                              ----------------  --------------

      Total liabilities                                           149,497,891     158,158,360
                                                              ----------------  --------------

STOCKHOLDERS' EQUITY
  Common stock, $5 par value: 10,000,000 shares authorized,
    652,638 shares issued and outstanding                           3,263,190       3,263,190
  Additional paid-in capital                                        3,336,335       3,296,440
  Retained earnings                                                 5,081,544       4,638,896
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                  129,907         (39,161)
                                                              ----------------  --------------

      Total stockholders' equity                                   11,810,976      11,159,365
                                                              ----------------  --------------

      Total liabilities and stockholders' equity              $   161,308,867   $ 169,317,725
                                                              ================  ==============
<FN>


The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


                                      -3-
<PAGE>
<TABLE>
<CAPTION>
                      GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                    (unaudited)


                                                             Three Months Ended
                                                           -----------------------
                                                            March 31,   March 31,
                                                              2004         2003
                                                           -----------  ----------
<S>                                                        <C>          <C>
INTEREST INCOME
  Loans                                                    $2,063,183   $1,708,340
  Interest on securities:
    Taxable interest                                          208,085      199,972
    Nontaxable interest                                        39,183       29,359
  Interest on federal funds sold                                4,424       15,258
                                                           -----------  ----------

      Total interest income                                 2,314,875    1,952,929
                                                           -----------  ----------

INTEREST EXPENSE
  Interest on deposits                                        642,496      684,702
  Interest on notes payable                                    34,900        8,500
  Interest on Federal Home Loan Bank advances                  27,475       29,984
  Interest on federal funds purchased and securities sold
    under agreements to repurchase                             11,534        4,823
                                                           -----------  ----------

      Total interest expense                                  716,405      728,009
                                                           -----------  ----------

NET INTEREST INCOME                                         1,598,470    1,224,920
  Provision for loan losses                                    85,000      110,000
                                                           -----------  ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         1,513,470    1,114,920
                                                           -----------  ----------

NONINTEREST INCOME
  Service charges on deposits                                 273,555      224,480
  Mortgage loan fees                                           70,724      125,578
  Insurance commissions                                         2,111        4,671
  Gains (losses) on sale of securities                         (4,086)     183,804
  Other income                                                 72,988       29,765
                                                           -----------  ----------

      Total noninterest income                                415,292      568,298
                                                           -----------  ----------

NONINTEREST EXPENSE
  Salaries and employee benefits                              706,807      634,191
  Occupancy expense                                            55,137       49,516
  Furniture and equipment expense                              49,624       44,047
  Other operating expenses                                    442,378      358,124
                                                           -----------  ----------

      Total noninterest expense                             1,253,946    1,085,878
                                                           -----------  ----------

Income before income taxes                                    674,816      597,340
Income taxes                                                  232,168      206,159
                                                           -----------  ----------

      Net income                                           $  442,648   $  391,181
                                                           ===========  ==========

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

  Net income per common share                              $     0.68   $     0.57

  Basic weighted average shares outstanding                   652,638      681,758

  Diluted earnings per common share                        $     0.62   $     0.56

  Diluted weighted average shares outstanding                 711,073      695,116
<FN>


The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


                                      -4-
<PAGE>
<TABLE>
<CAPTION>
                                            GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                                   CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                          (unaudited)


                                                                                                                   Accumulated
                                                                  Total                   Additional                 Other
                                              Comprehensive   Stockholders'     Common     Paid-in     Retained   Comprehensive
                                                  Income          Equity        Stock      Capital     Earnings      Income
                                              --------------  --------------  ----------  ----------  ----------  -------------
<S>                                           <C>             <C>             <C>         <C>         <C>         <C>

BALANCE, December 31, 2003                                    $   11,159,365  $3,263,190  $3,296,440  $4,638,896  $    (39,161)

  Stock options compensation                                          39,895           -      39,895           -             -

  Comprehensive income:
    Net income                                $      442,648         442,648           -           -    442,648               -

    Other comprehensive income, net of tax:
      Unrealized holding gains
        (losses) on securities available for
        available for sale, net
        of reclassification adjustment               169,068         169,068           -           -          -         169,068
                                              --------------  --------------  ----------  ----------  ----------  -------------

    Total comprehensive income                $      611,716
                                              ==============

BALANCE, March 31, 2004                                       $   11,810,976  $3,263,190  $3,336,335  $5,081,544  $     129,907
                                                              ==============  ==========  ==========  ==========  =============
<FN>


The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


                                      -5-
<PAGE>
<TABLE>
<CAPTION>
                              GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                           (unaudited)

                                                                          Three Months Ended
                                                                     ----------------------------
                                                                       March 31,      March 31,
                                                                         2004           2003
                                                                     -------------  -------------
<S>                                                                  <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                         $    442,648   $    391,181
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
      Provision for loan losses                                            85,000        110,000
      Depreciation and amortization                                        49,481         40,345
      Stock options compensation                                           39,895         35,223
      Net amortization on securities                                       71,564         98,778
      (Gain) loss on sale of securities                                     4,086       (183,804)
      Deferred income taxes                                               (36,206)       (39,518)
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                       (21,859)         9,418
        Accrued interest payable                                          (51,219)       (11,981)
        Other assets and liabilities                                     (182,924)      (199,491)
                                                                     -------------  -------------

          Net cash provided by operating activities                       400,466        250,151
                                                                     -------------  -------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net increase in loans                                                (4,679,716)    (1,813,542)
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                       6,609,656      9,895,101
  Proceeds from sales of available-for-sale securities                  1,259,997      3,603,824
  Purchase of available-for-sale securities                            (2,339,501)   (13,541,353)
  Purchase of Federal Home Bank stock                                     (46,800)       (38,200)
  Purchase of premises and equipment                                      (36,962)       (38,049)
                                                                     -------------  -------------

          Net cash provided by (used in) investing activities             766,674     (1,932,219)
                                                                     -------------  -------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net increase (decrease) in deposits                                 (10,299,954)       557,817
  Net increase (decrease) in federal funds purchased and securities
    sold under agreements to repurchase                                 1,834,681       (520,837)
  Payments on Federal Home Loan Bank advances                                   -     (1,000,000)
                                                                     -------------  -------------

          Net cash used in financing activities                        (8,465,273)      (963,020)
                                                                     -------------  -------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                              (7,298,133)    (2,645,088)

CASH AND CASH EQUIVALENTS, beginning of period                         13,329,083     14,499,445
                                                                     -------------  -------------

CASH AND CASH EQUIVALENTS, end of period                             $  6,030,950   $ 11,854,357
                                                                     =============  =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                         $    767,624   $    739,990
    Income taxes                                                           89,329        158,002
                                                                     =============  =============
<FN>


The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


                                      -6-
<PAGE>
                    GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
                                 March 31, 2004

NOTE 1 - BASIS OF PRESENTATION
------------------------------

The  consolidated  financial  statements  include  the  accounts  of  Gateway
Bancshares,  Inc.,  and  its  wholly-owned subsidiary, Gateway Bank & Trust. All
significant  intercompany  accounts  and  transactions  have  been eliminated in
consolidation.

The  accompanying unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  for  interim
financial  information  and  with the instructions to Form 10-QSB and Regulation
S-B.  Accordingly,  they  do  not  include  all of the information and footnotes
required by U.S. generally accepted accounting principles for complete financial
statements.  In  management's  opinion,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary  for  a  fair presentation have been
included.  Operating results for the three-month period ended March 31, 2004 are
not  necessarily  indicative  of  the  results that may be expected for the year
ending  December  31,  2004.  For  further  information,  refer to the financial
statements  and  footnotes thereto included in the Company's annual report filed
under  cover  of  Form  10-KSB  for  the  year  ended  December  31,  2003.

NOTE 2 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------

Organization
------------

Gateway  Bancshares,  Inc.  (the  Company)  is  a one-bank holding company which
engages  in  providing  a  full range of banking services through its subsidiary
bank,  Gateway  Bank & Trust (the Bank), in Ringgold, Georgia. The Bank received
preliminary  charter  approval  in  1995.  In  April 1997 the Bank was granted a
charter  by  the  Georgia  Department  of  Banking  and  Finance  and began full
operations.  Further discussion of the Company's financial condition and results
of  operations  is  included  in the Company's consolidated financial statements
presented  in  the  Company's  annual  report  on Form 10-KSB for the year ended
December  31,  2003.

Net Income Per Common Share
---------------------------

Net  income  per  common share is based on the weighted-average number of shares
outstanding  for  the  periods  presented.

NOTE 3 - INVESTMENT SECURITIES
------------------------------

The  Company  has applied the accounting and reporting requirements of Statement
of Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (SFAS No. 115).  This pronouncement requires that all
investments  in  debt  securities  be  classified  as  either  held-to-maturity
securities,  which are reported at amortized cost; trading securities, which are
reported  at  fair value, with unrealized gains and losses included in earnings;
or  available-for-sale  securities,  which  are  reported  at  fair  value, with
unrealized  gains  and  losses excluded from earnings and reported in a separate
component  of  stockholders'  equity  (net  of  deferred  taxes).

At  March  31,  2004,  the  Company  had  net  unrealized  gains  of $209,526 on
available-for-sale  securities.  As  a  result,  the  increase  in stockholders'
equity,  net  of deferred taxes, was $129,907.  There were no trading securities
at  March 31, 2004.  The net increase in stockholders' equity as a


                                      -7-
<PAGE>
result of the SFAS No. 115 adjustment from December 31, 2003, to March 31, 2004,
was  $169,068.

NOTE 4 - BORROWED FUNDS
-----------------------

In  September  2000,  the  Bank obtained a $1 million loan from the Federal Home
Loan Bank.  The note requires quarterly interest payments at an interest rate of
6.09  percent,  and  matures  on September 15, 2010.  This note is subject to an
early  conversion  option effective September 15, 2003, which allows the Federal
Home  Loan  Bank  to  covert  this note into a floating rate advance tied to the
three-month LIBOR.  The Bank has not exercised this option.  The note is secured
by  a  blanket  lien  on  single-family  first  mortgage  loans.

In August 2002, the Bank obtained four additional advances of $500,000 each from
the  Federal  Home Loan Bank.  One advance with an interest rate of 2.24 percent
was  paid  at  maturity  on  August 27, 2003.  The three remaining notes require
monthly  interest  payments  at  rates  of  2.73 percent, 3.33 percent, and 3.84
percent.  These  notes  have staggered maturities of August 27, 2004, August 29,
2005,  and August 28, 2006, respectively.  All advances are secured by a blanket
lien on single-family first mortgage loans and securities pledged to the Federal
Home  Loan  Bank.

In  December,  2003,  the  Company  formed  a wholly owned Connecticut statutory
trust,  Gateway  Bancshares  Statutory Trust I, (the "Trust"), which issued $3.5
million  aggregate  principal  amount  of trust preferred securities.  The trust
preferred  securities represent guaranteed preferred beneficial interests in the
Company's  junior  subordinated  deferrable  interest debentures that qualify as
Tier  I  capital  subject  to  the  limitations  under  Federal  Reserve  Board
guidelines.  The  Company owns all of the $109,000 aggregate principal amount of
the  common  securities  of  the  Trust.  The  proceeds from the issuance of the
common  securities  and the trust preferred securities were used by the Trust to
purchase  $3.6  million  of junior subordinated debentures of the Company, which
pay  interest at a floating rate equal to the three-month LIBOR plus 2.85%.  The
debentures  represent  the  sole  asset  of  the  Trust.

The  trust  preferred securities accrue and pay quarterly distributions based on
the liquidation value of $1,000 per capital security at a floating rate equal to
the  three-month  LIBOR  plus  2.85%.  The  Company has entered into contractual
agreements  which,  taken  collectively,  constitute  a  full  and unconditional
guarantee on a subordinated basis by the Company of the obligations of the Trust
under  the  trust  preferred securities.  The Company's guarantee, however, does
not  apply  if  the  Company  does not make payments on the debentures and, as a
result,  the  Trust  does not have sufficient funds to make payments.  The trust
preferred  securities are mandatorily redeemable upon maturity of the debentures
on  December  17, 2033, or upon earlier redemption of the debentures as provided
in  the indenture.  The Company has the right to redeem the debentures purchased
by  the  Trust in whole or in part, on or after December 17, 2008.  As specified
in  the  indenture, if the debentures are redeemed on or after December 17, 2008
and prior to maturity, the redemption price will be the principal amount and any
accrued  but unpaid interest.  Additionally, the Company may redeem, at any time
(and  possibly  before  December  17,  2008),  within  120  days  following  the
occurrence  of  a  change  in  banking, tax, investment company or other laws or
regulations  that  results  in  specified  changes in the treatment of the trust
preferred  securities  for  tax  or  regulatory  capital  purposes  or under the
Investment  Company  Act  of  1940.  If  the  debentures  are  redeemed prior to
December  17,  2008, the redemption price will be in the range of 100% to 104.6%
of  the  principal  amount  plus  any  accrued  and  unpaid  interest.


                                      -8-
<PAGE>
NOTE 5 - STOCK OPTION PLAN
--------------------------

The  Company  has  a  stock  option  plan that provides for both incentive stock
options  and  nonqualified stock options.  The maximum number of shares that can
be  issued  or  optioned  under  the  plan  is  200,000  shares.  In the case of
incentive  stock  options, the exercise price shall not be less than 100 percent
(110  percent  for  persons  owning  more  than  10  percent  of  the  Company's
outstanding  common  stock)  of the fair market value of the common stock on the
date  of  grant.  In  the case of nonqualified stock options, the purchase price
may  be  equal  to,  less than, or more than the fair market value of the common
stock  on  the  date of grant.  All options have been granted at the fair market
value  of  the  shares at the date of grant.  If not exercised, the options will
expire  from  2009  to  2011.

The  Company accounts for its stock option plan under the fair value recognition
provisions  of  Statement of Financial Accounting Standards No. 123, "Accounting
for  Stock-Based  Compensation,"  (SFAS  No.  123)  for  stock-based  employee
compensation.  A  summary of activity in the Company's stock option plan for the
period  ended  March  31,  2004,  is  as  follows:

                                                                    Weighted
                                                                     Average
                                                          Number    Exercise
                                                         of Shares    Price
                                                         ---------  ---------

     Unexercised options outstanding, December 31, 2003    147,750  $   12.07

        Stock options exercised                                  -          -

        Stock options forfeited                                  -          -
                                                         ---------  ---------

     Unexercised options outstanding, March 31, 2004       147,750  $   12.07
                                                         =========  =========

Each  of  the  outstanding  options to purchase common shares vest beginning one
year  from  the  grant  date on an equal incremental basis over a period of five
years.  At  March  31,  2004,  the number of options exercisable is 141,450. The
range  of  exercise  prices  and  weighted-average remaining contractual life of
outstanding  options  under the stock option plan were $12.00 to $13.00 and 5.16
years,  respectively.

Under  SFAS  No.  123,  the  fair value of stock options at the date of grant is
charged  to  compensation  costs  over  the  vesting  period. Compensation costs
recognized  in  the accompanying statements of income for the three-month period
ended  March  31,  2004  and  2003  were  $39,895  and  $35,223,  respectively.

NOTE 6 -RECENTLY ISSUED ACCOUNTING STANDARDS
--------------------------------------------

On  March  31,  2004,  the  FASB issued an exposure draft of a proposed standard
that,  if  adopted,  will significantly change the accounting for employee stock
options,  commonly  referred to as equity-based compensation.  If adopted in its
current  form, the exposure draft will require all companies to expense employee
stock  options using a fair value method.  Comments are expected on the exposure
draft,  which  may  impact  the form of the final standard.  Because the Company
voluntarily  elected  to begin expensing stock options in 2002, adoption of this
standard is not expected to have a significant impact on the Company's financial
position  and  results  of  operations.


                                      -9-
<PAGE>
PART I - FINANCIAL INFORMATION

ITEM  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

This  discussion  is  intended  to  assist  in an understanding of the Company's
financial  condition  and results of operations. This analysis should be read in
conjunction  with the financial statements and related notes appearing in Item 1
of  the  March 31, 2004, Form 10-QSB and Management's Discussion and Analysis of
Financial  Condition  and  Results of Operations appearing in the Company's Form
10-KSB  for  the  year  ended  December  31,  2003.

FORWARD-LOOKING  STATEMENTS

This  Quarterly Report on Form 10-QSB contains forward-looking statements within
the  meaning  of  the  Private  Securities Litigation Reform Act (the "Act"). In
addition,  certain  statements  in  future  filings  by  the  Company  with  the
Securities  and  Exchange Commission, in press releases, and in oral and written
statements  made  by  or  with  the  approval  of  the  Company  may  contain
forward-looking  statements  within  the  meaning  of  the  Act.  Examples  of
forward-looking  statements  include  but are not limited to: (1) projections of
revenues, income or loss, earnings or loss per share, the payment or non-payment
of  dividends,  capital  structure  and other financial items; (2) statements of
plans  and  objectives  of  the Company or its management or Board of Directors,
including  those  relating  to  products  or  services; (3) statements of future
economic  performance  and  (4)  statements  of  assumptions  underlying  such
statements.  Words  such  as  "believes,"  "anticipates,"  "expects," "intends,"
"targeted,"  and  similar  expressions  are intended to identify forward-looking
statements  but  are  not  the  exclusive  means of identifying such statements.

Forward-looking  statements  involve  risks  and  uncertainties, which may cause
actual  results  to  differ  materially  from  those  in  the  forward-looking
statements.  Facts  that  could  cause  actual  results  to  differ  from  those
discussed in the forward-looking statements include, but are not limited to: (1)
the  strength  of  the  U.S.  economy  in  general and the strength of the local
economies  in  which operations are conducted; (2) the effects of and changes in
trade monetary and fiscal policies and laws, including interest rate policies of
the  Board  of  Governors of the Federal Reserve System; (3) inflation, interest
rate,  market  and  monetary  fluctuations;  (4)  the  timely development of and
acceptance  of  new  products  and services and perceived overall value of these
products and services by users; (5) changes in consumer spending, borrowing, and
saving  habits;  (6) technological changes; (7) consumer spending, borrowing and
saving  habits;  (8)  acquisitions; (9) the ability to increase market share and
control  expenses; (10) the effect of changes in laws and regulations (including
laws  and  regulations concerning taxes, banking, securities and insurance) with
which  the Company and its subsidiary must comply; (11) the effect of changes in
accounting policies and practices, as may be adopted by the regulatory agencies,
as  well  as  the  Financial  Accounting  Standards  Board;  (12) changes in the
Company's  organization,  compensation,  and  benefit  plans; (13) the costs and
effects  of litigation and of unexpected or adverse outcomes in such litigation;
and  (14)  the  success  of  the  Company  at managing the risks involved in the
foregoing.

Such  forward-looking  statements  speak  only  as  of  the  date  on  which the
statements  are  made,  and  the  Company undertakes no obligation to update any
forward-looking  statement  to reflect events or circumstances after the date on
which  the  statement is made to reflect the occurrence of unanticipated events.


                                      -10-
<PAGE>
CRITICAL  ACCOUNTING  POLICIES

Management  has  determined  that  the accounting for the allowance for loan and
lease  losses  is a critical accounting policy with respect to the determination
of  financial  condition  and  reporting  of  results  of  operations.

Management  determines the required allowances by classifying loans according to
credit  quality and collateral security and applying historical loss percentages
to  each  category.  Additionally,  as necessary, management determines specific
allowances  related  to  impaired  loans  based on the present value of expected
future  cash flows discounted at the loan's effective interest rate, or the fair
value  of the collateral if the loan is collateral dependent. A key component in
the  accounting  policy  is  management's  ability to timely identify changes in
credit  quality,  which  may  impact  the  Company's  financial  results.

Management  recognizes  that  in making loans, credit losses will be experienced
and  that  the risk of loss will vary with, among other things, the type of loan
being  made, the creditworthiness of the borrower over the term of the loan and,
in  the  case  of  a  secured  loan,  the  quality of the security for the loan.
Management's  policy  is to maintain an appropriate allowance for estimated loan
and  lease  losses  on  the  portfolio  as  a whole. The allowances are based on
estimates  of  the  historical  loan  loss  experience,  evaluation  of economic
conditions  and  regular  periodic  reviews of the Bank's loan portfolio by both
internal  personnel  and  a  third  party review firm. The Bank's loan portfolio
consists  mostly  of  commercial  and  real estate loans to companies in various
industries,  whose  financial  performance  may  be  impacted differently by the
local,  regional  or  national  economies  and  stage  of  the  economic  cycle.
Management  believes  that  the  effects of any reasonably likely changes in the
economy  would  be  limited  somewhat  due  to  the  diversification of the loan
portfolio  and  the  Bank's normal collateral requirements for such loans. While
management  uses  available information to recognize losses on loans and leases,
future  adjustments  in  the  allowance  may  be  necessary  based on changes in
economic  conditions,  which  could have a significant detrimental impact to the
Company's  financial  condition  and results of operation. Additionally, various
regulatory  agencies,  as  an  integral  part  of  their  examination  process,
periodically  review  the  Company's  allowance for loans and lease losses. Such
agencies  may  require  the  Company to recognize additions to the allowance for
loan  and  lease  losses  based on their judgment about information available to
them  at  the  time  of  their  examination.

RESULTS OF OPERATIONS

EARNINGS SUMMARY

The  Company's net income for the three months ended March 31, 2004 and 2003 was
$442,648  and  $391,181,  respectively.  The  increase  in  net  income resulted
primarily  from  net  loan  growth  and  an  increased  net  interest  margin.

INTEREST INCOME

Interest income on loans and securities is the principal source of the Company's
earnings  stream.  Fluctuations  in  interest  rates  as  well as volume and mix
changes in earning assets materially affect interest income. Interest income was
$2,314,875  and  $1,952,929  for the three months ended March 31, 2004 and 2003,
respectively.  The  increase  in  interest  income  is  a result of overall loan
growth  during  the  past  year.


                                      -11-
<PAGE>
INTEREST  EXPENSE

Interest  expense  on  deposits  and other borrowings for the three months ended
March  31,  2004 and 2003 was $716,405 and $728,009, respectively.  The decrease
in  interest expense is a result of a continued decline in interest rates during
the  past  year.  The Bank has successfully lowered all deposit rates during the
past  year  without  sacrificing  growth  in  deposits.

PROVISION FOR LOAN LOSSES

The  provision  for  loan  losses represents the charge against current earnings
necessary  to maintain the allowance for loan losses at a level which management
considers  adequate  to provide for probable losses in the loan portfolio.  This
level  is  determined  based  upon  management's  assessment of current economic
conditions,  the composition of the loan portfolio and the levels of nonaccruing
and  past  due  loans.  The  provision for loan losses was $85,000 for the three
months  ended  March  31,  2004.  The  allowance for loan losses as a percent of
outstanding  loans  was  1.41  percent  at  March  31, 2004, and 1.40 percent at
December  31,  2003.

NONINTEREST  INCOME

Noninterest  income  for  the  three  months  ended  March 31, 2004 and 2003 was
$415,292  and  $568,298, respectively. Noninterest income consisted primarily of
service  charges  on  customer  deposits ($273,555 for the first three months of
2004  and $224,480 for the same period in 2003), mortgage loan fees ($70,724 for
the  first  three  months  of  2004  and  $125,578 for the same period in 2003),
gains(losses)  on  sales  of  securities ($(4,086) for the first three months of
2004  and  $183,804  for the same period in 2003), ATM and credit card fees, and
rental of safe deposit boxes. The decrease primarily resulted from significantly
less  gains  on  sales  of  securities.

NONINTEREST  EXPENSE

Noninterest expense totaled $1,253,946 and $1,085,878 for the three months ended
March  31,  2004  and 2003, respectively.  The largest components of noninterest
expense  consist of salaries and employee benefits and other operating expenses.
Other  operating  expenses  consist  primarily  of data processing, advertising,
professional  fees,  supplies,  printing  and  postage  and  other miscellaneous
expenses.  For  the  three  months  ended  March 31, 2004, salaries and employee
benefits  were  $72,616 more than the same time period in 2003 due to the hiring
of  additional staff and increased insurance premiums.  At March 31, 2004, other
operating  expenses were  $84,254 more than March 31, 2003 due to increased data
processing  fees  and  printing  and  supplies  expenses directly related to the
growth  in customer accounts and increased consulting fees related to the Bank's
pricing  model.

INCOME  TAXES

Income  tax  expense  was $232,168 and $206,159 for the three months ended March
31, 2004 and 2003, respectively.  The increase is a direct result of an increase
in  taxable  income  in  2004  as  compared  to  2003.


                                      -12-
<PAGE>
FINANCIAL  CONDITION

EARNING ASSETS

The  Company's  earning assets include loans, securities and federal funds sold.
The  mix  of  earning  assets reflects management's attempt to maximize interest
income  while  maintaining  acceptable  levels  of  risk.

SECURITIES AND FEDERAL FUNDS SOLD

The  composition  of  the  Company's securities portfolio reflects the Company's
investment strategy of maximizing portfolio yields subject to risk and liquidity
considerations.  The primary objectives of the Company's investment strategy are
to  maintain  an  appropriate level of liquidity and provide a tool to assist in
controlling  the  Company's  interest  rate  position  while  at  the  same time
producing  adequate  levels  of  interest  income.  For securities classified as
available-for-sale,  management  intends  to  hold  such  securities  for  the
foreseeable  future  except  to fund increases in loan demand. Management of the
maturity  of  the  portfolio  is  necessary  to provide liquidity and to control
interest  rate  risks.

Securities  and  federal  funds  sold  decreased $9,673,112 or 25.4 percent from
December  31,  2003, to March 31, 2004. The securities portfolio may be analyzed
in  order  to  purchase  or  sell various term investments. Term investments may
provide  a  source  of  liquidity  and may serve as collateral to secure certain
government  deposits.  Securities  at  March 31, 2004 and December 31, 2003 were
$28,359,860 and $33,692,972, respectively, reflecting an decrease of $5,333,112.
Federal  funds  sold  decreased  $4,340,000  from December 31, 2003 to March 31,
2004.  This decline is related to the increase in loans and a decrease in public
fund  deposits  during  the  same  period.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
March  31, 2004.  At March 31, 2004, the Company had outstanding loans amounting
to  $121,487,517  net of its allowance for loan losses, or 75.3 percent of total
assets,  compared to net loans of $116,892,801, or 69 percent of total assets at
December  31,  2003.  The Company will continue to search for loan opportunities
in  its  market  area  while  assuming  acceptable  levels  of  risk.

ASSET  QUALITY

Asset  quality  is  measured  by  three  key  ratios: (1) the ratio of loan loss
allowance to total nonperforming assets (defined as nonaccrual loans, loans past
due  90  days  or greater, restructured loans, nonaccruing securities, and other
real  estate),  (2)  nonperforming assets to total assets, and (3) nonperforming
assets  to total loans.  At March 31, 2004, the Company had nonperforming assets
of  $557,345,  which  was 32.2 percent of the loan loss allowance of $1,731,866.
Nonperforming  assets  were  .45  percent  of all loans and .35 percent of total
assets.  At December 31, 2003, the Company had nonperforming assets of $444,000,
which  was 26.7 percent of the loan loss allowance of $1,664,578.  Nonperforming
assets  at  December  31,  2003 were .37 percent of all loans and .26 percent of
total  assets.


                                      -13-
<PAGE>
NONEARNING  ASSETS

Nonearning assets include premises and equipment of $2,949,440 and $2,956,709 at
March  31,  2004  and December 31, 2003, respectively. The decrease of $7,269 in
premises  and  equipment from December 31, 2003 is primarily due to depreciation
of  $44,231  outpacing  the  additions  of  new  fixed  assets.

The  Bank  leases  the site for its main office at the rate of $2,165 per month.
The  lease  term is for a maximum of fifty years, including extensions after the
initial  twenty-year period, and subject to certain conditions after the initial
forty-year  period.

Accrued  interest  receivable  was  $794,759  at  March 31, 2004, an increase of
$21,859  from  December 31, 2003. The increase is primarily due to the growth in
the  loan  portfolio.

Other  assets  consist primarily of prepaid expenses, deferred income taxes, and
other  real  estate.  Deferred  income  taxes consists primarily of tax benefits
related  to  timing  differences in the tax and financial reporting treatment of
the  allowance  of  loan  losses,  as  well  as  other  factors.

DEPOSITS

At March 31, 2004, the Company had outstanding deposits of $137,781,148 compared
to  $148,081,102  at  December  31,  2003.  The  decrease  in deposits is due to
approximately  $14  million Catoosa County property tax deposits being withdrawn
in  early  2004 which were held at December 31, 2003. Deposits are the Company's
primary  source  of  funds  to  support  its earning assets. Noninterest-bearing
deposits  increased  from  $12,308,701  at  December 31, 2003, to $14,088,773 at
March  31,  2004.  Time  deposits  of  $100,000 or more decreased by $1,165,623.

OTHER LIABILITIES

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued  interest payable decreased $51,219 from December 31, 2003, to
March  31,  2004.  The  decrease is due to slightly lower interest rates in 2004
and  lower  balances  in  savings  and  certificates  of  deposit.

STOCKHOLDERS' EQUITY

Stockholders'  equity  increased  $651,611  from December 31, 2003, to March 31,
2004, due in part to net income of $442,648 for the three months ended March 31,
2004.  The  equity  adjustment  for  unrealized  gains  on  securities
available-for-sale  increased  $169,068  during the three months ended March 31,
2004  resulting  in  an unrealized gain of $129,907. This increase is due to the
rise  in  market  values  on  securities  during  the  same  period.

RELATED PARTY TRANSACTIONS

In  the  normal course of business, the Bank makes loans to directors, executive
officers  and  principal shareholders on substantially the same terms, including
interest  rates  and  collateral, as those prevailing at the time for comparable
transactions with other borrowers.  Extensions of credit to directors, executive
officers,  and  principal  shareholders  totaled  $4,825,000  at March 31, 2004.


                                      -14-
<PAGE>
OFF-BALANCE SHEET ARRANGEMENTS

The  Bank is a party to financial instruments with off-balance-sheet risk in the
normal  course  of business to meet the financing needs of its customers.  These
financial  instruments include standby letters of credit and various commitments
to  extend  credit.  At  March  31,  2004,  commitments under standby letters of
credit  and  undisbursed  loan  commitments  aggregated $23,806,000.  The Bank's
credit  exposure  for  these  financial  instruments  is  represented  by  their
contractual  amounts.  The  Bank  does  not  anticipate any material losses as a
result  of  the commitments under standby letters of credit and undisbursed loan
commitments.

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY MANAGEMENT

Liquidity  is defined as the ability of a company to convert assets into cash or
cash  equivalents  without  significant  loss.  Liquidity  management  involves
maintaining  the Bank's ability to meet the day-to-day cash flow requirements of
its  customers,  whether  they  are  depositors  wishing  to  withdraw  funds or
borrowers  requiring  funds to meet their credit needs. Without proper liquidity
management,  the  Bank  would  not  be able to perform the primary function of a
financial  intermediary  and  therefore would not be able to meet the production
and  growth  needs  of  the  communities  it  serves.

The  primary  function  of  asset and liability management is not only to assure
adequate liquidity in order for the Bank to meet the needs of its customer base,
but  also  to  maintain an appropriate balance between interest-sensitive assets
and interest-sensitive liabilities so that the Bank can also meet the investment
requirements  of  its  stockholders. Daily monitoring of the sources and uses of
funds  is  necessary  to  maintain  an  acceptable cash position that meets both
requirements.  In  the  banking  environment,  both  assets  and liabilities are
considered  sources of liquidity funding and both are, therefore, monitored on a
daily  basis.

The asset portion of the balance sheet provides liquidity primarily through loan
principal  repayments  or  sales of securities. Outstanding loans that mature in
one  year  or  less  totaled  approximately  $63.2  million  at  March 31, 2004.
Securities  maturing  in  one  year or less totaled approximately $215 thousand.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing  and noninterest-bearing deposit accounts. At March
31,  2004,  funds were also available through the purchase of federal funds from
correspondent commercial banks. Purchases can be made from available lines of up
to  an  aggregate of approximately $8.4 million. At March 31, 2004, $2.9 million
federal  funds  had  been  purchased.  Liquidity  management  involves the daily
monitoring  of  the  sources  and  uses  of funds to maintain an acceptable cash
position.

CAPITAL  RESOURCES

A  strong  capital position is vital to the profitability of the Company because
it  promotes  depositor  and investor confidence and provides a solid foundation
for future growth of the organization.  The Company has provided for its capital
requirements  with  proceeds from its initial stock offering in 1996 and through
the  retention  of  earnings.


                                      -15-
<PAGE>
FEDERAL HOME LOAN BANK ADVANCES

In  an  effort  to  maintain  and  improve  the  liquidity position of the Bank,
management  approved  the  Bank's  membership with the Federal Home Loan Bank of
Atlanta  (FHLB).  As  a  member  of  the  FHLB, the Bank improved its ability to
manage  liquidity  and  reduce  interest rate risk by having a funding source to
match  longer  term  loans.  The  terms  of  the  Bank's loans from the FHLB are
summarized  in Note 4 to the Consolidated Financial Statements appearing in this
report.

REGULATORY CAPITAL REQUIREMENTS

Regulatory  capital guidelines administered by the federal banking agencies take
into  consideration  risk  factors associated with various categories of assets,
both  on  and off the balance sheet. Under the guidelines, the Company's capital
strength  is  measured  in  two  tiers  which  are  used  in  conjunction  with
risk-adjusted assets to determine the risk-based capital ratios. Tier I capital,
which  consists  of  common  equity  less unrealized gains on available-for-sale
securities plus qualifying trust preferred securities, amounted to $15.2 million
at  March  31,  2004.  Tier  II  capital components include supplemental capital
components  such  as  qualifying  allowance  for  loan  losses  and  qualifying
subordinated  debt.  Tier  I  capital  plus  the  Tier  II capital components is
referred to as total risk-based capital and was $16.9 million at March 31, 2004.
The percentage ratios as calculated under FDIC guidelines were 11.61 percent and
12.89  percent  for  Tier  I  and  total  risk-based  capital,  respectively, to
risk-weighted  assets at March 31, 2004. Both levels exceeded the minimum ratios
of  4  percent  and  8  percent,  respectively. Management has reviewed and will
continue  to  monitor  asset  mix, product pricing, and the loan loss allowance,
which  are  the  areas  it  believes  are  most  affected by these requirements.

ITEM 3. CONTROLS AND PROCEDURES

At  March  31,  2004, an evaluation was performed under the supervision and with
the  participation  of  the  Company's management, including the Chief Executive
Officer  and  Chief  Financial  Officer,  of the effectiveness of the design and
operation  of  the  Company's disclosure controls and procedures.  Based on that
evaluation,  the Company's management, including the Chief Executive Officer and
Chief  Financial  Officer,  concluded that the Company's disclosure controls and
procedures  were  effective  at  timely  alerting  them  to material information
relating to the Company (including its consolidated subsidiary) that is required
to  be  included  in  the  Company's  periodic  filings  with the Securities and
Exchange  Commission.  There  have  been  no  changes  in the Company's internal
control  over  financial  reporting during the year ended December 31, 2003 that
have  materially  affected,  or  are reasonably likely to materially affect, the
Company's  internal  control  over  financial  reporting.

PART II - OTHER INFORMATION

ITEM 1- LEGAL PROCEEDINGS

Neither  the  Company  nor  the Bank is a party to any pending legal proceedings
which  management  believes  would  have  a  material  adverse  effect  upon the
operations  or  financial  condition  of  the  Bank.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - NONE

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - NONE


                                      -16-
<PAGE>
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE

ITEM 5 - OTHER INFORMATION

Stockholder  proposals submitted for consideration at the next annual meeting of
stockholders must be received by the Company no later than November 29, 2004, to
be  included  in the 2005 proxy materials. A stockholder must notify the Company
before  February  9,  2005,  of a proposal for the 2005 annual meeting which the
stockholder  intends  to  present other than by inclusion in the Company's proxy
material. If the Company does not receive such notice prior to February 9, 2005,
proxies  solicited  by  the  management of the Company will confer discretionary
authority  upon  the  management  of  the  Company to vote upon any such matter.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     Exhibit Number      Description of Exhibit
     --------------      ----------------------

          11             Computation of Net Income Per Share

          31             Certifications Pursuant to 18 U.S.C. Section 1350
                         as Adopted Pursuant to Section 302 of the
                         Sarbanes-Oxley Act of 2002

          32             Certification Pursuant to 18 U.S.C. Section 1350
                         as Adopted Pursuant to Section 906 of the
                         Sarbanes-Oxley Act of 2002



(b)  Reports on Form 8-K

The  Company did not file any reports on Form 8-K during the quarter ended March
31,  2004.


                                      -17-
<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.


GATEWAY BANCSHARES, INC.




               /s/  Robert G. Peck                      May 7, 2004
               ---------------------                    -----------
               Robert G. Peck,                             Date
               President and CEO
               (Principal Executive Officer)



               /s/  Harle B. Green                      May 7, 2004
               ---------------------                    -----------
               Harle B. Green,                             Date
               Chairman and Chief Financial Officer
               (Principal Financial Officer)


                                      -18-
<PAGE>