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 June
          30,  2002

     [ ]  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                      681,758


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


<PAGE>
                            GATEWAY BANCSHARES, INC.

                            June 30, 2002 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 . . . . . . . . . . . . . . . . . .   9


PART  II.      OTHER  INFORMATION

  Item  1.     Legal  Proceedings . . . . . . . . . . . . . . . . . . . . .   15

  Item  2.     Changes  in  Securities  and  Use  of  Proceeds. . . . . . .   15

  Item  3.     Defaults  Upon  Senior  Securities . . . . . . . . . . . . .   15

  Item  4.     Submission  of Matters to a Vote of Security Holders . . . .   15

  Item  5.     Other  Information . . . . . . . . . . . . . . . . . . . . .   15

  Item  6.     Exhibits  and  Reports  on  Form  8-K  . . . . . . . . . . .   16




                                   * * * * *


                                      - 2 -
<PAGE>
<TABLE>
<CAPTION>
PART  I.  FINANCIAL  INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

                          GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY
                                 CONSOLIDATED  BALANCE  SHEETS

                                                                 June 30, 2002    December 31,
                                                                   (unaudited)       2001
                                                                ---------------  --------------
<S>                                                             <C>              <C>
ASSETS
  Cash                                                          $      784,070   $     759,998
  Due from banks                                                     4,635,418       3,523,270
  Federal funds sold                                                 3,525,000      10,680,000
  Securities available-for-sale                                     27,927,788      27,495,629
  Federal Home Loan Bank stock, at cost                                260,000         260,000
  Loans                                                             78,476,653      79,616,337
  Allowance for loan losses                                         (1,091,193)       (996,301)
                                                                ---------------  --------------
  Net loans                                                         77,385,460      78,620,036

  Premises and equipment, net                                        2,964,734       3,029,915
  Accrued interest                                                     675,830         772,557
  Other assets                                                         770,195         359,904
                                                                ---------------  --------------

      Total assets                                              $  118,928,495   $ 125,501,309
                                                                ===============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                         $   10,461,984   $  11,710,006
    Interest-bearing                                                95,453,342     101,399,383
                                                                ---------------  --------------

      Total deposits                                               105,915,326     113,109,389

  Long-term borrowings:
    Federal Home Loan Bank advances                                  2,000,000       2,000,000
    Notes payable                                                    1,000,000       1,000,000
  Accrued interest                                                     306,000         375,336
  Other liabilities                                                    207,083         313,306
                                                                ---------------  --------------

      Total liabilities                                            109,428,409     116,798,031
                                                                ---------------  --------------

STOCKHOLDERS' EQUITY
  Common stock ($5 par value: 10,000,000 shares authorized,
    shares issued and outstanding of 681,758 at June 30, 2002
    and 679,048 at December 31, 2001)                                3,408,790       3,395,240
  Additional paid-in capital                                         3,376,607       3,357,637
  Retained earnings                                                  2,497,846       1,864,660
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                   216,843          85,741
                                                                ---------------  --------------

      Total stockholders' equity                                     9,500,086       8,703,278
                                                                ---------------  --------------

      Total liabilities and stockholders' equity                $  118,928,495   $ 125,501,309
                                                                ===============  ==============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


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


                                                         Three Months Ended         Six Months Ended
                                                      ------------------------  -----------------------
                                                       June 30,     June 30,     June 30,     June 30,
                                                         2002         2001         2002         2001
                                                      -----------  -----------  -----------  ----------
<S>                                                   <C>          <C>          <C>          <C>
INTEREST INCOME
  Loans                                               $ 1,573,775  $1,757,404   $ 3,167,043  $3,522,796
  Interest on securities:
    Taxable interest                                      271,467     342,428       529,980     701,272
    Nontaxable interest                                    22,075       2,679        39,905       5,346
  Interest on federal funds sold                           17,399      24,814        30,138      75,912
                                                      -----------  -----------  -----------  ----------

      Total interest income                             1,884,716   2,127,325     3,767,066   4,305,326
                                                      -----------  -----------  -----------  ----------

INTEREST EXPENSE
  Interest on deposits                                    680,226   1,201,309     1,408,266   2,447,078
  Interest on notes payable                                12,195      12,075        24,390      35,575
  Interest on Federal Home Loan Bank advances              29,622      29,444        58,742      58,565
  Interest on federal funds purchased                           -          88         3,015          88
                                                      -----------  -----------  -----------  ----------

      Total interest expense                              722,043   1,242,916     1,494,413   2,541,306
                                                      -----------  -----------  -----------  ----------

NET INTEREST INCOME                                     1,162,673     884,409     2,272,653   1,764,020
  Provision for loan losses                                75,000      65,000       155,000      90,000
                                                      -----------  -----------  -----------  ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     1,087,673     819,409     2,117,653   1,674,020
                                                      -----------  -----------  -----------  ----------

NONINTEREST INCOME
  Service charges on deposits                             156,269      99,981       266,494     182,192
  Mortgage loan fees                                       82,962     108,792       176,181     156,843
  Insurance commissions                                     2,860       3,078         7,585       5,480
  Gains (losses) on sale of securities                      5,788        (629)        8,613       9,756
  Other income                                             30,594      15,318        53,031      29,241
                                                      -----------  -----------  -----------  ----------

      Total noninterest income                            278,473     226,540       511,904     383,512
                                                      -----------  -----------  -----------  ----------

NONINTEREST EXPENSE
  Salaries and employee benefits                          503,663     419,455       966,007     814,041
  Occupancy expense                                        43,512      42,844        90,358      98,622
  Furniture and equipment expense                          45,782      54,065       100,254     103,683
  Other operating expenses                                278,476     249,633       519,278     508,509
                                                      -----------  -----------  -----------  ----------

      Total noninterest expense                           871,433     765,997     1,675,897   1,524,855
                                                      -----------  -----------  -----------  ----------

Income before income taxes                                494,713     279,952       953,660     532,677
Income taxes                                              170,434     103,315       320,474     192,226
                                                      -----------  -----------  -----------  ----------

      Net income                                      $   324,279  $  176,637   $   633,186  $  340,451
                                                      ===========  ===========  ===========  ==========


EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED

  Net income per common share                         $      0.48  $     0.26   $      0.93  $     0.50

  Basic weighted average shares outstanding               681,758     679,048       681,668     679,048

  Diluted earnings per common share                   $      0.47  $     0.26   $      0.92  $     0.50

  Diluted weighted average shares outstanding             689,886     681,842       689,660     682,006
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


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


                                                                                     Total
                                                                 Comprehensive   Stockholders'     Common
                                                                     Income          Equity        Stock      Surplus
                                                                 --------------  --------------  ----------  ----------
<S>                                                              <C>             <C>             <C>         <C>
BALANCE, December 31, 2001                                                       $    8,703,278  $3,395,240  $3,357,637

  Exercise of stock options                                                              32,520      13,550      18,970

  Comprehensive income:
    Net income                                                   $      633,186         633,186           -           -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on securities available
        for sale, net of reclassification adjustment                    131,102         131,102           -           -
                                                                 --------------  --------------  ----------  ----------

    Total comprehensive income                                   $      764,288
                                                                 ==============

BALANCE, June 30, 2002                                                           $    9,500,086  $3,408,790  $3,376,607
                                                                                 ==============  ==========  ==========

                                                                                Accumulated
                                                                                   Other
                                                                 Accumulated   Comprehensive
                                                                   Earnings        Income
                                                                 ------------  --------------
<S>                                                              <C>           <C>
BALANCE, December 31, 2001                                       $  1,864,660  $       85,741

  Exercise of stock options                                                 -               -

  Comprehensive income:
    Net income                                                        633,186               -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on securities available
        for sale, net of reclassification adjustment                        -         131,102
                                                                 ------------  --------------
    Total comprehensive income


BALANCE, June 30, 2002                                           $  2,497,846  $      216,843
                                                                 ============  ==============
</TABLE>

The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


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

                                                                   Six  Months Ended
                                                               ---------------------------
                                                                 June 30,      June 30,
                                                                   2002          2001
                                                               ------------  -------------
<S>                                                            <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                   $   633,186   $    340,451
  Adjustments to reconcile net income to net cash provided by
    operating activities:
      Provision for loan losses                                    155,000         90,000
      Provision for depreciation and amortization                   98,040        102,843
      Net amortization on securities                                99,054          7,728
      Gain on sale of securities                                    (8,613)        (9,756)
      Deferred income taxes                                          3,773         (7,520)
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                 96,727         60,893
        Accrued interest payable                                   (69,336)      (112,330)
        Other assets and liabilities                              (600,640)        89,904
                                                               ------------  -------------

          Net cash provided by operating activities                407,191        562,213
                                                               ------------  -------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net (increase) decrease in loans                               1,079,576     (4,915,247)
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                2,761,365      8,077,603
  Proceeds from sales of available-for-sale securities           5,006,000      4,882,127
  Purchase of available-for-sale securities                     (8,078,510)   (11,606,304)
  Purchase of premises and equipment                               (32,859)       (80,677)
                                                               ------------  -------------

          Net cash provided by (used in) investing activities      735,572     (3,642,498)
                                                               ------------  -------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net decrease in deposits                                      (7,194,063)      (282,878)
  Exercise of stock options                                         32,520              -
                                                               ------------  -------------

          Net cash used in financing activities                 (7,161,543)      (282,878)
                                                               ------------  -------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                       (6,018,780)    (3,363,163)

CASH AND CASH EQUIVALENTS, beginning of period                  14,963,268      7,178,996
                                                               ------------  -------------

CASH AND CASH EQUIVALENTS, end of period                       $ 8,944,488   $  3,815,833
                                                               ============  =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                   $ 1,563,749   $  2,653,636
    Income taxes                                                   274,740        159,619
                                                               ============  =============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                      - 6 -
<PAGE>
                    GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
                                  June 30, 2002

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  generally  accepted  accounting  principles for complete financial
statements.  In the opinion of management, all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for  a  fair presentation have been
included.  Operating  results  for  the six-month period ended June 30, 2002 are
not  necessarily  indicative  of  the  results that may be expected for the year
ending  December  31,  2002.  For  further  information,  refer to the financial
statements  and  footnotes  thereto  included  in the Company's annual financial
report  filed  under  cover  Form  10-KSB  for the year ended December 31, 2001.

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,  2001.

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  stockholder's  equity  (net  of  deferred  taxes).


                                      - 7 -
<PAGE>
At  June  30,  2002,  the  Company  had  net  unrealized  gains  of  $349,747 on
available-for-sale  securities.  As  a  result,  the  increase  in stockholders'
equity,  net of deferred taxes, was $216,843.  There were no trading securities.
The  net  increase  in  stockholder's  equity  as  a  result of the SFAS No. 115
adjustment  from  December  31,  2001,  to  June  30,  2002,  was  $131,102.

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

In  January 1998, the Bank obtained a $1 million loan from the Federal Home Loan
Bank.  The  note  requires monthly interest payments at an interest rate of 5.72
percent,  and  matures on January 13, 2003.  The note is secured by specifically
identified  single  family  first  mortgage  loans.

In  June  2000,  the Company obtained a $1 million loan from Gilmer County Bank.
The  proceeds  of  this note were used to inject additional capital in the Bank.
This  note  requires quarterly interest payments at the prime interest rate less
one-half  percent.  Principal is due in full on September 20, 2002.  The note is
secured  by  600,000  shares  of  Gateway  Bank  &  Trust  common  stock.

In  September  2000,  the  Bank  obtained an additional $1 million loan from the
Federal  Home  Loan  Bank.  The  note  requires  monthly interest payments at an
interest  rate  of 6.09 percent, and matures on September 15, 2010.  The note is
secured  by  specifically-identified  single  family  first  mortgage  loans.

NOTE  5  -  STOCK  OPTION  PLAN
-------------------------------

In  1999  the  Company  issued a total of 171,850 options to purchase its common
shares  to  its directors and executive officers.  Each director received 13,550
shares  and  the  executive  officers received varying amounts of shares ranging
from  2,500  to  20,350  shares.  In  2001 the Company issued to its officers an
additional  14,000  options.  Each  of  the stock option agreements contained an
option  price  equal  to  the market value of the shares at the date the options
were  granted.  The  option  price for the options granted in 1999 and 2001 were
$12.00  per  share  and  $13.00 per share, respectively.  The options vest on an
equal  incremental  basis over a period of five years.  During the first quarter
of  2002,  options  for  2,710 shares were exercised.  As of March 31, 2002, the
unexercised  options  total  167,300  shares.

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

In  July  of 2001, the Financial Accounting Standards Board issued Statement No.
141,  "Business  Combinations"  (SFAS  141)  and  No.  142,  "Goodwill and Other
Intangible  Assets"  (SFAS  142).  SFAS 141 establishes accounting and reporting
standards  for  business combinations.  This statement eliminates the use of the
pooling-of-interests  method  of  accounting,  and  requires  future  business
combinations to be accounting for using the purchase method of accounting.  SFAS
141  applies  to business combinations after July 1, 2001.  SFAS 142 establishes
accounting  and  reporting  standards  for goodwill and other intangible assets.
Under this statement, goodwill is no longer amortized, but will be subject to an
annual  assessment  for impairment.  SFAS 142 is effective January 1, 2002.  The
adoption  of these statements is not expected to have an impact on the Company's
consolidated  financial  statements.


                                      - 8 -
<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  June  30, 2002, 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,  2001.

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.


                                      - 9 -
<PAGE>
EARNINGS  SUMMARY

The  Company's  net  income  for the six months ended June 30, 2002 and 2001 was
$633,186  and  $340,451,  respectively.  The  increase  in  net  income resulted
primarily  from  an  increased  net  interest  margin.


RESULTS  OF  OPERATIONS

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
$3,767,066  and  $4,305,326  for  the  six  months ended June 30, 2002 and 2001,
respectively.  The  decrease  in  interest  income resulted from the decrease in
loan  interest  rates  within  the past year.  Interest rates on securities have
also  declined  significantly.

INTEREST  EXPENSE

Interest  expense on deposits and other borrowings for the six months ended June
30,  2002 and 2001 was $1,494,413 and $2,541,306, respectively.  The decrease in
interest  expense  is  a result of the decline in interest rates during the past
year.  Most  time deposits have repriced at lower interest rates during the last
half  of  2001  and  the  first six months of 2002 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 $155,000 for the six
months  ended  June  30,  2002.  The  allowance  for loan losses as a percent of
outstanding  loans  was  1.39  percent  at  June  30,  2002, and 1.25 percent at
December  31,  2001.

NONINTEREST  INCOME

Noninterest  income for the six months ended June 30, 2002 and 2001 was $511,904
and  $383,512,  respectively.  Noninterest income consisted primarily of service
charges  on  customer  deposits  ($266,494 through June 30, 2002), mortgage loan
fees  ($176,181  through June 30, 2002), ATM and credit card fees, and rental of
safe  deposit  boxes.  The increase is attributable to an increase in the Bank's
fee  structure.


                                     - 10 -
<PAGE>
NONINTEREST  EXPENSE

Noninterest  expense  totaled $1,675,897 and $1,524,855 for the six months ended
June  30,  2002  and  2001,  respectively.  The  increase in expense reflects an
increase in the number of employees as well as an overall increase in salary and
benefit  expenses.  Other  operating  expenses  consist  primarily  of occupancy
expense,  depreciation expense, data processing, advertising, professional fees,
printing  and  postage  and  other  miscellaneous  expenses.

INCOME  TAXES

Income  taxes  of  $320,474  and  $192,226 have been provided for the six months
ended June 30, 2002 and 2001, respectively.  The increase is directly the result
of  an  increase  in  taxable  income  in  2002  as  compared  to  2001.

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  risk.

Securities  and  federal  funds  sold decreased $6,722,841 or 17.61 percent from
December  31,  2001, to June 30, 2002.  The securities portfolio may be adjusted
to  make various term investments, to provide a source of liquidity and to serve
as  collateral  to  secure  certain  government  deposits.  Federal  funds  sold
decreased from $10,680,000 at December 31, 2001, to $3,525,000 at June 30, 2002.
This decline is directly related to the decrease in customer deposits during the
same  period.  Management  was  aware of temporary deposits at December 31, 2001
and  had  increased  the  level  of  federal  funds  sold in order to manage the
liquidity  of  these  deposits.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
June 30, 2002.  At June 30, 2002, the Company had outstanding loans amounting to
$77,385,460  net  of  its  allowance  for  loan losses, or 65.1 percent of total
assets,  compared to net loans of $78,620,036 or 62.6 percent of total assets at
December  31,  2001.  The Company will continue to search for loan opportunities
in  its  market  area  while  assuming  acceptable  levels  of  risk.


                                     - 11 -
<PAGE>
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 June 30, 2002, the Company had nonperforming loans of
$66,437, which was 6.1% of the loan loss allowance of $1,091,193.  Nonperforming
assets  were  .23  percent  of  all  loans  and .15 percent of total assets.  At
December  31,  2001,  the Company had nonperforming loans of $252,000, which was
25.3%  of  the  loan  loss allowance of $996,301.  Nonperforming assets were .46
percent  of  all  loans  and  .29  percent  of  total  assets.

NONEARNING  ASSETS

Nonearning assets include premises and equipment of $2,964,734 at June 30, 2002,
a  decrease  of  $65,181 from December 31, 2001.  The decrease results primarily
from  the  depreciation  of  $98,040 outpacing the addition of new fixed assets.

The  Bank  leases  the site for its main office at the rate of $2,077 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 $675,830 at June 30, 2002, a decrease of $96,727
from  December 31, 2001.  The decrease is due to lower interest rates on earning
assets  during  2002.

Other  assets  consist  primarily  of  prepaid expenses, cash surrender value of
bank-owned  life  insurance  and  deferred  income taxes.  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  June 30, 2002, the Company had outstanding deposits of $105,915,326 compared
to $113,109,389 at December 31, 2001.  Deposits are the Company's primary source
of  funds to support its earning assets.  Noninterest-bearing deposits decreased
from  $11,710,006  at  December 31, 2001, to $10,461,984 at June 30, 2002.  Time
deposits of $100,000 or more decreased by $895,240.  The decrease in deposits is
primarily  due  to  the  withdrawal  of a temporary deposit of county tax funds,
which  was  identified  as volatile deposits by management at December 31, 2001.

OTHER  LIABILITIES

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued  interest payable decreased $69,336 from December 31, 2001, to
June 30, 2002.  The decrease is directly related to the decrease in deposits and
lower  interest  rates  during  2002.


                                     - 12 -
<PAGE>
STOCKHOLDERS'  EQUITY

Stockholders' equity increased $796,808 from December 31, 2001 to June 30, 2002,
due  in  part  to net income of $633,186 for the six months ended June 30, 2002.
The  equity  adjustment  for  unrealized  gains  or  losses  on  securities
available-for-sale increased $131,102 during the six months ended June 30, 2002.
The value of common stock and additional paid-in capital increased from December
31,  2001 to June 30, 2002 by $32,520 due to the exercise of 2,710 stock options
by  the  estate  of  a  founding  director.


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  $35.5  million  at  June  30, 2002.
Securities  maturing  in  one  year  or less totaled approximately $2.8 million.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing  and noninterest-bearing deposit accounts.  At June
30,  2002,  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  $14.65  million.  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.


                                     - 13 -
<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.

In  January 1998, the Company obtained a $1 million loan from the FHLB.  At June
30,  2002,  the  balance  of  the  loan was $1,000,000.  Interest on the loan is
payable on a monthly basis at 5.72 percent.  Principal is due in full on January
13,  2003.  The  note  is secured by specifically identified single family first
mortgage  loans.

In  September  2000, the Company obtained an additional $1 million loan from the
FHLB.  At  June  30,  2002, the balance on the note was $1,000,000.  Interest on
the  loan  is  payable  on a monthly basis at 6.09 percent.  Principal is due in
full  on  September  15, 2010.  Additional lines of credit totaling $8.9 million
are  available to the Company from secured loans at the Federal Reserve Bank and
the  FHLB.

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 Bank'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 goodwill, amounted to $10 million
at  June  30,  2002.  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 $11.1 million at June 30, 2002.
The percentage ratios as calculated under FDIC guidelines were 11.15 percent and
12.37  percent  for  Tier  I  and  total  risk-based  capital,  respectively, to
risk-weighted  assets at June 30, 2002.  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.


                                     - 14 -
<PAGE>
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

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

On  April 18, 2002, the Company held its annual meeting of shareholders at which
the  following  director  nominees  were elected to a one-year term by the votes
indicated:

     Directors                    Votes  For     Votes  Withheld
     ---------                    ----------     ---------------

Jack  J.  Babb                      421,397          -  0  -
William  H.  H.  Clark              421,397          -  0  -
Patricia  Y.  Cochran               421,197            200
Jeanette  W.  Dupree                421,397          -  0  -
James  Arthell  Gray,  Sr.          421,397          -  0  -
Harle  B.  Green                    421,397          -  0  -
Danny  Ray  Jackson                 421,397          -  0  -
Ernest  Kresch                      421,397          -  0  -
Robert  G.  Peck                    421,397          -  0  -

ITEM  5  -  OTHER  INFORMATION

Stockholder  proposals  to  be  submitted  for  consideration at the next annual
meeting  of  stockholders must be received by the Company no later than December
1,  2002, to be included in the 2003 proxy materials.  A stockholder must notify
the  Company  before February 1, 2003, of a proposal for the 2003 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 1, 2003, proxies solicited by the management of the Company will confer
discretionary authority upon the management of the Company to vote upon any such
matter.


                                     - 15 -
<PAGE>
ITEM  6  -  EXHIBITS  AND  REPORTS  ON  FORM  8-K

  (a)  Exhibits:

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

                  11                Computation of Net Income Per Share

  (b)  Reports  on  Form  8-K

The  Company  did not file any reports on Form 8-K during the quarter ended June
30,  2002.



                                   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                      July 31, 2002
               ---------------------                      -------------
               Robert G. Peck,                            Date
               President and CEO
               (Principal Executive Officer)



               /s/  Harle  B.  Green                      July 31, 2002
               ---------------------                      -------------
               Harle B. Green,                            Date
               Chairman and Chief Financial Officer
               (Principal Financial Officer)


                                     - 16 -
<PAGE>