<PAGE>   1
                           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 period ended September 30, 1999

[ ]      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                      679,048


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


<PAGE>   2

                            GATEWAY BANCSHARES, INC.

                         September 30, 1999 Form 10-QSB


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                      Page No.
                                                                                      --------
<S>                                                                                   <C>
PART I.       FINANCIAL INFORMATION

  Item 1.     Financial Statements (unaudited)

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

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

              Consolidated Statements of Comprehensive Income..........................  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.......................................................  18

  Item 2.     Changes in Securities and Use of Proceeds ..............................  18

  Item 3.     Defaults Upon Senior Securities ........................................  18

  Item 4.     Submission of Matters to a Vote of Security Holders.....................  18

  Item 5.     Other Information.......................................................  18

  Item 6.     Exhibits and Reports on Form 8-K........................................  18
</TABLE>








                                   * * * * *


                                       2
<PAGE>   3

         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            GATEWAY BANCSHARES, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                   SEPTEMBER 30, 1999      December 31,
                                                                       (UNAUDITED)             1998
                                                                   ------------------      ------------
<S>                                                                <C>                     <C>
ASSETS
  Cash                                                               $    665,705          $    397,459
  Due from banks                                                        1,833,295             1,015,443
  Federal funds sold                                                           --             4,700,000

  Securities available-for-sale                                        17,034,592            24,526,907
  Securities held-to-maturity                                           4,781,546             7,562,904
  Restricted investments                                                  230,800               118,300

  Loans                                                                57,779,319            36,464,131
  Allowance for loan losses                                              (641,560)             (366,158)
                                                                     ------------          ------------
  Net loans                                                            57,137,759            36,097,973

  Premises and equipment, net                                           1,959,689             1,694,514
  Accrued interest                                                        720,798               678,770
  Other assets                                                            411,933               146,841
                                                                     ------------          ------------
      TOTAL ASSETS                                                   $ 84,776,117          $ 76,939,111
                                                                     ============          ============

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
  Deposits:
    Noninterest-bearing                                              $  6,600,193          $  6,249,127
    Interest-bearing                                                   66,623,140            62,586,245
                                                                     ------------          ------------
     TOTAL DEPOSITS                                                    73,223,333            68,835,372

  Federal funds purchased                                               1,500,000                    --
  Long-term debt                                                        3,300,000             1,000,000
  Accrued interest                                                        322,391               276,995
  Other liabilities                                                        28,311               240,127
                                                                     ------------          ------------
     TOTAL LIABILITIES                                                 78,374,035            70,352,494
                                                                     ------------          ------------

SHAREHOLDERS' EQUITY:
  Common stock ($5 par value; 10,000,000 shares
     authorized, 679,048 shares issued and outstanding)                 3,395,240             3,395,240
  Capital surplus                                                       3,357,637             3,357,637
  Accumulated deficit                                                     121,816              (173,497)
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                     (472,611)                7,237
                                                                         --------                 -----


     TOTAL SHAREHOLDERS' EQUITY                                         6,402,082             6,586,617
                                                                     ------------          ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                           $ 84,776,117          $ 76,939,111
                                                                     ============          ============
</TABLE>

                 See notes to consolidated financial statements.


                                       3




<PAGE>   4

                            GATEWAY BANCSHARES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (unaudited)

<TABLE>
<CAPTION>

                                                                          THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                             SEPTEMBER 30,               SEPTEMBER 30,
                                                                          ------------------          ------------------
                                                                          1999          1998          1999          1998
                                                                          ----          ----          ----          ----
<S>                                                                    <C>           <C>           <C>           <C>
REVENUE FROM EARNING ASSETS:
  Loans                                                                $1,299,931    $  804,609    $3,434,900    $1,976,863
  Interest on investment securities
    Taxable securities                                                    346,600       353,017     1,106,568       793,860
    Non-taxable securities                                                    -0-           -0-           -0-           -0-
  Interest on federal funds sold                                            3,196        18,541        28,713        74,812
  Interest on deposits in other banks                                         223           -0-           646           -0-
                                                                       ----------    ----------    ----------    ----------
   TOTAL REVENUE FROM EARNING ASSETS                                    1,649,950     1,176,167     4,570,827     2,845,535
                                                                       ----------    ----------    ----------    ----------

INTEREST EXPENSE:
  Interest on deposits                                                    846,518       660,221     2,397,343     1,511,313
  Interest on notes payable                                                17,654        14,483        46,019        41,124
  Interest on federal funds purchased                                      12,915           537        19,097           859
                                                                       ----------    ----------    ----------    ----------
   TOTAL INTEREST EXPENSE                                                 877,087       675,241     2,462,459     1,553,296
                                                                       ----------    ----------    ----------    ----------

NET INTEREST INCOME                                                       772,863       500,926     2,108,368     1,292,239
  Provision for loan losses                                               165,000        72,000       360,000       190,000
                                                                       ----------    ----------    ----------    ----------

NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES                                             607,863       428,926     1,748,368     1,102,239
                                                                       ----------    ----------    ----------    ----------

NON INTEREST INCOME:
  Service charges                                                          55,190        41,157       151,673        96,410
  Mortgage lending fees                                                    19,685        42,701       104,287       121,038
  Commissions on insurance                                                  1,684         1,453         4,842         3,373
  Investment gains                                                             --         2,967         9,433         3,571
  Other income                                                             20,591         7,913        37,861        28,746
                                                                       ----------    ----------    ----------    ----------
    TOTAL NON INTEREST INCOME                                              97,150        96,191       308,096       253,138
                                                                       ----------    ----------    ----------    ----------

NON INTEREST EXPENSE
  Salaries and employee benefits                                          242,281       186,481       754,012       552,801
  Occupancy expense                                                        31,380        30,732        82,362        79,760
  Furniture and equipment expense                                          38,650        29,044       112,826        80,801
  Other operating expenses                                                104,827       196,847       643,951       463,900
                                                                       ----------    ----------    ----------    ----------
    TOTAL NON INTEREST EXPENSE                                            417,138       443,104     1,593,151     1,177,262
                                                                       ----------    ----------    ----------    ----------
Income Before Income Taxes                                                287,875        82,013       463,313       178,115
Income Tax Provision                                                      100,000        15,250       168,000        15,250
                                                                       ----------    ----------    ----------    ----------
    NET INCOME                                                         $  187,875    $   66,763    $  295,313    $  162,865
                                                                       ==========    ==========    ==========    ==========

EARNINGS PER COMMON SHARE - PRIMARY AND FULLY DILUTED
  Net income per common share                                          $      .28    $      .10    $      .43    $      .24
  Basic weighted average shares outstanding                               679,048       679,048       679,048       679,048
  Diluted earnings per common share                                    $      .28    $      .10    $      .44    $      .24
  Diluted weighted average shares outstanding                             679,377       679,048       679,377       679,048
</TABLE>

                    See notes to consolidated financial statements.



                                       4
<PAGE>   5

                            GATEWAY BANCSHARES, INC.
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (unaudited)


<TABLE>
<CAPTION>


                                                                          THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                             SEPTEMBER 30,               SEPTEMBER 30,
                                                                          ------------------          ------------------
                                                                          1999          1998          1999          1998
                                                                          ----          ----          ----          ----

<S>                                                                    <C>           <C>           <C>           <C>
Net Income                                                             $  187,875    $   66,764    $  295,313    $  162,865
                                                                       ----------    ----------    ----------    ----------
Other comprehensive, net of tax:
    Unrealized gains on securities:
        Unrealized holding gains (losses) arising
             during the period                                           (138,770)       91,334      (727,044)       89,203
    Less:  reclassification adjustments for gains
             (losses) included in net income                                  -0-        (4,175)          -0-        (3,571)
                                                                       ----------    ----------    ----------    ----------
                                                                         (138,770)       87,159      (727,044)       85,632
    Income tax (expense) benefit related items
             of other comprehensive income                                 47,182       (29,635)      247,195       (29,115)
                                                                       ----------    ----------    ----------    ----------

                Other comprehensive income (loss)                         (91,588)       57,524      (479,849)       56,517
                                                                       ----------    ----------    ----------    ----------


Comprehensive income (loss)                                            $   96,287    $  124,288    $ (184,536)   $  219,382
                                                                       ==========    ==========    ==========    ==========
</TABLE>

                See notes to consolidated financial statements.


                                       5
<PAGE>   6

                                GATEWAY BANCSHARES, INC.
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (unaudited)

<TABLE>
<CAPTION>

                                                                                                 NINE MONTHS ENDED
                                                                                                    SEPTEMBER 30,
                                                                                                 -----------------
                                                                                             1999                  1998
                                                                                         ------------          ------------
<S>                                                                                      <C>                   <C>
OPERATING ACTIVITIES:
   Net income (loss)                                                                     $    295,313          $    162,865
   Adjustments to reconcile net loss to net cash provided by
      operating activities:
   Provision for loan losses                                                                  360,000               190,000
   Provision for depreciation and amortization                                                129,585                90,307
   Amortization of investment security premiums and
      accretion of discounts                                                                   38,504               (12,158)
   Gain on sale of investment securities                                                       (9,433)               (3,571)
   Deferred tax provision                                                                     168,000                   -0-
   Decrease (increase) in accrued interest receivable                                         (42,028)             (323,195)
   Increase (decrease) in accrued interest payable                                             45,396               172,202
   Other                                                                                     (425,169)               53,569
                                                                                         ------------          ------------
          NET CASH PROVIDED IN OPERATING ACTIVITIES                                           560,168               330,019
                                                                                         ------------          ------------

INVESTING ACTIVITIES:
   Net increase in loans                                                                  (21,399,786)          (15,116,523)
   Proceeds from maturities, calls, and principal pay-downs
      of securities                                                                         5,661,555             5,163,260
   Proceeds from sales of available-for-sale securities                                     4,949,028             5,901,148
   Proceeds from sale of held-to-maturity securities                                        2,500,937                   -0-
   Purchase of available-for-sale securities                                               (3,369,356)          (11,900,628)
   Purchase of held-to-maturity securities                                                   (337,106)           (9,485,981)
   Capital expenditures                                                                      (367,303)              (41,329)
                                                                                         ------------          ------------
          NET CASH USED IN INVESTING ACTIVITIES                                           (12,362,031)          (25,480,053)
                                                                                         ------------          ------------
FINANCING ACTIVITIES:
   Net increase (decrease) in demand deposits, NOW accounts,
      and savings accounts                                                                 (3,665,276)            8,510,592
   Net increase in certificates of deposit                                                  8,053,237            15,660,514
   Borrowing under line of credit                                                           2,300,000             1,000,000
   Purchase of federal funds                                                               14,440,000                   -0-
   Repayments of federal funds purchased                                                  (12,940,000)                  -0-
                                                                                         ------------          ------------
          NET CASH PROVIDED IN FINANCING ACTIVITIES                                        8,187,961            25,171,106
                                                                                         ------------          ------------

Net increase (decrease) in cash and cash equivalents                                       (3,613,902)               21,072
Cash and cash equivalents at beginning of period                                            6,112,902             2,132,418
                                                                                         ------------          ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               $  2,499,000          $  2,153,490
                                                                                         ============          ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for:
     Interest                                                                            $  2,424,609          $  1,317,469
     Income taxes                                                                        $    166,000          $        -0-
</TABLE>

                    See notes to consolidated financial statements.


                                       6
<PAGE>   7

                                GATEWAY BANCSHARES, INC.

                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      (unaudited)
                                   September 30, 1999


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 three month and nine month periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. 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, 1998.

NOTE 2 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Gateway Bancshares, Inc. (the "Company") is a one-bank holding which engages in
providing a full range of banking services through its subsidiary bank in
Ringgold, Georgia, Gateway Bank & Trust (the "Bank"). The Bank received
preliminary charter approval on December 11, 1995 and a permit to begin
business on April 21, 1997. The Bank was granted a charter by the Georgia
Department of Banking and Finance, and began full operation on April 21, 1997.
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, 1998.

Income Taxes

The Company and the Bank are subject to federal and state income taxes. Income
taxes have been accrued during the first nine months of 1999 at a rate of 34
percent of income before income taxes. For the same period in 1998, the
effective income tax rate was -0- percent due to the reversing effects of the
valuation allowance on the deferred tax asset.

Net Income Per Common Share

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


                                       7
<PAGE>   8

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 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 shareholder's equity (net of deferred tax effect).

At September 30, 1999, the Company had net unrealized losses of $716,078 in
available-for-sale securities which are reflected in the presented assets and
resulted in an decrease in shareholders' equity of $472,611, net of deferred
tax asset. There were no trading securities. The net decrease in shareholder's
equity as a result of the SFAS No. 115 adjustment from December 31, 1998 to
September 30, 1999 was $479,848.

NOTE 4 - NOTES PAYABLE

In January, 1998, the Company 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. Principal is due in full on January 13, 2003. The note is secured
by specifically identified single family first mortgage loans. In September
1999, the Company obtained $1.2 million loan from the Federal Home Loan Bank
with terms of 5.49% maturing October 18, 1999. Additionally, a $1.1 million
loan was obtained in September 1999 from the Federal Home Loan Bank with
maturity date of September 28, 2000 with interest rate of the Atlanta overnight
deposit rate plus .25%.

NOTE 5 - STOCK OPTION PLAN

On March 18, 1999 the Company issued a total of 164,350 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 13,550 to 20,350 shares. Each of the stock option agreements
contained an option price of $12.00 per share, the market value of the shares
at the time of issuance. The options vest on an equal incremental basis over a
period of five years.

NOTE 6 - Recently Issued Accounting Standards

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income", issued
by FASB, which establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The Statement requires that an enterprise classify items
of other comprehensive income by their nature in the financial statement and
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. Management does not believe that the adoption
of SFAS No. 130 will have a material impact on the Company's consolidated
financial statements.

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" effective for its year ending December 31, 1998. This
Statement, which establishes standards for the way that public business
enterprises report information about operating


                                       8
<PAGE>   9

segments in annual financial statements, requires the reporting of selected
financials and descriptive information about its reportable operating segments.
The Company operates a commercial bank, through its wholly owned subsidiary,
and provides financial services to its customers in the Northwest Georgia area.
The services provided constitute one business segment, and are all related to
accepting deposits from customers, providing loans for customers, related
banking services and management of the bank's assets and liabilities. The
Company's internal reporting considers all activities as one business segment.
The Company considers its entire operations as one operating segment. The
adoption of SFAS No. 131 had no effect on the Company's net income or
stockholders' equity.

Effective for years ending after December 15, 1998, SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" was issued by
FASB which standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan
assets that will facilitate financial analysis, and eliminates certain other
disclosures previously required. Management does not believe that the adoption
of SFAS No. 132 will have a material impact on the Company's consolidated
financial statements.

Effective for years beginning after December 15, 1998, Statement of Position
(SOP) 98-5 requires costs of start-up activities and organization costs to be
expensed as incurred. Management adopted the statement in 1999, the application
of which does not have a material impact on the Company's financial statements.

Effective for fiscal quarters ending after June 15, 1999, SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If
certain conditions are met, a derivative may be specifically designated as (a)
a hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an unrecognized
firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. Management does not
believe that the adoption of SFAS No.133 will have a material impact on the
Company's consolidated financial statements.

NOTE 7 - RECLASSIFICATIONS

Certain amounts in 1998 have been reclassified to conform with the 1999
presentation.


                         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 September 30, 1999 Form 10-QSB and


                                       9
<PAGE>   10

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, 1998.


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) the impact of Year 2000 and 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.

EARNINGS SUMMARY

The Company's net income for the three and nine months ended September 30, 1999
was $187,875 and $295,313, respectively, compared to net income of $66,763 and
$162,865 for the same periods in 1998. The increase in net income resulted
primarily from the increased net interest income from growth in the Company's
loan and deposit base.


                                      10
<PAGE>   11

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income on loans and investment 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 $1,649,950 and $4,570,827 for the three and nine months ended
September 30, 1999, respectively, compared to interest income of $1,176,167 and
$2,848,535 for the same periods in 1998. The increase in interest income
resulted from the increase in the Company's loan portfolio.

INTEREST EXPENSE

Interest expense on deposits for the three and nine months ended September 30,
1999 was $877,087 and $2,462,459, respectively, compared to interest expense of
$675,241 and $1,553,296 for the same periods in 1998. The increase in interest
expense relates to the increase in Company's deposit base, the $3,300,000 notes
due to the Federal Home Loan Bank obtained in January, 1998 and September,
1999, and federal funds purchased during 1999.

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 $165,000 and $360,000 for
the three and nine months ended September 30, 1999. The allowance for loan
losses as a percent of outstanding loans was 1.11 percent and 1.01 percent at
September 30, 1999 and at December 31, 1998, respectively.

NONINTEREST INCOME

Noninterest income for the three and nine months ended September 30, 1999 was
$97,150 and $308,096, respectively, compared to $96,191 and $253,138 for the
same periods in 1998. Noninterest income consisted primarily of service charges
on customer deposits ($151,673 through September 30, 1999), mortgage lending
fees, ATM and credit card fees, and rental of safe deposit boxes.

NONINTEREST EXPENSE

Noninterest expense totaled $417,138 and $1,593,151 for the three and nine
months ended September 30, 1999, respectively, compared to $443,104 and
$1,177,262 for the same periods in 1998. The increases reflect the hiring of
additional staff, and increased occupancy, furniture and fixtures, and other
expenses necessary for the operation of the Company and are reflective of the
growth of the Bank. Other operating expenses consist primarily of data
processing, advertising, professional fees, printing and postage and other
miscellaneous expenses.


                                      11
<PAGE>   12

The Bank incurred a loss of $192,000 on the fraudulent use of check cards
through its system. Unauthorized withdrawals were drafted from the Bank's
system and processed by the Bank's outside contractor. The Bank believes that
these fraudulent transactions were the direct result of the outside
contractor's failure to ensure verification controls were in place to protect
the Bank's check cards from potential fraud. The outside contractor filed a
demand for arbitration alleging that the Bank failed to honor a contract
calling for recovery of the transactions. The Bank has denied liability in this
action and filed a counterclaim against the outside contractor based upon the
outside contractor's gross negligence in its failure to ensure that the Bank's
check cards were being protected from potential fraud. As of September 30,
1999, the claims have been settled and a cumulative loss of $192,000 has been
recognized.

INCOME TAXES

The Company's net operating losses from prior periods of approximately $41,000
were utilized in the current year to offset income taxes. Income taxes of
$100,000 and $168,000 have been provided for the net income for the three and
nine months ended September 30, 1999, respectively.

FINANCIAL CONDITION

EARNING ASSETS

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

INVESTMENT SECURITIES AND FEDERAL FUNDS SOLD

The composition of the Company's investment 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.

Investment securities and federal funds sold decreased $10,161,173 or 31.55
percent from December 31, 1998 to September 30, 1999. The decrease is due to
the growth in loans since year end 1998, which required the reallocation of
funds for those loans. The investment securities portfolio is adjusted to make
various term investments, to provide a source of liquidity and to serve as
collateral to secure certain government deposits. Investment securities at
September 30, 1999 were $22,046,938 compared to $32,208,111 at December 31,
1998, reflecting a decrease of $10,161,173. Federal funds sold decreased from
$4,700,000 at December 31, 1998 to zero at September 30, 1999.

LOANS

Loans comprised the single largest category of the Company's earning assets on
September 30, 1999. At September 30, 1999, the Company had outstanding loans
amounting to $57,137,759 net


                                      12
<PAGE>   13

of its allowance for loan losses, or 67.4 percent of total assets, compared to
net loans of $36,097,973, or 46.9 percent of total assets at December 31, 1998.
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: 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), nonperforming assets to total assets, and nonperforming assets to
total loans. At September 30, 1999, the Company had nonperforming assets of
$193,168, or .33 percent of all loans and .23 percent of total assets. At
December 31, 1998, the Company had no nonperforming loans.

NONEARNING ASSETS

Nonearning assets include premises and equipment of $1,959,689 at September 30,
1999, an increase of $265,175 from December 31, 1998. The increase results
primarily from the acquisition of real estate, net of the effect of
depreciation of $102,128 provided for those assets that have been previously
placed in service.

The Bank leases the site for the Bank at the rate of $1,707 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 was $720,798 at September 30, 1999, an increase of $42,028
from December 31, 1998. The increase is due to related increases in earning
assets since year end 1998.

Other assets consist primarily of accrued interest receivable on earning assets
and the deferred tax asset. The deferred tax asset 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 September 30, 1999, the Company had outstanding deposits of $73,223,333
compared to $68,835,372 at December 31, 1998. Deposits are the Company's
primary source of funds to support its earning assets. Non-interest bearing
deposits increased from $6,249,127 at December 31, 1998 to $6,600,193 at
September 30, 1999. Time deposits of $100,000 or more increased by $1,282,914.
The increase in deposits reflects management's philosophy of aggressively
seeking new deposits while maximizing the interest income spread on earning
assets to interest bearing liabilities.

OTHER LIABILITIES

Liabilities consists primarily of accrued interest payable and accounts
payable. Accrued interest payable increased $45,396 from December 31, 1998 to
September 30, 1999. The increase relates to the increase in the Company's
deposit base.


                                      13
<PAGE>   14

SHAREHOLDERS' EQUITY

Shareholders' equity decreased $184,535 from December 31, 1998 to September 30,
1999, due primarily to the increase in unrealized losses on securities
available-for-sale totaling $479,848, net of deferred tax liability.

YEAR 2000

The Company utilizes and depends upon data processing systems and software to
conduct its business. The approach of the Year 2000 presents a problem in that
many computer programs have been written using two digits rather than four to
define the applicable year. Computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the Year 2000. For
example, computer systems may compute payment, interest, delinquency or other
amounts important to the operations of the Company based on the wrong date.
This could result in internal system failure or miscalculation, and also
creates risk for the Company from third parties with whom the Company deals on
financial transactions.

The FDIC has issued guidelines for insured financial institutions with respect
to Year 2000 compliance. The Company has developed a Year 2000 action plan
based in part on the guidelines and timetables issued by the FDIC. The
Company's action plan focuses on four primary areas: (1) information systems,
(2) embedded systems located at the Bank's offices and within its off-site ATM
machines, (3) third-party and customer relationships, and (4) contingency
planning. The Company has designated a Year 2000 compliance team, headed by its
Chief Financial Officer and Chief Operating Officer, who are making Year 2000
readiness assessments and remediation where necessary.

Information Systems. The Company identified all mission critical information
technology ("IT") systems and developed a schedule for testing and remediation
of these systems. Testing of key computer hardware and mission critical
hardware modification or replacement has been completed. The Company has
completed its inventory of mission critical software and has obtained
certification from software vendors of Year 2000 compliance. The Company has
completed programming and testing of changes to critical systems. Testing of
internal mission critical systems began during the first quarter of 1999 and
implementation was completed by September 30, 1999.

Embedded Systems. The Company is performing a comprehensive inventory of its
embedded systems, such as microcontrollers used to operate security systems and
elevators, and has completed its inventory of mission critical non-IT systems.
The Company has contacted manufacturers and vendors of those components
utilized in operations to determine whether these components are Year 2000
compliant. As a result, the Company has remediated or replaced, as applicable,
any non-compliant components and completed this process for mission critical
embedded systems by September 30, 1999.

Third Party and Customer Relationships. The Company has initiated
communications with all suppliers and vendors to determine the potential impact
of such third parties' failure to remediate their own Year 2000 issues. These
third parties include other financial institutions, office supply vendors and
telephone, electric and other utility companies. The Company is encouraging its
counterparts and customers to conduct their own Year 2000 assessments and take
appropriate steps to become Year 2000 compliant.


                                      14
<PAGE>   15

The Company outsources its principal data processing activities to another
financial institution. The Company is actively communicating with and
monitoring the progress of such institution to assess the impact of Year 2000
issues on this institution and its ability to provide the Company with data
processing services. The Company will consider new business relationships with
alternate providers of products and services if necessary.

Additionally, the Company has initiated communications with its larger and
commercial borrowers to assess the potential impact of Year 2000 on them and
their ability to remain current on loan repayments. The Bank's credit review
process has also been modified to identify and address this risk. The Company's
current plan is to help the Bank's customers understand the potential Year 2000
risks, to share the Bank's strategies, and to encourage those customers to
satisfy their own Year 2000 compliance requirements on time lines that are
consistent with those of the Company.

Contingency Plans. As part of the Company's normal business practice, it
maintains contingency plans to follow in the event of emergency situations,
some of which could arise from Year 2000-related problems. The Company has
formulated a detailed Year 2000 contingency plan, which assesses several
possible scenarios to which the Company may be required to react. The Company's
formal Year 2000 contingency plan was completed by September 30, 1999.

Financial Implications. The Company believes that, since a majority of its
equipment is relatively new, the Year 2000 issue will not pose significant
internal operational problems or generate material additional expenditures.
Maintenance, testing, and modification costs will be expensed as incurred,
while the costs of new software or hardware will be capitalized and amortized
over their useful lives. The Company does not expect the amounts required to be
expensed to resolve Year 2000 issues to have a material effect on its financial
position or results of operations,. The Company currently estimates that the
costs of assessing, testing, and remediation of Year 2000 issues will total
$25,000 in 1999. The anticipated costs associated with the Company's Year 2000
compliance program do not include time and costs that may be incurred as a
result of any potential failure of third parties to become Year 2000 compliant
or costs to implement the Company's contingency plans.

Potential Risks. The Year 2000 issue presents a number of risks to the business
and financial condition of the Company and the Bank. External factors, which
include but are not limited to electric, telephone and water service, are
beyond the control of the Company and the failure of such systems could have a
negative impact on the Company, its customers and third parties on whom the
Company relies for its day-to-day operations. The business of many of the
Company's customers may be negatively affected by the Year 2000 issue, and any
financial difficulties incurred by the Company's customers in connection with
the century change could negatively affect such customers' ability to repay
loans to the Company. The failure of the Bank's computer system or applications
or those operated by customers or third parties could have a material adverse
effect on the Company's results of operations and financial condition.

The foregoing are forward-looking statements reflecting management's current
assessment and estimates with respect to the Company's Year 2000 compliance
efforts and the impact of Year 2000 issues on the Company's business and
operations. Various factors could cause actual plans and results to differ
materially from those contemplated by the assessments, estimates and
forward-looking statements, many of which are beyond the control of the
Company. Some of these factors include, but are not limited to representations
by the Company's vendors and


                                      15
<PAGE>   16

counterparties, technological advances, economic considerations, and consumer
perceptions. The Company's Year 2000 compliance program is an ongoing process
involving continual evaluation and may be subject to change in response to new
developments.

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 assets and liabilities 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 shareholders. 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 investment and trading account
securities. Outstanding loans that mature in one year or less, excluding
outstanding credit card debts equaled approximately $30 million at September
30, 1999. Investment securities maturing in one year or less equaled
approximately $898,000. Other sources of liquidity include short-term
investments such as federal funds sold and maturing interest-bearing deposits
with other banks.

The liability portion of the balance sheet provides liquidity through various
customers' interest-bearing and non interest-bearing deposit accounts. At the
end of third quarter 1999, 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 $4 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.

Note Payable - Federal Home Loan Bank

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. As a member of the FHLB, the Bank improved its ability to manage
liquidity and reduce interest rate risk by having a


                                      16
<PAGE>   17

funding sources to match longer term loans. In January, 1998, the Company
obtained a $1 million loan from the FHLB of Atlanta. At September, 1999, the
balance on the note was $1,000,000. Interest on the outstanding amounts under
the note 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. Additionally, in September 1999, loans were
obtained from the Federal Home Loan Bank of Atlanta in the amounts of $1.2
million and $1.1 million, with interest rates of 5.49 percent and rates of the
Atlanta overnight deposit rate plus .25 percent, respectively. Principal is due
in full on October 18, 1999 and September 28, 2000, respectively. Total
principal balances outstanding was $3,300,000 as of September 30, 1999.

Federal Capital Standards

Regulatory capital guidelines take into consideration risk factors, as defined
by regulators, associated with various categories of assets, both on and off
the balance sheet. Under the guidelines, 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 $6.1 million at September 30, 1999. 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 $6.8
million at September 30, 1999. The percentage ratios as calculated under FDIC
guidelines were 8.91 percent and 9.84 percent for Tier I and Total Risk-based
capital, respectively, to risk-weighted assets at September 30, 1999. Both
levels exceeded the minimum ratios of 4 percent and 8 percent, respectively.
Management has reviewed and will continue to monitor the Company's asset mix
and product pricing, and the loan loss allowance, which are the areas it
believes are most affected by these requirements.

Other important indicators of capital adequacy in the banking industry are the
leverage ratio and the tangible leverage ratio. The leverage ratio is defined
as the ratio that the Bank's shareholders equity minus goodwill bears to total
assets minus goodwill. The tangible leverage ratio is defined as the Bank's
shareholders equity minus all intangibles, divided by total assets minus all
intangibles. The Bank's leverage ratios as of September 30, 1999 exceeded the
regulatory minimum requirements which are generally 3 percent plus an
additional cushion of at least 100-200 basis points depending on risk profiles
and other factors.

Georgia Department of Banking and Finance Capital Requirement

In addition to the capital standards imposed by federal banking regulators, the
Georgia Department of Banking and Finance (DBF) imposed its 8 percent primary
capital ratio as a condition to the approval of the Bank's charter. This
requirement, which exceeds the FDIC capital requirements, is calculated as the
ratio of total equity to total assets, each as adjusted for unrealized gains
and losses on securities and allowance for loan losses. This heightened
requirement will continue through the first three years of the Bank's
operation, at which time the Bank will be subject to a 6 percent minimum
capital ratio. At September 30, 1999, the capital ratio as calculated under the
DBF standard was 8.46 percent. As of September 30, 1999 the Bank was in
compliance with the 8 percent requirement.


                                      17
<PAGE>   18

                          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 - NONE

                           ITEM 5 - OTHER INFORMATION

Pursuant to Rule 14a-4 (c) (1) promulgated under the Securities Exchange Act of
1934, as amended, shareholders desiring to present a proposal for consideration
at the Company's 2000 Annual Meeting of Shareholders must notify the Company in
writing at its principal office at 5102 Alabama Highway, Ringgold, Georgia
30736 of the contents of such proposal no later than February 7, 2000. Failure
to timely submit such a proposal will enable the proxies appointed by
management to exercise their discretionary voting authority when the proposal
is raised at the Annual Meeting of Shareholders without any discussion to the
matter in the proxy statement.

                    ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits:

<TABLE>
<CAPTION>
         Exhibit Number             Description of Exhibit                         Page number
         --------------             ----------------------                         -----------

         <S>                        <C>
               11                   Computation of Net Income Per Share

               27                   Financial Data Schedule
                                    (for the SEC use only )
</TABLE>

 (b) Reports on Form 8-K

The Company did not file any reports on Form 8-K during the quarter ended
September 30, 1999.


                                      18
<PAGE>   19

                                   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.


Dated:  November 12, 1999

GATEWAY BANCSHARES, INC.





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



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


                                      19