SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


     [X]  Quarterly  Report  Pursuant  to Section 13 or 15 (d) of the Securities
          Exchange Act of 1934 for the quarterly period ended September 30, 2001

     [ ]  Transition report 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>
                            GATEWAY BANCSHARES, INC.

                         September 30, 2001 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 . . . . . . . . . . . . . . . . . 15



                                    * * * * *


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

ITEM  1.  FINANCIAL  STATEMENTS

                       GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                             CONSOLIDATED BALANCE SHEETS


                                                          September 30,    December 31,
                                                              2001             2000
                                                         ---------------  --------------
                                                           (unaudited)
<S>                                                      <C>              <C>
ASSETS
  Cash                                                   $      613,140   $     964,384
  Due from banks                                              3,754,640       2,134,612
  Federal funds sold                                          2,100,000       4,080,000
  Securities available-for-sale                              23,294,266      20,469,637
  Securities held-to-maturity (market value
    of $0 and $4,470,405, respectively)                               -       4,724,788
  Federal Home Loan Bank stock, at cost                         260,000         260,000
  Loans                                                      78,177,220      72,363,307
  Allowance for loan losses                                    (937,959)       (930,473)
                                                         ---------------  --------------
  Net loans                                                  77,239,261      71,432,834

  Premises and equipment, net                                 3,072,190       3,126,038
  Accrued interest                                              837,921         944,475
  Other assets                                                  217,931         437,868
                                                         ---------------  --------------

      Total assets                                       $  111,389,349   $ 108,574,636
                                                         ===============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                  $    8,109,916   $   7,294,943
    Interest-bearing                                         91,099,881      89,682,342
                                                         ---------------  --------------

      Total deposits                                         99,209,797      96,977,285

  Long-term borrowings:
    Federal Home Loan Bank advances                           2,000,000       2,000,000
    Notes payable                                             1,000,000       1,000,000
  Accrued interest                                              416,521         559,284
  Other liabilities                                             131,138         235,755
                                                         ---------------  --------------

      Total liabilities                                     102,757,456     100,772,324
                                                         ---------------  --------------

STOCKHOLDERS' 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
  Retained earnings                                           1,687,200       1,163,149
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                            191,816        (113,714)
                                                         ---------------  --------------

      Total stockholders' equity                              8,631,893       7,802,312
                                                         ---------------  --------------

      Total liabilities and stockholders' equity         $  111,389,349   $ 108,574,636
                                                         ===============  ==============
</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               Nine Months Ended
                                                     ------------------------------  -------------------------------
                                                     September 30,   September 30,   September 30,    September 30,
                                                          2001            2000            2001            2000
                                                     --------------  --------------  --------------  ---------------
<S>                                                  <C>             <C>             <C>             <C>
INTEREST INCOME
  Loans                                              $    1,743,574  $    1,782,594  $    5,266,370  $    4,982,760
  Interest on securities:
    Taxable interest                                        311,813         356,463       1,013,085       1,011,019
    Nontaxable interest                                       3,018           2,666           8,364           8,004
  Interest on federal funds sold                             31,825          11,048         107,737          30,389
                                                     --------------  --------------  --------------  ---------------

      Total interest income                               2,090,230       2,152,771       6,395,556       6,032,172
                                                     --------------  --------------  --------------  ---------------

INTEREST EXPENSE
  Interest on deposits                                    1,089,972       1,113,841       3,537,050       3,089,042
  Interest on notes payable                                  15,941          26,250          51,516          26,250
  Interest on Federal Home Loan Bank advances                29,767          57,604          88,332         106,150
  Interest on federal funds purchased                           102           3,176             190          24,079
                                                     --------------  --------------  --------------  ---------------

      Total interest expense                              1,135,782       1,200,871       3,677,088       3,245,521
                                                     --------------  --------------  --------------  ---------------

NET INTEREST INCOME                                         954,448         951,900       2,718,468       2,786,651
  Provision for loan losses                                 135,000          90,000         225,000         278,500
                                                     --------------  --------------  --------------  ---------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         819,448         861,900       2,493,468       2,508,151
                                                     --------------  --------------  --------------  ---------------

NONINTEREST INCOME
  Service charges on deposits                                97,878          80,688         280,070         219,481
  Mortgage loan fees                                         81,896          32,034         238,739          84,828
  Insurance commissions                                       1,721           3,025           7,201           4,859
  Gains (losses) on sale of securities                       22,542               -          32,298          (1,250)
  Other income                                               16,276          11,593          45,517          35,093
                                                     --------------  --------------  --------------  ---------------

      Total noninterest income                              220,313         127,340         603,825         343,011
                                                     --------------  --------------  --------------  ---------------

NONINTEREST EXPENSE
  Salaries and employee benefits                            409,161         322,997       1,223,202       1,008,865
  Occupancy expense                                         202,440          34,260         301,062          93,208
  Furniture and equipment expense                            51,154          38,969         154,837         115,671
  Other operating expenses                                   86,209         248,792         594,718         705,495
                                                     --------------  --------------  --------------  ---------------

      Total noninterest expense                             748,964         645,018       2,273,819       1,923,239
                                                     --------------  --------------  --------------  ---------------

Income before income taxes                                  290,797         344,222         823,474         927,923
Income taxes                                                107,197         111,625         299,423         309,625
                                                     --------------  --------------  --------------  ---------------

      Net income                                     $      183,600  $      232,597  $      524,051  $      618,298
                                                     ==============  ==============  ==============  ===============

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

  Net income per common share                        $         0.27  $         0.34  $         0.77  $         0.91

  Basic weighted average shares outstanding                 679,048         679,048         679,048         679,048

  Diluted earnings per common share                  $         0.27  $         0.34  $         0.77  $         0.91

  Diluted weighted average shares outstanding               682,171         680,054         682,335         680,054
</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)


                                                                                                                       Accumulated
                                                                      Total                                               Other
                                                    Comprehensive Stockholders'  Common                  Accumulated  Comprehensive
                                                        Income       Equity      Stock        Surplus      Earnings       Income
                                                     ------------  ----------  ----------  ------------  -------------  -----------
<S>                                                  <C>           <C>         <C>         <C>           <C>            <C>
BALANCE, December 31, 2000                                         $7,802,312  $3,395,240  $  3,357,637  $   1,163,149  $ (113,714)

  Comprehensive income:
    Net income                                       $    524,051     524,051           -             -        524,051           -

    Other comprehensive income, net of tax:
     Unrealized holding gains (losses) on
       Securities available for sale, net
        of reclassification adjustment                    305,530     305,530           -             -              -      305,530
                                                     ------------  ----------  ----------  ------------  -------------  -----------

    Total comprehensive income                       $    829,581
                                                     ============

BALANCE, September 30, 2001                                        $8,631,893  $3,395,240  $  3,357,637  $   1,687,200  $   191,816
                                                                   ==========  ==========  ============  =============  ===========
</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)

                                                                       Nine  Months Ended
                                                               --------------------------------
                                                                September 30,    September 30,
                                                                    2001             2000
                                                               ---------------  ---------------
<S>                                                            <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                   $      524,051   $      618,298
  Adjustments to reconcile net income to net cash provided by
    operating activities:
      Provision for loan losses                                       225,000          278,500
      Provision for depreciation and amortization                     152,941          108,599
      Net amortization on securities                                   10,508           25,052
      Gain on sale of securities                                       29,251            1,250
      Deferred income taxes                                           (11,280)         (62,080)
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                   106,554         (122,712)
        Accrued interest payable                                     (142,763)         113,541
        Other assets and liabilities                                  112,416          110,567
                                                               ---------------  ---------------

          Net cash provided by operating activities                 1,006,678        1,071,015
                                                               ---------------  ---------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net increase in loans                                            (6,031,427)      (7,351,977)
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                  14,528,110          859,387
  Proceeds from sales of available-for-sale securities              5,741,158          592,936
  Purchase of available-for-sale securities                       (18,089,154)      (3,498,067)
  Purchase of Federal Home Loan Stock                                       -          (29,200)
  Purchase of premises and equipment                                  (99,093)        (765,521)
                                                               ---------------  ---------------

          Net cash used in investing activities                    (3,950,406)     (10,192,442)
                                                               ---------------  ---------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net increase in deposits                                          2,232,512        6,535,721
  Proceeds from Federal Home Loan Bank advances                             -        1,000,000
  Proceeds from notes payable                                               -        1,000,000
                                                               ---------------  ---------------

          Net cash provided by financing activities                 2,232,512        8,535,721
                                                               ---------------  ---------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                            (711,216)        (585,706)

CASH AND CASH EQUIVALENTS, beginning of period                      7,178,996        2,978,535
                                                               ---------------  ---------------

CASH AND CASH EQUIVALENTS, end of period                       $    6,467,780   $    2,392,829
                                                               ===============  ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                   $    3,819,851   $    3,131,980
    Income taxes                                                      260,139          391,338
                                                               ===============  ===============
</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)
                               September 30, 2001

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 nine-month period ended September 30, 2001
are  not necessarily indicative of the results that may be expected for the year
ending  December  31,  2001.  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, 2000.

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,  2000.

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  September  30,  2001,  the  Company  had net unrealized gains of $309,381 on
available-for-sale  securities.  As  a  result,  the  increase  in stockholders'
equity,  net of deferred taxes, was $191,816.  There were no trading securities.
The  net  increase  in  stockholder's  equity  as  a  result of the SFAS No. 115
adjustment  from  December  31,  2000,  to  September  2001,  was  $305,530.

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 to its directors and executive officers a total of
164,350  options  to  purchase its common shares.  Each director received 13,550
shares  and  the  executive  officers received varying amounts of shares ranging
from  13,550  to  20,350  shares.  On  June  19, 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.

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

Effective  for  fiscal  quarters  beginning  after  June 15, 2000, 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.  The  adoption  of SFAS No.133 is not expected to have an impact on
the  Company's  consolidated  financial  statements.

NOTE 7 - RECLASSIFICATIONS
--------------------------

Certain  amounts  in  2000  have  been  reclassified  to  conform  with the 2001
presentation.


                                      - 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 September 30, 2001, 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,  2000.

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 nine months ended September 30, 2001 and 2000
was  $524,051  and  $618,298, respectively.  The decrease in net income resulted
primarily  from  (1)  lower  net interest margins resulting from fluctuations in
interest  rates and (2) increases in noninterest expenses due to the new branch.


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
$6,395,556 and $6,032,172 for the nine months ended September 30, 2001 and 2000,
respectively.  The increase in interest income resulted from the increase in the
Company's  loan portfolio and an increase in the amount of federal funds sold to
other  banks.

INTEREST EXPENSE

Interest  expense  on  deposits  and  other borrowings for the nine months ended
September  30,  2001  and  2000 was $3,677,088 and $3,245,521 respectively.  The
increase  in  interest  expense relates to the increase in the Company's deposit
base  over  the  past  year.

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 $225,000 for the nine
months  ended September 30, 2001.  The allowance for loan losses as a percent of
outstanding  loans  was  1.20 percent at September 30, 2001, and 1.29 percent at
December  31,  2000.

NONINTEREST  INCOME

Noninterest  income  for  the  nine months ended September 30, 2001 and 2000 was
$603,825  and $343,011, respectively.  Noninterest income consisted primarily of
service  charges  on  customer  deposits  ($280,070 through September 30, 2001),
mortgage  loan  fees  ($238,739 through September 30, 2001), ATM and credit card
fees,  and  rental  of  safe  deposit  boxes.


                                     - 10 -
<PAGE>
NONINTEREST EXPENSE

Noninterest  expense totaled $2,273,819 and $1,923,239 for the nine months ended
September  30, 2001 and 2000, respectively.  The increases reflect the hiring of
additional  staff,  and  increased  occupancy, furniture and fixtures, and other
expenses  related to the new branch.  Other operating expenses consist primarily
of  data  processing,  advertising,  professional fees, printing and postage and
other  miscellaneous  expenses.

INCOME TAXES

Income  taxes  of  $299,423  and $309,625 have been provided for the nine months
ended September 30, 2001 and 2000, respectively.  The decrease was the result of
a  decrease  in  taxable  income  in  2001  as  compared  to  2000.

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 $3,880,159 or 13.25 percent from
December  31, 2000, to September 30, 2001.  A portion of the decrease was caused
by  several  securities  being called in 2001.  The securities portfolio is also
adjusted  to make various term investments, to provide a source of liquidity and
to  serve  as  collateral  to secure certain government deposits.  Securities at
September  30,  2001  and  December  31,  2000 were $23,294,266 and $25,194,425,
respectively, reflecting a decrease of $1,900,159.  Federal funds sold decreased
from  $4,080,000  at  December  31, 2000, to $2,100,000 at September 30, 2001; a
decrease  of  $1,980,000.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
September  30,  2001.  At  September 30, 2001, the Company had outstanding loans
amounting  to $77,239,261 net of its allowance for loan losses, or 69.34 percent
of  total assets, compared to net loans of $71,432,834, or 65.8 percent of total
assets  at  December  31,  2000.  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  September 30, 2001, the Company had nonperforming
loans  of  $113,549,  which  was  12.1%  of the loan loss allowance of $937,959.
Nonperforming  assets  were  .32  percent  of all loans and .23 percent of total
assets.  At  December 31, 2000, the Company had nonperforming loans of $296,000,
which  was  31.8%  of the loan loss allowance of $930,473.  Nonperforming assets
were  .60  percent  of  all  loans  and  .40  percent  of  total  assets.

NONEARNING ASSETS

Nonearning  assets include premises and equipment of $3,072,190 at September 30,
2001,  a  decrease  of  $53,848  from  December  31, 2000.  The decrease results
primarily from the depreciation of $152,941 outpacing the additions of new fixed
assets.

The  Bank  leases  the site for its main office at the rate of $1,857 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 $837,921 at September 30, 2001, a decrease of
$106,554 from December 31, 2000.  The decrease is due to lower interest rates on
earning  assets  during  2001.

Other  assets  consist  primarily of prepaid expenses 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  September  30,  2001,  the  Company  had outstanding deposits of $99,209,797
compared  to  $96,977,285  at  December  31,  2000.  Deposits  are the Company's
primary  source  of  funds  to  support its earning assets.  Noninterest-bearing
deposits  increased  from  $7,294,943  at  December  31,  2000, to $8,109,916 at
September  30, 2001.  Time deposits of $100,000 or more decreased by $4,675,160.
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

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued interest payable decreased $142,763 from December 31, 2000, to
September 30, 2001.  The decrease is directly related to lower interest rates on
deposits  during  2001.


                                     - 12 -
<PAGE>
STOCKHOLDERS' EQUITY

Stockholders' equity increased $829,581 from December 31, 2000, to September 30,
2001,  due in part to net income of $524,051 for the nine months ended September
30,  2001.  The  equity  adjustment  for  unrealized  gains  on  securities
available-for-sale increased $305,530 during the nine months ended September 30,
2001.

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  $41  million at September 30, 2001.
Securities  maturing  in  one  year  or  less  totaled approximately $1 million.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing  and  noninterest-bearing  deposit  accounts.  At
September  30,  2001,  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 $9 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
September  30,  2001,  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  September 30, 2001, 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 $9.9 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 $9.6 million
at  September 30, 2001.  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 $10.5 million at September 30,
2001.  The  percentage  ratios  as  calculated  under FDIC guidelines were 11.21
percent and 12.31 percent for Tier I and total risk-based capital, respectively,
to risk-weighted assets at September 30, 2001.  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 - NONE

ITEM 5 - OTHER INFORMATION

Stockholder  proposals submitted for consideration at the next annual meeting of
stockholders  must be received by the Company no later than December 1, 2001, to
be  included in the 2002 proxy materials.  A stockholder must notify the Company
before  February  1,  2002,  of a proposal for the 2002 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,
2002,  proxies  solicited  by  the  management  of  the  Company  will  confer
discretionary authority upon the management of the Company to vote upon any such
matter.

ITEM  6  -  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  Exhibits:

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

          11               Computation of Net Income Per Share

(b)  Reports  on  Form  8-K

The  Company  did  not  file  any  reports  on Form 8-K during the quarter ended
September  30,  2001.


                                     - 15 -
<PAGE>
                                   SIGNATURES


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


GATEWAY BANCSHARES, INC.



               /s/  Robert  G.  Peck                      November  9,  2001
               -------------------------------            ------------------
               Robert G. Peck,                            Date
               President and CEO
               (Principal Executive Officer)


               /s/  Harle  B.  Green                      November  9,  2001
               -------------------------------            ------------------
               Harle B. Green,                            Date
               Chairman and Chief Financial Officer
               (Principal Financial Officer)


                                     - 16 -
<PAGE>