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, 2002

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

                       Commission file number:   000-24137


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


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


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


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



Check  whether  the  issuer  (1)  has  filed all reports required to be filed by
Section  13  or  15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and  (2) has been subject to such filing requirements for the past 90
days.          Yes  [X]     No  [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity,  as  of  the  latest  practicable  date:

               Class
               -----

     Common  Stock, $5.00 par value               681,758 as of November 5, 2002


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


<PAGE>
<TABLE>
<CAPTION>
                                 GATEWAY BANCSHARES, INC.

                              September 30, 2002 Form 10-QSB


                                     TABLE OF CONTENTS



                                                                              Page No.
                                                                              --------
<S>                                                                           <C>
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

  Item 3. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . .      14

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

  Signatures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      16

  Certifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      17
</TABLE>

                                    * * * * *


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

ITEM 1.  FINANCIAL STATEMENTS

                    GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS


                                                                      September 30,
                                                                          2002         December 31,
                                                                       (unaudited)         2001
                                                                     ---------------  --------------
<S>                                                                  <C>              <C>
ASSETS
  Cash                                                               $      768,528   $     759,998
  Due from banks                                                          3,143,615       3,523,270
  Federal funds sold                                                              -      10,680,000
  Securities available-for-sale                                          32,404,839      27,495,629
  Federal Home Loan Bank stock, at cost                                     260,000         260,000
  Loans                                                                  85,880,047      79,616,337
  Allowance for loan losses                                              (1,174,860)       (996,301)
                                                                     ---------------  --------------
  Net loans                                                              84,705,187      78,620,036

  Premises and equipment, net                                             2,936,885       3,029,915
  Accrued interest                                                          735,982         772,557
  Other assets                                                              959,040         359,904
                                                                     ---------------  --------------

       Total assets                                                  $  125,914,076   $ 125,501,309
                                                                     ===============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                              $    8,863,683   $  11,710,006
    Interest-bearing                                                     97,603,513     101,399,383
                                                                     ---------------  --------------

       Total deposits                                                   106,467,196     113,109,389

  Federal Home Loan Bank advances                                         4,000,000       2,000,000
  Notes payable                                                             800,000       1,000,000
  Federal funds purchased                                                 1,000,000               -
  Securities sold under agreements to repurchase                          2,667,701               -
  Accrued interest                                                          296,028         375,336
  Other liabilities                                                         716,125         313,306
                                                                     ---------------  --------------

       Total liabilities                                                115,947,050     116,798,031
                                                                     ---------------  --------------

STOCKHOLDERS' EQUITY
  Common stock ($5 par value: 10,000,000 shares authorized,
    shares issued and outstanding of 681,758 at September 30, 2002
    and 679,048 at December 31, 2001)                                     3,408,790       3,395,240
  Additional paid-in capital                                              3,376,607       3,357,637
  Retained earnings                                                       2,853,519       1,864,660
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                        328,110          85,741
                                                                     ---------------  --------------

      Total stockholders' equity                                          9,967,026       8,703,278
                                                                     ---------------  --------------

      Total liabilities and stockholders' equity                     $  125,914,076   $ 125,501,309
                                                                     ===============  ==============
</TABLE>


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


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


                                                          Three Months Ended               Nine Months Ended
                                                     ------------------------------  ------------------------------
                                                     September 30,   September 30,   September 30,   September 30,
                                                          2002            2001            2002            2001
                                                     --------------  --------------  --------------  --------------
<S>                                                  <C>             <C>             <C>             <C>
INTEREST INCOME
  Loans                                              $    1,631,472  $    1,743,574  $    4,798,515  $    5,266,370
  Interest on securities:
    Taxable interest                                        262,251         311,813         792,231       1,013,085
    Nontaxable interest                                      27,457           3,018          67,362           8,364
  Interest on federal funds sold                              8,613          31,825          38,751         107,737
                                                     --------------  --------------  --------------  --------------

    Total interest income                                 1,929,793       2,090,230       5,696,859       6,395,556
                                                     --------------  --------------  --------------  --------------

INTEREST EXPENSE
  Interest on deposits                                      669,629       1,089,972       2,077,895       3,537,050
  Interest on notes payable                                  12,195          15,941          36,585          51,516
  Interest on Federal Home Loan Bank advances                34,579          29,767          93,321          88,332
  Interest on federal funds purchased                           495             102           3,510             190
                                                     --------------  --------------  --------------  --------------

    Total interest expense                                  716,898       1,135,782       2,211,311       3,677,088
                                                     --------------  --------------  --------------  --------------

NET INTEREST INCOME                                       1,212,895         954,448       3,485,548       2,718,468
  Provision for loan losses                                  90,000         135,000         245,000         225,000
                                                     --------------  --------------  --------------  --------------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       1,122,895         819,448       3,240,548       2,493,468
                                                     --------------  --------------  --------------  --------------

NONINTEREST INCOME
  Service charges on deposits                               196,368          97,878         462,862         280,070
  Mortgage loan fees                                        105,650          81,896         281,831         238,739
  Insurance commissions                                       3,271           1,721          10,856           7,201
  Gains (losses) on sale of securities                            -          22,542           8,613          32,298
  Other income                                               31,363          16,276          84,394          45,517
                                                     --------------  --------------  --------------  --------------

    Total noninterest income                                336,652         220,313         848,556         603,825
                                                     --------------  --------------  --------------  --------------

NONINTEREST EXPENSE
  Salaries and employee benefits                            546,846         409,161       1,512,853       1,223,202
  Occupancy expense                                          54,474         202,440         144,832         301,062
  Furniture and equipment expense                            43,376          51,154         143,630         154,837
  Other operating expenses                                  267,802          86,209         787,080         594,718
                                                     --------------  --------------  --------------  --------------

    Total noninterest expense                               912,498         748,964       2,588,395       2,273,819
                                                     --------------  --------------  --------------  --------------

Income before income taxes                                  547,049         290,797       1,500,709         823,474
Income taxes                                                191,376         107,197         511,850         299,423
                                                     --------------  --------------  --------------  --------------

    Net income                                       $      355,673  $      183,600  $      988,859  $      524,051
                                                     ==============  ==============  ==============  ==============

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

  Net income per common share                        $         0.52  $         0.27  $         1.45  $         0.77

  Basic weighted average shares outstanding                 681,758         679,048         681,698         679,048

  Diluted earnings per common share                  $         0.52  $         0.27  $         1.45  $         0.77

  Diluted weighted average shares outstanding               685,807         682,171         681,698         682,335
</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                   Additional                 Other
                                             Comprehensive    Stockholders'    Common     Paid-in     Retained   Comprehensive
                                                 Income          Equity        Stock      Capital     Earnings      Income
                                             --------------  --------------  ----------  ----------  ----------  -------------
<S>                                          <C>             <C>             <C>         <C>         <C>         <C>
BALANCE, December 31, 2001                                   $    8,703,278  $3,395,240  $3,357,637  $1,864,660  $     85,741

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

  Comprehensive income:
    Net income                               $      988,859         988,859           -           -    988,859              -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on
        securities available for sale, net          242,369         242,369           -           -          -        242,369
                                             --------------  --------------  ----------  ----------  ----------  -------------
         of reclassification adjustment

    Total comprehensive income               $    1,231,228
                                             ==============

BALANCE, September 30, 2002                                  $    9,967,026  $3,408,790  $3,376,607  $2,853,519  $    328,110
                                                             ==============  ==========  ==========  ==========  =============
</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,
                                                                       2002             2001
                                                                  ---------------  ---------------
<S>                                                               <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                      $      988,859   $      524,051
  Adjustments to reconcile net income to net cash provided by
    operating activities:
      Provision for loan losses                                          245,000          225,000
      Provision for depreciation and amortization                        137,417          152,941
      Net amortization on securities                                     165,662           10,508
      (Gain) loss on sale of securities                                   (8,613)          29,251
      Deferred income taxes                                                5,659          (11,280)
      Gain on sale of equipment                                             (196)               -
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                       36,575          106,554
        Accrued interest payable                                         (79,308)        (142,763)
        Other assets and liabilities                                    (338,916)         112,416
                                                                  ---------------  ---------------

          Net cash provided by operating activities                    1,152,139        1,006,678
                                                                  ---------------  ---------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net increase in loans                                               (6,330,151)      (6,031,427)
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                      4,120,744       14,528,110
  Proceeds from sales of available-for-sale securities                 6,236,000        5,741,158
  Purchase of available-for-sale securities                          (15,043,694)     (18,089,154)
  Proceeds from sales of equipment                                         8,500                -
  Purchase of premises and equipment                                     (52,691)         (99,093)
                                                                  ---------------  ---------------

          Net cash used in investing activities                      (11,061,292)      (3,950,406)
                                                                  ---------------  ---------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net increase (decrease) in deposits                                 (6,642,193)       2,232,512
  Net increase in securities sold under agreements to repurchase       2,667,701                -
  Proceeds from federal funds purchased                                1,000,000                -
  Proceeds from Federal Home Loan Bank advances                        2,000,000                -
  Payments on notes payable                                             (200,000)               -
  Exercise of stock options                                               32,520                -
                                                                  ---------------  ---------------

          Net cash provided by (used in) financing activities         (1,141,972)       2,232,512
                                                                  ---------------  ---------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                            (11,051,125)        (711,216)

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

CASH AND CASH EQUIVALENTS, end of period                          $    3,912,143   $    6,467,780
                                                                  ===============  ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                      $    2,290,619   $    3,819,851
    Income taxes                                                         448,740          260,139
                                                                  ===============  ===============
</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, 2002


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

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

The  accompanying unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  for  interim
financial  information  and  with the instructions to Form 10-QSB and Regulation
S-B.  Accordingly,  they  do  not  include  all of the information and footnotes
required by U.S. generally accepted accounting principles for complete financial
statements.  In  management's  opinion,  all  adjustments  (consisting of normal
recurring  accruals)  considered  necessary  for  a  fair presentation have been
included.  Operating  results for the nine-month period ended September 30, 2002
are  not necessarily indicative of the results that may be expected for the year
ending  December  31,  2002.  For  further  information,  refer to the financial
statements  and  footnotes thereto included in the Company's annual report filed
under  cover  of  Form  10-KSB  for  the  year  ended  December  31,  2001.

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

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

Gateway  Bancshares,  Inc.  (the  Company)  is  a one-bank holding company which
engages  in  providing  a  full range of banking services through its subsidiary
bank,  Gateway  Bank & Trust (the Bank), in Ringgold, Georgia. The Bank received
preliminary  charter  approval  in  1995.  In  April 1997 the Bank was granted a
charter  by  the  Georgia  Department  of  Banking  and  Finance  and began full
operations.  Further discussion of the Company's financial condition and results
of  operations  is  included  in the Company's consolidated financial statements
presented  in  the  Company's  annual  report  on Form 10-KSB for the year ended
December  31,  2001.

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

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

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

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

At  September  30,  2002,  the  Company  had net unrealized gains of $529,210 on
available-for-sale  securities.  As  a  result,  the  increase  in stockholders'
equity,  net of deferred taxes, was $328,110.  There were no trading securities.
The  net  increase  in  stockholders'  equity  as  a  result of the SFAS No. 115
adjustment from December 31, 2001, to September 30, 2002, was $242,369.


                                      -7-
<PAGE>
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  September  2000,  the  Bank  obtained an additional $1 million loan from the
Federal  Home  Loan  Bank.  The  note requires quarterly interest payments at an
interest  rate of 6.09 percent, and matures on September 15, 2010.  This note is
subject to an early conversion option effective September 15, 2003, which allows
the Federal Home Loan Bank to covert this note into a floating rate advance tied
to the LIBOR rate.  The note is secured by specifically identified single-family
first  mortgage  loans.

In  September  2002,  the  Company refinanced $800,000 of a $1,000,000 loan from
Gilmer  County  Bank.  The  proceeds  of  the  original 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,  2004.  The  note  is secured by 600,000 shares of Gateway Bank &
Trust  common  stock.

In August 2002, the Bank obtained four additional advances of $500,000 each from
the  Federal  Home  Loan Bank.  These notes require monthly interest payments at
rates  of  2.24  percent,  2.73  percent, 3.33 percent, and 3.84 percent.  These
notes  have staggered maturities of August 27, 2003, August 27, 2004, August 29,
2005, and August 28, 2006, respectively.  All advances are secured by securities
held  by  the  Federal  Home  Loan  Bank.

At  September  30, 2002, the Bank also had $1 million in federal funds purchased
from  Compass  Bank.

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 options
to  purchase  13,550  shares  and  the  executive  officers  received options to
purchase varying amounts of shares ranging from 2,500 to 20,350 shares.  On June
19,  2001,  the  Company issued to its officers additional options to purchase a
total  of  14,000  shares.  Each  of  the  stock  option agreements contained an
exercise  price  equal  to the market value of the underlying shares at the date
the  options  were granted.  The exercise prices 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.  At September
30,  2002,  the  unexercised  options  total  167,300  shares.

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

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


                                      -8-
<PAGE>
PART I - FINANCIAL INFORMATION

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

This  discussion  is  intended  to  assist  in an understanding of the Company's
financial  condition and results of operations.  This analysis should be read in
conjunction  with the financial statements and related notes appearing in Item 1
of  the September 30, 2002, Form 10-QSB and Management's Discussion and Analysis
of Financial Condition and Results of Operations appearing in the Company's Form
10-KSB  for  the  year  ended  December  31,  2001.

FORWARD-LOOKING  STATEMENTS

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

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

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


                                      -9-
<PAGE>
EARNINGS SUMMARY

The  Company's  net income for the nine months ended September 30, 2002 and 2001
was  $988,859  and  $524,051, respectively.  The increase in net income resulted
primarily  from  net  loan  growth  and  from  an increased net interest margin.

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income on loans and securities is the principal source of the Company's
earnings  stream.  Fluctuations  in  interest  rates  as  well as volume and mix
changes in earning assets materially affect interest income. Interest income was
$5,696,859 and $6,395,556 for the nine months ended September 30, 2002 and 2001,
respectively.  The decrease in interest income has resulted from the decrease in
interest  rates  for  both  loans  and  securities  during  the  past  year.

INTEREST EXPENSE

Interest  expense  on  deposits  and  other borrowings for the nine months ended
September  30,  2002  and 2001 was $2,211,311 and $3,677,088, respectively.  The
decrease in interest expense is a result of the decline in interest rates during
the  past year.  The Bank has successfully lowered all deposit rates during 2002
without  sacrificing  growth  in  deposits.

PROVISION FOR LOAN LOSSES

The  provision  for  loan  losses represents the charge against current earnings
necessary  to maintain the allowance for loan losses at a level which management
considers  adequate  to provide for probable losses in the loan portfolio.  This
level  is  determined  based  upon  management's  assessment of current economic
conditions,  the composition of the loan portfolio and the levels of nonaccruing
and  past  due  loans.  The  provision for loan losses was $245,000 for the nine
months  ended  September  30, 2002, and $90,000 for the three months then ended.
The allowance for loan losses as a percent of outstanding loans was 1.37 percent
at  September  30,  2002,  and  1.25  percent  at  December  31,  2001.

NONINTEREST INCOME

Noninterest  income  for  the  nine months ended September 30, 2002 and 2001 was
$848,556  and $603,825, respectively.  Noninterest income consisted primarily of
service charges on customer deposits ($462,862 for the first nine months of 2002
and  $280,070 for the same period in 2001), mortgage loan fees ($281,831 for the
first  nine  months  of  2002 and $238,739 for the same period in 2001), ATM and
credit  card  fees,  and  rental  of  safe  deposit  boxes.  The  increase  is
attributable  to  an  increase  in  the  Bank's  fee  structure.

NONINTEREST EXPENSE

Noninterest  expense totaled $2,588,395 and $2,273,819 for the nine months ended
September  30, 2002 and 2001, respectively.  The increase reflects the hiring of
additional  staff  and the increase in other salary and benefit expenses.  Other
operating  expenses  consist  primarily  of  data  processing,  advertising,
professional  fees,  printing  and  postage  and  other  miscellaneous expenses.


                                      -10-
<PAGE>
INCOME TAXES

Income  taxes  of  $511,850  and $299,423 have been provided for the nine months
ended  September  30,  2002  and  2001,  respectively.  The increase is a direct
result  of  an  increase  in  taxable  income  in  2002  as  compared  to  2001.

FINANCIAL CONDITION

EARNING ASSETS

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

SECURITIES AND FEDERAL FUNDS SOLD

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

Securities  and  federal  funds  sold  decreased $5,770,790 or 15.1 percent from
December  31,  2001,  to  September  30,  2002.  The securities portfolio may be
adjusted  to make various term investments, to provide a source of liquidity and
to  serve  as  collateral  to secure certain government deposits.  Securities at
September  30,  2002  and  December  31,  2001 were $32,404,839 and $27,495,629,
respectively,  reflecting  an  increase  of  $4,909,210.  Federal  funds  sold
decreased  from $10,680,000 at December 31, 2001, to zero at September 30, 2001.
This decline is directly related to the decrease in customer deposits during the
same  period.  Management  was  aware of temporary deposits at December 31, 2001
and  had  increased  the  level  of  federal  funds  sold in order to manage the
liquidity  of  these  deposits.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
September  30,  2002.  At  September 30, 2002, the Company had outstanding loans
amounting  to  $84,705,187 net of its allowance for loan losses, or 67.2 percent
of  total assets, compared to net loans of $78,620,036, or 62.6 percent of total
assets  at  December  31,  2001.  The  Company  will continue to search for loan
opportunities in its market area while assuming acceptable levels of risk.


                                      -11-
<PAGE>
ASSET QUALITY

Asset  quality  is  measured  by  three  key  ratios: (1) the ratio of loan loss
allowance to total nonperforming assets (defined as nonaccrual loans, loans past
due  90  days  or greater, restructured loans, nonaccruing securities, and other
real  estate),  (2)  nonperforming assets to total assets, and (3) nonperforming
assets  to  total  loans.  At  September 30, 2002, the Company had nonperforming
loans  of  $292,806,  which  was 24.9% of the loan loss allowance of $1,174,860.
Nonperforming  assets  were  .34  percent  of all loans and .23 percent of total
assets.  At  December 31, 2001, the Company had nonperforming loans of $252,000,
which  was  25.3%  of the loan loss allowance of $996,401.  Nonperforming assets
were  .46  percent  of  all  loans  and  .29  percent  of  total  assets.

NONEARNING ASSETS

Nonearning  assets include premises and equipment of $2,936,885 at September 30,
2002,  a  decrease  of  $93,030  from  December  31, 2001.  The decrease results
primarily from the depreciation of $137,417 outpacing the additions of new fixed
assets.

The  Bank  leases  the site for its main office at the rate of $2,089 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 $735,982 at September 30, 2002, a decrease of
$36,575  from December 31, 2001.  The decrease is due to lower interest rates on
earning  assets  during  2002.

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,  2002,  the  Company had outstanding deposits of $106,467,196
compared  to  $113,109,389  at  December  31,  2001.  Deposits are the Company's
primary  source  of  funds  to  support its earning assets.  Noninterest-bearing
deposits  decreased  from  $11,701,006  at  December  31, 2001, to $8,863,683 at
September  30, 2002.  Time deposits of $100,000 or more decreased by $1,823,339.
The  decrease  in  deposits  is  partially  due to the withdrawal of a temporary
deposit  of  county  tax  funds,  which  was  identified as volatile deposits by
management  at  December  31,  2001.

OTHER LIABILITIES

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued  interest payable decreased $79,308 from December 31, 2001, to
September 30, 2002.  The decrease is directly related to lower interest rates on
deposits  during  2002.

STOCKHOLDERS' EQUITY

Stockholders'  equity  increased $1,263,748 from December 31, 2001, to September
30,  2002,  due  in  part  to  net  income of $988,859 for the nine months ended
September  30,  2002.  The  equity adjustment for unrealized gains on securities
available-for-sale increased $242,369 during the nine months ended September 30,
2002.


                                      -12-
<PAGE>
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  $42  million at September 30, 2002.
Securities  maturing  in  one  year  or less totaled approximately $4.6 million.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing  and  noninterest-bearing  deposit  accounts.  At
September  30,  2002,  funds were also available through the purchase of federal
funds from correspondent commercial banks.  Purchases can be made from available
lines  of  up to an aggregate of approximately $14.65 million.  At September 30,
2002,  $1  million  in  federal  funds had been purchased.  Liquidity management
involves  the  daily  monitoring of the sources and uses of funds to maintain an
acceptable  cash  position.

CAPITAL RESOURCES

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


                                      -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.  The  terms  of  the  Bank's loans from the FHLB are
summarized  in Note 4 to the Consolidated Financial Statements appearing in this
report.

REGULATORY CAPITAL REQUIREMENTS

Regulatory  capital guidelines administered by the federal banking agencies take
into  consideration  risk  factors associated with various categories of assets,
both  on  and  off  the balance sheet.  Under the guidelines, the Bank's capital
strength  is  measured  in  two  tiers  which  are  used  in  conjunction  with
risk-adjusted  assets  to  determine  the  risk-based  capital  ratios.  Tier  I
capital,  which  consists  of  common  equity  less  goodwill, amounted to $10.2
million  at September 30, 2002.  Tier II capital components include supplemental
capital  components  such as qualifying allowance for loan losses and qualifying
subordinated  debt.  Tier  I  capital  plus  the  Tier  II capital components is
referred  to  as total risk-based capital and was $11.4 million at September 30,
2002.  The  percentage  ratios  as  calculated  under FDIC guidelines were 10.93
percent and 12.19 percent for Tier I and total risk-based capital, respectively,
to risk-weighted assets at September 30, 2002.  Both levels exceeded the minimum
ratios  of  4  percent and 8 percent, respectively.  Management has reviewed and
will  continue  to  monitor  asset  mix,  product  pricing,  and  the  loan loss
allowance,  which  are  the  areas  it  believes  are  most  affected  by  these
requirements.

ITEM 3. CONTROLS AND PROCEDURES

At  September  30,  2002,  an evaluation was performed under the supervision and
with  the  participation of the Company's management, including the CEO and CFO,
of  the  effectiveness  of  the design and operation of the Company's disclosure
controls  and  procedures.  Based  on that evaluation, the Company's management,
including  the CEO and CFO, concluded that the Company's disclosure controls and
procedures were effective at September 30, 2002.  There have been no significant
changes  in  the  Company's  internal  controls  or  in other factors that could
significantly  affect  internal  controls  subsequent to September 30, 2002, and
there  have  been  no  significant deficiencies or material weaknesses requiring
corrective  action.


                                      -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, 2002, to
be  included in the 2003 proxy materials.  A stockholder must notify the Company
before  February  1,  2003,  of a proposal for the 2003 annual meeting which the
stockholder  intends  to  present other than by inclusion in the Company's proxy
material.  If  the  Company  does  not  receive such notice prior to February 1,
2003,  proxies  solicited  by  the  management  of  the  Company  will  confer
discretionary authority upon the management of the Company to vote upon any such
matter.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

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

          11             Computation  of  Net  Income  Per  Share

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

(b)  Reports on Form 8-K

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


                                      -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 5, 2002
               ----------------------                    ----------------
               Robert G. Peck,                           Date
               President and CEO
               (Principal Executive Officer)



               /s/  Harle B. Green                       November 5, 2002
               ----------------------                    ----------------
               Harle B. Green,                           Date
               Chairman and Chief Financial Officer
               (Principal Financial Officer)


                                      -16-
<PAGE>
                                 CERTIFICATIONS

I, Robert G. Peck, certify that:

     1.   I  have  reviewed  this  quarterly  report  on  Form 10-QSB of Gateway
          Bancshares,  Inc.  and  Subsidiary.

     2.   Based  on  my  knowledge,  this  quarterly report does not contain any
          untrue  statement  of a material fact or omit to state a material fact
          necessary  to  make the statements made, in light of the circumstances
          under  which such statements were made, not misleading with respect to
          the  period  covered  by  this  quarterly  report;

     3.   Based  on  my knowledge, the financial statements, and other financial
          information  included  in this quarterly report, fairly present in all
          material  respects  the financial condition, results of operations and
          cash  flows of the registrant as of, and for, the periods presented in
          this  quarterly  report;

     4.   The  registrant's  other  certifying officer and I are responsible for
          establishing  and  maintaining  disclosure controls and procedures (as
          defined  in  Exchange  Act Rules 13a-14 and 15d-14) for the registrant
          and  have:

               a)   designed  such  disclosure controls and procedures to ensure
                    that  material  information  relating  to  the  registrant,
                    including its consolidated subsidiaries, is made known to us
                    by  others  within  those  entities, particularly during the
                    period  in  which  this  quarterly report is being prepared;

               b)   evaluated  the  effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the  filing  date  of this quarterly report (the "Evaluation
                    Date");  and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness  of  the  disclosure  controls  and procedures
                    based  on  our  evaluation  as  of  the  Evaluation  Date;

     5.   The  registrant's other certifying officer and I have disclosed, based
          on  our  most  recent evaluation, to the registrant's auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing  the  equivalent  functions):

               a)   all  significant  deficiencies in the design or operation of
                    internal  controls  which  could  adversely  affect  the
                    registrant's  ability  to  record,  process,  summarize  and
                    report  financial  data  and  have  identified  for  the
                    registrant's  auditors  any  material weaknesses in internal
                    controls;  and

               b)   any fraud, whether or not material, that involves management
                    or  other  employees  who  have  a  significant  role in the
                    registrant's  internal  controls;  and

     6.   The registrant's other certifying officer and I have indicated in this
          quarterly  report  whether  there were significant changes in internal
          controls  or in other factors that could significantly affect internal
          controls  subsequent  to  the  date  of  our  most  recent evaluation,
          including  any  corrective  actions  with  regard  to  significant
          deficiencies  and  material  weaknesses.


                                                   /s/ Robert G. Peck
                                                   -----------------------------
                                                     Robert G. Peck
                                                     President and CEO
     November 5, 2002


                                      -17-
<PAGE>
                                 CERTIFICATIONS

I, Harle B. Green, certify that:

     1.   I  have  reviewed  this  quarterly  report  on  Form 10-QSB of Gateway
          Bancshares,  Inc.  and  Subsidiary.

     2.   Based  on  my  knowledge,  this  quarterly report does not contain any
          untrue  statement  of a material fact or omit to state a material fact
          necessary  to  make the statements made, in light of the circumstances
          under  which such statements were made, not misleading with respect to
          the  period  covered  by  this  quarterly  report;

     3.   Based  on  my knowledge, the financial statements, and other financial
          information  included  in this quarterly report, fairly present in all
          material  respects  the financial condition, results of operations and
          cash  flows of the registrant as of, and for, the periods presented in
          this  quarterly  report;

     4.   The  registrant's  other  certifying officer and I are responsible for
          establishing  and  maintaining  disclosure controls and procedures (as
          defined  in  Exchange  Act Rules 13a-14 and 15d-14) for the registrant
          and  have:

               a)   designed  such  disclosure controls and procedures to ensure
                    that  material  information  relating  to  the  registrant,
                    including its consolidated subsidiaries, is made known to us
                    by  others  within  those  entities, particularly during the
                    period  in  which  this  quarterly report is being prepared;

               b)   evaluated  the  effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the  filing  date  of this quarterly report (the "Evaluation
                    Date");  and

               c)   presented in this quarterly report our conclusions about the
                    effectiveness  of  the  disclosure  controls  and procedures
                    based  on  our  evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other  certifying officer and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

               a)   all  significant  deficiencies in the design or operation of
                    internal  controls  which  could  adversely  affect  the
                    registrant's  ability  to  record,  process,  summarize  and
                    report  financial  data  and  have  identified  for  the
                    registrant's  auditors  any  material weaknesses in internal
                    controls;  and

               b)   any fraud, whether or not material, that involves management
                    or  other  employees  who  have  a  significant  role in the
                    registrant's  internal  controls;  and

7.   The  registrant's  other  certifying  officer  and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or  in  other  factors  that  could significantly affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


                                               /s/ Harle B. Green
                                               ---------------------
                                                 Harle B. Green
                                                 Chairman and CFO
     November 5, 2002


                                      -18-
<PAGE>