SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


     [X]     Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
             Exchange Act of 1934 for the quarterly period ended June 30, 2003

     [ ]     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              657,638     as of August 8, 2003


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


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

                                  June 30, 2003 Form 10-QSB


                                      TABLE OF CONTENTS



                                                                                    Page No.
                                                                                    --------
<S>               <C>                                                               <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 . . . . . . . . . . . . . . . . . . . . .   16

PART II.          OTHER INFORMATION

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

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

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

  Item 4.         Submission of Matters to a Vote of Security Holders . . . . . . .   16

  Item 5.         Other Information . . . . . . . . . . . . . . . . . . . . . . . .   16

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

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

  Certifications  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
</TABLE>

                                    * * * * *


                                      - 2 -
<PAGE>
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                          GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY
                                 CONSOLIDATED  BALANCE  SHEETS


                                                                 June 30, 2003    December 31,
                                                                   (unaudited)       2002
                                                                ---------------  --------------
<S>                                                             <C>              <C>
ASSETS
  Cash and due from banks                                       $    6,161,479   $   7,049,445
  Federal funds sold                                                   800,000       7,450,000
  Securities available-for-sale                                     32,223,514      29,374,441
  Federal Home Loan Bank stock, at cost                                298,200         260,000
  Loans                                                            101,303,057      93,897,207
  Allowance for loan losses                                         (1,524,240)     (1,291,097)
                                                                ---------------  --------------
  Net loans                                                         99,778,817      92,606,110

  Premises and equipment, net                                        2,933,003       2,930,060
  Accrued interest                                                     729,751         723,943
  Other assets                                                       1,135,821       1,077,919
                                                                ---------------  --------------

      Total assets                                              $  144,060,585   $ 141,471,918
                                                                ===============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                         $   11,731,136   $   7,816,038
    Interest-bearing                                               114,723,277     114,174,960
                                                                ---------------  --------------

      Total deposits                                               126,454,413     121,990,998

  Long-term borrowings:
    Federal Home Loan Bank advances                                  3,000,000       4,000,000
    Notes payable                                                    1,100,000         800,000
  Securities sold under agreements to repurchase                     2,315,971       3,202,343
  Accrued interest                                                     271,383         288,629
  Other liabilities                                                    391,598         793,648
                                                                ---------------  --------------

      Total liabilities                                            133,533,365     131,075,618
                                                                ---------------  --------------

STOCKHOLDERS' EQUITY
  Common stock ($5 par value: 10,000,000 shares authorized,
    shares issued and outstanding of 657,638 at June 30, 2003
    and 681,758 at December 31, 2002)                                3,288,190       3,408,790
  Additional paid-in capital                                         3,305,748       3,610,206
  Retained earnings                                                  3,803,128       3,067,123
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                   130,154         310,181
                                                                ---------------  --------------

      Total stockholders' equity                                    10,527,220      10,396,300
                                                                ---------------  --------------

      Total liabilities and stockholders' equity                $  144,060,585   $ 141,471,918
                                                                ===============  ==============
<FN>
The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


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



                                                                    Three Months Ended      Six Months Ended
                                                                 ----------------------  ----------------------
                                                                  June 30,    June 30,    June 30,    June 30,
                                                                    2003        2002        2003        2002
                                                                 ----------  ----------  ----------  ----------
<S>                                                              <C>         <C>         <C>         <C>
INTEREST INCOME
  Loans                                                          $1,827,774  $1,573,775  $3,536,114  $3,167,043
  Interest on securities:
    Taxable interest                                                182,094     271,467     382,066     529,980
    Nontaxable interest                                              33,580      22,075      62,939      39,905
  Interest on federal funds sold                                     16,028      17,399      31,286      30,138
                                                                 ----------  ----------  ----------  ----------

      Total interest income                                       2,059,476   1,884,716   4,012,405   3,767,066
                                                                 ----------  ----------  ----------  ----------

INTEREST EXPENSE
  Interest on deposits                                              681,862     680,226   1,366,564   1,408,266
  Interest on notes payable                                             694      12,195       9,194      24,390
  Interest on Federal Home Loan Bank advances                        30,316      29,622      60,300      58,742
  Interest on federal funds purchased and securities sold under
    agreement to repurchase                                           3,422           -       8,245       3,015
                                                                 ----------  ----------  ----------  ----------

      Total interest expense                                        716,294     722,043   1,444,303   1,494,413
                                                                 ----------  ----------  ----------  ----------

NET INTEREST INCOME                                               1,343,182   1,162,673   2,568,102   2,272,653
  Provision for loan losses                                         150,000      75,000     260,000     155,000
                                                                 ----------  ----------  ----------  ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES               1,193,182   1,087,673   2,308,102   2,117,653
                                                                 ----------  ----------  ----------  ----------

NONINTEREST INCOME
  Service charges on deposits                                       233,839     156,269     458,319     266,494
  Mortgage loan fees                                                153,596      82,962     279,174     176,181
  Insurance commissions                                               2,866       2,860       7,537       7,585
  Gains on sale of securities                                             -       5,788     183,804       8,613
  Other income                                                       33,689      30,594      63,454      53,031
                                                                 ----------  ----------  ----------  ----------

      Total noninterest income                                      423,990     278,473     992,288     511,904
                                                                 ----------  ----------  ----------  ----------

NONINTEREST EXPENSE
  Salaries and employee benefits                                    640,898     541,015   1,275,089   1,040,711
  Occupancy expense                                                  47,343      43,512      96,859      90,358
  Furniture and equipment expense                                    47,881      45,782      91,928     100,254
  Other operating expenses                                          332,129     278,476     690,253     519,278
                                                                 ----------  ----------  ----------  ----------

      Total noninterest expense                                   1,068,251     908,785   2,154,129   1,750,601
                                                                 ----------  ----------  ----------  ----------

Income before income taxes                                          548,921     457,361   1,146,261     878,956
Income taxes                                                        204,097     156,240     410,256     292,086
                                                                 ----------  ----------  ----------  ----------

      Net income                                                 $  344,824  $  301,121  $  736,005  $  586,870
                                                                 ==========  ==========  ==========  ==========


EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED

  Net income per common share                                    $     0.51  $     0.44  $     1.08  $     0.86

  Basic weighted average shares outstanding                         681,461     681,758     681,608     681,668

  Diluted earnings per common share                              $     0.49  $     0.44  $     1.02  $     0.85

  Diluted weighted average shares outstanding                       707,258     689,660     720,789     689,886
<FN>
The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


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



                                                                                                                    Accumulated
                                                                  Total                  Additional                    Other
                                              Comprehensive   Stockholders'   Common       Paid-in      Retained   Comprehensive
                                                  Income         Equity        Stock       Capital      Earnings       Income
                                             ---------------  ------------  -----------  -----------  -----------  --------------
<S>                                          <C>              <C>           <C>          <C>          <C>          <C>
BALANCE, December 31, 2002                                    $10,396,300   $3,408,790   $3,610,206   $ 3,067,123  $     310,181

  Stock options compensation                                       59,792            -       59,792             -              -

  Exercise of stock options                                       122,060       50,650       71,410             -              -

  Repurchases of common stock, at cost                           (606,910)    (171,250)    (435,660)            -              -

  Comprehensive income:
    Net income                               $      736,005       736,005            -            -       736,005              -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on
        securities available for sale, net
        of reclassification adjustment             (180,027)     (180,027)           -            -             -       (180,027)
                                             ---------------  ------------  -----------  -----------  -----------  --------------

    Total comprehensive income               $      555,978
                                             ===============

BALANCE, June 30, 2003                                        $10,527,220   $3,288,190   $3,305,748   $ 3,803,128  $     130,154
                                                              ============  ===========  ===========  ===========  ==============
<FN>
The  Notes  to  Consolidated  Financial  Statements  are  an  integral  part  of  these  statements.
</TABLE>


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

                                                                       Six  Months Ended
                                                                  ---------------------------
                                                                    June 30,       June 30,
                                                                      2003           2002
                                                                  -------------  ------------
<S>                                                               <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                      $    736,005   $   586,870
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
      Provision for loan losses                                        260,000       155,000
      Depreciation and amortization                                     81,601        98,040
      Stock options compensation                                        59,792        74,704
      Net amortization on securities                                   235,036        99,054
      Gain on sale of securities                                      (183,804)       (8,613)
      Deferred income taxes                                            (79,716)      (24,615)
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                     (5,808)       96,727
        Accrued interest payable                                       (17,246)      (69,336)
        Other assets and liabilities                                  (269,896)     (600,640)
                                                                  -------------  ------------

          Net cash provided by operating activities                    815,964       407,191
                                                                  -------------  ------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net (increase) decrease in loans                                  (7,432,707)    1,079,576
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                   11,265,729     2,761,365
  Proceeds from sales of available-for-sale securities               7,595,101     5,006,000
  Purchase of available-for-sale securities                        (22,051,502)   (8,078,510)
  Purchase of Federal Home Loan Bank stock                             (38,200)            -
  Purchase of premises and equipment                                   (84,544)      (32,859)
                                                                  -------------  ------------

          Net cash provided by (used in) investing activities      (10,746,123)      735,572
                                                                  -------------  ------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net increase (decrease) in deposits                                4,463,415    (7,194,063)
  Net decrease in securities sold under agreements to repurchase      (886,372)            -
  Proceeds from notes payable                                          300,000             -
  Payments on Federal Home Loan Bank advances                       (1,000,000)            -
  Repurchases of common stock                                         (606,910)            -
  Exercise of stock options                                            122,060        32,520
                                                                  -------------  ------------

          Net cash provided by (used in) financing activities        2,392,193    (7,161,543)
                                                                  -------------  ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                           (7,537,966)   (6,018,780)

CASH AND CASH EQUIVALENTS, beginning of period                      14,499,445    14,963,268
                                                                  -------------  ------------

CASH AND CASH EQUIVALENTS, end of period                          $  6,961,479   $ 8,944,488
                                                                  =============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                      $  1,461,549   $ 1,563,749
    Income taxes                                                       538,232       274,740
                                                                  =============  ============
<FN>
The Notes to Consolidated Financial Statements are an integral part of these statements.
</TABLE>


                                      - 6 -
<PAGE>
                   GATEWAY  BANCSHARES,  INC.  AND  SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)
                                  June 30, 2003

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 six-month period ended June 30, 2003 are
not  necessarily  indicative  of  the  results that may be expected for the year
ending  December  31,  2003.  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,  2002.

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,  2002.

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  June  30,  2003,  the  Company  had  net  unrealized  gains  of  $209,925 on
available-for-sale  securities.  As  a  result,  the  increase  in stockholders'
equity,  net  of deferred taxes, was $130,154.  There were no trading securities
at  June  30,  2003.  The  net  decrease  in  stockholders'  equity  as  a


                                      - 7 -
<PAGE>
result  of the SFAS No. 115 adjustment from December 31, 2002, to June 30, 2003,
was  $180,027.

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


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

In August 2002, the Bank obtained four additional advances of $500,000 each from
the  Federal  Home  Loan Bank.  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.

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  June  2003,  the Company obtained a $300,000 loan from Gilmer County Bank to
fund  the  repurchase  of  Company  stock.  The note requires quarterly interest
payments  at  the  prime  interest rate with the rate not being less than 4.25%.
Principal  is  due  in  full  on  June 16, 2004.  The note is secured by 600,000
shares  of  Gateway  Bank  &  Trust  common  stock.


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

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

Prior  to  2002,  the  Company  accounted  for  its  stock option plan under the
recognition  and  measurement  provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
No stock-based employee compensation was reflected in previously issued results,
as  all options granted under the plan had an exercise price equal to the market
value  of  the  underlying common stock on the date of grant.  During the fourth
quarter  of  2002,  the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  (SFAS No. 123) for stock-based employee compensation.  All prior
periods presented have been restated to reflect the compensation cost that would
have been recognized had the recognition provisions of SFAS No. 123 been applied
to  all  awards  granted  to  employees  after  January  1,  1995.


                                      - 8 -
<PAGE>
A  summary  of  activity in the Company's stock option plan for the period ended
June  30,  2003,  is  as  follows:


<TABLE>
<CAPTION>
                                                                      Weighted
                                                                       Average
                                                           Number     Exercise
                                                          of Shares     Price
                                                         -----------  ---------
<S>                                                      <C>          <C>

     Unexercised options outstanding, December 31, 2002     166,300   $   12.08

        Stock options exercised                             (10,130)      12.05

        Stock options forfeited                             ( 5,420)      12.00
                                                         -----------  ---------

     Unexercised options outstanding, June 30, 2003      $  150,750       12.09
                                                         ===========  =========
</TABLE>

Each  of  the  outstanding  options to purchase common shares vest beginning one
year  from  the  grant  date on an equal incremental basis over a period of five
years.  At  June  30,  2003,  the number of options exercisable is 115,400.  The
range  of  exercise  prices  and  weighted-average remaining contractual life of
outstanding  options  under the stock option plan were $12.00 to $13.00 and 5.93
years,  respectively.

Under  SFAS  No.  123,  the  fair value of stock options at the date of grant is
charged  to  compensation  costs  over  the  vesting period.  Compensation costs
recognized  in  the  accompanying statements of income for the six-month periods
ended  June  30,  2003  and  2002,  were  $59,792  and  $74,704,  respectively.

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

In  December  of 2002, the Financial Accounting Standards Board issued Statement
No.  148,  "Accounting for Stock-Based Compensation - Transition and Disclosure"
(SFAS 148).  SFAS 148 provides alternative methods of transition for a voluntary
change  to  the  fair  value based method of accounting for stock-based employee
compensation.  In  addition, SFAS 148 amends the disclosure requirements of SFAS
No.  123  to  require prominent disclosures in both annual and interim financial
statements  about the method of accounting for stock-based employee compensation
and  the  effect  of  the  method  used  on  reported  results.  The Company has
voluntarily  elected  to  change  to  the  fair  value method.  The accompanying
consolidated financial statements include stock option expense, and the required
disclosures  are  provided.

PART I - FINANCIAL INFORMATION

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

This  discussion  is  intended  to  assist  in an understanding of the Company's
financial  condition and results of operations.  This analysis should be read in
conjunction  with the financial statements and related notes appearing in Item 1
of  the  June  30, 2003, 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,  2002.

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


                                      - 9 -
<PAGE>
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.

CRITICAL  ACCOUNTING  POLICIES

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

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


                                     - 10 -
<PAGE>
Management  recognizes  that  in making loans, credit losses will be experienced
and  that  the risk of loss will vary with, among other things, the type of loan
being  made, the creditworthiness of the borrower over the term of the loan and,
in  the  case  of  a  secured  loan,  the  quality of the security for the loan.
Management's  policy  is to maintain an appropriate allowance for estimated loan
and  lease  losses  on  the  portfolio  as  a whole. The allowances are based on
estimates  of  the  historical  loan  loss  experience,  evaluation  of economic
conditions  and  regular  periodic  reviews of the Bank's loan portfolio by both
internal  personnel  and  a  third  party review firm. The Bank's loan portfolio
consists  mostly  of  commercial  and  real estate loans to companies in various
industries,  whose  financial  performance  may  be  impacted differently by the
local,  regional  or  national  economies  and  stage  of  the  economic  cycle.
Management  believes  that  the  effects of any reasonably likely changes in the
economy  would  be  limited  somewhat  due  to  the  diversification of the loan
portfolio  and  the Bank's normal collateral requirements for such loans.  While
management  uses  available information to recognize losses on loans and leases,
future  adjustments  in  the  allowance  may  be  necessary  based on changes in
economic  conditions,  which  could have a significant detrimental impact to the
Company's  financial  condition  and results of operation. Additionally, various
regulatory  agencies,  as  an  integral  part  of  their  examination  process,
periodically  review  the  Company's  allowance for loans and lease losses. Such
agencies  may  require  the  Company to recognize additions to the allowance for
loan  and  lease  losses  based on their judgment about information available to
them  at  the  time  of  their  examination.

EARNINGS  SUMMARY

The  Company's  net  income  for the six months ended June 30, 2003 and 2002 was
$736,005  and  $586,780,  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
$4,012,405  and  $3,767,066  for  the  six  months ended June 30, 2003 and 2002,
respectively.  The  increase  in  interest  income  is  a result of overall loan
growth  during  the  past  year.

INTEREST  EXPENSE

Interest  expense on deposits and other borrowings for the six months ended June
30,  2003 and 2002 was $1,444,303 and $1,494,413, respectively.  The decrease in
interest expense is a result of a continued decline in interest rates during the
past  year.  The Bank had successfully lowered all deposit rates during the past
year  without  sacrificing  growth  in  deposits.

PROVISION  FOR  LOAN  LOSSES

The  provision  for  loan  losses represents the charge against current earnings
necessary  to maintain the allowance for loan losses at a level which management
considers  adequate  to provide for probable losses in the loan portfolio.  This
level  is  determined  based  upon  management's  assessment of current economic
conditions,  the composition of the loan portfolio and the levels of nonaccruing
and  past  due  loans.  The  provision  for loan losses was $260,000 for the six


                                     - 11 -
<PAGE>
months  ended  June  30,  2003.  The  allowance  for loan losses as a percent of
outstanding  loans  was  1.50  percent  at  June  30,  2003, and 1.37 percent at
December  31,  2002.

NONINTEREST  INCOME

Noninterest  income for the six months ended June 30, 2003 and 2002 was $992,288
and  $511,904,  respectively.  Noninterest income consisted primarily of service
charges  on  customer  deposits  ($458,319  for the first six months of 2003 and
$266,494  for  the  same  period  in 2002), mortgage loan fees ($279,174 for the
first  six  months  of  2003 and $176,181 for the same period in 2002), gains on
sales  of  securities  ($183,804 for the first six months of 2003 and $8,613 for
the  same  period in 2002), ATM and credit card fees, and rental of safe deposit
boxes.  The  increase  resulted  from  significantly  greater  gains on sales of
securities  and  an  increase  in  the  Bank's  fee  structure.

NONINTEREST  EXPENSE

Noninterest  expense  totaled $2,154,129 and $1,750,601 for the six months ended
June  30,  2003  and  2002,  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.

INCOME  TAXES

Income  taxes  of  $410,256  and  $292,086 have been provided for the six months
ended  June 30, 2003 and 2002, respectively.  The increase is a direct result of
an  increase  in  taxable  income  in  2003  as  compared  to  2002.

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 $3,800,927 or 10.3 percent from
December  31,  2002, to June 30, 2003.  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 June 30,
2003  and  December  31,  2002  were  $32,223,514 and $29,374,441, respectively,
reflecting  an  increase  of  $2,849,073.  Federal  funds  sold  decreased  from
$7,450,000


                                     - 12 -
<PAGE>
at  December 31, 2002, to $800,000 at June 30, 2003.  This decline is related to
the  increase  in  loans  during  the  same  period.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
June 30, 2003.  At June 30, 2003, the Company had outstanding loans amounting to
$99,778,817  net  of  its  allowance  for  loan losses, or 69.3 percent of total
assets, compared to net loans of $92,606,110, or 65.5 percent of total assets at
December  31,  2002.  The Company will continue to search for loan opportunities
in  its  market  area  while  assuming  acceptable  levels  of  risk.

ASSET  QUALITY

Asset  quality  is  measured  by  three  key  ratios: (1) the ratio of loan loss
allowance to total nonperforming assets (defined as nonaccrual loans, loans past
due  90  days  or greater, restructured loans, nonaccruing securities, and other
real  estate),  (2)  nonperforming assets to total assets, and (3) nonperforming
assets  to  total loans.  At June 30, 2003, the Company had nonperforming assets
of  $249,822,  which  was 16.4 percent of the loan loss allowance of $1,524,240.
Nonperforming  assets  were  .25  percent  of all loans and .17 percent of total
assets.  At December 31, 2002, the Company had nonperforming assets of $508,000,
which  was 39.3 percent of the loan loss allowance of $1,291,097.  Nonperforming
assets  at  December  31,  2002 were .55 percent of all loans and .36 percent of
total  assets.

NONEARNING  ASSETS

Nonearning assets include premises and equipment of $2,933,003 at June 30, 2003,
an  increase  of  $2,943 from December 31, 2002.  The increase results primarily
from  the  additions  of new fixed assets outpacing the depreciation of $81,601.

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 $729,751 at June 30, 2003, a decrease of $5,808
from  December 31, 2002.  The decrease is due to slightly lower overall interest
rates  on  earning  assets  during  2003.

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

DEPOSITS

At  June 30, 2003, the Company had outstanding deposits of $126,454,413 compared
to $121,990,998 at December 31, 2002.  Deposits are the Company's primary source
of  funds to support its earning assets.  Noninterest-bearing deposits increased
from  $7,816,038  at  December  31, 2002, to $11,731,136 at June 30, 2003.  Time
deposits  of  $100,000  or  more  decreased  by  $2,649,343.


                                     - 13 -
<PAGE>
OTHER  LIABILITIES

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued  interest payable decreased $17,246 from December 31, 2002, to
June 30, 2003.  The decrease is due to slightly lower interest rates in 2003 and
lower  balances  in  interest-bearing  deposits.

STOCKHOLDERS'  EQUITY

Stockholders'  equity  increased  $130,920  from  December 31, 2002, to June 30,
2003,  due  in  part to net income of $736,005 for the six months ended June 30,
2003.  The  equity  adjustment  for  unrealized  gains  on  securities
available-for-sale decreased $180,027 during the six months ended June 30, 2003.
This  decrease  is mostly due to the recognized earnings of $183,804 on the sale
of  securities  during  the  same  period.

On  April  30,  2003,  the  Company initiated a tender offer to repurchase up to
110,000  shares  of its outstanding common stock, par value $5.00, at a price of
$17.72  per share.  The tender offer expired on May 30, 2003.  A total of 34,250
shares  of  the  Company's  Common  Stock  were  repurchased  at a total cost of
$606,910.

RELATED  PARTY  TRANSACTIONS

In  the  normal course of business, the Bank makes loans to directors, executive
officers  and  principal shareholders on substantially the same terms, including
interest  rates  and  collateral, as those prevailing at the time for comparable
transactions  with other borrowers.  Loans to directors, executive officers, and
principal  shareholders  totaled  $1,672,000  at  June  30,  2003.

OFF-BALANCE  SHEET  ARRANGEMENTS

The  Bank is a party to financial instruments with off-balance-sheet risk in the
normal  course  of business to meet the financing needs of its customers.  These
financial  instruments include standby letters of credit and various commitments
to extend credit.  At June 30, 2003, commitments under standby letters of credit
and  undisbursed  loan  commitments  aggregated  $20,472,000.  The Bank's credit
exposure  for  these  financial  instruments is represented by their contractual
amounts.  The  Bank  does  not anticipate any material losses as a result of the
commitments  under  standby  letters of credit and undisbursed loan commitments.

LIQUIDITY  AND  CAPITAL  RESOURCES

LIQUIDITY  MANAGEMENT

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

The  primary  function  of  asset and liability management is not only to assure
adequate liquidity in order for the Bank to meet the needs of its customer base,
but  also  to  maintain an appropriate balance between interest-sensitive assets
and  interest-sensitive  liabilities  so  that  the  Bank  can


                                     - 14 -
<PAGE>
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  $52.5  million  at  June  30, 2003.
Securities  maturing  in  one  year  or less totaled approximately $2.0 million.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing  and noninterest-bearing deposit accounts.  At June
30,  2003,  funds were also available through the purchase of federal funds from
correspondent  commercial  banks.  Purchases can be made from available lines of
up  to an aggregate of approximately $8.0 million.  At June 30, 2003, no 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.

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  unrealized  gains  on
available-for-sale  securities,  amounted  to  $11.34  million at June 30, 2003.
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  $12.7  million  at  June  30, 2003.  The percentage ratios as
calculated under FDIC guidelines were 10.32 percent and 11.57 percent for Tier I
and  total risk-based capital, respectively, to risk-weighted assets at June 30,
2003.  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.


                                     - 15 -
<PAGE>
ITEM 3. CONTROLS AND PROCEDURES

At June 30, 2003, an evaluation was performed under the supervision and with the
participation of the Company's management, including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures.  Based on that evaluation, the
Company's  management, including the Chief Executive Officer and Chief Financial
Officer,  concluded  that  the Company's disclosure controls and procedures were
effective  at  timely  alerting  them  to  material  information relating to the
Company  (including its consolidated subsidiary) that is required to be included
in  the  Company's periodic filings with the Securities and Exchange Commission.
There  have been no significant changes in the Company's internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
June  30,  2003,  and  there  have  been no significant deficiencies or material
weaknesses  requiring  corrective  action.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

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

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

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - NONE

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

On  April 17, 2003, the Company held its annual meeting of shareholders at which
the  following  director  nominees  were elected to a one-year term by the votes
indicated:

<TABLE>
<CAPTION>
     Directors           Votes For  Votes Withheld
     ---------           ---------  --------------
<S>                      <C>        <C>
Jack J. Babb               491,854      - 250 -
William H. H. Clark        491,854      - 250 -
Jeanette W. Dupree         491,854      - 250 -
James Arthell Gray, Sr.    491,854      - 250 -
Harle B. Green             491,854      - 250 -
Danny Ray Jackson          491,854      - 250 -
Ernest Kresch              491,354      - 750 -
Robert G. Peck             491,854      - 250 -
</TABLE>

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, 2003, to
be  included in the 2004 proxy materials.  A stockholder must notify the Company
before  February  1,  2004,  of a proposal for the 2004 annual meeting which the
stockholder  intends  to  present other than by inclusion in the Company's proxy
material.  If  the


                                     - 16 -
<PAGE>
Company  does  not  receive  such  notice  prior  to  February  1, 2004, proxies
solicited  by  the management of the Company will confer discretionary authority
upon  the  management  of  the  Company  to  vote  upon  any  such  matter.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

 (a) Exhibits:

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

             11           Computation of Net Income Per Share

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

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


 (b) Reports on Form 8-K

The  Company  did not file any reports on Form 8-K during the quarter ended June
30,  2003.


                                     - 17 -
<PAGE>
                                   SIGNATURES


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


GATEWAY  BANCSHARES,  INC.




               /s/ Robert G. Peck                           August 8, 2003
               -------------------                          ---------------
               Robert  G.  Peck,                            Date
               President  and  CEO
               (Principal  Executive  Officer)



               /s/  Harle  B.  Green                        August  8,  2003
               ----------------------                       ----------------
               Harle  B.  Green,                            Date
               Chairman  and  Chief  Financial  Officer
               (Principal  Financial  Officer)


                                     - 18 -
<PAGE>