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 March 31, 2002


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

                        Commission file number: 000-24137


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


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


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


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



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

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

                 Class
                 -----

     Common Stock, $5.00 par value                      681,758


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


<PAGE>
                            GATEWAY BANCSHARES, INC.

                           March 31, 2002 Form 10-QSB


                                TABLE OF CONTENTS


                                                                        Page No.
                                                                        --------

PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements (unaudited)

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

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

           Consolidated Statement of Changes in Stockholders' Equity        5

           Consolidated Statements of Cash Flows . . . . . . . . . . . .    6

           Notes to Consolidated Financial Statements. . . . . . . . . .    7

  Item 2.  Management's Discussion and Analysis of Financial Condition and
             Results of Operations  . . . .  . . . . . . . . . . . . . .    9


PART II.  OTHER INFORMATION

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

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

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

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

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

  Item 6.  Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . .    15


                                   * * * * *


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

ITEM  1.  FINANCIAL  STATEMENTS

                             GATEWAY BANCSHARES, INC. AND SUBSIDIARY
                                  CONSOLIDATED  BALANCE  SHEETS


                                                                  March 31, 2002    December 31,
                                                                    (unaudited)        2001
                                                                 ----------------  --------------
<S>                                                              <C>               <C>
ASSETS
  Cash                                                           $       598,429   $     759,998
  Due from banks                                                       4,255,187       3,523,270
  Federal funds sold                                                   3,920,000      10,680,000
  Securities available-for-sale                                       26,185,912      27,495,629
  Federal Home Loan Bank stock, at cost                                  260,000         260,000
  Loans                                                               78,348,781      79,616,337
  Allowance for loan losses                                           (1,065,401)       (996,301)
                                                                 ----------------  --------------
  Net loans                                                           77,283,380      78,620,036

  Premises and equipment, net                                          2,993,980       3,029,915
  Accrued interest                                                       767,241         772,557
  Other assets                                                           820,880         359,904
                                                                 ----------------  --------------

      Total assets                                               $   117,085,009   $ 125,501,309
                                                                 ================  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
  Deposits:
    Noninterest-bearing                                          $    11,519,757   $  11,710,006
    Interest-bearing                                                  93,073,282     101,399,383
                                                                 ----------------  --------------

      Total deposits                                                 104,593,039     113,109,389

  Long-term borrowings:
    Federal Home Loan Bank advances                                    2,000,000       2,000,000
    Notes payable                                                      1,000,000       1,000,000
  Accrued interest                                                       299,468         375,336
  Other liabilities                                                      252,024         313,306
                                                                 ----------------  --------------

      Total liabilities                                              108,144,531     116,798,031
                                                                 ----------------  --------------

STOCKHOLDERS' EQUITY
  Common stock ($5 par value: 10,000,000 shares authorized,
    shares issued and outstanding of 681,758 at March 31, 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                                                    2,173,567       1,864,660
  Accumulated other comprehensive income:
    Unrealized gains (losses) on investment securities
      available-for-sale, net of tax                                     (18,486)         85,741
                                                                 ----------------  --------------

      Total stockholders' equity                                       8,940,478       8,703,278
                                                                 ----------------  --------------

      Total liabilities and stockholders' equity                 $   117,085,009   $ 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
                                                     ----------------------
                                                     March 31,   March 31,
                                                        2002        2001
                                                     ----------  ----------
<S>                                                  <C>         <C>
INTEREST INCOME
  Loans                                              $1,593,268  $1,765,392
  Interest on securities:
    Taxable interest                                    258,513     358,844
    Nontaxable interest                                  17,830       2,667
  Interest on federal funds sold                         12,739      51,098
                                                     ----------  ----------

      Total interest income                           1,882,350   2,178,001
                                                     ----------  ----------

INTEREST EXPENSE
  Interest on deposits                                  728,040   1,245,769
  Interest on notes payable                              12,195      23,500
  Interest on Federal Home Loan Bank advances            29,120      29,121
  Interest on federal funds purchased                     3,015           -
                                                     ----------  ----------

      Total interest expense                            772,370   1,298,390
                                                     ----------  ----------

NET INTEREST INCOME                                   1,109,980     879,611
  Provision for loan losses                              80,000      25,000
                                                     ----------  ----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   1,029,980     854,611
                                                     ----------  ----------

NONINTEREST INCOME
  Service charges on deposits                           110,225      82,211
  Mortgage loan fees                                     93,219      48,051
  Insurance commissions                                   4,725       2,402
  Gains (losses) on sale of securities                    2,825      10,385
  Other income                                           22,437      13,923
                                                     ----------  ----------

      Total noninterest income                          233,431     156,972
                                                     ----------  ----------

NONINTEREST EXPENSE
  Salaries and employee benefits                        462,344     394,586
  Occupancy expense                                      46,846      55,778
  Furniture and equipment expense                        54,472      49,618
  Other operating expenses                              240,802     258,876
                                                     ----------  ----------

      Total noninterest expense                         804,464     758,858
                                                     ----------  ----------

Income before income taxes                              458,947     252,725
Income taxes                                            150,040      88,911
                                                     ----------  ----------

      Net income                                     $  308,907  $  163,814
                                                     ==========  ==========

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

  Net income per common share                        $     0.45  $     0.24

  Basic weighted average shares outstanding             681,577     679,048

  Diluted earnings per common share                  $     0.45  $     0.24

  Diluted weighted average shares outstanding           688,846     681,678
</TABLE>

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


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


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

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

  Comprehensive income:
    Net income                                                   $      308,907          308,907            -           -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on securities available
        for sale, net of reclassification adjustment                   (104,227)        (104,227)           -           -
                                                                 ---------------  ---------------  ----------  ----------

    Total comprehensive income                                   $      204,680
                                                                 ===============

BALANCE, March 31, 2002                                                           $    8,940,478   $3,408,790  $3,376,607
                                                                                  ===============  ==========  ==========


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

  Exercise of stock options                                               -               -

  Comprehensive income:
    Net income                                                      308,907               -

    Other comprehensive income, net of tax:
      Unrealized holding gains (losses) on securities available
        for sale, net of reclassification adjustment                      -        (104,227)
                                                                 ----------  ---------------

    Total comprehensive income


BALANCE, March 31, 2002                                          $2,173,567  $      (18,486)
                                                                 ==========  ===============
</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)

                                                                  Three Months Ended
                                                               --------------------------
                                                                March 31,     March 31,
                                                                   2002          2001
                                                               ------------  ------------
<S>                                                            <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES
  Net income                                                   $   308,907   $   163,814
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
      Provision for loan losses                                     80,000        25,000
      Provision for depreciation and amortization                   53,520        51,080
      Net amortization on securities                                42,425         9,999
      Gain on sale of securities                                    (2,825)      (10,385)
      Deferred income taxes                                          1,886        (3,760)
      Changes in other operating assets and liabilities:
        Accrued interest receivable                                  5,316        (6,065)
        Accrued interest payable                                   (75,868)      (75,302)
        Other assets and liabilities                              (460,268)       34,149
                                                               ------------  ------------

          Net cash provided by (used in) operating activities      (46,907)      188,530
                                                               ------------  ------------

CASH FLOW FROM INVESTING ACTIVITIES
  Net (increase) decrease in loans                               1,256,656    (1,052,485)
  Proceeds from maturities, calls, and principal pay-downs
    of securities                                                1,295,074     3,420,187
  Proceeds from sales of available-for-sale securities           3,499,000     4,882,127
  Purchase of available-for-sale securities                     (3,692,060)   (6,655,264)
  Purchase of premises and equipment                               (17,585)      (47,581)
                                                               ------------  ------------

          Net cash provided by (used in) investing activities    2,341,085       546,984
                                                               ------------  ------------

CASH FLOW FROM FINANCING ACTIVITIES
  Net increase in deposits                                      (8,516,350)      641,389
  Exercise of stock options                                         32,520             -
                                                               ------------  ------------

          Net cash provided by financing activities             (8,483,830)      641,389
                                                               ------------  ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                       (6,189,652)    1,376,903

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

CASH AND CASH EQUIVALENTS, end of period                       $ 8,773,616   $ 8,555,899
                                                               ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest                                                   $   848,238   $ 1,373,692
    Income taxes                                                         -        24,279
                                                               ============  ============
</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)
                                 March 31, 2002

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

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

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

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

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

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

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

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

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

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


                                      -7-
<PAGE>
At  March  31,  2002,  the  Company  had  net  unrealized  losses  of $29,816 on
available-for-sale  securities.  As  a  result,  the  decrease  in stockholders'
equity,  net  of deferred taxes, was $18,486.  There were no trading securities.
The  net  decrease  in  stockholder's  equity  as  a  result of the SFAS No. 115
adjustment  from  December  31,  2000,  to  March  31,  2001,  was  $104,227.

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

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

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

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


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

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


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

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


                                      -8-
<PAGE>
PART I - FINANCIAL INFORMATION

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

This  discussion  is  intended  to  assist  in an understanding of the Company's
financial  condition and results of operations.  This analysis should be read in
conjunction  with the financial statements and related notes appearing in Item 1
of  the  March 31, 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 three months ended March 31, 2002 and 2000 was
$308,907  and  $163,814  respectively.  The  increase  in  net  income  resulted
primarily from an increased net interest margin as well as income from growth in
the  Company's  loan  and  deposit  base.


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
$1,882,350  and  $2,178,001  for the three months ended March 31, 2002 and 2001,
respectively.  The  decrease  in  interest  income resulted from the decrease in
loan  interest  rates  during  the  past  year.

INTEREST  EXPENSE

Interest  expense  on  deposits  and other borrowings for the three months ended
March 31, 2002 and 2001 was $772,370 and $1,298,390, respectively.  The decrease
in interest expense is a result of the decline in interest rates during the past
year.  Most  time deposits were repriced at lower interest rates during the last
half  of  2001  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 $80,000 for the three
months  ended  March  31,  2002.  The  allowance for loan losses as a percent of
outstanding  loans  was  1.36  percent  at  March  31, 2002, and 1.25 percent at
December  31,  2001.

NONINTEREST  INCOME

Noninterest  income  for  the  three  months  ended  March 31, 2002 and 2001 was
$233,431  and $156,972, respectively.  Noninterest income consisted primarily of
service charges on customer deposits ($110,225 through March 31, 2002), mortgage
loan fees ($93,219 through March 31, 2002), ATM and credit card fees, and rental
of  safe  deposit  boxes.


                                      -10-
<PAGE>
NONINTEREST  EXPENSE

Noninterest  expense  totaled  $804,464  and $758,858 for the three months ended
March  31,  2002  and  2001, respectively.  This increase in expense reflects an
increase in the number of employees as well as an overall increase in salary and
benefit  expenses.  Other  operating  expenses  consist  primarily  of occupancy
expense,  data  processing, advertising, professional fees, printing and postage
and  other  miscellaneous  expenses.

INCOME  TAXES

Income  taxes  of  $150,040  and $88,911 have been provided for the three months
ended  March 31, 2002 and 2001, respectively.  The increase was the result of an
increase  in  taxable  income  in  2002  as  compared  to  2001.

FINANCIAL  CONDITION

EARNING  ASSETS

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

SECURITIES  AND  FEDERAL  FUNDS  SOLD

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

Securities  and  federal  funds  sold decreased $8,069,717 or 21.14 percent from
December  31,  2001,  to  March  31,  2002.  Federal  funds  sold decreased from
$10,680,000 at December 31, 2001, to $3,920,000 at March 31, 2002.  This decline
is  directly related to the decrease in customer deposits.  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.  The
securities  portfolio  is  also  adjusted  to  make various term investments, to
provide  a  source  of  liquidity  and  to serve as collateral to secure certain
government  deposits.

LOANS

Loans  represent  the single largest category of the Company's earning assets at
March  31, 2002.  At March 31, 2002, the Company had outstanding loans amounting
to  $77,283,380  net  of its allowance for loan losses, or 66.0 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 March 31, 2002, the Company had nonperforming loans
of  $102,162,  which  was  9.6%  of  the  loan  loss  allowance  of  $1,065,401.
Nonperforming  assets  were  .28  percent  of all loans and .19 percent of total
assets.  At  December 31, 2001, the Company had nonperforming loans of $252,000,
which  was  25.3%  of the loan loss allowance of $996,301.  Nonperforming assets
were  .46  percent  of  all  loans  and  .29  percent  of  total  assets.

NONEARNING  ASSETS

Nonearning  assets  include  premises  and  equipment of $2,993,980 at March 31,
2002,  a  decrease  of  $35,935  from  December  31, 2001.  The decrease results
primarily  from the depreciation of $53,520 outpacing the additions of new fixed
assets.

The  Bank  leases  the site for its main office at the rate of $2,077 per month.
The  lease  term is for a maximum of fifty years, including extensions after the
initial  twenty-year period, and subject to certain conditions after the initial
forty-year  period.

Accrued interest receivable was $767,241 at March 31, 2002, a decrease of $5,316
from  December  31,  2001.  The  increase  is  directly related to corresponding
decreases  in  earning  assets  during  2002.

Other  assets  consist  primarily  of  prepaid expenses, cash surrender value of
bank-owned  life  insurance  and  deferred  income taxes.  Deferred income taxes
consists  primarily of tax benefits related to timing differences in the tax and
financial  reporting treatment of the allowance of loan losses, as well as other
factors.

DEPOSITS

At March 31, 2002, the Company had outstanding deposits of $104,593,039 compared
to $113,109,389 at December 31, 2001.  Deposits are the Company's primary source
of  funds to support its earning assets.  Noninterest-bearing deposits decreased
from  $11,710,006  at December 31, 2001, to $11,519,757 at March 31, 2002.  Time
deposits  of $100,000 or more decreased by $1,656,438.  The decrease in deposits
is  primarily  due to the withdrawal of a temporary deposit of county tax funds,
which  was  identified  as volatile deposits by management at December 31, 2001.

OTHER  LIABILITIES

Other  liabilities  consist  primarily  of accrued interest payable and accounts
payable.  Accrued  interest payable decreased $75,868 from December 31, 2001, to
March  31,  2002.  The decrease is directly related to the decrease in deposits.


                                      -12-
<PAGE>
STOCKHOLDERS'  EQUITY

Stockholders'  equity  increased  $237,200  from  December 31, 2001 to March 31,
2002, due in part to net income of $308,907 for the three months ended March 31,
2002.  The  equity  adjustment  for  unrealized  gains  or  losses on securities
available-for-sale  decreased  $104,227  during the three months ended March 31,
2002.  The  value  of common stock and additional paid-in capital increased from
December  31,  2001  to  March  31, 2002 by $32,520 due to the exercise of 2,710
stock  options  by  the  estate  of  a  founding  director.

LIQUIDITY  AND  CAPITAL  RESOURCES

LIQUIDITY  MANAGEMENT

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

The  primary  function  of  asset and liability management is not only to assure
adequate liquidity in order for the Bank to meet the needs of its customer base,
but  also  to  maintain an appropriate balance between interest-sensitive assets
and interest-sensitive liabilities so that the Bank can also meet the investment
requirements  of  its stockholders.  Daily monitoring of the sources and uses of
funds  is  necessary  to  maintain  an  acceptable cash position that meets both
requirements.  In  the  banking  environment,  both  assets  and liabilities are
considered  sources of liquidity funding and both are, therefore, monitored on a
daily  basis.

The asset portion of the balance sheet provides liquidity primarily through loan
principal  repayments  or sales of securities.  Outstanding loans that mature in
one  year  or  less  totaled  approximately  $37  million  at  March  31,  2002.
Securities  maturing  in  one  year  or  less  totaled approximately $2 million.
Federal  funds  sold  are  another  source  of  liquidity.

The  liability  portion  of the balance sheet provides liquidity through various
customers'  interest-bearing and noninterest-bearing deposit accounts.  At March
31,  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 $9 million.  Liquidity management involves
the  daily monitoring of the sources and uses of funds to maintain an acceptable
cash  position.

CAPITAL  RESOURCES

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


                                      -13-
<PAGE>
FEDERAL  HOME  LOAN  BANK  ADVANCES

In  an  effort  to  maintain  and  improve  the  liquidity position of the Bank,
management  approved  the  Bank's  membership with the Federal Home Loan Bank of
Atlanta  (FHLB).  As  a  member  of  the  FHLB, the Bank improved its ability to
manage  liquidity  and  reduce  interest rate risk by having a funding source to
match  longer  term  loans.

In January 1998, the Company obtained a $1 million loan from the FHLB.  At March
31,  2002,  the  balance  of  the  loan was $1,000,000.  Interest on the loan is
payable on a monthly basis at 5.72 percent.  Principal is due in full on January
13,  2003.  The  note  is secured by specifically identified single family first
mortgage  loans.

In  September  2000, the Company obtained an additional $1 million loan from the
FHLB.  At  March  31, 2002, the balance on the note was $1,000,000.  Interest on
the  loan  is  payable  on a monthly basis at 6.09 percent.  Principal is due in
full  on  September  15, 2010.  Additional lines of credit totaling $9.9 million
are  available to the Company from secured loans at the Federal Reserve Bank and
the  FHLB.

REGULATORY  CAPITAL  REQUIREMENTS

Regulatory  capital guidelines administered by the federal banking agencies take
into  consideration  risk  factors associated with various categories of assets,
both  on  and  off  the balance sheet.  Under the guidelines, the Bank's capital
strength  is  measured  in  two  tiers  which  are  used  in  conjunction  with
risk-adjusted  assets  to  determine  the  risk-based  capital  ratios.  Tier  I
capital, which consists of common equity less goodwill, amounted to $9.6 million
at  March  31,  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 $10.7 million at March 31, 2002.
The percentage ratios as calculated under FDIC guidelines were 10.93 percent and
12.14  percent  for  Tier  I  and  total  risk-based  capital,  respectively, to
risk-weighted assets at March 31, 2002.  Both levels exceeded the minimum ratios
of  4  percent  and  8  percent, respectively.  Management has reviewed and will
continue  to  monitor  asset  mix, product pricing, and the loan loss allowance,
which  are  the  areas  it  believes  are  most  affected by these requirements.


                                      -14-
<PAGE>
PART II - OTHER INFORMATION

ITEM  1 - LEGAL PROCEEDINGS

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

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

ITEM  3 - DEFAULTS UPON SENIOR SECURITIES - NONE

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

 (b) Reports on Form 8-K

The Company did not file any reports on Form 8-K during the quarter ended March
31, 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                            May 10, 2002
               -------------------                           ------------
               Robert G. Peck,                               Date
               President and  CEO
               (Principal Executive Officer)



               /s/  Harle  B.  Green                         May  10,  2002
               ----------------------                        --------------
               Harle  B.  Green,                             Date
               Chairman and Chief  Financial Officer
               (Principal Financial Officer)


                                      -16-
<PAGE>