SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)
            X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2001

                                       OR

              _ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

          For the transition period from _____________ to ____________

                         Commission file number 0-18488

                         FIRST CHEROKEE BANCSHARES, INC.
                         -------------------------------
             (Exact name of registrant as specified in its charter)

                             GEORGIA            58-1807887
                             -------             ----------
            (State or other jurisdiction of   (IRS Employer
            incorporation or organization)    Identification No.)

                    9860 Highway 92, Woodstock, Georgia 30188
                    -----------------------------------------
                    (Address of principal executive offices)

                                  770-591-9000
                           (Issuer's telephone number)

     Check whether the issuer (1) filed all reports required to be filed by
 Section 13 or 15(d) of the Exchange Act 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.

 X Yes   ___ No
 -

 The number of shares outstanding of registrant's common stock par value $1.00
 per share at June 30, 2001 was 724,495 shares.

 Traditional Small Business Disclosure Format (check one): ___ Yes X No





<PAGE>



                         First Cherokee Bancshares, Inc.
                         Quarterly Report on Form 10-QSB
                For the Three and Six Months Ended June 30, 2001

                                      Index




Part I.  Financial Information
                                                                        Page No.
         Consolidated Financial Statements
         Consolidated Balance Sheet (unaudited) at June 30, 2001              1

         Consolidated Statements of Earnings (unaudited)
         for the six months ended June 30, 2001 and 2000                      2

         Consolidated Statements of Earnings (unaudited)
         for the three months ended June 30, 2001 and 2000                    3

         Consolidated Statements of Comprehensive Income (unaudited)
         for the six months ended June 30, 2001 and 2000                      4

         Consolidated Statements of Comprehensive Income (unaudited) for the
         three months ended June 30, 2001 and 2000                            5

         Consolidated Statements of Cash Flows (unaudited)
         for the six months ended June 30, 2001 and 2000                      6

         Notes to Consolidated Financial Statements (unaudited)               7

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

Part II.  Other Information

Item 1.  Legal Proceedings                                                   13

Item 2.  Changes in Securities and Use of Proceeds                           13

Item 3.  Defaults Upon Senior Securities                                     13

Item 4.  Submission of Matters to a Vote of  Security Holders                13

Item 5.  Other Information                                                   14

Item 6.  Exhibits and Reports on Form 8-K                                    14

Signatures                                                                   15

<PAGE>

                         First Cherokee Bancshares, Inc.
                           Consolidated Balance Sheet
                                  June 30, 2001
                                   (Unaudited)

                                     Assets
                                     ------
Cash & due from banks, including $752,295 bearing interest           $6,203,784
Federal funds sold                                                    2,586,000
                                                                      ---------
          Total cash & cash equivalents                               8,789,784

Investment securities available for sale,
         at fair value                                                1,773,836
Other investments                                                     1,100,900
Loans, less allowance for loan losses
     of $2,143,677                                                  150,740,830
Premises and equipment, net                                           4,092,340
Accrued interest receivable and other assets                          8,949,142
                                                                      ---------
                    Total Assets                                   $175,446,832
                                                                   ============


                      Liabilities and Stockholders' Equity
                      ------------------------------------
Liabilities:
Deposits:
     Interest-bearing deposits                                     $133,676,690
     Noninterest-bearing deposits                                    23,886,948
                                                                     ----------
          Total deposits                                            157,563,638

Note payable and other borrowings                                     4,363,259
Accrued interest payable and other liabilities                        1,609,604
                                                                      ---------
                    Total Liabilities                               163,536,501

Minority Interest                                                      (17,308)

Stockholders' Equity:
Common stock ($1 par value; 10,000,000 shares authorized,
     775,325 shares issued, 724,495 shares outstanding)                 775,325
Additional paid-in-capital                                            6,892,555
Retained earnings                                                     5,307,455
Treasury Stock (50,830 shares acquired
     at cost)                                                        (1,052,565)
Accumulated other comprehensive
     income, net of tax                                                   4,869
                                                                          -----
               Total Stockholders' Equity                            11,927,639
                                                                     ==========

                    Total Liabilities and Stockholders' Equity     $175,446,832
                                                                   ============

                 See notes to consolidated financial statements
                                       -1-
<PAGE>
                         First Cherokee Bancshares, Inc.
                       Consolidated Statements of Earnings
                        For the six months ended June 30,
                                   (Unaudited)

Interest income:                                        2001           2000
                                                        ----           ----
     Interest and fees on loans                      $7,863,358      $6,753,276
     Interest on federal funds sold/overnight funds     149,318          18,391
     Interest and dividends on investments               62,686          52,263
                                                         ------          ------
          Total interest income                       8,075,362       6,823,930

Interest expense:
     Interest on deposits                             3,811,696       2,708,226
     Interest on note payable and other borrowings       75,573         147,255
                                                         ------         -------
          Total interest expense                      3,887,269       2,855,481

Net interest income                                   4,188,093       3,968,449
Provision for loan losses                                67,000         392,590
                                                         ------         -------
Net interest income after provision
     for loan losses                                  4,121,093       3,575,859

Other income:
     Gain (loss) on sales of loans                      (11,583)         52,770
     Service charges on deposit accounts
          and other income                              565,610         491,839
                                                        -------         -------
Total other income                                      554,027         544,609

Other expense:
     Salaries and employee benefits                   1,932,334       1,673,218
     Occupancy                                          508,547         454,720
     Other operating expense                          1,318,835         971,902
                                                      ---------         -------
Total other expense                                   3,759,716       3,099,840

Earnings before income taxes                            915,404       1,020,628

Income tax expense                                      404,250         389,000
Minority interest in losses of consolidated subsidiary (137,308)              0
                                                       --------               -
Net earnings                                           $648,462        $631,628
                                                       ========        ========

Basic earnings per share                                  $0.90           $0.83
                                                          =====           =====
Diluted earnings per share                                $0.89           $0.83
                                                          =====           =====

                 See notes to consolidated financial statements
                                    -2-
  <PAGE>

                         First Cherokee Bancshares, Inc.
                       Consolidated Statements of Earnings
                       For the three months ended June 30,
                                   (Unaudited)

Interest income:                                        2001             2000
                                                        ----             ----
     Interest and fees on loans                      $3,870,419      $3,567,144
     Interest on federal funds sold/overnight funds      64,867          10,908
     Interest and dividends on investments               36,822          25,611
                                                         ------          ------
          Total interest income                       3,972,108       3,603,663
                                                      ---------       ---------

Interest expense:
     Interest on deposits                             1,889,419       1,443,500
     Interest on note payable and other borrowings       40,434          66,851
                                                         ------          ------
          Total interest expense                      1,929,853       1,510,351
                                                      ---------       ---------

Net interest income                                   2,042,255       2,093,312
Provision for loan losses                                     0         221,000
                                                              -         -------
Net interest income after provision
     for loan losses                                  2,042,255       1,872,312
                                                      ---------       ---------

Other income:
     Loss on sales of loans                              (6,579)         (3,617)
     Service charges on deposit accounts
          and other income                              279,878         275,579
                                                        -------         -------
Total other income                                      273,299         271,962
                                                        -------         -------

Other expense:
     Salaries and employee benefits                     956,154         842,445
     Occupancy                                          255,723         234,812
     Other operating expense                            676,543         491,236
                                                        -------         -------
Total other expense                                   1,888,420       1,568,493
                                                      ---------       ---------

Earnings before income taxes                            427,134         575,781

Income tax expense                                      188,000         210,000
Minority interest in losses of consolidated subsidiary  (67,740)              0
                                                        -------               -
Net earnings                                           $306,874        $365,781
                                                       ========        ========

Basic earnings per share                                  $0.42           $0.49
                                                          =====           =====
Diluted earnings per share                                $0.42           $0.49
                                                          =====           =====

                 See notes to consolidated financial statements
                                       -3-
<PAGE>






                         First Cherokee Bancshares, Inc.
                 Consolidated Statements of Comprehensive Income
                        For the six months ended June 30,
                                   (Unaudited)

                                                           2001           2000
                                                           ----           ----
Net earnings                                             $648,462      $631,628
Other comprehensive income, net of tax:
    Unrealized gain (loss) arising during the period, net
      of tax of $4,207 and $(831), respectively             6,786        (1,341)
                                                            -----        ------

Comprehensive income                                     $655,248      $630,287
                                                         ========      ========

                 See Notes to Consolidated Financial Statements
                                       -4-
<PAGE>



                         First Cherokee Bancshares, Inc.
                 Consolidated Statements of Comprehensive Income
                       For the three months ended June 30,
                                   (Unaudited)

                                                           2001          2000
                                                           ----          ----

Net earnings                                             $306,874      $365,781
Other comprehensive income, net of tax:
    Unrealized gain arising during the period, net
      of tax of $2,738 and $242, respectively               4,416           397
                                                            -----           ---

Comprehensive income                                     $311,290      $366,178
                                                         ========      ========

                 See Notes to Consolidated Financial Statements



                                       -5-
<PAGE>
                         First Cherokee Bancshares, Inc.
                      Consolidated Statements of Cash Flows
                        For the six months ended June 30,
                                   (Unaudited)
                                                        2001          2000
                                                        ----          ----
Cash flows from operating activities:
Net earnings                                          $648,462      $631,628
Adjustments to reconcile net earnings to net cash
  provided in operating activities:
    Depreciation, amortization and accretion           446,665       190,526
    Provision for loan losses                           67,000       392,590
    Change in accrued interest payable and
      other liabilities                                (51,185)       35,207
    Change in accrued interest receivable and
      other assets                                    (435,480)     (232,473)
                                                       --------     --------
        Total adjustments                               27,000       385,850
                                                        ------       -------
        Net Cash provided by operating activities      675,462     1,017,478

Cash flows from investing activities:
    Purchase of other cash surrender value
      of life insurance                               (498,000)            0
    Purchases of other investments                     (13,500)     (222,100)
    Purchases of investment securities              (1,750,000)            0
    Proceeds from sale of OREO                               0       887,466
    Improvements to OREO                              (293,079)            0
    Proceeds from maturities and calls of investment
      securities available for sale                    523,610        18,999
    Net change in loans                             (6,999,419)  (21,834,351)
    Purchases of premises and equipment               (268,130)      (79,536)
    Investment in unconsolidated subsidiary           (226,125)            0
                                                      --------             -
        Net Cash used by investing activities       (9,524,643)  (21,229,522)

Cash flows from financing activities:
    Net change in deposits                           8,813,802    21,970,106
    Proceeds from FHLB advances                      2,500,000     1,000,000
    Proceeds from exercise of stock options             10,000         4,980
    Proceeds from sale of  treasury stock              220,750        41,569
    Purchase of treasury stock                         (10,414)            0
    Net proceeds from note payable                     350,000      (625,299)
    Minority Interest                                  (17,308)            0
                                                       -------             -
        Net Cash provided by financing activities   11,866,830    22,391,356

Net change in cash and cash equivalents              3,017,649     2,179,312
Beginning cash and cash equivalents                  5,772,135     4,559,572
                                                     ---------     ---------
Ending cash and cash equivalents                    $8,789,784    $6,738,884
                                                    ==========    ==========

Noncash investing activities:
    Change in accumulated other comprehensive
         income, net of tax                             $6,786       ($1,341)
    Transfer of loans to other real estate            $546,187      $104,500
    Financed Sale of OREO                             $105,000      $109,915

Supplemental disclosure of cash flow information:
    Interest Paid                                   $3,734,108    $2,648,415
    Income Taxes Paid                                 $533,000      $414,000

                 See notes to consolidated financial statements



                                       -6-
<PAGE>


                         FIRST CHEROKEE BANCSHARES, INC
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                  June 30, 2001

NOTE (1) - BASIS OF PRESENTATION

The consolidated financial statements include the accounts of First Cherokee
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary, First National
Bank of Cherokee (the "Bank"), along with its 60% owned subsidiary, Cherokee
National Trust LLC ("CNT"). All significant accounts have been eliminated in
consolidation. Certain prior period amounts have been reclassified to conform
with current year presentation.

In December 2000, the Bank entered into an operating agreement with a registered
investment advisor to form CNT to offer services permitted by a national bank
trust charter. Pursuant to the operating agreement, the Bank obtained a 60%
interest in CNT with an initial investment of $300,000 and is entitled to 50% of
CNT's results of operations. CNT began operations during the first quarter of
2001.

In May 2001, the Bank obtained a 33.34% ownership interest in Elizabeth Station,
LLC through an initial capital contribution of $226,125. Elizabeth Station, LLC
was formed for the purpose of acquiring, developing and leasing real property.
As of June 30, 2001, Elizabeth Station, LLC had not begun operations. The
investment in Elizabeth Station is accounted for using the equity method of
accounting.

The accompanying unaudited interim consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the Company's financial position as of June 30, 2001, and the results of its
operations and its cash flows for the six-month period then ended. All such
adjustments are normal and recurring in nature. The financial statements
included herein should be read in conjunction with the consolidated financial
statements and the related notes and the report of independent accountants
included in the Company's 2000 Annual Report on Form 10-KSB.

NOTE (2) - NET EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of common
shares outstanding during the period while the effects of potential common
shares outstanding during the period are included in diluted earnings per share.
The average market price during the year is used to compute equivalent shares.

Reconciliations of the amounts used in the computation of both "basic earnings
per share" and "diluted earnings per share" for the periods ended June 30, 2001
and June 30, 2000 are as follows:


                     For the six months ended June 30, 2001:

                                   Net Earnings    Common Shares     Per Share
                                   (Numerator)     (Denominator)       Amount
                                   -----------     -------------       ------
Basic earnings per share             $648,462         722,281          $0.90
Effect of dilutive securities:
     Stock options                          0           9,269
                                            -           -----
Diluted earnings per share           $648,462         731,550          $0.89
                                     ========         =======          =====

                     For the six months ended June 30, 2000

                                   Net Earnings    Common Shares     Per Share
                                   (Numerator)     (Denominator)       Amount
                                   -----------     -------------       ------
Basic earnings per share             $631,628         759,450          $0.83
Effect of dilutive securities:
     Stock options                          0           1,899
                                            -           -----
Diluted earnings per share           $631,628         761,349          $0.83
                                     ========         =======          =====
                                       -7-
<PAGE>

                    For the three months ended June 30, 2001:

                                   Net Earnings    Common Shares     Per Share
                                   (Numerator)     (Denominator)       Amount
                                   -----------     -------------       ------
Basic earnings per share            $306,874          723,895          $0.42
Effect of dilutive securities:
     Stock options                         0           10,162
                                           -           ------

Diluted earnings per share          $306,874          734,057          $0.42
                                    ========          =======          =====

                    For the three months ended June 30, 2000

                                   Net Earnings    Common Shares     Per Share
                                   (Numerator)     (Denominator)       Amount
                                   -----------     -------------       ------
Basic earnings per share            $365,781          748,096          $0.49
Effect of dilutive securities:
     Stock options                         0              296
                                           -              ---
Diluted earnings per share          $365,781          748,392          $0.49
                                    ========          =======          =====
                                       -8-
<PAGE>




ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001

FORWARD LOOKING STATEMENTS

Various statements contained in this Quarterly Report on Form 10-QSB and the
exhibits to this Quarterly Report which are not statements of historical fact
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act (the "Act"). In addition, various 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 which are not statements of historical fact constitute
forward-looking statements within the meaning of the Act. Examples of
forward-looking statements include, but are not limited to:

o   projections of revenues, income or loss, earnings or loss per share, the
    payment or non-payment of dividends, capital structure and other
    financial items;
o   statements of plans and objectives of the Company or its management or Board
    of Directors, including those relating to products or services;
o   statements of future economic performance; and
o   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 such statements. Facts that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to:

o   the strength of the U.S. economy in general and the strength of the local
    economies in which we conduct operations;
o   the effects of and changes in trade, monetary and fiscal policies and laws,
    including the interest rate policies of the Board of Governors of the
    Federal Reserve System;
o   inflation, interest rate, market and monetary fluctuations;
o   the timely development of new products and services and the overall value of
    these products and services to users;
o   changes in consumer spending, borrowing and saving habits;
o   technological changes;
o   acquisitions;
o   the ability to increase market share and control expenses;
o   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;
o   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;
o   changes in the Company's organization, compensation and benefit plans;
o   the costs and effects of litigation and of unexpected or adverse outcomes in
    such litigation; and
o   the success of the Company at managing the risks involved in the foregoing.

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

                                       -9-
<PAGE>

The following narrative should be read in conjunction with the Company's
consolidated financial statements and the notes thereto.

FINANCIAL CONDITION

Total assets as of June 30, 2001 were $175.4 million compared to $163.0 million
as of December 31, 2000. Assets of the Company decreased approximately $700,000
during the second quarter of 2001 as compared to an increase of approximately
$8.9 million during the second quarter of 2000. The Company obtained $8 million
in brokered deposits during the second quarter of 2000, to help fund loan
growth, but at costs lower than it paid for deposits in the local market.

Loans increased to $152.9 million at June 30, 2001 from $146.3 million at
December 31, 2000. Management anticipates loan production will continue to
increase during the remainder of the year. The following table presents major
classifications of loans at June 30, 2001:

                                                                      % of
                                                                      Total
                                               Total                  Loan
                                               Loans                Portfolio
                                               -----                ---------
         Commercial                         $ 12,256,198              8.01%
         SBA - unguaranteed                   29,232,482             19.12%
         Real estate - mortgage               73,766,795             48.25%
         Real estate - construction           27,664,969             18.10%
         Installment and other consumer        9,964,063              6.52%
                                             ------------           ---------
           Total loans                       152,884,507            100.00%
                                                                    =======
           Less: Allowance for loan losses    (2,143,677)
                                              ----------

           Total net loans                  $150,740,830
                                            ============



Net premises and equipment were $4.1 million at June 30, 2001 and December 31,
2000. Other assets increased from $7.3 million as of December 31, 2000 to $8.9
million as of June 30, 2001.

Total deposits were $157.6 million at June 30, 2001 compared to $148.8 million
at December 31, 2000. As of June 30, 2001, interest-bearing deposits and non
interest-bearing deposits were $133.7 million and $23.9 million, respectively.
As of December 31, 2000, interest-bearing deposits and non interest-bearing
deposits were $126.8 million and $22.0 million, respectively.

No provision was added to the allowance for loan losses during the second
quarter of 2001. The allowance had a balance of $2,143,677 at June 30, 2001,
representing 1.40% of loans. Chargeoffs were $15,356 while recoveries were
$44,071 resulting in net recoveries of $28,715 for the first two quarters of
2001. Management believes this allowance is adequate to cover possible loan
losses. At June 30, 2001, management determined that two loans required specific
reserves totaling $18,242. The allowance is allocated among the loan categories
based on the relative percentage of the particular category to total loans. The
following table presents the activity in the allowance for the first two
quarters of 2001.


                         FIRST CHEROKEE BANCSHARES, INC.
                    ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

       Balance, December 31, 2000                            $2,047,962

       Chargeoffs                                               (15,356)

       Recoveries                                                44,071

       Provision for Loan Losses                                 67,000
                                                             ----------
       Balance, June 30, 2001                                $2,143,677
                                    -10-                     ==========
<PAGE>
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
At June 30, 2001, the Bank had eleven loans classified as nonaccrual totaling
$2,314,551, all of which are secured by real estate, vehicles, equipment or
inventory. The Bank's impaired loans consist of those nonaccrual loans that are
either greater than 90 days delinquent as of June 30, 2001 or are classified as
nonaccrual by management because the collection of interest from the borrower is
doubtful. Specific reserves totaling $18,242 have been allocated on selected
nonaccrual loans considered impaired. Interest income from impaired loans is
recognized using a cash basis method of accounting for the time period during
which the loans were impaired. If interest income on the total nonaccrual loans
had been accrued, that income would have approximated $216,000 as of June 30,
2001. Interest income on such loans, recorded only when received, was
approximately $227,000 for the first six months of 2001. As of June 30, 2001,
the Bank had five properties classified as other real estate owned, totaling
$769,494. The ratio of loans past due 30 days or more to total loans was .20% at
June 30, 2001 compared to 4.84% at December 31, 2000. There were no loans past
due 90 days or more still accruing interest as of June 30, 2001. There were no
restructured loans as of June 30, 2001 or December 31, 2000.

LIQUIDITY
Liquidity refers to the ability of the Company to meet its cash flow
requirements and fund its commitments. The Company manages the levels, types,
and maturities of earning assets in relation to the sources available to fund
current and future needs to ensure that adequate funding will be available at
all times. The Company's primary sources of funds are increases in deposits,
loan repayments, and sales and maturities of investments. In addition, the
Company is able to borrow funds from the Federal Reserve system, the Federal
Home Loan Bank, and The Bankers Bank and is also able to borrow from other
financial institutions. The Company monitors its compliance with regulatory
liquidity requirements and anticipates that funding requirements will be
satisfactorily met.

CAPITAL RESOURCES
At June 30, 2001, consolidated stockholders' equity was $11,927,639 or 6.80% of
total assets compared to $11,052,055 or 6.78% of total assets at December 31,
2000. The Company's common stock had a book value of $16.46 per share at June
30, 2001 compared to a book value of $15.52 per share at December 31, 2000. At
the end of the second quarter of 2001, the Company had approximately 500
stockholders of record.

The Bank and the Company are subject to the capital requirements of the Office
of the Comptroller of the Currency ("OCC") and the Federal Reserve Bank (the
"FRB"), respectively. The OCC and FRB have adopted risk-based capital guidelines
for all national banks and bank holding companies, respectively. To be
"adequately capitalized," all national banks are expected to maintain a minimum
ratio of total capital (after deductions) to risk-weighted assets of 8% (of
which at least 4% must consist of Tier 1 Capital, as defined).

The following table sets forth information with respect to the risk-based and
leverage ratios for the Company and Bank at June 30, 2001 and 2000 compared to
minimum ratios required by regulation.
<TABLE>

<CAPTION>
                                                                                                      To Be Well
                                                                                                  Capitalized Under
                                                                        For Capital               Prompt Corrective
                                              Actual                 Adequacy Purposes            Action Provisions
                                    --------------------------------------------------------------------------------------
                                        Amount        Ratio         Amount         Ratio         Amount         Ratio
                                        ------        -----         ------         -----         ------         -----
<S>                                     <C>           <C>           <C>            <C>           <C>            <C>
                                                                (dollars in thousands)
As of June 30, 2001:
 Total Capital (to Risk-Weighted Assets)
            Consolidated                  $13,747        9.31%          11,821        8.00%            n/a           n/a
            Bank                          $15,375       10.41%          11,821        8.00%         14,777        10.00%
 Tier 1 Capital (to Risk-Weighted Assets)
            Consolidated                  $11,897        8.05%           5,911        4.00%            n/a           n/a
            Bank                          $13,525        9.15%           5,911        4.00%          8,866         6.00%
 Tier 1 Capital (to Average Assets)
            Consolidated                  $11,897        6.78%           7,019        4.00%            n/a           n/a
            Bank                          $13,525        7.71%           7,019        4.00%          8,774         5.00%

As of June 30, 2000:
 Total Capital (to Risk-Weighted Assets)
            Consolidated                  $12,560        9.85%          10,206        8.00%            n/a           n/a
            Bank                          $12,786       10.02%          10,206        8.00%         12,757        10.00%
 Tier 1 Capital (to Risk-Weighted Assets)
            Consolidated                  $10,964        8.59%           5,103        4.00%            n/a           n/a
            Bank                          $11,190        8.77%           5,103        4.00%          7,654         6.00%
 Tier 1 Capital (to Average Assets)
            Consolidated                  $10,964        7.71%           5,692        4.00%            n/a           n/a
            Bank                          $11,190        7.86%           5,692        4.00%          7,114         5.00%
</TABLE>
                                      -11-
<PAGE>

RESULTS OF OPERATIONS
The Company recognized earnings of $648,462 for the first six months of 2001. In
comparison, net earnings for the first six months of 2000 were $631,628.

Net interest income for the first six months of 2001 was $4,188,093 as compared
to $3,968,449 for the first six months of 2000. The average yield on earning
assets for the first two quarters of 2001 decreased to 10.30% as compared to
11.13% for the first two quarters of 2000. The decrease is primarily due to the
decrease in the prime lending rate. The average cost of funds on
interest-bearing liabilities increased for the first six months of 2001 to
5.62%, as compared to 5.33% for the first six months of 2000. The increase is
primarily due to increased rates in the Bank's marketplace. Consequently, the
net interest spread for the first six months of 2001 and for the first six
months of 2000 was 4.68% and 5.80%, respectively.

Total other expense for the first half of 2001 was $3,759,716 compared to
$3,099,840 for the first half of 2000. The increase is primarily due to
increased personnel costs. Additionally, CNT recorded a net loss of $274,617
during the first six months of 2001 as a result of start-up and personnel costs.
The annualized ratio of operating expenses to average assets was 3.99% for the
first six months of 2001 compared to 4.48% for the first six months of 2000.


                                      -12-
<PAGE>
PART II - OTHER INFORMATION

         Item 1. Legal Proceedings - None

         Item 2. Changes in Securities and Use of Proceeds
                (a) None
                (b) None
                (c) Periodically, the Company has sold unregistered shares of
                    its common stock, par value $1.00 per share, to the
                    Company's 401(k) Profit Sharing Plan for Bank employees.
                    The following table sets forth information of such
                    transactions for 2000 and through June 30, 2001:

       Date                            Number of Shares                 Price
       ----                            ----------------                 -----
      May 2000                               2,284                     $16.00
      December 2000                            386                     $18.75
      January 2001                              75                     $18.75
      January 2001                           3,004                     $17.00
      January 2001                           3,156                     $18.75
      February 2001                          3,889                     $18.00
      March 2001                             1,160                     $21.00
      April 2001                               236                     $21.00
      April 2001                                39                     $21.00
      May 2001                                 284                     $18.50
      June 2001                                200                     $18.50

                    Because the Company only sold these shares to the
                    Company's 401(k) Profit Sharing Plan, the transactions did
                    not involve public offerings and are exempt from
                    registration under Section 4(2) of the Securities Act of
                    1933.

                    In May 2001, Carl C. Hames, Jr. CEO and President of the
                    Company, exercised an incentive stock option, granted him
                    under his Employment Agreement with the Company, to
                    purchase 1,100 shares of Company stock. The Company sold
                    1,100 unregistered shares of its common stock, par value
                    $1.00 per share, to Mr. Hames for $9.09 per share. Because
                    the Company sold these shares to Mr. Hames under the terms
                    of his Employment Agreement, the transaction did not
                    involve a public offering and is exempt from registration
                    under Section 4(2) of the Securities Act of 1933.
                (d) None

         Item 3. Defaults Upon Senior Securities - None

         Item 4. Submission of Matters to a Vote of Security Holders
                (a) An Annual Shareholders Meeting was held on April 25, 2001
                (b) All of the thirteen incumbent directors were elected to
                    serve one-year terms until the annual meeting of
                    shareholders in 2002. The following  table sets forth the
                    number of votes cast for and withheld with respect to each
                    nominated Director.  There were no abstentions or broker
                    non-votes.


          Name of Nominee           Votes for                 Votes Withheld
          ---------------           ---------                 --------------
          Alan D. Bobo               497,894                       4,060
          Elwin K. Bobo              497,894                       4,060
          Michael A. Edwards         497,894                       4,060
          J. Stanley Fitts           497,894                       4,060
          Russell L. Flynn           497,894                       4,060
          Carl C. Hames, Jr.         497,619                       4,335
          C. Garry Haygood           497,784                       4,170
          Thomas D. Hopkins          497,894                       4,060
          Bobby R. Hubbard           497,894                       4,060
          R. O. Kononen, Jr.         497,894                       4,060
          Dennis M. Lord             497,894                       4,060
          Larry R. Lusk              497,894                       4,060
          Dr. Stuart R. Tasman       497,894                       4,060
                                      -13-
<PAGE>

          Pursuant to Rule 14a-4 (c) (1) promulgated under the Securities
          Exchange Act of 1934, as amended, shareholders desiring to present a
          proposal for consideration at the Company's 2002 Annual Meeting of
          Shareholders must notify the Company in writing at its principal
          office at 9860 Highway 92, Woodstock, Ga. 30188, of the contents of
          such proposal no later than December 1, 2001. Failure to timely submit
          such a proposal will enable the proxies appointed by management to
          exercise their discretionary voting authority when the proposal is
          raised at the Annual Meeting of Shareholders without any discussion of
          the matter in the proxy statement.

         Item 5. Other Information - None

         Item 6. Exhibits and Reports on Form 8-K

          (a)  Exhibits

          Exhibit
          Number                   Description

          3.1(1)                   Articles of Incorporation
          3.2(2)                   Bylaws, as amended through March 29,1994
          10.3(1)                  Agreement for Lease/Purchase of Real Property
                                   for Bank Premises
          10.4(1)(3)               Form of Key Employee Stock Option Plan
          10.5(3)(4)               Form of Incentive Stock Option Certificate to
                                   Purchase Stock of  First Cherokee Bancshares,
                                   Inc., issued under the Key Employee Stock
                                   Option Plan effective October 13, 1988
          10.6(3)(4)               Form of Directors' Non-Qualified Stock Option
                                   Agreement
          10.2(3)(5)               First Cherokee Bancshares, Inc. 1999 Stock
                                   Option Plan
          10.7(3)(6)               Employment Agreement (Carl Hames) dated
                                   May 11, 2000.

------------------------

         (1)      Incorporated  herein  by  reference  to  Exhibit  of the same
                  number in the  Company's  Registration  Statement  No.
                  33-25075-A.

         (2)      Incorporated  herein by reference to Exhibit of the same
                  number in the Company's Annual Report on Form 10-KSB for the
                  year ended December 31, 1994.

         (3)      The indicated exhibits are management contracts or
                  compensatory plans or arrangements required to be filed or
                  incorporated by reference herein.

         (4)      Incorporated herein by reference to Exhibit of the same number
                  in the Company's Annual Report on Form 10-KSB for the year
                  ended December 31, 1998.

         (5)      Incorporated herein by reference to Appendix A to the
                  Company's Proxy Statement filed  on March 30, 1999.

         (6)      Incorporated herein by reference to Exhibit of the same number
                  in the Company's Report on Form 10-QSB for the quarter ended
                  June 30, 2000.

          (b)  The Company has not filed any reports on Form 8-K during the
               quarter ended June 30, 2001.


                                      -14-
<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.

      FIRST CHEROKEE BANCSHARES, INC.
      (Registrant)

DATE: August 13, 2001                                BY:  /s/Carl C. Hames, Jr.
      ---------------                                    ----------------------
                                                             Carl C. Hames, Jr.
                                                      President & CEO/Principal
                                                              Executive Officer

DATE: August 13, 2001                                BY:  /s/Kitty A. Kendrick
      ---------------                                     ----------------------
                                                             Kitty A. Kendrick
                                                        Chief Financial Officer/
                                      Principal Financial and Accounting Officer








                                      -15-