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 September 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 September 30, 2001 was 725,986 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 Nine Months Ended September 30, 2001

                                      Index
                                      -----

Page No.
--------
Part I.  Financial Information

         Consolidated Financial Statements
         Consolidated Balance Sheet (unaudited) at September 30, 2001       3

         Consolidated Statements of Earnings (unaudited)
         for the nine months ended September 30, 2001 and 2000              4

         Consolidated Statements of Earnings (unaudited)
         for the three months ended September 30, 2001 and 2000             5

         Consolidated Statements of Comprehensive Income (unaudited)
         for the nine months ended September 30, 2001 and 2000              6

         Consolidated Statements of Comprehensive Income (unaudited)
         for the three months ended September 30, 2001 and 2000             6

         Consolidated Statements of Cash Flows (unaudited)
         for the nine months ended September 30, 2001 and 2000              7

         Notes to Consolidated Financial Statements (unaudited)             8

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         10

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                                  16

Signatures                                                                 17
















                                        2

<PAGE>




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

                                     Assets
                                     ------
Cash & due from banks, including $794,024
  bearing interest                                                $5,232,929
Federal funds sold                                                   988,000
                                                                     -------
      Total cash & cash equivalents                                6,220,929
Investment securities available for sale,
  at fair value                                                    1,771,179
Other investments                                                  1,100,900
Loans, less allowance for loan losses
  of $2,147,891                                                  154,804,071
Premises and equipment, net                                        4,928,378
Accrued interest receivable and other assets                       9,059,778
                                                                ------------
                   Total Assets                                 $177,885,235
                                                                ============



                      Liabilities and Stockholders' Equity

Liabilities:
Deposits:
  Interest-bearing deposits                                     $139,824,515
  Noninterest-bearing deposits                                    22,267,380
                                                                  ----------
      Total deposits                                             162,091,895
Note payable and other borrowings                                  1,863,259
Accrued interest payable and other liabilities                     1,629,467
                                                                   ---------
                   Total Liabilities                             165,584,621


Stockholders' Equity:
Common stock ($1 par value; 10,000,000 shares authorized,
  775,325 shares issued, 725,986 shares outstanding)                 775,325
Additional paid-in-capital                                         6,898,481
Retained earnings                                                  5,649,278
Treasury Stock (49,339 shares acquired
  at cost)                                                        (1,027,170)
Accumulated other comprehensive
  income, net of tax                                                   4,700
                                                                       -----
                   Total Stockholders' Equity                     12,300,614
                                                                  ----------

                    Total Liabilities and Stockholders' Equity  $177,885,235
                                                                ============

                 See notes to consolidated financial statements









                                       3
<PAGE>


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

Interest income:                                       2001              2000
                                                       ----              ----
  Interest and fees on loans                        $11,734,411     $10,546,802
  Interest on federal funds sold/overnight funds        171,737         145,174
  Interest and dividends on investments                 104,600          77,972
                                                        -------          ------
     Total interest income                           12,010,748      10,769,948

Interest expense:
  Interest on deposits                                5,639,553       4,476,775
  Interest on note payable and other borrowings         114,261         162,499
                                                        -------         -------
     Total interest expense                           5,753,814       4,639,274

Net interest income                                   6,256,934       6,130,674
Provision for loan losses                                67,000         606,244
                                                         ------         -------
Net interest income after provision
    for loan losses                                   6,189,934       5,524,430
                                                      ---------       ---------

Other income:
  Gain (loss) on sales of loans                         (19,413)        113,252
  Service charges on deposit accounts
    and other income                                    899,047         773,756
                                                        -------       ---------

Total other income                                      879,634         887,008
                                                        -------       ---------

Other expense:
  Salaries and employee benefits                      2,936,785       2,565,574
  Occupancy                                             771,598         697,852
  Other operating expense                             1,757,650       1,489,290
                                                      ---------       ---------

Total other expense                                   5,466,033       4,752,716
                                                      ---------       ---------

Earnings before income taxes                          1,603,535       1,658,722

Income tax expense                                      613,250         633,000
                                                       --------               -
Net earnings                                           $990,285      $1,025,722
                                                       ========      ==========

Basic earnings per share                                  $1.37           $1.37
                                                          =====           =====
Diluted earnings per share                                $1.35           $1.37
                                                          =====           =====


                 See notes to consolidated financial statements








                                       4
<PAGE>

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

Interest income:                                       2001              2000
                                                       ----              ----
  Interest and fees on loans                        $3,871,053       $3,793,526
  Interest on federal funds sold/overnight funds        22,419          126,783
  Interest and dividends on investments                 41,914           25,709
                                                        ------           ------
     Total interest income                           3,935,386        3,946,018

Interest expense:
  Interest on deposits                               1,827,857        1,768,549
  Interest on note payable and other borrowings         38,688           15,244
                                                        ------           ------
     Total interest expense                          1,866,545        1,783,793

Net interest income                                  2,068,841        2,162,225
Provision for loan losses                                    0          213,654
                                                             -          -------
Net interest income after provision
   for loan losses                                   2,068,841        1,948,571
                                                     ---------        ---------

Other income:
     Gain (loss)on sales of loans                       (7,830)          60,482
     Service charges on deposit accounts
        and other income                               333,437          281,917
                                                       -------          -------
Total other income                                     325,607          342,399
                                                       -------          -------

Other expense:
     Salaries and employee benefits                  1,004,451          892,356
     Occupancy                                         263,051          243,132
     Other operating expense                           576,123          517,388
                                                       -------          -------
Total other expense                                  1,843,625        1,652,876
                                                     ---------        ---------

Earnings before income taxes                           550,823          638,094

Income tax expense                                     209,000          244,000
                                                       -------                -
Net earnings                                          $341,823         $394,094
                                                      ========         ========

Basic earnings per share                                 $0.47            $0.53
                                                        ======            =====
Diluted earnings per share                               $0.47            $0.53
                                                        ======            =====

                 See notes to consolidated financial statements








                                       5
<PAGE>


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

                                                       2001              2000
                                                       ----              ----
Net earnings                                         $990,285       $1,025,722
Other comprehensive income, net of tax:
  Unrealized gain arising during the period, net
  of tax of $4,103 and $580, respectively               6,617              936
                                                        -----              ---

Comprehensive income                                 $996,902       $1,026,658
                                                     ========       ==========

                 See Notes to Consolidated Financial Statements




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

                                                          2001           2000
                                                          ----           ----
Net earnings                                           $341,823       $394,094
Other comprehensive income, net of tax:
    Unrealized gain (loss) arising during the period, net
      of tax of ($105) and $1,412, respectively            (169)         2,277
                                                           ----          -----

Comprehensive income                                   $341,654       $396,371
                                                       ========       ========

                 See Notes to Consolidated Financial Statements












                                       6

<PAGE>
                         First Cherokee Bancshares, Inc.
                      Consolidated Statements of Cash Flows
                     For the nine months ended September 30,
                                   (Unaudited)
                                                       2001             2000
                                                       ----             ----
Cash flows from operating activities:
Net earnings                                         $990,285        $1,025,722
Adjustments to reconcile net earnings to net cash
  provided in operating activities:
    Depreciation, amortization and accretion          656,345           346,402
    Provision for loan losses                          67,000           606,244
    Change in accrued interest payable and
      other liabilities                               (31,322)          214,710
    Net (loss) gain on sale of OREO                    23,873            (7,389)
    Change in accrued interest receivable and
      other assets                                   (752,061)         (545,557)
                                                     --------          --------
        Total adjustments                             (36,165)          614,410
                                                     --------          --------
        Net cash provided by operating activities     954,120         1,640,132

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                        103,338           887,466
    Improvements to OREO                             (383,951)         (168,549)
    Proceeds from maturities and calls of investment
      securities available for sale                   539,247            26,173
    Net change in loans                           (11,000,458)      (26,225,844)
    Purchases of premises and equipment            (1,219,593)         (271,017)
    Investment in unconsolidated subsidiary          (226,125)                0
                                                     --------                 -
        Net cash used by investing activities     (14,449,042)      (25,973,871)

Cash flows from financing activities:
    Net change in deposits                         13,342,059        34,323,934
    Net proceeds from FHLB advances                         0        (3,000,000)
    Proceeds from exercise of stock options            10,000            10,000
    Proceeds from sale of  treasury stock             265,133            36,550
    Purchase of treasury stock                        (23,476)         (813,259)
    Net proceeds from note payable                    350,000           287,960
                                                      -------           -------
        Net cash provided by financing activities  13,943,716        30,845,185

Net change in cash and cash equivalents               448,794         6,511,446
Beginning cash and cash equivalents                 5,772,135         4,559,572
                                                    ---------         ---------
Ending cash and cash equivalents                   $6,220,929       $11,071,018
                                                   ==========       ===========

Noncash investing activities:
    Change in accumulated other comprehensive
         income, net of tax                            $6,617              $936
    Transfer of loans to other real estate           $732,986          $306,345
    Financed Sale of OREO                            $354,000          $109,915

Supplemental disclosure of cash flow information:
    Interest Paid                                  $5,830,721        $4,270,376
    Income Taxes Paid                                $703,000          $717,000

                 See notes to consolidated financial statements







                                       7
<PAGE>


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

NOTE (1) - BASIS OF PRESENTATION
--------------------------------

The consolidated financial statements include the accounts of First Cherokee
Bancshares, Inc. (the "Company"), a financial holding 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 September 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 September 30, 2001, and the results of
its operations and its cash flows for the nine-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 September 30,
2001 and September 30, 2000 are as follows:















                                       8

<PAGE>


                  For the nine months ended September 30, 2001:

                                    Net Earnings   Common Shares     Per Share
                                    (Numerator)    (Denominator)       Amount
                                    -----------    -------------       ------
Basic earnings per share             $990,285         722,310          $1.37
Effect of dilutive securities:
     Stock options                                      9,539
                                                        -----
Diluted earnings per share           $990,285         731,849          $1.35
                                     ========         =======          =====

                  For the nine months ended September 30, 2000

                                    Net Earnings   Common Shares     Per Share
                                    (Numerator)    (Denominator)       Amount
                                    -----------    -------------       ------
Basic earnings per share           $1,025,722         746,281          $1.37
Effect of dilutive securities:
     Stock options                                      3,627
                                                        -----
Diluted earnings per share         $1,025,722         749,908          $1.37
                                   ==========         =======          =====

                  For the three months ended September 30, 2001

                                    Net Earnings   Common Shares     Per Share
                                    (Numerator)    (Denominator)       Amount
                                    -----------    -------------       ------
Basic earnings per share             $341,823         724,581          $0.47
Effect of dilutive securities:
     Stock options                                     10,069
                                                       ------
Diluted earnings per share           $341,823         734,650          $0.47
                                     ========         =======          =====

                  For the three months ended September 30, 2000

                                    Net Earnings   Common Shares     Per Share
                                    (Numerator)    (Denominator)       Amount
                                    -----------    -------------       ------
Basic earnings per share             $394,094         744,810          $0.53
Effect of dilutive securities:
     Stock options                                      4,344
                                                        -----
Diluted earnings per share           $394,094         749,154          $0.53
                                     ========         =======          =====












                                       9
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 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.






                                       10
<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 September 30, 2001 were $177.9 million compared to $163.0
million as of December 31, 2000. Assets of the Company increased approximately
$2.4 million during the third quarter of 2001 as compared to an increase of
approximately $9 million during the third quarter of 2000. The Company obtained
$8 million in brokered deposits during the third quarter of 2000, to help fund
loan growth, but at costs lower than it paid for deposits in the local market.

Loans increased to $157.0 million at September 30, 2001 from $146.3 million at
December 31, 2000.  Management anticipates loan production will continue to
increase, based on historical trends, during the remainder of the year.  The
following table presents major classifications of loans at September 30, 2001:

                                                                  % of
                                                                  Total
                                           Total                  Loan
                                           Loans                Portfolio
                                           -----                ---------

      Commercial                        $ 11,534,664              7.35%
      SBA - unguaranteed                  29,387,654             18.72%
      Real estate - mortgage              75,468,854             48.08%
      Real estate - construction          30,895,819             19.69%
      Installment and other consumer       9,664,971              6.16%
                                           ---------              ----
        Total loans                      156,951,962            100.00%
                                                                ======
        Less: Allowance for loan losses   (2,147,891)
                                          ----------
        Total net loans                 $154,804,071
                                        ============



Net premises and equipment were $4.9 million at September 30, 2001 and $4.1
million at December 31, 2000.  Other assets increased from $7.3 million as of
December 31, 2000 to $9.1 million as of September 30, 2001.

Total deposits were $162.1 million at September 30, 2001 compared to $148.8
million at December 31, 2000.  As of September 30, 2001, interest-bearing
deposits and non interest-bearing deposits were $139.8 million and $22.3
million, respectively. As of December 31, 2000, interest-bearing deposits and
non interest-bearing deposits were $126.8 million and $22.0 million,
respectively.











                                       11
<PAGE>


No provision was added to the allowance for loan losses during the third quarter
of 2001. The allowance had a balance of $2,147,891 at September 30, 2001,
representing 1.37% of loans. Chargeoffs were $90,403 while recoveries were
$123,332 resulting in net recoveries of $32,929 for the first three quarters
of 2001. Management believes this allowance is adequate to cover possible loan
losses. At September 30, 2001, management determined that no loans required
specific reserves. 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 three
quarters of 2001.


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

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

        Chargeoffs                                          (90,403)

        Recoveries                                          123,332

        Provision for Loan Losses                            67,000
                                                             ------

        Balance, September 30, 2001                      $2,147,891
                                                         ==========


NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
-------------------------------------------
At September 30, 2001, the Bank had two loans classified as nonaccrual totaling
$241,772, both of which are secured by real estate. The Bank's impaired loans
consist of those nonaccrual loans that are either greater than 90 days
delinquent as of September 30, 2001 or are classified as nonaccrual by
management because the collection of interest from the borrower is doubtful. No
specific reserves have been allocated on these nonaccrual loans
because they are not 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 $37,786 as of
September 30, 2001. Interest income on such loans, recorded only when received,
was approximately $77,601 for the first nine months of 2001. As of September
30, 2001, the Bank had four properties classified as other real estate owned,
totaling $683,196. The ratio of loans past due 30 days or more to total loans
was 1.22% at September 30, 2001 compared to 4.84% at December 31, 2000. There
were nine loans totaling $692,500 past due 90 days or more still accruing
interest as of September 30, 2001, each of which is well secured and in the
process of collection. There were no restructured loans as of September 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.






                                       12

<PAGE>

CAPITAL RESOURCES
-----------------
At September 30, 2001, consolidated stockholders' equity was $12,300,614 or
6.91% 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 $16.94
per share at September 30, 2001 compared to a book value of $15.52 per share at
December 31, 2000. At the end of the third 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 September 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 September 30, 2001:
  Total Capital (to Risk-Weighted Assets)
             Consolidated                  $14,206        9.23%          12,317        8.00%            n/a           n/a
             Bank                          $15,839       10.29%          12,310        8.00%         15,388        10.00%
  Tier 1 Capital (to Risk-Weighted Assets)
             Consolidated                  $12,279        7.98%           6,158        4.00%            n/a           n/a
             Bank                          $13,913        9.04%           6,155        4.00%          9,233         6.00%
  Tier 1 Capital (to Average Assets)
             Consolidated                  $12,279        6.96%           7,057        4.00%            n/a           n/a
             Bank                          $13,913        7.89%           7,057        4.00%          8,821         5.00%

As of September 30, 2000:
  Total Capital (to Risk-Weighted Assets)
             Consolidated                  $12,215        9.20%          10,623        8.00%            n/a           n/a
             Bank                          $13,375       10.07%          10,623        8.00%         13,279        10.00%
  Tier 1 Capital (to Risk-Weighted Assets)
             Consolidated                  $10,553        7.95%           5,312        4.00%            n/a           n/a
             Bank                          $11,712        8.82%           5,312        4.00%          7,967         6.00%
  Tier 1 Capital (to Average Assets)
             Consolidated                  $10,553        6.75%           6,253        4.00%            n/a           n/a
             Bank                          $11,712        7.49%           6,253        4.00%          7,816         5.00%

</TABLE>



                                       13


<PAGE>

RESULTS OF OPERATIONS
---------------------
The Company recognized earnings of $990,285 for the first nine months of 2001.
In comparison, net earnings for the first nine months of 2000 were $1,025,722.

Net interest income for the first nine months of 2001 was $6,256,934 as compared
to $6,130,674 for the first nine months of 2000. The average yield on earning
assets for the first three quarters of 2001 decreased to 9.99% as compared to
11.15% for the first three 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 decreased for the first nine months of 2001 to
5.60%, as compared to 5.65% for the first nine months of 2000. Consequently, the
net interest spread for the first nine months of 2001 and for the first nine
months of 2000 was 4.39% and 5.50%, respectively.

Total other expense for the first three quarters of 2001 was $5,466,033 compared
to $4,752,716 for the first three quarters of 2000. The increase is primarily
due to increased personnel costs.  Additionally, CNT recorded a
net loss of $366,458 during the first nine months of 2001 as a result of
start-up and personnel costs. The annualized ratio of operating expenses to
average assets was 4.01% for the first nine months of 2001 compared to
4.38% for the first nine months of 2000.








                                       14

<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 the
                   three months ended September 30, 2001:

         Date                      Number of Shares                 Price
         ----                      ----------------                 -----
         July 2001                        165                      $21.00
         August 2001                      183                      $21.00
         September 2001                 1,765                      $21.00

         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.

               (d)None

         Item 3. Defaults Upon Senior Securities - None

         Item 4. Submission of Matters to a Vote of Security Holders  - None

         Item 5. Other Information - None






                                       15
<PAGE>



         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 September 30, 2001.







                                       16

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

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


















                                       17