** **

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

** **

**FORM 10-Q**

** **

**Mark One**

** **

| **ý**                                  | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                               |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                        |                                                                                                                                                                                                                                       |
|                                        | **For the quarterly period ended  March 31, 2003**                                                                                                                                                                                         |
|                                        |                                                                                                                                                                                                                                       |
| **o**                                       | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                              |
|                                        |                                                                                                                                                                                                                                       |
|                                        | **For the transition period from                    to                  ** |
|                                        |                                                                                                                                                                                                                                       |
| **Commission File Number:  000-24203** |

** **

**GB&TBancshares, Inc.**

(Exact name ofregistrant as specified in its charter)

 

| **Georgia**                                                                         |   | **58-2400756**                     |
|-------------------------------------------------------------------------------------|--------|------------------------------------|
| (State or other  jurisdiction of  incorporation or organization)                    |   | (IRS Employer  Identification No.) |
|                                                                                |   |                               |
| **500 Jesse Jewell Parkway, S.E.  Gainesville, Georgia 30501**                      |
| (Address of  principal executive offices)                                           |
|                                                                                |   |                               |
| **(770) 532-1212**                                                                  |
| (Registrant’s  telephone number, including area code)                          |
|                                                                                |   |                               |
| **N/A**                                                                             |
| (Former name,  former address and former fiscal year, if changed since last report) |
|                                                                                     |        |                                    |  |  |

 

Indicate by checkmark whether the registrant (1) filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirements for the past90 days.  Yes   ý    No   o

 

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act).  Yes   o    No   ý

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

State the numberof shares outstanding of each of the issuer’s classes of common stock, as ofMay 5, 2003:    5,381,747 shares; no parvalue

 

 

----

 

**GB&T BANCSHARES, INC.**

** **

**TABLE OF CONTENTS**

 
| **PART I.**  | **FINANCIAL  INFORMATION**                                                                                    |                                                                                            |
|--------------|---------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|
|         |                                                                                                          |                                                                                            |   |
|         | **Item 1.**                                                                                                   | **FINANCIAL  STATEMENTS**                                                                       |   |
|         |                                                                                                          |                                                                                            |   |
|         | **Consolidated Balance Sheets  – March 31, 2003 (Unaudited)  and December 31, 2002**                     |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Consolidated  Statements of Income (Unaudited)-  Three months ended March 31, 2003 and 2002**               | **.**                                                                                           |
|         |                                                                                                          |                                                                                            |   |
|         | **Consolidated  Statements of Comprehensive Income (Unaudited)-  Three months ended March 31, 2003 and 2002** |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Consolidated  Statements of Stockholders’ Equity (Unaudited)   Three months ended March 31, 2003**     |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Consolidated  Statements of Cash Flows (Unaudited) -  Three months ended March 31, 2003 and 2002**          | **.**                                                                                           |
|         |                                                                                                          |                                                                                            |   |
|         | **Notes to  Consolidated Financial Statements (Unaudited)**                                                   |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Item 2.**                                                                                                   | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations** |   |
|         |                                                                                                          |                                                                                            |   |
|         | **Item 3.**                                                                                                   | **Quantitative  and Qualitative Disclosures About Market Risk**                                 |   |
|         |                                                                                                          |                                                                                            |   |
|         | **Item 4.**                                                                                                   | **Controls  and Procedures**                                                                    |   |
|         |                                                                                                          |                                                                                            |   |
| **PART II.** | **OTHER  INFORMATION**                                                                                        |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Item 6.**                                                                                                   | **Exhibits  and Reports on Form 8-K**                                                           |   |
|         |                                                                                                          |                                                                                            |   |
|         | **Signatures**                                                                                                |                                                                                            |
|         |                                                                                                          |                                                                                            |   |
|         | **Certifications**                                                                                            |                                                                                            |

 

2

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**PARTI****- FINANCIAL INFORMATION**

**ITEM1****- FINANCIAL STATEMENTS**

** **

**GB&T BANCSHARES, INC. AND SUBSIDIARIES**

**Consolidated Balance Sheets**

**(Unaudited)**

 
|                                                                                                                                                                                                   |   | **March 31,  2003**                             |       | **December  31,  2002** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|------------|-------------------------|------------|
|                                                                                                                                                                                                   |   | **(Dollars  in thousands,  except share data)** | ** ** |
| Assets                                                                                                                                                                                                 |   |                                            |       |                    |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Cash  and due from banks                                                                                                                                                                               |   | $                                               | 18,217     |                    | $          | 18,113 |   |
| Interest-bearing  deposits in banks                                                                                                                                                                    |   | 2,332                                           |       | 8,205                   |       |
| Federal  funds sold                                                                                                                                                                                    |   | 29,590                                          |       | 25,170                  |       |
| Securities  available for sale, at fair value                                                                                                                                                          |   | 104,811                                         |       | 106,843                 |       |
| Restricted  equity securities                                                                                                                                                                          |   | 3,784                                           |       | 3,784                   |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Loans,  net of unearned income                                                                                                                                                                         |   | 562,682                                         |       | 542,834                 |       |
| Less  allowance for loan losses                                                                                                                                                                        |   | 7,438                                           |       | 7,538                   |       |
| Loans,  net                                                                                                                                                                                            |   | 555,244                                         |       | 535,296                 |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Premises  and equipment                                                                                                                                                                                |   | 20,734                                          |       | 20,774                  |       |
| Goodwill  and intangible assets                                                                                                                                                                        |   | 9,509                                           |       | 9,522                   |       |
| Other  assets                                                                                                                                                                                          |   | 13,732                                          |       | 14,265                  |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| **Total  assets**                                                                                                                                                                                      |   | $                                               | 757,953    |                    | $          | 741,972 |   |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Liabilities  and Stockholders’ Equity                                                                                                                                                             |   |                                            |       |                    |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Liabilities:                                                                                                                                                                                           |   |                                            |       |                    |       |
| Deposits:                                                                                                                                                                                              |   |                                            |       |                    |       |
| Noninterest-bearing  demand deposits                                                                                                                                                                   |   | $                                               | 66,830     |                    | $          | 56,795 |   |
| Interest-bearing  deposits                                                                                                                                                                             |   | 533,374                                         |       | 523,453                 |       |
| Total  deposits                                                                                                                                                                                        |   | 600,204                                         |       | 580,248                 |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Federal  funds purchased and securities sold Under repurchase agreements                                                                                                                               |   | 14,351                                          |       | 11,538                  |       |
| Federal  Home Loan Bank advances                                                                                                                                                                       |   | 61,619                                          |       | 63,654                  |       |
| Other  borrowings                                                                                                                                                                                      |   | 231                                             |       | 820                     |       |
| Other  liabilities                                                                                                                                                                                     |   | 4,872                                           |       | 9,935                   |       |
| Company  guaranteed trust preferred securities                                                                                                                                                         |   | 15,000                                          |       | 15,000                  |       |
| **Total  liabilities**                                                                                                                                                                                 |   | 696,277                                         |       | 681,195                 |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| Stockholders’  Equity:                                                                                                                                                                            |   |                                            |       |                    |       |
| Capital  Stock-no par value; 20,000,000 shares   Authorized, 5,365,478 shares issued and Outstanding at March 31, 2003;  5,356,946  Shares issued and  outstanding at December 31, 2002 |   | 35,688                                          |       | 35,658                  |       |
| Retained  earnings                                                                                                                                                                                     |   | 24,386                                          |       | 23,130                  |       |
| Accumulated  other comprehensive income, Net of tax                                                                                                                                                    |   | 1,602                                           |       | 1,989                   |       |
| **Total  stockholders’ equity**                                                                                                                                                                   |   | 61,676                                          |       | 60,777                  |       |
|                                                                                                                                                                                                   |   |                                            |       |                    |       |
| **Total liabilities and stockholders’ equity**                                                                                                                                                    |   | $                                               | 757,953    |                    | $          | 741,972 |   |

 

See accompanyingnotes to consolidated financial statements.

 

3

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**GB&T BANCSHARES, INC. ANDSUBSIDIARIES**

**Consolidated Statements of Income**

**(Unaudited)**

 
|                                                                     |   | **Three  months ended  March 31,**                  | ** ** |
|--------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                     |   | **2003**                                            |       | **2002** | ** ** |
|                                                                     |   | **(Dollars  in thousands, except per  share data)** | ** ** |
| Interest  income:                                                        |   |                                                |       |   |   |
| Loans,  including fees                                                   |   | $                                                   | 9,738      |   | $ | 8,200 |   |
| Taxable  securities                                                      |   | 985                                                 |       | 992 |   |
| Nontaxable  securities                                                   |   | 168                                                 |       | 176 |   |
| Federal  funds sold                                                      |   | 54                                                  |       | 20 |   |
| Interest-bearing  deposits in banks                                      |   | 11                                                  |       | 9 |   |
| Total  interest income                                                   |   | 10,956                                              |       | 9,397 |   |
|                                                                     |   |                                                |       |   |   |
| Interest  expense:                                                       |   |                                                |       |   |   |
| Deposits                                                                 |   | 2,977                                               |       | 3,090 |   |
| Federal  funds purchased and securities sold under repurchase agreements |   | 41                                                  |       | 80 |   |
| Federal  Home Loan Bank advances                                         |   | 728                                                 |       | 705 |   |
| Other  borrowings                                                        |   | 213                                                 |       | 23 |   |
| Total  interest expense                                                  |   | 3,959                                               |       | 3,898 |   |
|                                                                     |   |                                                |       |   |   |
| Net  interest income                                                     |   | 6,997                                               |       | 5,499 |   |
|                                                                     |   |                                                |       |   |   |
| Provision  for loan losses                                               |   | 214                                                 |       | 183 |   |
|                                                                     |   |                                                |       |   |   |
| Net  interest income after Provision for loan losses                     |   | 6,783                                               |       | 5,316 |   |
|                                                                     |   |                                                |       |   |   |
| Other  income:                                                           |   |                                                |       |   |   |
| Service  charges on deposit accounts                                     |   | 1,092                                               |       | 828 |   |
| Mortgage  origination fees                                               |   | 557                                                 |       | 304 |   |
| Insurance  commissions                                                   |   | 144                                                 |       | 144 |   |
| Gain  (loss) on sale of securities                                       |   | 28                                                  |       | 137 |   |
| Other  operating income                                                  |   | 531                                                 |       | 469 |   |
| Total  other income                                                      |   | 2,352                                               |       | 1,882 |   |
|                                                                     |   |                                                |       |   |   |
| Other  expense:                                                          |   |                                                |       |   |   |
| Salaries  and employee benefits                                          |   | 4,124                                               |       | 2,956 |   |
| Net  occupancy and equipment expense                                     |   | 1,004                                               |       | 768 |   |
| Other  operating expenses                                                |   | 1,673                                               |       | 1,275 |   |
| Total  other expense                                                     |   | 6,801                                               |       | 4,999 |   |
|                                                                     |   |                                                |       |   |   |
| Income  before income taxes                                              |   | 2,334                                               |       | 2,199 |   |
|                                                                     |   |                                                |       |   |   |
| Income  tax expense                                                      |   | 623                                                 |       | 702 |   |
|                                                                     |   |                                                |       |   |   |
| Net  income                                                              |   | $                                                   | 1,711      |   | $ | 1,497 |   |
|                                                                     |   |                                                |       |   |   |
| Earnings  per share:                                                     |   |                                                |       |   |   |
| Basic                                                                    |   | $                                                   | 0.32       |   | $ | 0.32 |   |
| Diluted                                                                  |   | $                                                   | 0.31       |   | $ | 0.31 |   |
|                                                                     |   |                                                |       |   |   |
| Weighted  average shares:                                                |   |                                                |       |   |   |
| Basic                                                                    |   | 5,361                                               |       | 4,757 |   |
| Diluted                                                                  |   | 5,523                                               |       | 4,872 |   |
|                                                                     |   |                                                |       |   |   |
| Cash  dividends declared per common share                                |   | $                                                   | 0.085      |   | $ | 0.080 |   |

 

See accompanying notes toconsolidated financial statements.

 

4

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**GB&T BANCSHARES, INC. ANDSUBSIDIARIES**

**Consolidated Statements ofComprehensive Income**

**(Unaudited)**

 
|                                                                                                             |   | **Three months ended March 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                             |   | **2003**                         |       | **2002** | ** ** |
|                                                                                                             |   | **(Dollars in thousands)**       | ** ** |
|                                                                                                             |   |                             |       |   |   |
| **Net Income**                                                                                                   |   | $                                | 1,711      |   | $ | 1,497 |   |
|                                                                                                             |   |                             |       |   |   |
| Unrealized losses on securities available-for-sale  arising during period, net of tax                            |   | (370                             | )          | (349 | ) |
|                                                                                                             |   |                             |       |   |   |
| Reclassification adjustment for gains realized on  securities available-for-sale in net  income, net of tax |   | (17                              | )          | (85 | ) |
|                                                                                                             |   |                             |       |   |   |
| Other comprehensive loss                                                                                         |   | (387                             | )          | (434 | ) |
|                                                                                                             |   |                             |       |   |   |
| **Comprehensive income**                                                                                         |   | $                                | 1,324      |   | $ | 1,063 |   |

 
| **Consolidated  Statements of Stockholders’ Equity**                                              |
|--------------------------------------------------------------------------------------------------------|
| **Three  Months Ended March 31, 2003  (unaudited)**                                                    |
|                                                                                                   |
|                                                                                                   |   | **Shares** |   | **Capital  Stock** | ** ** | **Retained  Earnings** | ** ** | **Accumulated****Other  Comprehensive  Income** | ** ** | **Total  Stockholders’  Equity** | ** ** |
|                                                                                                   |   | **(Dollars in thousands)** |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2002                                                                             |   | 5,357 |   | $ | 35,658 |   | $ | 23,130 |   | $ | 1,989 |   | $ | 60,777 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                             |   | — |   | — |   | 1,711 |   | — |   | 1,711 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Options excercised                                                                                     |   | 9 |   | 37 |   | — |   | — |   | 37 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends declared $0.085 per share                                                                    |   | — |   | — |   | (455 | ) | — |   | (455 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Payment for fractional shares in connection with the  HomeTown Bank of Villa Rica business combination |   | (1 | ) | (7 | ) | — |   | — |   | (7 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss                                                                               |   | — |   | — |   | — |   | (387 | ) | (387 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31, 2003                                                                                |   | 5,365 |   | $ | 35,688 |   | $ | 24,386 |   | $ | 1,602 |   | $ | 61,676 |   |

 

5

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**GB&T BANCSHARES, INC. ANDSUBSIDIARIES**

**Condensed Consolidated Statements ofCash Flows**

**(Unaudited)**

 
|                                                                                                  |   | **Three  months ended  March 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                                                  |   | **2003**                           |       | **2002** | ** ** |
|                                                                                                  |   | **(Dollars  in thousands)**        | ** ** |
| **Operating Activities**                                                                              |   |                               |       |   |   |
| Net  income                                                                                           |   | $                                  | 1,711      |   | $ | 1,497 |   |
| Adjustments  to reconcile net income to net cash provided by (used in) operating  activities:         |   |                               |       |   |   |
| Depreciation                                                                                          |   | 458                                |       | 348 |   |
| Provision  for loan losses                                                                            |   | 214                                |       | 183 |   |
| Amortization  and (accretion), net                                                                    |   | 157                                |       | 23 |   |
| Gain  on sale of securities                                                                           |   | (28                                | )          | (137 | ) |
| Net  (increase) decrease in other assets                                                              |   | 971                                |       | (480 | ) |
| Net  decrease in other liabilities                                                                    |   | (4,825                             | )          | (377 | ) |
| Net  cash (used in) provided by operating activities                                                  |   | (1,342                             | )          | 1,057 |   |
|                                                                                                  |   |                               |       |   |   |
| **Investing Activities**                                                                              |   |                               | ** ** |   | ** ** |
| Purchases  of securities available for sale                                                           |   | (23,479                            | )          | (14,420 | ) |
| Purchases  of restricted equity securities                                                            |   | —                             |       | (1,765 | ) |
| Proceeds  from sales of securities available for sale                                                 |   | 1,116                              |       | 11,116 |   |
| Proceeds  from maturities of securities available for sale                                            |   | 23,613                             |       | 4,962 |   |
| (Increase)  decrease in interest-bearing deposits in banks                                            |   | 5,873                              |       | (99 | ) |
| Net  increase in federal funds sold                                                                   |   | (4,420                             | )          | (8,509 | ) |
| Net  increase in loans                                                                                |   | (21,110                            | )          | (6,776 | ) |
| Proceeds  from sales of other real estate owned                                                       |   | 544                                |       | 202 |   |
| Purchases  of premises and equipment                                                                  |   | (439                               | )          | (861 | ) |
| Disposal  of premises and equipment                                                                   |   | 21                                 |       | — |   |
| Net  cash used in investing activities                                                                |   | (18,281                            | )          | (16,150 | ) |
|                                                                                                  |   |                               |       |   |   |
| **Financing Activities**                                                                              |   |                               |       |   |   |
| Net  increase in deposits                                                                             |   | 19,956                             |       | 12,926 |   |
| Net  increase (decrease) in federal funds purchased and securities sold under  repurchase agreements  |   | 2,813                              |       | (8,084 | ) |
| Proceeds  from issuance of long-term debt, other borrowings and  Federal Home Loan Bank advances |   | 107                                |       | 19,500 |   |
| Payments  on long-term debt, other borrowings and Federal Home Loan Bank advances                     |   | (2,731                             | )          | (8,100 | ) |
| Dividends  paid to stockholders                                                                       |   | (455                               | )          | (381 | ) |
| Proceeds  from issuance of common stock                                                               |   | 37                                 |       | 118 |   |
| Net  cash provided by financing activities                                                            |   | 19,727                             |       | 15,979 |   |
|                                                                                                  |   |                               |       |   |   |
| Net  increase in cash and due from banks                                                              |   | 104                                |       | 886 |   |
|                                                                                                  |   |                               |       |   |   |
| Cash  and due from banks at beginning of period                                                       |   | 18,113                             |       | 18,097 |   |
|                                                                                                  |   |                               |       |   |   |
| Cash  and due from banks at end of period                                                             |   | $                                  | 18,217     |   | $ | 18,983 |   |
|                                                                                                  |   |                               |       |   |   |
| Supplemental  disclosure of cash paid during the period for:                                          |   |                               |       |   |   |
| Interest                                                                                              |   | $                                  | 4,136      |   | $ | 4,608 |   |
| Income  taxes                                                                                         |   | $                                  | 142        |   | $ | 580 |   |

 

See accompanying notes to consolidated financial statements.

 

6

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**GB&T BANCSHARES, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**(Unaudited)**

 

**NOTE 1.**                                                   **BASIS OF PRESENTATION**

** **

The unauditedconsolidated financial statements include the accounts of GB&T Bancshares,Inc. and its wholly-owned banking subsidiaries, Gainesville Bank & Trust,United Bank & Trust, Community Trust Bank and HomeTown Bank of Villa Ricaand its consumer finance company, Community Loan Company (collectively “theCompany”).  Significant intercompanytransactions and balances have been eliminated in consolidation.

 

The accompanyingunaudited consolidated financial statements have been prepared in accordancewith accounting principles generally accepted in the United States of America,for interim financial information and with instructions for Form 10-Q.  Accordingly, they do not include all of theinformation and footnotes required by generally accepted accounting principlesfor complete financial statements.  Inthe opinion of management, all adjustments (consisting of normal and recurringadjustments) considered necessary for a fair presentation have been included.The results of operations for the three month period ended March 31, 2003 isnot necessarily indicative of the results that may be expected for the yearending December 31, 2003.

 

**NOTE2.**                                                 **STOCKCOMPENSATION PLANS**

 

The Company has a stockoption plan for granting of options to directors, officers and employees.  The options may be exercised over a periodof ten years in accordance with vesting schedules determined by the Board ofDirectors.  The Company accounts for theplan under the recognition and measurement principles of APB Opinion No. 25, *Accountingfor**Stock Issued to Employees*, and related Interpretations.  No stock-based employee compensation cost isreflected in net income, as all options granted under the plan had an exerciseprice equal to the market value of the underlying stock on the date ofgrant.  The following table illustratesthe effect on net income and earnings per share if the Company had applied thefair value recognition provisions of SFAS No. 123, *Accounting for Stock-Based Compensation*,to stock-based employee compensation.

 
|                                                                                                                                                |   | **March 31,**               | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                                                                                                |   | **2003**                    |       | **2002** |   |
|                                                                                                                                                |   | **(Dollars  in thousands)** | ** ** |
|                                                                                                                                                |   |                        |       |   |   |
| Net income, as reported                                                                                                                             |   | **$**                       | 1,711      |   | $ | 1,497 |   |
| Deduct:   Total stock-based employee compensation expense determined under fair  value based method for all awards, net of related tax effects |   | 26                          |       | 19 |   |
| Pro forma net income                                                                                                                                |   | $                           | 1,685      |   | $ | 1,478 |   |
| Earnings per share:                                                                                                                                 |   |                        |       |   |   |
| Basic - as reported                                                                                                                                 |   | **$**                       | 0.32       |   | $ | 0.32 |   |
| Basic - pro forma                                                                                                                                   |   | **$**                       | 0.32       |   | $ | 0.32 |   |
| Diluted - as reported                                                                                                                               |   | **$**                       | 0.31       |   | $ | 0.31 |   |
| Diluted - pro forma                                                                                                                                 |   | **$**                       | 0.31       |   | $ | 0.31 |   |

 

Effective February 2003,the Board of Directors adopted the Employee and Director Stock PurchasePlan.  The Bank, serving as custodian,uses funds contributed from employees and directors, matched by the company ata rate of 50%, to purchase shares of the Company’s common stock.  Employees may contribute up to the lesser of$3,500 or 10% of their salary.  TheCompany may amend or terminate the plan at any time.

 

7

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**NOTE3.**                                                 **SUBSEQUENTEVENTS**

** **

On April 28, 2003, theCompany signed a definitive agreement with Baldwin Bancshares, Inc., the parentcompany of First National Bank of the South, Milledgeville, Georgia.  The agreement calls for the exchange of2.895 shares of GB&T Bancshares, Inc. stock for each of the outstandingshares of Baldwin Bancshares, Inc.  Theacquisition is initially valued at $25.9 million and will be accounted for as apurchase.  The acquisition is expectedto be completed no later than early fourth quarter of 2003.

 

**NOTE4.**                                                 **EARNINGS PERCOMMON SHARE**

 

Presented below is a summary of the components used to calculate basicand diluted earnings per share for the three month periods ended March 31, 2003and 2002.

 
|                                                                                                                               |   | **Three months ended March 31,**          | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|------------|
|                                                                                                                               |   | **2003**                                  |       | **2002** | ** ** |
|                                                                                                                               |   | **(in thousands, except per share data)** |       |
| Basic Earnings Per Share:                                                                                                          |   |                                      |       |   |   |
|                                                                                                                               |   |                                      |       |   |   |
| Weighted average common shares outstanding                                                                                         |   | 5,361                                     |       | 4,757 |   |
|                                                                                                                               |   |                                      |       |   |   |
| Net income                                                                                                                         |   | $                                         | 1,711      |   | $ | 1,497 |   |
|                                                                                                                               |   |                                      |       |   |   |
| Basic earnings per share                                                                                                           |   | $                                         | 0.32       |   | $ | 0.32 |   |
|                                                                                                                               |   |                                      |       |   |   |
| Diluted Earnings Per Share:                                                                                                        |   |                                      |       |   |   |
|                                                                                                                               |   |                                      |       |   |   |
| Weighted average common shares outstanding                                                                                         |   | 5,361                                     |       | 4,757 |   |
| Net effect of the assumed exercise of stock Options  based on the treasury stock method Using average market prices for the period |   | 162                                       |       | 115 |   |
| Total weighted average common shares and Common stock  equivalents outstanding                                                     |   | 5,523                                     |       | 4,872 |   |
|                                                                                                                               |   |                                      |       |   |   |
| Net income                                                                                                                         |   | $                                         | 1,711      |   | $ | 1,497 |   |
|                                                                                                                               |   |                                      |       |   |   |
| Diluted earnings per share                                                                                                         |   | $                                         | 0.31       |   | $ | 0.31 |   |

 

8

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**Item 2.****   MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL****CONDITION AND  RESULTS OF OPERATIONS**

** **

The following ismanagement’s discussion and analysis of certain significant factors which haveaffected our financial position and operating results including ourwholly-owned subsidiaries, Gainesville Bank & Trust, United Bank &Trust, Community Trust Bank, HomeTown Bank of Villa Rica and Community LoanCompany during the periods included in the accompanying consolidated financialstatements.

 

**Cautionary Notice RegardingForward-Looking Statements**

** **

Some of the statements inthis Report, including, without limitation, matters discussed under the caption“Management’s Discussion and Analysis of Financial Condition and Results ofOperation,” GB&T Bancshares, Inc. (the “Company”) are “forward-lookingstatements” within the meaning of the federal securities laws.  Forward-looking statements includestatements about the competitiveness of the banking industry, potentialregulatory obligations, our entrance and expansion into other markets, ourother business strategies, our expectations with respect to our allowance forloan losses and impaired loans, and other statements that are not historicalfacts.  When we use words like“anticipate”, “believe”, “intend”, “expect”, “estimate”, “could”, “should”,“will”, and similar expressions, you should consider them as identifyingforward-looking statements, although we may use other phrasing.  These forward-looking statements involverisks and uncertainties and are based on our beliefs and assumptions, and onthe information available to us at the time that these disclosures wereprepared.  Factors that may cause actualresults to differ materially from those expressed or implied by suchforward-looking statements include, among others, the following possibilities:(1) competitive pressures among depository and other financial institutions mayincrease significantly; (2) changes in the interest rate environment may reducemargins; (3) general economic conditions may be less favorable than expected,resulting in, among other things, a deterioration in credit quality and/or areduction in demand for credit; (4) legislative or regulatory changes,including changes in accounting standards, may adversely affect the businessesin which we are engaged; (5) costs or difficulties related to the integrationof our businesses, may be greater than expected; (6) deposit attrition,customer loss or revenue loss following acquisitions may be greater thanexpected; (7) competitors may have greater financial resources and developproducts that enable such competitors to compete more successfully than us; and(8) adverse changes may occur in the equity markets.

 

Many of such factors arebeyond our ability to control or predict, and readers are cautioned not to putundue reliance on such forward-looking statements.  We disclaim any obligation to update or revise anyforward-looking statements contained in this Report, whether as a result of newinformation, future events or otherwise.

 

**Balance Sheets**

** **

Our total assetsincreased $16.0 million or 2.15% for the period ended March 31, 2003 comparedto December 31, 2002.  The increaseconsists primarily of an increase in loans of $19.8 million and an increase infederal funds sold of $4.4 million. This increase is partially offset by decreases in securities of $2.0million and interest-earning deposits of $5.9 million.

 

Total deposits haveincreased $20.0 million, or 3.44% during the period ended March 31, 2003compared to December 31, 2002.  Bothnoninterest-bearing and interest-bearing deposits increased $10 million eachduring the period.   Deposit growth wasslightly ahead of loan growth resulting in a loan to deposit ratio of 93.75% atMarch 31, 2003 compared to 93.55% at December 31, 2002.

 

9

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**Liquidity and Capital Resources**

 

Liquidity managementinvolves the matching of the cash flow requirements of customers who may beeither depositors desiring to withdraw funds or borrowers needing assurancethat sufficient funds will be available to meet their credit needs and ourability to meet those needs.  We seek tomeet liquidity requirements primarily through management of short-terminvestments, monthly amortizing loans, maturing single payment loans, andmaturities of securities and prepayments. Also we maintain relationships with correspondent banks which couldprovide funds on short notice.  As ofMarch 31, 2003, we had borrowed under Federal funds purchase lines andsecurities sold under agreement to repurchase, $14.4 million compared to $11.5million at December 31, 2002.

 

Our liquidity and capitalresources are monitored on a periodic basis by management, State and Federalregulatory authorities.  Managementreviews liquidity on a periodic basis to monitor and adjust liquidity asnecessary.  Management has the abilityto adjust liquidity by selling securities available for sale, sellingparticipations in loans we generate and accessing available funds throughvarious borrowing arrangements.  Ourshort-term investments and available borrowing arrangements are adequate tocover any reasonably anticipated immediate need for funds.

 

Our liquidity ratio was21.22% at March 31, 2003, above our policy minimum ratio of 15%.  Liquidity is measured by the ratio of netcash, Federal funds sold and securities to net deposits and short-termliabilities. In the event the banks need to generate additional liquidity,funding plans would be implemented as outlined in the liquidity policy of thebanks. The subsidiary banks have lines of credit available to meet anyunforeseen liquidity needs.  Also, theBanks have relationships with the Federal Home Loan Bank of Atlanta, whichprovide funding for loan growth on an as needed basis.

** **

We have entered into asales contract to sell a building we own in Hiram, Georgia which was purchasedas part of the merger with Community Trust Financial Services.  The sale is scheduled to close in May 2003.  We anticipate an after tax loss on theproperty of approximately $175,000.   Weexpect this loss to be offset by the termination of the current annualoperating cost of approximately $100,000.

 

We have entered into asales contract to purchase a piece of property in Gainesville, Georgia for thepurpose of locating an operations center for the Company’s operations and dataprocessing.  This contract is scheduledto close in May 2003.  The approximatecost of the property is $1,150,000.   Weanticipate the construction of the operations center to be completed in 2004.

 

10

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As of March 31, 2003, theCompany and the Banks were considered to be well-capitalized as defined in theFDIC Improvement Act and based on regulatory minimum capital requirements.  The Company and its bank subsidiaries’actual capital ratios are presented in the following table.

 
|                                    |   | **ACTUAL** |   | **FOR CAPITAL  ADEQUACY  PURPOSES** | ** ** | **TO BE  WELL  CAPITALIZED** | ** ** |
|-----------------------------------------|--------|------------|--------|-------------------------------------|------------|------------------------------|------------|
|                                    |   |       |   |                                |       |                         |       |
| As of March 31, 2003                    |   |       |   |                                |       |                         |       |
| Total Capital to Risk Weighted Assets:  |   |       |   |                                |       |                         |       |
| Consolidated                            |   | 12.53      | %      | 8                                   | %          | N\A                          |       |
| Gainesville Bank & Trust            |   | 10.29      | %      | 8                                   | %          | 10                           | %          |
| United Bank & Trust                 |   | 12.54      | %      | 8                                   | %          | 10                           | %          |
| Community Trust Bank                    |   | 11.33      | %      | 8                                   | %          | 10                           | %          |
| HomeTown Bank of Villa Rica             |   | 10.89      | %      | 8                                   | %          | 10                           | %          |
| Tier I Capital to Risk Weighted Assets: |   |       |   |                                |       |                         |       |
| Consolidated                            |   | 11.28      | %      | 4                                   | %          | N\A                          |       |
| Gainesville Bank & Trust            |   | 9.17       | %      | 4                                   | %          | 6                            | %          |
| United Bank & Trust                 |   | 11.33      | %      | 4                                   | %          | 6                            | %          |
| Community Trust Bank                    |   | 10.08      | %      | 4                                   | %          | 6                            | %          |
| HomeTown Bank of Villa Rica             |   | 9.64       | %      | 4                                   | %          | 6                            | %          |
| Tier I Capital to Average Assets:       |   |       |   |                                |       |                         |       |
| Consolidated                            |   | 8.89       | %      | 4                                   | %          | N\A                          |       |
| Gainesville Bank & Trust            |   | 7.02       | %      | 4                                   | %          | 5                            | %          |
| United Bank & Trust                 |   | 8.54       | %      | 4                                   | %          | 5                            | %          |
| Community Trust Bank                    |   | 8.10       | %      | 4                                   | %          | 5                            | %          |
| HomeTown Bank of Villa Rica             |   | 7.59       | %      | 4                                   | %          | 5                            | %          |

 

**Results of Operations**

 

Our profitability isdetermined by our ability to effectively manage interest income and expense, tominimize loan and security losses, to generate noninterest income, and tocontrol operating expenses.  Sinceinterest rates are determined by market forces and economic conditions beyondour control, our ability to generate net interest income is dependent upon ourability to obtain an adequate net interest spread between the rate paid oninterest-bearing liabilities and the rate earned on interest-earningassets.  The net interest margin was4.14% for the three months ended March 31, 2003, compared to 4.33% for the sameperiod in 2002, a decrease of 19 basis points. This decrease resulted from a 91 basis point decrease in the yield onearning assets and a 77 basis point decrease in the effective cost offunds.  The decreased yield on earningassets was primarily due to lower yields on loans.  This was largely due to a 50 basis point decrease in the averagePrime rate as compared to the prior year to date.  The decreased effective cost of funds was due to lower averagerates paid on interest-bearing funding.

 

The results of operationsfor the three months ended March 31, 2003, includes HomeTown Bank of Villa Ricawhich became part of the Company in November 2002.  The merger was accounted for as a purchase, therefore results forHTB have been included since November 2002.

 

Net interest incomeincreased $1,498,000 or 27.24% for the three months ended March 31, 2003compared to the same period in 2002. The net increase consists of an increase in interest income of$1,559,000 or 16.59% less an increase in interest expense of $61,000 or 1.56%for the three-month period. The increase in net interest income is due toincreases in volume, primarily in loans.

 

11

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Our provision for loanlosses increased by $31,000 or 16.94% during the three months ended March 31,2003 as compared to the same period in 2002. The analysis below indicates an increase of $149,000 in net charge-offsfor the three months ended March 31, 2003 as compared to the same period in2002.  This increase is primarilyattributable to one loan for $232,000 that was charged off and moved to otherreal estate.  The allowance for loanlosses at March 31, 2003 was $7,438,000 or 1.32% of total loans compared to1.39% at December 31, 2002.  Based onmanagement’s evaluation, the allowance is adequate to absorb any potential loanlosses at March 31, 2003.  The allowancefor loan losses is evaluated monthly and adjusted to reflect the risk in theportfolio.

 

The following tablesummarizes the allowance for loan losses for the three-month period ended March31, 2003 and 2002.

 
|                                                              |   | **2003**                   |        | **2002**   | ** ** |
|-------------------------------------------------------------------|--------|----------------------------|-------------|------------|------------|
|                                                              |   | **(Dollars in Thousands)** | ** **  |
| **Average amount of loans outstanding**                           |   | **$**                      | **555,727** | ** ** | $          | 420,405 |   |
|                                                              |   |                       | ** **  |       |       |
| **Allowance  for loan  losses balance, beginning of period** |   | **$**                      | **7,538**   | ** ** | $          | 5,522 |   |
|                                                              |   |                       | ** **  |       |       |
| **Less charge-offs**                                              |   |                       | ** **  |       |       |
| Commercial loans                                                  |   | **—**                 | ** **  | —     |       |
| Real estate loans                                                 |   | **(232**                   | **)**       | —     |       |
| Consumer  loans                                              |   | **(167**                   | **)**       | (222       | )          |
| Total Charge-offs                                                 |   | **(399**                   | **)**       | (222       | )          |
|                                                              |   |                       | ** **  |       |       |
| **Plus recoveries**                                               |   |                       | ** **  |       |       |
| Commercial loans                                                  |   | **21**                     | ** **  | 1          |       |
| Real estate loans                                                 |   | **1**                      | ** **  | 3          |       |
| Consumer loans                                                    |   | **63**                     | ** **  | 53         |       |
| Total recoveries                                                  |   | **85**                     | ** **  | 57         |       |
| **Net charge-offs**                                               |   | **(314**                   | **)**       | (165       | )          |
|                                                              |   |                       | ** **  |       |       |
| **Plus provision for loan losses**                                |   | **214**                    | ** **  | 183        |       |
|                                                              |   |                       | ** **  |       |       |
| **Allowance for loan losses balance, end of period**              |   | **$**                      | **7,438**   | ** ** | $          | 5,540 |   |
|                                                              |   |                       | ** **  |       |       |
| **Net charge-offs to average loans**                              |   | **0.057**                  | **%**       | 0.039      | %          |
|                                                                   |        |                            |             |            |            |  |  |  |

 

12

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The following table is asummary of nonaccrual, past due and restructured loans. The numbers indicate anincrease of $3,376,000 in nonaccrual loans which consists of one loan for$1,408,000 and seven additional loans totaling $1,264,000 all which are securedby real estate.  The Company believesthere is sufficient collateral to cover these loans, therefore losses are expectedto be minimal to none.  Approximately61%, or $437,000 of the nonaccrual consumer loan balance at March 31, 2003, isrelated to Community Loan Company, our consumer finance company.  The table presents an increase of $13,000 inpast due loans over 90 days.  Themajority of this increase is related to Community Loan Company, which accountsfor approximately 74%, or $334,000 of the past due loan balance at March 31,2003.  Due to the nature of the consumerfinance business, the level of nonaccrual loans and past due loans over 90 daysis normal and will consistently remain higher than those seen in the otherbanking affiliates.  Community LoanCompany’s allowance for loan loss to total loans is also higher to cover thesehigher levels of nonaccrual and past due loans.

 
|              |   | **March 31, 2003**         |       |
|-------------------|--------|----------------------------|------------|
|              |   | **Nonaccrual  Loans**      |       | **Past Due  90 Days  Still Accruing** | ** ** | **Restructured  Loans** | ** ** |
|              |   | **(Dollars in Thousands)** | ** ** |
|              |   |                       |       |   |   |   |   |
| Real estate loans |   | $                          | 3,104      |   | $ | 83 |   | $ | — |   |
| Commercial loans  |   | 288                        |       | 9 |   | — |   |
| Consumer loans    |   | 718                        |       | 357 |   | — |   |
| Total             |   | $                          | 4,110      |   | $ | 449 |   | $ | — |   |
|              |   |                       |       |   |   |   |   |
|              |   | **March 31, 2002**         | ** ** |
|              |   | **Nonaccrual  Loans**      |       | **Past Due  90 Days  Still Accruing** | ** ** | **Restructured  Loans** | ** ** |
|              |   | **(Dollars in Thousands)** | ** ** |
|              |   |                       |       |   |   |   |   |
| Real estate loans |   | $                          | 103        |   | $ | 93 |   | $ | — |   |
| Commercial loans  |   | 50                         |       | — |   | 14 |   |
| Consumer loans    |   | 581                        |       | 343 |   | — |   |
| Total             |   | $                          | 734        |   | $ | 436 |   | $ | 14 |   |

 

Our policy is todiscontinue the accrual of interest income when, in the opinion of management,collection of such interest becomes doubtful. This status is determined when; (1) there is a significant deteriorationin the financial condition of the borrower and full repayment of principal andinterest is not expected; or (2) the principal or interest is more than 90 dayspast due, unless the loan is both well-secured and in the process ofcollection.  Accrual of interest on suchloans is resumed when, in management’s judgment, the collection of interest andprincipal becomes probable.

 

Loans classified forregulatory purposes as loss, doubtful, substandard, or special mention thathave not been included in the table above do not represent or result fromtrends or uncertainties which management reasonably expects will materiallyimpact future operating results, liquidity or capital resources.  These classified loans do not representmaterial credits about which management is aware of any information whichcauses management to have serious doubts as to the ability of such borrowers tocomply with their loan repayment terms.

 

13

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Other income for thethree months ended March 31, 2003, increased by $470,000 or 24.97% compared tothe same period in 2002.  Servicecharges increased by $263,000 and mortgage origination fees increased by$253,000. This increase was partially offset by a decrease in gain on sale ofsecurities of $109,000.  Mortgageorigination fees increased as a result of refinancing activity spurred by thecontinued decline in mortgage rates.

 

Other expenses increasedby approximately $1,802,000 or 36.05% for the three months ended March 31, 2003compared to the same period in 2002. The increase is due primarily to an increase in salaries and employeebenefits of $1,168,000, an increase in net occupancy and equipment expense of$239,000, an increase in marketing and public relations of $53,000 and anincrease of $83,000 in supplies, postage and telephone.  The increase in salaries and employeebenefits is partially due to HTB, which accounted for $491,000 of the increaseand also an increase of 31 employees, exclusive of HTB, as of March 31, 2003compared to the same period in 2002.

 

Income tax expensedecreased by $80,000 for the three-month period ended March 31, 2003, comparedto the same period last year. The effective tax rate for the period ended March31, 2003 was 26.69%, compared to 31.92% for the same period in 2002.  The decrease in the effective tax rate isprimarily due to the tax effect of the net operating loss carryforward at HTB.

 

Net income increased by$214,000 or 14.30%, for the three months ended March 31, 2003 compared to thesame period in 2002.

 

We are not aware of anyother known trends, events or uncertainties, other than the effect of anyevents described above, that will have or that are reasonably likely to have amaterial effect on its liquidity, capital resources or operations.  We are not aware of any currentrecommendations by the regulatory authorities, which, if they were implemented,would have such an effect.

 

14

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**Item 3.****   QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

** **

Our net interest incomeand the fair value of our financial instruments (interest earning assets andinterest bearing liabilities) are influenced by changes in market interestrates. We actively manage our exposure to interest rate fluctuations throughpolicies established by the Asset/Liability Management Committee (the “ALCO”).The ALCO meets regularly and is responsible for approving asset/liabilitymanagement policies, developing and implementing strategies to improve balancesheet positioning and net interest income and assessing the interest ratesensitivity of the Banks.  See “Item 7A”of the Company’s Annual Report on Form 10-K for a more complete discussion.

 

**Item 4.****   CONTROLSAND PROCEDURES**

** **

Within 90 days prior tothe date of filing of this report, we carried out an evaluation, under thesupervision and with the participation of our Chief Executive Officer and theChief Financial Officer, of the design and operation of our disclosure controlsand procedures.  Based on thisevaluation, our Chief Executive Officer and Chief Financial Officer concludedthat our disclosure controls and procedures are effective for gathering,analyzing and disclosing the information that we are required to disclose inthe reports we file under the Securities Exchange Act of 1934, within the timeperiods specified in the SEC’s rules and forms.  Our Chief Executive Officer and Chief Financial Officer alsoconcluded that our disclosure controls and procedures are effective in timelyalerting them to material information relating to our company required to beincluded in our periodic SEC filings. In connection with the rules, we continually review and document ourdisclosure controls and procedures, including our internal controls andprocedures for financial reporting, and may from time to time make changesdesigned to enhance their effectiveness and to ensure that our systems evolvewith our business.

 

There have been nosignificant changes in our internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of thisevaluation.

 

**PARTII****- OTHER INFORMATION**

 

**Item 6.****    Exhibitsand Reports on Form 8-K**

** **

(a)         Reportson Form 8-K

 

We did not file areport on Form 8-K during the quarter ending March 31, 2003.

 

(b)        Exhibits

 

99.1         Section906 Certification of CEO

99.2         Section906 Certification of CFO

 

15

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized.

 

 
| GB&T BANCSHARES,  INC. |       |
|----------------------------|------------|
|                       |       |
|                       |       |
| DATE:                      | 05/14/2003 |   | BY: | /s/ Richard A. Hunt |   |
|                       |       |   |   | Richard A. Hunt  President and Chief Executive Officer |
|                       |       |   |   |   |
|                       |       |   |   |   |
| DATE:                      | 05/14/2003 |   | BY: | /s/ Gregory L. Hamby |   |
|                       |       |   |   | Gregory L. Hamby  Executive Vice President &  Chief Financial Officer |
|                            |            |  |  |  |  |  |

 

16

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**Certificate****pursuant toSection 302 of the Sarbanes-Oxley Act of 2002**

** **

# **I,Richard A. Hunt, certify that:**

# ** **

1.               I have reviewed this quarterly report on Form 10-Q of GB&T Bancshares,Inc.;

 

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

 

3.               Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.               Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b)             evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of a datewithin 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)              presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a)              allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b)             anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.               Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

 
| Date:  | May 14, 2003                             |   |   |
|-------------|------------------------------------------|--------|--------|
|        |                                     |
|        |                                     |
|        | /s/ Richard A. Hunt                      |   |
|        | Richard A. Hunt  Chief Executive Officer |

 

17

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**Certificate pursuant to Section 302of the Sarbanes-Oxley Act of 2002**

** **

# **I,Gregory L. Hamby, certify that:**

# ** **

1.               I have reviewedthis quarterly report on Form 10-Q of GB&T Bancshares, Inc.;

 

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

 

3.               Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.               Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b)             evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c)              presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

c)              allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

d)             anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.               Theregistrant’s other certifying officers and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

 
| Date:  | May 14, 2003                              |   |   |
|-------------|-------------------------------------------|--------|--------|
|        |                                      |
|        |                                      |
|        | /s/ Gregory L. Hamby                      |   |
|        | Gregory L. Hamby  Chief Financial Officer |

 

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