** **

**UNITED STATES SECURITIES ANDEXCHANGE 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  September 30, 2002**                                                                                                                  |
|         |   |                                                                                                                                                                    |
| 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&T  Bancshares, Inc.**                                    |
|-------------------------------------------------------------------|
| (Exact name of registrant 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 ofprincipal executive offices)

 

**(770) 532-1212**

(Registrant’stelephone 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

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

State the numberof shares outstanding of each of the issuer’s classes of common stock, as ofNovember 8, 2002:    4,770,311 shares;no par value

** **

 

----

 

**GB&T BANCSHARES, INC.**

** **

**TABLE OF CONTENTS**

 
|         |                                                                                                          |                                                                                                                             |   |   |   |
|--------------|---------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| **PART I.**  | **FINANCIAL INFORMATION**                                                                                     |                                                                                                                             |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         | **Item 1.  FINANCIAL STATEMENTS**                                                                        |                                                                                                                             |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **Consolidated Balance Sheets  – September 30, 2002 (Unaudited)   and December 31, 2001**                              |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **Consolidated  Statements of Income (Unaudited)-  Three and nine months ended  September 30, 2002 and 2001**               |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **Consolidated  Statements of Comprehensive Income (Unaudited)-  Three and nine months ended  September 30, 2002 and 2001** |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **Consolidated  Statements of Stockholders’ Equity (Unaudited)   Nine months ended September 30, 2002**                |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **Consolidated  Statements of Cash Flows (Unaudited) -  Nine months ended September 30, 2002  and 2001**                    |   |   |
|         |                                                                                                          |                                                                                                                             |   |   |   |
|         |                                                                                                          | **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

----

 

**PART I - FINANCIAL INFORMATION**

**ITEM 1 -FINANCIAL STATEMENTS**

** **

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

**Consolidated Balance Sheets**

**(Unaudited)**

 
|                                                                                                                      |   | **September  30,   2002**                      |    | **December  31,   2001** |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------------------------|--------|
|                                                                                                                      |   | **(amounts in thousands,  except share data)** |    |
| Assets                                                                                                                    |   |                                           |    |                     |   |
| Cash and due  from banks                                                                                                  |   | $                                              | 16,718  |                     | $      | 18,097 |   |
| Interest-bearing  deposits in banks                                                                                       |   | 2,527                                          |    | 1,087                    |   |
| Federal funds  sold                                                                                                       |   | 18,343                                         |    | 24                       |   |
| Securities  available for sale, at fair value                                                                             |   | 84,243                                         |    | 86,204                   |   |
| Restricted  equity securities                                                                                             |   | 3,463                                          |    | 2,992                    |   |
|                                                                                                                      |   |                                           |    |                     |   |
| Loans, net of  unearned income                                                                                            |   | 451,490                                        |    | 418,656                  |   |
| Less allowance  for loan losses                                                                                           |   | 5,789                                          |    | 5,522                    |   |
| Loans, net                                                                                                                |   | 445,701                                        |    | 413,134                  |   |
| Premises and  equipment                                                                                                   |   | 16,042                                         |    | 14,807                   |   |
| Other assets                                                                                                              |   | 12,409                                         |    | 11,251                   |   |
| **Total assets**                                                                                                          |   | $                                              | 599,446 |                     | $      | 547,596 |   |
|                                                                                                                      |   |                                           |    |                     |   |
| Liabilities and  Stockholders’ Equity                                                                                |   |                                           |    |                     |   |
| Liabilities:                                                                                                              |   |                                           |    |                     |   |
| Deposits:                                                                                                                 |   |                                           |    |                     |   |
| Noninterest-bearing  demand deposits                                                                                      |   | $                                              | 63,202  |                     | $      | 54,393 |   |
| Interest-bearing  deposits                                                                                                |   | 406,214                                        |    | 372,365                  |   |
| Total deposits                                                                                                            |   | 469,416                                        |    | 426,758                  |   |
|                                                                                                                      |   |                                           |    |                     |   |
| Federal funds  purchased and securities sold Under repurchase agreements                                                  |   | 14,389                                         |    | 19,707                   |   |
| Federal Home  Loan Bank advances                                                                                          |   | 57,026                                         |    | 47,551                   |   |
| Other borrowings                                                                                                          |   | 4,822                                          |    | 2,911                    |   |
| Accrued expenses  and other liabilities                                                                                   |   | 4,483                                          |    | 5,895                    |   |
| **Total liabilities**                                                                                                     |   | 550,136                                        |    | 502,822                  |   |
|                                                                                                                      |   |                                           |    |                     |   |
| Stockholders’  Equity:                                                                                               |   |                                           |    |                     |   |
| Capital Stock-no  par value. Authorized 20,000,000 Shares;  issued and outstanding 4,769,155 shares at September 30, 2002 |   | 25,807                                         |    | —                   |   |
| Common Stock-$5  par value. Authorized 20,000,000 shares;  issued and outstanding 4,739,139 shares at December 31, 2001   |   | —                                         |    | 23,696                   |   |
| Capital surplus                                                                                                           |   | —                                         |    | 1,894                    |   |
| Retained  earnings                                                                                                        |   | 21,518                                         |    | 18,198                   |   |
| Accumulated  other comprehensive income, net of tax                                                                       |   | 1,985                                          |    | 986                      |   |
| **Total stockholders’ equity**                                                                                       |   | 49,310                                         |    | 44,774                   |   |
| **Total  liabilities and stockholders’ equity**                                                                      |   | $                                              | 599,446 |                     | $      | 547,596 |   |

 

See accompanying notes to consolidated financial statements.

 

3

----

** **

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

**Consolidated Statements of Income**

**(Unaudited)**

 
|                                                                       |   | **Three months  ended   September 30,**            |   | **Nine  months ended   September 30,**              |   |
|----------------------------------------------------------------------------|--------|----------------------------------------------------|--------|-----------------------------------------------------|--------|
|                                                                       |   | **2002**                                           |   | **2001**                                            |   | **2002** |   | **2001** |   |
|                                                                       |   | **(amounts in thousands, except per  share data)** |   | **(amounts in thousands, except per   share data)** |   |
| Interest income:                                                           |   |                                               |   |                                                |   |   |   |   |   |
| Loans, including  fees                                                     |   | $                                                  | 8,604  |                                                | $      | 9,048 |   | $ | 25,220 |   | $ | 28,154 |   |
| Investment  securities:                                                    |   |                                               |   |                                                |   |   |   |   |   |
| Taxable                                                                    |   | 948                                                |   | 1,089                                               |   | 2,938 |   | 3,296 |   |
| Nontaxable                                                                 |   | 173                                                |   | 179                                                 |   | 526 |   | 541 |   |
| Federal funds  sold                                                        |   | 30                                                 |   | 150                                                 |   | 69 |   | 395 |   |
| Interest-bearing  deposits in banks                                        |   | 7                                                  |   | 21                                                  |   | 25 |   | 46 |   |
| Total interest  income                                                     |   | 9,762                                              |   | 10,487                                              |   | 28,778 |   | 32,432 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Interest  expense:                                                         |   |                                               |   |                                                |   |   |   |   |   |
| Deposits                                                                   |   | 2,738                                              |   | 4,374                                               |   | 8,627 |   | 13,862 |   |
| Federal funds  purchased and securities sold   under repurchase agreements |   | 57                                                 |   | 91                                                  |   | 190 |   | 375 |   |
| Federal Home  Loan Bank advances                                           |   | 743                                                |   | 702                                                 |   | 2,193 |   | 2,096 |   |
| Other borrowings                                                           |   | 38                                                 |   | 42                                                  |   | 92 |   | 140 |   |
| Total interest  expense                                                    |   | 3,576                                              |   | 5,209                                               |   | 11,102 |   | 16,473 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Net interest  income                                                       |   | 6,186                                              |   | 5,278                                               |   | 17,676 |   | 15,959 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Provision for  loan losses                                                 |   | 202                                                |   | 230                                                 |   | 589 |   | 1,038 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Net interest  income after provision for loan losses                       |   | 5,984                                              |   | 5,048                                               |   | 17,087 |   | 14,921 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Other income:                                                              |   |                                               |   |                                                |   |   |   |   |   |
| Service charges  on deposit accounts                                       |   | 852                                                |   | 775                                                 |   | 2,610 |   | 2,365 |   |
| Mortgage  origination fees                                                 |   | 429                                                |   | 260                                                 |   | 964 |   | 658 |   |
| Insurance  commissions                                                     |   | 152                                                |   | 194                                                 |   | 447 |   | 519 |   |
| Net gain (loss)  on sale of securities                                     |   | 33                                                 |   | 38                                                  |   | 170 |   | 35 |   |
| Other operating  income                                                    |   | 444                                                |   | 293                                                 |   | 1,208 |   | 885 |   |
| Total other  income                                                        |   | 1,910                                              |   | 1,560                                               |   | 5,399 |   | 4,462 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Other expense:                                                             |   |                                               |   |                                                |   |   |   |   |   |
| Salaries and  employee benefits                                            |   | 3,178                                              |   | 2,627                                               |   | 9,102 |   | 8,803 |   |
| Net occupancy  and equipment expense                                       |   | 843                                                |   | 780                                                 |   | 2,414 |   | 2,464 |   |
| Other operating  expenses                                                  |   | 1,595                                              |   | 1,226                                               |   | 4,304 |   | 4,239 |   |
| Total other  expense                                                       |   | 5,616                                              |   | 4,633                                               |   | 15,820 |   | 15,506 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Income before  income taxes                                                |   | 2,278                                              |   | 1,975                                               |   | 6,666 |   | 3,877 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Income tax  expense                                                        |   | 744                                                |   | 670                                                 |   | 2,156 |   | 1,345 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Net income                                                                 |   | $                                                  | 1,534  |                                                | $      | 1,305 |   | $ | 4,510 |   | $ | 2,532 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Earnings per  share:                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Basic                                                                      |   | $                                                  | 0.32   |                                                | $      | 0.28 |   | $ | 0.95 |   | $ | 0.54 |   |
| Diluted                                                                    |   | $                                                  | 0.31   |                                                | $      | 0.27 |   | $ | 0.92 |   | $ | 0.52 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Weighted average  shares                                                   |   |                                               |   |                                                |   |   |   |   |   |
| Basic                                                                      |   | 4,767                                              |   | 4,674                                               |   | 4,762 |   | 4,663 |   |
| Diluted                                                                    |   | 4,918                                              |   | 4,873                                               |   | 4,903 |   | 4,864 |   |
|                                                                       |   |                                               |   |                                                |   |   |   |   |   |
| Cash dividends  per common share                                           |   | $                                                  | 0.085  |                                                | $      | 0.080 |   | $ | 0.250 |   | $ | 0.230 |   |

 

See accompanying notes to consolidated financial statements.

 

4

----

 

**GB&TBANCSHARES, INC. AND SUBSIDIARIES**

**Consolidated Statements of Comprehensive Income**

 
|                                                                                                       |   | **Three months ended September 30,** |       | **Nine months ended September 30,** | ** ** |
|------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|-------------------------------------|------------|
|                                                                                                       |   | **2002**                             |       | **2001**                            |       | **2002** |   | **2001** | ** ** |
|                                                                                                       |   | **(Dollars in thousands)**           | ** ** |
|                                                                                                       |   | **(unaudited)**                      |       |
|                                                                                                       |   |                                 |       |
| **Net Income**                                                                                             |   | $                                    | 1,534      |                                | $          | 1,305 |   | $ | 4,510 |   | $ | 2,532 |   |
|                                                                                                       |   |                                 |       |                                |       |   |   |   |   |
| Unrealized gains on securities available-for-sale arising during  period, net of tax                       |   | 622                                  |       | 759                                 |       | 1,104 |   | 1,393 |   |
|                                                                                                       |   |                                 |       |                                |       |   |   |   |   |
| Reclassification adjustment for gains realized on securities  available-for-sale in net income, net of tax |   | (20                                  | )          | (24                                 | )          | (105 | ) | (22 | ) |
|                                                                                                       |   |                                 |       |                                |       |   |   |   |   |
| Other comprehensive income                                                                                 |   | 602                                  |       | 735                                 |       | 999 |   | 1,371 |   |
|                                                                                                       |   |                                 |       |                                |       |   |   |   |   |
| **Comprehensive  income**                                                                                  |   | $                                    | 2,136      |                                | $          | 2,040 |   | $ | 5,509 |   | $ | 3,903 |   |

 

**Consolidated Statements ofStockholders’ Equity**

**Nine Months Ended September 30, 2002**

** **

**(Amounts inthousands)**

**(unaudited)**

** **
|                                       |   |          |       | **Capital  Stock** |       | **Capital  Surplus** |       | **Retained  Earnings** |       | **Accumulated  Other Comprehensive  Income** |       | **Total  Stockholders’  Equity** | ** ** |
|--------------------------------------------|--------|---------------|------------|--------------------|------------|----------------------|------------|------------------------|------------|----------------------------------------------|------------|---------------------------------------|------------|
|                                       |
| **Common Stock**                           |
| **Shares**                                 |   | **Par Value** |
|                                       |   |          | ** ** |               | ** ** |                 | ** ** |                   | ** ** |                                         | ** ** |                                  | ** ** |   | ** ** |
| Balance, December 31, 2001                 |   | 4,739         |       | $                  | 23,696     |                 | $          | —                 |       | $                                            | 1,894      |                                  | $          | 18,198 |   | $ | 986 |   | $ | 44,774 |   |
|                                       |   |          |       |               |       |                 |       |                   |       |                                         |       |                                  |       |   |   |
| Net income                                 |   | —        |       | —             |       | —               |       | —                 |       | 4,510                                        |       | —                                |       | 4,510 |   |
|                                       |   |          |       |               |       |                 |       |                   |       |                                         |       |                                  |       |   |   |
| Options excercised                         |   | 30            |       | 111                |       | 88                   |       | 18                     |       | —                                       |       | —                                |       | 217 |   |
| Dividends declared $0.25 per share         |   | —        |       | —             |       | —               |       | —                 |       | (1,190                                       | )          | —                                |       | (1,190 | ) |
|                                       |   |          |       |               |       |                 |       |                   |       |                                         |       |                                  |       |   |   |
| Other comprehensive income                 |   | —        |       | —             |       | —               |       | —                 |       | —                                       |       | 999                                   |       | 999 |   |
|                                       |   |          |       |               |       |                 |       |                   |       |                                         |       |                                  |       |   |   |
| Reclassification of stock to no par stock* |   | —        |       | (23,807            | )          | 25,719               |       | (1,912                 | )          | —                                       |       | —                                |       | — |   |
|                                       |   |          |       |               |       |                 |       |                   |       |                                         |       |                                  |       |   |   |
| Balance, September 30, 2002                |   | 4,769         |       | $                  | —     |                 | $          | 25,807                 |       | $                                            | —     |                                  | $          | 21,518 |   | $ | 1,985 |   | $ | 49,310 |   |

 

----

* Effective June 30, 2002, the Company changed its common stock from $5par value to no par value.

 

5

----

 

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

**Condensed Consolidated Statements of Cash Flows**

**(Unaudited)**

 
|                                                                                             |   | **Nine  months ended   September 30,** |   |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                             |   | **2002**                               |   | **2001** |   |
|                                                                                             |   | **(amounts in thousands)**             |   |
| **Operating  Activities**                                                                        |   |                                   |   |   |   |
| Net income                                                                                       |   | $                                      | 4,510  |   | $ | 2,532 |   |
| Adjustments to  reconcile net income to net cash                                                 |   |                                   |   |   |   |
| Provided by  operating activities:                                                               |   |                                   |   |   |   |
| Depreciation                                                                                     |   | 1,078                                  |   | 989 |   |
| Provision for  loan losses                                                                       |   | 387                                    |   | 1,038 |   |
| Amortization and  (accretion), net                                                               |   | 126                                    |   | 75 |   |
| Securities  (gains) losses, net                                                                  |   | (170                                   | )      | (35 | ) |
| Net (increase)  decrease in other assets                                                         |   | (2,207                                 | )      | 895 |   |
| Net decrease in  other liabilities                                                               |   | (1,412                                 | )      | (306 | ) |
| Net cash  provided by operating activities                                                       |   | 2,312                                  |   | 5,188 |   |
|                                                                                             |   |                                   |   |   |   |
| **Investing  Activities**                                                                        |   |                                   |   |   |   |
| Purchase of  investment securities available for sale                                            |   | (26,802                                | )      | (42,594 | ) |
| Purchase of Federal  Home Loan Bank stock                                                        |   | (1,766                                 | )      | — |   |
| Proceeds from  sales of investment securities available for sale                                 |   | 17,345                                 |   | 10,772 |   |
| Principal  collections and maturities of investment securities available for sale                |   | 14,303                                 |   | 25,950 |   |
| Net increase in  interest-bearing deposits in other banks                                        |   | (1,440                                 | )      | (983 | ) |
| Net (increase)  decrease in federal funds sold                                                   |   | (18,319                                | )      | 384 |   |
| Net increase in  loans                                                                           |   | (32,835                                | )      | (19,227 | ) |
| Proceeds from  sales of real estate acquired through foreclosure                                 |   | 383                                    |   | 20 |   |
| Purchases of  premises and equipment                                                             |   | (2,313                                 | )      | (2,561 | ) |
| Net cash used in  investing activities                                                           |   | (51,444                                | )      | (28,239 | ) |
|                                                                                             |   |                                   |   |   |   |
| **Financing  Activities**                                                                        |   |                                   |   |   |   |
| Net increase in  deposits                                                                        |   | 42,658                                 |   | 29,159 |   |
| Net decrease in  federal funds purchased and securities sold under repurchase agreements         |   | (5,318                                 | )      | (7,778 | ) |
| Proceeds from  issuance of long-term debt, other borrowings and Federal Home Loan Bank  advances |   | 19,689                                 |   | 4,532 |   |
| Payments on  long-term debt, other borrowings and Federal                                        |   |                                   |   |   |   |
| Home Loan Bank  advances                                                                         |   | (8,303                                 | )      | (779 | ) |
| Dividends paid  to stockholders                                                                  |   | (1,190                                 | )      | (979 | ) |
| Proceeds from  issuance of common stock                                                          |   | 217                                    |   | 319 |   |
| Net cash  provided by financing activities                                                       |   | 47,753                                 |   | 24,474 |   |
|                                                                                             |   |                                   |   |   |   |
| Net increase  (decrease) in cash and due from banks                                              |   | (1,379                                 | )      | 1,423 |   |
|                                                                                             |   |                                   |   |   |   |
| Cash and due  from banks at beginning of period                                                  |   | 18,097                                 |   | 16,332 |   |
|                                                                                             |   |                                   |   |   |   |
| Cash and due  from banks at end of period                                                        |   | $                                      | 16,718 |   | $ | 17,755 |   |
|                                                                                             |   |                                   |   |   |   |
| Supplemental  disclosure of cash paid during the period for:                                     |   |                                   |   |   |   |
| Interest                                                                                         |   | $                                      | 12,867 |   | $ | 16,502 |   |
| Income taxes                                                                                     |   | $                                      | 2,771  |   | $ | 1,380 |   |

 

See accompanying notes to consolidated financial statements.

 

6

----

** **

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

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE1.        BASIS OF PRESENTATION**

** **

The unaudited consolidated financial statementsinclude the accounts of GB&T Bancshares, Inc. and its wholly ownedsubsidiaries, Gainesville Bank & Trust, United Bank & Trust, CommunityTrust Bank and Community Loan Company (collectively “the Company”).

 

The accompanying unaudited consolidated financialstatements have been prepared in accordance with accounting principlesgenerally accepted in the United States of America, for interim financialinformation and with instructions for Form 10-Q.  Accordingly, they do not include all of the information andfootnotes required by generally accepted accounting principles for completefinancial statements.  In the opinion ofmanagement, all adjustments (consisting of normal and recurring adjustments)considered necessary for a fair presentation have been included. The results ofoperations for the three and nine-month periods ended September 30, 2002 is notnecessarily indicative of the results that may be expected for the year endingDecember 31, 2002.

 

 

**NOTE 2.        MERGERAGREEMENT WITH HOME TOWN BANK OF VILLA RICA**

** **

Effective June 13, 2002, the Company entered into anagreement and Plan of Reorganization (“the Agreement”) to merge Home Town Bankof Villa Rica, Villa Rica, Georgia, into GB&T Bancshares, Inc.  Terms of the agreement call for eachshareholder of Home Town Bank of Villa Rica to receive either $18.00 in cash or1.0588 shares of GB&T capital stock for each share of Home Town Bank ofVilla Rica common stock or a combination of the two.  The total cash consideration for conversion of all of the HomeTown Bank of Villa Rica shares is subject to an overall limit of 50percent.  The merger has been approvedby the regulators and shareholders of Home Town Bank of Villa Rica and isexpected to close effective November 30, 2002.

 

**NOTE3.        NEW ACCOUNTING PRONOUCEMENTS**

 

In June 2001, the Financial Accounting Standards Boardissued Statement of Financial Accounting Standards ("SFAS") No. 141,Business Combinations and SFAS No. 142, Goodwill and other Intangible Assets.SFAS No. 141 requires that all business combinations entered into after June30, 2001 be accounted for under the purchase method. SFAS No. 142 requires thatall intangible assets, including goodwill that results from business combinations,be periodically (at least annually) evaluated for impairment, with anyresulting impairment loss being charged against earnings. Also, under SFAS No.142, goodwill resulting from any business combination accounted for accordingto SFAS No. 141 will not be amortized, and the amortization of goodwill relatedto business combinations entered into prior to June 30, 2001 will bediscontinued effective, for the Company, January 1, 2002. The adoption of theprovisions of SFAS No. 141 and SFAS 142 has not affected the Company'sfinancial statements except for the suspension of the amortization of goodwillrelated to the acquisition of Community Loan Company in the second quarter of2001.  Amortization expense for the ninemonths ended September 30, 2002 was $0 compared to $49,000 for the nine monthsended September 30, 2001.

 

 

7

----

 

**NOTE 4.       EARNINGS PER COMMON SHARE**(in thousands, except pershare data)

 

 Presented below is a summary of the components used to calculatebasic and diluted earnings per share for the three and nine month periods endedSeptember 30, 2002 and 2001.

 
|                                                                                                                                |   | **Quarters ended September 30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                                                                |   | **2002**                         |   | **2001** |   |
| Basic Earnings Per Share:                                                                                                           |   |                             |   |   |   |
| Weighted average common shares outstanding                                                                                          |   | 4,767                            |   | 4,674 |   |
|                                                                                                                                |   |                             |   |   |   |
| Net income                                                                                                                          |   | $                                | 1,534  |   | $ | 1,305 |   |
|                                                                                                                                |   |                             |   |   |   |
| Basic earnings per share                                                                                                            |   | $                                | 0.32   |   | $ | 0.28 |   |
|                                                                                                                                |   |                             |   |   |   |
| Diluted Earnings Per Share:                                                                                                         |   |                             |   |   |   |
| Weighted average common shares outstanding                                                                                          |   | 4,767                            |   | 4,674 |   |
| Net effect of the assumed exercise of stock  Options based on the treasury stock method  Using average market prices for the period |   | 151                              |   | 199 |   |
| Total weighted average common shares and Common stock equivalents  outstanding                                                      |   | 4,918                            |   | 4,873 |   |
|                                                                                                                                |   |                             |   |   |   |
| Net income                                                                                                                          |   | $                                | 1,534  |   | $ | 1,305 |   |
|                                                                                                                                |   |                             |   |   |   |
| Diluted earnings per share                                                                                                          |   | $                                | 0.31   |   | $ | 0.27 |   |

 
|                                                                                                                                  |   | **Nine Months ended September 30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                  |   | **2002**                            |   | **2001** |   |
| Basic Earnings Per Share:                                                                                                             |   |                                |   |   |   |
| Weighted average common shares outstanding                                                                                            |   | 4,762                               |   | 4,663 |   |
|                                                                                                                                  |   |                                |   |   |   |
| Net income                                                                                                                            |   | $                                   | 4,510  |   | $ | 2,532 |   |
|                                                                                                                                  |   |                                |   |   |   |
| Basic earnings per share                                                                                                              |   | $                                   | 0.95   |   | $ | 0.54 |   |
|                                                                                                                                  |   |                                |   |   |   |
| Diluted Earnings Per Share:                                                                                                           |   |                                |   |   |   |
| Weighted average common shares outstanding                                                                                            |   | 4,762                               |   | 4,663 |   |
| Net effect of the assumed exercise of stock   Options based on the treasury stock method   using average market prices for the period |   | 141                                 |   | 201 |   |
| Total weighted average common shares and   Common stock equivalents outstanding                                                       |   | 4,903                               |   | 4,864 |   |
|                                                                                                                                  |   |                                |   |   |   |
| Net income                                                                                                                            |   | $                                   | 4,510  |   | $ | 2,532 |   |
|                                                                                                                                  |   |                                |   |   |   |
| Diluted earnings per share                                                                                                            |   | $                                   | 0.92   |   | $ | 0.52 |   |

 

8

----

 

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

** **
| **Item  2****.** |   | **MANAGEMENT’S DISCUSSION  AND ANALYSIS OF FINANCIAL****CONDITION AND RESULTS OF****OPERATIONS** |
|------------------|--------|-------------------------------------------------------------------------------------------------------|

** **

The following is management’s discussion and analysisof certain significant factors which have affected our financial position andoperating results including our wholly-owned subsidiaries, Gainesville Bank& Trust, United Bank & Trust, Community Trust Bank and Community LoanCompany during the periods included in the accompanying consolidated financialstatements.

 

**Forward-Looking Statements**

 

Some of thestatements made in this quarterly report (and in other documents to which werefer) are “forward-looking statements.” When used in this document, the words, “anticipate,” “believe,”“estimate,” and similar expressions generally identify forward-lookingstatements.  These statements are basedon the beliefs, assumptions, and expectations of our management, and oninformation currently available to those members of management.  They are expressions of historical fact, notguarantees of future performance. Forward-looking statements include information concerning possible orassumed future results of our operations.

 

Forward-lookingstatements involve risks, uncertainties, and assumptions, and certain factorscould cause actual results to differ from results expressed or implied by theforward-looking statements, including:

 

1.                       economicconditions (both generally and in the markets where we operate);

2.                       competitionfrom other companies that provide financial services similar to those we offer;

3.                       governmentregulation and legislation;

4.                       changesin interest rates; and

5.                       unexpectedchanges in the financial stability and liquidity of our credit customers.

 

We believe theseforward-looking statements are reasonable. You should not, however, place undue reliance on these forward-lookingstatements, because the future results and stockholder values of the Companymay differ materially from those expressed or implied by these forward-lookingstatements.

 

**FinancialCondition**

 

We reported consolidated total assets of $599 millionat September 30, 2002 compared to $548 million at December 31, 2001,representing an increase of $51 million or 9.3%.  We continued to experience growth in total assets, loans anddeposits during the nine months ended September 30, 2002. Total loans increasedby $32 million or 7.6% for the nine months ended September 30, 2002.  Total deposits increased $42 million or 9.8%for the nine months ended September 30, 2002. Deposit growth outpaced loan growth during the period resulting in aloan to deposit ratio of 96.2%, down slightly from 98.1% at December 31, 2001.

** **

 

9

----

** **

**Liquidityand Capital Resources**

 

Liquidity management involves the matching of the cashflow requirements of customers who may be either depositors desiring towithdraw funds or borrowers needing assurance that sufficient funds will beavailable to meet their credit needs and our ability to meet those needs.  We seek to meet liquidity requirementsprimarily through management of short-term investments, monthly amortizingloans, maturing single payment loans, and maturities of securities andprepayments.  Also we maintainrelationships with correspondent banks which could provide funds on shortnotice.  As of September 30, 2002, wehad borrowed under Federal funds purchase lines and securities sold underagreement to repurchase, $14.3 million compared to $19.7 million at December31, 2001.

 

Our liquidity and capital resources are monitored on aperiodic basis by management, State and Federal regulatory authorities.  Management reviews liquidity on a periodicbasis to monitor and adjust liquidity as necessary.  Management has the ability to adjust liquidity by sellingsecurities available for sale, selling participations in loans we generate andaccessing available funds through various borrowing arrangements.  Our short-term investments and availableborrowing arrangements are adequate to cover any reasonably anticipatedimmediate need for funds.

 

Our liquidity ratio was 21.58% at September 30, 2002,above our policy minimum ratio of 15%. Liquidity is measured by the ratio of net cash, Federal funds sold andsecurities to net deposits and short-term liabilities. In the event the banksneed to generate additional liquidity, funding plans would be implemented asoutlined in the liquidity policy of the banks. The subsidiary banks have linesof credit available to meet any unforeseen liquidity needs.  Also, the Banks have relationships with theFederal Home Loan Bank of Atlanta, which provide funding for loan growth on anas needed basis.

 

10

----

 

 

As of September 30, 2002, the Company and the Bankswere considered to be well-capitalized as defined in the FDIC Improvement Actand based on regulatory minimum capital requirements.  The Company and its bank subsidiaries’ actual capital ratios arepresented in the following table.

 
|                                    |   |       |   | **FOR CAPITAL** |   | **TO BE**       |   |
|-----------------------------------------|--------|------------|--------|-----------------|--------|-----------------|--------|
|                                    |   |       |   | **ADEQUACY**    |   | **WELL**        |   |
|                                    |   | **ACTUAL** |   | **PURPOSES**    |   | **CAPITALIZED** |   |
|                                    |   |       |   |            |   |            |   |
| As of September 30, 2002                |   |       |   |            |   |            |   |
| Total Capital to Risk Weighted Assets:  |   |       |   |            |   |            |   |
| Consolidated                            |   | 10.97      | %      | 8               | %      | N\A             |   |
| Gainesville Bank & Trust            |   | 10.03      | %      | 8               | %      | 10              | %      |
| United Bank & Trust                 |   | 13.20      | %      | 8               | %      | 10              | %      |
| Community Trust Bank                    |   | 10.21      | %      | 8               | %      | 10              | %      |
| Tier I Capital to Risk Weighted Assets: |   |       |   |            |   |            |   |
| Consolidated                            |   | 9.76       | %      | 4               | %      | N\A             |   |
| Gainesville Bank & Trust            |   | 8.89       | %      | 4               | %      | 6               | %      |
| United Bank & Trust                 |   | 11.95      | %      | 4               | %      | 6               | %      |
| Community Trust Bank                    |   | 9.09       | %      | 4               | %      | 6               | %      |
| Tier I Capital to Average Assets:       |   |       |   |            |   |            |   |
| Consolidated                            |   | 8.05       | %      | 4               | %      | N\A             |   |
| Gainesville Bank & Trust            |   | 7.01       | %      | 4               | %      | 5               | %      |
| United Bank & Trust                 |   | 8.91       | %      | 4               | %      | 5               | %      |
| Community Trust Bank                    |   | 8.21       | %      | 4               | %      | 5               | %      |

** **

**Resultsof Operations**

** **

Our profitability is determined by our ability toeffectively manage interest income and expense, to minimize loan and securitylosses, to generate noninterest income, and to control operating expenses.  Since interest rates are determined bymarket forces and economic conditions beyond our control, our ability togenerate net interest income is dependent upon our ability to obtain anadequate net interest spread between the rate paid on interest-bearingliabilities and the rate earned on interest-earning assets.  The net interest margin was 4.44% for thenine months ended September 30, 2002, compared to 4.33% for the same period in2001.  In the first nine months of 2002,the yield on earning assets decreased to 7.23% from 8.80% for the same periodin 2001, and the cost of interest bearing liabilities decreased to 3.23% from5.12%.

 

Net interest income increased $908,000 or 17.20% forthe three months ended September 30, 2002 compared to the same period in2001.  The net increase consists of adecrease in interest income of $725,000 or 6.91% less a decrease in interestexpense of $1,633,000 or 31.35% for the three-month period.  Net interest income increased $1,717,000 or10.76% for the nine months ended September 30, 2002 compared to the same periodin 2001.  The net increase consists of adecrease in interest income of $3,654,000 or 11.27% less a decrease in interestexpense of $5,371,000 or 32.60% for the nine-month period.  The increase in net interest income is dueto a combination of the increase in the net interest spread to 4.00% for thenine months ended September 30, 2002 from 3.68% for the same period in 2001 andincreases in volume.

 

 

11

----

 

Our provision for loan losses decreased by $28,000 or12.17% during the three months ended September 30, 2002 as compared to the sameperiod in 2001.  Our provision for loanlosses decreased by $449,000 or 43.26% during the nine months ended September30, 2002 as compared to the same period in 2001.  The analysis below indicates a decrease of $338,000 in netcharge-offs for the nine months ended September 30, 2002 as compared to thesame period in 2001.  Although totalcharge-offs indicate a decrease from the prior period, consumer charge-offsreflect an increase which is related to Community Loan Company, our consumerfinance company.  Community Loan Companyrepresents approximately 49.56% of the consumer charge-off balance at September30, 2002.  The allowance for loan lossesat September 30, 2002 was $5,789,000 or 1.28% of total loans compared to 1.36%at September 30, 2001.  Based onmanagement’s evaluation, the allowance is adequate to absorb any potential loanlosses at September 30, 2002.  Theallowance for loan losses is evaluated monthly and adjusted to reflect the riskin the portfolio.

 

The following table summarizes the allowance for loanlosses for the nine-month period ended September 30, 2002 and 2001.

 
|                                                        |   | **2002**                   |        | **2001** |   |
|-------------------------------------------------------------|--------|----------------------------|-------------|----------|--------|
|                                                        |   | **(Dollars in Thousands)** |        |
| **Average  amount of loans outstanding**                    |   | $                          | **435,408** |     | $      | 394,224 |   |
|                                                        |   |                       |        |     |   |
| **Allowance for  loan losses balance, beginning of period** |   | $                          | **5,522**   |     | $      | 5,099 |   |
|                                                        |   |                       |        |     |   |
| **Less  charge-offs**                                       |   |                       |        |     |   |
| Commercial loans                                            |   | **—**                 |        | (61      | )      |
| Real estate loans                                           |   | **(2**                     | )           | (211     | )      |
| Consumer  loans                                        |   | **(680**                   | )           | (588     | )      |
| Total Charge-offs                                           |   | **(682**                   | )           | (860     | )      |
|                                                        |   |                       |        |     |   |
| **Plus  recoveries**                                        |   |                       |        |     |   |
| Commercial loans                                            |   | **1**                      |        | 6        |   |
| Real estate loans                                           |   | **174**                    |        | 16       |   |
| Consumer loans                                              |   | **185**                    |        | 178      |   |
| Total recoveries                                            |   | **360**                    |        | 200      |   |
| **Net  charge-offs**                                        |   | **(322**                   | )           | (660     | )      |
|                                                        |   |                       |        |     |   |
| **Plus  provision for loan losses**                         |   | **589**                    |        | 1,038    |   |
|                                                        |   |                       |        |     |   |
| **Allowance for  loan losses balance, end of period**       |   | $                          | **5,789**   |     | $      | 5,477 |   |
|                                                        |   |                       |        |     |   |
| **Net  charge-offs to average loans**                       |   | **0.074**                  | %           | 0.167    | %      |

 

12

----

 

The following table is a summary of nonaccrual, pastdue and restructured debt. The numbers indicate increases of $499,000 innonaccrual loans and increases of $355,000 in past due loans over 90 days. Themajority of the increase in nonaccrual loans is related to one loan for$456,000 that is secured by real estate. Approximately 34% of the nonaccrual balance at September 30, 2002, isrelated to Community Loan Company, our consumer finance company.  The majority of the increase in past dueloans over 90 days is related to two loans totaling $339,000 that were in theprocess of foreclosure at September 30, 2002, however these loans have sincebeen fully collected.  Approximately 31%of the past due loan balance at September 30, 2002 is related to Community LoanCompany.  Due to the nature of theconsumer finance business, the level of nonaccrual loans and past due loansover 90 days is normal and will consistently remain higher than those seen inthe banking industry.  Community LoanCompany’s reserve for loan loss is also higher to cover these higher levels ofnonaccrual and past due loans.

 
|              |   | **September 30, 2002**     |       |
|-------------------|--------|----------------------------|------------|
|              |   | **Nonaccrual  Loans**      | ** ** | **Past Due  90 Days  Still Accruing** | ** ** | **Restructured  Debt** |   |
|              |   | **(Dollars in Thousands)** |       |
|              |   |                       |       |   |   |   |   |
| Real estate loans |   | $                          | 643        |   | $ | 466 |   | $ | — |   |
| Commercial loans  |   | 172                        |       | 5 |   | — |   |
| Consumer loans    |   | 566                        |       | 420 |   | — |   |
| Total             |   | $                          | 1,381      |   | $ | 891 |   | $ | — |   |
|              |   |                       |       |   |   |   |   |
|              |   | **September 30, 2001**     |       |
|              |   | **Nonaccrual  Loans**      |       | **Past Due  90 Days  Still Accruing** |   | **Restructured  Debt** |   |
|              |   | **(Dollars in Thousands)** |       |
|              |   |                       |       |   |   |   |   |
| Real estate loans |   | $                          | 161        |   | $ | 186 |   | $ | — |   |
| Commercial loans  |   | —                     |       | 13 |   | — |   |
| Consumer loans    |   | 721                        |       | 337 |   | — |   |
| Total             |   | $                          | 882        |   | $ | 536 |   | $ | — |   |

 

Our policy is to discontinue the accrual of interestincome when, in the opinion of management, collection of such interest becomesdoubtful.  This status is determinedwhen; (1) there is a significant deterioration in the financial condition ofthe borrower and full repayment of principal and interest is not expected; or(2) the principal or interest is more than 90 days past due, unless the loan isboth well-secured and in the process of collection.  Accrual of interest on such loans is resumed when, inmanagement’s judgment, the collection of interest and principal becomesprobable.

 

Loans classified for regulatory purposes as loss,doubtful, substandard, or special mention that have not been included in thetable above do not represent or result from trends or uncertainties whichmanagement reasonably expects will materially impact future operating results,liquidity or capital resources.  Theseclassified loans do not represent material credits about which management isaware of any information which causes management to have serious doubts as tothe ability of such borrowers to comply with their loan repayment terms.

 

 

13

----

 

 

Other income for the three months ended September 30,2002, increased by $350,000 or 22.44% compared to the same period in 2001.  Service charges increased by $77,000 andmortgage origination fees increased by $169,000. These increases were offset bydecreases in insurance commissions of $42,000 and gain on sale of securities of$5,000.  Other income for the ninemonths ended September 30, 2002, increased $937,000 or 21.00% compared to thesame period in 2001.  Service chargesincreased by $245,000, mortgage origination fees increased by $306,000, gain onsale of securities increased by $135,000 and gain on sale of assets increasedby $115,000.  The increases in otherincome were partially offset by a $72,000 decrease in insurancecommissions.  Mortgage origination feesincreased as a result of refinancing activity spurred by the decline inmortgage rates.

 

Other expenses increased by approximately $983,000 or21.22% for the three months ended September 30, 2002 compared to the sameperiod in 2001.  The increase is dueprimarily to an increase in salaries and employee benefits of $551,000, anincrease in net occupancy and equipment expense of $63,000, an increase in dataprocessing fees of $114,000 and an increase of $60,000 in education andtraining expenses related to the computer upgrade. Other expenses increased byapproximately $314,000 or 2.03% for the nine months ended September 30, 2002compared to the same period in 2001. The increase is due primarily to an increase in salaries and employeebenefits of $299,000, which is partially offset by a decrease in net occupancyand equipment expense of $50,000.

 

Income tax expense increased by $74,000 and $811,000for the three and nine months ended September 30, 2002, compared to the sameperiods last year. The effective tax rate for the three-month period was32.66%, compared to 33.92% for the same period in 2001. The effective tax ratefor the nine-month period ended September 30, 2002 was 32.34% compared to34.69% for the same period in 2001.  These decreases in the effective tax rate for the respective periods aredue to merger related expenses which were non-deductible in 2001.

 

Net income increased by $229,000 or 17.55%, for thethree months ended September 30, 2002 compared to the same period in 2001. Netincome increased by $1,978,000 or 78.12% for the nine months ended September30, 2002 compared to the same period in 2001. Exclusive of non-recurring expenses of $1,090,000 incurred during thenine months ending September 30, 2001 related to the merger with CommunityTrust Financial Services, Inc. in the second quarter of 2001, net incomeincreased by $888,000 or 35.07%.

 

During the third quarter of 2001, we signed contractswith Jack Henry & Associates, Inc. to purchase hardware and softwaresolutions to better equip the company for future operations.  These contracts amounted to approximately$1,200,000 and will afford us growth potential and allow us to process allaffiliates on the same system.  Theconversion to the new system is expected to be completed during the fourthquarter of 2002.

 

We are not aware of any other known trends, events oruncertainties, other than the effect of any events described above, that willhave or that are reasonably likely to have a material effect on its liquidity,capital resources or operations.  We arenot aware of any current recommendations by the regulatory authorities, which,if they were implemented, would have such an effect.

 

 

14

----

 

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

** **

**Item 3****.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

** **

Our net interest income and the fair value of ourfinancial instruments (interest earning assets and interest bearingliabilities) are influenced by changes in market interest rates. We activelymanage our exposure to interest rate fluctuations through policies establishedby the Asset/Liability Management Committee (the "ALCO"). The ALCOmeets regularly and is responsible for approving asset/liability managementpolicies, developing and implementing strategies to improve balance sheetpositioning and net interest income and assessing the interest rate sensitivityof the Banks.

 

**Item 4****.  CONTROLS AND PROCEDURES**

 

Within 90 days prior to the date of filing of thisreport, we carried out an evaluation, under the supervision and with theparticipation of our Chief Executive Officer and the Chief Financial Officer,of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that our disclosurecontrols and procedures are effective for gathering, analyzing and disclosingthe information that we are required to disclose in the reports we file underthe Securities Exchange Act of 1934, within the time periods specified in theSEC’s rules and forms.  Our Chief ExecutiveOfficer and Chief Financial Officer also concluded that our disclosure controlsand procedures are effective in timely alerting them to material informationrelating to our company required to be included in our periodic SECfilings.  In connection with the newrules, we are in the process of further reviewing and documenting 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 no significant changes in our internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of this evaluation.

 

**PART II****- OTHERINFORMATION**

 

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

** **

(a)          Reports on Form 8-K

 

We did not file a reporton Form 8-K during the quarter ending September 30, 2002.

 

15

----

 

**SIGNAT****URES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the Registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 

 

 

GB&TBANCSHARES, INC.

 

 
|                    |   |   |                                  |
|-------------------------|--------|--------|---------------------------------------|
| DATE:   11/14/2002 |   | BY:    | /s/ Richard A. Hunt                   |
|                    |   |   | Richard A. Hunt, Jr.                  |
|                    |   |   | President and Chief Executive Officer |
|                    |   |   |                                  |
|                    |   |   |                                  |
| DATE:   11/14/2002 |   | BY:    | /s/ Gregory L. Hamby                  |
|                    |   |   | Gregory L. Hamby                      |
|                    |   |   | Executive Vice President &        |
|                    |   |   | Chief Financial Officer               |

 

 

16

----

 

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

 

 

 

# **I, Richard A. Hunt, Jr.,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.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.               The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly 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 inthis quarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, 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)                     any fraud,whether or not material, that involves management or other employees who have asignificant 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:   November 14, 2002 |   |                     |
|--------------------------------|--------|--------------------------|
|                           |   |                     |
|                           |   |                     |
|                           |   | /s/ Richard A. Hunt, Jr. |
|                           |   | Richard A. Hunt, Jr.     |
|                           |   | Chief Executive Officer  |

 

 

17

----

 

**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.               Based on myknowledge, the financial statements, and other financial information includedin this quarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.               The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is made knownto us by others within those entities, particularly during the period in whichthis quarterly 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 inthis quarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, 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)                     any fraud,whether or not material, that involves management or other employees who have asignificant 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:   November 14, 2002 |   |                    |
|--------------------------------|--------|-------------------------|
|                           |   |                    |
|                           |   |                    |
|                           |   | /s/ Gregory L. Hamby    |
|                           |   | Gregory L. Hamby        |
|                           |   | Chief Financial Officer |

 

 

18

----

 

**Certificate pursuant to 18 U.S.C.Section 1350, as adopted pursuant to**

**Section 906 of the Sarbanes-Oxley Actof 2002**

 

 

In connection withthe Quarterly Report of GB&T Bancshares, Inc. (the “Company”) on Form 10-Qfor the period ending September 30, 2002, as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Richard A. Hunt, Jr.,Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350,as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.                                       TheReport fully complies with the requirements of section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and

 

2.                                       Theinformation contained in the Report fairly presents, in all material respects,the financial condition and results of operations of the Company.

 

 
| /s/ Richard A. Hunt, Jr.                      |   |
|-----------------------------------------------|--------|
| Richard A. Hunt, Jr., Chief Executive Officer |

 

November 14, 2002

 

19

----

 

**Certificate pursuant to 18 U.S.C.Section 1350, as adopted pursuant to**

**Section 906 of the Sarbanes-Oxley Actof 2002**

 

In connection withthe Quarterly Report of GB&T Bancshares, Inc. (the “Company”) on Form 10-Qfor the period ending September 30, 2002, as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Gregory L. Hamby,Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350,as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.                                       TheReport fully complies with the requirements of section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and

 

2.                                       Theinformation contained in the Report fairly presents, in all material respects,the financial condition and results of operations of the Company.

 

 
| /s/ Gregory L. Hamby                      |   |
|-------------------------------------------|--------|
| Gregory L. Hamby, Chief Financial Officer |   |
|                                      |   |
|                                           |        |  |

 

November 14, 2002

 

20

----