<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB
Mark One

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the quarterly period ended   SEPTEMBER 30, 1998
                                       ----------------------

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
         For the transition period from __________ to __________

                        COMMISSION FILE NUMBER:  000-24203

                             GB&T BANCSHARES, INC.
          ----------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

     GEORGIA                                            58-2400756
---------------------                                ----------------
(State or other jurisdiction of                         (IRS Employer
incorporation or organization)                        Identification No.)

                         500 JESSE JEWELL PARKWAY, S.E.
                            GAINESVILLE, GEORGIA 30501
                      -------------------------------------
                    (Address of principal executive offices)

                                   (770) 532-1212
                            ------------------------
                          (Issuer's telephone number)
                                          N/A
                 ---------------------------------------------------------
              (Former name, former address and former fiscal year, if changed
               since last report)

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

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 1, 1998:    2,095,171 shares; $5 par value

Transitional Small Business Disclosure Format (Check One)  Yes ____  No   X
                                                                        -----
<PAGE>
 
                     GB&T BANCSHARES, INC. AND SUBSISIARY
                                        
                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                                                             PAGE NO.
                                                                                                             --------
<S>               <C>                                                                                        <C>
PART I.           FINANCIAL INFORMATION

                  ITEM 1.  FINANCIAL STATEMENTS

                      CONSOLIDATED BALANCE SHEET - SEPTEMBER 30, 1998........................................   1

                      CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME -
                        THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND NINE MONTHS
                        ENDED SEPTEMBER 30, 1998 AND 1997....................................................   2

                      CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE MONTHS ENDED
                        SEPTEMBER 30, 1998 AND 1997.........................................................    3

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................. 4-6

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                               FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................ 7-11

PART II.          OTHER INFORMATION

                  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............................   12

                  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.................................................   12

                  SIGNATURES................................................................................   13
</TABLE>
<PAGE>
 
                        PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                     GB&T BANCSHARES, INC. AND SUBSIDIARY

                          CONSOLIDATED BALANCE SHEET
                              SEPTEMBER 30, 1998
                                  (UNAUDITED)
                            (DOLLARS IN THOUSANDS)



<TABLE> 
<CAPTION> 
ASSETS
------
<S>                                                                               <C> 
Cash and due from banks                                                           $       8,016
Interest-bearing deposits in banks                                                          254
Federal funds sold                                                                       15,560
Securities available-for-sale, at fair value                                             31,902

Loans                                                                                   129,364
Less allowance for loan losses                                                            1,774
                                                                                  --------------
     Loans, Net                                                                         127,590
                                                                                  --------------

Premises and equipment                                                                    4,390
Other assets                                                                              4,667

                                                                                  ==============
     TOTAL ASSETS                                                                 $     192,379
                                                                                  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Deposits
   Demand                                                                         $      19,756
   Interest-bearing demand                                                               14,750
   Savings                                                                               33,937
   Time deposits                                                                        103,836
                                                                                  --------------
     Total deposits                                                                     172,279

Other borrowings                                                                          3,328
Other liabilities                                                                         1,806
                                                                                  --------------
     TOTAL LIABILITIES                                                                  177,413
                                                                                  --------------

Stockholders' Equity
   Common Stock, par value $5; 10,000,000
       shares authorized; 2,095,171 shares
       issued and outstanding                                                            10,476
   Capital surplus                                                                        2,003
   Retained earnings                                                                      2,306
   Accumulated other comprehensive
       income, net of tax                                                                   181
                                                                                  --------------
     TOTAL STOCKHOLDERS' EQUITY                                                          14,966
                                                                                  --------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $     192,379
                                                                                  ==============
</TABLE> 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                       1
<PAGE>
 
                     GB&T BANCSHARES, INC. AND SUBSIDIARY

          CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
              THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND
                 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)
               (Dollars in Thousands, except per share amounts)

<TABLE> 
<CAPTION> 
                                                               Three Months Ended            Nine Months Ended        
                                                                  September 30,                 September 30,       
                                                         ----------------------------   ---------------------------  
                                                             1998            1997            1998          1997       
                                                         ------------    ------------   -------------  ------------  
<S>                                                      <C>             <C>            <C>            <C> 
Interest income                                                                                                      
   Loans                                                       3,342           2,990           9,566         8,316   
   Taxable securities                                            446             375           1,253         1,114   
   Nontaxable securities                                          36              14              93            41   
   Federal funds sold                                            142              84             459           216   
   Interest-bearing deposits in banks                              7               5              17            14    
                                                         ------------    ------------   -------------  ------------
     Total interest income                                     3,973           3,468          11,388         9,701 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
Interest expense                                                                                                   
   Deposits                                                    1,934           1,708           5,639         4,652 
   Other borrowings                                               37              20              84            48 
                                                         ------------    ------------   -------------  ------------
     Total interest expense                                    1,971           1,728           5,723         4,700 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
     Net interest income                                       2,002           1,740           5,665         5,001 
Provision for loan losses                                        126              72             378           216 
                                                         ------------    ------------   -------------  ------------
     Net interest income after                                                                                     
      provision for loan losses                                1,876           1,668           5,287         4,785 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
Other income                                                                                                       
   Service charges on deposit accounts                           123             137             372           374 
   Mortgage origination fees                                      64              24             251            90 
   Gain on sale of loans                                          46               1             197            10 
   Other operating income                                        110              59             309           200 
                                                         ------------    ------------   -------------  ------------
     Total other income                                          343             221           1,129           674 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
Other expenses                                                                                                     
   Salaries and other employee benefits                          877             690           2,562         1,932 
   Occupancy and equipment expenses                              265             204             787           565 
   Marketing expenses                                             59              30             158            75 
   Other operating expenses                                      351             313           1,047           891 
                                                         ------------    ------------   -------------  ------------
     Total other expenses                                      1,552           1,237           4,554         3,463 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
     Income before income taxes                                  667             652           1,862         1,996 
                                                                                                                   
Income tax expense                                               213             229             602           705 
                                                         ------------    ------------   -------------  ------------
                                                                                                                   
    Net Income                                                   454             423           1,260         1,291 
                                                         ------------    ------------   -------------  ------------
Other comprehensive income:                                                                                        
   Unrealized gains (losses) on securities                                                                         
    available-for-sale arising during period,                                                                      
    net of tax                                                   124              72             121            97
                                                         ============    ============   =============  ============
     Comprehensive income                                  $     578       $     495       $   1,381     $   1,388 
                                                         ============    ============   =============  ============
                                                                                                                   
Basic earnings per common share                            $    0.22       $    0.20       $    0.60     $    0.62 
                                                         ============    ============   =============  ============
                                                                                                                   
Diluted earnings per common share                          $    0.21       $    0.20       $    0.57     $    0.62 
                                                         ============    ============   =============  ============
                                                                                                                   
Cash dividends per common share                            $    0.06       $       -       $    0.10      $   0.09 
                                                         ============    ============   =============  ============
</TABLE> 

The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
 
                     GB&T BANCSHARES, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)
                            (Dollars in Thousands)

<TABLE> 
<CAPTION> 
                                                                               1998                     1997
                                                                           ------------            -------------
<S>                                                                        <C>                     <C> 
OPERATING ACITIVITIES
  Net income                                                                 $   1,260                $   1,291
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation                                                                  312                      306
     Provision for loan losses                                                     378                      216
     Net realized losses on securities                                               -                       10
     Other operating activities                                                   (862)                    (371)

                                                                           ------------            -------------
          Net cash provided by operating activities                              1,088                    1,452
                                                                           ------------            -------------

INVESTING ACTIVITIES
   Purchases of securities available-for-sale                                  (16,134)                  (4,610)
   Proceeds from maturities of securities available-for-sale                     9,137                    3,859
   Net decrease in interest-bearing deposits in banks                               85                       36
   Net increase in Federal funds sold                                           (5,035)                  (2,850)
   Net increase in loans                                                        (8,191)                 (24,395)
   Purchase of premises and equipment                                             (371)                  (1,131)

                                                                           ------------            -------------
          Net cash used in investing activities                                (20,509)                 (29,091)
                                                                           ------------            -------------

FINANCING ACTIVITIES
   Net increase in deposits                                                     16,668                   27,079
   Net increase in other borrowings                                              1,898                    1,048
   Options exercised                                                                                         14
   Dividends paid                                                                 (217)                    (184)
                                                                           ------------            -------------
          Net cash provided by financing activities                             18,349                   27,957
                                                                           ------------            -------------

Net (decrease) increase in cash and due from banks                              (1,072)                     318

Cash and due from banks at beginning of period                                   9,088                    6,453

                                                                           ============            =============
Cash and due from banks at end of period                                     $   8,016                $   6,771
                                                                           ============            =============
</TABLE> 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                       3
<PAGE>
 
                     GB&T BANCSHARES, INC. AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE 1.   BASIS OF PRESENTATION

          The consolidated financial information included herein is unaudited;
          however, such information reflects all adjustments (consisting solely
          of normal recurring adjustments) which are, in the opinion of
          management, necessary for a fair statement of results for the interim
          periods.

          The results of operations for the nine month period ended September
          30, 1998 are not necessarily indicative of the results to be expected
          for the full year.


NOTE 2.   CURRENT ACCOUNTING DEVELOPMENTS

          The adoption of the provisions of SFAS No. 125, "Accounting for
          Transfers and Servicing of Financial Assets and Extinguishments of
          Liabilities" that became effective on January 1, 1998 did not have a
          material effect on the Company's financial statements.

          The adoption of SFAS No. 128, Earnings Per Share", that became
          effective as of December 31, 1997 had no effect on the calculation of
          income per common share for the three and six months ended September
          30, 1997.

          The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
          became effective on January 1, 1998 required the Company to report
          comprehensive income in the Company's Statements of Income and
          Comprehensive Income.

          In April of 1998 the Accounting Standards Executive Committee issued
          Statement of Position (SOP) 98-5, "Reporting on the Costs of Start Up
          Activities". SOP 98-5 requires that costs of startup activities and
          organization costs be expensed as incurred. SOP 98-5 becomes effective
          for financial statements for fiscal years beginning after December 15,
          1998. However, early adoption is encouraged for fiscal years in which
          financial statements have not been issued. As of September 30, 1998
          the company had $38,558 of unamortized organization costs which will
          be required to be written off upon adoption of SOP 98-5.

          In June of 1998 the Financial Accounting Standards Board (FASB) issued
          Statement of Financial Accounting Standards (SFAS) No. 133, "
          Accounting for Derivative Instruments and Hedging Activities". This
          statement establishes accounting and reporting standards for
          derivative instruments, including certain derivative instruments
          embedded in other contracts and for hedging activities. It requires
          that an entity recognize all derivatives as either assets
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE 2.   CURRENT ACCOUNTING DEVELOPMENTS (CONTINUED)

          or liabilities in the statement of financial position and measure
          those instruments at fair value. The statement is effective for all
          fiscal quarters of fiscal years beginning after June 15, 1999.

          Earlier adoption is encouraged, but permitted only as of the beginning
          of any fiscal quarter that begins after June 1998. The company has not
          determined the affect of SFAS 133 on its financial condition and
          results of operations at this time.

          There are no other recent accounting pronouncements that have had, or
          are expected to have a material effect on the Company's financial
          statements.

NOTE 3.   EARNINGS PER COMMON SHARE

          The following is a reconciliation of net income and weighted-average
          shares outstanding used in determining basic and diluted earnings per
          common share (EPS):

<TABLE>
<CAPTION>
                                                                Three Months Ended September 30, 1998
                                                       ----------------------------------------------------
                                                            Net          Weighted-Average
                                                          Income              Shares            PER SHARE
                                                                                                  AMOUNT
                                                       -------------    -----------------    --------------
               <S>                                     <C>              <C>                  <C> 
               Basic EPS                               $     454,000            2,095,171    $         0.22
 
               Effect of Dilutive Securities
                   Stock options                                   -              104,478
                                                       -------------    ----------------- 
               Diluted EPS                             $     454,000            2,199,649    $         0.21
                                                       =============    =================    ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                Three Months Ended September 30, 1997
                                                       ----------------------------------------------------
                                                            Net          Weighted-Average
                                                          Income              Shares            Per Share
                                                                                                  Amount
                                                       -------------    -----------------    --------------
               <S>                                     <C>              <C>                  <C> 
               Basic EPS                               $     423,000            2,093,338    $         0.20
 
               Effect of Dilutive Securities
                   Stock options                                   -                5,491
                                                       -------------    -----------------
               Diluted EPS                             $     423,000            2,098,829    $         0.20
                                                       =============    =================    ==============
</TABLE>
<PAGE>
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

<TABLE> 
<CAPTION>
                                                                Nine Months Ended September 30, 1998
                                                       ----------------------------------------------------
                                                            Net          Weighted-Average
                                                          Income              Shares            PER SHARE
                                                                                                  AMOUNT
                                                       -------------    -----------------    --------------
               <S>                                     <C>              <C>                  <C> 
               Basic EPS                               $   1,260,000            2,095,171    $         0.60
 
               Effect of Dilutive Securities
                   Stock options                                   -               99,629
                                                       -------------    -----------------
               Diluted EPS                             $   1,260,000            2,194,800    $         0.57
                                                       =============    =================    ==============
</TABLE>

<TABLE>
<CAPTION>
                                                                Nine Months Ended September 30, 1997
                                                       ----------------------------------------------------
                                                            Net          Weighted-Average
                                                          Income              Shares            Per Share
                                                                                                  Amount
                                                       -------------    -----------------    --------------
               <S>                                     <C>              <C>                  <C> 
               Basic EPS                               $   1,291,000            2,092,727    $         0.62
 
               Effect of Dilutive Securities
                    Stock options                                  -                4,836
                                                       -------------    -----------------
               Diluted EPS                             $   1,291,000            2,097,563    $         0.62
                                                       =============    =================    ==============
</TABLE>


NOTE 4.   EARNINGS PER COMMON SHARE

          GB&T Bancshares, Inc. declared a stock dividend in the form of a stock
          split on August 29, 1998, paid on September 21, 1998 to stockholder's
          of record August 31, 1998, All per share amounts have been restated to
          reflect the split.
<PAGE>
 
                     GB&T BANCSHARES, INC. AND SUBSIDIARY

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


The following is management's discussion and analysis of certain significant
factors which have affected the financial position and operating results of the
Company and its bank subsidiary, Gainesville Bank & Trust, during the periods
included in the accompanying consolidated financial statements.

FINANCIAL CONDITION

The Company's total assets increased $19,381,000 or 11.2%, for the nine months
ended September 30, 1998.  Total loans increased by $8,154,000 or 6.7% for the
nine months ended September 30, 1998.  The loan to deposit ratio as of September
30, 1998 was 75.1%, within the Company's target range of 75% to 80%, as compared
to 81.6% at September 30, 1997.  Total deposits increased by $16,668,000 for the
nine months ended September 30, 1998.  The deposit growth is believed to stem
from a more volatile economy in the third quarter.  Prior to the current year,
the Bank's market area has experienced significant growth during the last
several years.

LIQUIDITY

As of September 30, 1998, the liquidity ratio was 29.70% compared to 21.89% at
September 30, 1997.  This is above the Bank's target ratio of 25%.  Liquidity is
measured by the ratio of net cash, Federal funds sold and securities to net
deposits and short-term liabilities.  The increase in the liquidity ratio is
related to the increase in deposits and a reduction of pledged deposits since
December 31, 1997.  The Bank has lines of credit available to meet any
unforeseen liquidity needs.  Also, the Bank has a relationship with the Federal
Home Loan Bank of Atlanta which provides funding for loan growth on an as needed
basis.

CAPITAL

The minimum capital requirements for banks and bank holding companies require a
leverage capital to total assets ratio of at least 4%, core capital to risk-
weighted assets ratio of at least 4% and total capital to risk-weighted assets
of at least 8%.

At September 30, 1998, the capital ratios at the Company and the Bank were
adequate based on regulatory minimum capital requirements.  The actual capital
ratios of the Company are as follows:

      Leverage capital ratio                                       7.98%
      Risk-based capital ratios:
        Core capital                                              10.98%
        Total capital                                             12.23%
<PAGE>
 
RESULTS OF OPERATIONS

Net interest income increased $262,000 or 15.1% for the three months ended
September 30, 1998 compared to the same period in 1997.  The net increase
consists of an increase in interest income of $505,000 or 14.6% less an increase
in interest expense of $243,000 or 14.1% for the three month period.  The
increase in interest income is due primarily to the growth in total interest-
earning assets of $29 million from September 30, 1997 to September 30, 1998.
Total interest-bearing liabilities increased during the same period by $26
million.

Net interest income increased $664,000 or 13.3% for the nine months ended
September 30, 1998 compared to the same period in 1997.  The net increase
consists of an increase in interest income of $1,687,000 or 17.4% less an
increase in interest expense of $1,023,000 or 21.7% for the nine month period.
The increase in interest income is due primarily to the growth in total
interest-earning assets of $29 million from September 30, 1997 to September 30,
1998.  Total interest-bearing liabilities increased during the same period by
$26 million. The net interest margin was 4.68% and 5.01% for the nine months
ended September 30, 1998 and 1997, respectively.  Competitive pressures continue
to place downward pressure on net interest margin.

The Bank's provision for loan losses increased by $54,000 or 75% during the
three months ended September 30, 1998 as compared to the same period in 1997.
The Bank's provision for loan losses increased by $162,000 or 75% during the
nine months ended September 30, 1998 as compared to the same period in 1997.
The allowance for loan losses at September 30, 1998 was $1,774,000 or 1.37% of
total loans compared to 1.13% at September 30, 1997.  Based on management's
evaluation, the allowance is adequate to absorb any anticipated loan losses at
September 30, 1998.

The increase in the provision for loan losses for the three and nine month
periods ended September 30, 1998 as compared to 1997 is based on an overall
slowing economy.  The analysis below indicates only a slight increase in net
charge-offs in 1998 as compared to 1997.  The second table following indicates
increases of $359,000 and $126,000 in nonaccrual loans and past due loans over
90 days, respectively.  The increase in nonaccrual and past due loans resulted
from three larger well collateralized loans. There are minimal or no losses
anticipated on these loans.  The allowance for loan losses is evaluated monthly
and adjusted to reflect the risk in the portfolio.

The following table summarizes the allowance for loan losses for the nine month
periods ended September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                                1998            1997
                                                            ------------    ------------
                                                               (DOLLARS IN THOUSANDS)
                                                            ----------------------------
                    <S>                                     <C>             <C>
                    BALANCE, BEGINNING OF PERIOD            $      1,433    $      1,146
 
 
                    LESS CHARGE-OFFS
                       Commercial loans                              (42)            (34)
                       Consumer  loans                               (24)            (15)
 
                    PLUS RECOVERIES
                       Commercial loans                               19
                       Consumer loans                                 10              17
                                                            ------------    ------------
</TABLE> 
<PAGE>
 
<TABLE> 
                   <S>                                      <C>             <C> 
                                                            ------------    ------------
                   Net charge-offs                                   (37)            (32)
                                                            ------------    ------------

                   PLUS PROVISION FOR LOAN LOSSES                    378             216
                                                            ------------    ------------ 
 
                   BALANCE, END OF PERIOD                   $      1,774    $      1,330
                                                            ============    ============ 
</TABLE>


The following table is a summary of nonaccrual, past due and restructured debt.

<TABLE>
<CAPTION>
                                                                                 September 30, 1998
                                                            -----------------------------------------------------------
 
                                                                                     Past Due
                                                               Nonaccural            90 Days             Restructured
                                                                 Loans                Still                   Debt
                                                                                     Accruing
                                                            ----------------     ----------------     -----------------
                                                                              (Dollars in Thousands)
                                                            -----------------------------------------------------------
                   <S>                                      <C>                  <C>                  <C> 
                   Real estate loans                        $            339     $            317     $               -
                   Commercial loans                                        -                    -                     -
                   Consumer loans                                         20                    -                     -
                                                            ----------------     ----------------     -----------------
                         Total                              $            359     $            317     $               -
                                                            ================     ================     =================
</TABLE>

<TABLE>
<CAPTION>
                                                                                 September 30, 1997
                                                            -----------------------------------------------------------
 
                                                                                     Past Due
                                                               Nonaccural            90 Days             Restructured
                                                                 Loans                Still                   Debt
                                                                                     Accruing
                                                            ----------------     ----------------     -----------------
                                                                              (Dollars in Thousands)
                                                            -----------------------------------------------------------
                   <S>                                      <C>                  <C>                  <C> 
                   Real estate loans                        $              -     $            124     $               -
                   Commercial loans                                        -                    8                     -
                   Consumer loans                                          -                   59                     -
                                                            ----------------     ----------------     -----------------
                         Total                              $              -     $            191     $               -
                                                            ================     ================     =================
</TABLE>

The Company's policy is to discontinue 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 deterioration in the
financial condition of the borrower and full repayment of principal and interest
is not expected; and (2) the principal or interest is more than ninety days past
due, unless the loan is both well-secured and in the process of collection.
Accrual of interest on such loans is resumed when, in management's judgment, the
collection of interest and principal becomes probable.

Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.
<PAGE>
 
Other income for the three months ended September 30, 1998 increased by $122,000
or 55.2% compared to the same period in 1997.  The increase in other income is
primarily due to increases in mortgage origination fees  of $42,000 and SBA loan
premiums of $45,000.  Other income for the nine months ended September 30, 1998
increased by $455,000 or 67.5% compared to the same period in 1997.  The
increase in other income is primarily due to increases in mortgage origination
fees of $161,000 and SBA loan premiums of $187,000.

Other expenses increased by approximately $315,000 or 25.5% for the three month
period ended September 30, 1998 compared to the same period in 1997.  The
increase is due primarily to an increase in salaries and employee benefits of
$187,000.  Other expenses increased by approximately $1,091,000 or 31.5% for the
nine month period ended September 30, 1998 compared to the same period in 1997.
The increase is due primarily to an increase in salaries and employee benefits
of $630,000 which can be partially attributed to an increase of full time
employees to 86 in 1998 as compared to 72 in 1997.  The significant increase in
employees is due to the opening of two new branches in the past two years.  In
addition, the Bank has begun offering trust services and increased the activity
in their mortgage operations, both which required additional experienced
personnel.  The increase in occupancy and equipment expenses of $222,000 is also
related to the opening of two branches within the past two years.  The increase
in other operating expenses of $156,000 is not related to any one significant
item, but includes normal increases in operating expenses.

Income tax expense decreased by $16,000 for the three months ended September 30,
1998 compared to the three months ended September 30, 1997.  Income tax expense
decreased by $103,000 for the nine months ended September 30, 1998 compared to
the nine months ended September 30, 1997.  The effective tax rate for the period
in 1998 was 32% compared to 35% for the same period in 1997.  This decrease is
attibutable to the investment in tax free investments during the year.

Net income increased for the three months ended September 30, 1998 by $31,000
compared to the same period in 1997.   Net income decreased for the nine months
ended September 30, 1998 by $31,000 compared to the same period in 1997.  The
decrease in net income is attributable to increases in provision for loan losses
and other expense as explained above.

The Company is not aware of any other known trends, events or uncertainties,
other than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations.  The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.

CAPABILITY OF THE BANK'S DATA PROCESSING SOFTWARE TO ACCOMMODATE THE YEAR 2000

The Company heavily relies upon computers for the daily conduct of their
business and for data processing generally.  There is concern among industry
experts that commencing on January 1, 2000, computers will be unable to "read"
the new year and there may be widespread computer malfunctions.

The Company has conducted a comprehensive review of its computer systems,
programs, applications, and other electronic components used in the operations
of the Company as well as third party vendors and customers to identify the
areas that could be affected by the Year 2000 issue, and has developed a
remediation plan to resolve any identified non-compliant component. All mission
critical components have been identified and the Company is currently in the
validation phase of its Year 2000 plan.  The validation phase of its plan is
expected to be substantially complete by December 31, 1998. The Company has
budgeted the cost of remediation at approximately $275,000.  As of October 31,
1998,  the Company has expended approximately $176,000 of the budget.
<PAGE>
 
A material negative impact on the operations, liquidity and financial condition
of the bank would occur in a worst case scenario if the bank performed no
remediation. The company has substantially completed its remediation plan.  In
the event of a worst case scenario the Company also has a contingency plan that
addresses each of its mission critical components.
<PAGE>
 
                          PART II - OTHER INFORMATION



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

          None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a)  Exhibits.

               27.  Financial Data Schedule

          (b)  Reports on Form 8-K.

               None
<PAGE>
 
                                  SIGNATURES


In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



GB&T BANCSHARES, INC.



DATE: 11/13/98                       BY:  /s/ Richard A. Hunt
     ------------------                 ---------------------
                                         Richard A. Hunt
                                         President and Chief Executive Officer



DATE:  11/13/98                      BY: /s/ Gregory L. Hamby
     ------------------                 ---------------------
                                         Gregory L. Hamby
                                         Chief Financial Officer