**UNITED STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-K/A**

**(Amendment No. 1)**

 

**(Mark One)**

   x                                                                   **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THESECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31,2007**

 

**Or**

 

   o                                                                     **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THESECURITIES EXCHANGE ACT OF 1934 for the transition period from             to          **

 

**CommissionFile Number 000-24203**

 

**GB&T Bancshares, Inc.**

(Exact name of registrant as specified in its charter)

 

| **Georgia**                                                           | ** ** | **58-2400756**                              |
|-----------------------------------------------------------------------|------------|---------------------------------------------|
| (State  or other jurisdiction of                                      |       | (IRS  Employer Identification No.)          |
| incorporation or organization)                                        |       |                                        |
|                                                                  |       |                                        |
| **500 Jesse Jewell Parkway, S.E.**                                    | ** ** | ** **                                  |
| **Gainesville, Georgia**                                              | ** ** | **30501**                                   |
| (Address  of principal executive offices)                             |       | (Zip  Code)                                 |
|                                                                  |       |                                        |
| **(770) 532-1212**                                                    |
| Registrant’s  telephone number, including area code              |
| Securities registered pursuant to Section 12(b) of the Act: |
|                                                                  |       |                                        |
| **Common Stock, no par value**                                        | ** ** | **Nasdaq Global Select Market**             |
| **(Title  of class)**                                                 | ** ** | **(Name of  exchange on which registered)** |

** **

Securities registered pursuant to Section 12(g) ofthe Act:**        None**

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.

                                                Yeso                                                                No    x

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Exchange Act.

                                                Yeso                                                                No   x

 

Indicateby check mark whether the registrant: (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days:                                         Yes    x                                                  Noo

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.     o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,”  “accelerated filer” and “smaller reportingcompany” in Rule 12b-2 of the Exchange Act.

 
| Large  accelerated filer   o                                                          |   | Accelerated  filer  x         |
|-------------------------------------------------------------------------------------------------|--------|------------------------------------|
| Non-accelerated  filer   o   (Do  not check if a smaller reporting company) |   | Smaller  reporting company  o |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes o  No x

 

The aggregatemarket value of the registrant’s common stock held by nonaffiliates as of June 30,2007 was approximately $218,098,009 based on the closing price of the common stockon the Nasdaq Global Select Market of $16.70 per share on that date.  For this purpose, directors and executiveofficers have been assumed to be affiliates.

 

As of February 28, 2008, the Company hadissued and outstanding 14,230,796 shares of the 20,000,000 authorized shares ofits no par value common stock.

 

**DOCUMENTSINCORPORATED BY REFERENCE**

 

None.

 

 

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**EXPLANATORY NOTE**

 

GB&T Bancshares, Inc. (the “Company”) is filing this AmendmentNo. 1 on Form 10-K/A (this “Amendment”) to its Annual Report on Form 10-Kfor the fiscal year ended December 31, 2007, originally filed on March 5,2008, for the purpose of including certain information required by Item 5 of Part IIand the information required by Part III of Form 10-K.  In addition, the registrant is also includingas exhibits to this Amendment the certifications required pursuant to Section 302of the Sarbanes-Oxley Act of 2002. Because no financial statements are contained within this Amendment, theregistrant is not including certifications pursuant to Section 906 of theSarbanes-Oxley Act.  Except as set forthherein, the registrant is making no other changes to its Annual Report on Form 10-Kfor the fiscal year ended December 31, 2007.

 

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**PART II**

 
| **ITEM 5.** | ** ** | **MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS  AND ISSUER PURCHASES OF EQUITY SECURITIES** |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------|

 

The following graph compares the Company’s yearly percentage change incumulative, five-year shareholder return with the Nasdaq Market (U.S.) Indexand the SNL Nasdaq Bank Index. The graph assumes that the value of theinvestment in the Company’s common stock and in each index was $100 on December 31,2002 and that all dividends were reinvested. The change in cumulative totalreturn is measured by dividing (i) the sum of (a) the cumulativeamount of dividends for the period, and (b) the change in share pricebetween the beginning and end of the period, by (ii) the share price atthe beginning of the period.

** **

** **

** **
| ** **                          | ** ** | **Period Ending** | ** ** |
|-------------------------------------|------------|-------------------|------------|
| **Index**                           | ** ** | **12/31/02**      | ** ** | **12/31/03** | ** ** | **12/31/04** | ** ** | **12/31/05** | ** ** | **12/31/06** | ** ** | **12/31/07** | ** ** |
| GB&T Bancshares, Inc. |       | 100.00            |       | 133.53 |   | 172.81 |   | 155.74 |   | 163.92 |   | 70.98 |   |
| NASDAQ Composite                    |       | 100.00            |       | 150.01 |   | 162.89 |   | 165.13 |   | 180.85 |   | 198.60 |   |
| SNL Bank NASDAQ Index               |       | 100.00            |       | 129.08 |   | 147.94 |   | 143.43 |   | 161.02 |   | 126.42 |   |

 

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**Source: SNL Financial LC,Charlottesville, Virginia, 2008.Used with permission. All rights reserved. www.snl.com  (434) 977-1600*

 

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*The foregoing Total Return Performance Graph shall not be deemed to be “soliciting material” or to be “filed” with the*Securitiesand Exchange *Commission (“SEC”), nor shall such information be incorporatedby reference into any future filing under the Securities Act of 1933, asamended, or the Securities Exchange Act of 1934 ,as amended (the “Exchange Act”),  except to the extent the Company specificallyincorporates it by reference into such filing.*

 

**PART III**

 

**ITEM 10.****                                              DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**

 

**Directors**

 

The followingare the names and ages of the directors, the year each individual begancontinuous service as a director of the Company and the business experience ofeach, including principal occupations, at present and for at least the pastfive years:

** **
| **Name, Age and Term as Director**  | ** ** | **Principal Occupation for Last Five Years and Other Directorships**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                   | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Lowell  S. (Casey) Cagle**, age 42  Director since 2004    |       | Mr. Cagle is the owner and  President of Casey Cagle Properties, LLC and is the Lieutenant Governor of  Georgia. He served as Chairman of the Board of Southern Heritage Bancorp and  Southern Heritage Bank from Southern Heritage’s inception in 1998 until the  Company’s acquisition of Southern Heritage in 2004.                                                                                                                                                                                                                                                                                              |
| ** **                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Dr. John W.  Darden**, age  62 Director since 1987    |       | Dr. Darden is a retired medical doctor, having practiced surgery  in Gainesville, Georgia for 25 years. In addition to serving on the Company’s  board, Dr. Darden also serves as a director of Gainesville  Bank & Trust.                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **William A.  Foster, III**, age 63 Director since 2001 |       | Since 1992, Mr. Foster has served as Superior Court Judge for  the Paulding Circuit, State of Georgia. On February 1, 2005,  Mr. Foster became a Senior Judge of the Superior Courts of Georgia.  Mr. Foster was a director of Community Trust Financial Services  Corporation until that company was acquired by the Company on June 30,  2001. Mr. Foster is Chairman of the Board of Directors of Community  Trust Bank, which became a subsidiary of the Company in connection with its  acquisition of Community Trust Financial Services Corporation.                                          |
| ** **                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Bennie E. Hewett**, age 69 Director since 1987             |       | Prior to 2002, Mr. Hewett was President of Capital Loan Company  of Gainesville, Inc. In addition, from 1987 until 2002, Mr. Hewett  served as Chairman of the Board of Delta Management Company, a sole  proprietorship, which operated a chain of consumer finance companies located  in Georgia, South Carolina, Texas and Louisiana. Presently, he is president  and owner of Capital Assets, Inc., which invests in real estate, media  and various other ventures. In addition to serving on the Company’s board,  Mr. Hewett also serves as a director of Gainesville Bank &  Trust. |
| ** **                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Richard A. Hunt**, age 63 Director since 1987              |       | Mr. Hunt is President and Chief Executive Officer of the  Company, a position he has held since July 1987. Mr. Hunt also  serves on the Boards of United Bank & Trust, Community Trust Bank,  Gainesville Bank & Trust, HomeTown Bank of Villa Rica and Mountain  State Bank.                                                                                                                                                                                                                                                                                                                     |
| ** **                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **James L. Lester**, age 62 Director since 2000              |       | Mr. Lester is President of J. L. Lester &  Son, Inc., an investment company,****and has been  Vice President of Sales for EBY-Brown,  a food distributorship, located in Rockmart, Georgia, since 1998. In  addition to serving on the Company’s board, Mr. Lester also serves as  Chairman of the Board of United Bank & Trust.                                                                                                                                                                                                                                                             |

 

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| **John E. Mansour,**age 55 Director since 2005           |   | Mr. Mansour was the Chairman of FNBG Bancshares until its merger  with the Company in March of 2005. Mr. Mansour currently operates a  Chevrolet dealership in Canton, Georgia. He is also the President of Berkeley  Enterprises, Inc., a real estate investment company, and is an investor  or partner in several other business ventures. Mr. Mansour is a  registered pharmacist with a degree from the University of Georgia. In  addition to serving on the Company’s board, Mr. Mansour also serves as  Chairman of the Board of Directors of First National Bank of Gwinnett. |
|----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Dr. T. Alan Maxwell**, age 59 Director since 2003 |   | Dr. Maxwell is the owner and President of T. Alan Maxwell,  D.D.S., P.C., a general dentistry practice in Milledgeville, Georgia. He was  an organizer in 1989 of First National Bank of Baldwin County, which changed  its name to First National Bank of the South, and has served as a director  since 1989. Dr. Maxwell became a director of the Company in connection  with its acquisition of First National Bank of the South in August 2003.                                                                                                                                                       |
| ** **                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Samuel L. Oliver**, age 65   Director since 1987       |   | Mr. Oliver is Vice Chairman of the Company and a director and  the Vice Chairman of Gainesville  Bank & Trust. He is a practicing attorney and partner in the  law firm of Hulsey, Oliver & Mahar, LLP, which has served as legal counsel to the Company since  its organization. Mr. Oliver has been a member of Hulsey,  Oliver & Mahar, LLP since 1969.                                                                                                                                                                                                                           |
| ** **                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Alan A. Wayne**, age 65   Director since 1992          |   | Mr. Wayne  is Secretary of the Company and a director and the Secretary of Gainesville  Bank & Trust. Mr. Wayne is a partner in Wayne Co. Development,  the President of Wayne Brothers, Inc. and the President of Chattahoochee  Parks, Inc. All are commercial real estate development companies.  Mr. Wayne has held positions with these businesses or their predecessors  for more than five years.                                                                                                                                                                                |
| ** **                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Anna B. Williams**, age 65   Director since 2006       |   | Ms. Williams was an Organizing director of Mountain State Bank  and has served as Vice Chair of the Board of Directors of that bank since  2002. Ms. Williams is a certified public accountant and is founder of  Anna B. Williams, P.C., a business and tax-consulting firm specializing in  estate planning and tax-advisory services. Ms. Williams is a member of  The Maverick Group, LLC, a residential builder in metro Atlanta, and also a  member of the Atlanta Estate Planning Council.                                                                                                          |
| ** **                                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **Philip A. Wilheit**, age 63   Director since 1987      |   | Mr. Wilheit is Chairman of the Board of Directors of the Company  and of Gainesville Bank & Trust. Mr. Wilheit has served as  President of Wilheit Packaging, LLC, a distributor of packaging material and  paper-related products since 1999.****Mr. Wilheit  also serves as President of Marketing Images, a corrugated paper products  company.                                                                                                                                                                                                                                                |

 

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## **Executive Officers**

##  

The executiveofficers of the Company are elected annually and serve at the pleasure of theBoard of Directors.  The following setsforth each executive officer of the Company by name, age, the year firstelected as an officer of the Company, position with the Company, and businessexperience for the past five years.

 
| ** **                                                                   | ** ** | ** ** | ** ** | **Year First** | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Name**                                                                     | ** ** | **Age**    | ** ** | **Elected**         | ** ** | **Business Experience**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** **                                                                   | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Richard A. Hunt** President and Chief Executive Officer                    |       | 63         |       | 1987                |       | Additional biographical  information regarding Mr. Hunt, who is also a director, can be found  under the heading of this Report entitled “Directors.”                                                                                                                                                                                                                                                                                                                                                                               |
| ** **                                                                   |       |       |       |                |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Gregory L. Hamby**  Executive Vice President  and Chief Financial  Officer |       | 53         |       | 1996                |       | Mr. Hamby has been the Executive Vice President and Chief  Financial Officer of the Company and Gainesville Bank & Trust since  2001. From 1996 to 2001, he served as Senior Vice President of the Company  and Gainesville Bank & Trust, and from 1995 to 1996, he served as  Vice President and Accounting Manager of Gainesville Bank & Trust.  Mr. Hamby has served on the Boards of First National Bank of the South since  October 2003 and First National Bank of Gwinnett since March 2005. |

##  

**Family Relationships**

 

The followingfamily relationships exist between certain directors and executive officers ofthe Company or any of its subsidiaries:

 

·                  Alan Wayne isthe first cousin of Scott Wayne, who is Senior Vice President of GainesvilleBank & Trust and President of the Bank of Athens division ofGainesville Bank & Trust.

 

**Section 16(a) Beneficial OwnershipReporting Compliance**

 

Section 16(a) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”), requiresthe Company’s officers and directors, and persons who own 10% or more of theregistered class of the Company’s equity securities, to file with theSecurities and Exchange Commission (“SEC”) initial reports of ownership andreports of changes in ownership of common stock and other equity securities ofthe Company.  Officers, directors and 10%shareholders are required by regulations of the SEC to furnish the Company withcopies of all of the forms they file under Section 16(a) of theExchange Act.  To the Company’sknowledge, based solely on a review of the copies of such reports furnished tothe Company during the fiscal year ended December 31, 2007, all directors,officers and 10% shareholders complied with all filing requirements under Section 16(a) ofthe Exchange Act with the exception that a Form 4 relating to the exerciseof options by Mr. Hamby was inadvertently filed late in February 2007,and a Form 4 relating to the exercise of options by Mr. Hewett wasalso inadvertently filed late in March 2007.

 

**Code of Ethics**

 

The Company’s Code of Ethics, as amended on April 17, 2004,applies to all of our directors, executive officers and employees.  The Code of Ethics is available on ourwebsite at www.gbtbancshares.com under the heading “Investor Relations,” “CorporateInformation” and “Governance Documents.” We intend to disclose any amendments to our Code of Ethics, and anywaiver from a provision the Code of Ethics granted to our principal executiveofficer, principal financial and accounting officer or persons performingsimilar functions on our website at www.gbtbancshares.com under the heading “InvestorRelations” and “Corporate Information” within four business days following suchamendment or waiver.

 

## **AuditCommittee**

##  

                                                TheBoard of Directors has astanding Audit Committee, composed of Messrs. Darden, Hewett, Mansour, Wilheit and Ms. Williams.  The Audit Committee held 13 meetings during the fiscal year ended December 31, 2007.  The Audit

 

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Committee, among other things, recommends to the Board of Directors theengagement of the independent accountants of the Company and reviews the scopeand results of the audits and the internal accounting controls of the Company and its subsidiary banks.

 

The AuditCommittee acts under an amended and restated written charter, which isavailable on the Company’s website at www.gbtbancshares.com under the heading “InvestorRelations,” “Corporate Information” and “Governance Documents.”

 

The Board ofDirectors has determined that Messrs. Darden, Hewett, Mansour, Wilheit and Ms. Williamsare “independent” as required by applicable listing standards of the NasdaqStock Market and Rule 10A-3(b)(1) of the Exchange Act.  The Board of Directors has examined the SEC’sdefinition of “audit committee financial expert” and has determined that Ms. Williamsmeets these standards.  Accordingly, Ms. Williamshas been designated by the Board as an audit committee financial expert.

 

## **Shareholder Recommendations forDirector Nominees**

##  

No materialchanges have been made to the procedures by which the Company’s shareholdersmay recommend nominees to the Company’s Board of Directors since we lastdescribed these procedures in our definitive proxy statement issued inconnection with our 2007 Annual Meeting of Shareholders and filed with the SECon April 18, 2007.

 

**ITEM 11.****                                              EXECUTIVECOMPENSATION**

 

**Compensation Discussion and Analysis**

 

The Compensation Committee, appointed by the Board of Directors, setsand administers the policies that govern the Company’s executive compensationprograms, director compensation and various incentive and stock optionprograms.  Voting members of theCompensation Committee must meet SEC and Nasdaq independence requirements,although the Board of Directors may appoint non-independent directors to serveon the committee as ex-officio, non-voting members.

 

To assist withunderstanding the executive compensation tables included in this Report, thefollowing discussion provides an overview and analysis of our compensationprogram and policies with respect to our named executive officers.

 

Objectives ofour Compensation Program

 

The objectivesof our compensation program are as follows:

 

·                  Attracta sufficient number of qualified executives to meet the needs of the Company asdefined by its strategic plans,

·                  Retainand motivate executives whose performance supports the achievement of ourobjectives,

·                  Providetotal compensation that the individual believes is fair and equitable in themarketplace and has the highest perceived value to the Company’s shareholders,

·                  Provideopportunities that integrate pay with the Company’s annual and long-termperformance goals,

·                  Encourageachievement of strategic objectives and creation of shareholder value,

·                  Recognizeand reward individual initiative and achievements, and

·                  Maintainan appropriate balance between base salary and short- and long-term incentiveopportunity.

 

Market Dataand Use of Consultants

 

We compete for executive talent with national and regional banks ofsimilar scope and shareholder returns. While emphasis is placed on the internal equity of executivecompensation relative to other managers and staff of the Company, theCompensation Committee strives to ensure that our executive officercompensation is competitive in the marketplace. To assist in making its compensation decisions, the CompensationCommittee retained Matthews, Young - Management Consulting (“Matthews Young”)to review all forms of compensation to identify strengths, weaknesses and areasto improve upon.  The CompensationCommittee reviews market data from surveys and has relied on reports providedby Matthews Young.  In January 2007,at the request of the Compensation Committee, Matthews Young conducted a reviewof total compensation provided to the named executive officers and to thepresidents of each subsidiary Bank (collectively, the “Management Team”)compared with banks in the following categories:

 

·      13financial institutions in southeastern United States with average assets of$1.872 billion,

·      213United States banks with assets of $1 billion to $4 billion,

 

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·                  29 United Statesfinancial institutions with average assets of greater than $1.0 billion andassets at the 75th percentile of $2 billion, and

·                  16 United Statesfinancial institutions with assets of greater than $1.0 billion and assets atthe 75th percentile of $1.964 billion.

 

Specifically, Matthews Young has: (i) provided market dataregarding compensation practices of the peer group described above; (ii) providedsuggestions regarding various types and levels of base salaries, executivebenefits, perquisites, long-term and short-term incentive compensation; and (iii) calculatedthe potential effects of various equity based compensation plans.  References to our “peer group” throughoutthis CD&A reflect the group described above.

 

After considering this data, the Compensation Committee determined thatbase salaries are generally somewhat below the median in the marketplace, withwhich the Compensation Committee is comfortable given that it intends to offersignificant incentives.  The CompensationCommittee targeted annual cash incentive awards and long-term incentive awardsfor our Management Team above the median of a peer group of similar communitybanking companies.

 

## Allocationof Compensation Components

##  

Under the Company’s compensation structure, the targeted allocation ofbase salary, bonus and equity compensation varies depending on the officer’slevel within the organization.  TheCompensation Committee has not established a defined range of potentialcompensation components as a percentage of total cash and equity, but inallocating compensation among these elements, the Compensation Committee aimsto structure the compensation of the Company’s Management Team (including theCompany’s named executive officers) in a way that will have the greatestability to influence the Company’s performance. Accordingly, a higher weighting of performance-based incentives areavailable to those officers having greater influence as compared to lowerlevels of management who receive a greater portion of their compensation inbase salary.

 

Certain perquisites and other employee benefits are also provided tothe Company’s named executive officers. Additional information regarding each element of executive compensationis provided below.

 

Elements of Compensation

 

Ourcompensation program consists of the following elements: (i) base salary, (ii) annualcash incentive awards, (iii) long-term incentive awards, (iv) perquisitesand other executive benefits, and (v) change-in-control severancebenefits.

 

*Base Salary*

 

TheCompensation Committee views base salaries as necessary to recruit and retainexecutives, but recognizes that base salaries do not focus the Management Teamon achieving strong performance.  Thesalaries of our Management Team are designed to provide a competitive level ofcompensation that is affordable to the Company and fair to the executive.  Salaries are reviewed annually andadjustments, if any, are made based on the review of competitive salaries atour peer companies, as well as an evaluation of the individual officer’sresponsibilities, job scope, and individual performance.  For example, we assess each officer’sperformance with reference to his performance toward meeting objectives such asearnings, achievement of core deposit growth, successful execution of ourcapital plan, business conduct and integrity, and leadership and team building.

 

Matthews Young and the Compensation Committee reviewed salaries ofpositions similar to those held by the named executives within the peergroups.  Based on this review, MatthewsYoung and the Compensation Committee determined that our named executiveofficers’ salaries were below the median relative to comparable positionswithin the peer group.  The CompensationCommittee also reviewed the multiple of executives’ base salaries relative tothe next levels of management positions and all Company staff.  The Compensation Committee believes that basesalaries can be somewhat below peer base salaries, as long as the gap is not sobig as to make it difficult to attract and retain qualified executives.  However, some current base salaries are toofar below peers and a smaller part of the mix than is appropriate given theCompensation Committee’s strategy. Therefore, the Compensation Committee increased base salaries of certainofficers during 2007 in amounts to catch up with our growth from prioryears.  The 2007 base salaries for eachof our named executive officers are reflected in the Summary Compensation Tableincluded in this Report.

 

The Compensation Committeeapproved 2007 base salaries for our named executive officers in the followingamounts: Mr. Hunt: $352,500, and Mr. Hamby: $202,000.  In arriving at these amounts, theCompensation Committee took into consideration the factors discussedabove.  However, the CompensationCommittee also considered that, in February 2007, after bonuses had beenpaid to our named executive officers, the Company revised its results for thefourth quarter of 2006 by increasing the Company’s allowance for loan losses byapproximately $9.7 million, resulting in a reduction in net income of $5.9million for the fourth quarter and year ended December 31, 2006.  Notwithstanding the fact that the revision 

 

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related primarily to several loan relationships originated by thepresident of HomeTown Bank of Villa Rica in which numerous bank loan policiesand procedures were not followed, the Compensation Committee deemed the mostprudent course of action was to keep Mr. Hunt’s base pay the same as itwas in 2006 and to provide a modest increase in Mr. Hamby’s base pay.  In anticipation of the Company’s pendingmerger with SunTrust Banks, Inc. (“SunTrust”), no further increases in thebase salaries of our named executive officers are contemplated.

 

*Annual Cash Incentive Awards*

 

We believe that annual cash incentive awardsfocus our Management Team on the achievement of short-term objectives that arecritical to achievement of our strategic plan. Our continued success is derived from sustaining a balance between ourshort-term and our long-term objectives. As a result, as we reach our short-term milestones, we believe ourManagement Team should be rewarded.

 

Our ManagementTeam receives annual cash incentive awards under annual “Executive IncentivePlans,” which provide for target cash awards to certain members of ourManagement Team upon achievement of certain financial objectives.  We seek to ensure that annual cash incentiveawards constitute a significant portion (35% to 55%) of each executive officer’sannual base salary based on the attainment of the annual performance objectivesunder the annual plans.

 

In December 2006, the Compensation Committee approved the 2007performance objectives for the executive incentive plans for 2007.  These objectives came from line items in theproposed budget for 2007.  Awards for Messrs. Huntand Hamby were based on budgeted net income, loan growth, deposit growth, netcharge-offs, efficiency ratio and safety and soundness ratings established bythe Compensation Committee.

 

These performance objectives represent those metrics that we believeare of utmost importance for the long term growth of a high performingcommunity bank.  The annual budgets fromwhich many of the performance objectives tend to be practical but ambitious andaggressive, shaping our goals for maximum performance and efficiency.  As such, achieving 100% of the targeted cashbonus level is relatively difficult but not unrealistic.  Notwithstanding the budgeted targets andother performance objectives communicated to each member of the Management Teamin each annual plan, the Compensation Committee ultimately has discretion todetermine what, if any, cash bonus awards are granted, regardless of whichperformance objectives are or are not met.

 

The table below summarizes the financial measures (along with theirrespective weighting factors) for the executive officers to receive cash bonusawards in 2007:

 
| **Financial Measure** | ** ** | **Weighting  Factor** | ** ** |
|----------------------------|------------|-----------------------|------------|
| Net Income                 |       | 50                    | %          |
| Loan Growth                |       | 10                    | %          |
| Non Interest DDA           |       | 10                    | %          |
| Other Core Deposits        |       | 10                    | %          |
| Net Charge-offs            |       | 10                    | %          |
| Efficiency Ratio           |       | 5                     | %          |
| Safety and Soundness       |       | 5                     | %          |

 

If the above performance criteria weresatisfied, Messrs. Hunt and Hamby were eligible to receive a cash awardequal to a percentage of their base salary as set forth below.

 
| ** **                                                        | ** ** | **Hunt** | ** ** | **Hamby** | ** ** |
|-------------------------------------------------------------------|------------|----------|------------|-----------|------------|
| Maximum Percent of Base Salary for Superior  Level of Performance |       | 55       | %          | 50        | %          |

 

In early 2008 and after reviewing the year-end financial reports, theCompensation Committee determined that the level of performance warranted Mr. Huntand Mr. Hamby earning cash awards which approximated 75% and 83%,respectively, of their individually targeted awards.  Awards earned in 2007 by each of our namedexecutive officers are reflected in the Bonus column of the Summary CompensationTable included in this Report.

 

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*Long-Term Incentive Awards*

 

The Company believes that while short-termincentives are important, the value of our franchise is a long-term issue.Therefore, we offer a set of incentives that balance executives’ motivationsbetween achieving annual strategic objectives and building long-term value.Toward that end, the Company offers long-term incentives in the form of stockoptions. In order to retain flexibility, the Compensation Committee has notestablished rigid, periodic dates upon which awards will be made, and typicallygrants options on random dates throughout the year or as needed. TheCompensation Committee does not time the grant of options to take advantage ofmaterial non-public information, nor does the Compensation Committee take intoaccount the prevailing trading prices of the Company’s common stock in thetiming of awards in any way. The option exercise price, or strike price, forany award is always set at the fair market value on the date of the grant. Fairmarket value is defined as the closing price on the date of the grant. No newstock options were granted to our named executive officers during 2007.

 

In January 2007, Matthews Young comparedhistorical stock option grants with peer companies, normal guidelines, and ourphilosophy and strategy. They found that we have been conservative with ourlong term incentive grants relative to all comparables. Matthews Young alsorecommended that we consider alternatives to stock options, such as performanceand restricted stock. In May 2007, our shareholders approved the 2007Omnibus Long-Term Incentive Plan which provided for such awards. No awardsunder this new plan were granted to the named executive officers in 2007.

 

*Perquisites and Other Executive Benefits.*

 

*Perquisites.*We provide the following perquisites to our named executive officers: (i) personaluse of company automobile or a car allowance; (ii) country clubmemberships and dues; and (iii) cell phones.

 

We believe these perquisites serve a dual purpose. They are competitivewith companies in our peer group, and they also facilitate the officer’sability to work outside our corporate headquarters by assisting with travel andproviding an external location to conduct business.

 

For information on the incremental cost of these perquisites, seefootnotes 5 through 8 to the Summary Compensation Table included in thisReport.

 

TheCompensation Committee believes that the primary purpose of providing perks isto assist an employee to execute their responsibilities effectively. Since mostperks also provide some personal facility, we recognize the cost of the perksas compensation. Philosophically, we see no need to be a leader in offeringperks to our executives, but we will evaluate the value to both the Company andexecutive when they become common in our industry. Currently, we have noprogram for controlling the nature and cost of perks other than theCompensation Committee’s discretion.

 

*RetirementBenefits*. We maintain supplemental executiveretirement agreements (“SERPs”) under an Executive Salary Continuation Planwith Messrs. Hunt and Hamby. The CompensationCommittee provides SERPs to address the issues of internal and externalequity in terms of retirement benefits offered to all employees at the Companyas a percentage of final average pay and executives in our peer group. It isthe Compensation Committee’sdesire to fairly compensate executives and provide competitive retirementbenefits given the restrictions on executives within tax qualified plans.

 

Some of our current SERP plans are notperforming as desired which has resulted in inequities, and we asked MatthewsYoung to study alternative approaches during 2007.

 

We also offer a 401(k) plan to eligibleemployees (including the Management Team). The 401(k) plan allowsparticipants to defer a portion of their compensation and provides that theCompany may match a portion of the participants’ deferred compensation. In2007, the Company matched 32.96% of eligible contributions up to an annualthreshold equal to 6% of a participant’s total compensation.

 

Our executives are also eligible toparticipate in the Company’s other benefit plans on the same terms as otheremployees. These plans include paid vacation leave, medical and dentalinsurance, annual physical examinations, employee assistance programs, employeeand dependent group term life insurance, and employee and spousal disabilityinsurance.

 

## Potential Payments UponTermination or Change in Control

##  

The Company has employment agreements with Mr. Huntand Mr. Hamby that begin on the effective date of any “change in control”of the Company. The terms of these agreements regarding potential payments upontermination after a change in control of the Company are essentially the same.These executives have helped to build the Company into the successful franchisethat it is today, and the Compensation Committee believes that it is importantto protect these officers in

 

10

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the event of a change in control. Further, it is the Compensation Committee’sbelief that the interests of shareholders will be best served if the interestsof executive management are aligned with them, and providing change in controlbenefits should eliminate, or at least reduce, the reluctance of executivemanagement to pursue potential change in control transactions that may be inthe best interests of shareholders.

 

For purposes of these benefits, a change incontrol is deemed to occur, in general, upon (a) the closing of anytransaction, whether by merger, consolidation, asset sale, tender offer,reverse stock split or otherwise, which results in the acquisition ofbeneficial ownership (as such term is defined under the Exchange Act rules) byany person or entity or any group (except the Board of Directors of the Companyas it exists on the date of execution of the agreement) or other persons orentities acting in concert, of 50% or more of the outstanding shares of commonstock of the Company; or (b) the closing of any sale of all orsubstantially all of the assets of the Company. The pending merger withSunTrust will be deemed a “change in control” when it is completed.

 

In theevent of a change in control of the Company, the terms of the employmentagreements become in effect for a period of 36 months for Mr. Hunt and 24months for Mr. Hamby. Compensation under the agreements includes:

 

·                  atotal annual salary and bonus at least equal to the average of the compensation(base salary and incentive bonus) the officer has received for the threecalendar years preceding the effective date, payable in semi-monthlyinstallments payable on the 15th and last day of each month;

 

·                  healthinsurance and health benefits under the same terms and conditions as all otheremployees of the Company during the term of the agreement;

 

·                  eligibilityto participate in the 401(k) Plan on the same terms and conditions asprovided for all employees at the senior vice-president level or higher at theCompany;

 

·                  thesame number of weeks paid vacation as the officer was entitled to under theterms and conditions of his employment immediately preceding the eventconstituting the change in control of the Company; and

 

·                  otherfringe benefits that the officer was receiving under the terms and conditionsof his employment immediately prior to the event constituting change in controlof the Company.

 

Under the agreement, the officer’s employment may be terminated:

 

·                  by the Companyfor “cause” (such as a material breach of the employment agreement, grossnegligence or willful misconduct by the officer or conviction of a felony,misdemeanor involving moral turpitude, or fraud), without further obligationand for monies already paid;

 

·                  by the Companyfor any reason other than “cause”, in which case the Company will have to payto the officer a sum equal to the compensation above for the period remainingin the agreement, which payment shall be made in a lump sum due not later than15 days after the last to occur of the date of any closing in which change incontrol takes place and the date upon which the officer is given notice by theCompany that his employment is terminated; and

 

·                  by the officerupon two weeks’ notice to the Company which, if terminated within 90 days ofthe effective date of the change in control, will entitle the officer to thecompensation above, to be paid in a lump sum.  In the event the officerelects to terminate more than 90 days after the effective date of a change incontrol, he will receive no further salary or other benefits.

 

The following table summarizes in tabularform the potential post-employment payments due to the executive officers ifthe employment agreements discussed above become effective upon a change incontrol of the Company, assuming the change of control and the events occurredon the last business day of the last fiscal year.

 

11

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| ** **       | ** ** | **Termination by the  Company for  “cause”** | ** ** | **Termination  by the  Company for  any reason  during the  term other  than for  “cause”** | ** ** | **Termination  by the officer  within 90  days of the  change in  control** | ** ** | **Termination  by the  officer past  90 days of  the change  in control** | ** ** | **Death or  Disability** | ** ** |
|------------------|------------|-----------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|------------|-------------------------------|------------|
| **Name**         | ** ** | **($)**                                                               | ** ** | **($)**                                                                                                                             | ** ** | **($)**                                                                                                   | ** ** | **($)**                                                                                                 | ** ** | **($)**                       | ** ** |
|             |       |                                                                  |       |                                                                                                                                |       |                                                                                                      |       |                                                                                                    |       |                          |       |
| Richard A. Hunt  |       | 0                                                                     |       | 1,736,462                                                                                                                           |       | 1,736,462                                                                                                 |       | 0                                                                                                       |       | 0                             |       |
|             |       |                                                                  |       |                                                                                                                                |       |                                                                                                      |       |                                                                                                    |       |                          |       |
| Gregory L. Hamby |       | 0                                                                     |       | 633,451                                                                                                                             |       | 633,451                                                                                                   |       | 0                                                                                                       |       | 0                             |       |

 

Stock TradingPolicies

 

Executives and other employees may not engagein any transaction in which they may profit from short-term speculative swingsin the value of the company’s securities. This includes “short sales” (sellingborrowed securities which the seller hopes can be purchased at a lower price inthe future) or “short sales against the box” (selling owned, but not deliveredsecurities), “put” and “call” options (publicly available rights to sell or buysecurities within a certain period of time at a specified price or the like)and hedging transactions, such as zero-cost collars and forward sale contracts.In addition, this policy is designed to ensure compliance with allinsider-trading rules.

 

Tax Deductibility of Executive Compensation

 

Section 162(m) of the InternalRevenue Code places a limit of $1,000,000 on the amount of compensation thatthe Company may deduct in any one year with respect to each of it five mosthighly paid executive officers. There is an exception to the $1,000,000 limitationfor performance-based compensation meeting certain requirements. Annual cashincentive awards, long-term incentive awards and stock option awards areperformance-based compensation meting these requirements and are fullydeductible. Thus far, none of our Management Team has received compensation inexcess of the Section 162(m) limitation and therefore, allcompensation has been fully deductible.

 

**Summary Compensation Table**

 

The following table sets forth certaininformation for the 2006 and 2007 fiscal years concerning compensation paid bythe Company to its President and Chief Executive Officer and Chief FinancialOfficer.

 
| **Name and Principal**   | ** ** | **Salary(1)** | ** ** | **Bonus(2)** | ** ** | **Option  Awards** | ** ** | **Change in  Pension Value** | ** ** | **All Other  Compensation** | ** ** | **Total** | ** ** |
|------------------------------------|------------|---------------|------------|--------------|------------|--------------------|------------|----------------------------------------|------------|----------------------------------|------------|-----------|------------|
| **Position**                       | ** ** | **($)**       | ** ** | **($)**      | ** ** | **($)(3)**         | ** ** | **($)(4)**                             | ** ** | **($)**                          | ** ** | **($)**   | ** ** |
|                               |       |          |       |         |       |               |       |                                   |       |                             |       |      |       |   |
| **Richard A. Hunt**                |       |          |       |         |       |               |       |                                   |       |                             |       |      |       |   |
| President and Chief Executive      |       | 2007          | 352,500    |         | 88,000     |               | 22,373     |                                   | 40,239     |                             | 71,350     | (5)       | 574,462    |   |
| Officer                            |       | 2006          | 352,500    |         | 146,499    |               | 31,419     |                                   | 40,404     |                             | 64,039     | (6)       | 634,861    |   |
|                               |       |          |       |         |       |               |       |                                   |       |                             |       |      |       |   |
| **Gregory L. Hamby**               |       |          |       |         |       |               |       |                                   |       |                             |       |      |       |   |
| Executive Vice President and Chief |       | 2007          | 202,000    |         | 50,500     |               | 8,815      |                                   | 4,733      |                             | 22,446     | (7)       | 288,494    |   |
| Financial Officer                  |       | 2006          | 190,000    |         | 78,964     |               | 17,158     |                                   | 3,795      |                             | 21,810     | (8)       | 311,727    |   |

 

12

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----

(1) Each of the named executives contributeda portion of his salary to the Company’s 401(k) plan, which amounts arenot deducted from the salary amounts indicated.

 

(2)  These annual cash bonuses were paid in thefirst quarter of 2007 and the second quarter of 2008 for performance in 2006and 2007, respectively.

 

(3)  This column represents the dollar amountrecognized for financial statement reporting purposes with respect to the 2006fiscal year for the fair value of stock options granted to each of the namedexecutive officers, in such year as well as prior fiscal years, in accordancewith SFAS 123R. For additional information on the valuation assumptions withrespect to the grants, refer to Note 12 of the Company’s financial statementsin the Form 10-K for the year ended December 31, 2007, as filed withthe SEC. For information on the valuation assumptions with respect to grantsmade prior to 2007, refer to the note on Stock-Based Compensation for the Company’sfinancial statements in the Form 10-K for the respective year-end. Theseamounts reflect the Company’s accounting expense for these awards, and do notcorrespond to the actual value that will be recognized by the named executiveofficers.

 

(4)  This column represents the sum of the changein pension value and non-qualified deferred compensation earnings in 2006 and2007 for each of the named executive officers. See the Pension Benefits Tableincluded in this Report, including the present value assumptions used in thiscalculation.

 

(5)  Includes $51,050 in director fees; $6750 in401(k) plan match; $132 in automobile allowance; $1750 in contributions tothe stock purchase plan; $5420 in social club dues; and $6248 in life****insurance premiums.

 

(6)  Includes $44,800 in director fees; $6,600 in401(k) plan match; $493 in automobile allowance; $1,750 in contributionsto the stock purchase plan; $4,596 in social club dues; and $5,800 in life****insurance premiums.

 

(7)  Includes $12,000 in director fees; $6,750 in401(k) plan match; $1,750 in contributions to the stock purchase plan; and$1,946 in life****insurance premiums.

 

(8)  Includes $12,000 in director fees; $6,600 in401(k) plan match; $1,750 in contributions to the stock purchase plan; and$1,460 in life****insurance premiums.

 

**Grants of Plan-Based Awards**

 

The following sets forth information aboutgrants of plan-based awards granted to the named executive officers in 2007. Noplan-based awards were granted to the named executive officers in 2007.

 

**Outstanding Equity Awards at December 31,2007**

 

The following table includes certaininformation with respect to the unexercised options held by the named executiveofficers at December 31, 2007. The listed stock option grants wereapproved by the Board of Directors under the Company’s 1997 Incentive Plan toeach of the named executive officers listed. The option exercise prices arebased on the closing price of the Company’s common stock listed on the NasdaqGlobal Select Market on the grant date. All options in the table vest at a rateof 20% per year, in each case beginning on the first anniversary of the optiongrant date.

 
| ** **               | ** ** | **Option Awards**      | ** ** |
|--------------------------|------------|-----------------------------|------------|
| **Name**                 | ** ** | **Option Grant  Date** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  Exercisable  (#)** | ** ** | **Number of  Securities  Underlying  Unexercised  Options  Unexercisable  (#)** | ** ** | **Option  Exercise  Price  ($)** | ** ** | **Option  Expiration  Date** | ** ** |
| ** **               | ** ** | ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Richard A. Hunt**      |       |                        |       |   |   |   |   |   |   |   |   |
| President and Chief      |       | 10/28/02                    |       | 25,000 |   | 0 |   | 13.72 |   | 10/28/2012 |   |
| Executive Officer        |       | 2/20/06                     |       | 2000 |   | 8,000 |   | 21.66 |   | 02/20/2016 |   |
|                     |       |                        |       |   |   |   |   |   |   |   |   |
| **Gregory L. Hamby**     |       |                        |       |   |   |   |   |   |   |   |   |
| Executive Vice President |       | 7/16/01                     |       | 6,250 |   | — |   | 10.92 |   | 07/16/2011 |   |
| and Chief Financial      |       | 2/21/05                     |       | 2,000 |   | 3,000 |   | 23.50 |   | 02/21/2015 |   |
| Officer                  |       | 2/20/06                     |       | 600 |   | 2400 |   | 21.66 |   | 02/20/2016 |   |

 

13

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**OptionExercises and Stock Vested Table**

 

The following table sets forth certaininformation regarding the exercise of stock options during 2007 by the personsnamed in the Summary Compensation Table and the value realized on the exerciseof such options. 

 
| ** **                                                             | ** ** | **Option Awards**                                    | ** ** |
|------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| **Name**                                                               | ** ** | **Number of  Shares  Acquired  on Exercise  #** | ** ** | **Value Realized  On Exercise(1)  ($)** | ** ** |
| **Richard A. Hunt**

President and Chief Executive Officer             |       | 6,250                                                     |       | 28,312 |   |
| ** **                                                             |       |                                                      |       |   |   |
| Gregory L. Hamby

Executive Vice President and Chief Financial Officer |       | 2,100                                                     |       | 241,542 |   |

 

----

(1)  “Value Realized” is based on the differencebetween the market price of our common stock on the date of exercise and theexercise price multiplied by the number of shares. On September 14, 2007, Mr. Huntexercised 6,250 options with an exercise price of $8.64. On January 31,2007, Mr. Hamby exercised 17,875 options, and on September 18, 2007, Mr. Hambyexercised 3,125 options, all with an exercise price of $8.64. The closingprices of our common stock as reported by the Nasdaq Stock Market (NasdaqGlobal Select Market) on September 14, 2007, January 31, 2007, and September 18,2007 were $13.17  $21.31, and $13.69, respectively.

 

## **Pension Benefits Table**

##  

The following table sets forth certaininformation regarding plans that provide for payments or other benefits at,following or in connection with retirement.

 
| ** **                                           | ** ** | ** **                          | ** ** | **Number of  Years of  Credited  Service(1)** | ** ** | **Present Value of  Accumulated  Benefit(2)** | ** ** | **Payments  During 2007** | ** ** |
|------------------------------------------------------|------------|-------------------------------------|------------|---------------------------------------------------------|------------|---------------------------------------------------------|------------|--------------------------------|------------|
| **Name**                                             | ** ** | **Plan Name**                  | ** ** | **(#)**                                                 | ** ** | **($)**                                                 | ** ** | **($)**                        | ** ** |
| ** **                                           | ** ** | ** **                          | ** ** | ** **                                              | ** ** | ** **                                              | ** ** | ** **                     | ** ** |
| **Richard A. Hunt**                                  |       |                                |       | 19                                                      |       | 388,333                                                 |       | —                         |       |
| President and Chief Executive Officer                |       | Executive Salary  Continuation Plan |       |                                                    |       |                                                    |       |                           |       |
|                                                 |       |                                |       |                                                    |       |                                                    |       |                           |       |
| **Gregory L. Hamby**                                 |       |                                |       | 9                                                       |       | 62,915                                                  |       | —                         |       |
| Executive Vice President and Chief Financial Officer |       | Executive Salary  Continuation Plan |       |                                                    |       |                                                    |       |                           |       |

 

----

(1)  Computed as of the same pension planmeasurement date as used for 2007 financial statement reporting purposes.

(2)  The Present Value of Accumulated Benefit wascalculated using the assumptions that were used for 2007 financial statementreporting purposes, including a 6.75% discount rate.

 

14

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**DirectorCompensation**

 

The following table summarizes in tabularform the compensation awarded to, earned by, or paid to the Company’s directorsother than Mr. Hunt, whose compensation for services rendered as adirector is reported in the Summary Compensation Table above, for 2007.

** **
| **Name**                    | ** ** | **Fees Earned or  Paid in  Cash(1)  ($)** | ** ** | **All Other  Compensation(2)  ($)** | ** ** | **Total  ($)** | ** ** |
|-----------------------------|------------|----------------------------------------------------------|------------|------------------------------------------|------------|----------------|------------|
| Lowell S. (Casey) Cagle     |       | 19,200                                                   |       | —                                   |       | 19,200         |       |
| Dr. John W. Darden     |       | 31,900                                                   |       |                                     |       | 31,900         |       |
| William A. Foster, III |       | 26,850                                                   |       | 1,750                                    |       | 28,600         |       |
| Bennie E. Hewett            |       | 33,900                                                   |       | 1,750                                    |       | 35,650         |       |
| James L. Lester             |       | 25,500                                                   |       | 1,750                                    |       | 27,250         |       |
| John E. Mansour             |       | 32,700                                                   |       | 1750                                     |       | 34,450         |       |
| Dr. T. Alan Maxwell    |       | 22,100                                                   |       | 1,750                                    |       | 23,850         |       |
| James H. Moore(3)           |       | 40,350                                                   |       | 1750                                     |       | 42,100         |       |
| Samuel L. Oliver            |       | 39,650                                                   |       | 1,750                                    |       | 41,400         |       |
| Alan A. Wayne               |       | 43,600                                                   |       | 1,740                                    |       | 45,340         |       |
| Philip A. Wilheit           |       | 48,250                                                   |       | 1,750                                    |       | 50,000         |       |
| Anna B. Williams            |       | 36,600                                                   |       | —                                   |       | 36,600         |       |

 

----

(1) Includes cash payment for service on the Company’s Board and subsidiary BankBoards, if any.

(2)  Consists ofmatching contributions to the stock purchase plan. Under that plan, allfull-time employees and directors of the Company or a Bank are eligible toparticipate in the plan. The Company matches payroll deductions (for employees)and direct contributions at a rate of 50% of the amount contributed.

(3)  Mr. Mooreresigned as a director effective December 31, 2007.

 

**Compensation Committee Report**

 

We have reviewed and discussed withmanagement certain Compensation Discussion and Analysis contained in thisReport and, based on such review and discussion, the Compensation Committee hasrecommended to the Board of Directors that the Compensation Discussion andAnalysis be included in this Report.

 
|   | Compensation Committee                                  |
|--------|---------------------------------------------------------|
|   |                                                    |
|   | Philip A. Wilheit

Alan A. Wayne

William A. Foster III |

 

*The foregoing report of the CompensationCommittee does not constitute soliciting material and  shall not be deemed to be incorporated byreference in any previous or future documents filed by the Company with the SECunder the Securities Act of 1933, as amended, or the Exchange Act, except tothe extent that the Company specifically incorporates the report by referencein any such document.*

 

**CompensationCommittee Interlocks and Insider Participation**

 

None of the members of the CompensationCommittee has ever been an officer of the Company or was an officer or employeeof the Company or any of the Banks during 2007. In addition, none of theseindividuals had any or have any relationship requiring disclosure under Item404 of Regulation S-K. During 2007, (i) no executive officer of theCompany served as a member of the compensation committee (or other boardcommittee performing equivalent functions or, in the absence of any suchcommittee, the entire board of directors) of another entity, one of whoseexecutive officers served on the Compensation Committee of the Company; (ii) noexecutive officer of the Company served as a director of another entity, one ofwhose executive officers served on the Compensation Committee of the Company;and (iii) no executive officer of the Company served as a member of thecompensation committee (or other board committee performing equivalentfunctions or, in the absence of any such committee, the entire board ofdirectors) of another entity, one of whose executive officers served as adirector of the Company.

 

15

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| **ITEM 12.** | **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL  OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** |
|--------------|-----------------------------------------------------------------------------------------------------|

 

**SecurityOwnership of Certain Beneficial Owners and Management**

 

The followingtable sets forth certain information regarding the shares of the Company’scommon stock owned as of March 5, 2008, (i) by each person known tothe Company who beneficially owned more than 5% of the shares of the Company’scommon stock, (ii) by each of the Company’s directors and the executiveofficers named in the Summary Compensation Table included in this Report, and (iii) byall of the Company’s directors and executive officers as a group.

 
| **Name of Beneficial Owner**                   | ** ** | **Amount and  Nature of  Beneficial  Ownership(1)** | ** ** | **Percent  of Class(2)** | ** ** |
|---------------------------------------------------------------|------------|---------------------------------------------------------------|------------|-------------------------------|------------|
| Lowell S. (Casey) Cagle                                       |       | 18,632                                                        | (3)        | *                             |       |
| Dr. John W. Darden                                       |       | 149,009                                                       | (4)        | 1.05                          |       |
| William A. Foster, III                                   |       | 86,713                                                        | (5)        | *                             |       |
| Bennie E. Hewett                                              |       | 178,666                                                       | (6)        | 1.26                          |       |
| Richard A. Hunt                                               |       | 154,859                                                       | (7)        | 1.09                          |       |
| James L. Lester                                               |       | 55,780                                                        | (8)        | *                             | ** ** |
| John E. Mansour                                               |       | 51,751                                                        | (9)        | *                             |       |
| Dr. T. Alan Maxwell                                      |       | 76,239                                                        | (10)       | *                             |       |
| Samuel L. Oliver                                              |       | 93,589                                                        | (11)       | *                             |       |
| Alan A. Wayne                                                 |       | 35,986                                                        | (12)       | *                             |       |
| Philip A. Wilheit                                             |       | 222,452                                                       | (13)       | 1.56                          |       |
| Anna B. Williams                                              |       | 49,310                                                        | (14)       | *                             |       |
| Gregory L. Hamby                                              |       | 36,585                                                        | (15)       | *                             |       |
| Dimensional Fund Advisors LP                                  |       | 1,035,716                                                     | (16)       | 7.28                          |       |
|                                                          |       |                                                          |       |                          |       |
| SunTrust Banks, Inc.                                     |       | 1,122,581                                                     | (17)       | 7.89                          |       |
|                                                          |       |                                                          |       |                          |       |
| All directors and executive officers as a  group (13 persons) |       | 1,209,571                                                     |       | 8.50                          |       |

 

----

*Representsless than 1% of the Company’s outstanding shares.

 
|   | (1)    | Under the rules of the U.S. Securities  and Exchange Commission (the “SEC”), a person is deemed to be a beneficial  owner of a security if he or she has or shares the power to vote or to direct  the voting of such security, or the power to dispose or to direct the  disposition of such security. Accordingly, more than one person may be deemed  to be a beneficial owner of the same securities. A person is also deemed to  be a beneficial owner of any securities that such person has the right to  acquire beneficial ownership of within 60 days. Except as otherwise  indicated, the persons named in the above table have sole voting and  investment power with respect to all shares shown as beneficially owned by  them. The information as to beneficial ownership has been furnished by the  respective persons listed in the above table. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (2)    | Based on 14,230,796 shares outstanding as  of March 5, 2008. Shares underlying outstanding stock options or  warrants exercisable within 60 days of such date are deemed to be outstanding  for purposes of calculating the percentage owned by such holder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (3)    | Includes currently exercisable options to  purchase 9,800 shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (4)    | Includes 14,357 shares owned by  Dr. Darden’s wife, 1,064 shares held in the Company’s stock purchase  plan and an aggregate of 57,524 shares which are held in two individual retirement  accounts for Dr. Darden’s benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (5)    | Includes 28,120 shares held in an  individual retirement account for Mr. Foster’s benefit and 1,440 shares  held in the Company’s stock purchase plan. Also includes currently  exercisable options to purchase 7,860 shares. 32,890 shares have been pledged  by Mr. Foster as security for a $500,000 loan from Community Trust Bank.  3,325 shares have been pledged as security for a $50,000 loan to an  individual on which Mr. Foster is guarantor.                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (6)    | Includes 1,820 shares held by  Mr. Hewett’s children, an aggregate of 12,172 shares held in individual  retirement accounts for Mr. Hewett’s benefit, 1,320 shares held in the  Company’s stock purchase plan, 50,340 shares held by Citizens Family  Partnership, 7,532 shares held by Life of Georgia Credit Reinsurance, and  40,289 shares held by Citizen Reinsurance. Mr. Hewett shares voting  power over the shares held by his children. Mr. Hewett shares investment  and voting power over the shares held by Citizens Family Partnership.                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | (7)    | Includes 28,805 shares held in an  individual retirement account for Mr. Hunt’s benefit. Also includes  currently exercisable options to purchase 27,000 shares, 2,543 shares held by  his spouse and 781 shares owned jointly with his mother.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

16

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|   | (8)    | Includes 25,698 shares owned by J.L.  Lester & Son and 163 shares owned by Mr. Lester and his spouse  as joint tenants. Includes 11,746 shares held in an individual retirement  account for Mr. Lester’s benefit. Also includes 2,816 shares held in the  Company’s deferred compensation plan, and 1,440 shares held in the Company’s  stock purchase plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (9)    | Includes 2,807 shares owned jointly by  Mr. Mansour and his wife, 542 shares held by his wife in an individual  retirement account, and 20,069 shares held in an individual retirement  account for Mr. Mansour’s benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (10)   | Includes 38,363 shares held in an  individual retirement account for Dr. Maxwell’s benefit, 1,122 shares  held in the Company’s deferred compensation plan, 1,078 shares held in the  Company’s stock purchase plan, and 2,672 shares held in an individual  retirement account for his wife’s benefit. Also includes 2,351 shares held by  Dr. Maxwell’s mother, for whom he serves as co-legal guardian.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (11)   | Includes 15,718 shares owned by  Mr. Oliver’s wife, 58,315 shares held by the Hulsey, Oliver &  Mahar 401(k) Plan for the benefit of Mr. Oliver, 312 shares held by  the Hulsey & Oliver Building Company, for which Mr. Oliver is a  50% partner, and 1395 shares in held in the Company’s stock purchase plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (12)   | Includes 2,080 shares owned by  Mr. Wayne’s wife. Also, includes 531 shares held in an individual  retirement account for Mr. Wayne’s benefit, 62 shares held in an  individual retirement account for Mr. Wayne’s wife’s benefit, 17,545  held in a joint brokerage account with his Mr. Wayne’s wife, and 1,367  shares held in the Company’s stock purchase plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | (13)   | Includes 15,569 shares owned by  Mr. Wilheit’s wife, 7,390 shares held in an investment account, 1,321  shares held in the Company’s stock purchase plan, and 7,911 shares held by  the Wilheit Family Properties. Mr. Wilheit shares investment and voting  power over the shares held by Wilheit Family Properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (14)   | Includes  17,485 shares held in an individual retirement account for  Ms. Williams’s benefit, and 31,825 shares held in Ms. Williams’  husband’s name.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (15)   | Includes  currently exercisable options to purchase 8,850 shares, 312 shares which are  held in an individual retirement account for Mr. Hamby’s benefit, and  1,373 shares held in the Company’s stock purchase plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (16)   | Dimensional  Fund Advisors LP (formerly, Dimensional Fund Advisors Inc.) reported on its  Schedule 13G filed with the SEC on February 6, 2008, that (a) it is  an investment advisor registered under Section 203 of the Investment  Advisors Act of 1940, furnishing investment advice to four investment  companies registered under the Investment Company Act of 1940, and serves as  investment manager to certain other commingled group trusts and separate  accounts, possessing investment and/or voting power over the securities of  our common stock owned by those investment companies, trusts and accounts  (although it disclaims beneficial ownership of such securities); and (b) its  address is 1299 Ocean Avenue, Santa Monica, California 90401.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | (17)   | SunTrust  Banks, Inc., a Georgia corporation, reported on its Schedule 13D filed  with the SEC filed on November 9, 2007 that on November 2, 2007,  the Company entered into an Agreement and Plan of Merger (the “Merger  Agreement”) with SunTrust. Under the terms of the Merger Agreement, the  Company will merge with and into SunTrust or one of SunTrust’s subsidiaries,  with SunTrust or its subsidiary continuing as the surviving entity (the  “Merger”). Certain shareholders of the Company (each a “Shareholder,” and  collectively, the “Shareholders”) and SunTrust have entered into Voting  Agreements, each dated November 2, 2007, which are attached to the  Schedule 13D as Exhibits 2 through 14 (each a “Voting Agreement,” and  collectively, the “Voting Agreements”) with respect to certain Shares  beneficially owned by the Shareholders. Pursuant to the Voting Agreements,  the Shareholders agreed to vote an aggregate of 1,122,581 Shares owned by  them, as well as any Shares acquired by them after November 2, 2007 (the  “Committed Shares”), in favor of the Merger Agreement and for approval of the  Merger. As of November 9, 2007, SunTrust owned no Shares. For purposes  of Rule 13d-3 under the Act, however, as a result of entering into the  Voting Agreements, SunTrust may be deemed to possess beneficial ownership of  the Committed Shares. SunTrust, however, disclaims beneficial ownership of  such securities, and the filing of Schedule 13D is not to be construed as an  admission that SunTrust is the beneficial owner for any purpose of the  securities subject to the Voting Agreements. SunTrust’s principal place of  business and principal office is at 303 Peachtree Street NE, Atlanta, Georgia  30308. |

 

17

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**ITEM 13.               CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**

 

**Transactions with Related Persons, Promotersand Certain Control Persons**

 

Certain of the officers, directors andshareholders of the Company named in this Report and the Banks, and affiliatesof such persons, have from time to time engaged in banking transactions withthe Banks. Such persons are expected to continue these transactions in thefuture. Any loans or other extensions of credit made by the Bank to suchindividuals were made in the ordinary course of business on substantially thesame terms, including interest rates and collateral, as those prevailing at thetime for comparable transactions with unaffiliated third parties and did not involvemore than the normal risk of collectibility or present other unfavorablefeatures. At December 31, 2007, loans to officers, directors, andshareholders of the Company named in this Report and the Bank amounted to anaggregate of approximately $38,263,000.

 

Samuel L. Oliver, a director of the Company,is a partner in the law firm of Hulsey, Oliver & Mahar, LLP,Gainesville, Georgia, (“Hulsey Oliver”) which firm served as legal counsel tothe Company in 2007. During 2007, the Company paid an aggregate of $563,205 inlegal fees to Hulsey Oliver. It is anticipated that this firm will also providelegal services to the Company and the Banks during 2008.

 

Alan Wayne is the first cousin of ScottWayne, who is Senior Vice President of Gainesville Bank & Trust andPresident of the Bank of Athens division of Gainesville Bank & Trust.

 

All related party transactions are subject toreview by the full Board of Directors. We believe that the terms for allrelated party transactions are at least as favorable as those that could beobtained from a third party. Nasdaq Listing Standards Rule 4350(h) requiresthe Company to conduct an appropriate review of all related party transactionsfor potential conflict of interest situations on an ongoing basis and furtherrequires all such transactions to be approved by the Company’s Audit Committeeor another “independent body” of the Board of Directors. The term “relatedparty transaction” is generally defined as any transaction (or series ofrelated transactions) in which the Company is a participant and the amountinvolved exceeds $120,000, and in which any director, director nominee, orexecutive officer of the Company, any holder of more than 5% of the outstandingvoting securities of the Company, or any immediate family member of theforegoing persons will have a direct or indirect interest. The term includesmost financial transactions and arrangements, such as loans, guarantees andsales of property, and remuneration for services rendered (as an employee,consultant or otherwise) to the Company.

 

**Director Independence**

 

The business and affairs of the Company areunder the direction of the Company’s Board of Directors. The Board of Directorshas affirmatively determined that the majority of the Board (10 of 12) iscomprised of “independent directors” within the meaning of the Nasdaq StockMarket rules governing director independence. The independent directorsare:  Mr. Cagle, Dr. Darden, Mr. Foster,Mr. Hewett, Mr. Lester, Dr. Maxwell, Mr. Mansour, Mr. Wayne,Ms. Williams, and Mr. Wilheit.

 

To be considered independent, the director(or a family member of the director) cannot:

 
|   | · | have been employed by the Company or a  subsidiary in the last three years;                                                                                             |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                    |
|   | · | have accepted, in the last three years, any  payments from the Company or a subsidiary in excess of $100,000 during any  twelve-month period, other than the following: |
|   |   |                                                                                                                                                                    |
|   |   |                                                                                                                                                                    | · | compensation for board or board committee  service; |
|   |   |                                                                                                                                                                    |   |   |
|   |   |                                                                                                                                                                    | · | payments arising solely from investments in  the Company’s securities; |
|   |   |                                                                                                                                                                    |   |   |
|   |   |                                                                                                                                                                    | · | compensation paid to a family member who is  a non-executive employee of the company or a subsidiary of the company; |
|   |   |                                                                                                                                                                    |   |   |
|   |   |                                                                                                                                                                    | · | benefits under a tax-qualified retirement  plan, or non-discretionary compensation; |
|   |   |                                                                                                                                                                    |   |   |
|   |   |                                                                                                                                                                    | · | loans from a financial institution where  the loans were made in the ordinary course of business, on substantially the  same terms, including interest rates and collateral, as those prevailing at  the time for comparable transactions with the general public, and did not  involve more than a normal degree of risk or other unfavorable factors; or |

 

18

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|   |   |                                                                                                                                                                                                                                                                                                                                                                   | · | payments from a financial institution in  connection with the deposit of funds or the financial institution acting in  an agency capacity, provided such payments were made in the ordinary course  of business and on substantially the same terms as those prevailing at the  time for comparable transactions with the general public; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                      |
|   | · | be a partner in, or a controlling  shareholder or an executive officer of, any organization to which the Company  made or received payments for property or services in the current or any of  the past three fiscal years exceeding 5% of the recipient’s consolidated  gross revenues for that year, or $200,000, whichever is more, other than the  following: |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   | · | payments arising solely from investments in  the company’s securities; or                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   | · | payments under non-discretionary charitable  contribution matching programs.                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                      |
|   | · | have a relationship that, in the opinion of  our Board of Directors, would interfere with the exercise of independent  judgment in carrying out the responsibilities of a director;                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |
|   | · | be an executive officer of another entity  where at any time during the past three years any of the executive officers  of the Company serve on the Compensation Committee of the other entity; or                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                   |
|   | · | be a partner of the Company’s outside  auditor, or was a partner or employee of the Company’s outside auditor who  worked on the Company’s audit at any time during any of the past three years.                                                                                                                                                        |

 

In addition, each member of the AuditCommittee, Compensation Committee and Nominating Committee of the Company’sBoard of Directors is independent under the rules of Nasdaq, and eachmember of the Audit Committee also meets the independence requirements setforth in Rule 10A-3(b)(1) of the Securities Exchange Act of 1934.

 
| **ITEM 14.** | **PRINCIPAL ACCOUNTING FEES AND SERVICES** |
|--------------|--------------------------------------------|

 

**Independent Accountants**

 

Fees

 

The fees billed by M&J for fiscal yearsended December 31, 2006 and 2007 were as follows**:**

** **
| ** **            | ** ** | **2006** | ** ** | **2007** | ** ** |
|-----------------------|------------|----------|------------|----------|------------|
| Audit fees(1)         |       | $        | 363,034    |     | $          | 398,615 |   |
| Audit related fees(2) |       | $        | 20,671     |     | $          | 22,000 |   |
| Tax fees(3)           |       | $        | 30,719     |     | $          | 26,000 |   |
| All other fees(4)     |       | —   |       | —   |       |

 

----

| (1)    | Includes professional services rendered for  the audit of the Company’s financial statements for the fiscal year and the  reviews of the Company’s financial statements included in the Company’s Forms  10-Q filed during such fiscal year. Audit fees include attendance at Audit  Committee meetings related to the audit or review, and consultation on audit  and accounting matters arising during the course of such services, audit  committee and management letter communications related to the audit or  reviews. Audit fees also include fees for services provided in connection  with regulatory filings, consents, and assistance with and review of  documents filed with the SEC, as well as review and assistance with Form S-4  filings. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (2)    | Audit-related fees were in connection with  consultations concerning financial accounting and reporting standards, audits  of employee benefit plans, and services performed in connection with mergers  or acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (3)    | Tax fees included fees for tax  compliance, tax planning, tax advice, preparation of original and amended tax  returns, claims for refunds, tax advice related to mergers and acquisitions,  benefit plan tax preparation, requests for rulings or technical advice from  taxing authorities, and preparation of short-period tax returns  related to Mountain Bancshares, Inc.                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (4)    | No fees were paid for services provided by  M&J during 2006 and 2007 other than those described above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

 

Audit Committee Pre-Approval Policy

 

Pursuant to the terms of the Company’s AuditCommittee charter, the Audit Committee is responsible for the appointment,compensation and oversight of the work performed by the Company’s independentaccountants. The Audit Committee, or a designated member of the AuditCommittee, must pre-approve all audit (including audit-related) and 

 

19

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non-audit services performed by the independent accountants in order toassure that the provisions of such services does not impair the accountants’independence.

 

20

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**PART IV**

 

**ITEM 15.               EXHIBITSAND FINANCIAL STATEMENT SCHEDULES**

 

**(a)(1) ****Financial Statements**

 

None.

 

**(a)(2) ****Financial Statement Schedules**

 

None.

 

**(a)(3)  Exhibits**

 

**Thefollowing exhibits are filed as part of this Report:**

** **

**31.1**                                       Rule 13a-14(a) Certificationof Principal Executive Officer.

** **

**31.2**                                       Rule 13a-14(a) Certificationof Principal Financial Officer.

 

21

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**SIGNATURES**

 
|                                                                                                | Pursuant to  the requirements of Section 13 or 15(d) of the Securities Exchange  Act of 1934, as amended, the registrant has |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| duly caused  this Report to be signed on its behalf by the undersigned, thereunto duly  authorized. |

 

 
|                             | GB&T BANCSHARES, INC. |
|----------------------------------|---------------------------|
|                             |                      |
| Dated:  April 28, 2008 | By:                       | /s/ Richard A. Hunt |
|                             |                      | Richard A. Hunt, President and CEO |

 
|                                                                                           | Pursuant to  the requirements of the Securities Exchange Act of 1934, as amended, this  Report has been signed below by the |
|------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
| following  persons on behalf of the registrant, in the capacities and on the dates  indicated. |

 

 
| By:    | /s/ Richard A. Hunt                                                                                                   |   | DATE:  | April 28, 2008 |
|--------|-----------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------|
|   | Richard A. Hunt, President, Chief  Executive Officer and Director  (Principal Executive Officer)                      |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Gregory L. Hamby, Executive Vice President  and Chief Financial Officer  (Principal Financial and Accounting Officer) |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Philip A. Wilheit,  Chairman and Director                                                                             |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Samuel L. Oliver, Vice  Chairman and                                                                                  |   |   |                |
|   | Director                                                                                                              |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Alan A. Wayne,  Secretary and Director                                                                                |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Anna B. Williams,  Director                                                                                           |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Dr. John W.  Darden, Director                                                                                    |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | William A.  Foster, III, Director                                                                                |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Bennie E. Hewett,  Director                                                                                           |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | James L. Lester,  Director                                                                                            |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | T. Alan Maxwell,  Director                                                                                            |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | Lowell S. (Casey)  Cagle, Director                                                                                    |   |   |                |
|   |                                                                                                                  |   |   |                |
| By:    | *                                                                                                                     |   | DATE:  | April 28, 2008 |
|   | John E. Mansour,  Director                                                                                            |   |   |                |
|   |                                                                                                                  |   |   |                |
| *By:   | /s/ Richard A. Hunt                                                                                                   |   |   |                |
|   | Attorney-in-Fact                                                                                                      |   |   |                |
|        |                                                                                                                       |        |        |                     |  |

 

22

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