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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   FORM 10-QSB þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 2005
 OR
 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File No. 333-116852 GEORGIA TRUST BANCSHARES, INC.  Georgia
(State of Incorporation)
    
    34-1985678
(I.R.S. Employer Identification Number)
   2725 Mall of Georgia Boulevard
Buford, Georgia 30519
(Address of Principal Executive Offices) (770) 614-7644
(Issuers Telephone Number, Including Area Code) 3570 Financial Center Way, Suite 2
Buford, Georgia 30519
(Issuers Former Address)   Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes þ No o As of May 13, 2005, there were 1,800,000 shares of the issuers common stock outstanding. Transitional Small Business Disclosure Format (check one): Yes o No þ




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TABLE OF CONTENTS PART IFINANCIAL
INFORMATIONItem 1.
Financial StatementsItem 2. Managements Discussion and Analysis or Plan of OperationItem 3. Controls and ProceduresPART IIOTHER
INFORMATIONItem 2.
Unregistered Sales of Securities and Use of ProceedsItem 6. ExhibitsSIGNATURESEX-10.5 PURCHASE AND SALE AGREEMENT DATED MARCH 18, 2005EX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32.1 SECTION 906, CERTIFICATION OF THE CEO AND CFO




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PART I
FINANCIAL
INFORMATION Item 1. Financial
Statements
 GEORGIA TRUST BANCSHARES, INC. (A Development Stage Company)
 CONSOLIDATED BALANCE SHEET
MARCH 31, 2005
(Unaudited) AssetsCash
    
    $
    27,373Federal funds sold
    
    
    15,918,000Premises and
equipment (net of accumulated depreciation of $ 7,798)
    
    
    1,430,464Other assets
    
    
    50,173Total assets
    
    $
    17,426,010Liabilities and Stockholders EquityLiabilities:Accounts payable
    
    $
    22,525Total liabilities
    
    
    22,525Commitments and contingenciesStockholders equity:Preferred stock, no par value; 10,000,000 shares authorized; no
shares issued and outstanding
    
    
    Common stock, $1 par value; 10,000,000 shares authorized;
1,800,000 shares issued and outstanding
    
    
    1,800,000Surplus
    
    
    16,125,939Deficit accumulated during the development stage
    
    
    (522,454
    )Total stockholders equity
    
    
    17,403,485Total liabilities and stockholders equity
    
    $
    17,426,010
 See Notes to Consolidated Financial Statements. 1




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GEORGIA TRUST BANCSHARES, INC. (A Development Stage Company)
 CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2005 AND
PERIOD FROM FEBRUARY 25, 2004, DATE OF INCEPTION,
TO MARCH 31, 2005
(Unaudited) InceptionThree Months
    
    
    (February 25,Ended
    
    
    2004) toMarch 31, 2005
    
    
    March 31, 2005Interest income
    
    $
    98,181
    
    
    $
    98,181ExpensesInterest expense
    
    
    2,341
    
    
    
    7,866Personnel expenses
    
    
    132,595
    
    
    
    355,408Equipment and occupancy expenses
    
    
    21,062
    
    
    
    54,449Other operating expenses
    
    
    39,363
    
    
    
    202,912Total expenses
    
    
    195,361
    
    
    
    620,635Net loss
    
    $
    (97,180
    )
    
    $
    (522,454
    )Losses per share
    
    $
    (0.05
    )
    
    $
    (0.29
    )
 See Notes to Consolidated Financial Statements. 2




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GEORGIA TRUST BANCSHARES, INC. (A Development Stage Company)
 CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2005 AND
PERIOD FROM FEBRUARY 25, 2004, DATE OF INCEPTION,
TO MARCH 31, 2005
(Unaudited) InceptionThree Months
    
    
    (February 25,Ended
    
    
    2004) toMarch 31, 2005
    
    
    March 31, 2005OPERATING ACTIVITIESNet loss
    
    $
    (97,180
    )
    
    $
    (522,454
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    3,080
    
    
    
    7,798Net other operating activities
    
    
    (12,088
    )
    
    
    (22,607
    )Net cash used in operating activities
    
    
    (106,188
    )
    
    
    (537,263
    )INVESTING ACTIVITIESIncrease in federal funds sold
    
    
    (15,918,000
    )
    
    
    (15,918,000
    )Purchase of premises and equipment
    
    
    (1,360,832
    )
    
    
    (1,418,303
    )Increase in earnest money deposits
    
    
    (25,000
    )
    
    
    (25,000
    )Net cash used in investing activities
    
    
    (17,303,832
    )
    
    
    (17,361,303
    )FINANCING ACTIVITIESProceeds from line of credit
    
    
    106,000
    
    
    
    600,000Repayment of line of credit
    
    
    (600,000
    )
    
    
    (600,000
    )Proceeds from issuance of common stock
    
    
    17,925,839
    
    
    
    17,925,839Net cash provided by financing activities
    
    
    17,431,839
    
    
    
    17,925,839Net increase in cash
    
    
    21,819
    
    
    
    27,273Cash at beginning of period
    
    
    5,554
    
    
    
    Cash at end of period
    
    $
    27,373
    
    
    $
    27,273NONCASH TRANSACTIONLiability incurred for purchase of premises and equipment
    
    $
    
    
    
    $
    19,959
 See Notes to Consolidated Financial Statements. 3




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GEORGIA TRUST BANCSHARES, INC. (A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)    NOTE 1.
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Business Georgia Trust Bancshares, Inc. (the Company) was incorporated to organize
and serve as the holding company for Georgia Trust Bank (the Bank), a state bank
in organization in Gwinnett County, Georgia. On May 12, 2004, an application was
filed for approval of the organization of the Bank with the Georgia Department of
Banking and Finance (the DBF) and with the Federal Deposit Insurance Corporation
(the FDIC) for insurance of the Banks deposits. Subsequent to obtaining
approval of the FDIC application, the Company filed an application with the Board
of Governors of the Federal Reserve System and the DBF to become a bank holding
company. This application was approved on December 30, 2004, which subsequently
allowed the Company to acquire all of the capital stock of the Bank in 2005. The Company is a development stage company as defined by Statement of Financial
Accounting Standards No. 7, Accounting and Reporting by Development Stage
Enterprises, as it devotes substantially all its efforts to establishing a new
business. Activities since inception have consisted primarily of the Banks organizers
engaging in organizational and preopening activities necessary to obtain regulatory
approvals and to prepare to commence business as a financial institution. The
Company expects to commence operations on May 16, 2005. Significant Accounting Policies Basis of Presentation: The consolidated financial information for the Company included herein is
unaudited; however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim period. The results of operations for the three month period ended March 31, 2005 are
not necessarily indicative of the results to be expected for the full year. The financial statements have been prepared on the accrual basis in accordance
with U.S. generally accepted accounting principles. Significant accounting
policies are as follows: 4




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)    NOTE 1.
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Organization and Stock Offering Costs Organization costs have been expensed as incurred in accordance with U.S.
generally accepted accounting principles. Stock offering costs were charged to
capital surplus upon completion of the Companys stock offering. Significant Accounting Policies (Continued) Premises and Equipment Premises and equipment is stated at cost less accumulated depreciation.
Depreciation is computed by the straight-line method over the estimated useful
lives of the assets. Income Taxes The Company will be subject to federal and state income taxes when taxable
income is generated. No income taxes have been accrued because of operating
losses incurred during the preopening period. Stock-Based Compensation The Company intends to issue stock options to its President/Chief Executive
under an employee agreement and stock warrants to directors under warrant
agreements. The Company will account for these options and warrants in
accordance with U.S. generally accepted accounting principles. Losses Per Share Losses per share are computed by dividing net loss by the number of shares
issued in the Companys stock offering, or 1,800,000 shares. Fiscal Year The Company and Bank have adopted a calendar year for both financial
reporting and tax reporting purposes. 5




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)    NOTE 1.
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Significant Accounting Policies (Continued) Recent Accounting Developments In December 2004, the FASB published Statement No. 123 (revised 2004),
Share-Based Payment (FAS123(R) or the Statement). FAS 123(R) requires
that the compensation cost relating to share-based payment transactions,
including grants of employee stock options, be recognized in financial
statements. That cost will be measured based on the fair value of the equity or
liability instruments issued. FAS 123(R) covers a wide range of share-based
compensation arrangements including stock options, restricted share plans,
performance-based awards, share appreciation rights, and employee share purchase
plans. FAS 123 (R) is a replacement of FASB Statement No. 123, Accounting for
Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and its related interpretive guidance (APB 25). The effect of the Statement will be to require entities to measure the cost of
employee services received in exchange for stock options based on the grant-date
fair value of the award, and to recognize the cost over the period the employee
is required to provide services for the award. FAS 123(R) permits entities to
use any option-pricing model that meets the fair value objective in the
Statement. The Company will be required to apply FAS 123(R) as of the beginning of its
first interim period that begins after December 15, 2005, which will be the year
ending December 31, 2006. FAS 123(R) allows two methods for determining the effects of the transition: the
modified prospective transition method and the modified retrospective method of
transition. Under the modified prospective transition method, and entity would
use the fair value based accounting method for all employee awards granted,
modified, or settled after the effective date. As of the effective date,
compensation cost related to the nonvested portion of awards outstanding as of
that date would be based on the grant-date fair value of those awards as
calculated under the original provisions of Statement No. 123; that is, an
entity would not remeasure the grant-date fair value estimate of the unvested
portion of awards granted prior to the effective date. An entity will have the
further option to either apply the Statement to only the quarters in the period
of adoption and subsequent periods, or apply the Statement to all quarters in
the fiscal year of adoption. Under the modified retrospective method of
transition, an entity would revise its previously issued financial statements to
recognize employee compensation cost for periods presented in accordance with
the original provisions of Statement No. 123. 6




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)  NOTE 1.
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Significant Accounting Policies (Continued) Recent Accounting Developments (Continued) The Company has not completed its study of the transition methods or made
any decisions about how it will adopt FAS 123(R). The impact of this Statement
on the Company in fiscal 2006 and beyond will depend upon various factors, among
them being our future compensation strategy.  NOTE 2.
    COMMON STOCK OFFERING The Company offered a minimum of 1,060,000 and a maximum of 1,800,000 shares in
its initial offering of common stock at an offering price of $10 per share. The
Company capitalized the Bank on March 1, 2005 with $12,500,000 in order to meet
expected regulatory conditions for approval of the Banks charter. The offering
closed on March 11, 2005. 7




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Item 2. Managements Discussion and Analysis or Plan of Operation The purpose of the following discussion is to address information relating to the financial
condition and results of operations of Georgia Trust Bancshares that may not be readily apparent
from the unaudited financial statements and notes thereto, which begin on page 1 of this Report.
This discussion should be read in conjunction with the information provided in our unaudited
financial statements and notes thereto. General During the period ended March 31, 2005, we were in the development stage. We anticipate that
we will begin our banking operations on or about May 15, 2005. Georgia Trust Bancshares was
incorporated on May 20, 2004 to serve as a holding company for Georgia Trust Bank. During the
quarter ended March 31, 2005, our main activities were:  
    seeking, interviewing and selecting our officers;
    completing our initial public offering; and
    preparing our facilities to commence operations. On October 7, 2004, we began an initial public offering of a minimum of 1,060,000 shares and a
maximum of 1,500,000 shares of the common stock of Georgia Trust Bancshares. On March 11, 2005, we
completed our offering raising $18,000,000 by issuing 1,800,000 shares of our common stock in the
offering. Financial Results From January 1, 2005 through March 31, 2005, our net loss amounted to $ 97,180. Our financial
statements and related notes, which are included in this Report, provide additional information
relating to the discussion of our financial condition. We anticipate completing our organizational activities and beginning our banking operations on
or about May 15, 2005. We will incur substantial expenses in establishing Georgia Trust Bank as a
going concern, and we can give you no assurance that we will be profitable or that future earnings,
if any, will meet the levels prevailing in the banking industry. Typically new banks are not
profitable in their first year of banking operations and, in some cases are not profitable for
several years. Our future results will be determined primarily by our ability to manage effectively
interest income and expense, to minimize loan and investment losses, to generate non-interest
income, and to control non-interest expenses. Since interest rates will be determined by market
forces and economic conditions beyond our control, our ability to generate net interest income will
be dependent upon our ability to maintain an adequate spread between the rate earned on earning
assets, such as loans and investment securities, and the rate paid on interest-bearing liabilities,
such as deposits and borrowing. Liquidity and Interest Rate Sensitivity Organizational Period.During our organizational period, our cash requirements consisted
principally of funding our pre-opening expenses, described above, as well as capital expenditures
for the purchase, construction, furnishing and equipping of our initial Gwinnett County main office
facility. From February 25, 2004 through January 21, 2005, our pre-opening expenses were funded through
an organizing line of credit from Nexity Bank. The total amount available on the line of credit was
$600,000. Each of our 10 organizers guaranteed the full amount of this loan, which bore interest at
1.0% less than the prime rate as published in the Money Rates section of The Wall Street Journal.
On January 21, 2005, 8




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we repaid the outstanding balance on the line of credit of $600,000 by using a portion of the
proceeds from our initial public offering. In addition, during our organizational period, we purchased a property in which we expect to
construct our Gwinnett County banking facility, for a purchase price of $1,400,000. We expect that
the costs of constructing, furnishing and equipping our Gwinnett County permanent office to be
$2,650,000. We expect to incur estimated costs of $2,100,000 to purchase, furnish and equip our
Cobb County facility. We are using a portion of the net proceeds from our initial public offering
to fund the purchase, furnishing and equipping of our Cobb County facility. Commencement of Banking Operations.Since we were in the development stage as of March 31,
2005, there are no operating results to present at this time. Once we have begun our banking
operations, net interest income, our primary source of earnings, will fluctuate with significant
interest rate movements. To lessen the impact of these margin swings, we intend to structure our
balance sheet so we will have regular opportunities to reprice or change the interest rates on
our interest-bearing assets and liabilities. Imbalance in these repricing opportunities at any
point in time constitutes interest rate sensitivity. Interest rate sensitivity refers to the responsiveness of interest-bearing assets and
liabilities to changes in market interest rates. The rate sensitive position, or gap, is the
difference in the volume of rate sensitive assets and liabilities at a given time interval. The
general objective of gap management is to actively manage rate sensitive assets and liabilities in
order to reduce the impact of interest rate fluctuations on the net interest margin. We will
generally attempt to maintain a balance between rate sensitive assets and liabilities as the
exposure period is lengthened to minimize our overall interest rate risks. We will evaluate regularly our balance sheets asset mix in terms of several variables,
including yield, credit quality, appropriate funding sources and liquidity. To effectively manage
our balance sheets liability mix, we plan to focus on expanding our deposit base and converting
assets to cash as necessary. As we continue to grow, we will restructure our rate sensitivity position in an effort to
hedge against rapidly rising or falling interest rates. Our Investment Committee will meet on a
quarterly basis to develop a strategy for the upcoming period. For an operating bank, liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient funds to cover
deposit withdrawals and payment of debt and operating obligations. Initially, we expect that a
portion of the net proceeds of the offering will be available for working capital purposes and will
provide funds for these purposes. In addition, we can obtain these funds by converting assets to
cash or by attracting new deposits. Through our banking operations, our ability to maintain and
increase deposits will serve as our primary source of liquidity. To provide additional sources of
liquidity, we plan to maintain a federal funds borrowed line of credit with one or more
correspondent banks and to apply for membership to the Federal Home Loan Bank of Atlanta. Permanent Main Office and Branch Facilities.On July 14, 2004, we entered into an agreement
to acquire a site for our Gwinnett County main office facility. On January 21, 2005, we closed on
the purchase of the Gwinnett County facility when the subscription funds were released from the
escrow account. We expect to begin construction of our Gwinnett County facility in the second
quarter of 2005, with completion anticipated in the first quarter of 2006. Our permanent main
office facility in Gwinnett County will consist of approximately 13,000 square feet. The estimated
costs of constructing our permanent main office facility are $2,200,000. On March 18, 2005, we
entered into an agreement to acquire a site for our Cobb County office facility. We expect to begin
construction of our Cobb County facility in the third quarter of 2005, with completion anticipated
in the first quarter of 2006. Our 9




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permanent office facility in Cobb County will consist of approximately 11,500 square feet. The
estimated costs of constructing our permanent Cobb office are $1,200,000. We will operate our
banking facilities from modular units located at the same address of our permanent facility until
our permanent office in Gwinnett County and Cobb County are constructed. Other than the initial public offering and as discussed above, we know of no trends, demands,
commitments, events or uncertainties that should result in, or are reasonably likely to result in,
our liquidity increasing or decreasing in any material way in the foreseeable future. Capital Adequacy There are now two primary measures of capital adequacy for banks and bank holding companies:
(i) risk-based capital guidelines and (ii) the leverage ratio. The risk-based capital guidelines measure the amount of a banks required capital in relation
to the degree of risk perceived in its assets and its off-balance sheet items. Under the risk-based
capital guidelines, capital is divided into two tiers. Tier 1 capital consists of common
shareholders equity, noncumulative and cumulative perpetual preferred stock, and minority
interests. Goodwill is subtracted from the total. Tier 2 capital consists of the allowance for loan
losses, hybrid capital instruments, term subordinated debt and intermediate term preferred stock.
Banks are required to maintain a minimum risk-based capital ratio of 8%, with at least 4%
consisting of tier 1 capital. The second measure of capital adequacy relates to the leverage ratio. The FDIC has established
a 3% minimum leverage ratio requirement. The leverage ratio is computed by dividing tier 1 capital
into total assets. In the case of Georgia Trust Bank and other banks that are experiencing growth
or have not received the highest regulatory rating from their primary regulator, the minimum
leverage ratio should be 3% plus an additional cushion of at least 1% to 2%, depending upon risk
profiles and other factors. We believe that the net proceeds from our initial public offering will satisfy our capital
requirements for at least the next 12 months following the opening of Georgia Trust Bank. We
believe all anticipated material expenditures for this period have been identified and provided for
out of the proceeds of the initial public offering. 
 Item 3. Controls and Procedures As of the end of the period covered by this Report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined
in Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that our current disclosure controls and procedures are effective
as of March 31, 2005. There have been no significant changes in our internal controls over
financial reporting during the first fiscal quarter ended March 31, 2005 that have materially
affected, or are reasonably likely to materially affect, our internal controls over financial
reporting. The design of any system of controls and procedures is based in part upon certain assumptions
about the likelihood of future events. There can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of how remote. 10




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PART II OTHER INFORMATION
 
 Item 6. Exhibits Exhibit Number
    
    Description10.5
    
    Purchase and Sale Agreement dated March 18, 2005 by and
between Argonaut Associates Ltd. (L.P.) and Georgia Trust
Bancshares, Inc.31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certifications




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SIGNATURES In accordance with the requirements 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, in the City
of Buford, State of Georgia, on May 13, 2005. GEORGIA TRUST BANCSHARES, INC./s/ J. Michael AllenJ. Michael Allen
President and Chief Executive Officer/s/ J. Dave DeVennyJ. Dave DeVenny
Senior Vice President and Chief Financial Officer