**U.
S. SECURITIES AND EXCHANGE COMMISSION**
 **WASHINGTON,
D.C. 20549**
 
 **FORM
10-QSB**
 
 
 x
    QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934
 
 For
the quarterly period ended **March
31, 2005**
 
 o
    TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934
 
 For
the transition period from __________ to __________
 **Commission
File Number: 333-84142** ****
 Seasons
      Bancshares, Inc.
 **** (Exact
name of small business issuer as specified in its charter)
 
 Georgia
    
    58-2633700(State
      or other jurisdiction of incorporation or organization)
    
    (IRS
      Employer Identification No.)
  **336
Blue Ridge Street, Blairsville, GA 30512**
 (Address
of principal executive offices)
 
 **(706)
745-5588**
 (Issuer’s
telephone number)
 
 N/A(Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Check
whether the issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
 
 YES x NO o
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of May 13,
2005: 913,834, $1 par value.
 
 Transitional
Small Business Disclosure Format    Yes o No x
 
 
 
 
 **SEASONS
BANCSHARES, INC.**
 **AND
SUBSIDIARY**
 
 INDEX
 
 
 PagePart
      I.Financial
      InformationItem
      1.
    Financial Statements (unaudited)
    3-7Item
      2.
    Management’s Discussion and
Analysis
    8-13Item
      3.
    Controls and Procedures
    13Part
      II.Other
      InformationItem
      1.
    Legal Proceedings
    14Item
      2.
    Unregistered Sales of Equity Securities and Use of
      Proceeds
    14Item
      3.
    Defaults Upon Senior Securities
    14Item
      4.
    Submission of Matters to a Vote of Security
      Holders
    14Item
      5.
    Other Information
    14Item
      6.
    Exhibits
    14Signatures
    
    15
  2
 *Index*
 **PART
I - FINANCIAL INFORMATION**
 **ITEM I. FINANCIAL STATEMENTS**
 
 **SEASONS
BANCSHARES, INC.**
 **AND
SUBSIDIARY**
 
 **CONSOLIDATED
BALANCE SHEETS**
 **MARCH
31, 2005 AND DECEMBER 31, 2004**
 **(Unaudited)**
 
 **Assets**
    
    **2005**
    
    **2004**Cash
      and due from banks
    
    $
    698,700
    
    $
    1,656,205Interest
      bearing deposits in banks
    
    
    31,011
    
    
    -Federal
      funds sold
    
    
    254,000
    
    
    1,094,000Securities
      available-for-sale, at fair value
    
    
    6,475,440
    
    
    6,616,962Restricted
      equity securities, at cost
    
    
    343,200
    
    
    75,700Loans,
      net of unearned loan fees
    
    
    47,676,712
    
    
    42,296,073Less
      allowance for loan losses
    
    
    594,767
    
    
    538,665Loans,
      net
    
    
    47,081,945
    
    
    41,757,408Premises
      and equipment
    
    
    3,224,308
    
    
    3,047,361Other
      assets
    
    
    414,134
    
    
    323,210**Total
      assets**
    
    $
    58,522,738
    
    $
    54,570,846**Liabilities
      and Stockholder's Equity****Deposits**Noninterest-bearing
    
    $
    2,929,821
    
    $
    2,968,091Interest-bearing
    
    
    43,751,337
    
    
    44,811,875**Total
      deposits**
    
    
    46,681,158
    
    
    47,779,966Other
      borrowings
    
    
    5,200,000
    
    
    -Other
      liabilities
    
    
    171,068
    
    
    181,356**Total
      liabilities**
    
    
    52,052,226
    
    
    47,961,322**Commitments
      and contingencies****Stockholder's
      equity**Preferred
      stock, no par value; 2,000,000 sharesauthorized;
      no shares issued and outstanding
    
    
    -
    
    
    -Common
      stock, $1 par value; 10,000,000 sharesauthorized;
      913,834 issued and outstanding
    
    
    913,834
    
    
    913,834Capital
      surplus
    
    
    8,053,558
    
    
    8,053,558Accumulated
      deficit
    
    
    (2,394,353
    )
    
    (2,304,600
    )Accumulated
      other comprehensive loss
    
    
    (102,527
    )
    
    (53,268
    )**Total
      stockholder's equity**
    
    
    6,470,512
    
    
    6,609,524**Total
      liabilities and stockholder's equity**
    
    $
    58,522,738
    
    $
    54,570,846
 
 **See
Notes to Consolidated Financial Statements.**
  3
 *Index*
  **SEASONS
BANCSHARES, INC.**
 **AND
SUBSIDIARY**
 
 **CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**
 **THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**
 **(Unaudited)**
 
 **2005**
    
    ******2004****Interest
      income**Loans
    
    $
    773,751
    
    $
    418,345Taxable
      securities
    
    
    43,755
    
    
    44,018Federal
      funds sold
    
    
    1,952
    
    
    11,344Interest
      on deposits in other banks
    
    
    942
    
    
    -**Total
      interest income**
    
    
    820,400
    
    
    473,707**Interest
      expense**Deposits
    
    
    287,028
    
    
    188,366Other
      borrowings
    
    
    2,952
    
    
    -**Total
      interest expense**
    
    
    289,980
    
    
    188,366**Net
      interest income**
    
    
    530,420
    
    
    285,341**Provision
      for loan losses**
    
    
    71,000
    
    
    75,500**Net
      interest income after****provision
      for loan losses**
    
    
    459,420
    
    
    209,841**Other
      income**Service
      charges, fees and other income
    
    
    32,889
    
    
    13,877**Total
      other income**
    
    
    32,889
    
    
    13,877**Other
      expenses**Salaries
      and employee benefits
    
    
    282,418
    
    
    203,683Occupancy
      and equipment expenses
    
    
    119,098
    
    
    103,759Other
      operating expenses
    
    
    180,547
    
    
    145,941**Total
      other expenses**
    
    
    582,063
    
    
    453,383**Net
      loss before income taxes**
    
    
    (89,754
    )
    
    (229,665
    )**Income
      taxes**
    
    
    -
    
    
    -**Net
      loss**
    
    
    (89,754
    )
    
    (229,665
    )**Other
      comprehensive loss :**Unrealized
      gains (losses) on securitiesavailable-for-sale
      arising during period
    
    
    (49,259
    )
    
    34,888**Comprehensive
      loss**
    
    $
    (139,013
    )
    $
    (194,777
    )**Basic
      and diluted losses per share**
    
    $
    (0.10
    )
    $
    (0.25
    )**Cash
      dividends per share**
    
    $
    -
    
    $
    -
 
 **See
Notes to Consolidated Financial Statements.**
  4
 *Index*
  **SEASONS
BANCSHARES, INC.**
 **AND
SUBSIDIARY**
 
 **CONSOLIDATED
STATEMENTS OF CASH FLOWS**
 **THREE
MONTHS ENDED MARCH 31, 2005 AND 2004**
 **(Unaudited)**
 
 **2005**
    
    ******2004****OPERATING
      ACTIVITIES**Net
      loss
    
    $
    (89,754
    )
    $
    (229,665
    )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
    
    
    44,480
    
    
    28,197Provision
      for loan losses
    
    
    71,000
    
    
    75,500Increase
      in interest receivable
    
    
    (38,747
    )
    
    (34,762
    )Increase
      (decrease) in interest payable
    
    
    645
    
    
    (8,346
    )Other
      operating activities
    
    
    (63,109
    )
    
    (51,816
    )Net
      cash used in operating activities
    
    
    (75,485
    )
    
    (220,892
    )**INVESTING
      ACTIVITIES**Net
      increase in interest-bearing deposits in banks
    
    
    (31,011
    )
    
    -Net
      decrease in federal funds sold
    
    
    840,000
    
    
    6,563,000Purchases
      of securities available-for-sale
    
    
    -
    
    
    (1,000,000
    )Proceeds
      from maturities of securities available-for-sale
    
    
    92,263
    
    
    1,040,409Net
      increase in loans
    
    
    (5,395,537
    )
    
    (7,581,820
    )Net
      increase in restricted equity securities
    
    
    (267,500
    )Purchase
      of premises, equipment and computer software
    
    
    (221,427
    )
    
    (428,426
    )Net
      cash used in investing activities
    
    
    (4,983,212
    )
    
    (1,406,837
    )**FINANCING
      ACTIVITIES**Net
      increase (decrease) in deposits
    
    
    (1,098,808
    )
    
    1,453,578Proceeds
      from other borrowings
    
    
    5,200,000
    
    
    -Net
      cash provided by financing activities
    
    
    4,101,192
    
    
    1,453,578Net
      decrease in cash and due from banks
    
    
    (957,505
    )
    
    (174,151
    )Cash
      and due from banks, beginning of year
    
    
    1,656,205
    
    
    1,103,325Cash
      and due from banks, end of period
    
    $
    698,700
    
    $
    929,174**SUPPLEMENTAL
      DISCLOSURES**Cash
      paid for:Interest
    
    $
    289,335
    
    $
    196,712
 
 **See
Notes to Consolidated Financial Statements.**
  5
 *Index*
 
 **SEASONS
BANCSHARES, INC.**
 **AND
SUBSIDIARY**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
      1.**
    **NATURE
      OF BUSINESS AND BASIS OF
PRESENTATION**
 
 Seasons
Bancshares, Inc. (the “Company”) was incorporated on October 1, 2001, to operate
as a bank holding company. The Company owns 100% of the issued and outstanding
capital stock of Seasons Bank (the “Bank”), a bank organized under the laws of
the State of Georgia to conduct a general banking business in Blairsville, Union
County, Georgia. The Bank commenced operations on January 27, 2003.
 
 On April
15, 2004 the corporate name changed from Generations Bancshares, Inc. to Seasons
Bancshares Inc.
 
 The
financial information included herein is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for a fair statement of
results for the interim periods.
 
 The
results of operations for the three-month period ended March 31, 2005 are not
necessarily indicative of the results to be expected for the full
year.
 
 **NOTE
      2.**
    **CURRENT
      ACCOUNTING DEVELOPMENTS**
 
 In
December 2004, the Financial Accounting Standards Board (“FASB”) issued FASB
Statement No. 123 (Revised 2004), *Share-Based
Payment* (“FAS
123(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, an 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 re-measure 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 prior periods presented in accordance
with the original provisions of Statement No. 123.
 6
 *Index*
  **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
      2.**
    **CURRENT
      ACCOUNTING DEVELOPMENTS
(Continued)**
 
 The
Company has not yet 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. The pro forma compensation costs
presented in the table above and in prior filings for the Company have been
calculated using a Black-Scholes option pricing model and may not be indicative
of amounts which should be expected in future years. No decisions have been made
as to which option-pricing model is most appropriate for the Company for future
awards.
 
 
 **NOTE
      3.**
    **STOCK
      COMPENSATION PLANS**
 
 At March
31, 2005, the Company has two stock-based compensation plans. The Company
accounts for those plans under the recognition and measurement principles of APB
Opinion No. 25, *Accounting
for Stock Issued to Employees* , and
related Interpretations. No stock-based compensation cost is reflected in net
loss, as all options and warrants granted under those plans had an exercise
price equal to the market value of the underlying stock on the date of grant.
The following table illustrates the effect on net loss and losses per share if
the Company had applied the fair value recognition provisions of SFAS Statement
No. 123, *Accounting
for Stock-Based Compensation* , to
stock-based compensation.
 **Three
      Months**
      **Ended
      March 31,****2005**
    
    **2004**Net
      loss, as reported
    
    **$**
    ****(89,754
    ****)
    
    (229,665
    )Deduct:
      Total stock-based compensation expense determined under fair value based
      method for all awards
    
    
    (296,022
    )
    
    (296,022
    )Pro
      forma net loss
    
    **$**
    ****(385,776
    ****)
    
    (525,687
    )Losses
      per share:Basic
      and diluted - as reported
    
    **$**
    ****(.10
    ****)
    
    (0.25
    )Basic
      and diluted - pro forma
    
    **$**
    ****(.42
    ****)
    
    (0.58
    )
 **NOTE
      4.**
    **LOSSES
      PER SHARE**
 
 Basic
losses per share are computed by dividing net loss by the weighted average
number of shares of common stock outstanding. Diluted losses per share are
computed by dividing net loss by the sum of the weighted average number of
shares of common stock outstanding and potential common shares. Potential common
shares consist of stock options and stock warrants. The effect of potential
common shares does not have a dilutive effect on losses per share. Weighted
average shares outstanding as of March 31, 2005 and 2004 was 913,834, or the
number of shares issued in the Company’s initial public stock offering.
 7
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
I. Financial Information**
 **Item 2. Management’s Discussion and Analysis**
 
 The
following is our discussion and analysis of certain significant factors that
have affected our financial position and operating results and those of our
subsidiary, Seasons Bank, during the periods included in the accompanying
financial statements. This commentary should be read in conjunction with the
financial statements and the related notes and the other statistical information
included in this report.
 
 **SPECIAL
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS**
 
 This
Report contains statements which constitute forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and the Securities
Exchange Act of 1934. These statements are based on many assumptions and
estimates and are not guarantees of future performance. Our actual results may
differ materially from those projected in any forward-looking statements, as
they will depend on many factors about which we are unsure, including many
factors which are beyond our control. The words “may,” “would,” “could,” “will,”
“expect,” “anticipate,” “believe,” “intend,” “plan,” and “estimate,” as well as
similar expressions, are meant to identify such forward-looking statements.
Potential risks and uncertainties include, but are not limited to:
 
 ·
    significant
      increases in competitive pressure in the banking and financial services
      industries;
 
 ·
    changes
      in the interest rate environment which could reduce anticipated or actual
      margins;
 
 ·
    changes
      in political conditions or the legislative or regulatory environment;
 
 ·
    general
      economic conditions, either nationally or regionally and especially in
      primary service area, becoming less favorable than expected resulting in,
      among other things, a deterioration in credit
quality;
 
 ·
    changes
      occurring in business conditions and
inflation;
 
 ·
    changes
      in technology;
 
 ·
    changes
      in monetary and tax policies;
 
 ·
    the
      level of allowance for loan loss;
 
 ·
    the
      rate of delinquencies and amounts of
charge-offs;
 
 ·
    the
      rates of loan growth;
 
 ·
    adverse
      changes in asset quality and resulting credit risk-related losses and
      expenses;
 
 ·
    changes
      in the securities markets; and
 
 ·
    other
      risks and uncertainties detailed from time to time in our filings with the
      Securities and Exchange Commission.
 
 **Critical
Accounting Policies**
 
 We have
adopted various accounting policies which govern the application of accounting
principles generally accepted in the United States in the preparation of our
financial statements. Our
significant accounting policies are described in the footnotes to the financial
statements at December 31, 2004 as filed in our annual report on Form 10-KSB. Certain
accounting policies involve significant judgments and assumptions by us which
have a material impact on the carrying value of certain assets and liabilities.
We consider these accounting policies to be critical accounting policies. The
judgments and assumptions we use are based on historical experience and other
factors, which we believe to be reasonable under the circumstances. Because of
the nature of the judgments and assumptions we make, actual results could
differ  from
these judgments and estimates which could have a material impact on our carrying
values of assets and liabilities and our results of operations.
 8
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
I. Financial Information**
 **Item
2. Management’s Discussion and Analysis**
 
 We
believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
consolidated financial statements. Refer to the portion of this discussion that
addresses our allowance for loan losses for a description of our processes and
methodology for determining our allowance for loan losses.
 
 **Liquidity
and Capital Resources**
 
 Liquidity
management involves the ability to match the cash flow requirements of our
customers. This matching is accomplished by monitoring and managing the balances
and maturities of our loans and deposits so that our cash in vault, cash held in
correspondent bank accounts, and federal funds sold are sufficient to meet
anticipated demand for immediate funds.
 
 Both we
and the regulatory authorities monitor the liquidity of our subsidiary bank on a
periodic basis. We have limited historical data for seasonal or other related
demands on our liquidity due to our commencing operations on January 27, 2003.
However, we believe the liquidity of our bank as of March 31, 2005 is adequate
to support the cash flow requirements of its customers.
 
 The
Company’s primary sources of liquidity are customer deposits, other borrowings,
loan repayments and securities available for sale. If additional funding sources
re needed, the Company has access to federal fund lines at correspondent banks
of $4.5million. Additionally, the subsidiary bank is a member of the Federal
Home Loan Bank of Atlanta, which provides access to FHLB lending sources. Lines
of credit with the FHLB totaling $5.9 million were available on March 31, 2005,
of which $5.2 million was outstanding.
 
 Requirements
by banking regulators include the monitoring of risk-based capital guidelines
for banks that are designed to make capital requirements more sensitive to
differences in risk profiles and account for off balance sheet items. We
substantially exceeded the regulatory minimums on capital requirements and
ratios as of March 31, 2005. However, as we continue to grow and the loan
portfolio increases, these ratios have and will continue to adjust downward. We
monitor these amounts and ratios on a frequent basis. The minimum capital
requirements and the actual capital ratios for the company and the bank as of
March 31, 2005 are as follows:
 
 ActualSeasons
    
    Seasons
    
    RegulatoryBancshares,
      Inc.
    
    Bank
    
    RequirementsLeverage
      capital ratio
    
    
    12.02
    %
    
    11.74
    %
    
    4.00
    %Risk-based
      capital ratios:Core
      capital
    
    
    13.28
    %
    
    12.98
    %
    
    4.00
    %Total
      capital
    
    
    14.48
    %
    
    14.18
    %
    
    8.00
    %
 
 **Off-Balance
Sheet Arrangements**
 
 Through
the operations of our bank, we have made contractual commitments to extend
credit in the ordinary course of our business activities. These commitments are
legally binding agreements to lend money to our customers at predetermined
interest rates for a specified period of time. At March 31, 2005, we had issued
unfunded commitments to extend credit of $6,819,000 through various types of
lending arrangements. We evaluate each customer’s credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by us
upon extension of credit, is based on our credit evaluation of the borrower.
Collateral varies but may include accounts receivable, inventory, property,
plant and equipment, commercial and residential real estate.
 
 If
needed, we have the ability on a short-term basis to borrow and purchase federal
funds from other financial institutions. At March 31, 2005, we had arrangements
with three commercial banks for short-term advances of $4,500,000.
 9
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
I. Financial Information**
 **Item
2. Management’s Discussion and Analysis**
 
 **Financial
Condition**
 
 Total
assets at March 31, 2005 were approximately $58,523,000 as compared to
$54,571,000 as of December 31, 2004 for an increase of $3,952,000, or 7.24%.
During the quarter ended March 31, 2005, our loans grew to $47,677,000 as
compared to $42,296,000 at December 31, 2004 for an increase of $5,381,000. The
increased loan growth was primarily funded by a decrease in our federal funds
sold of $840,000 and advances from the Federal Home Loan Bank of $5,200,000.
Total deposits decreased by $1,099,000 from December 31, 2004 to March 31,
2005.
 10
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
I. Financial Information**
 **Item
2. Management’s Discussion and Analysis**
 
 We expect
continued growth in assets and liabilities during the remainder of 2005. We will
monitor growth and seek to maintain a proper mix of types, maturities, and
interest rates. We believe that our current capital and liquidity levels are
adequate to support the current growth of the bank.
 
 Our total
equity decreased by $139,000 during the quarter ended March 31, 2005, due to the
net loss for the quarter of $90,000 and unrealized losses in our securities
available for sale category of $49,000.
 
 **Results
of Operations for the Three Months Ended March 31, 2005 and
2004**
 
 The
results of operations are determined by our ability to effectively manage net
interest income, control non-interest expenses, generate non-interest income and
minimize loan losses. In order for us to become profitable, we must increase the
amount of earning assets so that net interest income along with non-interest
income will be sufficient to cover normal operating expenses incurred in a
banking operation and the bank’s provision for loan losses.
 
 Net loss
for the three-month period ended March 31, 2005 was $90,000. The net loss for
the quarter was primarily due to the cost of opening a new branch in the first
quarter 2005.
 
 Net loss
for the three-month period ended March 31, 2004 was $230,000. The net loss for
the quarter was primarily due to ongoing costs of growing the Bank and the costs
of funding our loan loss reserve.
 
 Our net
interest income increased by $245,000 in the first quarter of 2005 as compared
to the same period in 2004. The increase in net interest income is attributed to
an increase in average outstanding loans. Our net interest margin was 4.23% for
the quarter ended March 31, 2005 as compared to 3.27% for the first quarter of
2004. Our yield on total earning assets was 6.54% as compared to 4.53% for the
first quarter of 2004. Our cost of funds was 2.45% for the quarter ended March
31, 2005 as compared to 2.54% for the first quarter of 2004.
 
 The
provision for loan losses was $71,000 and $76,000, respectively, as of March 31,
2005 and 2004. The amounts provided are due to loan growth and to our assessment
of the inherent risk in the portfolio. Management believes that the $595,000 in
the allowance for loan losses at March 31, 2005, or approximately 1.25% of total
net outstanding loans, is adequate to absorb known risks in the portfolio. No
assurance can be given, however, that increased loan volume, and adverse
economic conditions or other circumstances will not result in increased losses
in our loan portfolio.
 11
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
I. Financial Information**
 **Item
2. Management’s Discussion and Analysis**
 
 Information
with respect to non-accrual, past due and restructured loans at March 31, 2005
and 2004 is as follows:
 
 
 **2005**
    
    **2004**(Dollars
      in Thousands)Non-accrual
      loans
    
    $
    4
    
    
    0Loans
      contractually past due ninety days or more as to interest or principal
      payments and still accruing
    
    
    42
    
    
    0Restructured
      loans
    
    
    0
    
    
    0Loans,
      now current about which there are serious doubts as to the ability of the
      borrower to comply with loan repayment terms
    
    
    0
    
    
    0Interest
      income that would have been recorded on non-accrual and restructured loans
      under original terms
    
    
    0
    
    
    0Interest
      income that was recorded on non-accrual and restructured
    loans
    
    
    0
    
    
    0
 
 Potential
problem loans are defined as loans about which we have serious doubts as to the
ability of the borrower to comply with the present loan repayment terms and
which may cause the loan to be placed on non-accrual status, to become past due
more than ninety days, or to be restructured.
 
 It is our
policy to discontinue the accrual of interest income when, in our opinion,
collection of interest becomes doubtful. We will generally discontinue the
accrual of interest income when (1) there is a significant deterioration in the
financial condition of the borrower and full repayment of principal and interest
is not expected and (2) the principal or interest is more than ninety days past
due, unless the loan is both well-secured and in the process of
collection.
 
 Loans
classified for regulatory purposes as loss, doubtful, substandard, or special
mention that have not been included in the table above do not represent or
result from trends or uncertainties which we reasonably expect will materially
impact future operating results, liquidity or capital resources. We believe that
these borrowers will comply with their loan repayment terms.
 12
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
1. Financial Information**
 **Item
2. Management’s Discussion and Analysis (Continued)**
 
 Information
regarding certain loans and allowance for loan loss data through March 31, 2005
and 2004 (Dollars in Thousands) is as follows:
 
 **2005**
    
    **2004**Average
      amount of loans outstanding
    
    $
    43,854
    
    $
    23,144Balance
      of allowance for loan losses at beginning of period
    
    $
    539
    
    $
    271Loans
      charged offCommercial
      and financial
    
    
    13
    
    
    4Real
      estate mortgage
    
    
    0
    
    
    0Installment
    
    
    2
    
    
    215
    
    
    6Loans
      recoveredCommercial
      and financial
    
    
    0
    
    
    0Real
      estate mortgage
    
    
    0
    
    
    0Installment
    
    
    0
    
    
    00
    
    
    0Net
      charge-offs
    
    
    15
    
    
    6Additions
      to allowance charged to operating expense during period
    
    
    71
    
    
    76Balance
      of allowance for loan losses at end of period
    
    $
    595
    
    $
    341Ratio
      of net loans charged off during the period to average loans
      outstanding
    
    
    .03
    %
    
    .03
    %
 
 In making
our risk evaluation and establishing an allowance level that we believe is
adequate to absorb probable losses in the portfolio, we consider various sources
of information. Some of the more important sources include our ongoing review of
the loan portfolio, which is undertaken both to ascertain whether there are
probable losses, which must be charged off, and to assess the risk
characteristics of the portfolio in the aggregate. This review takes into
consideration the judgments of the responsible lending officers and senior
management, and also those of bank regulatory agencies that review the loan
portfolio as part of the regular bank examination process. Finally, we retain
internal and external credit reviews to perform independent reviews of the risk
management process, adequacy of loan documentation and the risk ratings and
appropriateness of the level of Allowance for Loan Losses. Loans identified as
having increased credit risk are classified in accordance with our loan policy
and appropriate reserves are established for each loan classification category.
Due to limited loan loss experience, reserves are established for the remaining
unclassified portion of the loan portfolio based on predetermined
factors.
 
 In
evaluating the allowance, we consider the historical loan loss experience of the
Company, the amount of past due and nonperforming loans, current and anticipated
economic conditions, lender requirements and other appropriate information.
 13
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Part
1. Financial Information**
 **Item
2. Management’s Discussion and Analysis (Continued)**
 
 Other
income was approximately $33,000 and $14,000, respectively, for the three months
ended March 31, 2005 and 2004. Other income consists primarily of service
charges on deposit accounts that include monthly service charges on transaction
accounts, insufficient funds charges, and miscellaneous maintenance fees. The
increase in service charge income is directly related to the growth of our
deposits.
 
 Other
expenses increased by $129,000 during the three months ended March 31, 2005
compared to the quarter ended March 31, 2004, due primarily to increased
salaries and increased occupancy expense associated with our new branch facility
and other items related to the growth of the Bank.
 
 Salaries
and employee benefits increased $79,000 for the three-month period ended March
31, 2005 compared to the same period in 2004 due to staffing requirements needed
to manage the Bank’s growth and the new branch that opened in the first quarter
2005. The number of full-time equivalent employees was 21 at March 31, 2005 as
compared to 15 at March 31, 2004. Occupancy and equipment and other operating
expenses increased $15,000 during the three months ended March 31, 2005 compared
to the same period during 2004 due primarily to the opening of our branch
facility during the first quarter of 2005. Other operating expenses increased
$35,000 during the three months ended March 31, 2005 compared to the same period
during 2004 due primarily to general growth of the Company along with the
addition of the branch.
 
 W e will be
subject to federal and state income taxes when taxable income is generated. No
income taxes have been accrued for the three months ended March 31, 2005 and
2004 because of operating losses incurred to date.
 
 We know
of no trends, demands, commitments, events or uncertainties that should result
in, or are reasonably likely to result in, our liquidity or capital resources
increasing or decreasing in any material way in the foreseeable future, other
than as a result of our normal operations. We also are not aware of any current
recommendations by the regulatory authorities, which, if implemented, would have
such an effect.
 
 **Item 3. Controls and Procedures**
 
 As of the
end of the period covered by this Quarterly Report on Form 10-QSB, our principal
executive officer and principal financial officer have evaluated the
effectiveness of our “disclosure controls and procedures.” Disclosure controls
and procedures, as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934, as amended, are procedures that are designed with the objective of
ensuring that information required to be disclosed in our reports filed under
the Exchange Act, such as this Quarterly Report, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms. Disclosure controls and procedures are
also designed with the objective of ensuring that such information is
accumulated and communicated to our management, including our acting chief
executive officer and chief financial officer, as appropriate to allow timely
decisions regarding required disclosure.
 
 Our
management, including our acting chief executive officer and chief financial
officer, does not expect that our disclosure controls and procedures will
prevent all error and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
 
 Based
upon their controls evaluation, our acting chief executive officer and chief
financial officer have concluded that our disclosure controls and procedures are
reasonably effective.
 
 There
have been no changes in our internal controls over financial reporting during
our first fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
 14
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **PART
II - OTHER INFORMATION**
 
 **Item 1. LEGAL PROCEEDINGS**
 
 None
 
 **Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS**
 
 None.
 
 **Item 3. DEFAULTS UPON SENIOR SECURITIES**
 
 None
 
 **Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS**
 
 None
 
 **Item 5. OTHER INFORMATION**
 
 Our
former chief executive officer, John H. Ketner, Jr., resigned his position as
chief executive officer of the Company and the Bank effective March 28,
2005.
 
 Mr. Ketner is still a director of the
Company.
 
 **Item 6. EXHIBITS**
 
 31.1
    Certification of the Acting Chief Executive Officer
      pursuant to Rule 13a-14(a) of the Exchange
Act
 31.2
    Certificate of the Chief Financial Officer pursuant to
      Rule 13a-14(a) of the Exchange Act
 32
    Certification of Acting Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350
 15
 *Index*
  **SEASONS
BANCSHARES, INC. AND SUBSIDIARY**
 
 **Signatures**
 
 In
accordance with the requirements of the Exchange Act, the registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
  SEASONS
      BANCSHARES, INC.
      (Registrant)Date:May
      13, 2005
    /s/ David K. GeorgeDavid
      K. George
      Acting
      Chief Executive Officer
      (Principal
      Executive Officer)
  Date:May
      13, 2005
    /s/ Nita ElliottNita
      Elliott
      Chief
      Financial Officer
      (Principal
      Accounting Officer)
 
 16