**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        DC 20549**
 
 
 **FORM
        10-QSB**
 
 **x**
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
 
 **For
        the quarterly period ended June 30, 2005**
 
 **o**
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
 
 **Commission
        File Number: 333-120681**
 
 **SUNBELT
        BANCSHARES, INC.**
 (Exact
        name of registrant as specified in its charter)
 
 **Texas**
 (State
        or
        other jurisdiction of
 corporation
        or organization)
 
 **20-1496006**
 (I.R.S.
        Employer Identification Number)
 
 
 **1625
        North Stemmons Freeway, Dallas, Texas**
 (Address
        of Principal Executive Offices)
 
 **78746**
 (Zip
        Code)
 
 **(214)
        217-3971**
 (Registrant’s
        telephone number, including area code)
 
 Indicate
        by check mark whether the issuer (1) has filed all reports required to be
        filed
        by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
        preceding 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****
 
 Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Exchange Act).
 **Yes
        o**  **No
        x**
 
 Indicate
        the number of shares outstanding of each of the issuer’s classes of common stock
        as of the close of business on August 6, 2005.
 
 $0.01 Par
          Value
          Common Stock 0
          shares
 
 Transitional
        Small Business Disclosure Format (Check one):   **Yes
        o**  **No** **x**
 
 
  **QUARTERLY
        REPORT ON FORM 10-QSB**
 **FOR
        THE PERIOD ENDED June 30, 2005**
 
 **TABLE
        OF CONTENTS**
 **Part
                      I.**
                  **Financial
                      Information****Item
                      1.**
                  *Financial
                      Statements*Balance
                      Sheets at June 30, 2005, and December 31, 2004 (unaudited)
                  3Statements
                      of Operations for the Three-Month and Six-Month Periods ended
                      June 30,
                      2004, and 2005 (unaudited)
                  4Statements
                      of Cash Flows for the Three-Month and Six-Month Period ended
                      June 30,
                      2004, and 2005 (unaudited)
                  5Notes
                    to Consolidated Financial Statements (unaudited)
                  6**Item
                      2.**
                  *Management’s
                      Discussion and Analysis of Financial Condition and Results
                      of
                      Operations*
                  8**Item
                      3.**
                  *Controls
                      and Procedures*
                  12**Part
                      II.**
                  **Other
                      Information****Item
                      1.**
                  *Legal
                      Proceedings*
                  12**Item
                      2.**
                  *Changes
                      in Securities and Use of Proceeds*
                  12**Item
                      3.**
                  *Defaults
                      Upon Senior Securities*
                  14**Item
                      4.**
                  *Submission
                      of Matters to a Vote of Security Holders*
                  14**Item
                      5.**
                  *Other
                      Information*
                  14**Item
                      6.**
                  *Exhibits
                      and Reports on Form 8-K*
                  14Signatures
                  15
  This
          Form
          10-QSB contains forward-looking statements consisting of estimates with
          respect
          to the financial condition, results of operations, and other business of
          Sunbelt
          Bancshares, Inc., that are subject to various factors which could cause
          actual
          results to differ materially from those estimates. Factors that could influence
          the estimates include changes in the national, regional, and local market
          conditions, legislative and regulatory conditions, and an adverse interest
          rate
          environment.
  2
  **Sunbelt
                      Bancshares, Inc.****(A
                      Development Stage Enterprise)****Balance
                      Sheets (Unaudited)**
  June
                      30,
                  
                  December
                      31,ASSETS
                  
                  2005
                  
                  2004(1)Cash
                      and cash items
                  
                  $
                  39,168
                  
                  $
                  21,895Deferred
                      stock issuance costs
                  
                  
                  345,734
                  
                  
                  212,250Total
                      assets
                  
                  $
                  384,902
                  
                  $
                  234,145LIABILITIES
                      AND SHAREHOLDERS' DEFICITAccounts
                      payable and accrued expenses
                  
                  $
                  219,126
                  
                  $
                  104,026Line
                      of credit - TIB
                  
                  
                  410,000
                  
                  
                  -Loans
                      payable - affiliate
                  
                  
                  200,000
                  
                  
                  -Advances
                      from organizers
                  
                  
                  634,660
                  
                  
                  770,000Total
                      liabilities
                  
                  
                  1,463,786
                  
                  
                  874,026Shareholders'
                      deficit:Common
                      stock, par value $0.01; 10,000,000 shares authorized;none
                      issued and outstandingDeficit
                      accumulated during the development stage
                  
                  
                  (1,078,884
                  )
                  
                  (639,881
                  )Total
                      shareholders' deficit
                  
                  
                  (1,078,884
                  )
                  
                  (639,881
                  )Total
                      liabilities and shareholders' deficit
                  
                  $
                  384,902
                  
                  $
                  234,145
 (1) Derived from audited financial statements.
   See
          accompanying notes to unaudited consolidated financial statements.
 3
  **Sunbelt
          Bancshares, Inc.**
 **(A
            Development Stage Enterprise)**
 **Statements
              of Operations (Unaudited)**
 Three
                      Months Ended
                  
                  Six
                      Months Ended
                  
                  CumulativeJune
                      30,
                  
                  June
                      30,
                  
                  Since2005
                  
                  2004
                  
                  2005
                  
                  2004
                  
                  InceptionExpenses:Professional
                      fees
                  
                  $
                  31,232
                  
                  $
                  20,452
                  
                  $
                  108,795
                  
                  $
                  24,805
                  
                  $
                  281,314Consulting
                      fees
                  
                  
                  37,198
                  
                  
                  42,912
                  
                  
                  63,215
                  
                  
                  67,829
                  
                  
                  374,815Payroll
                  
                  
                  48,736
                  
                  
                  -
                  
                  
                  90,485
                  
                  
                  -
                  
                  
                  90,485Regulatory
                      application and filing fees
                  
                  
                  -
                  
                  
                  20,000
                  
                  
                  12,920
                  
                  
                  20,000
                  
                  
                  115,306Interest
                      expense
                  
                  
                  11,853
                  
                  
                  -
                  
                  
                  11,853
                  
                  
                  -
                  
                  
                  11,853Miscellaneous
                  
                  
                  63,507
                  
                  
                  115
                  
                  
                  151,735
                  
                  
                  13,428
                  
                  
                  205,111Net
                      loss and deficit accumulated during thedevelopment
                      stage
                  
                  $
                  (192,526
                  )
                  $
                  (83,479
                  )
                  $
                  (439,003
                  )
                  $
                  (126,062
                  )
                  $
                  (1,078,884
                  )
 See
          accompanying notes to unaudited consolidated financial statements.
  4
  **Sunbelt
                      Bancshares, Inc.****(A
                      Development Stage Enterprise)****Statements
                      of Cash Flows (unaudited)**
  Six
                      Months Ended
                  
                  CumulativeJune
                      30,
                  
                  Since2005
                  
                  2004
                  
                  InceptionCash
                      flows from operating activities:Net
                      loss
                  
                  $
                  (439,003
                  )
                  $
                  (126,062
                  )
                  $
                  (1,078,884
                  )Adjustments
                      to reconcile net loss to net cash used in operating
                      activities:Changes
                      in other operating assets and liabilities:Deferred
                      stock issuance costs
                  
                  
                  (133,484
                  )
                  
                  (74,000
                  )
                  
                  (345,734
                  )Accounts
                      payable and accrued expenses
                  
                  
                  115,100
                  
                  
                  6,500
                  
                  
                  219,126Net
                      cash used in operating activities
                  
                  
                  (457,387
                  )
                  
                  (193,562
                  )
                  
                  (1,205,492
                  )Cash
                      flows from financing activities:Advances
                      from organizers
                  
                  
                  64,660
                  
                  
                  190,000
                  
                  
                  634,660Repayments
                      of advances from organizers
                  
                  
                  (200,000
                  )
                  
                  -
                  
                  
                  -Advances
                      from affiliate
                  
                  
                  200,000
                  
                  
                  -
                  
                  
                  200,000Borrowings
                      under line of credit
                  
                  
                  410,000
                  
                  
                  -
                  
                  
                  410,000Net
                      cash used in investing activities474,660
                  
                  
                  190,000
                  
                  
                  1,244,660Net
                      decrease in cash and cash equivalents
                  
                  
                  17,273
                  
                  
                  (3,562
                  )
                  
                  39,168Cash
                      and cash equivalents at beginning of period
                  
                  
                  21,895
                  
                  
                  70,676
                  
                  
                  -Cash
                      and cash equivalents at end of period
                  
                  $
                  39,168
                  
                  $
                  67,114
                  
                  $
                  39,168Supplemental
                      disclosures of cash flow information:Cash
                      paid for interest:
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
  See
          accompanying notes to unaudited consolidated financial statements.
 
 5
  **Sunbelt
          Bancshares, Inc.**
 **(A
          Development Stage Enterprise)**
 **Notes
          to Financial Statements - Unaudited)**
 **Note
            1.**  **Organization
            and Nature of Operations**
 
 Sunbelt
            Bancshares, Inc. (“the Company”) is a proposed bank holding company incorporated
            on December 18, 2002, for the purpose of forming a de novo bank
            subsidiary.
            The Company’s development stage activities, which commenced on January 1, 2003,
            have consisted primarily of preparing and filing applications with various
            bank
            regulatory authorities for permission to organize a state bank and a
            bank
            holding company, and taking all other actions necessary to organize and
            charter
            the bank, including the sale of the Company’s common stock. On June 30, 2004,
            the Company filed an application with the Texas Department of Banking
            to
            organize the Bank and with the Federal Deposit Insurance Corporation
            for federal
            deposit insurance. As of December 31, 2004, these applications were approved
            subject to certain conditions, including: (1) capitalizing the Bank with
            at
            least $10,600,000, and (2) implementing appropriate banking policies
            and
            procedures. The Bank expects to receive all necessary final regulatory
            approvals
            and begin banking operations during the third quarter of 2005.
 
 The
            Company was formed under the name “First Cornerstone Capital, Inc.” The Company
            changed the name to Sunbelt Bancshares, Inc. in January 2004.
 
 In
            February 2005, the Company’s Registration Statement on Form SB-2 became
            effective and it offered for sale a minimum of 1,240,000 shares and a
            maximum of
            1,500,000 shares of its common stock at $10 per share. (See Note 2)
            The
            proceeds of the offering will be utilized primarily to capitalize the
            Bank and
            reimburse the organizers for certain organizational expenses.
 
 Upon
            commencement of operations, the Bank intends to be a full service commercial
            bank initially serving customers in the South Arlington, South Grand
            Prairie,
            Mansfield, Texas area. The Company’s fiscal year ends on December
            31.
 
 The
            Company’s ability to commence operations is dependent upon, among other matters,
            the receipt of various regulatory approvals, equity capital of at least
            $12.4
            million raised through the sale of the Company’s common stock and receipt of
            deposit insurance from the Federal Deposit Insurance Corporation.
 
 The
            accompanying unaudited consolidated financial statements have been prepared
            in
            accordance with the instructions to Form 10-QSB and, therefore, do not
            include
            all of the disclosures and notes required by U.S. generally accepted
            accounting
            principles. In the opinion of management, all material adjustments (which
            are of
            a normal recurring nature) considered necessary for a fair presentation
            have
            been made. The information included in this Form 10-QSB should be read
            in
            conjunction with Management’s Discussion and Analysis and the financial
            statements and notes included in the Company’s 2004 Form 10-KSB. The results for
            the interim period are not necessarily indicative of the results to be
            expected
            for the entire year or any other interim periods.
 
 **Note
            2.**  **Common
            Stock Offering**
 
 In
            February 2005, the Company’s Registration Statement on Form SB-2 became
            effective and it offered for sale a minimum of 1,240,000 shares and a
            maximum of
            1,500,000 shares of its common stock at an offering price of $10 per
            share. In
            addition, the Company will issue one stock purchase warrant for every
            five
            shares of common stock purchased, up to a maximum of 300,000 warrants.
            The
            warrants will entitle the holder to purchase one share of the Company’s common
            stock for $12.50 at any time within three years of the date the Bank
            opens for
            business. The Company is not using an underwriter and officers of the
            Company
            will be selling the shares on a best efforts basis. The officers of the
            Company
            will not receive any commission in connection with the sale of shares.
            As of
            August 9, 2005, subscription funds in the amount of approximately $1,355,000
            have been received into escrow for the purchase of shares pursuant to
            the
            offering.
 
 6
  **Sunbelt
              Bancshares, Inc.**
 **(A
              Development Stage Enterprise)**
 **Notes
              to Financial Statements - Unaudited)**
   **Note
            3.** **** **Consulting
            Agreement**
 
 On
            May
            23, 2005, the Company engaged Treaty Oak Financial Services, Inc. (TOFS)
            to
            replace Bankmark Financial & Marketing Services as a consultant during the
            organizational process. TOFS was engaged to provide the Company with
            guidance
            about its capitalization strategy, public relations, event planning,
            director/senior management training, proposed shareholder database management
            and marketing consulting. The agreement with Treaty Oak provided for
            a term of
            120 days beginning June 17, 2005 and for payments of $35,000 per month
            (plus
            expenses). In addition, for its administrative support in connection
            with the
            transfer of individual retirement account funds used to satisfy subscriptions,
            TOFS would receive a payment of $300 per account processed.
 
 Effective
            July 20, 2005, the agreement between the Company and TOFS was terminated
            by
            mutual consent whereby certain events occurred and the parties believed
            the
            engagement was no longer desirable. On August 4, 2005, TOFS returned
            to the
            Company its second payment of $35,000 less expenses of $1,859. Effective
            July
            26, 2005, the Company hired Raindance Capital Partners, LLC to replace
            Treaty
            Oak Financial Services, Inc.
 
 The
            Company entered into a consulting agreement with Jerry Burnett, who is
            actively
            involved in directing the organizational and pre-opening activities of
            the
            Company and the Bank. This agreement provides for the payment to Mr.
            Burnett of
            $90,000 annually, for consulting and advisory services rendered in connection
            with the organization of the Company and the Bank. In addition, the consulting
            agreement provides for deferred compensation of $2,917 per month to be
            accrued
            for the benefit of Mr. Burnett. This agreement expired on June 30, 2005
            and has
            been extended through December 31, 2005.
 
 **Note
            4.** **** **Pre-Organizational
            Loan**
 
 On
            January 15, 2005, the Company obtained a working capital line of credit
            from
            TIB-The Independent Bankers Bank (TIB) in the amount of $600,000, with
            an
            interest rate of prime plus 50 basis points floating daily. As of June
            30, 2005,
            the balance on the line of credit was $410,000. The loan matured on June
            30,
            2005 (or upon lender’s demand) and is guaranteed by the Organizers. TIB agreed
            to extend the line of credit through September 30, 2005.
  **Note
            5.**  **Loans
            From Affiliate**
 
 On
            April
            6, 2005, Epic Realm, an entity affiliated with several of the organizers,
            loaned
            the Company a total of $200,000 as a bridge loan until the Company is
            able to
            draw the final $200,000 under the TIB line of credit. Subsequent to June
            30,
            2005, The Company will repay the outstanding balance on the TIB line
            of credit
            by using a portion of the proceeds of its initial public offering. The
            Company
            expects that additional amounts will be required to complete the organizational
            phase and trying to obtain an additional $450,000 working capital line
            of credit
            from an entity owned and controlled by some of the members of the Seib
            family to
            cover any remaining expenses.
 
 Following
            the close of the quarter ended June 30, 2005, Epic Realm Technologies,
            LLC, an
            entity affiliated with several of the organizers, loaned the Company
            $85,000 as
            a bridge loan until the Company is able to draw the final $200,000 under
            the TIB
            line of credit. From July 1, 2005 through August 13, 2005, three organizers
            loaned the Company $14,000 to pay certain accounts payable.
  7
  **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
            OPERATION.**
  The
            following discussion and analysis provides information which the Company
            believes is relevant to an assessment and understanding of the Company’s results
            of operations and financial condition. This discussion should be read
            in
            conjunction with the financial statements and accompanying notes appearing
            in
            this report.
  Statements
            contained in this report that are not purely historical are forward-looking
            statements within the meaning of Section 21E of the Securities Exchange
            Act of
            1934, as amended, including the Company’s and Bank’s expectations, intentions,
            beliefs, or strategies regarding the future. Any statements in this document
            about expectations, beliefs, plans, objectives, assumptions or future
            events or
            performance are not historical facts and are forward-looking statements.
            These
            statements are often, but not always, made through the use of words or
            phrases
            such as “may,”  “should,”  “could,”  “predict,” 
“potential,”  “believe,”  “will likely result,”  “expect,” 
“will continue,”  “anticipate,”  “seek,”  “estimate,” 
“intend,”  “plan,”  “projection,”  “would” and “outlook,” and
            similar expressions. Accordingly, these statements involve estimates,
            assumptions and uncertainties, which could cause actual results to differ
            materially from those expressed in them. Any forward-looking statements
            are
            qualified in their entirety by reference to the factors discussed throughout
            this document. All forward-looking statements concerning economic conditions,
            rates of growth, rates of income or values included in this document
            are based
            on information available to the Company on the dates noted, and the Company
            assumes no obligation to update any such forward-looking statements.
            It is
            important to note that the actual results of the Company or the Bank
            may differ
            materially from those in such forward-looking statements due to fluctuations
            in
            interest rates, inflation, government regulations, economic conditions,
            customer
            disintermediation and competitive product and pricing pressures in the
            geographic and business areas in which the Company and the Bank conduct
            operations, including their respective plans, objectives, expectations
            and
            intentions and other factors discussed under the section entitled “Risk
            Factors,” in the Company’s Annual Report on Form 10-KSB for the year ended
            December 31, 2004, and the Company’s Prospectus contained in its Registration
            Statement on Form SB-2, which was declared effective on February 14,
            2005,
            including the following:
  ·
                  the
                      Company and Bank must receive regulatory approvals before the
                      Bank may
                      open for business;
  ·
                  the
                      Bank must satisfy certain conditions following regulatory approval
                      before
                      it may open for business;
  ·
                  any
                      delay in beginning banking operations will result in additional
                      losses;
  ·
                  the
                      Company has no operating history upon which to base an estimate
                      of its
                      future financial performance;
  ·
                  the
                      Company expects to incur losses during its initial years of
                      operations;
  ·
                  failure
                      of the Company or the Bank to implement its business strategies
                      may
                      adversely affect its financial performance.
  ·
                  the
                      Company’s profitability will be affected by the ability of Bank management
                      to measure and limit credit risk associated with the Bank’s loan
                      portfolio;
  ·
                  the
                      Bank’s emphasis on commercial business and commercial real estate
                      lending
                      may result in greater credit risk;
  ·
                  departures
                      of key personnel or directors may impair the Bank’s operations;
  ·
                  the
                      Bank will face intense competition from a variety of
                      competitors;
  ·
                  the
                      Bank’s legal lending limits may impair its ability to attract
                      borrowers;
  8
 ·
                  an
                      economic downturn, especially one affecting the Bank’s primary service
                      areas, may have an adverse effect on the Company’s financial
                      performance;
  ·
                  monetary
                      policy and other economic factors could adversely affect the
                      Bank’s
                      profitability;
  ·
                  the
                      Bank could be negatively affected by changes in interest
                      rates;
  ·
                  the
                      determination of the offering price in the initial public offering
                      was
                      arbitrary, and shareholders may be unable to resell their shares
                      at or
                      above the offering price;
  ·
                  the
                      Company’s ability to pay dividends is
                      limited;
  ·
                  the
                      Company and Bank are subject to extensive regulatory oversight,
                      which
                      could restrain growth and profitability;
                      and
  ·
                  the
                      Company may not be able to raise additional capital on terms
                      favorable to
                      it.
  These
            factors and the risk factors referred to in the Company’s Annual Report on Form
            10-KSB and its Prospectus, dated February 15, 2005, could cause actual
            results
            or outcomes to differ materially from those expressed in any forward-looking
            statements made by the Company, and you should not place undue reliance
            on any
            such forward-looking statements. Any forward-looking statement speaks
            only as of
            the date on which it is made and the Company does not undertake any obligation
            to update any forward-looking statement or statements to reflect events
            or
            circumstances after the date on which such statement is made or to reflect
            the
            occurrence of unanticipated events. New factors emerge from time to time,
            and it
            is not possible for the Company to predict which will arise. In addition,
            the
            Company cannot assess the impact of each factor on the business of the
            Company
            or the Bank or the extent to which any factor, or combination of factors,
            may
            cause actual results to differ materially from those contained in any
            forward-looking statements.
  **OVERVIEW**
  The
            Company is a Texas corporation that was incorporated on December 18,
            2002 to
            organize and serve as the holding company for a proposed de novo bank,
            Sunbelt
            Bank (In Organization) (the “Bank”). The Bank will be a full service commercial
            bank headquartered in southwest Arlington, Texas, with a full service
            banking
            office in southeast Arlington, and will initially serve South Arlington,
            South
            Grand Prairie, Mansfield and the neighboring communities.
  On
            June
            30, 2004, an application was filed with the Texas Department of Banking
            (TDB) to
            organize the Bank and with the FDIC for federal deposit insurance. The
            Bank has
            received the regulatory approvals of the TDB and the FDIC; however, these
            regulatory approvals are subject to certain conditions that the Bank
            must
            satisfy before receiving a license to commence banking operations, including:
            (1) capitalizing the Bank with at least $10.6 million, and (2) implementing
            appropriate banking policies and procedures. The Company expects to capitalize
            the Bank with proceeds from the Company’s initial public offering, and receive
            all necessary final regulatory approvals and begin banking operations
            during the
            third quarter of 2005.
  The
            Company has filed a Registration Statement on Form SB-2 with the Securities
            and
            Exchange Commission (the “SEC”) which Registration Statement became effective
            February 14, 2005. Pursuant to the Registration Statement, a minimum
            of
            1,240,000 shares of the Company’s common stock, $.01 par value per share (the
“Common Stock”), and a maximum of 1,500,000 shares of Common Stock were
            registered for sale at an offering price of $10.00 per share. The Company
            expects to use at least $10.6 million of the proceeds of its initial
            public
            offering to capitalize the Bank if it sells 1,240,000 shares and at least
            $13.2
            million to capitalize the Bank if it sells 1,500,000 shares. As of August
            9,
            2005, funds in the amount of approximately $1,355,000 have
            been
            received into escrow for the purchase of shares.
  9
 
 **PLAN
            OF OPERATION**
  We
            intend
            to open the Bank in a temporary modular facility near the site of our
            future
            main office, which will also serve as the Bank's main office. The Bank
            will
            lease the temporary modular facility. We expect construction of our main
            office
            to be complete approximately 12 months after the Bank opens. Our proposed
            main
            office will be located at 7240 U. S. Highway 287, Arlington, Texas. The
            building
            will be a free-standing one story office building having up to approximately
            8,000 square foot. The Bank will also operate from a branch office to
            be located
            at the intersection of Mayfield Road and U. S. Highway 360 in Arlington,
            Texas,
            which is approximately 12 miles from our main office. The branch office
            will
            occupy up to 5,000 square feet in a one story free-standing office building.
            The
            Bank has executed lease agreements with respect to each of its proposed
            banking
            locations. These leases are contingent on the Bank receiving all necessary
            regulatory approvals and opening for business. Under each agreement,
            the Bank
            will have two options to renew and to extend the term of the lease for
            84 months each. In addition, the landlord will have a right of
            first
            refusal of 21 days from notice by the Bank to develop for lease
            any space
            or facility to be used by the Bank. In consideration for the right of
            first
            refusal, the Bank is not being required to pay any monthly cash rental
            amount
            for use of the leased land during the construction period of the permanent
            building. The obligations of the Bank under the leases are being guaranteed
            by
            the Company.
  At
            this
            time, we do not intend to own any of the properties from which we conduct
            banking operations. We expect to use approximately $585,400 of the proceeds
            of
            the Company’s initial public offering to purchase furniture, fixtures and
            equipment at the two permanent locations. Management believes that the
            temporary
            facilities will be adequate to meet our initial needs until the permanent
            facilities are available. We expect to hire up to 17 full-time equivalent
            employees to staff our banking offices and do not expect that the Company
            will
            have any employees who are not also employees of the Bank.
  The
            Bank
            will use the remainder of its capital for customer loans, investments
            and other
            general banking purposes. We believe that the Company’s minimum initial offering
            proceeds will enable the Bank to maintain a leverage capital ratio, which
            is a
            measure of core capital to average total assets, in excess of 8% for
            the first
            three years of operations as required by the FDIC. Accordingly, we do
            not
            anticipate raising additional capital during the 12-month period following
            the
            completion of the Company’s initial public offering. However, we cannot assure
            you that we will not need to raise additional capital within the next
            three
            years or over the next 12-month period.
  We
            have not fully developed the products and services that the Bank will
            initially
            offer its customers and anticipate engaging in additional product research
            and
            development during the 12-month period following the offering.
  **FINANCIAL
            RESULTS**
  For
            the
            six-month period ended June 30, 2005, the Company generated a net loss
            of $
            439,003. For the six-month period ended June 30, 2005, the primary expenses
            were
            consulting fees ($63,215), payroll expense ($90,485), professional fees
            ($108,795), regulatory application and filing fees ($12,920), and interest
            expense ($11,853). Because the Company is in the organizational stage,
            it has no
            operations from which to generate revenues. The Company engaged in no
            material
            operations during the six months ended June 30, 2005.
  Initially,
            the Bank anticipates deriving its revenues principally from interest
            charged on
            loans and, to a lesser extent, from interest earned on investments, fees
            received in connection with the origination of loans and other miscellaneous
            fees and service charges. Its principal expenses are anticipated to be
            interest
            expense on deposits and operating expenses. The funds for these activities
            are
            anticipated to be provided principally by operating revenues, deposit
            growth,
            purchases of federal funds from other banks, sale of loans and investment
            securities, and partial or full repayment of loans by borrowers.
  10
 The
            Bank’s operations will depend substantially on its net interest income, which
            is
            the difference between the interest income earned on its loans and other
            assets
            and the interest expense paid on its deposits and other borrowings. This
            difference is largely affected by changes in market interest rates, credit
            policies of monetary authorities, and other local, national or international
            economic factors which are beyond the Bank’s ability to predict or control.
            Large moves in interest rates may decrease or eliminate the Bank’s
            profitability.
  **FUNDING
            OF OPERATIONS AND LIQUIDITY**
  During
            the organizational period, the Company’s cash requirements have consisted
            principally of funding the Company’s pre-opening expenses, described above.
            Through June 30, 2005, the primary sources of liquidity to meet current
            obligations have been direct cash advances from the organizers in the
            aggregate
            amount of $64,660, a $200,000 loan from an affiliated entity and an extension
            of
            credit in the amount of $600,000 from TIB - The Independent BankersBank,
            which
            extension of credit has been guaranteed by the organizers. Under the
            line of
            credit agreement with TIB, the final $200,000 draw will be accessible
            to the
            Company when it attains subscriptions equal to 50% of the minimum offering
            amount.
 
 On
            April
            6, 2005, Epic Realm, an entity affiliated with several of the organizers,
            loaned
            the Company a total of $200,000 as a bridge loan until the Company is
            able to
            draw the final $200,000 under the TIB line of credit. The Company expects
            to
            repay the bridge loan with the proceeds of the final draw on the TIB
            line of
            credit.
 
 As
            of
            June 30, 2005, the Company had cash on hand of approximately $39,168.
            In
            addition, the Company had borrowing capacity under TIB line of credit
            of
            approximately $600,000, $200,000 of which will be used to repay the bridge
            loan.
            The Company expects that additional amounts will be required to complete
            the
            organizational phase and is working to obtain an additional $450,000
            working
            capital line of credit from an entity owned and controlled by some of
            the
            members of the Seib family to cover any remaining expenses.
 
 Although
            the Company has not received a binding commitment with respect to the
            supplemental $450,000 working capital line of credit, its organizers
            believe
            that the line of credit will be obtained on acceptable terms, based on
            informal
            discussions with the lender. In the event that the Company obtains the
            supplemental line of credit as expected, the Company believes that its
            liquidity
            sources will be adequate to meet the obligations that it would expect
            to incur
            following the receipt of preliminary regulatory approval and prior to
            the time
            that the Bank opens for business.
 
 If
            the
            Company is unable to secure a line or other extensions of credit on terms
            acceptable to it, it may be unable to fund the obligations through the
            end of
            the organizational process, in which case the Company may be unable to
            complete
            the organizational process. If the Company is unable to complete the
            organizational process, the escrow agent would return any offering subscription
            funds held in escrow with interest earned thereon and without deduction
            for
            expenses.
 
 Following
            the completion of the offering, the Company intends to repay the loan
            from TIB
            from the proceeds of the offering. With respect to the direct cash advances
            made
            by the organizers of the Company, the Company will either repay the advances
            from the proceeds of the offering or issue stock to each organizer in
            an amount
            equal to the cash advanced by the organizer.
 
 The
            Company believes that the proceeds to be raised during the initial public
            offering will provide sufficient capital to support the growth of both
            the
            Company and the Bank for their initial years of operations. The Company
            does not
            anticipate that it will need to raise additional funds to meet expenditures
            required to operate its business or that of the Bank over the initial
            12 months
            after a successful offering; all anticipated material expenditures during
            that
            period are expected to be provided for out of the proceeds of the Company’s
            initial public offering.
  11
  **CAPITAL
            EXPENDITURES**
  The
            Company had not made any significant capital expenditures as of June
            30,
            2005.
 
 **ITEM
            3. CONTROLS AND PROCEDURES**
  As
            of
            June 30, 2005, 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 the design and operation of
            our
“disclosure controls and procedures,” as such term is defined under Exchange Act
            Rules 13a-15(e) and 15d-15(e).
  Based
            on
            this evaluation, our chief executive officer and chief financial officer
            concluded that, as of June 30, 2005, such disclosure controls and procedures
            were effective to ensure that information required to be disclosed by
            us in the
            reports we file or submit under the Exchange Act is recorded, processed,
            summarized and reported within the time periods specified in the rules
            and forms
            of the SEC, and accumulated and communicated to our management, including
            our
            chief executive officer and chief financial officer, as appropriate to
            allow
            timely decisions regarding required disclosure.
  In
            designing and evaluating the disclosure controls and procedures, our
            management
            recognized that any controls and procedures, no matter how well designed
            and
            operated, can provide only reasonable assurance of achieving the desired
            control
            objectives and in reaching a reasonable level of assurance our management
            necessarily was required to apply its judgment in evaluating the cost-benefit
            relationship of possible controls and procedures.
  There
            were no changes in our internal controls over financial reporting during
            the
            quarter ended June 30, 2005 that materially affected, or are reasonably
            likely
            to materially affect, our internal controls over financial
            reporting.
  **PART
            II. OTHER INFORMATION**
  **ITEM
            1. LEGAL PROCEEDINGS.**
  The
            Company is not a party to any pending litigation.
  **ITEM
            2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
            PROCEEDS.**
  On
            February 14, 2005, the Securities and Exchange Commission declared effective
            our
            Registration Statement on Form SB-2 (File No. 333-120681) related to
            our initial
            public offering of our common stock, $0.01 par value.  We are
            offering for
            sale a minimum of 1,240,000 and a maximum of 1,500,000 shares of our
            common
            stock at a price of $10.00 per share to raise the money to organize Sunbelt
            Bank. We registered a total of 2,100,000 shares of our common stock,
            of which
            510,000 shares are issuable under registered common stock warrants (warrants
            to
            purchase an aggregate of 300,000 shares of common stock at an exercise
            price of
            $12.50 per share to be issued to the initial shareholders of the Company
            in
            connection with the offering, and warrants to purchase an aggregate of
            210,000
            shares of common stock at an exercise price of $10.00 per share to be
            issued to
            the organizers of the Company). Initially, we expected the offering to
            end on
            June 30, 2005. However, on June 6, 2005, the board of directors
            approved an
            extension of the offering until December 31, 2005. As of August 9, 2005,
            subscription funds in the amount of approximately $1,355,000 have been
            received
            into escrow for the purchase of shares pursuant to the offering.
 
 12
 As
            of
            June 30, 2005, the Company had incurred approximately $309,750 in offering
            expenses since the effective date, none of which was paid to directors,
            officers, ten percent or greater shareholders, any of their associates,
            or
            affiliates of the Company. None of those expenses were paid to underwriters
            or
            for underwriting discounts and commissions or finders’ fees.
  We
            anticipate that the gross proceeds of our offering will be a minimum
            of
            $12,400,000 and a maximum of $15,000,000. The following tables summarize
            the
            anticipated use of the proceeds by the Company and the Bank, respectively,
            based
            on the sale of the minimum and maximum number of shares being offered,
            as well
            as the midpoint of the offering. These figures are estimates based on
            information currently available. Accordingly, actual results may vary.
 
 **Sunbelt
            Bancshares**
 
 **Minimum
                      offering**
                  
                  **Midpoint
                      offering**
                  
                  **Maximum
                      offering**Gross
                      proceeds from offering
                  
                  $
                  12,400,000.00
                  
                  
                  100.00
                  %
                  $
                  13,500,000.00
                  
                  
                  100.00
                  %
                  $
                  15,000,000.00
                  
                  
                  100.00
                  %Organizational
                      and pre-opening exp.
                  
                  $
                  (1,763,982.00
                  )
                  
                  14.20
                  %
                  $
                  (1,763,982.00
                  )
                  
                  13.07
                  %
                  $
                  (1,763,982.00
                  )
                  
                  11.80
                  %Investment
                      in Bank stock
                  
                  $
                  (10,636,018.00
                  )
                  
                  85.80
                  %
                  $
                  (11,736,018.00
                  )
                  
                  86.93
                  %
                  $
                  (13,236,018.00
                  )
                  
                  88.20
                  %Remaining
                      proceeds
                  
                  $
                  -
                  
                  
                  0.0
                  %
                  $
                  -
                  
                  
                  0.0
                  %
                  $
                  -
                  
                  
                  0.0
                  %
  We
            have
            funded the organizational and other pre-opening expenses described in
            the table
            above from cash advances made by our organizers and affiliated entities
            and from
            draws under pre-opening lines of credit extended to us by TIB. These
            amounts
            will be repaid from the proceeds of the offering unless we are unable
            to sell at
            least 1,240,000 shares of common stock or fail to receive all regulatory
            approvals required to organize the Bank, in which case our organizers
            and the
            affiliated entities will bear the risk of loss with respect to the direct
            cash
            advances and our organizers may be pursued by the lending bank with respect
            to
            any funds advanced under the pre-opening lines of credit.
  As
            shown,
            we expect to use approximately $10.6 million to capitalize the
            Bank if we
            sell 1,240,000 shares, approximately $11.7 million if we sell
            1,350,000
            shares and approximately $13.2 million if we sell 1,500,000 shares.
            However, we reserve the right to retain a portion of the proceeds of
            the
            offering at the Company level for general corporate purposes as long
            as we
            contribute no less than $10.6 million to the Bank to fund its
            initial
            capitalization.
  **Sunbelt
            Bank**
  The
            following table shows the anticipated use of the proceeds allocated to
            the Bank.
            These proceeds will be in the form of a capital injection from the Company.
 
 **Minimum
                      offering**
                  
                  **Midpoint
                      offering**
                  
                  **Maximum
                      offering**Capital
                      injection
                  
                  $
                  10,636,018.00
                  
                  
                  100.0
                  %
                  $
                  11,736,018.00
                  
                  
                  100.0
                  %
                  $
                  13,236,018.00
                  
                  
                  100.0
                  %Furniture,
                      fixtures and equipment
                  
                  $
                  (585,400.00
                  )
                  
                  5.5
                  %
                  $
                  (585,400.00
                  )
                  
                  5.5
                  %
                  $
                  (585,400.00
                  )
                  
                  5.5
                  %Loans
                      to customers, investment and other general purposes
                  
                  $
                  (10,050,618.00
                  )
                  
                  94.5
                  %
                  $
                  (11,150,618.00
                  )
                  
                  94.5
                  %
                  $
                  (12,650,618.00
                  )
                  
                  94.5
                  %Remaining
                      proceeds
                  
                  $
                  (10,050,618.00
                  )
                  
                  0.0
                  %
                  $
                  -
                  
                  
                  0.0
                  %
                  $
                  -
                  
                  
                  0.0
                  %
 
 13
 **ITEM
            3. DEFAULTS UPON SENIOR SECURITIES.**
  This
            item
            is not applicable.
  **ITEM
            4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
  No
            matters were submitted to a vote of the shareholders of the Company during
            the
            six months ended June 30, 2005.
  **ITEM
            5. OTHER INFORMATION.**
  This
            item
            is not applicable.
  **ITEM
            6. EXHIBITS AND REPORTS ON FORM 8-K.**
  **Exhibit
                      Number**
                  
                  **Description
                      of Exhibit**31.1
                  
                  Rule
                      13a-14(a) Certification of Chief Executive Officer.31.2
                  
                  Rule
                      13a-14(a) Certification of Chief Financial Officer.32
                  
                  Certification
                      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                      Section 906 of
                      the Sarbanes-Oxley Act of 2002.
  14
  **SIGNATURES**
 
 Pursuant
            to the requirements of the Securities Exchange Act of 1934, the Registrant
            has
            duly caused this report to be signed on its behalf by the undersigned
            thereunto
            duly authorized.
  
 SUNBELT
            BANCSHARES, INC.
 Date:
            August 15, 2005
  
 By:  /s/
            Jerry
            Burnett
 
 _______________________________________
 Jerry
            Burnett
 Chief
            Executive Officer
 
 
 Date:
            August 15, 2005
 By:  /s/
            Cindy
            Swindle
 _______________________________________
 Cindy
            Swindle
 Chief
            Financial Officer
  15
  **EXHIBIT
            INDEX**
 
 **Exhibit
                      Number**
                  
                  **Description
                      of Exhibit**31.1
                  
                  Certification
                      pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities
                      Exchange
                      Act31.2
                  
                  Certification
                      pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities
                      Exchange
                      Act32
                  
                  Certification
                      pursuant to Rules 13a-14(b) or Rule 15d-14(b) of the Securities
                      Exchange
                      Act and 18 U.S.C. §1350
  16