WASHINGTON, D.C. 20549

 

FORM 10-Q

 

Mark One

 

 

GB&T Bancshares, Inc.

(Exact name of registrant as specified in its charter)

 

 

Indicate by check mark whether the registrant (1) 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   ý    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   ý

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of May 5, 2003:    5,381,747 shares; no par value

 

 

GB&T BANCSHARES, INC.

 

TABLE OF CONTENTS

 

PART I.	FINANCIAL INFORMATION
	Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets – March 31, 2003 (Unaudited) and December 31, 2002
	Consolidated Statements of Income (Unaudited)- Three months ended March 31, 2003 and 2002		.
	Consolidated Statements of Comprehensive Income (Unaudited)- Three months ended March 31, 2003 and 2002
	Consolidated Statements of Stockholders’ Equity (Unaudited) Three months ended March 31, 2003
	Consolidated Statements of Cash Flows (Unaudited) - Three months ended March 31, 2003 and 2002		.
	Notes to Consolidated Financial Statements (Unaudited)
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	Item 4.	Controls and Procedures
PART II.	OTHER INFORMATION
	Item 6.	Exhibits and Reports on Form 8-K
	Signatures
	Certifications

 

2

 

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

 

GB&T BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

 

		March 31, 2003			December 31, 2002
		(Dollars in thousands, except share data)
Assets
Cash and due from banks		$	18,217		$	18,113
Interest-bearing deposits in banks		2,332			8,205
Federal funds sold		29,590			25,170
Securities available for sale, at fair value		104,811			106,843
Restricted equity securities		3,784			3,784
Loans, net of unearned income		562,682			542,834
Less allowance for loan losses		7,438			7,538
Loans, net		555,244			535,296
Premises and equipment		20,734			20,774
Goodwill and intangible assets		9,509			9,522
Other assets		13,732			14,265
Total assets		$	757,953		$	741,972
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits		$	66,830		$	56,795
Interest-bearing deposits		533,374			523,453
Total deposits		600,204			580,248
Federal funds purchased and securities sold Under repurchase agreements		14,351			11,538
Federal Home Loan Bank advances		61,619			63,654
Other borrowings		231			820
Other liabilities		4,872			9,935
Company guaranteed trust preferred securities		15,000			15,000
Total liabilities		696,277			681,195
Stockholders’ Equity:
Capital Stock-no par value; 20,000,000 shares  Authorized, 5,365,478 shares issued and Outstanding at March 31, 2003; 5,356,946  Shares issued and outstanding at December 31, 2002		35,688			35,658
Retained earnings		24,386			23,130
Accumulated other comprehensive income, Net of tax		1,602			1,989
Total stockholders’ equity		61,676			60,777
Total liabilities and stockholders’ equity		$	757,953		$	741,972

 

See accompanying notes to consolidated financial statements.

 

3

 

GB&T BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

 

		Three months ended March 31,
		2003			2002
		(Dollars in thousands, except per share data)
Interest income:
Loans, including fees		$	9,738		$	8,200
Taxable securities		985			992
Nontaxable securities		168			176
Federal funds sold		54			20
Interest-bearing deposits in banks		11			9
Total interest income		10,956			9,397
Interest expense:
Deposits		2,977			3,090
Federal funds purchased and securities sold under repurchase agreements		41			80
Federal Home Loan Bank advances		728			705
Other borrowings		213			23
Total interest expense		3,959			3,898
Net interest income		6,997			5,499
Provision for loan losses		214			183
Net interest income after Provision for loan losses		6,783			5,316
Other income:
Service charges on deposit accounts		1,092			828
Mortgage origination fees		557			304
Insurance commissions		144			144
Gain (loss) on sale of securities		28			137
Other operating income		531			469
Total other income		2,352			1,882
Other expense:
Salaries and employee benefits		4,124			2,956
Net occupancy and equipment expense		1,004			768
Other operating expenses		1,673			1,275
Total other expense		6,801			4,999
Income before income taxes		2,334			2,199
Income tax expense		623			702
Net income		$	1,711		$	1,497
Earnings per share:
Basic		$	0.32		$	0.32
Diluted		$	0.31		$	0.31
Weighted average shares:
Basic		5,361			4,757
Diluted		5,523			4,872
Cash dividends declared per common share		$	0.085		$	0.080

 

See accompanying notes to consolidated financial statements.

 

4

 

GB&T BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

 

		Three months ended March 31,
		2003			2002
		(Dollars in thousands)
Net Income		$	1,711		$	1,497
Unrealized losses on securities available-for-sale arising during period, net of tax		(370		)	(349		)
Reclassification adjustment for gains realized on  securities available-for-sale in net income, net of tax		(17		)	(85		)
Other comprehensive loss		(387		)	(434		)
Comprehensive income		$	1,324		$	1,063

 

Consolidated Statements of Stockholders’ Equity
Three Months Ended March 31, 2003 (unaudited)
		Shares		Capital Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total Stockholders’ Equity
		(Dollars in thousands)
Balance, December 31, 2002		5,357		$	35,658		$	23,130		$	1,989		$	60,777
Net income		—		—			1,711			—			1,711
Options excercised		9		37			—			—			37
Dividends declared $0.085 per share		—		—			(455		)	—			(455		)
Payment for fractional shares in connection with the HomeTown Bank of Villa Rica business combination		(1	)	(7		)	—			—			(7		)
Other comprehensive loss		—		—			—			(387		)	(387		)
Balance, March 31, 2003		5,365		$	35,688		$	24,386		$	1,602		$	61,676

 

5

 

 

GB&T BANCSHARES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

		Three months ended March 31,
		2003			2002
		(Dollars in thousands)
Operating Activities
Net income		$	1,711		$	1,497
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		458			348
Provision for loan losses		214			183
Amortization and (accretion), net		157			23
Gain on sale of securities		(28		)	(137		)
Net (increase) decrease in other assets		971			(480		)
Net decrease in other liabilities		(4,825		)	(377		)
Net cash (used in) provided by operating activities		(1,342		)	1,057
Investing Activities
Purchases of securities available for sale		(23,479		)	(14,420		)
Purchases of restricted equity securities		—			(1,765		)
Proceeds from sales of securities available for sale		1,116			11,116
Proceeds from maturities of securities available for sale		23,613			4,962
(Increase) decrease in interest-bearing deposits in banks		5,873			(99		)
Net increase in federal funds sold		(4,420		)	(8,509		)
Net increase in loans		(21,110		)	(6,776		)
Proceeds from sales of other real estate owned		544			202
Purchases of premises and equipment		(439		)	(861		)
Disposal of premises and equipment		21			—
Net cash used in investing activities		(18,281		)	(16,150		)
Financing Activities
Net increase in deposits		19,956			12,926
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements		2,813			(8,084		)
Proceeds from issuance of long-term debt, other borrowings and  Federal Home Loan Bank advances		107			19,500
Payments on long-term debt, other borrowings and Federal Home Loan Bank advances		(2,731		)	(8,100		)
Dividends paid to stockholders		(455		)	(381		)
Proceeds from issuance of common stock		37			118
Net cash provided by financing activities		19,727			15,979
Net increase in cash and due from banks		104			886
Cash and due from banks at beginning of period		18,113			18,097
Cash and due from banks at end of period		$	18,217		$	18,983
Supplemental disclosure of cash paid during the period for:
Interest		$	4,136		$	4,608
Income taxes		$	142		$	580

 

See accompanying notes to consolidated financial statements.

 

6

 

GB&T BANCSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1.                                                   BASIS OF PRESENTATION

 

The unaudited consolidated financial statements include the accounts of GB&T Bancshares, Inc. and its wholly-owned banking subsidiaries, Gainesville Bank & Trust, United Bank & Trust, Community Trust Bank and HomeTown Bank of Villa Rica and its consumer finance company, Community Loan Company (collectively “the Company”).  Significant intercompany transactions and balances have been eliminated in consolidation.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, for interim financial information and with instructions for Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the three month period ended March 31, 2003 is not necessarily indicative of the results that may be expected for the year ending December 31, 2003.

 

NOTE 2.                                                 STOCK COMPENSATION PLANS

 

The Company has a stock option plan for granting of options to directors, officers and employees.  The options may be exercised over a period of ten years in accordance with vesting schedules determined by the Board of Directors.  The Company accounts for the plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations.  No stock-based employee compensation cost is reflected in net income, as all options granted under the plan 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 income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

 

		March 31,
		2003			2002
		(Dollars in thousands)
Net income, as reported		$	1,711		$	1,497
Deduct:  Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		26			19
Pro forma net income		$	1,685		$	1,478
Earnings per share:
Basic - as reported		$	0.32		$	0.32
Basic - pro forma		$	0.32		$	0.32
Diluted - as reported		$	0.31		$	0.31
Diluted - pro forma		$	0.31		$	0.31

 

Effective February 2003, the Board of Directors adopted the Employee and Director Stock Purchase Plan.  The Bank, serving as custodian, uses funds contributed from employees and directors, matched by the company at a rate of 50%, to purchase shares of the Company’s common stock.  Employees may contribute up to the lesser of $3,500 or 10% of their salary.  The Company may amend or terminate the plan at any time.

 

7

 

NOTE 3.                                                 SUBSEQUENT EVENTS

 

On April 28, 2003, the Company signed a definitive agreement with Baldwin Bancshares, Inc., the parent company of First National Bank of the South, Milledgeville, Georgia.  The agreement calls for the exchange of 2.895 shares of GB&T Bancshares, Inc. stock for each of the outstanding shares of Baldwin Bancshares, Inc.  The acquisition is initially valued at $25.9 million and will be accounted for as a purchase.  The acquisition is expected to be completed no later than early fourth quarter of 2003.

 

NOTE 4.                                                 EARNINGS PER COMMON SHARE

 

Presented below is a summary of the components used to calculate basic and diluted earnings per share for the three month periods ended March 31, 2003 and 2002.

 

		Three months ended March 31,
		2003			2002
		(in thousands, except per share data)
Basic Earnings Per Share:
Weighted average common shares outstanding		5,361			4,757
Net income		$	1,711		$	1,497
Basic earnings per share		$	0.32		$	0.32
Diluted Earnings Per Share:
Weighted average common shares outstanding		5,361			4,757
Net effect of the assumed exercise of stock Options based on the treasury stock method Using average market prices for the period		162			115
Total weighted average common shares and Common stock equivalents outstanding		5,523			4,872
Net income		$	1,711		$	1,497
Diluted earnings per share		$	0.31		$	0.31

 

8

 

Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS

 

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results including our wholly-owned subsidiaries, Gainesville Bank & Trust, United Bank & Trust, Community Trust Bank, HomeTown Bank of Villa Rica and Community Loan Company during the periods included in the accompanying consolidated financial statements.

 

Cautionary Notice Regarding Forward-Looking Statements

 

Some of the statements in this Report, including, without limitation, matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” GB&T Bancshares, Inc. (the “Company”) are “forward-looking statements” within the meaning of the federal securities laws.  Forward-looking statements include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, our other business strategies, our expectations with respect to our allowance for loan losses and impaired loans, and other statements that are not historical facts.  When we use words like “anticipate”, “believe”, “intend”, “expect”, “estimate”, “could”, “should”, “will”, and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing.  These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared.  Factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) changes in the interest rate environment may reduce margins; (3) general economic conditions may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduction in demand for credit; (4) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which we are engaged; (5) costs or difficulties related to the integration of our businesses, may be greater than expected; (6) deposit attrition, customer loss or revenue loss following acquisitions may be greater than expected; (7) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than us; and (8) adverse changes may occur in the equity markets.

 

Many of such factors are beyond our ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements.  We disclaim any obligation to update or revise any forward-looking statements contained in this Report, whether as a result of new information, future events or otherwise.

 

Balance Sheets

 

Our total assets increased $16.0 million or 2.15% for the period ended March 31, 2003 compared to December 31, 2002.  The increase consists primarily of an increase in loans of $19.8 million and an increase in federal funds sold of $4.4 million.  This increase is partially offset by decreases in securities of $2.0 million and interest-earning deposits of $5.9 million.

 

Total deposits have increased $20.0 million, or 3.44% during the period ended March 31, 2003 compared to December 31, 2002.  Both noninterest-bearing and interest-bearing deposits increased $10 million each during the period.   Deposit growth was slightly ahead of loan growth resulting in a loan to deposit ratio of 93.75% at March 31, 2003 compared to 93.55% at December 31, 2002.

 

9

 

Liquidity and Capital Resources

 

Liquidity management involves the matching of the cash flow requirements of customers who may be either depositors desiring to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs and our ability to meet those needs.  We seek to meet liquidity requirements primarily through management of short-term investments, monthly amortizing loans, maturing single payment loans, and maturities of securities and prepayments.  Also we maintain relationships with correspondent banks which could provide funds on short notice.  As of March 31, 2003, we had borrowed under Federal funds purchase lines and securities sold under agreement to repurchase, $14.4 million compared to $11.5 million at December 31, 2002.

 

Our liquidity and capital resources are monitored on a periodic basis by management, State and Federal regulatory authorities.  Management reviews liquidity on a periodic basis to monitor and adjust liquidity as necessary.  Management has the ability to adjust liquidity by selling securities available for sale, selling participations in loans we generate and accessing available funds through various borrowing arrangements.  Our short-term investments and available borrowing arrangements are adequate to cover any reasonably anticipated immediate need for funds.

 

Our liquidity ratio was 21.22% at March 31, 2003, above our policy minimum ratio of 15%.  Liquidity is measured by the ratio of net cash, Federal funds sold and securities to net deposits and short-term liabilities. In the event the banks need to generate additional liquidity, funding plans would be implemented as outlined in the liquidity policy of the banks. The subsidiary banks have lines of credit available to meet any unforeseen liquidity needs.  Also, the Banks have relationships with the Federal Home Loan Bank of Atlanta, which provide funding for loan growth on an as needed basis.

 

We have entered into a sales contract to sell a building we own in Hiram, Georgia which was purchased as part of the merger with Community Trust Financial Services.  The sale is scheduled to close in May 2003.  We anticipate an after tax loss on the property of approximately $175,000.   We expect this loss to be offset by the termination of the current annual operating cost of approximately $100,000.

 

We have entered into a sales contract to purchase a piece of property in Gainesville, Georgia for the purpose of locating an operations center for the Company’s operations and data processing.  This contract is scheduled to close in May 2003.  The approximate cost of the property is $1,150,000.   We anticipate the construction of the operations center to be completed in 2004.

 

10

 

As of March 31, 2003, the Company and the Banks were considered to be well-capitalized as defined in the FDIC Improvement Act and based on regulatory minimum capital requirements.  The Company and its bank subsidiaries’ actual capital ratios are presented in the following table.

 

		ACTUAL		FOR CAPITAL ADEQUACY PURPOSES		TO BE WELL CAPITALIZED
As of March 31, 2003
Total Capital to Risk Weighted Assets:
Consolidated		12.53	%	8	%	N\A
Gainesville Bank & Trust		10.29	%	8	%	10	%
United Bank & Trust		12.54	%	8	%	10	%
Community Trust Bank		11.33	%	8	%	10	%
HomeTown Bank of Villa Rica		10.89	%	8	%	10	%
Tier I Capital to Risk Weighted Assets:
Consolidated		11.28	%	4	%	N\A
Gainesville Bank & Trust		9.17	%	4	%	6	%
United Bank & Trust		11.33	%	4	%	6	%
Community Trust Bank		10.08	%	4	%	6	%
HomeTown Bank of Villa Rica		9.64	%	4	%	6	%
Tier I Capital to Average Assets:
Consolidated		8.89	%	4	%	N\A
Gainesville Bank & Trust		7.02	%	4	%	5	%
United Bank & Trust		8.54	%	4	%	5	%
Community Trust Bank		8.10	%	4	%	5	%
HomeTown Bank of Villa Rica		7.59	%	4	%	5	%

 

Results of Operations

 

Our profitability is determined by our ability to effectively manage interest income and expense, to minimize loan and security losses, to generate noninterest income, and to control operating expenses.  Since interest rates are determined by market forces and economic conditions beyond our control, our ability to generate net interest income is dependent upon our ability to obtain an adequate net interest spread between the rate paid on interest-bearing liabilities and the rate earned on interest-earning assets.  The net interest margin was 4.14% for the three months ended March 31, 2003, compared to 4.33% for the same period in 2002, a decrease of 19 basis points.  This decrease resulted from a 91 basis point decrease in the yield on earning assets and a 77 basis point decrease in the effective cost of funds.  The decreased yield on earning assets was primarily due to lower yields on loans.  This was largely due to a 50 basis point decrease in the average Prime rate as compared to the prior year to date.  The decreased effective cost of funds was due to lower average rates paid on interest-bearing funding.

 

The results of operations for the three months ended March 31, 2003, includes HomeTown Bank of Villa Rica which became part of the Company in November 2002.  The merger was accounted for as a purchase, therefore results for HTB have been included since November 2002.

 

Net interest income increased $1,498,000 or 27.24% for the three months ended March 31, 2003 compared to the same period in 2002.  The net increase consists of an increase in interest income of $1,559,000 or 16.59% less an increase in interest expense of $61,000 or 1.56% for the three-month period. The increase in net interest income is due to increases in volume, primarily in loans.

 

11

 

Our provision for loan losses increased by $31,000 or 16.94% during the three months ended March 31, 2003 as compared to the same period in 2002.  The analysis below indicates an increase of $149,000 in net charge-offs for the three months ended March 31, 2003 as compared to the same period in 2002.  This increase is primarily attributable to one loan for $232,000 that was charged off and moved to other real estate.  The allowance for loan losses at March 31, 2003 was $7,438,000 or 1.32% of total loans compared to 1.39% at December 31, 2002.  Based on management’s evaluation, the allowance is adequate to absorb any potential loan losses at March 31, 2003.  The allowance for loan losses is evaluated monthly and adjusted to reflect the risk in the portfolio.

 

The following table summarizes the allowance for loan losses for the three-month period ended March 31, 2003 and 2002.

 

		2003				2002
		(Dollars in Thousands)
Average amount of loans outstanding		$		555,727		$	420,405
Allowance  for loan losses balance, beginning of period		$		7,538		$	5,522
Less charge-offs
Commercial loans		—				—
Real estate loans		(232			)	—
Consumer  loans		(167			)	(222		)
Total Charge-offs		(399			)	(222		)
Plus recoveries
Commercial loans		21				1
Real estate loans		1				3
Consumer loans		63				53
Total recoveries		85				57
Net charge-offs		(314			)	(165		)
Plus provision for loan losses		214				183
Allowance for loan losses balance, end of period		$	7,438			$	5,540
Net charge-offs to average loans		0.057			%	0.039		%

 

12

 

The following table is a summary of nonaccrual, past due and restructured loans. The numbers indicate an increase of $3,376,000 in nonaccrual loans which consists of one loan for $1,408,000 and seven additional loans totaling $1,264,000 all which are secured by real estate.  The Company believes there is sufficient collateral to cover these loans, therefore losses are expected to be minimal to none.  Approximately 61%, or $437,000 of the nonaccrual consumer loan balance at March 31, 2003, is related to Community Loan Company, our consumer finance company.  The table presents an increase of $13,000 in past due loans over 90 days.  The majority of this increase is related to Community Loan Company, which accounts for approximately 74%, or $334,000 of the past due loan balance at March 31, 2003.  Due to the nature of the consumer finance business, the level of nonaccrual loans and past due loans over 90 days is normal and will consistently remain higher than those seen in the other banking affiliates.  Community Loan Company’s allowance for loan loss to total loans is also higher to cover these higher levels of nonaccrual and past due loans.

 

		March 31, 2003
		Nonaccrual Loans			Past Due 90 Days Still Accruing			Restructured Loans
		(Dollars in Thousands)
Real estate loans		$	3,104		$	83		$	—
Commercial loans		288			9			—
Consumer loans		718			357			—
Total		$	4,110		$	449		$	—
		March 31, 2002
		Nonaccrual Loans			Past Due 90 Days Still Accruing			Restructured Loans
		(Dollars in Thousands)
Real estate loans		$	103		$	93		$	—
Commercial loans		50			—			14
Consumer loans		581			343			—
Total		$	734		$	436		$	14

 

Our policy is to discontinue the accrual of interest income when, in the opinion of management, collection of such interest becomes doubtful.  This status is determined when; (1) there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected; or (2) the principal or interest is more than 90 days past due, unless the loan is both well-secured and in the process of collection.  Accrual of interest on such loans is resumed when, in management’s judgment, the collection of interest and principal becomes probable.

 

Loans classified for regulatory purposes as loss, doubtful, substandard, or special mention that have not been included in the table above do not represent or result from trends or uncertainties which management reasonably expects will materially impact future operating results, liquidity or capital resources.  These classified loans do not represent material credits about which management is aware of any information which causes management to have serious doubts as to the ability of such borrowers to comply with their loan repayment terms.

 

13

 

Other income for the three months ended March 31, 2003, increased by $470,000 or 24.97% compared to the same period in 2002.  Service charges increased by $263,000 and mortgage origination fees increased by $253,000. This increase was partially offset by a decrease in gain on sale of securities of $109,000.  Mortgage origination fees increased as a result of refinancing activity spurred by the continued decline in mortgage rates.

 

Other expenses increased by approximately $1,802,000 or 36.05% for the three months ended March 31, 2003 compared to the same period in 2002.  The increase is due primarily to an increase in salaries and employee benefits of $1,168,000, an increase in net occupancy and equipment expense of $239,000, an increase in marketing and public relations of $53,000 and an increase of $83,000 in supplies, postage and telephone.  The increase in salaries and employee benefits is partially due to HTB, which accounted for $491,000 of the increase and also an increase of 31 employees, exclusive of HTB, as of March 31, 2003 compared to the same period in 2002.

 

Income tax expense decreased by $80,000 for the three-month period ended March 31, 2003, compared to the same period last year. The effective tax rate for the period ended March 31, 2003 was 26.69%, compared to 31.92% for the same period in 2002.  The decrease in the effective tax rate is primarily due to the tax effect of the net operating loss carryforward at HTB.

 

Net income increased by $214,000 or 14.30%, for the three months ended March 31, 2003 compared to the same period in 2002.

 

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

 

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Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Our net interest income and the fair value of our financial instruments (interest earning assets and interest bearing liabilities) are influenced by changes in market interest rates. We actively manage our exposure to interest rate fluctuations through policies established by the Asset/Liability Management Committee (the “ALCO”). The ALCO meets regularly and is responsible for approving asset/liability management policies, developing and implementing strategies to improve balance sheet positioning and net interest income and assessing the interest rate sensitivity of the Banks.  See “Item 7A” of the Company’s Annual Report on Form 10-K for a more complete discussion.

 

Item 4.   CONTROLS AND PROCEDURES

 

Within 90 days prior to the date of filing of this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and the Chief Financial Officer, of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information that we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SEC’s rules and forms.  Our Chief Executive Officer and Chief Financial Officer also concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to our company required to be included in our periodic SEC filings.  In connection with the rules, we continually review and document our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes designed to enhance their effectiveness and to ensure that our systems evolve with our business.

 

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of this evaluation.

 

PART II - OTHER INFORMATION

 

Item 6.    Exhibits and Reports on Form 8-K

 

(a)         Reports on Form 8-K

 

We did not file a report on Form 8-K during the quarter ending March 31, 2003.

 

(b)        Exhibits

 

99.1         Section 906 Certification of CEO

99.2         Section 906 Certification of CFO

 

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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.

 

 

GB&T BANCSHARES, INC.
DATE:	05/14/2003		BY:	/s/ Richard A. Hunt
				Richard A. Hunt President and Chief Executive Officer
DATE:	05/14/2003		BY:	/s/ Gregory L. Hamby
				Gregory L. Hamby Executive Vice President & Chief Financial Officer

 

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Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Richard A. Hunt, certify that:

 

1.               I have reviewed this quarterly report on Form 10-Q of GB&T Bancshares, Inc.;

 

2.               Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.               Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.               The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

b)             evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

 

c)              presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

a)              all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

 

b)             any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6.               The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date:	May 14, 2003
			/s/ Richard A. Hunt
			Richard A. Hunt Chief Executive Officer

 

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Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Gregory L. Hamby, certify that:

 

1.               I have reviewed this quarterly report on Form 10-Q of GB&T Bancshares, Inc.;

 

2.               Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3.               Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4.               The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 

a)              designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

b)             evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

 

c)              presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

c)              all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

 

d)             any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

 

6.               The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

 

Date:	May 14, 2003
			/s/ Gregory L. Hamby
			Gregory L. Hamby Chief Financial Officer

 

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