GBTB GB&T Bancshares (MM)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)

(Mark One)

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

Or

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

Commission File Number 000-24203

GB&T Bancshares, Inc.

(Exact name of registrant as specified in its charter )

Securities registered pursuant to Section 12(g) of the Act:         None

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

                                                Yes o                                                                 No     x

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

                                                Yes o                                                                 No    x

Indicate by check mark whether the registrant: (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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     o

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

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

2

PART II

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

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

3

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

PART III

ITEM 10.                                               DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors

The following are the names and ages of the directors, the year each individual began continuous service as a director of the Company and the business experience of each, including principal occupations, at present and for at least the past five years:

4

5

Executive Officers

The executive officers of the Company are elected annually and serve at the pleasure of the Board of Directors.  The following sets forth each executive officer of the Company by name, age, the year first elected as an officer of the Company, position with the Company, and business experience for the past five years.

Family Relationships

The following family relationships exist between certain directors and executive officers of the Company or any of its subsidiaries:

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

Section 16(a) Beneficial Ownership Reporting Compliance

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

Code of Ethics

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

Audit Committee

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

6

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

The Audit Committee acts under an amended and restated written charter, which is available on the Company’s website at www.gbtbancshares.com under the heading “Investor Relations,” “Corporate Information” and “Governance Documents.”

The Board of Directors has determined that Messrs. Darden, Hewett, Mansour, Wilheit and Ms. Williams are “independent” as required by applicable listing standards of the Nasdaq Stock Market and Rule 10A-3(b)(1) of the Exchange Act.  The Board of Directors has examined the SEC’s definition of “audit committee financial expert” and has determined that Ms. Williams meets these standards.  Accordingly, Ms. Williams has been designated by the Board as an audit committee financial expert.

Shareholder Recommendations for Director Nominees

No material changes have been made to the procedures by which the Company’s shareholders may recommend nominees to the Company’s Board of Directors since we last described these procedures in our definitive proxy statement issued in connection with our 2007 Annual Meeting of Shareholders and filed with the SEC on April 18, 2007.

ITEM 11.                                               EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

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

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

Objectives of our Compensation Program

The objectives of our compensation program are as follows:

·                   Attract a sufficient number of qualified executives to meet the needs of the Company as defined by its strategic plans,

·                   Retain and motivate executives whose performance supports the achievement of our objectives,

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

·                   Provide opportunities that integrate pay with the Company’s annual and long-term performance goals,

·                   Encourage achievement of strategic objectives and creation of shareholder value,

·                   Recognize and reward individual initiative and achievements, and

·                   Maintain an appropriate balance between base salary and short- and long-term incentive opportunity.

Market Data and Use of Consultants

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

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

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

7

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

·                   16 United States financial institutions with assets of greater than $1.0 billion and assets at the 75 ^th percentile of $1.964 billion.

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

After considering this data, the Compensation Committee determined that base salaries are generally somewhat below the median in the marketplace, with which the Compensation Committee is comfortable given that it intends to offer significant incentives.  The Compensation Committee targeted annual cash incentive awards and long-term incentive awards for our Management Team above the median of a peer group of similar community banking companies.

Allocation of Compensation Components

Under the Company’s compensation structure, the targeted allocation of base salary, bonus and equity compensation varies depending on the officer’s level within the organization.  The Compensation Committee has not established a defined range of potential compensation components as a percentage of total cash and equity, but in allocating compensation among these elements, the Compensation Committee aims to structure the compensation of the Company’s Management Team (including the Company’s named executive officers) in a way that will have the greatest ability to influence the Company’s performance.  Accordingly, a higher weighting of performance-based incentives are available to those officers having greater influence as compared to lower levels of management who receive a greater portion of their compensation in base salary.

Certain perquisites and other employee benefits are also provided to the Company’s named executive officers.  Additional information regarding each element of executive compensation is provided below.

Elements of Compensation

Our compensation program consists of the following elements: (i) base salary, (ii) annual cash incentive awards, (iii) long-term incentive awards, (iv) perquisites and other executive benefits, and (v) change-in-control severance benefits.

Base Salary

The Compensation Committee views base salaries as necessary to recruit and retain executives, but recognizes that base salaries do not focus the Management Team on achieving strong performance.  The salaries of our Management Team are designed to provide a competitive level of compensation that is affordable to the Company and fair to the executive.  Salaries are reviewed annually and adjustments, if any, are made based on the review of competitive salaries at our peer companies, as well as an evaluation of the individual officer’s responsibilities, job scope, and individual performance.  For example, we assess each officer’s performance with reference to his performance toward meeting objectives such as earnings, achievement of core deposit growth, successful execution of our capital plan, business conduct and integrity, and leadership and team building.

Matthews Young and the Compensation Committee reviewed salaries of positions similar to those held by the named executives within the peer groups.  Based on this review, Matthews Young and the Compensation Committee determined that our named executive officers’ salaries were below the median relative to comparable positions within the peer group.  The Compensation Committee also reviewed the multiple of executives’ base salaries relative to the next levels of management positions and all Company staff.  The Compensation Committee believes that base salaries can be somewhat below peer base salaries, as long as the gap is not so big as to make it difficult to attract and retain qualified executives.  However, some current base salaries are too far below peers and a smaller part of the mix than is appropriate given the Compensation Committee’s strategy.  Therefore, the Compensation Committee increased base salaries of certain officers during 2007 in amounts to catch up with our growth from prior years.  The 2007 base salaries for each of our named executive officers are reflected in the Summary Compensation Table included in this Report.

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

8

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

Annual Cash Incentive Awards

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

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

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

These performance objectives represent those metrics that we believe are of utmost importance for the long term growth of a high performing community bank.  The annual budgets from which many of the performance objectives tend to be practical but ambitious and aggressive, shaping our goals for maximum performance and efficiency.  As such, achieving 100% of the targeted cash bonus level is relatively difficult but not unrealistic.  Notwithstanding the budgeted targets and other performance objectives communicated to each member of the Management Team in each annual plan, the Compensation Committee ultimately has discretion to determine what, if any, cash bonus awards are granted, regardless of which performance objectives are or are not met.

The table below summarizes the financial measures (along with their respective weighting factors) for the executive officers to receive cash bonus awards in 2007:

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

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

9

Long-Term Incentive Awards

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

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

Perquisites and Other Executive Benefits.

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

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

For information on the incremental cost of these perquisites, see footnotes 5 through 8 to the Summary Compensation Table included in this Report.

The Compensation Committee believes that the primary purpose of providing perks is to assist an employee to execute their responsibilities effectively. Since most perks also provide some personal facility, we recognize the cost of the perks as compensation. Philosophically, we see no need to be a leader in offering perks to our executives, but we will evaluate the value to both the Company and executive when they become common in our industry. Currently, we have no program for controlling the nature and cost of perks other than the Compensation Committee’s discretion.

Retirement Benefits . We maintain supplemental executive retirement agreements (“SERPs”) under an Executive Salary Continuation Plan with Messrs. Hunt and Hamby. The Compensation Committee provides SERPs to address the issues of internal and external equity in terms of retirement benefits offered to all employees at the Company as a percentage of final average pay and executives in our peer group. It is the Compensation Committee’s desire to fairly compensate executives and provide competitive retirement benefits given the restrictions on executives within tax qualified plans.

Some of our current SERP plans are not performing as desired which has resulted in inequities, and we asked Matthews Young to study alternative approaches during 2007.

We also offer a 401(k) plan to eligible employees (including the Management Team). The 401(k) plan allows participants to defer a portion of their compensation and provides that the Company may match a portion of the participants’ deferred compensation. In 2007, the Company matched 32.96% of eligible contributions up to an annual threshold equal to 6% of a participant’s total compensation.

Our executives are also eligible to participate in the Company’s other benefit plans on the same terms as other employees. These plans include paid vacation leave, medical and dental insurance, annual physical examinations, employee assistance programs, employee and dependent group term life insurance, and employee and spousal disability insurance.

Potential Payments Upon Termination or Change in Control

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

10

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

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

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

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

·                   health insurance and health benefits under the same terms and conditions as all other employees of the Company during the term of the agreement;

·                   eligibility to participate in the 401(k) Plan on the same terms and conditions as provided for all employees at the senior vice-president level or higher at the Company;

·                   the same number of weeks paid vacation as the officer was entitled to under the terms and conditions of his employment immediately preceding the event constituting the change in control of the Company; and

·                   other fringe benefits that the officer was receiving under the terms and conditions of his employment immediately prior to the event constituting change in control of the Company.

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

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

·                   by the Company for any reason other than “cause”, in which case the Company will have to pay to the officer a sum equal to the compensation above for the period remaining in the agreement, which payment shall be made in a lump sum due not later than 15 days after the last to occur of the date of any closing in which change in control takes place and the date upon which the officer is given notice by the Company that his employment is terminated; and

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

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

11

Stock Trading Policies

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

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each of it five most highly paid executive officers. There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements. Annual cash incentive awards, long-term incentive awards and stock option awards are performance-based compensation meting these requirements and are fully deductible. Thus far, none of our Management Team has received compensation in excess of the Section 162(m) limitation and therefore, all compensation has been fully deductible.

Summary Compensation Table

The following table sets forth certain information for the 2006 and 2007 fiscal years concerning compensation paid by the Company to its President and Chief Executive Officer and Chief Financial Officer.

12

(1)  Each of the named executives contributed a portion of his salary to the Company’s 401(k) plan, which amounts are not deducted from the salary amounts indicated.

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

(3)  This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2006 fiscal year for the fair value of stock options granted to each of the named executive officers, in such year as well as prior fiscal years, in accordance with SFAS 123R. For additional information on the valuation assumptions with respect to the grants, refer to Note 12 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2007, as filed with the SEC. For information on the valuation assumptions with respect to grants made prior to 2007, refer to the note on Stock-Based Compensation for the Company’s financial statements in the Form 10-K for the respective year-end. These amounts reflect the Company’s accounting expense for these awards, and do not correspond to the actual value that will be recognized by the named executive officers.

(4)  This column represents the sum of the change in pension value and non-qualified deferred compensation earnings in 2006 and 2007 for each of the named executive officers. See the Pension Benefits Table included in this Report, including the present value assumptions used in this calculation.

(5)  Includes $51,050 in director fees; $6750 in 401(k) plan match; $132 in automobile allowance; $1750 in contributions to the stock purchase plan; $5420 in social club dues; and $6248 in life insurance premiums.

(6)  Includes $44,800 in director fees; $6,600 in 401(k) plan match; $493 in automobile allowance; $1,750 in contributions to the stock purchase plan; $4,596 in social club dues; and $5,800 in life insurance premiums.

(7)  Includes $12,000 in director fees; $6,750 in 401(k) plan match; $1,750 in contributions to the stock purchase plan; and $1,946 in life insurance premiums.

(8)  Includes $12,000 in director fees; $6,600 in 401(k) plan match; $1,750 in contributions to the stock purchase plan; and $1,460 in life insurance premiums.

Grants of Plan-Based Awards

The following sets forth information about grants of plan-based awards granted to the named executive officers in 2007. No plan-based awards were granted to the named executive officers in 2007.

Outstanding Equity Awards at December 31, 2007

The following table includes certain information with respect to the unexercised options held by the named executive officers at December 31, 2007. The listed stock option grants were approved by the Board of Directors under the Company’s 1997 Incentive Plan to each of the named executive officers listed. The option exercise prices are based on the closing price of the Company’s common stock listed on the Nasdaq Global Select Market on the grant date. All options in the table vest at a rate of 20% per year, in each case beginning on the first anniversary of the option grant date.

13

Option Exercises and Stock Vested Table

The following table sets forth certain information regarding the exercise of stock options during 2007 by the persons named in the Summary Compensation Table and the value realized on the exercise of such options.

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

Pension Benefits Table

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

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

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

14

Director Compensation

The following table summarizes in tabular form the compensation awarded to, earned by, or paid to the Company’s directors other than Mr. Hunt, whose compensation for services rendered as a director is reported in the Summary Compensation Table above, for 2007.

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

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

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

Compensation Committee Report

We have reviewed and discussed with management certain Compensation Discussion and Analysis contained in this Report and, based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Report.

The foregoing report of the Compensation Committee does not constitute soliciting material and  shall not be deemed to be incorporated by reference in any previous or future documents filed by the Company with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates the report by reference in any such document.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has ever been an officer of the Company or was an officer or employee of the Company or any of the Banks during 2007. In addition, none of these individuals had any or have any relationship requiring disclosure under Item 404 of Regulation S-K. During 2007, (i) no executive officer of the Company served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the Compensation Committee of the Company; (ii) no executive officer of the Company served as a director of another entity, one of whose executive officers served on the Compensation Committee of the Company; and (iii) no executive officer of the Company served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company.

15

Security Ownership of Certain Beneficial Owners and Management

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

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

16

17

ITEM 13.               CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons, Promoters and Certain Control Persons

Certain of the officers, directors and shareholders of the Company named in this Report and the Banks, and affiliates of such persons, have from time to time engaged in banking transactions with the Banks. Such persons are expected to continue these transactions in the future. Any loans or other extensions of credit made by the Bank to such individuals were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated third parties and did not involve more than the normal risk of collectibility or present other unfavorable features. At December 31, 2007, loans to officers, directors, and shareholders of the Company named in this Report and the Bank amounted to an aggregate of approximately $38,263,000.

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

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

All related party transactions are subject to review by the full Board of Directors. We believe that the terms for all related party transactions are at least as favorable as those that could be obtained from a third party. Nasdaq Listing Standards Rule 4350(h) requires the Company to conduct an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis and further requires all such transactions to be approved by the Company’s Audit Committee or another “independent body” of the Board of Directors. The term “related party transaction” is generally defined as any transaction (or series of related transactions) in which the Company is a participant and the amount involved exceeds $120,000, and in which any director, director nominee, or executive officer of the Company, any holder of more than 5% of the outstanding voting securities of the Company, or any immediate family member of the foregoing persons will have a direct or indirect interest. The term includes most financial transactions and arrangements, such as loans, guarantees and sales of property, and remuneration for services rendered (as an employee, consultant or otherwise) to the Company.

Director Independence

The business and affairs of the Company are under the direction of the Company’s Board of Directors. The Board of Directors has affirmatively determined that the majority of the Board (10 of 12) is comprised of “independent directors” within the meaning of the Nasdaq Stock Market rules governing director independence. The independent directors are:  Mr. Cagle, Dr. Darden, Mr. Foster, Mr. Hewett, Mr. Lester, Dr. Maxwell, Mr. Mansour, Mr. Wayne, Ms. Williams, and Mr. Wilheit.

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

18

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

Independent Accountants

Fees

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

Audit Committee Pre-Approval Policy

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

19

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

20

PART IV

ITEM 15.               EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1)  Financial Statements

None.

(a)(2)  Financial Statement Schedules

None.

(a)(3)  Exhibits

The following exhibits are filed as part of this Report:

31.1                                        Rule 13a-14(a) Certification of Principal Executive Officer.

31.2                                        Rule 13a-14(a) Certification of Principal Financial Officer.

21

SIGNATURES

22