UNITED
STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

x
      QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended
September 30, 2004

ORo
      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 2-94292

FNB Banking Company(Exact name of registrant as specified in its charter)




Georgia

58-1479370(State of Incorporation)

(I.R.S. Employer Identification No.)




318 South Hill StreetGriffin, Georgia  30224(Address of principal executive offices)




770-227-2251(Issuer’s Telephone Number, Including Area Code)


State the number of shares outstanding of each of theissuer’s
classes of common equity, as of the latest practicable
date:

Common stock, par value $1 per share: 714,763 sharesoutstanding as of
November 1, 2004

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FNB BANKING COMPANY AND SUBSIDIARY

INDEX

Page No.PART I
     
     
     FINANCIAL INFORMATIONItem 1.
     
     
     Consolidated Financial StatementsConsolidated Balance Sheet (Unaudited) at
     September 30, 2004
     
     
     
     3Consolidated Statements of Earnings (Unaudited) for the Three
         Months and the Nine Months Ended September 30, 2004 and 2003
     
     
     
     4Consolidated Statements of Comprehensive Income (Unaudited)
        for the Three Months and the Nine Months Ended
     September30, 2004 and 2003
     
     
     
     5Consolidated Statements of Cash Flows (Unaudited) for the Six
        Months Ended September 30, 2004 and 2003
     
     
     
     6Notes to Consolidated Financial Statements (Unaudited)
     7Item 2.
     Managements Discussion and Analysis or Plan of Operation
     8Item 3.
     Controls and Procedures
     10PART II.
     OTHER INFORMATIONItem 1.
     Legal Proceedings
     11Item 2.
     Changes in Securities and Use of Proceeds
     11Item 3.
     Defaults Upon Senior Securities
     11Item 4.
     Submission of Matters to a Vote of Security Holders
     11Item 5.
     Other Information
     11Item 6.
     Exhibits and Reports on Form 8-K
     11SIGNATURES
     
     12


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PART I.
FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements

FNB BANKING COMPANY AND SUBSIDIARY

Consolidated Balance Sheet

September 30, 2004(Unaudited)

AssetsCash and due from banks
$
15,573,134Federal funds sold

5,650,000Cash and cash equivalents

21,223,134Investment securities available for sale

43,316,648Other investments

1,091,850Mortgage loans held for sale

178,450Loans

235,139,030Less:     Unearned income

(266,153)Allowance for loan losses

(3,415,765)Loans, net

231,457,112Premises and equipment, net

7,574,394Goodwill

4,401,920Other assets

2,691,590Total assets
$
311,935,098Liabilities and Stockholders’ EquityLiabilities:Deposits:Noninterest-bearing
$
43,438,563Interest-bearing

208,617,241Total deposits

252,055,804Securities sold under retail repurchase agreements

13,488,646FHLB advances

6,531,250Notes payable

6,131,400Other liabilities

1,756,254Total liabilities

279,963,354Stockholders’ equity:  Common stock, $1 par value; authorized
   5,000,000 shares; 714,776 shares issued and outstanding

714,776Retained earnings

30,150,925Accumulated other comprehensive income

1,106,043Total stockholders’ equity

31,971,744Total liabilities and stockholders’ equity
$
311,935,098


See accompanying notes to unaudited consolidated financial statements.

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FNB BANKING COMPANY AND SUBSIDIARY

Consolidated Statements of Earnings
For the Three Months and the Nine Months Ended September 30, 2004 and 2003
(Unaudited)

Three Months
Ended

Nine Months
Ended2004

2003

2004

2003Interest income:Loans
$
4,068,004

4,210,772

12,010,250

12,747,435Investment securities:Tax exempt

156,821

133,562

438,169

383,270Taxable

338,463

338,512

974,076

1,068,879Federal funds sold

17,337

18,894

46,237

64,991Total interest income

4,580,625

4,701,740

13,468,732

14,264,575Interest expense:Deposits and retail purchase agreements

887,373

993,765

2,673,341

2,749,591Notes payable

81,883

87,761

246,465

255,785Federal funds purchased and FHLB advances

58,532

73,100

168,102

207,463Total interest expense

1,027,788

1,154,626

3,087,908

3,212,839Net interest income

3,552,837

3,547,114

10,380,824

11,051,736Provision for loan losses

37,808

159,822

243,162

463,123Net interest income after provision for loan losses

3,515,029

3,387,292

10,137,662

10,588,613Other operating income:Service charges on deposit accounts

540,430

570,774

1,566,123

1,594,098Fees for trust services

60,000

66,000

120,000

138,000Securities gains

-

4,484

47,534

6,639Gain on mortgage loan sales

58,132

151,880

166,098

419,368Other operating income

166,148

132,277

477,278

351,072Total other operating income

824,710

925,415

2,377,033

2,509,177Other operating expense:Salaries and other personnel expense

1,572,802

1,681,963

4,795,920

5,052,929Net occupancy and equipment expense

553,641

497,819

1,629,243

1,518,600Other operating expense

678,762

708,711

2,054,339

2,196,800Total other operating expense

2,805,205

2,888,493

8,479,502

8,768,329Earnings before income taxes

1,534,534

1,424,214

4,035,193

4,329,461Income taxes

493,492

471,803

1,268,853

1,452,688Net earnings
$
1,041,042

952,411

2,766,340

2,876,773Earnings per common share based on average outstanding
     shares of:  714,726, 730,772, 714,763 and 730,798,
     respectively:Net earnings per share
$
1.46

1.30

3.87

3.94Dividends declared per common share
$
-

-

.80

.75


See accompanying notes to unaudited consolidated financial statements.

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FNB BANKING COMPANY AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

For the Three Months
and the Nine Months Ended September 30, 2004 and 2003
               
(Unaudited)

|                                                                                                                                          |   | Three Months
Ended |  | Nine Months
Ended
|----------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ |  | -----------------
|                                                                                                                                          |   | 2004               |  | 2003             
|Net earnings                                                                                                                              | $ | 1,041,042          |  | 952,411          
|Other comprehensive income (loss), net of tax:                                                                                            |   |                    |  |                  
|Unrealized holding gains (losses) on investment securities
     available for sale arising during the period                              |   | 1,055,606          |  | (837,939)        
|Unrealized holding gains (losses) on derivative financial
     instruments classified as cash flow hedges, arising during the
     period |   | (108,402)          |  | 120,794          
|Reclassification adjustment for (gains) losses on investment
     securities available for sale                                           |   | -                  |  | (4,484)          
|Total other comprehensive income (loss), before tax                                                                                       |   | 947,204            |  | (721,629)        
|Income taxes related to other comprehensive income:                                                                                       |   |                    |  |                  
|Unrealized holding gains (losses) on investment securities
     available for sale arising during the period                              |   | (401,130)          |  | 318,417          
|Unrealized holding gains (losses) on derivative financial
     instruments classified as cash flow hedges, arising during the
     period |   | 41,193             |  | (45,902)         
|Reclassification adjustment for (gains) losses on investment
     securities available for sale                                           |   | -                  |  | 1,704            
|Total income taxes related to other comprehensive income (loss)                                                                           |   | (359,937)          |  | 274,219          
|Total other comprehensive income, net of tax                                                                                              |   | 587,267            |  | (447,410)        
|Total comprehensive income                                                                                                                | $ | 1,628,309          |  | 505,001          

See accompanying notes to unaudited consolidated financial statements.

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FNB BANKING COMPANY AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2004 and 2003
(Unaudited)

Nine Months Ended
September 30,2004

2003Cash flows from operating activities:Net earnings
$
2,766,340

2,876,773Adjustments to reconcile net earnings to net cash provided by operating activities:Provision for loan losses

243,162

463,123Gain on sale of investment securities

(47,534)

(6,639)Depreciation, amortization and accretion

612,631

282,168Change in assets and liabilities:Other, net

(72,361)

(467,115)Mortgage loans held for sale

664,560

552,620Net cash provided by operating activities

4,166,798

3,700,930Cash flows from investing activities:Payment for purchase of subsidiary

-

(125,458)Proceeds from sale of other investments

163,150

20,100Change in interest bearing deposits with other banks

-

394,000Proceeds from sales of investment securities

1,905,249

216,011Proceeds from maturities, calls and paydowns of investment securities available for sale

8,386,937

9,701,097Purchases of investment securities available for sale

(14,546,893)

(10,604,771)Net change in loans

(2,869,375)

1,242,363Purchases of premises and equipment

(456,563)

(284,714)Net cash (used) provided by investing activities

(7,417,495)

558,628Cash flows from financing activities:Net change in federal funds purchased

(5,000,000)

-Net change in deposits

13,838,488

9,196,673Net change in securities sold under retail repurchase agreements

1,012,264

(1,606,663)Repayments of note payable, net of advances of $3,874 in 2003

(557,400)

(367,726)Repayments of FHLB advances

(1,093,750)

(13,343,750)Proceeds from FHLB advances

-

6,500,000Purchase and retirement of common stock

(17,615)

(13,250)Proceeds from stock option exercise and sale of stock

12,593

9,252Dividends paid

(571,741)

(1,096,384)Net cash provided (used) by financing activities

7,622,839

(721,848)Net change in cash and cash equivalents

4,372,142

3,537,710Cash and cash equivalents at beginning of period

16,850,992

13,201,242Cash and cash equivalents at end of period
$
21,223,134

16,738,952Supplemental cash flow information:Cash paid for income taxes
$
1,213,000

1,387,000Cash paid for interest
$
3,103,437

3,299,933Noncash investing and financing activities:Change in components of comprehensive income
$
(140,022)

(189,862)




See accompanying notes to unaudited consolidated financial statements.

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FNB BANKING COMPANY AND SUBSIDIARY

Notes to Consolidated Financial Statements
(Unaudited)



(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for interim financial information and with the
instructions for Form 10-QSB. Accordingly, they do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and
nine-month periods ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2004. For further information, refer to the consolidated financial statements and footnotes included in FNB Banking
Company’s annual report on Form 10-KSB for the year ended December 31, 2003.

Reclassifications of certain amounts
in the 2003 consolidated financial statements have been made to conform with the
financial statement presentation for 2004.  The reclassifications have no
effect on net earnings or shareholders equity as previously reported.















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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

For the Nine Months in the Periods Ended
           September 30, 2004 and 2003



Forward-Looking Statements

This discussion may contain forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties.  Although the Company believes the assumptions underlying the forward-looking statements contained in
the discussion are reasonable, any of the assumptions could be inaccurate, and therefore, no assurance can be made that any of the
forward-looking statements included in this discussion will be accurate. Factors that could cause actual results to differ from
results discussed in forward-looking statements include, but are not limited to:  economic conditions (both generally and in
the markets where the Company operates); competition from other providers of financial services offered by the Company; government
regulation and legislation; changes in interest rates; and material unforeseen changes in the financial stability and liquidity of
the Company’s credit customers;  all of which are difficult to predict and which may be beyond the control of the
Company. The Company undertakes no obligation to revise forward-looking statements to reflect events or changes after the date of
this discussion or to reflect the occurrence of unanticipated events.

Financial Condition

Total assets at September 30, 2004, were $311.9 million representing a $9.9 million (3.3%) increase from December 31, 2003.
Deposits, including retail repurchase agreements, increased $14.9 million (5.9%) from December 31, 2003. Gross loans increased $2.6
million (1.1%) from December 31, 2003. The allowance for loan and lease losses at September 30, 2004 totaled $3.4 million,
representing 1.45% of total loans compared to the December 31, 2003, total of $3.5 million representing 1.50% of total loans. Cash
and cash equivalents increased $4.4 million from December 31, 2003.

The following summarizes non-performing assets:

|                                        |   | September 30,
2004 |  | June 30,
2004 |  | March 31,
2004 |  | December 31,
2003
|--------------------------------------- | - | ------------------ |  | ------------- |  | -------------- |  | -----------------
|Accruing loans 90 days or more past due | $ | 26,000             |  | 29,000        |  | 147,000        |  | 19,000           
|Non-accrual loans                       |   | 2,476,191          |  | 2,530,519     |  | 2,505,124      |  | 2,614,475        
|                                        | $ | 2,502,191          |  | 2,559,519     |  | 2,652,124      |  | 2,633,475        

Non-accrual loans decreased $54,328 (2.1%) from June 30, 2004 to September 30, 2004.  The decrease is the net result of
several transactions outlined as follows:

Balance at June 30, 2004
$
2,530,519Loans reclassified as non-accrual

176,881Loans with improved performance and placed back on accrual status

(12,964)Payments on non-accrual loans

(60,109)Non-accrual loans that were charged off

(158,136)$
2,476,191


A total of $665,692 of valuation allocation was maintained in the allowance for loan losses at September 30, 2004, for
non-performing loans.





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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, continued

For the Nine Months in the Periods Ended
September 30, 2004 and 2003



The Company’s subsidiary bank was most recently examined by its primary regulatory authority in October 2004.  There
were no recommendations by the regulatory authority that, in management’s opinion would have a material effect on the
Company’s liquidity, capital resources or operations.

Results of Operations

For the nine months ended September 30, 2004, the Company reported net earnings of $2.8 million or $3.87 per share, compared to
$2.9 million, or $3.94 per share, for the same period in 2003.  Net earnings for the three months ended September 30, 2004,
increased $89,000 or 9.3%, compared to the same period in 2003 primarily due to a decrease in the amount provided for loan
losses.

Net interest income decreased approximately $670,000 (6.1%) in the first nine months of 2004 compared to the same period in
2003. Interest expense for the first nine months of 2004 decreased $125,000 (3.9%) compared to the same period in 2003.  The
primary reason for the decrease in net interest income for the nine-month period ended September 30, 2004, versus the same period
of 2003 was a decline in loan activity. Loan origination fees declined $345,000 in 2004 compared to 2003.  At September 30,
2004, the net interest margin was 4.99% versus 5.35% at September 30, 2003.  Since December 31, 2003, the net interest margin
has decreased 24 basis points primarily due to a decline in loan origination fees.

The provision for loan losses for the nine months of 2004 decreased $220,000 compared to the same period for 2003.  The
decrease in the provision for loan losses was attributable to management’s expectation of lower charge-offs and slow loan
growth.  Net loan charge-offs for the nine months ended September 30, 2004, were $328,000, compared to $341,000, for the same
period in 2003.  It is management’s belief that the allowance for loan losses is adequate to absorb probable losses in
the portfolio, but there is no assurance that this will be the case.

Other operating income decreased for the nine months ended September 30, 2004, by $132,000 or 5.3%, compared to the same period
in 2003, primarily due to a decrease in mortgage activity of $253,000.  This was partially offset by an increase from gains on
sales of investment securities available for sale of $41,000 for the nine months ended September 30, 2004, over the same period in
2003; as well as an increase in fee income of $27,000 in 2004 compared to the same nine-month period in 2003.

Other operating expenses for the first nine months of 2004 decreased $289,000 (3.3%) compared to the first nine months in
2003.  Included in the decrease for the nine months ended September 30, 2004, compared to the same period of 2003, was a
reduction in salary and personnel expense of $257,000 and a reduction in data processing expense of $122,000.

Income tax expense expressed as a percentage of pretax earnings declined from 33.6% to 31.4%, as tax-exempt income expressed as
a percentage of pre-tax earnings increased for the nine month period ending September 30, 2004 compared to the same period in
2003.  For the three months ended September 30, 2004, income tax expense expressed as a percentage  of pretax earnings
was 32.2%, compared to 33.1% for the same period in 2003.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, continued

For the Nine Months in the Periods Ended
September 30, 2004 and 2003



Capital

The following tables present the Company’s and the Bank’s regulatory capital position at September 30, 2004:



Risk-Based Capital Ratios
Consolidated

Bank OnlyTier 1 Tangible Capital, Actual
10.8%

12.48%Tier 1 Tangible Capital minimum requirement
4.00%

4.00%Excess
6.18%

8.48%===

===Total Capital, Actual
11.59%

13.72%Total Capital minimum requirement
8.00%

8.00%Excess
3.59%

5.73%===

===Leverage RatioTier 1 Tangible Capital to adjusted total assets (“Leverage Ratio”)
8.66%

10.61%Minimum leverage requirement
3.00%

3.00%Excess
5.66%

7.61%===

===


Item 3.

Controls and Procedures

Our management, including our principal executive officer and principal financial officer, supervised and participated in an
evaluation of our disclosure controls and procedures (as defined in federal securities rules) and pursuant to such evaluation,
concluded that our disclosure controls and procedures are effective as of September 30, 2004.  Disclosure controls and
procedures are those controls and procedures which ensure that information required to be disclosed this filing is accumulated and
communicated to management and is recorded, processed, summarized and reported in a timely manner and in accordance with Securities
and Exchange Commission rules and regulations.

There were no significant changes in our internal controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.

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PART II.  OTHER INFORMATION

FNB BANKING COMPANY AND SUBSIDIARY

Item 1. Legal Proceedings

None

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

a)    Exhibits – The following exhibits are filed with this report.
                           
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                           
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                            32      Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

b)
   Reports on Form 8-K - none



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FNB BANKING COMPANY AND SUBSIDIARY

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.



| | FNB BANKING COMPANY              
| | ---------------------------------
| |                                  
| |                                  
| |                                  
| | By: /s/ J. Charles Copeland      
| | J. Charles Copeland, President   
| | (Principal Executive Officer)    
| |                                  
| | Date: November 10, 2004          
| |                                  
| |                                  
| |                                  
| | By:_/s/ Mark Flowers             
| | Mark Flowers, Assistant Treasurer
| | (Principal Accounting Officer)   
| |                                  
| | Date: November 10, 2004          







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